Sep 01, 2010After five years of development work, the RFID Consortium has released a patent portfolio for EPC Gen 1, EPC Gen 2 and ISO 18000-6C ultrahigh-frequency (UHF) RFID technologies that RFID hardware manufacturers can license for a single fee. Payments are made quarterly, based on the number of tags or readers produced or sold.
The portfolio, which consists of pools of intellectual property (IP) belonging to the eight RFID companies that have joined the group's patent pool to date, is considered essential in order for RFID tags and readers to be compliant with the EPC Gen 2 and ISO 18000-6C standards. Sisvel US, the portfolio's license administrator, together with the consortium's members, announced the portfolio that would allow RFID technology firms access to five-year patent-licensing agreements with the entire group of consortium members. Those members whose licenses are included in the portfolio are 3M, the Electronics and Telecommunications Research Institute (ETRI), France Telecom, Hewlett-Packard (HP), LG Electronics, Motorola, ThingMagic and Zebra Technologies.
The portfolio is expected to promote faster adoption of UHF technology, by sparing RFID technology developers and manufacturers from having to individually negotiate patent licenses with each company. That becomes an even more arduous task, says Jim O'Hagan, the consortium's spokesperson and Zebra Technologies' director of patents and technology, because EPCglobal and ISO/IEC standards often force vendors to seek out multiple manufacturers and developers to patch together the IP licensing necessary to manufacture a particular piece of RFID hardware that meets the standards.
The technology comes with a discount for those who purchase a license before March 30, 2011, says Sean Corey, Sisvel's IP counsel. For those early adopters, he explains, the cost can be as little as 80 cents per 1,000 tags and $5 per reader, depending on the volume produced. "We think people who come in the next six months will save more than 50 percent off their licensing fees," he states, comparing the early-adopter rate with the fees that would typically be negotiated in a licensing agreement between two companies.
Any RFID technology company can participate, including those that are not RFID Consortium members but that wish to obtain a license from one of the eight current consortium portfolio licensors, as well as those firms that have a patent and would like to make that patent license available through the portfolio. The group is also reaching out to other owners of patents related to EPC Gen 2 UHF technology, in the hope of including more IP in the portfolio.
The consortium was first formed by several RFID companies in 2005 (see RFID Consortium Taps MPEG LA), and the resulting licensing development was completed over the past five years. "The program itself came into conception in 2005, as patent owners began working together to develop a single RFID license," O'Hagan states. "We decided to combine our forces and create a low-cost mechanism for licensing patents."
"It's a very complex process," O'Hagan says. "It did take longer than we expected." But over the course of that time, he notes, the group not only drew in more participating companies, but also gained approval from the U.S. Department of Justice, indicating that the portfolio would not violate laws or restrain trade (see Justice Department Gives Nod to EPC Gen 2 Patent Pool).
With the portfolio, O'Hagan says, RFID hardware vendors that previously had to negotiate each patent license individually can now avoid the need to develop terms of such an agreement with each company—including price, the frequency at which payments would be made, and the type of auditing to be performed—while also reducing the risk of litigation over patents. According to O'Hagan, the consortium's program will not affect existing license agreements that RFID hardware manufacturers already have struck with consortium members. "Many licensors and licensees will have other agreements regarding technology that is valuable, but not essential, to building licensed tags or readers," he says. "That may require agreements beyond the consortium. When people look at their own business plans, a licensing program removes a lot of the uncertainty around the technology and the legal implication of [acquiring an individual license]."
Zebra Technologies, O'Hagan says, is both a licensor (providing its licenses as part of the portfolio) and a licensee (paying a fee to access licenses in that portfolio). In other words, the firm hopes to benefit from access to existing patents from other consortium members. The portfolio will help not only RFID technology vendors, but ultimately technology users as well. For example, he says, a large retailer or manufacturer hoping to adopt an RFID solution to track items or individuals could be assured that the technology used would not be delayed by a future patent dispute.
The consortium license portfolio is unlikely to significantly affect the cost of RFID hardware, Corey notes, since the licensing fee is not a significant portion of the total expense of manufacturing the hardware. However, he says, "the consortium's portfolio license will add more transparency and predictability in the cost of licensing essential UHF RFID patents." This, he explains, should provide developers and manufacturers with greater confidence in their business plans, and make more companies more likely to introduce such products sooner. "Also, it should be cheaper to evaluate and execute a single standard license from the RFID Consortium... than it would be to negotiate custom agreements with each patent holder."
Similar patent-licensing portfolios have been developed for other technologies, Corey notes, such as MP3 players and DVDs. Since the portfolios in those industries were developed, O'Hagan says, numerous manufacturers of DVD- or MP3-related products have been "coming out with new products, and building technology into their existing products."
