SYMBOL-INTERMEC SUITS RAISE RFID QUESTIONS

Michael Garry

HOLTSVILLE, N.Y. -- In what has become a pitched battle over intellectual property (IP) rights between two of the industry's largest scanner suppliers, Symbol Technologies here recently filed a patent infringement lawsuit against Intermec Technologies, Everett, Wash.

Symbol's suit, filed March 10 in the U. S. District Court for the District of Delaware, alleges that Intermec has infringed Symbol's patents covering wireless communications standard 802.11, also known as Wi-Fi. In conjunction with its suit, Symbol terminated its supplier relationship with Intermec for laser scan engines, used by Intermec in scanners.

Symbol's suit grew out of failed cross-licensing negotiations stemming from Intermec's own suit filed in June 2004 against Matrics, which was acquired by Symbol in October.

In what is a now a suit against Symbol, Intermec's claims about alleged infringement of Intermec's radio frequency identification (RFID) patents raise questions about the "royalty-free" status of the new UHF Generation 2 RFID standard covering the communication (air interface) between RFID tags and readers. The Generation 2 standard was unveiled in December by EPCglobal, Lawrenceville, N.J.

Thus, the new case, ostensibly about wireless technology, puts a spotlight on RFID, already a buzzword around the industry with Wal-Mart Stores pursuing an ambitious program in the Dallas market and Hannaford Bros. developing its own program in Maine (see story, Page 53).

Responding to Symbol's suit, Intermec, in a statement, said it "strongly believes there is no basis for this lawsuit," calling it "an apparent reaction" to Intermec's RFID patent-infringement lawsuit against Symbol-owned Matrics.

"Intermec has gone to great lengths to negotiate an RFID licensing program with Symbol," said Intermec President Tom Miller. "Symbol walked away from the negotiations in the apparent belief that it is entitled to customary terms and conditions for its intellectual property but that Intermec is not entitled to the same."

The companies are also at odds about Intermec's approach to its RFID patents. "Intermec has stated publicly that it is reserving the right to license its RFID technology [to equipment makers] on discriminating terms, and may refuse to license it altogether as it sees fit," said Todd Hewlin, Symbol's senior vice president of global products, in a statement. "This approach could significantly deter the widespread implementation of a compelling new technology."

Steven Winter, Intermec's chief operating officer, acknowledged that Intermec is seeking royalties of 5% on RFID tags and 7.5% on RFID readers. "Intermec does not have nearly enough patents to extract these royalties," Peter Lieb, Symbol's senior vice president and general counsel, told SN. "For that reason we are drawing a line in the sand and saying we will not knuckle under and pay."

Responding to the charge that Intermec is hindering market adoption of RFID, Miller said, "Nothing could be further from the truth." Intermec, in its statement, added that it "has promoted and actively advanced RFID adoption and RFID standards-setting processes while respecting intellectual property rights. "

In addition, the company cited five patents "core to the practice of RFID" that it made available on a royalty-free basis "to further adoption of the EPCglobal Inc Generation 2 standard." It also referred to 11 patents made available on a "reasonable and non-discriminatory [RAND] basis."

Those patents, however, were withdrawn from RAND status after Intermec was told that they were not "essential" to the air-interface protocol, said Winter. He said Intermec's view is that the royalty-free term only applies to the communication between tags and readers, not the equipment itself.