RFID technology company Omni-ID has filed a patent-infringement lawsuit against its competitor, Xerafy Ltd., as well as one of Xerafy’s business partners, RFID TagSource. The lawsuit was filed on Feb. 8 of this year in the U.S. District Court in Camden, N.J. Xerafy says it is currently reviewing Omni-ID’s claims. “We are very confident in our intellectual property position,” said Xerafy’s CEO, in a statement issued by company. What’s more, a company spokesperson asserts, “the Omni-ID lawsuit makes claims about product designs and reading methods that Xerafy does not even use.”
Both Omni-ID and Xerafy manufacture rugged read-on-metal EPC ultrahigh-frequency (UHF) RFID tags. Omni-ID was initially a division of British research firm QinetiQ, but spun off as a separate company in 2007, and is now based in Rochester, N.Y. The firm invented a design that it called a “plasmonic structure,” which employs layers of conductors and dielectrics to isolate an RF signal from a tag’s surrounding environment, in order to ensure that a passive UHF RFID tag performs successfully on or near metal and liquids. Omni-ID sells a variety of tags based on that technology, and designed for tracking assets within harsh environments. Xerafy, founded in 2010 and headquartered in Hong Kong with an office in Texas, also produces rugged read-on-metal EPC UHF RFID tags used in aerospace, as well as in industrial, health-care and data-center environments. In addition, the company has developed a passive UHF tag designed for embedding in metal. In its lawsuit, Omni-ID claims that TagSource, based in Camden, N.J., is a “distributor of infringing products, including, for example, Xerafy’s infringing products.”
The Omni-ID complaint charges that Xerafy and RFID TagSource have violated two of Omni-ID’s patents, one for an “Electromagnetic Radiant Decoupler” (patent no. 7,768,400), which Omni-ID’s British predecessor filled with the U.S. Patent Office on June 23, 2006, and the other for “Electromagnetic Enhancement and Decoupling” (patent no. 7,880,619), filed with the Patent Office on June 15, 2007. For the past year, licenses for both patents have been available for purchase via the company’s Omni Global Technology Licensing (OGTL) Program (see RFID New Roundup: Omni-ID Launches Global Technology Licensing Program). “Imitation is the best form of flattery, and Omni-ID has been truly flattered since launching the first high performance on-metal tags to the market in 2005,” said Ed Nabrotzky, Omni-ID’s CTO, in a prepared statement announcing the OGTL program on Mar. 14, 2012. “It is very clear that many on-metal products being sold today are based on these foundational patents held by Omni-ID.”
In U.S. Patent 7,768,400, the company describes an electromagnetic radiation decoupler consisting of a dielectric layer sandwiched between two conductor layers, intended to protect a tag from performance degradation that could be caused by the metallic surface on which a tag is mounted. In U.S. Patent 7,880,619, the firm describes electromagnetic enhancement and decoupling technology designed to protect a tag from the degradation properties of metal, by providing a mount with a dielectric cavity into which the tag itself is placed.
Omni-ID contends, in its suit, that on three separate occasions last year—on Feb. 13, May 15 and July 9—the company notified Xerafy about what it perceived as infringement of the two patents. It further claims that Xerafy ignored those notices and launched additional products using technology that the plaintiff contends utilizes its intellectual property. The lawsuit cites Xerafy’s Data Trak II tag as one example of a recently released tag that violates Omni-ID’s patents.
In the lawsuit, Omni-ID asked the court to adjudge that the defendants have infringed the two patents; award damages for past, current and future infringements; issue an injunction permanently enjoining the defendants from further infringement; and award the plaintiff attorney’s fees and enhanced damages. The company demanded a trial by jury on all of its claims.
Tracy Gay, Omni-ID’s marketing VP, declines to discuss the specifics of the suit, but says, “We’re a company that’s heavily invested in opening doors to bring technology to the next generation of RFID technology providers. However, we also have to be aggressive in defending our intellectual property.”
In response to requests for comment, Xerafy e-mailed RFID Journal an official response from the company’s founder and CEO, Dennis Khoo. “Xerafy respects the intellectual property of all companies, including its competitors…,” Khoo said. “Xerafy has very broad patent protection itself, and therefore we take any allegations of infringement very seriously.” He added, “Patent disputes are common in growth technology markets. We are not surprised by Omni-ID’s actions, but we are disappointed. There have been aggressive patent litigation and licensing programs in the automated data collection industry before, and they have rarely if ever been beneficial for customers. Success in the market won’t come from the courtroom, but will come from focusing on meeting the needs of customers.”
The company declined to provide further information regarding the specifics of the suit and what it might mean for its products, or its customers using those products, however, the company indicated, “On the advice of our attorneys, Xerafy will not comment on the merits of the suit at this time.”
In a statement published in a Xerafy newsletter, Khoo said, “Omni-ID’s announcement came after we refused to join the technology licensing program discussed in their press release.”
Typically, such lawsuit filings result in a negotiation of settlement, according to Sean O’Connor, a professor and the faculty director of law, business and entrepreneurship at the University of Washington School of Law. “The vast majority of these cases don’t go all the way to litigation,” he explains.
In a statement published in a Xerafy newsletter, however, Khoo said, “Omni-ID’s announcement came after we refused to join the technology licensing program discussed in their press release.”
RFID TagSource says it no longer is selling Xerafy RFID tags. Its Web site, however, does sell on-metal tags made by Marubeni Chemix , Confidex and TROI.
LeclairRyan, the business law firm that filed the lawsuit on Omni-ID’s behalf, did not immediately respond to a request for comment.