Dec 06, 2013Avery Dennison RBIS (a division of Avery Dennison), Alien Technology and Invengo are the latest RFID technology companies to announce that they have settled their disputes with patent-licensing firm Round Rock Research. The agreements allow the RFID companies to continue selling their products while paying undisclosed licensing fees to Round Rock, a patent-assertion entity (sometimes referred to as a "patent troll") that holds 10 patents related to radio frequency identification technology . Avery Dennison signed its agreement in late November, while Alien Technology settled with the patent holder this week. The RFID tag and reader manufacturers say the licensing agreements were made to remove the obstacle that the patent suits were creating for users of RFID technology nationwide.
The agreements follow a series of similar deals Round Rock made this year with Checkpoint Systems, Motorola Solutions and Smartrac (see Motorola Solutions, Smartrac Settle Patent Litigation by Round Rock). Round Rock had purchased 10 ultrahigh-frequency (UHF)-based RFID patents related to tag and reader manufacture from semiconductor company Micron Technology and, beginning in December 2012, filed suits against customers of RFID companies making UHF tags and readers, including American Apparel, Dole Food, Fruit of the Loom, Gap, HanesBrands, JC Penney, Macy's Retail Holdings, PepsiCo and V.F. Corp.
According to Round Rock's website, a total of 13 companies (seven RFID technology providers, as well as six users) have signed agreements to date. RFID Journal has attempted to contact Round Rock, as well as numerous UHF RFID product providers that have yet to license the company's intellectual property (IP), but all either failed to respond or declined to comment for this story.
Shawn Neville, Avery Dennison RBIS' president, says that by signing the agreement with Round Rock, his firm has opened the way for the further adoption of item-level RFID technology by apparel marketers and retailers. Following Round Rock's filing of lawsuits against users of EPC UHF tags and readers, Neville explains, Avery Dennison joined the Joint Defense Group, which consisted of RFID suppliers working together to develop potential strategies, defend customers sued by Round Rock and safeguard the RFID industry. In April 2012, Neville says, Avery Dennison was successful in gaining a stay on Round Rock's lawsuits, when Judge Richard G. Andrews, with the U.S. District Court for the District of Delaware, suspended the proceedings pending a reexamination of Round Rock's patents. The pending legal action against RFID companies and technology users, however, still served as a deterrent for some considering the use of EPC UHF RFID technology.
Checkpoint left the group to settle with Round Rock in June of this year, followed by Motorola and Smartrac. At that point, Neville says, it made sense for Avery Dennison to sign its own licensing agreement with Round Rock, in order to benefit the RFID industry as a whole. Avery Dennison's agreement with the patent-assertion entity effectively dissolves the Joint Defense Group.
Although no Avery Dennison customers were sued by Round Rock for using technology that the patent company contended violated its patents, some did receive letters warning of the legal actions filed against Avery Dennison, and stating that they, too, may be liable.
"The biggest outcome [of the settlement] is that it reduces the noise going on in the industry," Neville states, noting that Round Rock had been proactive in going after RFID suppliers' customers, making many potential end users leery of acquiring the technology at all. While Avery Dennison's work with the Joint Defense Group was successful in placing a stay on the suits, he adds, the lack of resolution was impacting the entire industry in the United States.
"We were seeing fatigue in the industry as a whole," Neville says, adding that while the largest percentage of retailers employing RFID three years ago consisted of those within the United States, the largest percentage at present is in Europe, whereas the U.S. retailer market for item-level RFID products has been relatively stagnant of late. That is not only due to Round Rock patent concerns, he says, but also other causes, including Wal-Mart's and JC Penney's initial commitments to EPC UHF RFID tagging, which the retailers later vastly reduced (see Wal-Mart Relaunches EPC RFID Effort, Starting With Men's Jeans and Basics and J.C. Penney Defers Its RFID Dreams).
In the meantime, the growth of item-level EPC RFID tagging in Europe has continued, with multiple major retailers launching an RFID solution to track goods through the supply chain or in stores. In the case of European retailers, Neville adds, end users are often businesses that produce their own products and thus have closed-loop supply chains, while large retailers with multiple suppliers—such as many U.S. major store chains—face a more daunting challenge in convincing suppliers to begin tagging products at the item level.
However, Europe also has more stringent requirements that tend to deter patent holders from lawsuits, according to Patrick Ervin, Alien Technology's VP of marketing and sales. "The legal system related to IP law in Europe is less attractive to patent trolls than in the U.S.," he states, since it requires patent holders to manufacture products related to the patents they are protecting, and requires a plaintiff to pay a defendant's legal fees if the plaintiff's patent-related lawsuit is decided in the defendant's favor.
By signing the agreement with Round Rock, Neville says, Avery Dennison has helped to eliminate legal action concerns in the United States. He now expects RFID deployment to begin growing again. While the RFID side of his company's business represents only about 5 to 7 percent of its total sales, he anticipates that number will rise.
Alien Technology's licensing agreement covers the company's EPC UHF RFID inlays and readers, Ervin says. Alien also makes RFID chips, but did not require a licensing agreement to do so.
Alien Technology has never been sued by Round Rock, Ervin notes, though some of its customers have been. Thanks to the licensing agreement, Alien's customers no longer need worry about legal action from Round Rock. With the groundswell of licensing agreements from RFID companies, adds Neil Mitchell, Alien's director of marketing, customers will now have a greater number of licensed products from which to choose, without the concern of litigation from Round Rock.
"We settled to try to get this behind us and the industry," Ervin states. "We hope this will allow all retailers who've stalled [their deployments] to move forward."
Alien Technology intends to watch the response from end users during the coming months, and to be prepared to increase capacity if necessary in order to provide more tags, chips and readers.
Invengo, which makes passive UHF RFID inlays and labels, signed its own agreement with Round Rock this week. "Invengo is excited to be able to deliver RFID licensed products to our customers," says Joe Gomillion II, Invengo's executive VP for the Americas and Europe. The agreement, he explains, is intended to meet the company's commitment to driving the mass adoption of RFID technology across all business sectors. "Protecting our customers' interest is paramount to Invengo Technology's future success. The Round Rock RFID license agreement is a critical step in stimulating new RFID opportunities, and as a global supplier of RFID technology, Invengo is ready to deliver."
On Thursday, the U.S. House of Representatives approved the Innovation Act (H.R. 3309), which targets abusive patent litigation by increasing transparency within the litigation process, as well as requiring parties to disclose more initial information to explain why a suit is being filed. The bill also provides for education and outreach to small businesses, requires studies on abusive patent litigation, and makes improvements and corrections to the Leahy-Smith America Invents Act (AIA). H.R. 3309 was introduced on Oct. 23, 2013, by Rep. Bob Goodlatte (R-VA) and has 16 cosponsors. Starting at a hearing scheduled for Dec. 17, the Senate Judiciary Committee is expected to consider similar legislation: the Patent Transparency and Improvements Act of 2013 (S.1720). The senate bill was introduced by Sen. Patrick J. Leahy (D-VT) on Nov. 18, and has three cosponsors.
The house and senate bills come in response to requests by U.S. companies to address what they believe are economically harmful misuses of the U.S. patent system (see Companies Back U.S. Bills to Fight 'Patent Trolls').
