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What the Round Rock Settlements Mean

Motorola and Smartrac signed settlement agreements with Round Rock Research, which sued several retailers for patent infringement.
By Mark Roberti
Dec 13, 2013

On Nov. 4, Motorola Solutions and Smartrac announced they had concurrently signed settlement agreements with Round Rock Research, a patent licensing firm that sued several Motorola customers and other companies adopting passive ultrahigh-frequency radio frequency identification technology for patent infringement. This development could have far-reaching implications for the RFID industry and adoption of RFID technology (see Motorola Solutions, Smartrac Settle Patent Litigation by Round Rock).

Illustration: iStockphoto
The terms of the deal have not been disclosed, but RFID Journal has learned that retailers who have been sued by Round Rock Research will be given a period of time to comply with the settlement terms. This means retailers will have to use a high percentage—our source would not reveal the number—of readers from Motorola and tags from Smartrac (and other RFID vendors, if more settle). Retailers using RFID for the first time will be exempt from lawsuits by Round Rock if they use the same percentage of licensed RFID technology.

It is unusual for two companies to announce separate agreements together. The reason Motorola and Smartrac each issued a press release stating both companies had settled concurrently with Round Rock is that under the Round Rock lawsuit, an "RFID system" consists of tags and readers, so Motorola could not settle alone. And retailers would not move forward with deployments if they could use licensed readers but not licensed tags.

The deal is likely to impact RFID adoption—but before we explore that, let's discuss the background. Round Rock Research is a patent-licensing firm with several thousand patents and pending applications. The company does not manufacture, sell or market any products or services. Instead, it operates as a non-practicing entity (NPE), or what is sometimes referred to as a "patent-assertion entity" (PAE) or "patent troll," earning revenue solely by licensing and enforcing its patents.

On Dec. 14, 2011, the Mount Kisco, N.Y., firm filed lawsuits against nine companies using passive UHF RFID products provided by Motorola, Smartrac and other RFID vendors, charging that the solutions infringed on five of Round Rock's RFID patents granted by the U.S. Patent and Trademark Office. Those companies were American Apparel, Dole Food, Fruit of the Loom, Gap, HanesBrands, JC Penney, Macy's Retail Holdings, PepsiCo and VF Corp.

A week later, Round Rock filed a similar lawsuit against Amazon, claiming the online merchant infringed on nine Round Rock U.S. RFID patents. In March 2012, the company added Walmart to its list of defendants, claiming the retailer violated 10 of Round Rock's U.S. RFID patents. In all 11 lawsuits, Round Rock asked that it be awarded damages adequate to compensate for the alleged infringement, that such damages be determined by a jury and be trebled, with interest, and that it be reimbursed for its legal expenses.

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