By Rel S. Ambrozy

Dec. 1, 2006—Every few years, consumer demand for products based on a certain technology results in a wave of patent litigation. In the late 1990s, for example, improvements in the manufacturing of liquid-crystal displays and plasma-display panels caused sales to increase dramatically. As a result, the patent owners of the underlying technology sued the flat-panel display manufacturers to determine who owned the basic rights to that technology. Now, with the growth of the RFID industry, patent litigation involving the technology has begun.

Last summer, RFID World Ltd. filed suit in Texas claiming infringement of its patented RFID-based inventory-control system. What's interesting is that the lawsuit was brought against retailers and end users of the technology—including Home Depot, Gillette, Target and Wal-Mart—rather than against the manufacturers that make the technology.


Traditionally, end users were rarely sued by patent owners because they were either current or potential customers. But patent holders have begun suing end users for two reasons: The retailers arguably inflict the most pain on the patent holder because they represent the lost sale; and they are often quick to accept a license or settlement rather than face a long, disruptive and costly lawsuit.