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Ocado accused of patent infringement

The news comes after the online grocer became the UK's most valuable food retailer this week
October 1, 2020

Ocado (OCDO) is facing legal action launched by Norwegian technology company AutoStore over technology patents linked to the UK online grocer’s tech platform. The news knocked 5 per cent off Ocado’s share price, just a day after it became the UK’s most valuable food retailer.

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AutoStore, which specialises in automating storage using robots, has filed lawsuits in the US and the UK, alleging that Ocado’s own automated storage and retrieval systems infringe the Norwegian outfit’s patents. AutoStore claimed that its intellectual property had been violated by agreements signed by Ocado with retailers including WM Morrison (MRW), Marks and Spencer (MKS) and Kroger (US:KR). The dispute concerns Ocado’s robots’ design and mechanisms.

The company is looking to block Ocado from making and selling these products and from importing them into the US. It is also seeking financial damages.

Ocado has just 1.7 per cent of the UK grocery market, according to Kantar, compared to Tesco (TSCO), which has the biggest share at 26.8 per cent. It has recorded deepening financial losses over its past three financial years, posting £215m in pre-tax losses in its year to 1 December 2019. But the group’s shares have flown upwards since March, with lockdown having prompted a boom in grocery deliveries. Last month, Ocado said that it expected to beat full-year profit forecasts, with third-quarter retail turnover of £587m sitting 52 per cent ahead of last year’s level.

As well as launching a tie-up in the autumn with Marks and Spencer after years spent partnered with Waitrose, Ocado has been developing its Smart Platform, which helps other retailers scale up their own online operations using Ocado’s infrastructure and intellectual property. AutoStore claimed that Ocado itself has been one of its own customers since 2012. It said that Ocado’s patent infringement “is the foundation on which the Ocado Smart Platform was built and on which Ocado’s business today is based”.

Ocado has responded, saying that AutoStore’s public statement was the first it had heard of its claims, adding that it had not received any papers in connection to the allegations. “We are not aware of any infringement of any valid AutoStore rights and of course we will investigate any claims once we receive further details,” the company said.

The UK retailer also said that it is investigating whether AutoStore has, or intends, to breach any of Ocado’s own patents.