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Smart Card Manufacturer Reaches Patent Settlement

Issued: November 01 2011
Orrick, Herrington & Sutcliffe has successfully advised On Track Innovations (OTI), a manufacturer of contact-less microprocessor-based smart card solutions, in reaching a landmark patent settlement agreement with Smartrac N.V., a leading manufacturer and supplier of RFID transponders.
The settlement, agreed on November 9, 2009, was reached after more than two years of litigation in multiple jurisdictions. It fully secures OTI’s delivery of products and projects as well as confirming Smartrac as OTI’s exclusive supplier for wire-embedded and Dual Interface Inlays. The settlement also invalidates Smartrac’s patents.
OTI’s case began in August 2007 when Orrick filed a patent invalidation on behalf of OTI before the China Patent Reexamination Board (PRB) against Smartrac’s Chinese invention patent. In June 2008, Smartrac filed customs actions in Shenzhen and a patent infringement suit in the Shenzhen Intermediate Court against Millennium Card Technology Ltd (MCT), a subsidiary of OTI. As MCT is the primary Chinese manufacturing base for OTI smart cards, the successful outcome of this case was critical for OTI’s global business.
“This was a challenging patent case involving multiple jurisdictions,” said Beijing-based partner Xiang Wang. “We advised OTI on all the Chinese legal proceedings to which our client was a party, as well as OTI’s patent reexamination in the United States and interests in Hong Kong. We believe that the victories in the various Chinese legal actions provided OTI with a significant leverage in its multi-jurisdiction disputes with Smartrac in China, the United States, Germany, Holland and other jurisdictions, which ultimately led the settlement. The final settlement represents an important achievement for our client’s global business operations and strategy. With access to Smartrac's patented technology and high secure production network, OTI can further strengthen its ability to support its existing and future secured ID projects and enjoy Smartrac’s high volume production capacity in Europe.”



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