Federal Signal Denies Misleading Statements Made By Neology in Patent Litigation

Jul 31, 2012, 17:19 ET from Federal Signal Corporation

OAK BROOK, Ill., July 31, 2012 /PRNewswire/ -- Federal Signal Corporation (NYSE: FSS), a leader in environmental, safety and transportation solutions, announced today that Neology, Inc., issued a false and misleading press release on July 30, 2012, regarding litigation between the companies.  Federal Signal issues this release to address Neology's false and misleading statements. 

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The companies are engaged in patent litigation in the United States District Court in Delaware (Neology, Inc. v. Federal Signal Corp., et al).  Neology filed a motion for a preliminary injunction in the case, asking the Court to enjoin Federal Signal from making or selling certain products.  On June 18, 2012, Magistrate Judge Thynge recommended that Neology's motion be denied. 

Yesterday Neology issued a press release containing a number of false and misleading statements.  Neology falsely stated that "Federal Signal Admitted that [the] Patents are Valid and Infringed" and "FS also admitted that based on Judge Thynge's claim construction that [the] patents are valid and infringed."  These statements are not true.  Federal Signal did not admit that it infringed any of Neology's patents, or that any of Neology's patents are valid.

Neology also falsely states that "Judge Thynge recommended that Neology's patents be found valid and infringed by FS."  In fact, Judge Thynge only made one substantive "recommendation" in her report: "I recommend that the court DENY Neology's Motion for Preliminary Injunction."  Judge Thynge also found that for one Neology patent, Neology had not demonstrated a likelihood of success on infringement.  For three more of its patents-in-suit, Neology did not even ask the Court for a preliminary injunction.  Judge Thynge did make a finding for purposes of the preliminary injunction motion regarding two Neology patents.  However, that finding does not bind the parties as the case proceeds to trial, and Federal Signal has also expressed its disagreement with that finding.  At trial, Federal Signal believes that it will prevail on the infringement and invalidity issues. 

Finally, Neology falsely states that it can now "move for a quick resolution of these issues.  Neology will now move forward to seek a permanent injunction against FS's infringing products and to recover substantial and material damages suffered from FS's infringement."  In fact, Neology already tried to move for "a quick resolution of these issues" by filing a motion for a preliminary injunction.  Neology's attempt at a quick resolution in its favor has now failed, and just last week, Neology agreed to a schedule for the case that ensures the trial in this matter will not take place until 2014 at the earliest. 

Further, Federal Signal looks forward not only to defeating Neology's allegations of infringement and validity, but also defeating Neology's claims for damages and a permanent injunction.  Federal Signal is pleased with Judge Thynge's recommendation that Neology is not entitled to a preliminary injunction, because many of the considerations that factor into whether a party should get a preliminary injunction are the same as those a court examines when considering a permanent injunction. 

For instance, Neology must show irreparable harm in order to get a permanent injunction.  In her recommendation that Neology's motion for a preliminary injunction be denied, Judge Thynge found that Neology had not carried its burden of demonstrating irreparable harm.  As part of that finding, Judge Thynge stated that the "evidence does not support [Neology's] contention that defendants have denied, or will deny, Neology entry into the U.S. tolling market."  Judge Thynge also stated that the Court "rejects Neology's price erosion theory in support of its claim of irreparable harm."  Additionally, Judge Thynge noted that Federal Signal is "not responsible for the losses Neology suffered before becoming profitable in 2009, nor the cost-cutting measures that allegedly account for [Neology's] profitability from 2009-11." 

About Federal Signal Federal Signal Corporation (NYSE: FSS) enhances the safety, security and well-being of communities and workplaces around the world. Founded in 1901, Federal Signal is a leading global designer and manufacturer of products and total solutions that serve municipal, governmental, industrial and institutional customers. Headquartered in Oak Brook, Ill., with manufacturing facilities worldwide, the company operates four groups: Safety and Security Systems, Environmental Solutions, Federal Signal Technologies, and Fire Rescue. For more information on Federal Signal, visit: http://www.federalsignal.com.

SOURCE Federal Signal Corporation