The U.S. Department of Justice has given seven companies its approval to move forward with plans to jointly license patents that are essential to deliver radio frequency identification technology.
In its decision, the DoJ said the RFID Consortium L.L.C.’s plans could result in cost savings and greater access to the technology, ultimately benefiting competition and consumers.
A spokesman for the consortium said the various players are meeting to determine how the group will proceed now that the DoJ has cleared the group of any antitrust laws.
Last November, France Telecom, Hewlett-Packard Co., 3M Innovative Properties Co., LG Electronics Inc., Motorola Inc., ThingMagic Inc. and Zebra Technologies Corp., formed the consortium to license patents that are needed to make products supporting ultra-high frequency RFID standards. Each of the companies own at least one essential UHF RFID patent.
Pro-consumer
Thomas Barnett, assistant attorney general in charge of the justice department’s Antitrust Division, said the consortium’s arrangement would be pro-competition because the company’s would not be able to use their intellectual property rights to block or delay UHF RFID standards. Barnett also wrote that the deal provides savings in transactions between licensors and licensees.
“The proposed patent-licensing arrangement has the potential to speed up the commercialization of UHF RFID technology, to the benefit of competition and consumers, without harming competition or impeding innovation,” Barnett said in a statement.
The DoJ also said the consortium plans to implement safeguards to minimize risk of restricting competition between producers of the technology and dampening incentives to innovate.
The consortium plans to use an independent licensing agent to offer non-exclusive licenses of the group’s essential patents on reasonable and nondiscriminatory terms. The agent will make sure that the consortium does not offer patents that would compete with each other. However, the owners of the patents retain the rights to license their patents independently.
At the time the consortium was formed, officials said the licensing arrangement would provide a convenient and cost-effective way for companies to obtain patent licenses required to implement UHF RFID standards.
Big move for RFID
The stetting of standards is important for the technology and its use by businesses, said Dan Mullen, president of AIM Global, a standard setting organization for RFID. Mullen said the standards process for the technology started in 2000.
“So far, there has been a healthy identification of standards for all frequencies,” he said.
Mullen said the market for the technology is healthy even though RFID did not live up to the hype that it would replace the bar code.
“RFID is finding some good applications, but in reality the bar code and RFID can coexist,” he said.
The U.S, government is also a big user of the technology. The defense department uses the technology to control military gear and the Bush administration has pushed for other departments, including homeland security and immigration to integrate the technology in its policies.
Mullen said the current market is now finally putting the infrastructure in place for broader use of the technology.
“There has been tremendous progress made in regard to infrastructure,” he said.
Mullen added that the number of businesses in the market is also healthy. There are about 60 companies that manufacture tags, readers and finished labels and between 1,500 and 2,000 companies worldwide that are system sellers.
