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RFID Industry Patent Consortium Announced

Yesterday's announcement that an intellectual property consortium is being formed for the "consolidated licensing" of RFID-related patents marks a major development for the industry and one that could significantly impact adoption of RFID technology.
Tags: Labeling
Aug 10, 2005This article was originally published by RFID Update.

August 10, 2005—Yesterday's announcement that an intellectual property consortium is being formed for the "consolidated" or "pooled" licensing of RFID-related patents marks a major development for the industry and one that could significantly impact adoption of RFID technology. Nearly 20 companies, including some of the biggest names in RFID hardware, have decided to follow an IP licensing model that has enjoyed great success in the DVD and MPEG-2 arenas. Each participating company will confer to a third party administrator -- the consortium -- the management of its IP licensing, thereby saving the considerable time and resources the company would otherwise have had to invest developing licensing agreements with individual licensees. Similarly, licensees will be spared having to painstakingly approach and negotiate a separate licensing agreement with each IP-holder in turn; they can simply go to the consortium to subscribe to a standard licensing scheme available for all the relevant RFID patents of the participating licensors.

The central goal of the consortium, according to Stan Drobac, designated spokesperson for the consortium and Vice President of RFID Strategy and Planning at Avery Dennison, is to facilitate the rapid, easy adoption of RFID technology. In a conference call yesterday with journalists and analysts, Drobac called the consortium a "win-win all the way around," benefiting not just licensors and licensees, but RFID end users as well because the accelerated adoption will result in "greater competition and a larger market" for RFID products. Drobac also noted that the effort is a complimentary one to EPCglobal. All intellectual property managed by the consortium will be expected to adhere to EPCglobal and ISO specifications to ensure interoperability.

The consortium initiative is the fruition of months of tight-lipped, behind-the-scenes work on the part of the participating companies. Given its ambitiousness and the amount of companies involved, the fact that it was kept so well under wraps is impressive indeed. According to Drobac, the consortium hopes that in going public, companies holding relevant RFID intellectual property that have heretofore been uninvolved will come forward and participate. "We are encouraging all essential RFID patent holders to join with us to form the consortium and add their patents to the license in order to advance the broad adoption of this technology," he said in a statement. (Notably, yesterday's announcement was not that the consortium has become an acting legal entity; Drobac said that official formation would occur at the earliest sometime during the first part of next year. A formal call for patents is planned in the coming months.)

The companies that have signed term sheets to become members of the consortium are tag and reader manufacturer Alien Technology, reader manufacturer Applied Wireless Identification (AWID), tag manufacturer Avery Dennison, label converter Moore Wallace, tag and reader manufacturer Symbol Technologies, reader manufacturer ThingMagic, security and fire protections systems supplier Tyco Fire & Security, and industrial printer manufacturer Zebra. Additionally, tag and reader manufacturer Magellan Technology, conductive ink printer Precisia, and industrial printer manufacturer Printronix are "involved in, and support of, the consortium."

The elephant in the room is of course Intermec, whose participation is conspicuously, if predictably, absent. The first audience question Drobac fielded at yesterday's conference was about Intermec. While responding that he could not comment on the particulars of any unlisted company's potential involvement in the consortium, he did point out that the initiative's success does not hinge on the participation of any one company. He said that to whatever extent there is IP being managed by the consortium, it will offer savings and convenience to would-be licensees because such IP would otherwise have to be negotiated, licensed, and litigated separately. "Even in the absence of some players, [the consortium] will still have great value in that if there are ten licensors in the pool and three that are not, then a potential licensee will have to obtain licenses from [only] four entities instead of from [thirteen]." He noted that considerable value already exists with just the set of existing members.

While its long term affect is unclear, the consortium initiative could potentially represent one of the most significant developments to happen to the RFID industry, akin to the Wal-Mart mandate or the introduction of GEN 2. If it is truly successful in its mission and brings together a critical mass of licensees and licensors, the aggregate savings to the industry could be monumental. Rather than lining lawyers' pockets, those savings will be plowed back into the industry in the form of R&D, business development, and sales and marketing efforts, which will in turn stimulate adoption and a vibrant marketplace.

Read the press release
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