RFID Law Journal

2007-03-16T15:32:00.000-07:00

Steps Toward a Policy Framework for RFID in Europe

RFID Law Journal
Newsletter No. 44
March 16, 2007

The Commission of the European Communities announced its much anticipated communication on steps toward a policy framework for radio frequency identification in Europe. You can read the complete file at the following link:

http://ec.europa.eu/information_society/policy/rfid/doc/rfid_en.pdf

In its view, RFID is a “gateway to a new phase of development of the Information Society.” The Commission recognized that the phase of wide commercial and public sector deployment is approaching, and with such wider usage, it felt obligated to examine the legal framework under which RFID takes place to ensure safeguards for fundamental “values, health, data protection and privacy.” As a result, the Commission carried on a public dialogue during 2006 with early adopters and concerned citizens with respect to its tracking applications. The goal is taking in the perceived large social benefits of RFID while simultaneously incorporating privacy, health and environmental safeguards.

The Commission noted that Europeans are leading the way with innovative applications of RFID, smart sensors and RFID-enabled actuators and intelligent networks, and it is generally believed that RFID could “further strengthen the role of information and communication technologies in driving innovation and promoting economic growth.” According to the Commission, while the European market for RFID systems is growing at approximately 45% annually, it is lagging a global growth rate close to 60%.

One of the major factors holding back growth is the absence of a “clear and predictable legal and policy framework” making this new technology “acceptable to users,” including clarity on ethical implications, privacy and security protection, governance of RFID identity databases, the availability of radio spectrum, harmonized international standards and concerns over health and environmental implications. The Commission launched a wide public consultation to address these issues in 2006 with thousands of participants contributing to the study. During the study phase, the Commission noted emergence of concerns over privacy and data protection, finding that “RFID will only be able to deliver its numerous economic and societal benefits if effective guarantees are in place on data protection, privacy and the associated ethical dimensions that lie at the heart of the debate on the public acceptance of RFID.” The Commission noted that EC’s strong tradition in support of data protection (the regulations are substantially more stringent than US regulations). Indeed, the Data Protection Directive is broad, and in the view of the Commission, applicable to all technologies, including RFID.

The Commission noted that a “one-size fits all” approach to RFID would not be appropriate, given that security and privacy risks depend, in large part, upon the nature of the RFID application. A CBA of specific security and privacy-related risks prior to selection of RFID systems and deployment of applications is necessary according to the Commission. In view of limited information available to the public at this stage of deployment, the Commission felt that awareness and information campaigns would be an important part of RFID policy response.

The Commission noted that most respondents were concerned that the registration and naming of identities in the “Internet of Things” be interoperable, open and non-discriminatory, and it believes that the policy principles developed in the context of the World Summit on the Information Society will be relevant to the emerging policy debate.

Easy mobility and low costs of RFID systems depend, in part, upon the availability of radio spectrum and harmonization of spectrum usage conditions. The Commission opined that the allocation of RFID frequencies in the UHF band will be sufficient for the purposes of the next 3-10 years, but noted that it will be necessary to monitor demand as usage of RFID increases.

The Commission discusses both environmental and health impacts implied by widespread usage of RFID. Noting that the electromagnetic fields related to RFID applications are generally low in power, the Commission stated that “exposure of the general public and workers to RFID-related EMF is expected to be well below the current standard limits.”

Over the coming two years, the Commission is expected to continue to analyze the options and respond to concerns expressed by stakeholders. The Commission will work with the US and Asian counterparts to strive toward global interoperability on the basis of “open, fair and transparent” international standards.

The Commission advocates “security and privacy-by-design,” i.e., privacy and security built into systems prior to their widespread deployment. The Commission supports the development of codes of conduct and best practices by experts representing all stakeholders along the lines of the strategy for a Secure Information Society set out in COM (2006) 251. By year-end, the Commission is expected to establish principles for public authorities and other stakeholders applying to RFID usage.

The Commission aims to further stimulate research on the security of RFID systems and privacy-enhancing technologies. In view of the limited experience with the technology, the Commission indicated that it is necessary to carry out in-depth overall evaluations of RFID implementation through large-scale pilots in specific application domains as a precursor to widespread adoption. The Commission also recognized the importance of standardization within Europe and the maintenance of a dialogue with counterparts in US, China, Korea and Japan to ensure cooperation on standards on applications such as the security of containers, counterfeiting, air transportation and pharmaceutical goods. By the end of 2008, the Commission expects to publish a Communication analyzing the nature and effect of developments, in particular with respect to privacy, trust and governance, and at such time, will assess whether it is necessary to propose further legislative steps to safeguard data protection, privacy and other policy issues.

While one could construe the Commission’s statement as a relaxed, wait-and-see approach supportive of RFID adoption (See RFID Update “EU Opts for Hands-Off Approach to RFID Regulation”- http://www.rfidupdate.com/articles/index.php?id=1319),
it is worth noting that the Commission has expressly reserved (and called for) assessment following further experience with the technology. Just like their American counterparts who must actively engage in the dialogue over data protection, privacy and other societal concerns with state (and federal) legislatures and educate the public about RFID, European stakeholders must vigilantly educate their public about the technology and its applications and take steps to proactively address privacy, data protection and other safeguards to ensure that the “helping hand” of government doesn’t hamper the rollout of RFID.

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com.

You may not rely upon any material provided herein as legal, financial or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-02-27T14:02:00.000-08:00

RFID - Don’t Fold Up Your Tent

RFID Law Journal
Newsletter No. 43
February 27, 2007

Kudos to Bill Hardgrave, Ph.D., Director of RFID Research Center, University of Arkansas, for publishing a rebuttal to The Wall Street Journal’s recent article entitled “Wal-Mart’s Radio Tracked Inventory Hits Static” (February 15, 2007) in a special edition to the RFID Product News published on February 23, 2007. You can access Dr. Hardgrave’s article through the following link provided by RFID Product News:

http://www.rfidproductnews.com/reader/spe01/articles/index.php#one

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/.
You may not rely upon any material provided herein as legal, financial or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-02-27T13:38:00.000-08:00

Border Tracking Efforts Abandoned

RFID Law Journal
Newsletter No. 42
February 27, 2007

Earlier this month, the Department of Homeland Security (DHS) abandoned its substantial effort to deploy RFID in connection with its US VISIT program based upon, among other things, inadequate read rates and the inability of the system to tie back the data with the individual carrying the tagged travel document.

The RFID application envisioned embedding a tag within the I-94 travel document, aiming to facilitate secure border entry/exit by foreign nationals. However, during the course of a 15 month study, it was found that the biometric identity-matching capability envisioned within the entry/exit security system was ineffective because the I-94 form couldn’t be physically tied to individuals. The GAO also cited examples of poor read rates at five ports of entry tested as part of the US VISIT program.

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com.
You may not rely upon any material provided herein as legal, financial or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-02-27T13:36:00.000-08:00

Final “Interim” DoD RFID Rule

RFID Law Journal
Newsletter No. 41
February 27, 2007

Effective as of February 12, 2007, the Department of Defense’s interim RFID rule, which had initially been proposed on May 19, 2006, became final, effectively extending its passive RFID tagging rules to additional classes of commodities as well as expanding from two U.S. depot locations to most locations in the 48 contiguous states. Our readers can access these rules and related comments at the following link:

http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/E7-2209.htm

It should be noted that this latest iteration of the rules is merely finalization of an “interim” rule, and in the spring of 2007, it is expected that a new set of even more expansive rules will likely be put into effect as the Department of Defense rolls into the third – and final – year of its three year deployment effort. Now that the Department of Defense has, indeed, wired its U.S. depots, and has contracted for the wiring of its OCONUS depots, it is expected that the DoD will be administering ever more stringent requirements on its suppliers as it seeks to realize cost efficiencies with trading partners across its supply chain.

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com.
You may not rely upon any material provided herein as legal, financial or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-01-31T08:13:00.001-08:00

Benchmarking the National Animal Identification System

RFID Law Journal
Newsletter No. 40
January 31, 2007

The USDA is openly benchmarking its success in registering premises under the NAIS. Readers can note the progress of this program at this link to the USDA website: http://animalid.aphis.usda.gov/nais/premises_id/update.shtml. According to the statistical data set forth on the USDA website, 24.6% (i.e., 353,504) of the nation’s estimated 1.4 million livestock farms were registered in the National Animal Identification System as of January 29, 2007. The USDA defines a livestock farm as premises with more than $1,000 in annual income, and the total number of livestock farms is based upon an estimate of the National Agricultural Statistical Survey. The data counts premises with more than one species only one time. Wisconsin and Idaho represent the leadership in premises registration, with substantially all premises registered, and as of January, 2007, a majority of the livestock farms located in Indiana, Michigan, New York, North Dakota, Pennsylvania and Utah have registered themselves in the NAIS.

Some of the basic guidelines for registration can be found at the USDA’s website: http://animalid.aphis.usda.gov/nais/premises_id/index.shtml. The registration is free, and at present, it does not require participation in the other two components of NAIS – animal identification and animal tracking.

Since our last publication on the NAIS, the USDA updated its website. You can locate baseline information on animal tracing at this USDA link: http://animalid.aphis.usda.gov/nais/animal_track/index.shtml. Our readers can also find out more about animal identification at this USDA link: http://animalid.aphis.usda.gov/nais/animal_id/index.shtml. The USDA has formed working groups for different species and identified working group leaders, enabling information sharing, etc. Readers are invited to learn more about these working groups at this USDA link:
http://animalid.aphis.usda.gov/nais/species_work_groups/index.shtml.

In late January, 2007, the USDA also announced its endorsement of industry- recommended international standards for animal identification technologies. The USDA endorse the use of ISO 11784 and 11785, which would establish RFID technology standards for producers and service providers electing to use Radio Frequency Identification technology in NAIS. This will facilitate use of one reader to scan all Animal Identification Number (AIN) tags. However, the USDA is not requiring the use of RFID tags or implants. That decision is left to owners. It is also clear the USDA will continue reviewing other technology options over the horizon.
The USDA’s press release can be located through the following link: http://animalid.aphis.usda.gov/nais/naislibrary/documents/announcements/StakholderAnnouncement1_17_07.pdf.

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal, financial or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-01-23T19:31:00.000-08:00

Air Travel Rules for Western Hemisphere Travelers

RFID Law Journal
Newsletter No. 38
January 23, 2007

This is a short follow-up article to our Newsletter No. 37 (January 22, 2007). The Department of Homeland Security has released its official press release with respect to the new rules for air travel into the U.S. which became effective today. Initial signs suggest that most air travelers arriving in the US were aware of the new rules and came equipped with their travel documents.

You can read the DHS press release through this link:

http://www.dhs.gov/xnews/releases/pr_1169569034747.shtm

© 2007 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-01-22T07:59:00.000-08:00

New Rules Kick-in for Western Hemisphere Travel

RFID Law Journal
Newsletter No. 37
January 22, 2007

On Tuesday January 23, 2007, Canadian, Mexican and Bermuda citizens traveling by air, along with U.S. citizens, into the U.S. must, subject to few exceptions, provide border officials with a passport to gain entrance into the United States. This rule will bring our North American neighbors under the same rules applicable to all other worldwide travelers. In January, 2008 and June, 2009, the rules will expand to include land and sea entry, with the potential of clogging the borders.

Up until now, these Western Hemisphere neighbors typically were required only to display a birth certificate or driver’s license to gain entry into the U.S., but these more stringent rules were implemented following recommendations by the 9/11 Commission. The exception is the NEXUS Air card issued to frequent travelers and active members of the U.S. military. DHS is also considering the PASS Card as an alternative to the passport. A PASS Card is significantly less expensive than a passport, but it wouldn’t be accepted for other worldwide travel.

The new rule isn’t expected to materially impact business travelers, who usually carry a passport, but there is some concern that it could disrupt travel among ‘snow birds’ (e.g., the tens of thousands of Canadians who visit Florida and other sunny destinations each winter). It’s plausible that some jurisdictions, such as Puerto Rico and the U.S. Virgin Islands, will enjoy an incremental windfall because they’re exempted from the new rules.

While it’s certainly possible that the new rules may deter travel among some travelers, it could cause more American citizens over the longer term to procure and hold passports. At present, only 73 million citizens hold valid passports. If the supposition is correct, then the new rules will, in part, further enable e-passport deployment over the long haul.

You are invited to learn more at the State Department’s link:
http://travel.state.gov/travel/cbpmc/cbpmc_2223.html.

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2007-01-07T19:47:00.000-08:00

2007 Kick off – FDA Provides Draft Guidance for Industry & FDA Staff: RF Wireless Technology in Medical Devices

RFID Law Journal
Newsletter No. 36
January 7, 2007

On January 3rd, the FDA released for public comment purposes only a draft document on radio frequency wireless technology in medical devices. The FDA published this document to guide stakeholders in the development and evaluation of RF wireless technology with respect to medical devices. The rationale is providing guidance on the safe and effective use of RF wireless technology in medical devices (e.g., performance, data integrity, security, etc.). Among other things, the draft document provides examples of potentially problematic applications. The FDA provides recommendations, including consideration of issues in product design requirements, design verification and validation, and risk management processes.

You’re invited to learn more at the FDA link: http://www.fda.gov/cdrh/osel/guidance/1618.html. During the 90 day public comment period, the FDA invites questions through Donald M. Witters, Jr. at donald.witters@fda.hhs.gov. Interest parties may provide comments on the draft guidance document at: http://www.fda.gov/dockets/ecomments.

© 2007 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-12-31T07:17:00.000-08:00

A 2006 RFID Wrap-up

RFID Law Journal
Newsletter No. 35
December 31, 2006

The U.S. federal government played a significant role in driving RFID adoption in 2006 through its agency mandates, policies and spending decisions. A compliance-driven marketplace was particularly evident among DoD suppliers, who scrambled to educate themselves on the RFID and UID mandates. In 2006, it became evident that a number of other agencies will also play significant roles in establishing the timeline for adoption. While the federal government proved that it could promote the growth of RFID applications in 2006, industry participants faced initiatives, including those pertaining to privacy and data protection legislation, which could have tempered RFID’s growth in the coming years. The basic message - the industry must more effectively work with legislators to educate the public about the technology and its applications.

It seems likely that RFID legal developments in the coming year will probable follow a couple of trends established in 2006, including (1) expansion of the mandate-driven market, especially among DoD suppliers; (2) further adoption driven by government policies and spending decisions and (3) continuation of the privacy debate, which could potentially temper deployment decisions by government participants outside of basic supply chain applications.

We’d like to draw your attention to a couple of year-end overviews that may be of interest to our readers. RFID Product News provides a high level overview of legal issues for 2006. You can access this content at the following link: http://www.rfidproductnews.com/issues/2006.11/legal.side.php. RFID Update provides an interesting top 10 list for trends in the RFID marketplace observed in 2006. You can access this content at the following links:
http://www.rfidupdate.com/articles/index.php?id=1264
http://www.rfidupdate.com/articles/index.php?id=1266
http://www.rfidupdate.com/articles/index.php?id=1267

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-12-31T06:45:00.000-08:00

RFID Policy Memo Wired into DSCP Guidebook

RFID Law Journal
Newsletter No. 34
December 31, 2006

RFID Law Journal has confirmed with appropriate authorities that CP Memo 06-32 is now wired into the local Philadelphia Center DSCP guidebook. You can access the guidebook at http://www.dscp.dla.mil/contract/dgpa/dgpahome.htm. This development could be viewed as an additional indication that RFID is now part of every day business at the Department of Defense. Of course, contracting officers have always been required to follow applicable regulations, including the RFID mandate. Readers may recall that CP Memo 06-32 details more exacting procedures for allowance of a deferral or waiver and would appear to close systemic loopholes. The latest development reinforces the point that the passive RFID requirements are here to stay.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-12-30T22:12:00.000-08:00

GAO Indicates Weakness in Border Security

RFID Law Journal
Newsletter No. 33
December 30, 2006

On December 6, 2006, the GAO published its report “Border Security: US-VISIT Program Faces Strategic, Operational & Technological Challenges at Land Ports of Entry”. While there are plenty of opinions on what this report means, you’re encouraged to read the full report at http://www.gao.gov/new.items/d07248.pdf.

There is certainly no ‘silver bullet’ for exit border procedures. Yet, with millions of us relying upon similar technology in our daily commutes (e.g., E-Z Pass), it doesn’t take a lot of imagination to understand why RFID represents part of an overall solution, given the significant demands on manpower and the ability of vicinity RFID systems to provide policymakers with critical leverage. While some shortcomings appear daunting at this stage, this is early in the game to cast a ballot against further experimentation with the applications of this technology in the context of improving border security systems.

As mentioned above, there is no shortage of opinions on what this GAO’s report means for border security or auto identification technologies. On December 15, 2006, the New York Times provided its color in a front page article entitled “U.S. Dropping Bid to Track if Visitors Leave.” On that same day, Washington Technology published “US VISIT Exit System Flaw: GAO,” which is found at http://www.washingtontechnology.com/news/1_1/daily_news/29857-1.html. On December 21, 2006, RFID Journal covered the report with its story entitled “GAO Report Highlights RFID Weaknesses in US-VISIT.”

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-12-30T19:13:00.000-08:00

DoD - Clarifying the Default Rule on Passive RFID Requirements

RFID Law Journal
Newsletter No. 32
December 30, 2006

We’ve made the point more than a few times this past year that the Department of Defense is moving from the “carrot” to the “stick” phase of its rollout of its passive RFID requirements. With the third year of its three year rollout just around the corner, it’s not surprising that the DoD capped off the year with yet another notice to its vendors that essentially requires them to validate in processing their orders that they are shipping in compliance with the DoD’s RFID requirements. The text of the notice can be read at the following link which is entitled “Attention DIBBS Vendors Including EDI Vendors – DIBBS Quote Form and BATCH File Format Change – Effective December 17, 2006” https://www.dibbs.bsm.dla.mil/Notices/msgdspl.asp?MsgId=66 .

This most recent notice follows other significant policy change notices which foreshadowed for serious, long-term vendors that attention to RFID is a pre-condition to doing business with the DoD. For example, see “Significant Revision to our Previous Notice on New Passive RFID Requirements Effective July 19, 2006” https://www.dibbs.bsm.dla.mil/Notices/msgdspl.asp?MsgId=55) and “Passive RFID Requirements (May 25, 2006)” https://www.dibbs.bsm.dla.mil/Notices/msgdspl.asp?MsgId=52.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-11-01T07:39:00.000-08:00

Introduction of the RFID-Enabled Passport Card

RFID Law Journal
Newsletter No. 31
November 1, 2006

The Department of State recently announced a major step toward implementing its previously announced PASS (People Access Security Service) System aimed at facilitating expeditious, secure travel along the U.S. border. In October, 2006, the Department of State submitted for public comment a federal rule proposing the development of a card-format passport for international travel by U.S. citizens through ports between the U.S., Canada, Mexico, the Caribbean and Bermuda. The rule, which is expected to meet the documentary requirements of the WHTI (Western Hemisphere Travel Initiative),[1] was prepared by the Department of State with input from the Department of Homeland Security.

The rule calls for the creation of a “limited-use passport card” that would otherwise be subject to the same standards of a traditional passport. However, the passport card would be wallet-size, and according to the figures released in the Department of State’s announcement ($20 for an adult card and $10 for a child’s card, subject to a $25 execution fee) would be significantly less expensive for citizens to procure than a traditional passport.

The federal government expects to leverage RFID technology to facilitate linkage between the passport card and secure, U.S. government databases containing biographic information and a photograph. Under the currently proposed form, the passport card will not contain any personal information, and DHS will be responsible for implementing protective safeguards to ensure the integrity of the database.

The PASSport Card relies upon “Vicinity RFID,” which enables U.S. Customs and Border Protection officers to more quickly make critical decisions about travelers entering into the United States. Vicinity RFID is a recognized manpower enabler. DHS leverages its automation multiplier in a number of proven programs, including the FAST, NEXUS and SENTRI trusted traveler programs.[2] The most familiar example of Vicinity RFID is its usage in various highway toll systems. Vicinity RFID leverages one of the key attributes of RFID technology – the absence of a ‘line of sight’ requirement. It is believed that the PASSport Card will serve as a convenient and inexpensive means of identifying individuals (and their citizenships) frequently traversing our nation’s border.

For more information about this initiative (“Department of State to Introduce Passport Card”), read the following announcement at the Department of State’s website: http://www.state.gov/r/pa/prs/ps/2006/74083.htm. You may also view the proposed rule at www.regulations.gov and you can also learn more at the DHS and Department of State websites: www.dhs.gov and www.travel.state.gov.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] WHTI is the federal governmental plan for implementation of a provision under the Intelligence Reform Terrorism Prevention Act of 2004 mandating citizens of the U.S., Canada, the British Overseas Territory of Bermuda and Mexico to carry a passport or other designated travel document establishing the holder’s identity and nationality for entrance into the United States.

[2] These programs include 250,000 participants. US VISIT has also issued more than 450,000 RFID-enabled I-94s, its standard arrival and departure record at US ports of entry.

2006-10-26T13:56:00.000-07:00

Most Visa Waiver Countries Meet e-Passport Deadline

RFID Law Journal

Newsletter No. 30

October 26, 2006

Washington, D.C. - A significant majority of the 27 Visa Waiver Program countries met today’s DHS deadline requiring issuance of e-Passports. Some 24 of 27 VWP countries[1] collaborated with U.S. officials toward a collective goal of issuing electronic passports. An e-Passport contains a contactless chip with the passport holder’s biographic information and biometric identifier (e.g., digital photo of the passport holder). VWP countries collaborated with US officials in an attempt to improve the security features for international travel documents and prevent their fraudulent use. DHS officials consider the usage of the e-Passport as a significant step toward shutting down the ability of terrorists and criminals to use false travel documents to facilitate free movement over borders. It is believed that the e-Passport will help prevent the use of lost or stolen passport by terrorists and criminals for entry into the United States.

At this stage, the U.S. is working with three VWP countries, Andorra, Brunei and Liechtenstein, to bring their e-Passport initiatives online. Until e-Passports become available, citizens of these three VWP countries will require a visa to enter the US to the extent that such citizens hold passports issued on or after October 26, 2006.

Other valid passports may be used by VWP country citizens for entry into the U.S., including machine-readable passports containing a digital photo issued prior to October 26, 2006 or a machine-readable passport issued prior to October 26, 2005.

VWP travelers can determine if their passports meet the new requirements at the following website: http://www.dhs.gov/xlibrary/assets/vwp_travelerguide.pdf. You can also learn more at two new websites supported by the Department of Homeland Security:

http://www.dhs.gov/xtrvlsec/programs/content_multi_image_0021.shtm and

http://www.dhs.gov/xtrvlsec/crossingborders/gc_1161636133959.shtm.

Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] Visa Waiver Program countries include the following 27 nations: Andorra, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. 13 million people travel annually to the U.S. under this program to study, conduct business, visit family and holiday.

2006-10-26T10:22:00.000-07:00

Smart Card Deadline Looms

RFID Law Journal
Newsletter No. 29
October 26, 2006

At the end of the week, federal agencies shall begin issuing new secure identity cards to millions of employees and contractors pursuant to a post-9/11 executive branch directive aimed at securing the federal workforce (See Homeland Security Presidential Directive-12). The government-issued “smart card” will be used to verify identities when employees (or contractors) enter a government facility or log onto its computer networks.

The government smart card identifies a person’s name and agency, and it contains an electronic chip with personal data, such as the carrier’s photo, two fingerprints, a special identification number and digital certificates facilitating his or her access to locations and computer systems.

Agencies have been required to issue the smart cards and install recognition software so that governmental employees can carry one identification card to access multiple offices / systems. IBM, Lockheed Martin, Northrup Grumman Corp., Accenture, Ltd., General Dynamics Corp., Bearingpoint, Inc., and Electronic Data Systems, Inc. are among the approved service providers for the installation projects at federal agencies.

The rollout, including the initial issuance of the smart cards and the upgrading of equipment required to read them, is expected to take several years.

For more information about the rollout or HSPD-12, you can read more at the following informational links:

“Homeland Security Presidential Directive-12 Policy for a Common Identification Standard for Federal Employees and Contractors” (August 27, 2004)
http://www.osec.doc.gov/osy/HSPD12/HSPD-12Information.htm

“Smart Card Activities of the NIST” (October 6, 2004)
http://www.technology.gov/Testimony/p_BHW_041006.htm

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-10-25T17:45:00.000-07:00

More Progress with DHS E-Passport Reader Deployments

RFID Law Journal
Newsletter No. 28
October 25, 2006

Washington, D.C. - The U.S. Department of Homeland Security (DHS) indicated more progress in pushing the rollout of e-Passport readers, announcing that e-Passport readers are operational at Charlotte Douglas International Airport, Cincinnati/Northern Kentucky International Airport, Guam A.B. Won Pat International Airport, Houston George Bush Intercontinental Airport, Orlando International Airport, Orlando-Sanford International Airport and Toronto Pearson International Airport.

This latest rollout of e-Passport readers at U.S. ports of entry was made in preparation for an October 26, 2006 congressional deadline mandating that such ports of entry be capable of comparing and authenticating data in e-Passports issued by Visa Waiver Program (VWP) countries.[1] In late September, 2006, DHS completed deployment of e-Passport readers at San Francisco International Airport, and subsequently deployed these readers at Honolulu International Airport, Kona International Airport, Los Angeles International Airport, New York JFK International Airport, Newark Liberty International Airport, Washington Dulles International Airport, Chicago O’Hare International Airport, Hartsfield-Jackson Atlanta International Airport, Detroit Metropolitan Wayne County Airport, Las Vegas McCarran International Airport, Miami International Airport, Tampa International Airport and Phoenix Sky Harbor International Airport. DHS is reportedly processing travelers with e-Passports at all of these locations. This deployment is an ongoing process, i.e., the first in a series of steps toward further enhancement of security for international travel documents.

As of October 26, 2006, a VWP country citizen shall be required to carry a valid e-Passport to travel to the United States without a visa.[2] Valid e-Passports comply with ICAO (International Civil Aviation Organization) technical standards.[3] Pursuant to the requirements of the U.S. Border Security Act of 2002, the DHS is deploying e-Passport readers to U.S. ports of entry so that these ports can be capable of comparing and authenticating data from e-Passports by the congressional deadline. The U.S. port of entry inspection process is not expected to change for e-Passport holders, as U.S. Customs and Border Protection officials, equipped with the e-Passport readers, will be able to read the e-Passport chip at their inspection booths. VWP travelers can verify whether or not their passport meets the new requirements by locating the details at www.dhs.gov/interweb/assetlibrary/vwp_travelerguide.pdf.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] Visa Waiver Program countries include the following 27 nations: Andorra, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. 13 million people travel annually to the U.S. under this program to study, conduct business, visit family and holiday.

[2] See U.S. Border Security Act of 2002.
[3] Over the past two years, the U.S. worked with ICAO and VWP countries on technical standards to enable deployment of interoperable readers at U.S. ports of entry.

2006-10-20T06:47:00.000-07:00

More Progress with DHS E-Passport Reader Deployments

RFID Law Journal
Newsletter No. 27
October 20, 2006

The U.S. Department of Homeland Security (DHS) signaled further progress in its rollout of e-Passport readers at U.S. ports of entry in preparation for an October 26, 2006 congressional deadline mandating that such ports of entry be capable of comparing and authenticating data in e-Passports issued by Visa Waiver Program (VWP) countries.[1] In late September, 2006, DHS completed deployment of e-Passport readers at San Francisco International Airport, and since that time, DHS processed nearly 12,900 there. Last week, DHS announced that e-Passport readers had also been deployed at Honolulu International Airport, Kona International Airport, Los Angeles International Airport, New York JFK International Airport, Newark Liberty International Airport and Washington Dulles International Airport. Today, DHS announced the completion of its installation of e-Passport readers at several of the nation’s largest airports: Chicago O’Hare International Airport, Hartsfield-Jackson Atlanta International Airport, Detroit Metropolitan Wayne County Airport, Las Vegas McCarran International Airport, Miami International Airport, Tampa International Airport and Phoenix Sky Harbor International Airport. DHS is reportedly processing travelers with e-Passports at all of these locations. DHS will continue deploying e-Passport readers at several other U.S. airports in the coming weeks to satisfy the October 26th congressional deadline. This deployment is an ongoing process, i.e., the first in a series of steps toward further enhancement of security for international travel documents.

As of October 26, 2006, a VWP country citizen shall be required to carry a valid e-Passport to travel to the United States without a visa.[2] Valid e-Passports comply with ICAO (International Civil Aviation Organization) technical standards.[3] Pursuant to the requirements of the U.S. Border Security Act of 2002, the DHS is deploying e-Passport readers to U.S. ports of entry so that these ports can be capable of comparing and authenticating data from e-Passports by the congressional deadline. The U.S. port of entry inspection process is not expected to change for e-Passport holders, as U.S. Customs and Border Protection officials, equipped with the e-Passport readers, will be able to read the e-Passport chip at their inspection booths. VWP travelers can verify whether or not their passport meets the new requirements by locating the details at www.dhs.gov/interweb/assetlibrary/vwp_travelerguide.pdf.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] Visa Waiver Program countries include the following 27 nations: Andorra, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. 13 million people travel annually to the U.S. under this program to study, conduct business, visit family and holiday.

[2] See U.S. Border Security Act of 2002.
[3] Over the past two years, the U.S. worked with ICAO and VWP countries on technical standards to enable deployment of interoperable readers at U.S. ports of entry.

2006-10-16T11:20:00.000-07:00

Improving Your Firm’s Risk Management Profile with RFID

RFID Law Journal
Newsletter No. 26
October 16, 2006

Is your company considering deployment of a RFID, or other auto identification, system in support of its supply chain operations? If so, your company’s decision makers are usually tasked with identifying and evaluating ROI gains from such deployments. Most experts highlight the following as potential benefits:

-stock-out reductions,
-labor cost reductions,
-supply chain optimization,
-anti-counterfeiting,
-shrinkage reduction,
-spoilage reduction,
-payment optimization, and
-compliance (with mandates).

RFID gurus are typically well-equipped with pilots and studies supporting most of these rationales (e.g., Wal-Mart, etc.).

Your company's legal department may also help your firm identify another related gain from this early stage technology. Though not necessarily intuitive, RFID may serve as a “risk management” tool over the longer haul, and as such, could provide discernable benefits.

Ubiquitous deployment of RFID within your company’s (division’s) supply chain may, for example, provide your company (division) with ammunition to distinguish its valuable brands from “tainted” brands in the industry. (See RFID Law Journal Newsletters & Articles: “Making a Smart Investment in Your Company’s Supply Chain,” “Tracing the E.Coli Outbreak,” and “Products Liability Implications of Auto ID Deployments within the Aerospace Sector”). In the instance of major disruptions to a specific industry’s supply chain (e.g., tires, food (spinach), drugs, etc.), RFID could provide your firm with critical brand support at a time of crisis (for competitors). That translates into a competitive advantage, though its value may not be discerned for years.

RFID also equips companies with an important risk management tool in times of crisis. In the instance of an unsettling finding, RFID enables a management team to more quickly trace and track a problem within its supply chain (e.g., tainted goods, mislabeled products, etc.) and take action to minimize the risks for the company and the public, resulting potentially in a better brand protection and an improved public profile. After all, why amputate the patient’s leg if a far less intrusive method is available?

And if there are “commercially” available tools, such as RFID and other enabling technologies, to satisfy pedigree standards, it seems likely that stakeholders, including the trial bar and their clients (e.g., victims of mislabeled drugs, tainted food products, etc.), will be intensifying pressure on manufacturers to deploy such technologies to ensure supply chain optimization that falls on the right side of protecting the public’s health and safety.

While RFID isn’t necessarily a panacea for all of your company’s supply chain problems, RFID could provide your management team with a significant tool that reduces its long-term business risks. As such, it’s worth considering the opinions of your company’s risk management and legal departments when evaluating this IT deployment decision.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-10-13T06:21:00.000-07:00

DHS Announces Further Progress in Deploying E-Passport Readers

RFID Law Journal
Newsletter No. 25
October 13, 2006

The U.S. Department of Homeland Security (DHS) signaled further progress in its rollout of e-Passport readers at U.S. ports of entry in preparation for an October 26, 2006 congressional deadline mandating that such ports of entry be capable of comparing and authenticating data in e-Passports issued by Visa Waiver Program (VWP) countries.[1] In late September, 2006, DHS completed deployment of e-Passport readers at San Francisco International Airport, and in the past two weeks, e-Passport readers were deployed at Honolulu International Airport, Kona International Airport, Los Angeles International Airport, New York JFK International Airport, Newark Liberty International Airport and Washington Dulles International Airport. DHS will continue deploying e-Passport readers at several other U.S. airports in the coming weeks to satisfy the October 26th congressional deadline. This deployment is an ongoing process, i.e., the first in a series of steps toward further enhancement of security for international travel documents.

As of October 26, 2006, a VWP country citizen shall be required to carry a valid e-Passport to travel to the United States without a visa.[2] Valid e-Passports comply with ICAO (International Civil Aviation Organization) technical standards.[3] Pursuant to the requirements of the U.S. Border Security Act of 2002, the DHS is deploying e-Passport readers to U.S. ports of entry so that these ports can be capable of comparing and authenticating data from e-Passports by the congressional deadline. The U.S. port of entry inspection process is not expected to change for e-Passport holders, as U.S. Customs and Border Protection officials, equipped with the e-Passport readers, will be able to read the e-Passport chip at their inspection booths. VWP travelers can verify whether or not their passport meets the new requirements by locating the details at www.dhs.gov/interweb/assetlibrary/vwp_travelerguide.pdf.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] Visa Waiver Program countries include the following 27 nations: Andorra, Australia, Austria, Belgium, Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland and the United Kingdom. 13 million people travel annually to the U.S. under this program to study, conduct business, visit family and holiday.

[2] See U.S. Border Security Act of 2002.
[3] Over the past two years, the U.S. worked with ICAO and VWP countries on technical standards to enable deployment of interoperable readers at U.S. ports of entry.

2006-10-05T07:53:00.000-07:00

RFID – A Better Way of Tracking Baggage

RFID Law Journal
Newsletter No. 24
October 5, 2006

On the heels of the major airline security disruption which arose during August, 2006, it probably comes as no surprise that the DOT’s monthly airline industry baggage report indicates that the mishandled baggage rates of major carriers rose approximately 25% from July, 2006 (6.5 per 1,000 passengers) to August, 2006 (8.08 per 1,000 passengers).[1] A few airlines reported increases of 35% or more. This significant increase in the mishandled baggage rate correlates directly to the sizeable increase in the number of checked bags, which, in turn, is tied to new transportation security measures. International travelers recall these security measures were effectuated literally “on the fly” in the midst of the latest terrorist threat uncovered by British authorities.

Fast-evolving security rules require 21st century solutions. As the airlines and the transportation infrastructure become equipped with more effective technology tools, it’s likely that many discontinuities will be managed more effectively in the future.

This most recent terrorist threat is just another twist in the unique and difficult operational environment for today’s air carriers. There is some hope that by deploying automated solutions, airlines will eventually manage these discontinuities more efficiently. Among other things, the International Air Transport Association (“IATA”) is currently rolling out an initiative to use RFID tagging systems to improve the tracking of passenger luggage. If successful,[2] this “Simplifying the Business” initiative could save the airline industry hundreds of millions of dollars annually.[3] Additionally, these RFID-enabled baggage systems will likely increase system speeds, lower maintenance costs, facilitate faster baggage identification, and reduce clerical costs. IATA members expect that their investments in automated baggage systems will not only improve their bottom lines but also improve their approval ratings with customers.

Customer satisfaction is perhaps the ultimate metric. In our post-9/11 world, American travelers face a number of inconveniences for the sake of improved security. If, by way of deployment of automated baggage solutions, airlines deliver to us a more convenient, efficient and trustworthy means of traversing our nation’s airports, then they’ll be giving the American public something to smile about.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] Based upon complaints about lost, damaged, delayed and stone baggage filed with the nation’s top 20 airlines. For more source information, you can read the DOT’s report online through the following link: http://airconsumer.ost.dot.gov/.
[2] Initial RFID pilots at McCarran International Airport (Las Vegas) and the Hong Kong International Airport are widely-cited as successful tests. A number of other international airports are scheduled for RFID deployments in the coming year.
[3] According to IATA reports, annual baggage loss is a $800 million annual expense incurred by the industry.

2006-10-04T13:49:00.000-07:00

RFID Get Well Programs

RFID Law Journal
Newsletter No. 23
October 4, 2006

No more dragging your feet, DoD contractors…no more procrastinating… The verdict of one very important end-customer, the Department of Defense, is now “in.” Earlier today, RFID Update advised industry watchers of an imminent announcement by ODIN Technologies of its completion of the RFID wiring of 19 CONUS (Continental United States) depots (including 69 facilities in total).[1] What does that mean for the average DoD contractor? In all likelihood, it means that now is the time to “get well” and jump onto the RFID bandwagon.

Indeed, as a result of a 5-step “exemption/waiver” process, the DoD’s contracting officers are no longer able to merely grant a non-compliant party (even a sole source contract) an exemption from the DoD’s passive RFID tagging requirement. In most cases (other than for certain excepted classes of goods), DoD contracting officers must notify suppliers that the use of passive RFID tagging in connection with the delivery of goods into (most U.S.) depots is a contractual condition. If your organization is unprepared to do so (and as such, requires an exemption or waiver), your DoD contracting officer will be obligated to screen your contract (i.e., using the 5-step process described in our newsletter “DoD Contractors Beware of RFID Cramdown”) and require your organization to “get well” as a contractual condition. Pursuant to this requirement, suppliers must prepare a RFID-compliance plan specifying the steps to be taken to ensure RFID compliance. A Defense Department supplier’s failure to prepare and follow through on a RFID Get Well Plan may constitute a breach of contract, which could negatively impact its vendor scorecard and could result in serious fines.

In lieu of dwelling on the DoD’s requirement (and thinking about it as yet another cost of doing business), your organization should think about developing a RFID Get Well Plan as the initial step in the process of identifying the key benefits of RFID deployment. If the contractual relationship (with the DoD, Wal-Mart, etc.) accounts for a meaningful percentage of your company’s overall sales, chances are that RFID compliance may represent a significant intrinsic benefit. Quick attainment of RFID compliance could competitively position your company’s sales force vis-à-vis your competition.[2] There will certainly be “winners” and “losers” in this compliance game. Whereas a successful RFID Get Well Plan will doubtlessly position some organizations for improved relationships with the DoD (and others), some organization will undoubtedly fail to create and implement a RFID Get Well Plan, resulting in a competitive disadvantage.[3]

As an organization considers ROI benefits, many will identify other potential gains, including stock-out reduction, labor cost reduction, supply chain optimization, anti-counterfeiting, shrinkage reduction, spoilage reduction, payment optimization, etc. What can be gained will depend upon a number of characteristics, including your company’s existing infrastructure. In terms of benefits, don’t forget the obvious one – compliance. Compliance = better business relationships with key customers (i.e., the DoD, Wal-Mart, etc.)!

Be wary of cutting corners, especially if the DoD (or Wal-Mart, Target, etc.) is a significant portion of your organization’s business. While it’s tempting to defer making an investment in RFID through deployment of partial solutions (i.e., to save money short-term by deferring the cost of deploying a RFID system),[4] the RFID requirements are not going away (and if anything, the requirements will be expanding to all DoD operations as the DoD enters the third year of its rollout of the passive RFID requirement) and exemptions / waivers are not an effective mechanism for deferring deployment costs.

If doing business with the DoD (or other organizations with similar requirements) is important to your organization’s success, it would behoove your organization to assemble the right players within and outside of your organization (e.g., government sales, IT, RFID experts, etc.) to consider your organization’s RFID options carefully. Outside experts can be indispensable in helping you put together your company’s RFID Get Well Plan. Get going…and good luck!

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] For more details about RFID Update’s breaking story “RFID Deployment at DoD Complete First Phase,” click through to the following link: http://www.rfidupdate.com/articles/index.php?id=1217.
[2] Don’t under-estimate the time required to deploy a RFID system.
[3] For example, Lockheed Martin and Boeing are among the earliest adopters and most aggressive deployers of RFID technology. Clearly, the DoD is a vital aspect of their future businesses, and they are certainly using their RFID expertise as a competitive advantage over their competition.
[4] For example, some suppliers are purchasing pre-printed tags and a RFID reader (used to verify the tags at the point of shipment) to enable sending a shipment to a depot or distribution center. However, as suppliers are quickly finding out, it’s extremely difficult to rely solely upon this solution for volume shipments. Not only does such solutions fail to yield many of the ROI benefits typically identified as evolving out of the deployment of an automated RFID system, but also require extensive labor because it requires manual entry of the ASN into a WAWF system (i.e., clerical time for each shipment).

2006-10-03T09:50:00.000-07:00

RFID – Making a Smart Investment in Your Company’s Supply Chain

RFID Law Journal
Newsletter No. 22
October 3, 2006

Our headline could’ve been “Making a Smart Investment in Your Industry’s Supply Chain”; however, corporate actors usually won’t individually undertake costly measures unless such adoption is part of implementing an industry standard. Is this true even if an industry’s viability/survival is at stake? Apparently so. Historically, when it comes to the safety and security of the U.S. food and drug supply chains, industry standards often arise out of regulations, not self-regulated best practices.

The FDA has done little to encourage the food and drug companies to deploy auto identification technologies in connection with improving their health and safety best practices.[1] On their own initiative, leading food and drug manufacturers haven’t shown many signs that mass deployment of auto ID technologies is coming anytime soon.[2] The stakeholders are adopting these technologies slowly, notwithstanding a number of discernable, positive ROI benefits (e.g., improved visibility of objects within the supply chain, speedier and less costly product recalls, better risk management, etc.). While the instances of tainted goods may be infrequent within the U.S. food and drug supply chains, the massive downside of any related bad publicity evolving out of the rare instance of tainted goods should be taken into account as part of industry risk management calculus and, in light of the recent E.Coli outbreak of late August 2006-early September 2006 attributed to “tainted” spinach, may be reason enough to shift the tide of opinion within industry leadership.

Had spinach growers and their distributors (and regulators!) made smarter choices in favor of technological deployments supporting their supply chains, the industry would’ve probably been better positioned to address the recent E. Coli outbreak. Better tracking tools would’ve presumably enabled public health authorities to track the source of the E.Coli outbreak faster and enabled innocent industry stakeholders to defend their brands by quickly and definitively pointing to the results of federal health investigators. Unfortunately, timing is everything in the 21st century. As of late September 2006 (weeks after the announced outbreak!), innocent industry stakeholders can now rely upon the results of health investigations to support and reinvigorate their spinach brands; however, over the past few weeks, these stakeholders lost a substantial percentage of their inventories and exposed their brand reputations.

Now re-wind the clock a few weeks. Imagine being one of a few companies equipped with a technology that could definitively rule out a health concern. That’s not only a branding opportunity. It’s an opportunity to gain sizeable market share from competitors.

From 2001 to 2005, spinach growers reportedly doubled acreage from 15,000 to 31,000 acres to purportedly meet the demand for pre-washed, packaged spinach – i.e., packaged products ideally suited for the grocery aisle! Presumably, with the benefit of hindsight, stakeholders would’ve opted for a modest RFID infrastructure investment to coincide with their not insubstantial core investment in their spinach patches.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] We’ve extensively written about FDA pedigree rules. While we (and the affected industries) recognize that pedigree is the future, it’s worth noting that the regulators and impacted industries are seemingly taking, at most, baby-steps toward adoption of the technologies required to make pedigree a reality within the supply chain.
[2] Note: Several drug companies have held early stage RFID pilots, but it does not appear likely that the industry will deploy across their supply chains until the next phase of adoption.

2006-10-02T08:19:00.000-07:00

California RFID Legislation Vetoed as "Premature "

RFID Law Journal
Newsletter No. 21
October 2, 2006

The California Governor declined to sign legislation which would've likely slowed the development and evolution of RFID in the nation's largest state economy. A number of RFID industry supporters were critical of this legislation, though it had passed by a 30-7 majority vote of the legislature.

In our editorial, we had criticized the proposed legislation for a number of reasons. This legislation did not appear necessary given the protections afforded by existing privacy and data protection laws. Additionally, the legislation would have made it extremely difficult for a nascent industry to make a business case for its products; among other things, the legislation would have required 'human' involvement in a number of situations, and as such, would have potentially undermined the business case for using an automated solution.

Notwithstanding the seemingly strong support (30-7 vote) for this RFID legislation by the California legislature, a number of stakeholders, including RFID participants, maintain a strong vested interest in the health of the RFID industry. California is a key incubator state for nascent technology companies, and not surprisingly, a number of leading RFID vendors, including Alien Technologies, Inc., maintain a significant presence there.

In his press release, the California Governor indicated that it would be "premature" to legislate.
You can read the Governor's press release at: http://gov.ca.gov/pdf/press/sb_768_veto.pdf.

You can learn more about RFID legal issues at www.rfidlawjournal.com. You may contact our editor at editor@rfidlawjournal.com. This material is being provided for informational purposes only. Usage of this material is subject to the terms and conditions at www.rfidlawjournal.com. Among those conditions of use, you shall not reply upon information contained herein as legal or other advice, and you are expected to seek out your own trusted advice with respect to such matters.

You can learn more about the California RFID Legislation at the following link to an article by RFID Update “California RFID Restrictions Get Governor’s Veto.”
http://www.rfidupdate.com/articles/index.php?id=1218.

2006-09-28T09:51:00.000-07:00

DHS Deploys E-Passport Readers

RFID Law Journal
Newsletter No. 20
September 28, 2006

At San Francisco International Airport, the U.S Department of Homeland Security completed its deployment of e-Passport readers. This is the first deployment of such readers, and it is expected that the DHS will continue deploying these readers at several other U.S. airports in the coming weeks to satisfy the congressional deadline (i.e., October 26, 2006) which mandates comparison and authentication of data in e-Passports issued by Visa Waiver Program countries. The e-Passport reader deployment is viewed as an ongoing process, i.e., the first in a series of steps toward further enhancement of security for international travel documents.

As of October 26, 2006, a VWP country citizen shall be required to carry a valid e-Passport to travel to the United States without a visa. Valid e-Passports comply with ICAO (International Civil Aviation Organization) technical standards. Pursuant to the requirements of the U.S. Border Security Act of 2002, the DHS is deploying e-Passport readers to U.S. ports of entry so that these ports can be capable of comparing and authenticating data from e-Passports by the congressional deadline. The U.S. port of entry inspection process is not expected to change for e-Passport holders, as U.S. Customs and Border Protection officials, equipped with the e-Passport readers, will be able to read the e-Passport chip at their inspection booths. VWP travelers can verify whether or not their passport meets the new requirements by locating the details at www.dhs.gov/interweb/assetlibrary/vwp_travelerguide.pdf.

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at www.rfidlawjournal.com. You may not rely upon any material provided herein as legal or other advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

2006-09-28T09:06:00.000-07:00

DoD Contractors Beware of the RFID Exemption Cramdown

RFID Law Journal
Newsletter No. 19
September 28, 2006

Subsequent to its July, 2004 issuance of its official policy of implementing passive RFID standards, the Department of Defense has been abundantly clear on the point that RFID, along with usage of the Wide Area Workflow (“WAWF”), will quickly shift into the standard means of its doing business. Electronic invoicing is “here to stay.” At this point, the DoD is shifting its policy from one of incenting its suppliers with carrots (e.g., vendors receive faster payment when they elect to do business electronically; certain vendors qualify for reimbursement of IT purchases, etc.) to one of punishing them with sticks (e.g., vendor scorecards, fines, etc.) Unprepared vendors disregard these new standards at their own peril.

Certainly some vendors are approaching RFID on an one-off basis, especially where their DoD business constitutes a small percentage of their overall business. For example, vendors dealing with small, infrequent shipments are trying out pre-printed labels (and buying a RFID reader for verification purposes), but such solutions are typically not very scalable, as these vendors run into higher clerical costs associated with manually keying in and sending advance ship notice (i.e., an ASN) to the WAWF. Automated RFID solutions are clearly the preferable choice, especially for parties selling to the DoD in volume (or supplying to multiple organizations requiring RFID tagging, e.g., Wal-Mart and the DoD), but notwithstanding the obvious benefits (including, for many vendors, a positive ROI), many vendors are seeking to defer incurrence of the cost. Over the past year, one of the favored approaches to “adoption” among some DoD vendors has been obtaining deferrals/exemptions from their contracting officers. The Department of Defense has taken steps to shutdown this loophole in lockstep with its expansion of its passive RFID shipment regulations.

As mentioned in prior newsletters, the Department of Defense initiated interim changes to the RFID DFAR in May, 2006, noting that it was now in the second year of its three-year passive RFID policy rollout. Having wired 20+ DLA depots and distribution centers for RFID[1], the DoD is now requiring its suppliers (shipping into these affected depots) to use passive RFID tagging in their shipments under its interim RFID rule. Given that the universe of affected depots is essentially all the depots located in the Continental United States (i.e.,10x of the number of the depots affected in the period of November, 2005 through June, 2006) and that the number of affected classes has also doubled, the interim changes to the RFID DFARs[2] are now impacting a vastly larger group of suppliers than at this time last year. The DoD has established policies at the contracting officer level which will make it increasingly difficult for its suppliers to defer committing to its electronic payment system (i.e., use RFID and the WAWF).

Companies doing business in volume with the DoD are learning that seeking waivers from contracting officers is no loner a viable option. New policies shift the burden clearly onto the vendor in the case of an opt-out, making it clearly more desirable from an administrative perspective to deal with RFID-compliant contractors. A contracting officer (under Contracting & Production Policy Memo No. 06-20 and Memo No. 06-32), must satisfy, in pertinent part, the following five (5) pre-conditions before granting a waiver of RFID requirements:

1) If a contracting officer receives no RFID-compliant offer, then the lowest evaluated offeror must be engaged in negotiations with respect to compliance with the RFID requirement.
2) The contracting officer must indicate in the file the non-existence of a RFID-compliant offer.
3) In the case of a “sole source,” the contracting officer must document that no other sole source is available and indicate that such is the reason for the waiver.
4) The contracting officer must conclude that failure to grant the exemption would impair the DSCP’s ability to support its mission.
5) The non-complying vendor must agree to a “get well” date for mandatory compliance and potentially provide a lowered price.

The mandatory DFAR 252.211-7006 (RFID) must be included in the contracts, even if a waiver is granted. A case-specific justification must be specified in the file. The contracting officer must also document the waiver/exemption in a letter to the contractor, with inclusion in the letter of contractor’s commitment to a “get-well” date. Failure to “get well” (i.e., adopt RFID for shipping to the DoD) is now viewed as the basis for a breach of contract. If, as of the “get-well” date, there is non-compliance, the contracting officer must document it in the file, resulting in a potential negative performance rating for future business with the government. The contractor must supply the “get-well” plan to the contracting officer, and it’s included in the file, too. All contracting officers must maintain records of waivers and exemptions so that DLA HQ can track these statistics. And there is a monthly reporting system to monitor these statistics. In short, the DoD has laid out significant incentives for contracting officers to seek compliance from the suppliers and punish non-compliant vendors.

We’ve included links to CP No. 06-20, CP No. 06-32 and the current RFID notice found on the DLA’s bid board system as an additional resource for readers.

May 9, 2006
Contracting & Policy Production Memorandum No. 06-20
Interim Guidance on Waiver of Passive RFID Requirements
http://www.dscp.dla.mil/contract/cp0620.htm

On July 17, 2006, the Contract & Policy Production Memorandum No. 06-32
(Subject: Radio Frequency Identification) was issued, incorporating CP Memo 06-20 into the DGPA. You can locate CP Memo 06-32 through the following link: http://www.dscp.dla.mil/contract/cp0632.htm.

DLA Notice – Passive RFID
https://www.dibbs.bsm.dla.mil/Notices/msgdspl.asp?MsgId=55

© 2006 – RFID Law Journal, LLC. All rights reserved.

Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material (and any linked materials provided by third party sites) is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. You may not rely upon any material provided herein as legal or other (including, without limitation, investment) advice. You should consult your own advisor (legal, investment or otherwise) with respect to the advisability or accuracy of any of the material provided in this newsletter or any other material provided by us. We are not responsible for and do not attest to the accuracy of any third party content.

[1] The contracts specify completion of hardware and middleware deployment by the end of September, 2006.
[2] See e.g., DFAR 211.275-2 and DFAR 252.211-7006.

2006-09-26T15:13:00.000-07:00

A Rough Life in the Spinach Patch!

RFID Law Journal
Newsletter No. 17
September 26, 2006

Auto identification technologies provide improved risk management tools to those deploying RFID into their supply chain, and as a result, should improve the risk management profile of those with operational systems. In our September, 2006 feature article “Products Liability Implications of Auto ID Deployments within the Aerospace Sector,” we pointed out that in the context of aviation disasters, advanced (and currently commercially available) auto identification technologies could enable a faster, more granular piecing together of an aviation disaster, resulting in, among other things, (1) a reduction in the number of litigants as non-involved manufacturers are definitively ruled out as contributory causes of aviation accidents, (2) swifter government investigations with commensurately better safety practices and (3) improved product recall processes.

Fast-forward to one of today’s top news stories, indicating that after three weeks, health officials have finally identified two bags of baby spinach that tested for the E. Coli strain being packaged in the same plant on the same day. This is a ludicrous result for stakeholders. In lieu of a granular system which gives all stakeholders reliable information in hours/days, we’ve built an infrastructure which responds within weeks of an outbreak. For consumers, the logical response is to stop consuming the product until an all clear is sounded by regulators and industry participants. For the industry, it’s an unmitigated disaster, essentially requiring all industry participants from distributors to retailers to take the product out of the supply chain – even if there’s nothing wrong with their products! Improved pedigree achieved with auto identification tools is an achievable goal, and it is unfortunate that stakeholders usually fail to take into account an improved risk management profile when making auto identification technology deployment decisions.

RFID Law Journal is an online publication that provides auto identification resources for policy makers, attorneys, and industry participants. You can learn more about significant auto identification issues and policies, including RFID and UID, at http://www.rfidlawjournal.com/. You can provide us feedback about this newsletter at editor@rfidlawjournal.com. The material contained herein is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. The information contained herein is intended to serve an educational function and is not intended as specific legal or other advice. Should you require specific advice, you should engage a trusted legal or other advisor. © 2006 – RFID Law Journal, LLC. All rights reserved.

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2006-09-25T21:35:00.000-07:00

Going Green with RFID!

RFID Law Journal
Newsletter No. 16
September 25, 2006

On the heels of Al Gore’s widely acclaimed documentary “An Inconvenient Truth,” demonstrating one’s “green” bona fides is more popular than wearing a pair of Crocs. Will any Hollywooders dare show up to next year’s Oscar’s without their Prius? In the past week, we’ve seen an unprecedented amount of “alternative energy” funds being announced by, among others, former President Clinton at his Global Initiative, including adventure billionaire, Richard Branson’s $3 billion effort to curb greenhouse gases and promote alternative energy.[1] Amazingly, President Clinton’s announcements came on the heels of two surprising initiatives in California, an incubator state that not only recently passed ambitious legislation to reduce greenhouse gases by 2020 but brought a sizeable lawsuit against the six largest auto companies for their alleged role in contributing to GHG buildup. And lest we forget about California’s private sector, VC powerhouse Kleiner Perkins Caufield & Byers announced plans for a 9-figure alternative energy fund earlier this year, making it clear that real business opportunities are arising in the alternative energy space.

While the American public could perhaps use a “We’re Going to the Moon” speech to outline a clear vision for achieving the dream of energy independence, there are some practical technological applications which may already be providing us with the foundation for progressively addressing some of the concerns identified by the Green movement. Reviewing the auto industry hybrid projections for 2010 doesn’t provide much encouragement for the notion that widespread adoption of “green” technologies is around the corner. However, there is hope that several simple applications of existing technologies, such as RFID and other auto identification technologies, could favorably impact the GHG problem long before American policymakers seriously move down the path of rolling out proven green technologies.

Presumably, Mr. Branson, who leads, among other organizations, Virgin Atlantic, is aware of potential for RFID, among other auto identification technologies, to serve not only as a positive ROI vehicle for airlines (e.g., substantial cost savings for spare parts maintenance, improved baggage systems, etc.) but also as a technology that enables achievement of his environmental vision.

Indeed, airlines understand quite well that photons are cleaner and far cheaper to move than paper. Extracting efficiencies out of the supply chain for manufactured goods, including the long, logistical supply chains which are largely enabled by international air cargo operators, may play a significant role in achieving, among other things, environmental goals.

Like virtually all of the world’s major airlines, Virgin Atlantic is a member of IATA. While IATA’s members aren’t necessarily motivated by environmental friendliness, RFID may present a potential “win-win” for both the aviation industry and environmental movement. IATA is testing a variety of auto identification technologies, including RFID, as enablers of its StB (“Simplifying the Business”) initiatives. Its e-Freight Initiative is targeted to eliminate paper from international shipments by 2010 among its participating carriers and nations. RFID is among the potentially enabling technologies for this initiative. According to IATA’s projections, this initiative could save annually the “paper” equivalent of 39 Boeing 747 aircraft. That’s a lot of trees!

There are a number of other organizations who are certainly well-positioned to save a few trees by implementing incremental changes in the way they go about their daily business. One can hardly imagine a better place to begin than the U.S. federal government.

The Under Secretary for Acquisition, Technology and Logistics adopted its UID policy to respond to a 1998 report of the GAO criticizing ATL’s management of its equipment inventory. The GAO had determined that the DoD’s inventory exceeded its war reserve and current operational requirements but lacked key spare parts due to inadequate accountability on material shipments and ineffective monitoring of spare parts. As discussed in several of our other newsletters, the DoD is at the head of the RFID adoption curve. Coupled together, these auto identification technology deployments could substantially impact the DoD's "green" bottomline, as it captures substantial efficiencies within its supply chain.

Other federal agencies are starting to roll out auto identification initiatives within their supply chains. In December, 2004, the GSA issued Bulletin FMR B-7 (Radio Frequency Identification) directing all U.S. federal agency heads to review their processes and consider strategies for the future use of RFID technologies with a view toward improving personal property management, asset visibility, and maintenance practices and facilitating supply chain management improvement. As a result of this RFID initiative, more than a dozen federal agencies are now rolling out RFID applications. The anticipated supply chain gains, coupled with other federal initiatives to reduce paper (e.g., the Paper Reduction Act), may eventually impact the “green” bottom line, though not necessarily initiated based upon such objectives. Just as we, acting as individuals, implement “green” policies at the local level by recycling our aluminum, plastics and paper, large organizations and governments can start making marginal improvements in their behavior by adopting more efficient technologies, such as auto identification technologies, at the organizational level and favorably impact environmental issues.

Obviously, government is not alone in implementing RFID and other auto identification technologies. A number of leading multinationals are in the process of substantially altering their supply chain technologies through such deployments. If, as the aviation example cited above is demonstrative of the types of potential "green" gains, then the attorneys and business managers representing such multinationals should be considering whether implementation of such auto identification technologies could qualify their companies for carbon credits. If so, that could be a potential "win-win" for all stakeholders.

© 2006 – RFID Law Journal, LLC.Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You contact our editor about this publication at editor@RFIDLawJournal.com. Usage of this material is subject to the terms and conditions set forth at http://www.rfidlawjournal.com/. This material is provided as an educational resource and is not to be construed as legal or other (including investment) advice. You should not act on any information contained herein without the advice of a trusted legal advisor.

[1] Be clear, tapping into the alternative energy market will undoubtedly provide good fodder for the 2008 Presidential Campaign Trail. Indeed, it’ll be interesting to see who can successfully define for us how America can transform itself into a “green” economy while sustaining its ability to earn “greenbacks.”

2006-09-21T12:07:00.000-07:00

Is More RFID Industry Consolidation on its Way?

RFID Law Journal
Report No. 15
September 21, 2006

We told our readers in our September 19th article that Motorola's blockbuster acquisition of Symbol Technologies marked a point of key industry consolidation. This move followed Lockheed Martin's not insignificant purchase of SAVI Technologies earlier this year. With two of the industry's leaders off the table, where else might large bets be made in this industry? According to an article published by Line56.com, Intermec is perhaps in the bull's eye of one or more of Motorola's competitors (http://www.line56.com/articles/default.asp?ArticleID=7917). One can also surmise that after tabling its IPO, Alien Technologies may be a target at the "right price." Impinj is a similarly attractive target on the hardware side. On the software side, it's likely that we'll continue to observe smaller, strategic acquisitions in the transaction dollar range of the Verisign/R4 Global Solutions and BEA Systems/ ConnecTerra deals.

© 2006 – RFID Law Journal, LLC.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You contact our editor about this publication at editor@RFIDLawJournal.com. This material is being provided for educational purposes only and should not be construed as legal, investment or other advice. Consult your own trusted advisor for any such decisions. Use of this material is subject to the terms and conditions of www.rfidlawjournal.com.

2006-09-21T11:18:00.000-07:00

RFID – A Better Way to Track the Source of the E. Coli Outbreak

RFID Law Journal
Newsletter No. 14
September 21, 2006

Today’s headline is admittedly a misnomer of sorts. No publicly available source suggests RFID played any role in tracking down the notorious patch of spinach. We believe that auto identification technologies, including RFID, could’ve and should’ve played a role, resulting in faster answers to the 5Ws.

General news stories indicate that health officials are now focusing their E. Coli investigation on 9 farms located in California. While it's a relief (to spinach lovers) that health officals are narrowing their search, let's not lose sight of the fact that people actually started getting sick more than a month ago (on or about August 19th through September 5th). At this point, health offical are just identifying “9 farms” in California which may be responsible for the outbreak. Not exactly light speed, Hans Solo. Indeed, as this news story has developed over the past few weeks (and the FDA iterates toward the source of the outbreak), the best advice has been “don’t eat any raw spinach.” This is hardly optimal advice for American spinach growers, wholesalers and distributors, grocery stores or end-consumers. Indeed, for some of these stakeholders, such advice is an utter disaster.

Not to diminish the seriousness of the few actual cases of illnesses and death arising from the “bad” spinach, what would’ve happened had our federal government been dealing with a far more popular food or drug item or with a highly contagious strain of bacteria, virus, etc.?

It’s about time that policy makers deliver on the promise of bringing us into the 21st century. A number of auto identification tools, including RFID, could be ubiquitously deployed within the food and drug supply chains, and in doing so, facilitate better health and safety practices within those supply chains. Tangible safety improvements are within our grasp, and yet, with few exceptions (e.g., the Department of Defense), our federal government is taking a laissez-faire approach to deploying currently available technologies. When will the USDA put some Moo into its National Animal Identification System? When will drug pedigree become a reality? When will our policy makers take effective action to support such A.I.T. deployments?

While our government is literally throwing billions of dollars at aviation safety (by hiring thousands of TSA screeners) and homeland security, our policymakers are essentially saying that the safety and security of our nation’s food and drug supply chain does not present any “national security” issue. This is a curious position, especially in light of the current Administration’s hysteria (during the fall of 2005) over the possible impact of an Avian Flu epidemic.
Absent industry wide standards which require improved tracking of food and drugs within the supply chain, individual manufacturers and distributors of these goods are not showing a general inclination (with “open wallets”) of making the significant investments required for their deployments. This is the consensus viewpoint, despite significant enthusiasm shown by major retailers (e.g., Wal-Mart) about the various applications of RFID (e.g., the commonly cited studies of 20-30% improvement in out-of-stocks), because of who typically bears the upfront deployment costs.

Unless policy makers step into this situation and add some regulatory “teeth” (such as mandated pedigree deploying RFID or other enabling technologies), it’s not very likely that any individual U.S. drug or food supplier or wholesale distributor will “volunteer” to deploy an automated RFID system until such time as its deployment becomes a precondition to the maintenance of its significant business relationships. Indeed, a private business must justify its decisions primarily upon ROI. It is frequently a rationale decision for a business to adopt new technologies at a later point on the adoption cycle. Do we really want those responsible for our health and safety using the same calculus as those operating in a laissez-faire marketplace given the sizeable, post 9/11 challenges our nation faces?

© 2006 – RFID Law Journal, LLC.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You contact our editor about this publication at editor@RFIDLawJournal.com. The information contained herein is for your informational purposes and is not intended as legal or other (including but not limited to investment) advice. Usage of this material is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-15T21:39:00.000-07:00

The Elephant in the Room - Making Sense of the RFID Privacy Debate

RFID Law Journal
Newsletter No. 12
September 15, 2006

In terms of “mass deployment” experience, RFID is an early stage technology even though its history can be traced back several decades. In recent years, RFID started growing up, especially in connection with the rollout of several large initiatives by both the U.S. federal government (e.g., the Department of Defense) and several major retailers (e.g., Wal-Mart, Metro, Target, Albertson’s, Best Buy, etc.). These early adopters are the auto identification technology industry’s leading participants and enablers, and they recognize that these latest mass deployment efforts place them near the tipping point of realizing significantly enhanced capabilities for tracking objects within their supply chains. In their line of sight, the early adopter supply chain managers can visualize RFID grid systems facilitating substantially improved visibility of their institutions’ shop floors, distribution warehouse, depots, etc. In our view, it doesn’t seem likely that attorneys or policy makers will be dissuading these institutions from moving ahead with their deployments of ‘supply chain’ (object-based) applications.

But the same RFID technology that is capable of yielding a plenary vision of objects within a supply chain may also provide a security professional with similar visibility for tracking people. As governmental institutions increase their investments in such people tracking applications, it is increasingly likely that privacy advocates will ratchet up their objections to human tracking applications.

Industry advocates and many laissez-faire policy makers share the vision that new technologies, like RFID, require incubation, and after sufficient experience, would consider legislation or regulations following such world experience. On the other hand, privacy pundits suggest that the usage of RFID presents security and privacy concerns, especially in the context of human tracking applications, and would mandate legislation to control its deployment.

The Important Policy Question

Should policy makers rely upon existing legal frameworks to combat security concerns or are additional laws or restrictions required at the federal and/or state level with respect to RFID’s usage?

Federal Government Policymakers are Educating Themselves about the Issues

At this point, both branches of the federal government are learning more about auto identification technology. It’s fair to assume that these legislators and policy makers will increasingly thinking about privacy and security issues. Do existing laws sufficiently address legitimate concerns? Would it be jumping the gun to dictate detailed procedures without sufficient experimentation into potential applications at this stage?

In December, 2004, the Executive Branch explicitly called upon federal agency heads (see GSA Bulletin FMR B-7 (Radio Frequency Identification)) to review their processes and consider strategies for the future use of RFID technologies with a view toward improving personal property management, asset visibility, and maintenance practices and facilitating supply chain management improvement. (In other words, namely object-based supply chain applications.) As a result of this directive, many federal agencies have proactively considered RFID deployment, with more than a dozen agencies currently engaged in RFID-enabled projects. Having started its work with RFID nearly a decade earlier, the DoD is leading the way in terms of RFID supply chain (object-based) applications.[1]

More recently, Congress entered into RFID policy discussions. Among other things, Senators Dorgan and Cornyn recently launched a RFID Caucus to facilitate a better understanding of the RFID industry and its technology. Earlier this year, Congressmen pushed on the FDA to speed up its e-pedigree rollout. RFID industry participants can only hope that this enthusiasm for educating itself about RFID won’t lead to an effort to legislate it (as has been the case at the state level).[2] Indeed, industry participants contend that the RFID market is fragile and nascent, requires a chance to find its efficiencies. For them, the unfortunate side effect of inappropriate legislation is its ability to stunt the deployment of a promising technology.

Department of Homeland Security (“DHS”)

At present, at least one significant federal agency, the Department of Homeland Security, has expressed itself, though it’s unclear that those responsible for articulating the DHS’s views on privacy share the same objectives as those actually responsible for ensuring that the nation’s borders are safe.

In May, 2006, drafters of a report entitled “The Use of RFID for Human Identification” for the DHS Emerging Applications and Technology Subcommittee to the Full Privacy and Integrity Advisory Committee criticized the use of RFID devices for human identification purposes and recommended that DHS disfavor its use for human identity tracking. Simply put, these policy makers advocate blocking all ‘RFID’ applications (for human tracking) early in the adoption cycle. Such a policy would include blocking or unwinding usage of RFID for the SENTRI and NEXUS ‘trusted’ traveler cards, the ‘laser visa’ Mexican border crossing card, and the Free & Secure Trade Card for truck drivers.

There is little debate that the U.S./Mexican border is a security mess. Our Congress is considering spending billions of dollars to construct and maintain a 700-mile fence -- akin to deploying a 13th century moat instead of 21st century enabled security drones to address the problem. Most Homeland Security specialists recognize that better security will likely require the use of a more effective mix of technology and human intelligence deployment, as the task of managing millions of people crossing over this border is googlistic. Such an effort might include building a moat, but it’s difficult to imagine entirely ruling out the use of RFID applications at this stage.

Having heard the DHS officials rave about the US VISIT program at FOSE in March, 2006, “The Use of RFID for Human Identification” report is a bit confounding. DHS is experimenting with RFID, and other auto identification technologies, to leverage its manpower. One might think of the U.S. VISIT’s ‘trusted’ traveler program as an entrepreneurial endeavor that balances risks in a fairly measured way. DHS allows “trusted” aliens, i.e., individuals who (i) shuttle themselves back-and-forth across the border frequently (think “commuter”) and (ii) submit themselves to a pre-screening background check, to commute with the ease of an E-Z Pass commuter. While this particular RFID application may not be without some risks (e.g., terrorist steals trusted traveler’s car to cross border), this RFID-enabled program could free up DHS manpower, and in doing so, allow DHS agents to focus their energies on higher threats than trusted commuters.

The smart-card industry has noted that the deployment of RFID technology for tracking and authenticating human identities is not as secure as a contactless smart-card which protects individual privacy and secures the identity of individual users. However, that really misses the point of why DHS is using RFID technology within its U.S. VISIT program. It is isn’t about controlling access in a Level 5 Security Area. It isn’t about the existence of more effective alternatives for identification, e.g., biometrics. It isn’t about guaranteeing aliens with the same ‘right of privacy’ the government must afford U.S. citizens under the U.S. Constitution. It’s about designing and implementing an opt-in program for ‘trusted’ travelers who submit themselves to the inconvenience of a background check and install a tag into their vehicles for the purpose of affording a slightly more convenient commute. The ‘dividend’ for DHS is freeing up manpower to concentrate on greater threats. Given its significant manpower restrictions, DHS requires all the leverage it can muster, and it probably need more breathing room, not less, to find the optimal automation tools to solve the border patrol problem.

A few thoughts on Commercially-Developed Human Tracking Applications

One cannot discuss auto identification technologies and privacy without looking at ongoing commercial development. While entrepreneurs are developing a variety of human and object tracking tools, most reside on the supply side (i.e., object tracking) of the equation. Commercial development of human tracking tools is stirring the privacy policy pot.

One of the leading developers of ‘people tracking’ RFID applications is VeriChip, a subsidiary of publicly-traded Applied Digital Solutions, Inc. (http://www.verichip.com/). VeriChip is the developer, manufacturer and marketer of customized RFID solutions, including a number of applications for human tracking. It goes without saying that a couple of privacy groups are critical of several of its products. However, upon examination of VeriChip’s online product catalog, its bread-and-butter commercial products appear to be largely “opt-in” applications. Among other things, its website touts wander protection, infant protection and medical emergency protection. In each case, VeriChip lays out the facts for why a consumer might want purchase such products. For example, noting that 98,000 deaths are annually attributed to medical error in the United States, VeriChip supports the case for its medical emergency protection product, which consists of an implantable microchip containing a 16-digit proprietary number that hospital physicians can use to access, for example, an unconscious patient’s medical information from VeriChip’s secure database. This VeriChip product is presumably sold on a case-by-case, story-by-story basis (e.g., it saved my life, and it can do so for you, too), and given the aging U.S. population, may fuel growth of this company for the next decade. Taking a Libertarian perspective on such deployments, even a hardline privacy advocate might accept such opt-in ‘human tracing’ applications of RFID.

Some thoughts on Expanding Human Tracking Applications

How would the arguments unfold if it were the case that one or more governmental agencies purchased and deployed, for example, VeriChip’s implantable microchips in their own employees? That scenario usually draws a fairly strong line of demarcation from privacy advocates. While it may not sit comfortably in the stomach of many of us, certain agencies, like the Department of Defense, could likely articulate some supportable reasons for enacting such policies, such as justifying the use of the implantable microchips to protect the safety and security of soldiers. Deployment would arguably save some lives because the technology would give personnel exactly the right information at critical times, and as such, support the “Agile WarFighter” initiative.[3] Would other federal and state agencies extend such arguments to include, for example, first responders? Other federal employees? Like other intrusions, such as the pre-mission inoculation of soldiers (and others at risk) with a host of vaccines, would an implant procedure be deemed just another condition of their employment?[4] No matter how you personally feel about this issue (and no matter how compelling of a case you can build in favor of deployment), it’s a fairly safe bet that any mass deployment of such human tracking applications within the federal government would likely arise only after a vociferous set of objections are raised by privacy advocates.

If marking members of the military or first responders bothers your gut, what kind of scrutiny would be required to justify the deployment of such tracking technologies among their social opposites, i.e., convicted felons? Would it be appropriate to use such technology to track individuals during their probations? Can our judicial system rely upon RFID and related technologies (e.g., RFID or another A.I.T. coupled with GPS) to track non-violent, convicted felons who are, for example, subject to home arrest? Would it save precious funds, meaning it justifies itself based on its ROI? Should we set up RFID grids in our nation’s prisons to promote safer interactions among prisoners? (Check out the following site to see how our prisons can deploy RFID identification tags to track prisoners: http://www.pdcorp.com/law-enforcement/rfid_wristbands.html). Should RFID (coupled with other technologies such as GPS) be an enabling technology to track sex offenders?

What about approving deployments of RFID technology offshore? Should the U.S. government allow foreign powers, such as the Chinese military, to acquire U.S. technology for either object or people tracking applications?[5] What if an unsavory dictatorship were interested in acquiring the technology? In such case, would it be in the U.S. national interest (in addition to its citizens’ “moral” interest) to block the sale of such technology?

Some Initial Conclusions about the Elephant in the Room

Although RFID is a nascent technology, it is a good bet that as the DoD and Wal-Mart supply chain deployments pick up steam in the coming year, policy makers, industry proponents and attorneys alike will be hearing about a variety of new applications being introduced by the RFID industry. In considering new “privacy” legislation, policy makers should be careful not to unduly restrict technological innovation.[6] Institutions require time to gain experience with RFID and other auto identification technologies, and policy makers must craft wise rules based upon hardened experience. The RFID industry and its proponents need to work together with policy makers and legislatures to ensure that optimal policies for deployment evolve over time.

You can reach the DHS’ draft report “The Use of RFID for Human Identification – A Draft Report from DHS Emerging Applications and Technology Subcommittee to the Full Privacy and Integrity Advisory Committee” (2006) at: http://www.dhs.gov/interweb/assetlibrary/privacy_advcom_rpt_rfid_draft.pd.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal counsel or other such advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the this website is subject to the terms set forth at our website: www.rfidlawjournal.com.

[1] As discussed below, will the DoD also lead the way into ‘human tracking’ applications, or will the legislative and/executive branch take such applications off the table?
[2] The RFID industry needs to take a more active in educating legislatures (both at the state and federal level) about the technology so that, in an effort to ‘do something,’ the legislators don’t destroy a good technology in an effort to regulate conduct.
[3] There is a fairly pivotal assumption: the implantable chip wouldn’t expose soldiers to additional risks of detection, etc.
[4] Mining is one of a number of private sector jobs where its use could become a standard condition of employment based on safety reasons.
[5] China is perhaps a poor example, as it is clearly among the countries which will be aggressively adopting the object-based technology within the supply chain.
[6] As a practical matter, the vast majority of expenditures (by both government and private companies) are taking place on the object-based, supply chain side. Even on the supply chain side of the business, this is an early stage industry; with “large” RFID companies hitting $10m in quarterly sales, it is unlikely that much more than small, controlled pilots will be occurring with respect to human tracking applications in the coming few years.

2006-09-14T13:18:00.000-07:00

Shifting the FDA’s RFID Policy into Second Gear

RFID Law Journal
Newsletter No. 11
September 14, 2006

Although healthcare stakeholders, including pharmaceutical companies, medical equipment suppliers, wholesale distributors, pharmacies, hospitals and policymakers, share incentives to improve the health care industry’s supply chain best practices, the pharma/medical equipment industries are, in general, industry laggards with respect to RFID’s adoption within their supply chains. RFID subject matter experts contend that given several obvious supply chain benefits, including the ability to deter/prevent counterfeiting, speed product recalls, and improve product and patient identification (and thereby improve safety), the adoption of RFID technology is a ‘no brainer’ for this sector. Yet, the pharmaceutical and medical equipment industries have, other than conducting pilots for select drugs, been largely deferring their investments in new supply chain technologies. We believe that the regulatory environment (established by the FDA) and the negotiating power of end-users are playing a role in these manufacturers’ deployment decisions.

A contrasting situation has certainly evolved in both the aerospace and the defense sectors. Those manufacturers must meet the supply chain demands of customers and precise regulatory requirements. Having announced its RFID policy in July, 2004, the Department of Defense has backed it up with regulatory “teeth” (as well as notices, educational training of suppliers, etc.), having passed substantive RFID tagging requirements (not to mention UID requirements) that will eventually impact tens of thousands of suppliers by 2007. It is noteworthy that once these manufacturers started examining auto identification technologies, many of them recognized that substantial gains could be derived from not only deploying RFID within their supply chains to their end-customers (e.g., spare parts supplied to government depots) but also leveraging RFID to more efficiently manufacture their products (e.g., Boeing’s new 787).

It is worth noting that the FDA started issuing policy statements in favor of RFID deployment at about the same time as other agencies. The FDA’s favorable policy view is consistent with GSA Bulletin FMR B-7 (Radio Frequency Identification) (December 2004), which directed the heads of all federal agencies to review processes and consider strategies for the future use of RFID technology. And yet, as of the fall of 2006, the DoD is in the midst of a substantial expansion of its RFID deployment efforts, the Department of State is unveiling its e-Passport, the DHS is expanding the use of RFID within its U.S. VISITOR program, etc. It is fair to ask - where’s the beef - within the FDA's RFID policy?

In November, 2004, the FDA issued its “Compliance Policy Guidelines – RFID Feasibility Studies and Pilot Programs for Drugs” wherein it concluded (at the urging of industry stakeholders) that ‘track-and-trace’ technology deployment within the pharmaceutical supply chain would be “widespread” by 2007. As a result, the FDA essentially deferred establishing a hard deadline for the pharmaceutical industry to implement electronic pedigree procedures. Absent the “teeth” available to other federal agencies, the absence of any mass deployment of RFID (or any other enabling technology) for track-and-trace shouldn’t come as a surprise. (Ironically, several of the so-called “early” deployments consisted of early adopters, such as Purdue Pharma and H.D. Smith, acting to gain a competitive advantage (e.g., lock down relationship with Wal-Mart by ‘opting’ into its RFID rollout) as opposed to industry leaders conducting widespread pilots among their sizeable drug portfolios.)

The 2004 FDA Counterfeit Drug Task Force Report stated, among other things, that:

-Feasible, widely adopted electronic ‘track and trace’ technology helping secure the integrity of the pharmaceutical supply chain would be feasible by 2007.
-That this electronic ‘track and trace’ technology would provide accurate drug ‘pedigree’ (i.e., a record of the chain of custody of the product moving through the supply chain from the manufacturer to the pharmacy).
-RFID is a promising technology to achieve e-pedigree.
-The effective date of applicable regulations relating to the PDMA (Prescription Drug Marketing Act) should be delayed until December 1, 2006 to ensure that stakeholders focus on implementing widespread use of e-pedigree.

On June 9, 2006, the FDA Counterfeit Drug Task Force issued its latest report, with the key recommendation of lifting the “stay” on implementing pedigree rules (which had been on the books since the original PDMA) and issuing a draft Compliance Policy Guide (CPG 160.900) that requires inspections of wholesale chain of custody activities in January, 2007. It’s interesting that the basic message of the Task Force is that while “significant” progress has been made to establish widespread use of e-pedigree, this goal could not be met by 2007, and while the FDA believes that RFID is the “most promising technology” for implementing electronic “track and trace” in the pharmaceutical supply chain, the FDA is not willing to put any teeth behind a wider adoption of the technology within this sector. According to Associate Commissioner Lutter, the “stakeholders should move quickly to implement this technology.” Short of regulatory teeth (which has been absent for almost 20 years following the PDMA's passage), why, precisely, “should” these stakeholders make the sizeable investment in any new technology?

The 2006 FDA Task Force also recommended that “manufacturers take a risk-based approach to implementation,” meaning, in essence, rationalizing their tagging policies based upon metrics like sales, price, volume, demand, ease of counterfeiting, prior history of counterfeiting and diversion, etc. In essence, that’s what is currently ongoing over at the major pharmaceuticals. The high volume, blockbuster drugs represent first stage deployment for most of the large pharma companies. Absent regulatory prodding, most of these companies will be making their deployment decisions (re: e-pedigree enabling technologies) on a brand-by-brand basis based on a ROI metric. Query whether a brand-by-brand approach makes sense, given that drug companies have historically faced enormous contingent liability exposure arising out of significant problems with one or another brand. If a company widely disperses e-pedigree capabilities across its supply chain, shouldn't it assign a sizeable 'contingent' value to such deployments because improved logistics may help them more effectively rule in/out counterfeit brands and enable faster recalls when those 'worst case scearnios' do arise? At the current pace of deployment, it seems likely that such risk allocation implications will not enter into the equation for quite awhile.

The 2006 Task Force also identified the following obstacles: (1) mass serialization and unique ID of each drug package, (2) universal pedigree with national uniform information and (3) privacy / labeling issues. However, if the pedigree rules lack the teeth of other federal regulations (so as to cause pharmaceuticals and medical equipment companies to make substantial investments in the technology) and the technology is scheduled for roll out in a fairly prescribed fashion (i.e., one brand piloted after another), how does the FDA expect the RFID industry, with scarce resources to ‘chase’ pilots, to make adequate investments to attack these problems?

A finalized CPG is expected by year-end; however, as things stand, there is no universal pedigree standard for drug shipments and a phased-in approach (focused on high volume / high priced shipments) seems the likely policy direction for the time being. This translates into a significantly slower adoption rate than might take place had the FDA pushed out e-pedigree rules with teeth. Indeed, a key loophole in the current tact allows authorized distributors of record (“ADR”) to track individual shipments through their systems so long as such ADRs can provide sufficient documentation demonstrating receipt of the product directly from a manufacturer and distribution to either a dispensing pharmacy or other retailer. Since the three largest distributors account for ~ 90% of all pharmaceutical distribution and these firms deal directly with drug manufacturers, it is doubtful that the pharmaceutical supply chain will be hurried (by regulators) to deploy an electronic track-and-trace system anytime soon.

In future issues of the RFID Law Journal, we will examine other ongoing RFID policies and regulations impacting health care, including, for example, the piloting of RFID technologies at VA and major university hospitals.

You may find the following links of additional use on the topic of FDA pedigree policy and rules:

Statement of Randall W. Lutter, Ph.D, Associate Commissioner for Policy and Planning, FDA, before Subcommittee on Criminal Justice, Drug Policy and Human Resources Committee on Government Reform, House of Representatives (July 11, 2006) can be found at: http://www.fda.gov/ola/2006/counterfeit0711.html.

“FDA Draft Compliance Policy Guide 160.900 Prescription Drug Marketing Act – Pedigree Requirements under 21 CFR Part 203 (June 2006)”can be located at the following line: http://www.fda.gov/oc/initiatives/counterfeit/cpg.html.

“FDA Compliance Policy Guidelines – RFID Feasibility Studies and Pilot Programs for Drugs” (November 2004)can be located at: http://www.fda.gov/oc/initiatives/counterfeit/rfid_cpg.html

“FDA Announces New Initiative to Protect U.S. Drug Supply through the Use of RFID” can be found at the following link: http://www.fda.gov/bbs/topics/news/2004/NEW01133.html.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-13T13:38:00.000-07:00

Ready, Set Go! Wal-Mart & the DoD Expand RFID Deployments

RFID Law Journal
Newsletter No. 10
September 13, 2006

Yesterday Wal-Mart announced its expansion of suppliers participating in its RFID deployment program, resulting in the effective doubling of such participants to more than 1,000 by year-end 2006. This announcement was foreshadowed during the winter of 2006, when Wal-Mart favorably announced its Dallas-Fort Worth pilot results (i.e., where it observed significant reduction in out-of-stock figures). Indeed, at that time, Wal-Mart made clear that it had placed a significant RFID hardware order aimed at facilitating a substantial expansion of the number of its stores and distribution centers with RFID wiring by year-end. Now that Wal-Mart has expended the funds to wire its facilities, it’s only rationale that Wal-Mart is now ratcheting up the participation percentage of its suppliers in an effort to start reaping the benefits of the technology deployment.

Military suppliers beware. The DoD ordered a sizeable deployment of RFID hardware and middleware during the spring 2006, and pursuant to those contracts, more than 20 CONUS (Continental United States) facilities will be wired for the receipt of passive RFID tags by the end of September, 2006. The DoD has been fairly explicit since the introduction of its interim RFID DFAR in May, 2006. In short, the DoD has been saying “we’re now entering the second year of a three year-rollout.” (Meaning: a significant percentage of you (i.e., suppliers) will soon be impacted).

A review of the DoD’s Final Regulatory Flexibility Analysis of Passive RFID (August 2005) makes clear that the Department of Defense views its deployment as taking place in tandem with other major initiatives, including Wal-Mart’s. Indeed, the DoD justifies its early stage involvement in RFID’s deployment based upon its ability to favorable impact on the rate of adoption (i.e., faster), the development of standards (i.e., meeting both DoD and major retail requirements), the contribution of R&D and the reduction in supplier costs. By way of example, in discussing Class VI goods, the DoD noted that since many Class VI suppliers ship to both Wal-Mart and the DoD, synergies can be gained by working together on the development of standards, etc.

While the DoD and Wal-Mart may not be intentionally scheduling the timing of their deployments together, this double shot is welcome news for many RFID industry participants. Although industry eyeballs are currently focused primarily on the first 1,000 companies, there are tens of thousands of firms which will be encountering RFID for the first time in the coming two years. Based upon the major deployment decisions of the past six months (of Wal-Mart and the DoD), it seems very likely that Wal-Mart and the Department of Defense will each reach their next 9,000 participants much faster than their 1,000th RFID program participant.

To read the Wal-Mart announcement, go to http://www.walmartfacts.com/articles/4435.aspx

You can read the DoD’s Final Regulatory Flexibility Analysis of Passive RFID (August 2005) at http://www.acq.osd.mil/log/rfid/EA_08_02_05_UnHighlighted_Changes.pdf.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for appropriate counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-12T11:06:00.000-07:00

Products Liability Implications of Auto I.D. Deployments within the Aerospace Sector

RFID LAW JOURNAL
Monthly Article No. 1
SEPTEMBER 12, 2006

Leading aerospace manufacturers and their suppliers are ramping up their deployment of RFID (radio frequency identification)[1] and UID (unique identification)[2] technologies within their supply chains, resulting in a shift toward ever greater automation. In recent years, Boeing and Airbus began deploying these advanced auto identification technologies within their supply chains. This duo impacts nearly 70% of all commercial aerospace suppliers.[3] Additionally, the Department of Defense (the “DoD”) recently began rolling out two far-reaching regulations[4] requiring the use of UID and RFID by its suppliers, with aerospace defense contractors being among the earliest suppliers impacted by these mandates.[5] Taken together, these commercial initiatives and government mandates will likely make advanced auto identification technologies widely dispersed, if not ubiquitous, within the aerospace supply chain in the coming years. Aerospace stakeholders expect to gain greater insight into their supply chains as their deployment of auto identification technologies enables them to improve their processes and practices for manufacturing aircraft and maintaining their inventories of spare parts. The mass deployment of these technologies will also result in significant, albeit ancillary, implications for the global aerospace products liability landscape and the allocation of risk among aerospace stakeholders.

While improving logistics is the primary factor driving aerospace leaders to deploy advanced auto identification technologies within their own supply chains, other ancillary benefits may unlock additional value for aerospace stakeholders. Ubiquitous deployment of RFID and UID in the aerospace sector could provide all stakeholders with additional insights into the cause of aviation disasters and hasten efforts by all stakeholders to take corrective action. Indeed, armed with improved identification capabilities, a crash investigator may one day be relying upon the auto identification markers on an aircraft part in much the same way that a criminal investigator may turn to DNA markers to rule in-or-out a suspect in a criminal case.

Aerospace stakeholders, including manufacturers, suppliers, government agencies and their representatives (e.g., NTSB investigators) and litigants, will likely gain greater and faster insight into the cause of aviation disasters as a result of the deployment of these advanced auto identification technologies. The aerospace products liability landscape may eventually be altered in several material respects:

1) Post-crash investigations and litigation will be speedier as advanced auto identification technologies enable faster, more granular piecing together of the aviation disaster scene.
2) As aircraft failure points become easier to detect, the number of litigants will be reduced as non-involved parts manufacturers are definitively ruled out as contributory causes to aviation accidents.
3) Aviation safety will improve as a result of swifter government investigations.
4) Faster, improved product recall processes can be expected. The use of advanced auto identification technologies will enable manufacturers and operators to more quickly identify the location of defective parts in their supply chains, facilitating quicker corrective action.

How much actual benefit can be gained from the deployment of these two auto identification technologies will depend, in part, upon which technology is ultimately deployed by the stakeholders. Will any of the above cited factors motivate aerospace stakeholders to move in the direction of one technology, given that deployment decisions are largely being shaped by the stakeholders’ desire to improve their supply chains? Stakeholders may find these ancillary benefits attractive, but will stakeholders pay for the additional technological tweaks that may be required to realize these ancillary benefits? As a general policy matter, aerospace stakeholders, like any other parties deploying a new technology, should aim to deploy technologies at the lowest possible cost with the least amount of disruption to those in the supply chain. Will additional costs (e.g., specialized, durable coating of RFID tags, the use of both RFID and UID, etc.) be prohibitive so as to cause stakeholders to postpone seeking these potentially ancillary benefits? And notwithstanding the desire of stakeholders to deploy at the lowest possible cost, will government regulators dictate policy for them? After all, in its role as an early adopter, the DoD has already substantially influenced deployment policies (especially through its two far-reaching DFARS), and as such, the aerospace industry can certainly expect that federal agencies will continue to shape deployment policies.[6]

In the future, an aviation accident investigator’s efficiency may depend on a technology-driven question -- how many of the aircraft parts are tagged with RFID in lieu of (or in addition to) UID markings? A RFID reader does not require direct line of sight with a tagged object. Equipped with a RFID reader, a crash investigator could arguably find all parts very quickly and assemble a granular grid of an accident scene. Alternatively, UID readers require direct line of sight, meaning that it will likely take longer for an investigator to piece together a crash scene with UID parts. Should customers or the government dictate a preference toward one of these technologies based upon such expected benefits?[7]

Tag survivability is an important consideration. A sustained “fireball” may generate enough heat to impair, damage and/or destroy RFID tags. (Indeed, it’s doubtful that lower-end tags could survive a “fireball.”) At this point in time, an UID engraved metal part is more durable. RFID tags may become more rugged over time. The RFID industry is already responding to customer demand for a variety of commercial applications with temperature sensitive tags, including specialized tags to monitor temperatures during the transportation of food and pharmaceutical products. Such tags enable cargo carriers to monitor temperature extremes for sensitive shipments and take steps to improve logistics practices.[8] These specialized tags can withstand (and monitor) extremely cold temperatures experienced in refrigerated compartments as well as the heat of the Iraqi desert. While currently available, commercial tag solutions are capable of withstanding temperatures in the 400-450º range, the use of protective encasings and specialized coatings could be required to ensure a tag’s survival in the instance of an onboard fire. Taking into account the significant improvements in auto identification technologies over the past decade, one might argue that under Moore’s law, it would not be unreasonable to conclude that a commercially feasible, extremely durable tag is not far off. Indeed, in designing and deploying auto identification solutions for the aerospace sector, the auto identification industry is seeking to deploy durable solutions (at least with respect to the UID markings) that meet the long life cycle demands of commercial aircraft. With greater experience, the aviation industry may determine that stakeholders could reap sufficient benefits from RFID technology to justify partial deployment of specially coated and/or encased tags on a limited pool of “critical” parts, and in view of the cost of many aircraft parts, certain aerospace stakeholders may deem it worthwhile to expand their deployment of such specially coated or encased tags to a greater percentage of their parts pool. In those cases, the stakeholders would likely deploy both UID and RFID on applicable parts.

For the time being, leading aircraft manufacturers, military operators and commercial carriers are driving deployment decisions based largely upon the perceived (and more immediate) economic benefits derived from deployment of auto identification technologies within their supply chains. Both commercial aviation operators and governmental agencies manage sizeable spare part fleets – measured in the millions (of spare parts). A commercial operator (e.g., Delta Airlines) is faced with managing millions of spare parts frequently worth more than a billion dollars. In the case of the Department of Defense, the complexity and depth of the aerospace supply chain is googlistic.[9] By leveraging auto identification technologies, governmental and commercial operators seek to more efficiently stock their spare parts, enabling them to locate just the right part at just the right time.

The Department of Defense is dictating its precise needs in regulatory mandates (e.g., DFAR 252.211-7003 and DFAR 252.211-7006), while commercial operators, like Delta Airlines and Federal Express, are expressing their preferences in favor of auto identification technology based upon their commercial experiments with advanced pilot / early proof-of-concept programs. Test results suggest that mass deployment of automated identification technologies will significantly reduce maintenance costs for carriers over the long-term.[10] As a result of these automation gains, the verdict on the deployment of auto identification technologies is “in.” Government and industry-led initiatives will result in the ubiquitous deployment of auto identification technologies throughout the aerospace supply chain in the coming decade.

Attorneys should expect that these technology deployment decisions will ripple through the aerospace products liability landscape. The legal community can play a significant role in enhancing the return realized from the deployment of UID and RFID in the aerospace supply chain. As described above, these advanced technologies potentially equip us with better tools to investigate and understand aviation disasters, enabling us to assign risk to responsible parties more efficiently and improve the safety of our aviation fleets. By raising our antennae now, we can all stay on top of this rapidly evolving landscape.

About the Author: The Article Contributor, Kevin Davis, is a seasoned corporate attorney who has been actively involved in building a number of IT businesses, including Adaptive RFID, a nationally recognized provider of turnkey RFID and UID compliance solutions and a top-tier partner of leading RFID technology vendors.

RFID Law Journal is an online publication that provides auto identification resources for policy makers, attorneys, and industry participants. You can learn more about significant auto identification issues and policies, including RFID and UID, at http://www.rfidlawjournal.com/. You can provide us feedback about this article at editor@rfidlawjournal.com.

© 2006 – RFID Law Journal, LLC. All rights reserved. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal or other appropriate counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

[1] RFID is an automated identification and data collection technology that uses radio frequency waves to transfer data between a reader (interrogator) and tagged items (transponders) (i.e., a label affixed to a part).
[2] UID entails the placement of a two-dimensional data matrix barcode on items. The DoD envisions that UID will facilitate faster, more efficient acquisition, repair and deployment of items.
[3] Manufacturer deployment decisions arose following successful pilot programs. In November, 2003, Federal Express began testing passive RFID systems with Boeing and determined that there were no detrimental environmental effects or suspected electromagnetic interference from installed smart labels. In May, 2005, the FAA officially approved the use of passive RFID tags on the ground to facilitate more efficient aircraft maintenance and inventory controls. During the summer of 2006, Federal Express tested active RFID tags on one of its MD-10 freighters.
[4] See DFAR 252.211-7003 (UID) and DFAR 252.211-7006 (RFID). As of a result their substantial intrinsic value, aerospace parts are directly impacted by DFAR 252.211-7003 (UID), and as such, aerospace suppliers have been leading deployment efforts. DFAR 252.211-7006 (RFID) became a final rule in November, 2005, and it has been applied to numerous aerospace parts solicitations. In May, 2006, the DoD modified the RFID DFAR to substantially expand its scope.
[5] In 2005, Lockheed Martin became one of the first defense contractors (aerospace or otherwise) to opt into the DoD’s RFID tagging requirements - months ahead of applicable government mandates. In May, 2006, Lockheed further validated this initiative through its acquisition of SAVI Technology in the RFID industry’s largest acquisition to date.
[6] Commercial initiatives ultimately depend upon FAA policy. See footnote 3 above.
[7] The current state of RFID and UID Data Matrix 200 technologies are such that there are instances where material composition, environmental temperature, component size and other factors dictate the selection of automatic identification technology. Over time, improvements in both technologies are likely to make the method of choice primarily an economic decision.
[8] The deployment of temperature sensitive tags could significantly impact the allocation of risk among parties involved in such commercial shipments. For example, a seafood distributor would presumably pay more for this enhanced quality assurance, while the distributor’s cargo carrier could use such information as evidence of its satisfaction of contractual obligations during the course of shipment. The stored data could certainly provide a meaningful, if not dispositive, evidentiary trail.
[9] Indeed, the Under Secretary for Acquisition, Technology and Logistics adopted its UID policy to respond to a 1998 report of the GAO criticizing ATL’s management of its equipment inventory. The GAO had determined that the DoD’s inventory exceeded its war reserve and current operational requirements but lacked key spare parts due to inadequate accountability on material shipments and ineffective monitoring of spare parts.
[10] The airline industry is hopeful that auto identification technologies will provide billions of annual savings for the industry. According to IATA, auto identification technologies, such as RFID, are enablers for their StB (“Simplifying the Business”) initiatives. As a result, the airline industry is engaged in proof-of-concept deployments of RFID-enabled baggage systems in order to garner up to $800 million in annual industry savings.

2006-09-11T12:51:00.000-07:00

A Few Reflections on the Impact of 9/11

RFID Law Journal
Newsletter No. 9
September 11, 2006

A confluence of factors contributed to the substantial growth of the federal government’s IT budget from $40 billion in FY 2001 to $63.8 billion (the Bush administration’s projection) for FY 2007. While not the sole factor driving the expansion of federal IT budgets, the disruptive events of September 11th , including the terrorist attacks on the World Trade Centers and the Pentagon, managed to significantly influence U.S. policy, with a reprioritization of the Administration’s agenda toward homeland security and defense. Faced with googlistic asset and people tracking challenges, the U.S. government policymakers have increasingly turned to automation tools to meet their policy objectives.

U.S. policymakers are undeniably grappling with significant budgetary issues given their sizeable troop commitments for the War on Terror in Iraq and Afghanistan as well as the large manpower commitments for domestic security (e.g., the TSA airport screeners). Policymakers on both sides of the aisle understand that in order to sustain the War on Terror, improve homeland security and maintain other federal programs, the federal government must more effectively leverage the U.S.’s technological prowess. In other words, “manpower” has become a key policy driver for the DoD, the DHS and other governmental agencies. In such a world, those government contractors who can deliver automation tools/systems enabling the government to more effectively leverage its workforce will be significantly better positioned to compete for government projects.

Auto identification technologies, including RFID, 2D-Bar Coding and Biometrics, offer significant advantages to large institutions (such as governments) in terms of their capabilities for efficiently tracking assets and people. Simply put, auto identification is a manpower-enabler. The Bush Administration recognizes the importance of RFID deployment to achieve its own policy objectives. Indeed, in December, 2004, the Bush Administration announced (through GSA issued Bulletin FMR B-7 (Radio Frequency Identification)) its policy which directed all U.S. federal agency heads to review their processes and consider strategies for the future use of RFID technologies with a view toward improving personal property management, asset visibility, and maintenance practices and facilitating supply chain management improvement. In light of this policy directive, several federal agencies have been proactively considering, piloting and/or deploying RFID.

Neither the threat of terrorism nor the global war against terrorists is going away anytime soon. With a burgeoning budget deficit, it will become increasingly more difficult to throw ‘manpower’ at these problems (e.g., hire an endless number of TSA screeners). As a result, it is imperative that the federal government leverage its IT federal dollars as effectively as possible. Given the supply chain and asset tracking efficiencies derived from auto identification technology, it would seem likely that in view of the current policy and geopolitical environment, auto ID technologies would enjoy substantial growth in the coming years.

© 2006 – RFID Law Journal, LLC. All rigths reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal or other appropriate counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-11T09:45:00.000-07:00

DoD’s New Passive RFID Requirements

RFID Law Journal
Newsletter No. 8
September 11, 2006

Over the upcoming months, the RFID Law Journal will continue its focus on the rollout of the Department of Defense’s passive RFID regulations. In our kickoff newsletter (http://rfidlawjournal.blogspot.com/2006/08/dod-is-critical-early-adopter-rfid-law.html) “The Department of Defense is the Critical Early Adopter,” we noted that the DoD is taking a leadership role in the spread of RFID’s adoption. It is the “teeth” of DFAR 252.211-7006 (RFID) which is separating the DoD’s deployment efforts over those of other noteworthy early adopters, including Wal-Mart and Target. After all, while both Wal-Mart and the Department of Defense maintain tens of thousands of suppliers to provide them with a googlistic number of SKUs, only the DoD can enforce supplier compliance through regulatory measures.[1]

The DoD is mixing both the “carrot” and the “stick” in its attempts to bring its universe of suppliers into its electronic invoice and shipment systems. By electing to use the WAWF and RFID, DoD suppliers can obtain significantly faster payment of their invoices. It is literally a case of “guns” vs. “butter.” In the case of suppliers shipping costly pallets, the impact of receiving early payments (i.e., up to 30 days faster with WAWF/RFID) can make a significant impact on one’s balance sheet (to the point that RFID must be deemed as a ROI benefit). The RFID DFAR also provides suppliers with a mechanism for receiving a credit for installing a RFID system, though the reimbursement mechanism is not widely utilized and is scheduled to be phased out in 2008 (see link referenced at the bottom of this article). It is believed that SMBs, who may otherwise not be able to justify an automated RFID solution, are best positioned to win these credits from the DoD (who is clearly required to maintain its diverse universe of suppliers), but many of these suppliers are, for the time being, staying on the sidelines (i.e., playing chicken with their business) or attempting to use pre-printed labels to bring themselves into compliance. The DoD is also attempting to give incentives to compliant suppliers by incorporating RFID compliance into its vendor scorecard system. A compliant company can improve its vendor scorecard vis-à-vis non-compliant suppliers, enabling it potentially to take business away from other DoD suppliers.

The DoD’s “stick” entails a mix of measures. Standing on its regulatory rights, the DoD can refuse a non-compliant shipment and may withhold payment. It is believed that once the DoD starts more aggressively issuing fines to companies, additional parties (i.e., the ones currently on the sidelines) will pile into the market (i.e., purchase RFID systems, pre-printed labels, etc.).

In May, 2006, the DoD passed its interim RFID DFAR, which substantially expands the original RFID DFAR to encompass more than 20 depots in the Continental United States and expand the classes of affected goods. Since the DoD is busily wiring all of these facilities (and is expected to complete such wiring by the end of September 2006), suppliers should anticipate a significant uptick in contracts being impacted by DFAR 252.211-7006 (RFID) by the end of the year. The DoD has also been bombarding its suppliers with a variety of educational efforts, including workshops, and it has been prominently posting notices on its websites, including those of its primary procurement offices as well as the DLA Internet Bid Board. These RFID notices reiterate the message that the DoD is in the second year of a three year rollout, making it clear that the RFID is here to stay.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

Learn more about cost of compliance reimbursement at Comments 4 & 9 of the following link:
http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/05-18025.htm.

[1] While the Department of Defense is subject to diversity requirements, major retailers are not signaling that they will use the RFID requirements to “squeeze out” their SMBs, and indeed, if anything, their concentration of their Top 1,000 suppliers suggest more sensitivity to small business suppliers.

2006-09-08T14:44:00.000-07:00

California RFID Legislation: It’s the Data, Not the Technology!

RFID Law Journal
Newsletter No. 7
September 8, 2006

Recently approved legislation (by a 30-7 vote) is on the verge of disrupting the deployment of radio frequency identification in California. Though it’s far from clear whether the underlying requirements would actually improve privacy or data protection, it would certainly undermine the business case for deploying RFID for certain applications. Unfortunately, while sufficient data/privacy protection legislation exists on the books, the California legislature deemed it necessary to craft special legislation for RFID.

In our view, this really isn’t a debate about RFID. It’s a debate about how we feel about existing data protection. Leveraging our societal discomfort over the privacy of personal information, politicians know that they can score quick points with their constituents by passing additional legislation in the name of “protecting” consumers. Regrettably, while this legislation provides new additional protection, it contributes to the sentiment that auto identification technologies are risky or unsafe, i.e., subject to hacking and tampering.

Surely, we can all agree that there is a common good arising out of data protection measures, especially when such measures thwart data identity thieves. However, a legislated solution isn’t necessarily required to achieve such an objective (or even a desirable course of action). Both policy makers and industry advocates share incentives for ensuring appropriate steps are taken for avoiding data protection breaches and limiting any damage arising out of intentional or inadvertent leaks.

In the context of RFID, can existing or potential technology solutions address legitimate concerns about data protection? Certainly. Governmental agencies typical encrypt important information, and in the case of identity cards, it is customary practice to separate the information on, for example, an access card from the associated database. In addition, swiping of cards usually takes place at secure, governmental chokepoints. Is it really necessary for a state legislature to dictate to the executive branch the means which it must take to prevent an identity theif from engaging in illicit action (e.g., attempting to place himself in proximity with a secure area for the purpose of stealing personal data)?

The California legislature must be hypothecating a world of roaming identity thieves, and despite their obvious concern over the privacy of data, their proposed requirements may potentially undermine security. A persual of these requirements is disturbing. What social benefits can be derived from legislation that would require (i) publication of the location of RFID readers and information being collected on such readers and (ii) maintenance (by public entities) of websites identifying RFID reader locations? Why provide such bread crumbs to identity thieves?

The legislation’s mandatory opt-out provision is particularly puzzling, as it would appear to require (in every situation) human interaction with RFID-enabled systems. This would establish an unacceptable default rule. Policy makers who might otherwise consider a RFID system would be required to factor into their project costs and operating budgets an additional cost center – human drones hired to monitor the RFID system. Such a default rule means that RFID’s automation benefit will largely be discounted by California policy makers. This legislation would make RFID a less attractive alternative from a ROI point of view and would likely mean that fewer RFID projects will be deployed (in California) in the coming years. So the muted response of the industry is a bit puzzling...

We urge the RFID Industry participants to inject their opinions into this discussion. For more information about the underlying issues posed by the California RFID legislation, you can review articles posted by RFID Law Blog and RFID Update. You can review RFID Law Blog’s article in its entirety at the following link: http://rfidlawblog.mckennalong.com/archives/state-legislation-92-california-legislature-passes-legislation-regulating-rfid.html. You can view RFID Update’s analysis at http://www.rfidupdate.com. Note: RFID Law Blog and RFID Update are third parties and are not affiliated with the RFID Law Journal.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal or other appropriate counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-05T12:26:00.000-07:00

Aerospace Role in RFID’s Rollout

RFID Law Journal
Newsletter No. 6
September 5, 2006

The aerospace sector is on the front lines of auto identification initiatives within both the commercial and military supply chains.

Seeking greater control over their own supply chains, aircraft manufacturers Boeing and Airbus are working together to facilitate RFID’s deployment within the commercial aerospace supply chain. Their suppliers account for approximately 70% of all commercial aerospace manufacturers, and as such, their dual deployment effort is a key factor driving RFID adoption within this sector. Ultimately, if Boeing’s manufacturing supply chain for its 787 Dreamliner is indicative of the future, commercial aircraft suppliers would be wise to ramp up their deployments of auto identification technologies sooner rather than later.

Several leading air carriers, including Federal Express, are also seeking additional gains from RFID in order to improve their maintenance practices. RFID systems eliminate the ‘line of sight’ requirements of older, barcode-enabled systems, and as such, increase the visibility of a carrier’s spare parts inventories. In the late fall of 2003, Federal Express and Boeing started testing the use of passive RFID tags on certain aircraft parts on FedEx aircraft. Thereafter, in May, 2005, the FAA approved of the use of passive RFID in aircraft on the ground to enable improved transportation industry maintenance and inventory practices. Since the late spring of 2006, Federal Express has been testing active RFID tags for similar purposes, and it is expected that the FAA will review those test results during the fall of 2006. RFID deployment is expected to give these carriers greater insight into the cargo in their aircraft hulls and improve their controls over their vast inventory of spare parts, resulting in improved efficiency and safety and reduced operational costs.

Air carriers expect that their RFID initiatives will generate positive ROI. Several airports are following on the heels of deployments of RFID baggage systems at McCarran International Airport (Las Vegas) and the Hong Kong International Airport. The International Air Transport Association (IATA) is leading the initiative to use RFID tagging systems to track luggage, which, if successful, could represent hundreds of millions of dollars in annual industry savings. (According to IATA, baggage loss represents a staggering $800 million in annual expenses incurred by the industry.) RFID adoption is expected to increase system speeds, lower maintenance costs, facilitate faster baggage identification, reduce clerical costs and ultimately improve customer satisfaction. Indeed, it is expected that such investments may not only improve air carriers’ bottom lines but increase airline ratings.

Following on the heels of other successful StB (Simplifying the Business) initiatives (e.g., e-ticket), IATA is also rolling out its e-freight program, an initiative aimed at eliminating paper from international shipments. RFID is not a requirement for e-freight, but it could be an enabling technology. For example, instead of creating a bulky, paper contract of carriage, carriers could store relevant carriage information on a smart RFID tag. Radio frequency identification tags do not require line of sight for interaction, making them an appealing, enabling technology for IATA’s e-freight initiative. The e-freight program could substantially reduce – if not eliminate – the thick paper trail associated with international freight. IATA will begin piloting e-freight during 2007, with industry deployment scheduled to commence in 2010. In carrying forward the e-freight initiative, air carriers stand to not only improve their bottom lines but will also create ancillary environmental gains.

As mentioned in several recent newsletters, the DoD is also aggressively requiring its largest military aircraft suppliers to meet its RFID tagging standards. As the DoD pushes further into the second of its three-year rollout of its passive RFID tagging requirements, both military and commercial aerospace component manufacturers will increasingly face these requirements as an ordinary prerequisite of doing business with their end-customers.

For more information about the Department of Defense’s RFID mandates, you should read our DoD website presentations and links related thereto.

Learn more about IATA’s RFID goals at http://www.iata.org/whatwedo/rfid/index.htm.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal or other appropriate counsel. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-02T07:30:00.000-07:00

Department of State - Rolling out the E-Passport

RFID Law Journal
Newsletter No. 5
September 2, 2006

The U.S. Department of State is scheduled to roll out its e-Passport initiative in October, 2006. The State Department has already deployed e-Passports to U.S. diplomats, and this e-initiative can be interpreted as running in parallel to the DHS initiatives impacting inbound travelers from 27 countries.

The electronic Passport contains a small, contactless integrated circuit embedded in the back cover to securely store the same information typically displayed on the photo page of the passport. It also includes a digital photo, enabling biometric comparisons, and incorporating additional anti-fraud and security features. There is a grandfather provision for existing passports enabling their continued use through their original expiration dates.

You can access the final rule at http://edocket.access.gpo.gov/2005/05-21284.htm.

You can review comments on the rule at http://travel.state.gov/passport/eppt/passport_comments.pho.

For more information about security and privacy implications, see “Security and Privacy Issues in E-Passports” at http://eprint.iacr.org/2005/095.pdf.

Relevant testimony is set forth at:

http://hsgac.senate.gov/files/FMossHearingonGAOReport054771final1.pdf.
http://hsc.house.gov/files/TestimonyMoss.pdf.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal counsel or other appropriate advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of the information contained herein is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-01T15:12:00.000-07:00

GSA Policy Supports RFID Deployment

RFID Law Journal
Newsletter No. 3
September 1, 2006

Current U.S. federal policy generally supports deployment of RFID by federal agencies. In December, 2004, the GSA issued Bulletin FMR B-7 (Radio Frequency Identification) directing all U.S. federal agency heads to review their processes and consider strategies for the future use of RFID technologies with a view toward improving personal property management, asset visibility, and maintenance practices and facilitating supply chain management improvement. In view of this directive, many federal agencies have been proactively considering RFID deployment.

This policy is supported by early stage pilot successes, such as the oft-cited successful deployment of RFID warehouse tracking by the Social Security Administration in 2003. This RFID-enabled warehouse management system realized faster order processing, eliminated backlogs, increased pick rates threefold, substantially improved filing rates for both normal and urgent orders, and enabled the SSA to recover 60,000 square feet of warehouse space.

As RFID applications became more varied and robust in the coming years, one would expect policy makers to increasingly turn to automated identification technologies, including RFID, to improve their monitoring capabilities for critical objects (e.g., hazardous waste) and reduce the costs of tracking and managing large repositories of paper, such as libraries, court documents, etc.

GSA Bulletin FMR B-7 (Radio Frequency Identification): http://www.gsa.gov/gsa/cm_attachments/GSA_Document/FMR_Bulletin-B-7RADIOFREQIDENTIFICATION_R24T4-k_0Z5RDZ-i34K_pR.doc.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com/. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal counsel or other appropriate advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of this material is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-09-01T11:26:00.000-07:00

National Animal Identification System - Is there anything to Moo about yet?

RFID Law Journal
Newsletter No. 2
September 1, 2006

The USDA is in the midst of launching its National Animal Identification System (“NAIS”), which consists of three components – (1) premises identification, (2) animal identification and (3) animal tracking. NAIS is not at the mandate stage, and it does not dictate the technology choices enabling compliance. Early pilots support the view that RFID will play some role, especially with tracking cattle, because one of RFID’s primary advantages is that its tags offer the opportunity to automate the process of assigning individual animal identification numbers.

The NAIS initiative is a national program sponsored with industry and state cooperation. Its primary purpose is protecting U.S. livestock from foreign and domestic disease threats. The NAIS aims to identify all agriculture animals (i.e., not domestic animals like cats and dogs), and it enables tracking of livestock as they intermix with animals other than herdmates. It is expected that during disease investigations, automated, national animal identification will enable faster tracking of animal movements, resulting in faster detection of the location of outbreaks and quicker containment measures.

The USDA is promoting a fast timeline for this initiative – 25% premises identification by January 1, 2007, 70% by January 1, 2008 and 100% by January 1, 2009. However, premises identification is being implemented at the state level. Without the teeth of a mandate, query whether the USDA will hit its targets. For example, according to Texas officials administering NAIS, the average Texas herd consists of 35 animals. That suggests a situation not unlike the challenge of incenting the tens of thousands of small business manufacturers doing business with the DoD to comply with DFAR 252.211-7006 “voluntarily.” Few DoD suppliers, other than the likes of Lockheed Martin, “volunteered” to ship in accordance with the DoD’s passive RFID tagging requirements prior to the effective date of the RFID mandate. (On the commercial side, SMBs haven’t exactly been lining up to adopt Wal-Mart’s RFID tagging requirements.) Is it realistic to assume that participants in a highly fragmented industry will voluntarily opt into the NAIS program, especially in view of the few small business early adopters elsewhere? And without a mandate, will SMBs invest in automated technology, given that they may be required to replace or upgrade technologies as best practices, standards and regulations change as the initiative moves from the pilot phase to the proof-of-concept stage?

Beyond these policy questions, the USDA policy makers will be struggling with a number of other hurdles relating to the management of the data itself. One of the primary concerns is ensuring the privacy of the database, including, for example, taking steps so that the information doesn’t inadvertently become subject to FOIA requests.

RFID Law Journal will be following key developments as the USDA pushes forward with its NAIS initiative. In the interim, there are a number of original sources worth reviewing in greater detail if you are interested in learning more about the NAIS requirements.

“National Animal Identification Costs and Regulations,” Robert Fourdraine, Ph.D, Wisconsin Livestock Identification Consortium.

USDA NAIS Index: http://animalid.aphis.usda.gov/nais/index.shtml.

“Strategies for the Implementation of NAIS” (April 2006): http://animalid.usda.gov/nais/downloads/print/NAIS_Implementation_Plan_April_2006.pdf.

“Implementation of Animal Identification”
http://animalid.aphis.usda.gov/nais/ain_system/ain_implementation.shtml.

Premises Identification:
http://animalid.aphis.usda.gov/nais/subjects/premises_id/index.shtml.

Animal Identification:
http://animalid.aphis.usda.gov/nais/subjects/animal_id/index.shtml.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID legal issues at http://www.rfidlawjournal.com. You may contact our editor about this publication at editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice (including, without limitation, investment advice) or as a substitute for legal counsel or other appropriate advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of this material is subject to the terms and conditions set forth at www.rfidlawjournal.com.

2006-08-31T14:03:00.000-07:00

The DoD is the Critical Early Adopter

RFID Law Journal
Newsletter No. 1
August 31, 2006

While the RFID industry has spilled plenty of ink talking up Wal-Mart’s “Next 300,” the Department of Defense (the "DoD") has been methodically rolling out its RFID tagging requirements. Suppliers beware. The applicable DoD regulations contain teeth that will impact tens of thousands of manufacturers over the coming 12-18 months. Compliance failures can jeopardize a manufacturer’s DoD revenue stream, and as such, RFID could easily become a 4-letter word for an organization that ignores the warning signs and fails to develop a concrete plan for addressing the DoD’s passive RFID requirements.

The Department of Defense is in the midst of the single largest transformation in the way it conducts business in its history. The DoD views the automation of its supply chain as a competitive advantage (i.e., an “offensive” weapon) essential to the successful implementation of its Agile Warfighter Initiative. Following the First Gulf War, the DoD started an ambitious RFID deployment initiative viewed as necessary to improve the efficiency of its supply chain. Over the past decade, the DoD has endeavored to bring the factory to the foxhole by deploying active RFID systems throughout its 16,000 mile supply chain, including tagging outbound items at critical choke points, tracking actively tagged ship containers with GPS tracking systems, and linking to U.S. soldiers in the field equipped with mobile RFID systems.

In July, 2004, the DoD undertook the next logical step, announcing its final policy statement requiring its suppliers to tag their pallets and cases with passive RFID tags. Mandatory deployment of passive RFID tags by suppliers represents the final mile in the DoD's effort to link the factory to the foxhole. Under DFAR 252.211-7006 (RFID), the DoD mandated that effective as of November 14, 2005, its suppliers shipping specified classes of goods into its two largest U.S. depots (Susquehanna, Pennsylvania and San Joaquin, California) would be required to use passive RFID tags at the pallet and case level. Vendor compliance with this requirement is measured, and non-compliance may affect vendor invoices and scorecards. There is a limited opportunity to obtain (partial) cost reimbursement (e.g., for installing a RFID system), but the DoD is expected to phase out reimbursement eligibility in 2008.

In May, 2006, the DoD announced an interim rule that substantially expands the RFID tagging requirement – significantly increasing the classes of affected goods and depots. Indeed, at about the same time, the DoD awarded a sizeable contract to wire all of its CONUS (Continental United States) DLA depots for RFID by the end of 2006. As a result, RFID could be affecting tens of thousands of suppliers by the end of 2006.

This RFID mandate is intertwined with another significant initiative – the rollout of the Wide Area Workflow (WAWF). In deploying, promoting and (ultimately mandating the use of the WAWF), the DoD is, in effect, transitioning its suppliers from a paper invoice system to an electronic invoice system. In April, 2005, the WAWF added the RFID tag identification as an additional data element in the Material Inspection Receiving Report, meaning that suppliers who are required to affix passive RFID tags to materials must also send an Advance Ship Notice (ASN) via the WAWF. Coupled together, the WAWF and RFID requirements are expected to provide the backbone for an electronic supply chain enabling improved insight into the DoD’s assets and increased visibility of materials in its supply chain. A paperless invoice system is not far away.

As a result of these initiatives, DoD commercial suppliers will face significant pressure to meet WAWF and RFID requirements. At this point, suppliers asking for exemptions from RFID requirements will likely be placing themselves at a distinct competitive disadvantage vis-à-vis other bidders. As the DoD moves the adoption cycle toward a significant inflection point, it is imperative that DoD suppliers equip themselves with the expertise to understand the requirements and develop and implement a plan for satisfying these mandates.

A number of resources are linked for your educational benefit. To read the existing RFID mandate regulations and the interim rule:

www.acq.osd.mil/dpap/dars/dfars/html/current/211_2.htm#211.275-2.
www.acq.osd.mil/dpap/dars/dfars/html/current/211_3.htm#211.275-3.
www.acq.osd.mil/dpap/dars/dfars/html/current/252211.htm#252.211-7006. www.acq.osd.mil/log/rfid/DFARS.htm.

The DoD provides a number of educational resources to its suppliers.

RFID Policy: www.acq.osd.mil/log/rfid/rfid_policy.htm.
RFID Supplier Guide: www.acq.osd.mil/log/rfid/supplierguide.htm.
Regulatory Flexibility Analysis: www.acq.osd.mil/log/rfid/regflex.htm.

The DoD is sponsoring workshops for their suppliers. Additionally, 93 Procurement Technical Assistance Centers sponsor compliance workshops. You can learn more from your local PTAC: http://www.dla.mil/db/.

The Wide Area Workflow is an essential component of the paperless supply chain. Companies shipping significant volumes need to address WAWF issues now, as the DoD is entering the late stage of transitioning suppliers to this electronic payment system. Additionally, without an automated solution for RFID and WAWF, DoD suppliers will likely face increased clerical costs to meet the ASN requirements (i.e., manual entry into WAWF in conjunction with RFID shipments). You can learn more about the interaction between these requirements at www.acq.osd.mil/log/rfid/advance_shipment_ntc.htm.
The WAWF link is https://wawf.eb.mil/.

An important, related auto ID technology is Unique Identification. The U.S. federal government has mandated the use of UID to enable better tracking of its assets. RFID Law Journal will cover these requirements in future supplements, but you can learn more at http://www.uniqueid.org/.

© 2006 – RFID Law Journal, LLC. All rights reserved.
Learn more about RFID Law issues at http://www.rfidlawjournal.com or contact us at the RFID Law Journal by writing to our Editor: editor@RFIDLawJournal.com. The information provided herein is for your informational purposes only and is not to be construed as legal or other advice or as a substitute for legal counsel or other appropriate advice. Online readers should not act upon this information without seeking professional counsel from a trusted advisor. Usage of this material is subject to the terms and conditions set forth at www.rfidlawjournal.com.