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Symbol vs. Intermec, Round 4

Symbol has sued Intermec for patent infringement (again), this time relating to bar code intellectual property.
May 02, 2005This article was originally published by RFID Update.

May 2, 2005—Last week saw another shot fired in the ongoing battle between data capture rivals Intermec and Symbol Technologies. Symbol has sued Intermec for patent infringement relating to bar code intellectual property. Two patents specifically were named: one that relates to labeling objects too small for a normal-sized bar code, the other a method for decoding the "PDF417" type of bar code.

Despite the fact that the IP in question is bar code-related, the new suit is more about RFID than bar codes. Indeed, much of Symbol's announcement about the suit dwelled on Intermec's stance with respect to RFID intellectual property; Symbol's CEO is quoted as saying: "When it comes to RFID, we are involved in a number of production deployments to help end-users discover how best to implement EPC-compliant RFID enterprise mobility solutions. We urge Intermec, as well as the emerging RFID industry, to take a reasonable approach to RFID IP issues by supporting a royalty-free air interface standard. Such an approach will benefit both the industry and end-users."

Intermec last year announced its intention to charge in the range of 5-7% royalty fees for the use of fundamental RFID intellectual property that it purchased from IBM in the late nineties. It quickly sued competitor Matrics, a leading RFID hardware manufacturer, letting the whole industry know that it was very serious about prosecuting its IP. Symbol shortly thereafter acquired Matrics for $230 million, inheriting the lawsuit, and Intermec and Symbol entered into cross-licensing negotiations aimed at a friendly resolution allowing them to use each other's IP without paying the list price licensing fees. The negotiations failed, and Symbol counter-sued Intermec for its use of certain wireless technologies. It also discontinued supplying Intermec with key laser scanning engines, hoping to further wound the company. Intermec promptly counter-counter-sued, issuing a statement on its website and assuring its customers that it had stockpiled Symbol laser scanners and related technology so that the supply-cut would not affect customers.

Last week's suit therefore marks the fourth major milestone in what Imperial Capital's Vice President of Research Kevin Starke has called the "Clash of the Titans." Why this latest suit, and why now? Starke sums it up simply: "These two companies are going to throw the kitchen sink at each other. They have to." For the long-term health of its business, Intermec cannot back down from its patent suit and licensing scheme. And Symbol for its part cannot go to its shareholders saying that it is going to pay its archrival 5-7% royalty fees (considered very steep) for RFID technology that represents a strong engine of growth for the company. Thus, we have a case of "an unmovable object meeting an irresistible force," says Starke. The hope for the rest of the industry, of course, is that the impact does not cause a cataclysmic event that stunts wider adoption of RFID.

Here is the announcement of last week's suit
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