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Internationally recognized standards are paramount to ensuring successful deployments of open loop RFID solutions across retail supply chains. EPCglobal's Hardware Action Group (HAG) has been slowly but surely driving toward ratifying one of the most critical standards. The highly anticipated UHF Generation 2 (Gen 2) standard, which governs how tags and readers communicate, is now in its final phase prior to board ratification. As part of the process, it is now known that Intermec holds a significant patent portfolio relevant to the proposed specification.

In August, Intermec presented 15 issued patents and five pending patents as relevant to the Gen 2 specification. Five of the issued patents will be offered royalty free. Intermec also spelled out how other manufacturers can license the balance of this portfolio in order to produce product to the Gen 2 specification. Simply put, the license fees are 5% on chips, tags, inlays, and smart labels, and 7.5% on fixed readers, printers/encoders, and handheld devices. The fees apply to the net sales price, which means they only apply to the value being added along the way.

At the end of September, with full knowledge of Intermec's declared patents and RAND (reasonable and nondiscriminatory) licensing scheme, HAG voted to move the Gen 2 specification from a last call working draft to candidate status. During the candidate status phase, manufacturers are developing prototypes in order to validate that functioning products can be built based on the specification. If all goes well, the candidate phase could be successfully completed before the end of 2004. Once prototype production has been successfully demonstrated, EPCglobal's board of governors will vote on whether to ratify the specification as an EPC standard.

There seems to be some confusion about how Intermec's presentation of intellectual property is affecting EPCglobal's progress toward ultimate ratification. Intermec's position is not delaying the creation of the Gen 2 standard. On the contrary, by putting its cards on the table, Intermec is accelerating the process. According to my sources, the vote within HAG was 49 to 2 to promote the Gen 2 standard to candidate status (with full knowledge of Intermec's declared patents and licensing scheme). Intermec disclosed its relevant patents and RAND licensing in accordance with EPCglobal's guidelines.

The major chip manufacturers are now on track to ship Gen 2 production samples by second quarter 2005. In the meantime, the chip manufacturers are providing emulation prototyping support to facilitate the equipment manufacturers' prototyping activities.

Another misconception is that the specification was promoted to candidate status with disputed portions. The term "disputed portions" implies that that there is some sort of ongoing debate over whether or not the specification can be rewritten to circumvent Intermec's IP declarations. That exercise was supposed to have happened during the last call working draft phase. Apparently, HAG's membership decided that the industry can move further, faster, and at less cost by licensing Intermec's patented technology than by trying to develop alternative technologies.

EPCglobal and Intermec are not negotiating this issue. The fact is that Intermec is engaging in discussions with each of its potential licensees individually. According to Intermec VP of Global Business Development, Scott Medford, "The licensing of IP is between manufacturers. We have been dealing with these issues for years. Licensing provides a clear trail of where intellectual property originated, who owns what, and who is entitled to use what. This is why license arrangements are set up in the first place."

Read "How Intermec Plans To License Its RFID Patent Portfolio"

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Previous articles by Kurt Menges

Can EPCglobal Ratify A UHF Generation 2 Protocol Specification This Year?
EPCGlobal Marks A Major Milestone On The Road To Ratifying UHF Generation 2 Protocol Specification

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