Intermec introduces new RFID licensing program

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 5/17/2005

On May 4, Intermec announced a limited-time Rapid Start Licensing Program.

“We’re looking to stabilize the marketplace as new products are developed to deliver what the Wal-Marts, DoDs and Tescos want, which is rapid adoption of Gen 2 to drive down their costs,” says Mike Wills, vice president and general manager for global services and RFID technologies at Intermec (800-347-2636).

The program will be offered from June 1 through August 31. It provides manufacturers of RFID products access to Intermec’s entire portfolio of 145 RFID inventions for an initial fee of $250,000, payable in four installments, and royalty fees of 2.5 to 7.5%.

That’s a discount from Intermec’s initial reasonable and non-discriminatory (RAND) offer from last fall, which called for an initial fee of $1 million. The agreement will apply to any patent extensions on Intermec’s portfolio that may occur in the future.

In addition, the program provides lower royalties to licensees who cross-license their intellectual property to Intermec. For instance, a reader manufacturer that cross-licenses IP to Intermec can reduce its royalty from 7.5% to 6%.

Finally, the program settles issues of past patent infringement and frees partners from risk of future infringement litigation.

After the Rapid Start program ends, Intermec will offer for license a much more limited portfolio of patents at less favorable rates and terms.

If successful, the program may also add weight to Intermec’s IP claims. The initial RAND offer was made prior to the ratification of the Gen 2 standard and in the shadow of ongoing litigation with Matrics, now owned by Symbol Technologies (866-416-8545).

The response was a game of high-stakes chicken. “We have had dozens of good faith negotiations with the who’s who list of RFID players today,” says Wills. Those players, however, have been waiting for the other guy to be the first to agree to pay royalties.

Part of the hesitancy was the lack of a global standard. “Companies told us it was a little early to pay royalties since there was no standard,” Wills said. “Now that Gen 2 has been ratified, you can check the standards box.”

Another part of the hesitancy was the $1 million fee required up front. “The RFID industry has gigantic companies like TI standing shoulder-to-shoulder with start ups,” Wills says. “We had to give them a way to survive, which we’ve done with the low initial fee and payment plan.”

As to the litigation with Symbol, the case at this point is likely to go to trial, where a patent court will decide the issues.

What has been the response so far to the Rapid Start program? “Based on the amount of interest we’ve received, we think we’ve addressed all the common concerns people had with the RAND offer,” Wills says.