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Applied Digital Sues IBM
Over Rights To Verichip

ZDNet.co.uk
9-17-3


Applied Digital is suing IBM over the rights to a microchip that can be implanted beneath the skin and read by a remote sensor
 
Applied Digital Solutions says it has filed a lawsuit against IBM, alleging that IBM has tried to take control of the rights to a microchip that can be implanted under human skin.
 
Applied Digital, which has borrowed $77m (£48m) from IBM, alleged that the world's largest computer company is using its position as its lender to take control of a subsidiary that holds the intellectual rights to the Verichip, which can be embedded under the human skin and read by a remote sensor.
 
That unit is the collateral in the loan from IBM, on which Applied Digital just missed a $46m payment.
 
The Verichip, which was launched last year, is used in security, financial, emergency identification and other applications. The US Food and Drug Adminstration warned the company last year that it could not market the product for medical applications after opening an investigation.
 
The company also charged that IBM prevented Applied Digital from receiving funding from a third party that would have enabled it to meet its loan obligations, according to a copy of the lawsuit the company said was filed in Florida state court in Palm Beach County.
 
IBM spokesman Joe Stunkard declined to comment, saying that he had not seen the suit.
 
Applied Digital first missed a 28 February payment deadline to IBM unit IBM Credit, with which it has had a loan since 1999 and then was given a second deadline of 6 March, which it also missed.
 
Depending on the response from IBM, the missed payment could affect its ability to carry on business, Applied Digital said.
 
Applied Digital president Scott Sullivan said the company had filed a lawsuit seeking damages from IBM in order to protect itself.
 
"We do have an obligation to protect the assets of the company and our shareholders from what we view as corporate piracy," Sullivan said.
 
Applied Digital has not restructured the loan with IBM and Sullivan said he has not heard from the company since filing the suit.
 
Applied Digital shares fell 30 percent, or eight cents, to 19 cents on the Nasdaq. IBM was up 30 cents, or less than one percent, at $76.80.
 
http://news.zdnet.co.uk/hardware/emergingtech/0,39020357,39116397,00.htm

 

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