Aug 01, 2012Late last year, a patent-licensing company called Round Rock Research launched a barrage of lawsuits against end users of RFID technology, including American Apparel, Dole Food, Fruit of the Loom, Hanesbrands, JCPenney, Macy's, PepsiCo., Gap and VF Corp. The suits claim these companies are infringing on five U.S. patents relating to the use of ultrahigh-frequency RFID tags and readers. Round Rock acquired these patents—numbers 5,500,650, 5,627,544, 5,974,078, 6,459,726 and Re 41,531—from Micron Technology, a semiconductor company.
Other end users have received cease-and desist-letters from Round Rock, claiming plans to use RFID would violate Round Rock's patents. Round Rock was founded by John Desmarais, a patent attorney who became famous when he won a $1.52 billion verdict for Alcatel-Lucent against Microsoft in 2007. Round Rock is going after end users rather than technology providers, perhaps because they have more money and are more likely to settle and pay a licensing fee for the patents (settling could be cheaper than a long, drawn- out court fight).
In March, Motorola Solutions, a provider of RFID technology, filed a countersuit against Round Rock. According to Motorola's complaint, the company was asked to defend the retailers being sued, because Motorola had indemnified them in contracts signed when the retailers purchased the technology. Motorola is seeking a declaratory judgment that its RFID products do not infringe on the five patents, and that Round Rock's patent claims are invalid.
An anonymous party has requested reexamination of the patents, a process by which the U.S. Patent and Trademark Office reviews a patent that already has been issued, to verify the patent's claims and scope. Round Rock's lawyers have responded by requesting that the company be allowed to add more patents to the original complaints, a source told RFID Journal. The judge has not yet ruled on these motions.
Some end users are now demanding that any RFID contract they sign include an indemnification clause. Companies that provide RFID solutions based on GS1's UHF Electronic Product Code air-interface protocol standard are looking for guidance from GS1. GS1 conducted extensive patent research when it developed the Gen 2 EPC standard, and requested companies with intellectual property used in the standard make it available without a license. Many companies did this, but Micron never ventured into the UHF RFID market. It worked out a deal, instead, with Round Rock.
If Round Rock patents are validated, legal sources say, there are several ways forward. End users could be required to pay Round Rock a licensing fee, or solution providers could negotiate deals with Round Rock, in which the solution provider would pay a licensing fee in exchange for Round Rock agreeing not to sue its customers. If the patent claims are found invalid, the issue will go away—until another patent-licensing company holding RFID patents decides to try the same trick.