FTC Requiring Honeywell to License Barcode Scanner Patents

ball and chainSeptember 13, 2013 - From the FTC website:  "The Federal Trade Commission will require Honeywell International Inc. to license patents critical to the manufacture of two-dimensional (2D) bar code scanners, under a settlement resolving FTC charges that Honeywell’s acquisition of rival scan engine manufacturer Intermec Inc. would be anticompetitive.

The proposed FTC consent order preserves competition in the market for 2D scan engines by requiring Honeywell to license its and Intermec’s patents for 2D scan engines to Datalogic IPTECH s.r.l for the next 12 years.  Scan engines are used in products such as retail store scanners to translate an image (often a UPC barcode) into a digital format that can be interpreted and analyzed by a computer.

“Although divestiture of assets is the preferred remedy in merger cases, licensing requirements can preserve competition in markets where access to needed technology is the main barrier to entry,” said Deborah Feinstein, Director of the FTC’s Bureau of Competition.  “By requiring Honeywell to license its technology, the proposed order gives Datalogic access to the patents it needs to enter the U.S. market immediately and restore the competition lost due to the merger.”

According to the FTC’s complaint, Honeywell, Intermec, and a third competitor, Motorola, are the only 2D scan engine makers in the United States that have broad enough intellectual property portfolios to insulate them, and their customers, from potential patent-infringement lawsuits.  Accordingly, Honeywell’s acquisition of Intermec would leave two companies – Honeywell and Motorola – with control of more than 80 percent of the already highly concentrated U.S. market for 2D scan engines and increase the likelihood of post-acquisition coordination between Honeywell and Motorola.          

The most significant barrier to entry into the U.S. market from 2D scan engine manufacturers active outside the United States is lack of access to the relevant U.S. intellectual property.  Datalogic markets 2D scan engines similar to those made by Honeywell and Intermec outside of the United States, but it currently lacks the necessary patent rights to compete in the United States.  In order to preserve competition, the proposed consent order requires Honeywell to license its own 2D scan engine patents as well as those held by Intermec to Datalogic.  In addition to the licensing requirements, the proposed consent order bars Honeywell from filing patent infringement actions against Datalogic for 2D scan engine products, and from transferring the patents in the license to anyone who does not commit to abide by the terms of the order.

 See the full FTC release here

Article from Dec 2012 on the Honeywell- Intermec acquisition

Intermec Mobile Computer Solves Shipping Challenge ... a more flexible and inexpensive alternative to traditional home delivery services, as it allows customers to pick up their items at locations closer to their home or work. A long-standing -

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