LINEAR OPTICAL ENCODERS

I am working in linear optical encoders for Renishaw and here is a bit of literature from the web. Courtesy : Renishaw.

An infra-red LED emits light onto the angled scale facets where it is directed back into the readhead through a transparent phase grating. This produces sinusoidal interference fringes at the detection plane within the readhead. The optical scheme averages the contributions from many facets and effectively filters out signals not matching the scale period. This ensures signal stability even when the scale is contaminated or slightly damaged.
Thermal characteristics often play a significant role in determining overall measurement accuracy. The RGS20-S tape scale is rigidly restrained at its ends and is therefore forced to match the thermal behaviour of the substrate, removing the need to compensate for yet another coefficient of expansion.
Low short-term errors are assured by the unique optical design, typically giving less than ±0.15 µm cyclic error (or sub-divisional error). This is included within the linearity specification of ±0.75 µm in 60 mm or ±3 µm in any metre length.
RG2 readheads offer a durable scale with excellent metrology that can be cut to any length. RGS20-S gold plated tape scale is lacquer coated and requires none of the careful handling and cleaning most traditional scales need. A self-adhesive backing enables quick and easy installation with a range of applicators to suit the readhead type. To complete the installation, reference mark, limit switch actuators, and end clamps are simply glued into place.

Also you can find more information from a big range of products and brochures from at next link

http://www.renishaw.com/en/rg2-optical-linear-encoder--6441