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The RFID Patent Pool: Playing Poker - RFID Consortium Charts Its Next Move |
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[12/23/05] Mark Johnson
"My experience is that patent pools start with a base of patents that grow and gain momentum over time." Horn said.
It has been several months since the RFID Consortium announced its intent to form a patent pool for the intellectual property required for UHF RFID standards from EPCglobal and ISO. The RFID Consortium is charting its structure and creating its licensing rules.
Let the Game Begin
The RFID Consortium publicly announced its intent to form a patent pool in August 2005 and followed with an announcement in September 2005 that it had selected MPEG LA, LLC as the administrator for the RFID patent licensing process.
The RFID Consortium official members are Alien Technology, Applied Wireless Identifications Group (AWID), Avery Dennison, Moore Wallace, Symbol Technologies, ThingMagic, Tyco Fire & Security and Zebra Technologies. The group of eight companies that are official members of the consortium has not grown since the August announcement according to Stan Drobac, vice president of RFID applications at Avery Dennison and spokesperson for the RFID Consortium.
Patent pool structures and consortia royalty sharing models vary. Drobac told RFID Tribe, "We are borrowing elements from multiple business models to construct our model."
Playing Poker
RFID Tribe talked with Andrew Updegrove, partner at Gesmer Updegrove LLP and editor of ConsortiumInfo.org. Gesmer Updegrove has advised more than 70 standards-setting and promotional consortia regarding their formation, member classes, dues structure, standards and certification processes, including the Near Field Communication (NFC) Forum and the Mobile Payments Forum.
Updegrove said. "The idea for patent pools is to cap the 'tax' on a device to allow for greater market adoption." The tax in the form of a royalty is set at 'what the market will bear'. The cap is typically either a percent of the device's price or a flat fee per device.
There are several advantages to patent pool consortia. Patent pools enable efficiency when the market can obtain a single capped royalty for a device where equipment providers need only one license and deal with one entity for licensing. Consortium patent pool participants benefit by sharing in the consortium's royalty stream according to a patent pool formula devised by the participating companies. In addition, patent pools level the playing field so that one firm pays the same royalty fee as its competitor for selling a device. Consortia tend to save valuable resources for member companies - they spend less time and less capital defending a lower number of lawsuits.
With much at stake, companies work diligently to set technology standards and to commercialize their intellectual property by pooling their patents with others. "Standards setting is a game of hardball" said Updegrove.
Due to anti-trust issues associated with patent pooling, some consortia in the United States send a letter to the US Department of Justice (DOJ) seeking an opinion. This letter details the consortium's structure, membership model and licensing algorithms and asks the DOJ for an opinion on whether the consortium, as proposed, would violate anti-trust laws. The DOJ issues a non-binding letter back to the consortium rendering an opinion.
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RFID Component Encoder
A library for Visual Studio and other .NET development environments that enables printing of barcodes and encoding of RFID smart labels and tags at the same time.
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RFID/Barcode Printers
Offers high speed, dedicated thermal bar code label and card printers. Serial and parallel ports are provided on some of the printers listed, and some have USB and Ethernet interfaces.
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