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SAMSys CEO: Opposition to Royalties is Self-Serving

The latest development in the industry's ongoing intellectual property saga occurred last week as publicly traded RFID hardware manufacturer SAMSys Technologies announced that it had joined Intermec Technologies' Rapid Start Licensing Program.
Jun 06, 2005This article was originally published by RFID Update.

June 6, 2005—The latest development in the industry's ongoing intellectual property saga occurred last week as publicly traded RFID hardware manufacturer SAMSys Technologies of Ontario, Canada, announced that it had joined the Rapid Start Licensing Program of Everett, Washington's Intermec Technologies. The announcement came on Wednesday, the ninety-day program's inaugural day, lending an early victory to Intermec, whose intent to charge royalties for use of the intellectual property in its far-reaching portfolio of 145 RFID-related patents has been received with industry pushback and, indirectly, lawsuits from Symbol Technologies. Many have asserted that by charging royalties on fundamental RFID technology, Intermec will essentially tax the industry, dampening its growth at a formative moment in its development.

SAMSys CEO Cliff Horwitz doesn't see it that way, as he told RFID Update in a discussion about his company's decision to join Intermec's program. His perspective is simple: Intermec has valuable IP in which it has invested dearly, and basic principles of capitalism dictate that general usage of such an investment should be sold, not given away for free. "Without the reward for innovation, without the incentive, there is technological stagnation," said Horwitz. "The reality about Intermec's IP portfolio is that there was innovation done by some very talented engineers, and that has value." He cited other examples that support his logic, saying, "I don't think Microsoft or Cisco are giving their intellectual property away."

To further illustrate his position, Horwitz noted that his decision to license from Intermec was not a recent one precipitated by the year-old industry tumult over RFID intellectual property. He had decided long before to pay licensing fees; indeed, SAMSys had negotiated with Intermec on and off for about six years prior to Wednesday's announcement. Because of that protracted negotiation SAMSys was already well positioned to move forward with the Rapid Start program. "We had already researched what they had, and vice versa," said Horwitz, referring to Intermec's own research of SAMSys' proprietary technology. The ability for SAMSys to offer Intermec intellectual property in return meant that it could secure more favorable terms under the program's discounted fee structure in cases of cross licensing.

When asked why he thought the industry had reacted so negatively to Intermec given that similar royalty extraction is commonplace in other fields of technology, Horwitz said, "You have to look at from whence [the resistance] comes." The parties leading the anti-royalty charge, according to Horwitz, would clearly benefit from the free use of the IP in question, so they are pursuing an agenda to that end. "It is an entirely fallacious, self-serving argument" that Intermec should give away its intellectual property, he said.

The next ninety days will largely determine how many RFID manufacturers share Horwitz's view. The Rapid Start program ends on August 31st, after which time companies that approach Intermec to license will, in the words of Intermec President Tom Miller, "get less but pay more." In an earlier interview with RFID Update, Miller said Intermec devised the program to "bring closure" to the confusion surrounding its IP program by simplifying the royalty structure and strongly incenting would-be licensees to get on board. At the program's conclusion, said Miller, it will be clear which RFID hardware vendors are safely in accordance with Intermec's licensing program, and which are not. As of Wednesday, SAMSys has started the ball rolling. The industry is waiting to see which companies, if any, will come next.

Read the press release at SAMSys Technologies
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