Tyco's Patent Litigation against Ningbo Reaches Resolution

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Security and protection services provider Tyco International Ltd. (TYC) announced the resolution of its pending litigation with Chinese manufacturer Ningbo (referring to Ningbo Signatronic Technologies, LLC, ALL-TAG Security, Best Security Industries and Signatronic Corporation).

The settlement agreement prohibits Ningbo from importing certain acousto-magnetic (“AM”) electronic article surveillance systems (“EAS”) labels into the U.S. Ningbo is also required to make an unspecified payment to Tyco. All other terms of the resolution were kept confidential.

In Dec 2013, Tyco filed a complaint with the International Trade Commission (“ITC”) and the U.S. District Court for the Southern District of Florida against Ningbo, alleging that the latter was importing certain AM EAS labels that infringed on Tyco’s patents. Tyco, sought to recover monetary damages from Ningbo for infringing its patented U.S. labels together with a permanent Cease and Desist Order against Ningbo and its U.S. distributors.

The AM labels, which were the main subject of the litigation, were designed to thwart burglary in retail stores by setting off an alarm when live labels passed through Tyco's Sensormatic brand AM EAS systems. Tyco alleged that these labels infringe the company's '200 and '245 patents.

The legal action was aimed at protecting Tyco's intellectual property rights and helping to safeguard the value of its leading Sensormatic brand, given that infringing products may not adhere to the quality standards and manufacturing consistency of the brand’s authentic AM labels. Sensormatic AM labels performed optimally with Tyco’s detection and deactivation systems, and non-Sensormatic labels could compromise the performance of Tyco’s anti-shoplifting systems.

Consent agreements resolved both the ITC and District Court actions.

Tyco spearheaded the EAS anti-shoplifting industry through its Sensormatic brand to help retailers better manage their inventories, shoppers’ activity, facilities and employees. The company continues to invest significant research and development resources to expand its portfolio of high-technology Sensormatic security and store performance systems, catering to the increasingly competitive and dynamic global marketplace.

Tyco currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the diversified operations industry include Noble Group Ltd. (NOBGY), Macquarie Infrastructure Company LLC (MIC) and CLARCOR Inc. (CLC). While Noble Group sports a Zacks Rank #1 (Strong Buy), both Macquarie and CLARCOR hold a Zacks Rank #2 (Buy).

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