Two Settle RFID Patent Fight, But Issues Still Simmer - InformationWeek

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Two Settle RFID Patent Fight, But Issues Still Simmer

One of the clouds hanging over the radio-frequency identification market is the threat of patent litigation among industry leaders. Two of them, Symbol Technologies Inc. and Intermec Technologies Corp., say they'd rather negotiate than litigate but hadn't been able to arrive at reasonable terms until the last few weeks.

A partial resolution was unveiled last week based on a cross-licensing agreement. Symbol will join Intermec's Rapid Start licensing program for RFID intellectual property, which provides unlimited access to its portfolio of more than 145 RFID patents, in return for an initial fee plus royalty fees ranging from 2.5% to 7.5% of the finished product price. In exchange, Intermec will get access to elements of Symbol's RFID intellectual property by exercising cross-licensing provisions of the Rapid Start program. Symbol holds about 50 RFID patents and patent applications.

The dispute was sparked in June 2004, when Intermec filed a patent-infringement suit involving RFID against Matrics, a wireless-tag maker that Symbol had acquired for $230 million. During the past year, suits and countersuits have ping-ponged between the two.

Intermec and Symbol also agreed to negotiate settlements to their other intellectual-property disputes, including a 90-day moratorium as they look for a resolution to all intellectual-property squabbles between the two companies. "We expect to build more than 400 million inlays in 2006, so it was a good time to sit down and work things out," says John Bruno, Symbol's senior VP of RFID.

Symbol last week also began shipping Glacier, the company's internal code name for its new RFID chip and antenna inlay that can be inserted in a paper shipping label.

The new inlay, which allows RFID capability to be put in packaging labels and tags, comes after customers complained that up to 20% of Symbol inlays on a printer roll didn't work. Symbol says it wasn't to blame and that the inlays it ships have "yield rates in the very high 90 [percentages]," Bruno says. "There are many issues that can lead to low read rates," he says, including problems that occur at the plants of companies that insert the inlays into the printer rolls. "Damage to the inlays can be caused from poor paper stock, cracks in the die when the antenna is attached, or cracks in the die when the roll of labels is wound too tight," he says.

Intermec isn't playing nice on all patent fronts. Symbol is part of a 20-company, RFID technology licensing consortium to provide less-complicated access to RFID patents, as well as easier management. Intermec, one of the largest holders of RFID intellectual-property licenses, hasn't joined.

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