Following the model of the successful patent licensing consortia formed and implemented around essential technologies in the MPEG-2 and DVD industries, a group of companies involved with radio frequency identification (RFID) technology have worked together to develop an intellectual property (IP) licensing consortium.

The group is calling for other companies and individuals holding essential RFID patents to join in the proposed consortium.

According to the press release, the purpose behind the RFID Consortium is to provide a structured approach for holders of essential RFID patents to receive fair compensation for those patents, at a reasonable cost to the end-user, thus promoting rapid adoption of RFID. The consortium would offer patent holders an efficient patent management approach and provide manufacturers and end-users convenient access to RFID patents. This approach offers competitive benefits by integrating complementary technologies and reducing transaction costs. It offers an effective alternative to time-consuming and expensive individual licensing agreements.

While this approach is favored by many companies, it is not universally popular.  The concept was first broached several years ago, before the current spate of litigation, and was not adopted at that time.  EPCglobal was, at that time, making its own determination of which patents were "essential" to Gen2.  EPC's decision that much of Intermec's IP was not "essential" spurred much of the controversy that's currently muddying the legal landscape.

Additionally, now that Gen2 has entered the ISO arena, companies have the opportunity to submit their lists of IP they consider essential.  This list may not be the same as the list compiled by EPCglobal.

However, as with most of today's technologies, the RFID IP landscape is complex and there are many important patent holders -- including individuals, companies and academic institutions not currently involved in developing RFID products and services.  Reaching out to these IP holders may be much more difficult than bringing current litigants to the table -- companies that are conspicuous in their absence in the following list.

Companies that have signed term sheets to become members of the consortium as of 10 August 2005 include:

·        Alien Technology Corporation

·        Applied Wireless Identification Group, Inc. (“AWID”) 

·        Avery Dennison Corporation  (NYSE: AVY)

·        Moore Wallace, an RR Donnelley Company  (NYSE: RRD)

·        Symbol Technologies, Inc.  (NYSE: SBL)

·        ThingMagic, Inc.

·        Tyco Fire & Security  (NYSE: TYC)

·        Zebra Technologies Corporation  (Nasdaq: ZBRA)

The consortium's goal is to license patents that are essential to the commercially viable operation and manufacture of RFID chips, tags or labels, and readers.  Under the proposed licensing arrangement, all essential RFID patents owned by members of the consortium will be made available to interested companies via a single license on fair, reasonable and non-discriminatory terms.

According to the news release, "The consortium will be based on, and supportive of, the standards and specifications announced by EPCglobal as well as ISO (International Standards Organization) counterpart proposed standards.  The consortium will be open to all patent holders, regardless of whether they were involved in the development of those standards."

“We are encouraging all essential RFID patent holders to join with us to form the consortium and add their patents to the license in order to advance the broad adoption of this technology,” said Stan Drobac, designated spokesperson for the consortium and vice president, RFID strategy and planning, Avery Dennison. “We believe this consortium licensing approach is the best way to address the needs of all involved, and to help this emerging technology reach its full potential.”

While that statement seems to be a nod toward inclusiveness, holders of fundamental RFID IP that were not consulted during the development of the EPC standard, or chose not to pay for the privilege, might find it more of an affront, an acknowledgement after the fact, of their IP.  While there are certainly benefits to the concept of an IP consortium, smaller IP holder might think they'll be at a disadvantage if major IP holders decide to join.

With this breaking news there are many questions to be asked and AIM Global will be investigating the many different angles to this announcement.  Watch for more detailed coverage of this group in upcoming issues of our newsletters and at RFID.org.