RFID Patent Pool, Take 2

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- December 5, 2007 -

RFID Patent Pool, Take 2

Two Years after Initial Launch, RFID Consortium Formed to License RFID Patents is Revamped; Are IP Issues in RFID Declining?

SCDigest Editorial Staff

SCDigest Says:

While the danger of IP issues appears to be declining, it still makes sense to vet the potential IP issues and risks of any RFID vendor under consideration.

What do you say? Send us your comments here

The News: Two years after its initial 2005 launch, the RFID Consortium, a “patent pooling” organization made up of leading technology providers to minimize potential Intellectual Property barriers to RFID technology development and user adoption, has launched itself again, with a somewhat different set of members than the original 2005 participants.

The Impact: Early on, there was much concern about patents and IP being big barriers to vendor product development and even decisions by users to deploy RFID-based systems. The concern was particularly around IP and patents held by Intermec, which early on refused to make its IP available to the open standards coming out of EPC Global. It then set up its own, relatively low cost licensing program to make its patents available to others in the industry, a program that many companies have joined. (See Intermec Tries to Jump Start RFID Market with New Patent Licensing Program.)

The new RFID Consortium now includes seven companies: 3M, France Telecom, HP, LG Electronics, Motorola, ThingMagic, and Zebra. Additional members are likely and encouraged. Though the Consortium is not expected to be able to license patents until sometime in 2008 after approval from the US Justice Department, it should reduce IP obstacles that might hinder development. However, our sense overall is that RFID patent-related issues and concerns have been substantially reduced overall, and that users do not need to be overly worried that they might buy technology that later turns out to be the subject of a patent claim.

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The Story: The re-launched RFID Consortium was announced last week, with a stated goal of providing a "one-stop licensing" of intellectual property essential to compliance with EPCglobal Gen2 and related ISO/IEC standards.”

“Our licensing arrangement helps companies in the RFID industry avoid high transaction costs, blocking positions, and costly litigation which might otherwise occur,” explained Dave Poole, a spokesperson for the RFID Consortium LLC and former V.P. Patents and Technology for Zebra Technologies Corp.

The original announcement of the group in 2005 included more than 20 companies, including Alien, Avery, Tyco and others, that are not part of the reconfigured line-up. (See Will RFID Patent Pool Help Speed Technology Adoption?). At the time, the effort was seen as a direct reaction to Intermec’s strong Intellectual Property stance, which had been articulated not long before.

Poole said many of the original participants dropped out after determining that their patents are not "essential," which carries a strict legal definition. Obviously, other factors, such as a desire to protect IP rights, could also be at play.

The participation in the consortium of 3M, which owns a wide array RFID patents, is seen by many as a very positive step.

All told, however, patent pools in other industries have provided mixed results.

Still, SCDigest believes the move is a good one for technology developers, and that IP-related issues continue to decline for RFID adopters. While companies alleging patent disputes rarely file legal action against end users of the products, and often explicitly state they will not do so, companies can still be hurt if a vendor they have selected is the subject of action.

If that company is later found to have infringed patents, in the most extreme cases the vendor can be forced out of business. More often, they have to pay high damages, which can crimp future product development, pay high royalties, which can increase product prices, or revamp their technology, meaning big changes for new products from those that are currently installed.

So while the danger of IP issues appears to be declining, it still makes sense to vet the potential IP issues and risks of any RFID vendor under consideration.

Do you think this RFID Consortium will have any real impact on either RFID technology vendors or end users? Do end customers face much risk from these IP issues? Let us know your thoughts at the Feedback button below.