Royalty and Legal Moves Surprise RFID Industry, Says ABI Research

Intermec IP Corp. claims ownership of proposed air-interface protocol, intends to charge royalties for its use

Intermec IP Corp. claims ownership of proposed air-interface protocol, intends to charge royalties for its use

Oyster Bay, NY — July 9, 2004 — The recent announcement that the "Global" and "Freedom" group proposals for a new UHF EPC Generation 2 tag standard had reached a consensus (the "Chicago Proposal"), seemed at first to be good news.

But according to ABI Research Principal Analyst, Erik Michielsen, jubilation has been short-lived, as Intermec IP Corp., one of the pillars of the "Global" faction, announced its claim to ownership of the proposed air-interface protocol and an intention to charge royalties for its use. The company has said it will announce a licensing program soon.

Intermec also filed a spate of lawsuits against rival tag maker Matrics Inc., claiming not only "reasonable royalties" but also treble damages for Matrics' alleged "willful infringement" of its patents. The amounts involved are said to affect contracts such as the 100 million-tag deal Matrics has with Checkpoint Systems, a contract with Honk Kong airport, and a $25 million deal with Las Vegas' McCarran airport.

According to ABI, other players in the radio frequency identification (RFID) space said they are surprised and concerned at the prospect of Intermec putting their intellectual property into the most basic part of the proposed standard. Michielsen said that in the general opinion, what the industry needs instead is open access to the base technology, allowing multiple suppliers and low prices to meet escalating market demand.

"While Intermec has only filed suit against Matrics," said Michielsen, "that does not mean it won't file against other tagmakers in the future. All in all, this definitely clouds the UHF Generation 2 standards discussions and is fueling considerable animosity in the industry."

ABI Research has just released the latest edition of its RFID Quarterly Service, which examines RFID product markets in detail, with segmentation across product types, by region and price. It also includes qualitative insight and five-year forecasting based on movement in key RFID vertical markets and their related application markets.

Founded in 1990 and headquartered in New York, ABI Research maintains global operations that support annual research programs, quarterly intelligence services and market reports in wireless, automotive, semiconductors, broadband and energy.