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Two EPC Vendors Go Royalty Free

Alien Technology and Matrics have signed EPCglobal's intellectual-property policy and will offer their RFID IP on a royalty-free basis.
By Bob Violino
Tags: Standards
Dec 12, 2003One of the big questions surrounding the Electronic Product Code technology being commercialized by EPCglobal has been the status of the intellectual property that went into the protocol. Alien Technology and Matrics, the two companies currently offering EPC-based
Alien's Prodromou
RFID systems, have taken a step toward resolving the issue.

The two companies announced that they have agreed to EPCglobal's IP policy and will offer their IP related to core EPC specifications on a royalty-free basis. Alien CEO Stav Prodromou wrote an open letter on Dec. 5 to the EPCglobal community announcing Alien's position and urging other vendors to support EPCglobal's IP policy. Matrics CEO Piyush Sodha followed with a letter of his own on Dec. 9.

"It's extremely important for the industry to have a royalty-free IP base," says Prodromou. "Everyone involved with the Auto-ID Center worked very hard to develop standards that will be open and practiced widely. What will hurt the industry is if someone comes out and says this contains my patents or IP and in order for you to use this standard, you have to pay me a lot of money."

Companies that contribute IP to a proposed technology standard typically do so on a "reasonable and nondiscriminatory" basis, which means that it will not charge an outrageous licensing fee and will treat everyone the same. The Auto-ID Center, which developed the EPC technology with the help of Alien, Matrics and a few other vendors, felt that this was not a viable option because if each vendor that contributed IP to the protocol were to get a licensing fee, the cost of EPC tags would never reach a level low enough to be put on cases of product and eventually individual items.

In late October, EPCglobal, which has been charged with commercializing the technology, put out a draft of its IP policy, and more than two dozen companies worked with the organization to fine-tune it. EPCglobal held a meeting in Boston on Dec. 10 to listen to the vendor community's views on the issue in an effort to solidify the policy.

Sodha's letter expresses concern that EPCglobal may allow some royalty-based IP to become part of evolving specifications. "They have created enough of a gray area that I felt compelled to say in our letter that even though we are signing the policy, we believe that EPCglobal should demand that any IP incorporated into the core standard should be available for free," he says. "Otherwise, we open the door a crack to those who might want to cause problems."

The IP issue is critical because work on the Class 1, Gen2, specification can't move forward until it is resolved. Alien's Prodromou says Alien decided to take a leadership position on the issue because it hopes that others will understand that royalty-free IP would lead to lower costs and give end users of the technology the security of knowing that their deployments will not be disrupted by a patent infringement lawsuit.

"It's more important that we, as an industry, get going," he says. "We'll make our IP available to everyone else, so far as it is necessary to practice the specifications. None of us is going to get rich off of royalties, so let's create a market in which we can all make money."

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