Patent Holder to Ease Way to Licenses for RFID Tags

Responding to complaints that it has become a roadblock to new technology that uses radio signals to identify and track consumer goods, the Intermec Technologies Corporation said yesterday that it planned to license four broad portfolios of its radio-tagging patents on terms that it said should spur development.

Intermec said that the licensing program would be available to equipment suppliers from June 1 to Aug. 31, after which advance fees and royalties would rise and licenses would be negotiated one by one.

The tagging technology, known as RFID for radio frequency identification, is being pushed by retailing giants like Wal-Mart and big manufacturers like Procter & Gamble and Gillette as an improvement on bar codes because radio tags store more information, can be updated and can be read by scanners without the need to shine a laser beam at a specific spot. Among the principles Intermec is trying to establish is that it can collect a royalty on every tag as well as on the devices that read the tags. That pits it against many RFID developers who want the technology to follow the path of bar codes, where the pioneer, Symbol Technologies, was forced to abandon its effort to be paid every time a bar code was printed.

It was possible to design the first two generations of the consumer tags, known as Gen 0 and Gen 1, without infringing on Intermec's patents, according to industry analysts. But the industry's development hinges on the new generation of tags and related gear that began being introduced this spring, and avoiding infringement is more difficult with these.

The tags allow data to be encrypted and are the first to let companies add information about the product as it moves through the supply chain. Gen 2 systems are also expected to read tags more rapidly and with less chance of confusion if a tag is read by more than one scanner.

"We've had talks with over two dozen companies, including one that wanted to license 65 patents," said Tom Miller, president of Intermec, which is based in Everett, Wash., and is a unit of Unova. But, he said, the individual talks were too burdensome, so Intermec decided to try to break the logjam with a plan aimed at inducing companies to license one or more of four groups of patents.

Intermec is demanding nominal advance fees, but the royalties -- ranging from 2.5 percent for tags to as much as 7.5 percent for other RFID devices -- may be a sticking point for some equipment vendors. Intermec is already locked in a bitter patent infringement lawsuit with Symbol Technologies that grew out of a dispute over whether Matrics, an RFID start-up that Symbol acquired last year, is infringing Intermec's RFID patents.

Equipment vendors will have to weigh Intermec's demands against their need to assure customers like Wal-Mart that they will not be blocked from supplying the latest RFID equipment. "People will have some explaining to do if they don't take the deal," said Jeff Woods, an analyst at the Gartner Group. "This is a clever way for Intermec to say they aren't holding up the market."