Crystal Import Corp., a microchip manufacturer in Birmingham, Ala., filed a federal antitrust lawsuit Dec. 29 in U.S. District Court for the Northern District of Alabama, alleging that the nation’s No. 1 makers of microchips are participating in a monopolistic marketing, sale and distribution “conspiracy.”

Filed against Avid Identification Systems Inc. (Norco, Calif.) and Digital Angel Corp. (St. Paul, Minn.), the lawsuit seeks $10 million in damages and also seeks to force Avid to make its microchip encryption code public.

The lawsuit charges Avid and Digital Angel with antitrust violations, unfair competition, illegal monopolization and deceptive acts and practices. It says Avid used encryption technology and conspired with Digital Angel to prevent the use of 134.2-kilohertz microchips—used throughout most of the world and endorsed by the Internal Standards Organization—in the United States.

The 125-kilohertz scanner systems in place in most U.S. animal shelters and veterinary clinics cannot read 134.2-kilohertz microchips made by Crystal Import and other companies that sell ISO-compliant chips.

The lawsuit states that these actions have resulted in the exclusion of competitors in U.S. markets and led to artificially inflated prices approximately 100 percent higher than prices in other markets for the same or comparable products.

The lawsuit also charges that Avid’s public statements that 134.2-kilohertz microchips are unsafe or hazardous for pets are untrue, misleading and confusing to consumers. Furthermore, the lawsuit states that no industry or government task force has endorsed the Avid/Digital Angel systems as the standard and “the American National Standards Institute, the standards-setting body in the United States, in 1996, adopted the 134.2-kilohertz standard and related protocols created by the International Standards Organization.”

This is just the latest salvo in the legal battle over pet microchips. In November, the San Diego Superior Court issued a preliminary injunction preventing Banfield, The Pet Hospital (Portland, Ore.), which operates hospitals inside PetsMart stores across the country, from selling its 134.2-kilohertz RecoveryChip until the company obtained court approval for its advertisements and promotional materials. That injunction resulted from a lawsuit filed last May by Avid and veterinarian Robert Stonebreaker, alleging that Banfield engaged in unfair and deceptive business practices, deceptive and false advertising, and unfair competition.

The Superior Court also ordered Banfield to notify all purchasers of its microchip, as well as all veterinarians to whom it was recommended, that the majority of U.S. shelters presently use a scanner that will not detect or read its microchip.

Banfield voluntarily suspended sales of its microchip last May in response to pleas from animal shelters concerned about the incompatibility between the chip and their scanners. [March 2005 PET AGE]