RFID Experiences Important Growth And Regulatory Attention

Saturday, January 1, 2005 - 01:00

Radio frequency identification ("RFID") devices - small microchips with antennas that can be affixed to movable goods for identification and tracking - have attracted considerable attention over the past year. Even though the technology has been in use for decades, recent advances in microchip technology coupled with the need to improve homeland security have brought the technology to the fore.

RFID technology not only replaces conventional barcode technology, but it also provides a number of enhanced features. In contrast to barcodes, RFID can track objects that are difficult (or impossible) to count or handle individually. Also unlike barcodes, RFID does not require line-of-sight scanning and does away with bulky and costly optical readers. The technology is especially helpful where there are lots of items that may be in motion.

RFID technology's ability to assign unique identification codes to the same product is another notable advantage over barcodes. That is, a can of peas shipped to Anchorage, Alaska, can be instantly distinguished from a can of peas purchased in Arlington, Virginia. What's more, RFID not only allows data to be read from the RFID device, or "tag," but it also allows data to be written to memory that resides in the tag. Thus, the technology can track products with enhanced speed and precision.

In addition, RFID devices are not easily duplicated and can be hidden either for aesthetic or security reasons. For example, RFID tags can be embedded inside a product, sewn into clothing, or sandwiched between a banknote's paper layers.

The Emergence Of Privacy Concerns

The stealthy nature of RFID devices raises concerns that common products will be tracked beyond the intended use of manufacturers and retailers. The primary concern is that if RFID tags were to remain active after consumers complete their purchases and exit stores, they could be used by advertising firms for directed selling or, worse, by security organizations to monitor individuals covertly.

Indeed, RFID triggers many of the same privacy concerns as other technology in common use today such as cell phones, credit cards, and the Internet. As with these other technologies, the critical issues are: (i) what data are collected; (ii) who maintains the data; and (iii) who has access to the data. Despite the obvious potential for misuse, many experts believe that the advantages of RFID technology can be realized while simultaneously addressing privacy concerns.

With regard to product tracking, privacy advocates are calling for consumers to be able to turn off RFID monitoring capabilities and are pushing for means to restrict access to personal information. EPCglobal, a non-profit international standards body enacting industry-driven standards for the Electronic Product Code ("EPC") Network, is developing a uniform and worldwide RFID usage code of conduct. Developers of the code of conduct believe that consumers should be able to disable the tags if RFID technology is ever able to track consumers' movements and behavior.

The Promise Of The Technology

RFID devices with enhanced storage capabilities that cost pennies to produce are now a reality. The technology is expected to revolutionize the retail industry through inventory control enhancements and theft reduction.

The related benefits to homeland security also have been highlighted. The benefits of a technology that can track products crossing U.S. borders with enhanced speed and accuracy cannot be understated. Each day more than $1 billion in goods pass through our borders.

Beyond the tracking of goods, there is a new suite of RFID "sensors" that can link the digitally networked environment to the physical world. Several examples follow:

Physical Parameters. RFID technology can be used to monitor a host of physical parameters, such as temperature and movement. For example, certain foods, such as chicken, become especially hazardous if they are not properly refrigerated. RFID temperature sensors can alert retailers and consumers when the consumption of certain food items may be harmful. Also, RFID motion sensors can be used to monitor excessive vibration or impact when products are being transported or moved in a warehouse or retail location.

Product Tampering. The technology allows automatic tamper checking of products, such as over-the-counter drugs, reducing or even eliminating the need for careful inspection by retailers. Monitoring product integrity from factory to store shelves allows retailers to determine the location of criminal activity when tampering is detected.

Anti-terrorism. RFID sensors can minimize the danger of exposure to chemical, biological, or radioactive agentsÑmany of which are invisible and odorless. More importantly, the technology can be used to identify potential terrorist activity before it occurs by facilitating the identification and tracking of containers entering the United States.

Medical Applications. RFID sensors can be used to allow older people to live on their own for longer. Pill bottle sensors could be used to remind a person to take their medication. Clothing sensors can be used to determine whether a person is dressed and ready to go to the store or for a walk. RFID sensors also can be used for noninvasive medical monitoring. They can be placed inside a patient's body during a single procedure and be interrogated by a doctor during follow-on visits to obtain status reports.

RFID Systems

An RFID system includes a tag, typically mounted on a product, and a radiofrequency reader that sends signals to probe the tag for information. There are two types of RFID tags, "passive" tags and "active" tags. Passive tags (such as anti-theft devices on clothing) use the signal power received from the reader to re-radiate a signal. Active tags (such as cargo container security devices) are self-powered, usually with a battery. Passive units are more common in consumer applications because they cost less to make, require no maintenance, and can be made much smaller because they require no battery.

RFID systems have been used for years to track livestock and products in transport. Today, many automobile manufacturers deploy the technology in ignition keys as the basis for a vehicle immobilizer system. Some countries use the technology in currency to thwart counterfeiting.

Retail giant Wal-Mart is moving ahead with RFID technology, mandating its top one hundred suppliers to begin using the technology for shipments beginning in January 2005. The United States Department of Defense has likewise ordered its suppliers to begin using RFID by that time.

Recent FCC Activity

Earlier this year, the Federal Communications Commission ("FCC") issued new rules that enhance certain RFID operations. The new rules, which provide for increased transmission duration at 433 MHz, were limited to commercial shipping containers in ports, rail terminals, and warehouses. While this restriction was ostensibly applied to limit the risk of interference to other wireless devices that operate near 433 MHz (such as garage door openers), it also served to allay privacy concerns. The 433 MHz frequency band is available for unlicensed operation in many other countries and will allow manufacturers to produce one RFID model that can be deployed overseas.

Last year, the FCC also revised its Part 15 rules to bring U.S. regulations that govern operation of RFID tags at 13.56 MHz into line with those commonly found in Canada, Europe, Australia, and parts of Asia. This rule change also will facilitate the use of common tags and readers throughout much of the world. Tags operating at this frequency are often employed in item identification and in security badges worn by persons. As with the Commission's efforts involving 433 MHz RFID operations, Wiley Rein & Fielding played a key role in advocating for changes to the 13.56 MHz regulations.

The vast majority of RFID systems operate in unlicensed spectrum under Part 15 of the FCC rules, but licensed options are available, particularly for certain higher powered systems that operate near 915 MHz. Aside from the 13.56 and 433 MHz bands, the 2.45 GHz band also offers international opportunities.

Future Policymaking

The FCC is planning further activity in this area. In October 2004, the Commission held an RFID workshop where industry experts presented the capabilities of their systems and identified key regulatory impediments to future opportunities and growth. Commission attendees of the workshop said the agency would use the information provided by industry as it contemplates further revisions to the rules.

Congress is also keeping an eye on RFID developments. In August 2004, Senator Bill Nelson sent letters to the FCC and Federal Trade Commission ("FTC") Chairpersons asking the agencies how they plan to address the privacy concerns raised by RFID technology. Senator Nelson specifically inquired into whether the agencies compile statistics on which companies use the technology and whether they are aware of any privacy abuses.

The growing nexus between technical regulatory issues affecting RFID and privacy regulation promises to make the deployment of RFID a challenge both for technology developers and those looking to use the technology. Wiley Rein & Fielding has represented clients in matters involving RFID since 1988 and remains actively engaged with this rapidly developing technology and related government activity on both the legislative and regulatory fronts.

David Hilliard represents clients on a wide variety of matters before the Federal Communications Commission including wireless technology, mobile radio operations and mass media issues. He also represents clients before the Consumer Products Safety Commission in matters involving electrical products including battery powered devices. He can be reached at ( 202) 719-7058 . John Kuzin has had extensive experience in a broad range of Federal Communications Commission matters and frequently litigates cases relating to patent infringement, software licensing agreements, technology transfer and hardware/software integration. He can be reached at (202) 719-3506.

Please email the authors at dhilliard@wrf.com or jkuzin@wrf.com, with questions about this article.