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Update on the Round Rock Patent-Infringement Lawsuit

Little progress has been made in the courts, but some RFID providers and end users are taking steps to deal with the issue so they can deploy EPC technology.
By Mark Roberti

End users, too, are taking steps to address the issue. In March, Walmart sent a letter to suppliers tagging products for the retailer to inform them it was "curtailing its EPC program pending resolution of the existing litigation." Walmart said it planned to "defend the lawsuit vigorously."

RFID Journal has learned that some companies tagging auto parts for Walmart have been told to stop tagging individual items. Companies that were putting tags on individual jeans and basics continue to do so, though it is not clear whether Walmart is reading the tags and using the data gathered from them.

Some in the industry have been surprised by Walmart's actions, particularly given how fervently the retailer championed RFID in the past. RFID Journal believes Walmart took this stand because Round Rock is seeking a percentage of the benefits the retailer achieves by using RFID, rather than a straight licensing deal. Walmart was sending a message to Round Rock that it would rather forfeit its use of EPC technology than pay a percentage of the benefits. In addition, losing the case would make the world's largest retailer a prime target for holders of other technology patents—RFID and otherwise—to seek a percentage of the benefits. The letter was a preemptive attempt to let all patent holders know Walmart won't use new technologies if it would be forced to share the rewards.

It's hard to say how this case will be resolved. But one of two outcomes is likely. Either the Round Rock claims will be thrown out, or the RFID technology providers will negotiate a royalty with Round Rock, allowing Walmart to reinstate its EPC program.

Unlike Walmart, most end users of the technology have not been dissuaded from moving ahead. Macy's has said Walmart's decision to curtail its EPC efforts will have no effect on its RFID program. American Apparel continues to roll out the technology, as do many other companies.

In early June, President Barack Obama issued several executive orders and proposals aimed at reducing frivolous lawsuits. But companies in the United States understand that lawsuits are part of doing business, especially when it comes to adopting new technology. Regardless of how the Round Rock case is resolved, it will not be the end of the legal issue. As one patent consultant tells us, there are many other parties that hold RFID patents. "This is going to be part of the business landscape for a while," he says, "as it is with almost all new technologies."

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