Thursday, February 10, 2005

Mobile Commerce......Judgment Time?

A landmark case could be resolved this month and may set a precedent for how the physical world gets connected to the electronic one, or how it affects Internet Phase 2.

The idea of a barcode or an RFID tag being connected to the Internet through a mobile device was beyond comprehension in the States, until Virgin Mega Stores started to do this in their stores. In any Virgin music store you can take a CD or Video, scan the barcode, and up comes the contents of the CD and or video.

In the past, barcodes were scanned within a store and information was fed back from the store’s own internal network. The Virgin process allows a barcode to be scanned and information to be accessed outside the internal network. There are patents that allow this external access.

This intellectual property has been validated by contract, but has never been validated by the courts. The following lawsuit, I believe, is the first lawsuit involving the barcode/RFID tag being connected to the Internet via a mobile device.

Mobile commerce will include a cell phone, a PDA , a camera phone and any mobile computing device. This lawsuit could set a precedent and be a very key point in the development of mobile commerce.

The suit involves Virgin Entertainment Group.

Virgin Entertainment Group, Inc., et al., No. 04 C 00021. Subject: Complaint alleging infringement of plaintiff’s patents for automatically accessing remote web sites through use of secure machine-readable codes

The patent number 6,199,048 a system and method for automatic access of a remote computer over a network

The patents-in-suit generally relate to systems that allow users to scan or enter a machine -readable indicia, such as a barcode, ISGN number, EAN code, RFID tag, etc. Said indicia located on an article of commerce, such as a CD, DVD or computer game, allowing access to product information, such as music, movie previews, album and video cover art, notes and reviews about that particular item.

Now that barcodes can be connected to the Internet, how will this affect barcode related companies?

This use of the barcode is completely different from what Symbol Technologies has been doing with their barcode reading devices all these years. Symbol Technologies is considered the pioneer of barcode reading devices. Up until now, the information extracted from a barcode came from within a closed network.

Do you think Symbol will be keeping a close eye on this case?

Not because it involves just the barcode, but because a RFID tag is also considered a machine- readable identifier.

Do you think this is why Symbol took the necessary step years ago to insure if a barcode is connected to the Internet, they would be covered by licensing this technology?

If any company recognizes the threat they face when RFID tags replace barcodes, it would be Symbol.

A former Symbol VP, Rob Durst, was one of the inventors of this patent that allows the barcode, and RFID tag, to be connected to the Internet. Symbol does not own this intellectual property.

That, in my opinion, is why Symbol took the necessary steps years ago to license this technology.

Think of how many barcode reading machines are out there that will eventually have to be able to read RFID tags. Every supermarket, retail store, and warehouse has a barcode reading device.
Every one of these will have to be retrofitted or replaced in order to meet this transformation.

Will every device that scans a barcode, or an RFID tag, and extracts information have to be licensed under this intellectual property? The answer to this question rests with the court.

Symbol knows that the RFID tag will replace the barcode eventually. It may take years, but it WILL happen. Symbol recognizes that the RFID tag is really just a barcode with much more memory and an Internet address.

Is that why Symbol bought Matrics, an RFID card maker for $230m?
Is Symbol trying to continue their dominance in supply chain space?

What happens AFTER the identifier is scanned… is the real story here.

Will the court’s ruling encompass an RFID tag?

This landmark case could be resolved this month and may set precedence.

How will the court rule…?

What are your comments or thoughts?


Anonymous said...

Interesting read, vangorilla. the question i have is, if the patents are upheld, either implicitly through a settlement or directly through a judge's ruling (which seems less likely at this point), how could one even BEGIN to estimate the value of the company in question? How could it NOT be one of the biggest growth/explosion stories in the history of american stocks?

Mike McConnell said...
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Mike McConnell said...
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Anonymous said...

Exactly. We have more (or will very soon) web-enabled cell phones than PC at home. People carry their cell phones (smart phones) almost everywhere and that's where advertising on that 2inch by 2inch screen becomes prime real-estate. And now that 3G infrastructure is being set up, and faster chips (e.g. PXa27x) and faster downloads, who can put a price tag on that when it comes down to pure revenue and profits?

Nobody knew that Google would be worth 100 billion dollars 5 years ago with the ad market.

I dare anybody to try and guess what a company would be worth that allow the utilization of web-enabled cell phones with the physical world to internet connection where advertising is concerned. I dare ya. I double DOG dare ya!

Just like the famed physicist Richard Feyman's "There's plenty of room at the bottom." But thing is, who is going to get the biggest pie?


Anonymous said...