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Symbol Sues Intermec in IP Dispute

Two major RFID companies battle over the licensing of intellectual property related to EPC-compliant technology.
By Jonathan Collins
Tags: Standards
Mar 11, 2005Intensifying the conflict between two key RFID companies over the licensing of intellectual property related to EPC-compliant RFID technology, Symbol Technologies has filed a counter patent-infringement lawsuit against Intermec Technologies, an Everett, Wash.-based provider of radio frequency identification systems and one of the largest holders of RFID patents. In addition, Symbol says, it has stopped supplying its bar code laser scan engines to Intermec.

Symbol's lawsuit claims Intermec is infringing on Symbol patents covering Wi-Fi wireless communications technology. The patented technology in question is incorporated in Intermec's mobile computers, including its 700-series handheld RFID readers. Symbol asserts, however, that its lawsuit could help pressure Intermec to refrain from imposing royalties for IP related to EPCglobal’s emerging Generation 2 air-interface standard. Such royalties would raise the cost of an RFID tag by 5 percent, Symbol argues, presenting a greater barrier to adoption by many companies. "We just don't believe that one company should be able to hold the RFID industry hostage. It is using its IP to bully customers," says Todd Hewlin, Symbol senior vice president of global products.


Symbol's Todd Hewlin
Symbol maintains that in some cases, IP rights must take second place to the demands of an emerging industry. "RFID needs to be royalty-free. Tags are definitely analogous to bar codes, and in the past, Symbol lifted its IP royalties and worked with the UCC to make sure bar codes were widely adopted," says Hewlin. Symbol offered IP relating to bar codes—including PDF417, a two-dimensional code—freely to the public to aid in standards and technology adoption.

In response to the announcement of Symbol's suit, Intermec issued a statement saying that it has promoted and actively advanced RFID adoption and RFID standards-setting processes by making five patents core to the practice of RFID available on a royalty-free basis to further the adoption of the Gen 2 standard, and 11 patents available on a reasonable and nondiscriminatory (RAND) royalty-bearing basis to support adoption of the international RFID standard ISO 18000 6B.

"Intermec has gone to great lengths to negotiate an RFID licensing program with Symbol that is consistent with Symbol's historical practices with respect to laser scanning and wireless licensing programs," Intermec president Tom Miller said in the statement. "Symbol walked away from the negotiations in the apparent belief that it is entitled to customary terms and conditions for its intellectual property, but that Intermec is not entitled to the same."

Last year, all of the EPCglobal member companies—except Intermec—that collaborated to develop the Gen 2 air-interface standard had agreed to make all IP claims on the standard royalty-free. In August, Intermec announced that certain Intermec IP related to Gen 2 would be licensed on a RAND royalty-bearing basis (see Intermec Spells Out Licensing Plan). Six months later, however, the company withdrew it RAND policy (see Intermec Withdraws IP Licensing Plan), saying that it will exercise its right to set any terms and conditions it desires.

Now Symbol is using its own IP against the company. "Intermec has been using our IP without payment for years, and now we are moving to fully protect that IP," Hewlin says.
Symbol is seeking a permanent injunction against Intermec's use of Symbol's patented technologies, and monetary damages for prior use.

Symbol believes it is justified in its actions, and the company says it won a similar countersuit case when a jury found that Proxim Corp. infringed two of the four patents asserted in Symbol's lawsuit against Intermec. On Sept. 12, 2003, that jury ordered Proxim to pay Symbol approximately $23 million, based on past royalties, and 6 percent royalty payments going forward. That suit and Symbol's suit against Intermec were both filed in the United States District Court for the District of Delaware.

Effective Mar. 10, Symbol has terminated its supplier relationship with Intermec for laser scan engines. Intermec had embedded the engines in its bar code scanning equipment for a number of years, according to Symbol. Given the ongoing litigation between the two companies, however, Symbol believes it would be inappropriate to carry on such a commercial relationship with Intermec.

Symbol's actions are but the latest round in a long-standing struggle between Symbol and Intermec. In June 2004, Intermec filed a suit against RFID specialist Matrics, which is now owned by Symbol (see Intermec Sues Matrics). Intermec's suit against Matrics maintains that the company is infringing four Intermec patents. Two of the four patents relate to RFID. One of the allegedly infringed RFID patents involves Gen 2, Class 0, 0+ and Class 1 EPC standards; the other involves Class 0, 0+ and Class 1 standards. Symbol says that those four patents are invalid because they relate to work and implementations that existed prior to Intermec's patent filings and that, even if the patents were valid, Symbol's RFID designs do not infringe them. The first court hearing for that suit is scheduled for May 2006.

Subsequent to Intermec's filing of its suit, Symbol says, the two companies have held negotiations regarding relating to the licensing of IP. Symbol had sought to settle the dispute through a cross-licensing arrangement. Had an agreement been reached between the two companies, however, it would also have required Intermec to eliminate IP royalties for all RFID vendors, not just for Symbol.

In the past few days, EPCglobal said that Intermec had filed new claims to charge RAND royalties for the use of two pieces of intellectual property that are part of a draft Application-Level Events (ALE) specification that EPCglobal is hoping to standardize (see Intermec Files New EPC Royalty Claims).
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