Patent Lawsuit Not a Major Issue for RFID

By Mark Roberti

A company known as Round Rock Research is suing some users of EPC RFID technology, but the industry is addressing the matter in its usual way.

I received a call recently from someone who had heard that a patent-licensing firm called Round Rock Research was suing end users of passive ultrahigh-frequency (UHF) radio frequency identification systems. The person was very worried about what this might mean for his company's RFID project. "Should we shut it down until this is resolved?" he asked.

I said I didn't think this was something to be unduly concerned about, and I'll explain why. But first, a little background.




In 2011, Round Rock Research launched a barrage of lawsuits against end users of RFID technology, including American Apparel, Dole Food, Fruit of the Loom, Hanesbrands, JC Penney, Macy's, PepsiCo, Gap and VF Corp. (see Courting Confusion). The suits claimed these companies were infringing on five U.S. patents related to the use of UHF 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 semiconductor company Micron Technology.

Round Rock was founded by John Desmarais, a patent attorney who became famous for winning a $1.52 billion verdict for Alcatel-Lucent against Microsoft in 2007. The company goes after end users rather than technology providers, perhaps because the latter 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 2012, Motorola Solutions, a provider of passive UHF RFID technology, filed a countersuit against Round Rock. According to legal Web sites, Motorola's complaint claims the company was asked to defend the retailers being sued, because Motorola had indemnified them in contracts signed when the retailers purchased the technology. The reports indicate 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 requested a reexamination of the patents, a process by which the U.S. Patent and Trademark Office reviews a patent that has already been issued, in order to verify the patent's claims and scope. Round Rock's lawyers responded by requesting that the company be allowed to add additional patents to its original complaints. The patent review could take a year or more to complete, and it's likely it will be several more years before this court case can be settled.

Should you wait until it is settled before launching an RFID project? I don't think so. In fact, I know of no one who has shelved a project or slowed its deployment as a result of this lawsuit.

That's because this is a normal—if unpleasant—part of the technology business. Young RFID Journal readers might not remember that Apple sued Microsoft over the first version of Windows, when Microsoft made the switch from DOS to a graphical-user interface. In the mid-1990s, a technology company called Integraph sued Intel over its use of chip designs. Intel eventually paid Intergraph $224 million to settle the case. In 2003, a company known as SCO sued IBM, Novell, Red Hat and Daimler Chrysler, claiming that its proprietary software code had been misappropriated and incorporated into the Linux operating system.

Even within the automatic-identification technology sector, this is nothing new. When bar-code technology was gaining widespread acceptance, inventor Jerome H. Lemelson sued Symbol Technologies, Intermec Technologies, Metrologic Instruments, Teklogic, Zebra Technologies, Telxon and other manufacturers of bar-coding equipment, claiming they were infringing on his mid-1950s patents for machine-vision technologies. Lemelson's estate sued some users of bar-code technology—Walmart, Sears and The Home Depot—after he passed away in 1997. The courts eventually threw out the lawsuits, and manufacturers of bar-code technologies did not have to pay royalties to license the patents.

How will this court case turn out? It's impossible to know for sure, as U.S. patent cases are a crapshoot. But I would say that one of two outcomes is likely. Either the Round Rock claims will be thrown out, in which case everyone will be off the hook, or the RFID technology providers will negotiate a royalty to Round Rock. If the latter happens, that will have a marginal impact on equipment costs, but it is unlikely the royalty will be so high that it will affect deployments (that would be against Round Rock's interest, after all, since if no one used the technology, the company would earn no royalties).

Lawsuits, particularly within the United States, are part of the introduction of new technologies. There are processes for working out these issues, but they unfortunately take a long time to play out. Meanwhile, there is no need to sit and wait for every question to be answered before proceeding with an RFID deployment. Eventually, this issue will be settled, and RFID will proliferate.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.