Pet ID Chipmaker Accused Of Monopolization

MINNEAPOLIS (CN) - A company that controls the U.S. market for implantable radio frequency ID chips for pets is abusing its power to exclude competitors, and threatening the lives of the animals its chips are supposed to protect, one rival claims in Federal Court.

Defendant Avid Identification System makes encrypted radio frequency ID implantable chips for pets. Its competitor, Datamars, claims Avid is monopolizing the U.S. market by refusing to share its encryption code. Datamars claims this violates antitrust law and causes lost pets to be euthanized needlessly.

Radio frequency ID (RFID) chips have been sold since about 1995 in the United States. They operate at 125 kHz or at the International Organization for Standards' 134.2 kHz standard.

Avid sells its RFID chips in the United States only at 124kHz, the complaint states. They are encrypted with a proprietary code so that information on a Avid chip can be read only by an Avid reader. Even readers that operate at 125 kHz cannot read the chips without the Avid decryption algorithm.

Avid controls more than 60 percent of the market for RFID chips in the United States, the complaint states. Datamars claims Avid has provided the algorithm to one competitor, Digital Angel Corp., in exchange for a promise not to sue for patent infringement, but it refuses to provide the algorithm to Datamars or other competitors. "Since many lost and unidentified pets are euthanized by animal shelters every day, Avid's business practices are placing at risk the lives of animals whose owners have purchased RFID chips for the very purpose of protecting their pets," the complaint states. "There is no technological necessity, cost benefit, manufacturing advantage, or public benefit from Avid's use of this encryption technology. Avid's encryption of its chips is intended solely to exclude competitors and prospective competitors from both the U.S. market for RFID chips as well as the U.S. market for RFID readers and to pose an extreme and illegal barrier to entry with respect to both of these product markets. ... Outside the United States, Avid sells both chips and readers which operate at the ISO-compliant 134.2 frequency, and sells a universal reader that detects chips operating at both 125 and 134.2 kHz."

Datamars demands treble damages and an injunction. It is represented by Thomas Pursell with Lindquist & Vennum.

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