The Hindu Business Line : In the eye of IP storm

In July 2005, the Andhra Pradesh State Government could speed up the process of issuing ration cards. This followed the arrival of over 300 additional `iris' technology cameras from the US, reported the media. Each DPL (Designated Photography Location) had a capacity to issue 250 cards a day, and so 1.5 lakh cards could be distributed throughout the State daily, it was stated.

The official site of Hyderabad District has a page on `issue of ration cards' (http://hyderabad.ap.nic.in/rationcard.html). "The District Administration is making all arrangements for issue of ration cards in Hyderabad District from January 2, 2006. An estimated number of about 10 lakh households shall be issued fresh ration cards in a period of 3 months at a cost of Rs 40 per card," it informs.

Iris recognition for ration cards

For this purpose, Andhra Pradesh Technology Services developed "the software with IRIS (Iris Retrieval and Identification Software) Technology whereby the household data, digital photos and IRIS images of family members are gathered, integrated and a ration card is generated." The site assures: "The process of issue of ration cards would be transparent, convenient and shall be issued across the counter."

Click www.lgiris.com, to read a press release dated September 8, 2005, from LG Electronics Iris Technology Division in the US. "Iris recognition, the only biometric technology designed to operate in 1-to-many search mode, found a project where the database is finally large enough," it begins, referring to the AP contract awarded to the company.

"The program... will see 20 million persons enrolled in the first stage. When the program concludes, the user base will total 80 million persons. The 20 million enrolled in stage one will represent a database more than twenty times larger than the next largest iris recognition program ever done. It is anticipated that the program will be the largest biometric authentication program ever implemented."

One of the hurdles that the contract had to cross was a case before the Andhra Pradesh High Court: 4G Informatics (P) Ltd vs State of Andhra Pradesh. This petitioner, 4G, argued that LG's bid for procurement of State-wide iris licences was incomplete and that LG was unqualified for the contract.

4G is a Hyderabad-based company. Its CEO, Dr Srinivasa Rao, a specialist in vascular surgery, averred that his company was the sole and authorised representative of Iridian Technologies, Inc. of the US. One learns from the text of the judgment dated January 28 that Iridian developed for commercial utilisation software technology for iris recognition. And that iris recognition is considered to be the most accurate biometric identifier.

Biometrics and IP debate

For starters, biometrics is the science and technology of measuring and analysing biological data, as http://searchsecurity.techtarget.com defines. "Biometrics refers to technologies that measure and analyse human body characteristics, such as fingerprints, eye retinas and irises, voice patterns, facial patterns and hand measurements, for authentication purposes."

For instance, the Andhra Pradesh State Government wished to deploy biometrics to check misuse and fraudulent ration cards used for Public Distribution System of essential commodities. In addition to iris recognition, the Government considered fingerprinting as a method of authentication. A pilot project study was started for iris recognition in the Kapra Municipality, through 4G. One learns that LG's initial offer was for fingerprinting technology. After the trial, the matter of issue of ration cards was referred to a High Power Committee constituted by the Government. The Committee felt that iris technology was better than finger print technology.

The petition before the court mentioned that Professor Dr John Daugman, University of Cambridge, UK was the pioneer of the technology, and hold of 1994 patent for iris recognition algorithms. "This is the parent intellectual property (IP) for all the products viz., KnoWho Authentication Server, KnoWho OEM SDK (Software Development Kit), PC Iris and Engine Access Control System of Iriscan," reads a snatch from the text.

Iridian is the exclusive possessor and IP patent holder of iris licences, contended 4G. In February 2004, Iridian had granted to 4G, through a business agreement, `the status of an authorised agency to develop, represent and commercialise Iridian Technologies Software in India.' 4G said that it had been the consistent stand of Iridian that 4G "is the only Company in India to represent Iridian."

Arguments and the counter

It is not as if LG (US) didn't have any tie-up with Iridian. There was a contract between the two, `for operation, distribution and so on'. However, the business arrangement between Iridian and LG had been cancelled on August 23, 2004 by Iridian. LG sued against the unilateral termination of contact; a case, that is, in the District Court, New Jersey. `No order has been passed against Iridian,' by the US court, informs the text of the judgment. "In view of the termination of the contract by Iridian Technologies, LG Electronics, USA, is barred from conducting business in any of Iris User Licences, Iris Equipment, Software, allied products etc," said 4G.

After LG was awarded the contract by the Government, 4G and its principal "got an American Law firm to issue a notice to the Chief Secretary and others," about Iridian terminating its agreement with LG. The notice said that if the Government decided to use LG products, Iridian reserved all rights and remedies, in case the products were found to be unlicensed Iridian IP,

The only question, therefore, before the AP High Court was whether LG was qualified for the bid in view of the fact that the licence granted to LG by Iridian had been cancelled. But 4G had more to say. It said the condition that the Government laid down - that bidders must provide indemnity bonds to secure the interests of Government of Andhra Pradesh in legal wrangles between Iridian and LG - was a departure from the bid conditions and encouraged infringement of patented IP rights. Also, that software provided by LG was obsolete, and lacking in compatibility; while 4G could supply iris technology in its 4th generation stage, LG had only the 2nd generation solutions.

Eyes wide open!

From the side of the Government and LG too there were arguments. For instance, the Government said that 4G's proposal was an unsolicited one. 4G had offered to deploy Panasonic Authenticam Iris Cameras for trying out iris technology. "During the pilot run at Kapra, it was found that Panasonic Authenticam was slow and inconvenient and the number of cameras have to be increased to three in a single DPL," informs the text of the judgment. To man the addition computers attached to such cameras, more manpower was required proportionately, said the Government. "It was also found that in many cases, Panasonic Authenticam had a problem in capturing iris images, and citizens had to keep their eyes wide open, and sometimes take the help of another person to get the image captured by Panasonic Authenticam."

The Government's side told the court that apart from offering the least cost solution in terms of price of cameras to be deployed in each DPL as well as software licences, LG was "the only one to offer to supply the cameras substantially within the timeframe set by the Government for the entire exercise of issuing new ration cards." It further stated that 4G quoted a high price for the associated software licences and for cameras; moreover, the company did not meet the timeframe set for the exercise.

LG's defence

On the IP point, LG had this to say:

Licence agreement that provided LG with the right to use Iridian's iris recognition technology remained effective.

Business agreement between Iridian and LG had not been validly cancelled.

Even after alleged termination of the said agreement, LG was supplying the technology to different US Departments, with the knowledge of Iridian.

The US court had not passed any restraint order against LG.

LG continued to report and pay royalties to Iridian under the licence agreement and Iridian continued to accept those royalty payments.

Iridian did not appear to have any claim against the Government of Andhra Pradesh, since patents involved in this action are US patents.

And LG had agreed to indemnify the Government of Andhra Pradesh.

The high court noted that the difference between two prices, viz. 4G and LG, was huge: Rs 26 crore as against Rs 8 to 9 crore. Even after 4G lowered its rate, LG's was lower by about Rs 3 crore. Of relevance was the finding of the High Power Committee that 4G's cameras weren't found to be suitable.

Justices Bilal Nazki and G. Chandraiah said that they didn't see any arbitrariness on the part of the Government; and that its decision to award the contract to LG `was more profitable technically as well as monetarily'. To protect its interests, the Government had collected indemnity bonds from LG, said the judges.

Before dismissing 4G's petition, the court said that as on the date of judgment, there was nothing on record to show that LG was contravening any law on patents. On the matter pending before the US court, the verdict notes: "... it will be premature at this stage, particularly when Iridian Technologies is accepting royalties from LG Electronics even after termination of the agreement."

http://ITcases.blogspot.com

More Stories on : Courts/Legal Issues | IPR | Case Sensitive | E-Governance | Software

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