Rory Crump
Jul 29, 2012

Even trucks and trailers can’t dodge patent suits

The infringing PINC Yard Hound system tracks trailers in large yards using RFID tags.Based on recent patent infringement filings in the District Court of Delaware, trucking yards must be the next cradle of innovation. Mobile Logistics LLC, a faceless NPE, launched a sweeping attack on a notable mix of companies employing PINC Solution’s Yard Hound management system. Aimed at Fortune 500 companies operating in the retail, manufacturing, logistics and transportation sectors, Yard Hound is a real-time location system (RTLS) used to monitor and locate trailers stored in large truck yards mapped across a company supply chain. The NPE strategy is familiar, and the complaint is vague, but yard management must be the new patent battleground placing North America’s entire supply chain at risk. Or is it?

At this point, Mobile Logistics is calling out Yard Hound customers -- not the supplier-- as the alleged parties infringing on patent 5,999,091, entitled “Trailer Communication System,” originally issued to HighwayMaster Communications in 1999. Mobile Logistics does not appear to have commercial aspirations for ‘091 or meaningful ties to the technologies and applications in question.

Multiple suits were filed using similar language, referencing two points of contention directed at heavyweights Nestle USA, Kraft Foods Global and Kimberly-Clark. According to Mobile Logistics, all past users of the Yard Hound system. Each suit follows the same argument, making the same claims. The Mobile Logistics complaint first identifies Radio Frequency Identification (RFID) tag units, then PINC’s Yard Hound product, or “one infringing system.”FedEx is also being sued for infringing on the Mobile Logistics patent.

For example, in the suit filed against Kimberly-Clarke, Mobile Logistics claims infringement on the ‘091 patent regarding “RFID tag units for location on a trailer.” And furthers its claims on the use of the PINC Yard Hound system, “which includes tags for location on a trailer.” Paragraph 12 of the complaint summarizes the NPE’s hardship with a nebulous plea for justice. “Because of Defendant’s infringement of the ‘091 patent, Mobile Logistics has suffered damages and will continue to suffer damages in the future.”

So the question begs whether patent ‘091 is novel or embedded deep enough in PINC’s Yard Hound system to warrant a favorable ruling. ‘091 does propose a system for tracking trucks and trailers, with tag units and reader units communicating information in response to a predetermined event. The tag unit described could be active or inactive. Memory, processor, transmitter and event detector, it’s all there in one package and filed in 1997. But not a configuration we would label interactive, dynamic or truly automated in today’s Yard Hound terms.

And any mention of RFID -- a ubiquitous technology tagging anything from cattle to library books – seems radical. After all, Charles Walton was issued the first RFID patent and is widely considered the father of modern RFID technology. Patents do expire and ideas morph, but Mobile Logistics must be banking on language hidden deep in ‘091. Or maybe a heightened observation of the patent’s utility coupled with a loose interpretation of the application. Or maybe just a quick settlement. ‘091 would seem obvious given the proliferation and adoption of both RFID and GPS technologies.

In practice, RFID tag units are just one component of the Yard Hound system, considered advanced yard management technology by end users, and industry standards. Yard Hound is web-based with GPS enabled readers communicating data in real time to yard managers and trailer owners. And the system design includes passive RFID tags as a standard feature - no batteries or regular maintenance. The combination of GPS and passive RFID devices is the real cost saver and, in this case, product differentiator.

According to Yard Hound procedure, trailers are tagged when entering a yard. While trucks, gates and guard posts are equipped with readers for tracking purposes. The RTLS concept requires automation, collaboration, and leverages lean logistics to enable a more visible supply chain. Unlike patent ‘091, Yard Hound is the latest thing.

And PINC Solutions does innovate. Not only promoting their RTLS system as patented technology, but also being recognized for supplying a leading-edge platform to advanced supply chains. For the record, the California company holds three patents in position-tracking technologies – none issued before 2007.

So as a benchmark, Yard Hound is revered as a state-of-the-art solution for the transportation and logistics industries. This year, Gartner, the global giant of tech information, recognized PINC Solutions as a “Cool Vendor” for supply chain management. And Inbound Logistics magazine cited PINC as a Top 100 logistics IT provider. In a maturing field, PINC’s accolades, customer list and overall hot streak magnify Yard Hound’s reputation as a game-changing product.

It also makes PINC a target. Or, in this case, Yard Hound and the RFID tag unit inherent in the system are making PINC’s customers a target.

Going after the user instead of the maker is nothing new in RFID patent litigation. And much of the industry haggling has been about passive UHF EPC Gen 2 technology - both core to existing PINC RFID tags and an attractive feature of the Yard Hound system. Meanwhile, trolls just trying to make a buck ambush trophy customers like Kraft and Kimberly-Clark, two big players with deep pockets, just trying to move trucks from A to B.

This newer paradigm for infringement cases is predictable. And a RFID market no longer in its infancy and making money is subject to abuse, especially on the customer end. Assuming a claim is legitimate, theory suggests end users, based on sheer numbers and scale, can do more harm to the patent holder than one supplier.

Yet NPEs have no plans to develop a patent into a viable product. There’s the rub.

After NPEs file in a sympathetic court and legal pressure mounts, end users may be more likely to settle or accept a license rather than battle a lengthy suit. It’s the shakedown even trucking yards can’t escape. So now indemnification becomes a factor when investing in new technology. Fortunately, beyond the swashbuckling and patent reform debates, the hope is market forces will prevail. Proving RFID adoption and subsequent ROIs will negate, or at least cushion, the impact of patent trolling.

Whether ‘091 claims are bogus will be decided in or out of a Delaware court. This may not be Apple vs. Samsung. And it is a different game because end users don’t stockpile yard management patents as a business strategy. But we may never look at trucking yards - with miles of concrete stacked with lifeless trailers - the same again.