Claims Telxon Used Its Technology : MSI Sues Main Rival in Patent Infringement Case

MSI Data Corp., a Costa Mesa electronics manufacturer struggling to regain momentum after sagging sales gave it its first annual loss in a decade, has sued its major competitor for alleged patent infringement, the second lawsuit between the two hotly competing companies in the last seven months.

The MSI suit, filed Tuesday in U.S. District Court in Los Angeles, charges Telxon Corp. of Akron, Ohio, with using MSI-patented technology in the best selling of Telxon’s portable inventory counting devices.

In March, Telxon sued MSI for $100 million, alleging that MSI paid a former Telxon employee $24,000 to obtain Telxon’s European customer lists, marketing strategies and pricing schedules. MSI has denied the charges.

Although the amount of damages MSI is seeking in its suit was not specified, the company asked the court to order Telxon to stop making and selling devices that allegedly use MSI’s technology. Telxon officials declined to comment on the suit.

At issue in the suit is MSI’s claim that Telxon has pirated an MSI-developed and -patented method to preserve the batteries used to power portable bar code scanners often used by inventory counters in supermarkets, drugstores and apparel shops. MSI claims the method makes its devices more cost-effective than those sold by its competitors and thus represents a “significant competitive advantage.”

While the suit centers on technology, it is yet another strong indication of the battle that has developed between the two companies since Telxon overtook MSI last year as the top-selling inventory-counting device maker in the nation. MSI pioneered the market 18 years ago.