RFID vendors form patent IP consortium

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 8/23/2005

An industry group that licenses MPEG and DVD technology is one of the reasons you can buy a DVD player at Wal-Mart for less than $40.

Now, a group of 20 RFID vendors hopes to do the same for their industry with the formation of an RFID patent pool consortium.

Modeled after DVD and MPEG-2 licensing programs, the consortium will pool essential patents from participating patent holders to simplify and streamline access to RFID intellectual property. Founding members include industry leaders like Symbol Technologies (800-722-6234), Alien Technology (408-782-3900) Avery Dennison (626-304-2000), ThingMagic (866-833-4069) and Zebra Technologies (847 634 6700).

Once formed, the consortium will invite companies or individuals that hold essential RFID patents to join the group. The consortium will then provide a structured approach for holders of essential patents to receive fair compensation at a reasonable cost to the end-user. Participation is limited to patents that are essential to the practice of RFID. Participation is also voluntary, meaning that some patent holders may choose to go it alone.

The group will then offer one-stop shopping for equipment and technology providers to license RFID intellectual property for their products.

“There are multiple patent holders in RFID,” says Kevin Ashton, ThingMagic’s vice president of marketing and spokesperson for the newly-formed intellectual property (IP) licensing consortium. “The patent pool will aggregate essential RFID patents, offer a certification mark that indicates that a license has been granted for the patents included in the pool and administer the collection and distribution of royalties to the patent holders.”

The initial reaction to the August 9 announcement has been mixed. Erik Michielsen, ABI Research’s director of RFID and ubiquitous technologies (516-624-2500), saw the consortium as a positive step towards resolving the large number and disparity of patents in the industry. “The industry, in the absence of a process like the one now beginning, would be heading for stagnation and quagmire,” Micheilsen said.

Meanwhile, investment banking firm Bear Sterns said the consortium “underscores increased uncertainty on the impacts to adoption” of RFID technology (212-272-3939).

One reason for that uncertainty is that Intermec (425-348-2726) was not included in the original group. Intermec holds more than 100 RFID-related patents and is currently in the midst of its own licensing program.

In a written response, Intermec saw no impact from the consortium on its licensing efforts. The company noted that some of the founding consortium members have already signed a license agreement and others are in the application process. “Being a member of the consortium does not remove the need to have a license from Intermec to our broad RFID portfolio,” said Tom Miller, Intermec’s president. He added that aggregating some of the other RFID patents “may be beneficial for the industry and could encourage companies that previously have not done so to disclose their RFID patents.”

With or without Intermec’s participation, Ashton believes that patent users will benefit from the pool. “It is not unusual that a patent holder might want a unilateral approach,” says Ashton. “But if there are 20 patent holders and the pool has ten of them, that’s still nine fewer that a user has to deal with.”

Ashton says that while the organization has been announced, it will still be early to mid-2006 before the group is in full operation. “There are months of work ahead of us,” he says.

For more information on the consortium, call 312-807-4399.