Legal wrangling over intellectual property (IP) is heating up in the wireless communications realm, as Symbol Technologies Inc. filed a lawsuit late last week against Intermec Technologies Corp. claiming the latter's bar code scanning technology infringes on its Wi-Fi patents
Symbol's suit, filed in the U.S. District Court for the District of Delaware, seeks a permanent injunction against Intermec's use of Symbol's patented technologies and unspecified monetary damages.
In addition, Symbol terminated an agreement to supply Intermec with laser scan engines, which Intermec embeds in its bar code scanning equipment. Intermec says the move will not impact its ability to deliver the engines because it has alternate sources of supply.
Intermec rejected Symbol's patent infringement claims on its 802.11 technology, alleging Symbol's litigation is merely a response to an earlier RFID suit Intermec filed against Matrics Inc. -- a company which Symbol acquired last September. Symbol says it has spent the last six months trying to negotiate a resolution to the Matrics dispute with Intermec. Those negotiations recently broke down, sprouting a new round of counter claims.
Both Intermec and Symbol hold numerous patents centered on RFID technology, making them the two companies with the most IP at stake in the RFID tag and reader market. In fact, the patents in question were at the heart of a suit filed by Proxim Corp. against Symbol in the U.S. District Court for the District of Delaware in 2003. In an ironic twist, Symbol counter sued Proxim and was awarded $23 million in damages.
As the legal posturing intensifies, neither Symbol or Intermec appears willing to back down. "Intermec will vigorously defend its intellectual property and vigorously defend itself against this action by Symbol, which we think is completely unfounded," an Intermec spokeswoman said.
The legal backbiting between the two companies has multiple dimensions. Specifically, both Symbol and Intermec, along with other companies, contributed technology to EPCglobal Inc's Generation 2 air-interface standard. All companies collaborated on a royalty-free standard. Even Intermec, which was pressing for licensing fees, agreed to donate five core patents on a royalty-free basis.
However, Intermec is making available 11 additional patents to developers on a reasonable and nondiscriminatory (RAND) royalty-bearing basis. The fees Intermec wants to impose, Symbol officials said, are excessive, which could disrupt RFID adoption.
"We believe that the air interface for RFID should be royalty-free and [Intermec] wants to charge exorbitant royalties in terms of anything connected to RFID," said Peter Lieb, Symbol's senior vice president and general counsel, in an interview with Managing
Automation. "If the whole industry pays 7% on readers and 5% on tags, which is what they are offering to customers, it will have significant impact on the industry and cost structure. They have also said they reserve the right to not license on reasonable and nondiscriminatory terms, which means they may not give some companies a license at all or charge more ... we think that would be harmful to customers and that is one of the reasons we are taking this on."
As the litigation continues, the inevitable question becomes whether contention between these two important players will undermine customer adoption of RFID technology. "The good news is it is so embryonic at this stage, most (customers) ... haven't worried too much about the [EPCglobal] standard," said Simon Yates, an analyst at Forrester Research Inc. in an interview. "But if the battle drags on for long time, it will have significant impact on RFID adoption because companies don't know who they'll have to pay for certain kinds of technology, and end users know whatever cost goes into the technology side will be passed on to them."