Intermec’s Fees are the Real Complaint

By Admin

The problem is not so much that Intermec wants to charge royalties; it is how much Intermec wants to charge.

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This article was originally published by RFID Update.

March 17, 2005—For those that have been following the developments surrounding Intermec’s intention to charge licensing fees for fundamental RFID technology, it may be hard to determine which side has the more valid argument: Intermec, or the rest of the industry. On the one hand, many are irate that Intermec would selfishly seek royalties, since this will keep RFID prices higher and impede adoption at a formative moment for the industry. On the other hand, it seems perfectly reasonable that a company try to extract value from its portfolio of intellectual property. This isn’t charity, after all.

According to those we spoke with, the problem is not so much that Intermec wants to charge royalties; it is how much Intermec wants to charge. Typically, anywhere from 1% to 3% would be charged in similar licensing scenarios. Intermec is reportedly seeking 5% to 7%, which is staggering. At costs that high, many in the industry have simply panicked, particularly those companies whose products rely heavily on RFID technology covered by the Intermec IP in question.

Still, most in the industry will concede that Intermec should not be expected to simply give away the intellectual property in which it has invested so much. (When pressed, some even allow a bit of admiration for the company which, in the face of so much abuse and scorn, has stuck to its guns.) The question is, will Intermec bring its licensing fees down to less onerous levels? Only time will tell. Now that the company has withdrawn its commitment to license on a RAND (reasonable and non-discriminatory) basis, it could conceivably do just the opposite, raising prices to its competitors or even forbidding them from using the IP at all. That is what has some really worried. Indeed, an unwillingness to compromise on its high licensing fees may have been the sticking point that drove Symbol last week to walk away from the negotiating table with Intermec and sue.

Read Intermec’s response to Symbol