MIT Enterprise Forum of Cambridge 10/21 RFID Circle Event: What To Do About All the Patent Litigation?

1. A Brief Introduction To
RFID Patents
Quantity, Quality and Ownership
Litigation & Alternative Solutions
A Polarized Industry
Roger Stewart
President
Sourland Mountain Associates
Sourland
Mountain
Associates

2. How Many New RFID Patents?
the patent publication rate is accelerating
Sourland
Mountain
Associates
Number of Patents per year
600
500
400
300
200
100
0
1965
1970
1975
1980
1985
1990
1995
2000
2005
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

3. Sourland
Mountain
Associates
13,532
How Many RFID Patents?
Patents in RFID Word Search
7,600
Patents in Delphion Search
4,289
Patents in High-Impact RFID Database
550
15,000
New RFID per year
Rough Estimate of RFID Patents in 2013
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

4. Sourland
Mountain
Associates
Where are the RFID Patents Going?
Belgium
Greece
Israel
Lithuania
Norway
Romania
South Africa
United States
Hong Kong
Netherlands
Sweden
Singapore
Austria
New Zealand
Mexico
Korea
Europe
United Kingdom
Germany
Taiwan
China
Canada
Australia
Brazil
China
Japan
Australia
Canada
Germany
United States
Europe
United Kingdom
Japan
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

5. RFID Patent Classifications
Sourland
Mountain
Associates
•
Tag Chip
–
–
–
•
Tag Structure
–
–
–
•
low-noise transmitters & receivers
Data
Systems
–
–
–
•
anti-collision protocols
wireless data transport
security
Reader
–
•
readers & tags
impedance transformation & resonance
Protocols
–
–
–
•
chip packaging
batteries & energy storage
manufacturing
Antennas
–
–
•
memory
frequency synchronization
power extraction, regulation & management
exotic reader/tag combinations
range & location sensing
testing
Applications
–
–
–
libraries
retail
security
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

6. Sourland
Mountain
Associates
Technical Quality Ratings
A The most significant blocking RFID patents. They usually include a
breakthrough technical specification and will be extremely difficult or
impossible to work around.
B Important patents with key technical innovation that appear to be
difficult to work around when designing certain RFID products.
C Useful patents with significant technical innovation but narrower
scope. While they have technical merit, there are alternative
solutions that could be implemented if necessary.
D Secondary patents that -- while perhaps useful for some special
products -- appear only marginally useful in mainstream RFID
applications.
All quality ratings assume that the patents will withstand invalidity challenges.
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

7. Sourland
Mountain
Associates
Patent Ownership Summary
Company
A-Patents
Intermec
7
Checkpoint
1
Motorola
3
Micron
1
Avid
2
Lucent
1
BTG
-TI
1
Sarnoff
1
3M
1
Alien
1
Marconi
-Northrup
-Tadiran
1
Tek
1
U of Pittsburgh
1
Others
--
B-Patents
13
8
5
5
2
3
3
-1
--2
2
---20
C-Patents
9
10
6
7
-2
2
2
---1
1
---25
Total
23%
10%
10%
7%
5%
5%
3%
2%
2%
2%
2%
2%
2%
2%
2%
2%
19%
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

8. Why We Need A Patent Pool
Sourland
Mountain
Associates
the whirling wheel of death
• RFID Patent Assignment
by Company
• 71 Companies or more
• Each own 15 or more
RFID Patents
• Without as pool,
thousands of individual
licenses would have to be
negotiated and signed to
resolve patent
infringement issues
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

9. Standard Individual Licensing Models
Sourland
Mountain
Associates
Licensee
Licensee
Patent
Owner
-------Essential
Patent
Licensee
Licensee
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

10. Sourland
Mountain
Associates
Patent Licensing & Standards
Standard or technical specification
Licensee
---------------
Patent
Owner
Essential
Patent
Licensee
Patent
Owner
---------------
Essential
Patent
Licensee
---------------
Patent
Owner
Essential
Patent
Licensee
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

11. Sourland
Mountain
Associates
Licensing Through a Patent Pool
Essential
Patent
Pool License
Essential
Patent
License
Administrator
Licensee
Essential
Patent
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

12. Ostrich Society
Sourland
Mountain
Associates
. . . if I don’t look . . . I can’t see it . . . and therefore it must not exist . . .
Denial
Primary Premise:
There are no infringed patents.
Secondary Premise:
If there are,
then they must all be invalid.
Reality
Any successful RFID tag will infringe dozens of valid RFID patents.
- chip patents
- tag structure patents
- antenna design patents
- protocol patent
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

13. Flat Earth Society
Sourland
Mountain
Associates
. . . this is my patent . . . therefore it must be at the center of the universe . . .
• Patent Owners
– Know the value of their own patents,
but very little about other people’s patents
– Overestimate relative value of their patents
– Underestimate value of other patents
• Reality
– No one controls more than a tiny fraction
of the 15,000 RFID patents covering tags, readers, software, and applications
– Commercialization requires freedom to practice in all areas – not just yours
– Unlike the IP-dominated drug & art industries,
IP revenues are limited in RFID-related industries like semiconductors and displays
– Based on related industries, the RFID industry cannot sustain IP costs of more than
20% of profits or 10% of sales
– No one patent holder can claim more than a tiny part of that – perhaps 0.02 - 0.5% of sales
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13

14. Sourland
Mountain
Associates
•
Summary & Options
Currently
– Patent owners are offered nothing
– Owners are left with unreasonable expectations & no money
– Result: lawyers get rich
• 270 different vendors, 20 major patent owners, 15,000 patents
• Testing these patents in court is costing millions of dollars per patent
• Uncertainty is delaying manufacturing & adoption by users
– All RFID manufacturers & users are equally exposed
– All litigation and licensing costs will be passed on to users
•
Product and interface specifications make little difference
– Patent problems mostly unrelated to any particular specification
– Specification changes are unlikely to alter the legal outcome
significantly
•
•
Out-of-Court settlement via patent pools offer a solution
RFID Databases are available to help access risk & guide
acquisitions
MIT Enterprise Forum / RFID/NFC Circle Event, What to do about all the Patent Litigation? Roger Stewart 10/21/13