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Lawsuits against Macy’s, JCP and others are unlikely to derail deployments in 2012

Recent lawsuits brought against Macy’s, JC Penney and other retailers for utilizing RFID technology are unlikely to slow the pace of retail deployments in 2012. That is the opinion of several industry executives, most of whom chose not to speak publicly on the subject.

At the most, the suits brought by Round Rock Research LLC are likely to serve as a minor annoyance for retailers and brand owners. Industry deployment, which is expected to skyrocket in 2012, should not be impacted, although some retailers may opt to stay in stealth mode longer until the suits are settled or dismissed.

“The rate of adoption will only increase, particularly with Walmart, JC Penney and Macy’s formally announcing their RFID programs,” says Patrick Javick, vice president of Industry Engagement at GS1 US. He added that the participation of those three retailers will make the adoption curve much stronger.

In October, Javick told RFID 24-7 that “there is a lot of activity that we know about that we are just not authorized to speak about. The interest in apparel from other countries has skyrocketed.”

Round Rock Research LLC, the holder of several RFID patents, recently filed the lawsuits in a Delaware federal court against Macy’s, Gap, J.C. Penney, American Apparel and others over the alleged infringement of patents belonging to Round Rock. According to Washington DC law firm Arent Fox, Round Rock filed the suits in late December after growing tired of the slow pace of licensing talks with the retailers.

Jim Sluzewski, senior vice president of corporate communications and external affairs at Macy’s, said that the company does not comment on litigation.

One industry insider employed by a global provider of RFID hardware solutions said that his company is taking steps to double check that its patents – and those owned by the suppliers and integrators that the company works with – are locked down. “It’s forcing us to double check that everything is in order with our patents and our partners patents,” he said.

Some refer to the suits as “patent trolling,” a shakedown-like practice where attorneys bring suits against companies with the hope of settling for less than the cost of defending the suit.

Round Rock Research acquired a portfolio of 4,500 patents from Micron Technology in 2010, including many RFID patents. Round Rock was founded by John Desmarais, a patent attorney who won a $1.5 billion verdict for Alcatel-Lucent against Microsoft in 2007.

In June 2010, research and consulting company TechIPm, LLC — noting the purchase of RFID patents from Micron — predicted on its web site that a major patent lawsuit could occur once the highly fragmented RFID market matured and money making products appeared in the market. Today, that is clearly the case. TechIPm, LLC specializes in technology and intellectual property mining.

According to an article in the Daily Business Review, PepsiCo, J.C. Penney, Hanesbrands, The Gap, Fruit of the Loom, Dole Food Co., American Apparel, Macy’s, and V.F. Corp. (owner of Wrangler, Lee, and Nautica) have been targeted by Round Rock. The defendants allegedly infringed five patents held by Round Rock relating to RFID.

In an email published by the Daily Business Review, Desmarais said that “We are in discussions with many other companies using RFID equipment and systems. Most are substantively engaged in license negotiations and therefore are not part of these actions. We believe we have one the largest, if not the largest, RFID patent portfolios.”

The following is an excerpt from the story posted by Arent Fox.

Round Rock, founded by patent attorney John Desmarais, is a patent-licensing company that has acquired a patent portfolio consisting of several thousand issued patents and pending applications through the United States, Europe, and Asia. In the nine complaints that it filed in the US District Court for the District of Delaware, Round Rock cites the same five patents—Patent Numbers 5,500,650, 5,627,544, 5,974,078, 6,459,726, and RE41,531—which cover communications methods or RFID. Although the complaints differ in some ways, such as allegations of notice through letters sent to certain defendants by Round Rock, each claims that a given defendant has infringed Round Rock’s patents by making, using, selling, or importing products or systems that consist of or include ultra high frequency RFID tags and readers. Likewise, Round Rock has consistently asked the court to declare that a defendant’s infringement is “willful” and to award unspecified damages, attorneys’ fees, and expenses incurred in litigation.

 

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