Avery Dennison Announces Licensing Program, Acquisition

By Mary Catherine O'Connor

The company is rolling out a technology-transfer program to enable label and packaging manufacturers to create RFID inlays by attaching RFID straps to antennas printed onto label or cardboard substrates.

Label maker Avery Dennison's RFID division, which manufactures passive UHF RFID inlays compliant with EPCglobal's Gen 1 and Gen 2 protocols, has announced a new licensing initiative to enable converters and packaging manufacturers to begin making RFID inlays and integrating them into labels or packaging materials. The firm also announced the acquisition of Grand Rapids, Mich., RFID inlay and tag maker RF Identics.

Avery Dennison's RFID Division uses a patented process by which a strap (a pair of small metal dies attached to an integrated circuit) is bonded to an antenna to form an inlay. The company then sells these inlays to label converters, who embed them into labels—often referred to as "smart labels" or "RFID-enabled labels"—that companies use to track pallets and cases of goods being shipped to Wal-Mart, Target and other retailers. Avery Dennison RFID is now offering to license the intellectual property used in this strap-attaching process so label converters and packaging companies can make their own inlays. Possessing the know-how and tools to create their own inlays could help label converters shorten the lead time to bring new RFID smart labels to market, since they would not be dependent on an outside source for the devices.

Stan Drobac

The ability to add RFID inlays to packaging materials could help packaging companies better serve clients who want or need to track the goods being placed inside the packaging. These clients would no longer have to add tags to cases of goods once they've been packaged or labeled at the point of manufacture. "Part of the retailers' vision, when [retailers] initiated tagging mandates, was to have the companies that supply packaging to the retailers' suppliers begin including RFID tags in product packaging," explains Stan Drobac, Avery Dennison's vice president of RFID strategy and planning.

Avery is also licensing patents to manufacturers of RFID equipment for the design of the strap-attach machinery, so that these companies might begin manufacturing the machines for sale to any label and packaging firms licensing the IP process for attaching the straps to antennas. "The intent is to put everything in the converters' hands that they need to get going with this," says Drobac.

In late July, Texas Instruments (TI) announced its intention to make its Gen 2 chips available with straps already attached (see Texas Instruments Rolling Out Its Gen 2 Chips). TI, however, is not licensing the IP needed to attach the straps to antennas to form inlays—IP that Drobac says converters need if they want a high-speed, automated process for attaching straps to antennas.

Earlier this year, Texas Instruments partnered with packaging company Smurfit-Stone to create a prototypical package with integrated RFID inlay (see TI, Smurfit-Stone Demo RFID-Enabled Cases ). The antenna was printed directly onto the cardboard, with a conductive material used to attach it to the antenna. The first commercially available packaging materials with integrated inlays will likely use printed antennas, as well.

Avery Dennison's acquisition of RF Identics is complete, though terms have not been disclosed. RF Identics' company name will remain unchanged, and the company will operate out of its Grand Rapids location, says Drobac, with no staff cuts expected. RF Identics was formed in 2004 and sells both UHF and HF RFID inlays to label converters, as well as reusable passive RFID tags in rugged housings. The acquisition provides Avery Dennison access to the patented inlay manufacturing processes RF Identics uses; these are among the patents being offered through the new licensing program. The acquisition also provides Avery access to RF Identics' existing converter customer base.

Gary Burns, president and cofounder of RF Identics, says the acquisition by Avery Dennison benefits his company by providing access to Avery's marketing and support resources. He notes that both companies share a common vision for how RFID inlays will one day be integrated into packaging.