Avid Is Granted Injunction But Chip War Rages

There is a constant war between parties opposed to and for the use of microchips in avians.

Although members of the veterinary and animal welfare communities have been calling on pet microchip manufacturers and distributors to find a way to cooperate, the industry continues to be enmeshed in an increasing number of legal battles.

Avid Identification Systems, the plaintiff in several of these cases, reports that at least one of its lawsuits has been resolved and that it has been granted a preliminary injunction against the defendant in another.

The company cites both these developments as validations of Avid’s technological and intellectual property investments.

“Avid believes that the U.S. pet microchipping and recovery systems were jeopardized recently by several reckless attempts to introduce an incompatible 134.2 kHz-based microchip technology,” said Avid founder Hannis Stoddard III, DVM. “We anticipate this ruling [in regard to the settled case] will help validate the 125 kHz-based microchip technology.”

Regardless of the lawsuits, members of the Coalition for Reuniting Pets and Families, supported by the American Animal Hospital Association, the American Veterinary Medical Association and various animal welfare organizations, are still asking microchipping companies to permit the use of a “global” scanner that can read all chips on the U.S. market.

Avid officials say that such a scanner, capable of reading both 125 kHz and 134.2 kHz microchips, would not be dependable enough for the U.S. market. The company defends its ongoing lawsuits as being in the best interests of veterinarians, pet owners, shelter workers and pets.

“Spending a lot of time in court is not anybody’s favorite thing to do,” said Dr. Stoddard. “One of our competitors said we did this to protect our business-he was absolutely correct. Our business is to protect pets.”

Suit Settlement

In Wisconsin, a lawsuit filed by Avid against Pethealth Services and Allflex, two companies that partnered to join the North American pet microchipping industry last year, has reportedly been resolved, along with Pethealth’s countersuit.

Pethealth and manufacturer Allflex provide a 134.2 kHz microchip, often referred to as an ISO chip, in Wisconsin and Oregon and a non-ISO chip in other states.

In its suit, filed in the federal district court in Madison, Avid alleged that the companies infringed on two of Avid’s patents, and also accused them of unfair competition, and false, deceptive or misleading representations.  Pethealth’s counterclaim accused Avid of false and deceptive advertising, and unfair competition.

Most of the details of the settlements are not being released due to a confidentiality agreement between the companies. However, public records do show that the judge granted a summary judgment in Avid’s favor in regard to at least one aspect of its patent infringement case.

Although the companies are unable to explicitly disclose many of the other details, officials with Avid are hinting that the case’s settlement has serious implications for Pethealth’s ISO microchipping program.

“What [the settlement] really means is Pethealth is welcome to continue its microchipping program in U.S. as long as it conforms to the 125 kHz standards and other considerations, for example, correct consideration of patents,” said Stoddard.

Mark Warren, president and chief executive officer of Pethealth, which is a publicly traded company in Canada, said he was unable to comment on the matter at the time he was contacted, although he added that the company did plan to issue a formal statement at a later time.

Injunction Granted

In California, Avid has another lawsuit pending against Banfield The Pet Hospital. The suit, filed in the Superior Court of California in San Diego, accuses Banfield of misleading consumers and unfair competition in regard to its microchipping program, which launched in February and features an ISO microchip.

Avid argues that Banfield is putting pets at risk of being euthanized by offering a microchip that the majority of scanners used in shelters cannot read. The lawsuit points to a case in Virginia in which a lost dog implanted with a Banfield chip was euthanized at a local shelter before its owners could claim it because the facility’s scanner failed to detect the microchip.

Banfield voluntarily halted distribution of its chips in May, prior to the lawsuit, and currently the company has no plans to resume distribution. Banfield officials say that Avid is hiding “behind the guise of a ‘consumer protection’ lawsuit” in an effort to protect its profit margins.

In early November, the court granted Avid a preliminary injunction against Banfield. The order states that Banfield is cannot resume its microchipping program without first submitting copies of its promotional material to the court for review.

The court order references the aforementioned euthanasia incident and states that Avid “has presented evidence of the increased safety risks facing pets implanted with the RecoveryChip The circumstances are ‘extraordinary’ and the potential for serious, irreparable harm warrants the issuance of a mandatory preliminary injunction to inform potentially affected pet owners.”

The order states that Banfield must notify all purchasers of its microchips, as well as veterinarians to whom the company has recommended its program, with written correspondence that notifies them that not all shelters are equipped with scanners that can read the 134.2 kHz chips, and that those that are might not use those scanners on lost pets.

At press time, Banfield did not have additional information in regard to this portion of the injunction, and it was unclear whether such correspondence would need to be provided to those who had purchased the chips prior to Banfield’s halting its program or only in going forward with the program.

New and Ongoing Lawsuits

In a separate matter, Digital Angel Corp., which also manufacturers a 125 kHz microchip, has filed two patent infringement suits in a Minnesota court. Digital Angel’s microchips are used in Schering-Plough Animal Health’s Home Again program.

One suit, against Allflex and Pethealth, alleges that Allflex has violated a licensing agreement between it and Digital Angel, thereby infringing on one of the company’s patents. Pethealth is named in the suit because it distributes Allflex chips.

The other suit is against microchip manufacturer Datamars Inc., the Crystal Import Corp. and Banfield The Pet Hospital. The suit alleges Datamars’ microchips, distributed in the United States through Banfield’s now-halted program, infringe on a Digital Angel patent. The Crystal Corp., according to the suit, markets and sells Datamars chips.

Although Banfield officials said the Digital Angel lawsuit is mainly a manufacturing matter, the company issued a release stating, “Nonetheless, we believe this lawsuit is an effort by Digital Angel to protect its market share and is not in the best interests of pets.”

Avid also has a pending patent infringement suit against Datamars, Banfield and several other companies. Avid officials said they hope the case, filed in Texas, will be heard by the end of the year.

Continued Frustration

Members of the coalition urging industry cooperation are still hoping an accord can be reached, but many acknowledge that this is far from a simple matter.

“This is one of the biggest messes I’ve ever encountered,” said John Snyder of the Humane Societies of the United States, a member of the coalition. “In hindsight, in 1986, when all of us in this industry saw the microchip, we should have established a national standard then.”

By now, Snyder says, pet microchips should be like CD-ROMs: The technology should be uniform, and companies should compete on price. He says there’s a large enough market for all companies to move their products.

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