Jun 09, 2019Last week, Impinj, a maker of passive UHF RFID tag chips, sued NXP Semiconductors, its chief rival in this segment of the RFID market (see Impinj Sues NXP for Patent Infringement). I am not an engineer or a patent attorney, so I cannot comment on the validity of Impinj's claims or its chances of success, but I think it's important for readers to understand that this case is unlikely to have a significant impact on companies that want to use radio frequency identification technologies.
First, this case is significantly different from the Round Rock Research patent suits of a few years ago (see Courting Confusion). Round Rock owned intellectual property (IP) used in the creation of the passive UHF RFID standard, but the company did not make any products so it was not part of the GS1 IP policy that called for any company making passive UHF RFID tags based on the EPC Gen 2 air-interface protocol to contribute the IP royalty-free in exchange for being allowed to use every other company's IP royalty-free.
Round Rock sued end users in an attempt to force the companies using the Gen 2 protocol to pay it a royalty for its IP. This had a chilling effect on the adoption of passive UHF RFID, since businesses understandably did not want to be sued. Walmart, in fact, shut down its RFID program as a result of this lawsuit (it now appears to be restarting those efforts).
Since Impinj is suing NXP, but not its customers and partners, no company need fear that it will be penalized for using passive UHF RFID tags. Impinj is also suing NXP for alleged violations of U.S. patents and is seeking injunctive relief against the sale of NXP's UCODE 8 chips in the United States, so the case will not affect any customers outside if the U.S. or those using RFID tags with other NXP chips.
If the court grants a temporary injunction against the sale of UCODE 8 chips in the United States, this could potentially lead to a shortage of chips in the short term. That remains to be seen, but it's important to understand that any effect on the market will be brief. Of the 5,000 patent-infringement cases filed each year in the United States, very few actually make it to trial (less than 5 percent).
The most common outcomes in these cases are a voluntary settlement between the two parties (about 65 percent of cases are settled this way). Plaintiffs typically prevail about 3 percent of the time, while defendants win roughly 2 percent of the time. So it's likely that the lawsuit will force the parties to the negotiating table, and they will come to a business accommodation.
I believe neither party wants to see the lawsuit affect the adoption of passive UHF RFID, which is starting to accelerate. So I see this lawsuit as a routine business dispute that will be settled in time, with little effect on the market.
Mark Roberti is the founder and editor of RFID Journal.