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A firm that’s made millions of dollars enforcing patents has been sued for allegedly filing “baseless, sham” patent infringement suits. In a Dec. 10 complaint filed in Wisconsin federal court, Rockwell Automation Inc. claims that Chicago-based Niro, Scavone, Haller & Niro and Niro’s clients — Schneider Automation Inc. and Solaia Technology LLC — have conspired to extract tens of millions of dollars in licensing fees from companies using Rockwell’s industrial automation equipment. Niro, Scavone and its clients contend that Rockwell’s technology infringes a patent on a method of controlling factory production processes. Rather than suing Rockwell for infringement, Solaia — which purchased the patent from Schneider — has sued Rockwell’s customers. The customers include Clorox Co. Inc., Boeing Co., Eastman Kodak Co., Eli Lilly and Co., General Dynamics Corp., Shell Oil Co. and Tyco International Inc., among others. Rockwell’s suit is particularly noteworthy given Niro, Scavone’s reputation as one of the country’s leading patent enforcers. Devoted exclusively to plaintiffs’ litigation, the firm has been a successful enforcer, most frequently representing companies like Solaia that have no products but are solely in the business of licensing patents. From 1994 through July 2001, name partner Raymond Niro Sr. won 20 multimillion-dollar jury verdicts in a row, which garnered more than $400 million for his clients. Niro’s fee generally ranges from 35 percent to 45 percent of gross revenues. The Rockwell case is also remarkable since law firms aren’t typically sued for filing infringement suits. “It is unusual for a law firm itself to be sued for bringing a meritless patent claim,” said Edward Reines, a partner in Weil, Gotshal & Manges’ Redwood Shores office. “The Niro firm has earned a reputation in the patent community as an aggressive and controversial plaintiffs’ law firm. It is therefore not altogether shocking that the Niro firm is the subject of such allegations — whether those allegations are warranted or not.” It is perhaps more common for companies to sue patent holders for filing meritless suits. In one such case, Intel Corp. sued EMI Group North America Inc. for malicious prosecution, seeking millions of dollars in damages. That case settled several months ago. Such actions “are pretty disfavored by the courts,” said former Intel in-house attorney Peter Detkin, who pursued the EMI litigation and has battled Niro, Scavone in a separate high-stakes infringement suit against Intel. “They don’t like cases against litigation.” Niro disagrees with the strategy of going after firms and their clients with claims that their suits are baseless. He dismissed Rockwell’s suit as “an act of desperation.” “It’s frivolous, it’s ridiculous, it’s designed to intimidate and distract us from what we have to do, which is to represent our clients,” Niro said. “We’ve been getting phone calls and messages even from opposing counsel in some of the cases [against Rockwell customers] saying how ridiculous the lawsuit is.” Niro said a similar suit was brought against his firm and client IMS Technology Inc. by Centroid Corp. several years ago. That suit was dismissed, he said, and his firm recovered its fees. Rockwell attorneys David Cross, a partner at Milwaukee-based Quarles & Brady, and John Briggs III, a partner at Washington, D.C.’s Howrey Simon Arnold & White, could not be reached for comment. But a Rockwell spokesman said the company had filed the suit to support its customers. “We believe these defendants have conspired among themselves to harm our relationship with our customers,” said Matt Gonring, Rockwell’s vice president of communications and marketing. Unless they are stopped they “will continue baseless actions against hundreds of manufacturers.” In Rockwell Automation Inc. v. Schneider Automation Inc., 02-01195, Rockwell says its technology is not covered by the Solaia patent, and rather than battling that issue out in court, Niro, Scavone and its clients have sought to “‘shakedown’ manufacturers through threats of potential business interruption or catastrophic damages.” Solaia has filed two separate suits against Rockwell customers. Rockwell’s complaint says all the defendants named in the first suit have settled with Solaia and have sought indemnification from Rockwell for payments they’ve made. Rockwell’s suit also cites questionable behavior on the part of the defendants. Specifically, Rockwell claims that Schneider abused its position in an industry standards-setting body, failing to tell other members that it held a relevant patent. The complaint says once the industry standards were implemented, Schneider assigned the patent to a shell company (Solaia), whose sole purpose was to license the patent, and that the defendants agreed to split the proceeds of any patent litigation. Niro said that claim was brought in the first suit filed against Rockwell customers and dismissed by the court. Rockwell develops and markets software programs used in networks to monitor and control the operation of other factory automation equipment. The patent at issue relates to methods of communicating information between a network of programmable logic controllers and a personal computer.

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