American Microsystems' wireless bar code scanner
East Texas has become a haven for patent infringement suits in recent years, so one small Texas company thought it could see the writing on the wall when it received a letter regarding patent "issues" from a company it believes makes its living from lawsuits.
American Microsystems, based in Euless, didn't wait to be sued by WIAV Solutions LLC -- instead it filed a Declaratory Judgment Complaint against WIAV on Dec. 28, 2007, in the Sherman Division of the Eastern District of Texas.
American Microsystems, located between Dallas and Fort Worth and employing 31 people, sells wireless hand-held bar code readers. In the fall of 2007, American began to receive letters from WIAV that it believes were the first steps down the inevitable road to litigation and has now asked a judge to step in and put an end to the controversy before it begins.
According to the plaintiff's original complaint, American Microsystems is an information technology company specializing in providing data collection and transmittal products and services including wireless hand-held bar code readers which are used to scan bar codes on products and cartons primarily in warehouse facilities.
The scanned information is transmitted to central computers for inventory control, warehousing and real time manufacturing floor or transportation information processing.
"American has developed goodwill, recognition, and a favorable reputation in its business," the plaintiff's original complaint states. "On information and belief, defendant has no manufacturing technology or production facilities, but rather, is a company that purportedly owns patents it has collected and whose only business revenue is generated by suing alleged infringers of those patents and negotiating license fees from its victims."
On Oct. 15, 2007, American received a letter at its offices from counsel representing WIAV Solutions LLC, claiming WIAV is the owner of U.S. Patent Nos. 5,400,338 and 6,480,497. American says the letter also suggested it had infringed on the patents.
According to the complaint, WIAV's letter contained an offer to license the patents to companies such as American that make or sell electronic devices using wireless technology "covered by WIAV's patent portfolio."
WIAV stated it "takes seriously" any unlicensed use of its patent rights, but offered to meet with American "to discuss licensing terms," the complaint states.
"WIAV is offering generous terms for those companies which finalize licenses by the end of the year," American's lawsuit quotes from the WIAV's October letter.
The company says it received another letter from WIAV on Nov. 24, 2007, again referencing the patents and "indicating a renewed willingness to license its patents."
But American claims the second letter went further, stating that WIAV hoped that it and American could "reach a mutually beneficial business resolution of these issues."
Because the two letters referred to specific patents by number, mentioned that WIAV takes seriously "any unlicensed practice of its patent rights" and referred to the existence of "issues" that required "resolution," American Microsystems took action.
American tells the court that "there now exists an actual controversy and a likelihood of litigation as to the issues of validity, alleged infringement and enforceability of patents it has been accused of infringing, as well as defendant's purported right to enforce the asserted patents."
"American contends that no such infringement has occurred, and that it has the rights to use the technology now in its devices," the complaint states. "American … also contends that, if defendant owns the patents referenced, they are invalid and unenforceable."
American Microsystems is seeking a declaratory judgment so that it can continue to offer its products and services under its name and business practices "without fear of being unjustly accused of and sued for patent infringement by the defendant."
The plaintiff is also asking that the court award costs, expenses, attorney fees and other relief deemed just and proper.
Michael A. O'Neil of Dallas and Lawrence Phillips of Sherman are representing the plaintiff.
The case has been assigned to U.S. District Judge Michael H. Schneider and referred to Magistrate Don Bush.
Case No. 4:07-cv-589-MHS-DDB