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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.
More Patent Litigation?
Roger Stewart, former CTO of Alien Technology and president of Sourland Mountain Associates, an intellectual property consulting firm, says the U.S. Patent and Trademark Office has issued more than 15,000 RFID patents and continues to issue roughly 500 RFID patents annually. Given these numbers, it's likely the patent issue will not die with the resolution of the Round Rock lawsuit.Massachusetts Institute of Technology in October, Intermec Technologies has seven of these critical patents and Motorola has three, while Alien Technology, Checkpoint, Texas Instruments and several others each have one.
To date, RFID solution providers have not aggressively asserted their patents. That's because they have a vested interest in seeing the RFID market grow. There might be more suits once the technology achieves widespread adoption.
RFID Journal asked several RFID solution providers whether there are other NPEs that could assert their patents in the next few years. One told us there are many patents, but most are held by technology companies or small RFID companies. "We don't see anyone on the horizon that has the sophistication and resources of Round Rock," he said.
Another vendor agreed, but pointed out that the patent situation can change quickly. "If some struggling RFID company needs to cash in whatever assets it has before closing down, and they sell their patents to an NPE, then you have another Round Rock."
The good news is that the industry is quickly learning how to address patent issues. The bad news is that royalties add to the cost of RFID products. "Based on related industries, such as semiconductors and displays, the RFID industry cannot sustain IP costs of more than 20 percent of profits or 10 percent of sales," Stewart says. "I remain concerned about whether the industry would be able to carry the cumulative burden of 'stacking' 20 or so Round Rock royalty rates, if the Round Rock settlement becomes the template for the other major patent owners."
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