RFID & EPC Systems

By now, most members of the converting industry probably have heard about Electronic Product Code (EPC) systems which, using Radio Frequency Identification (RFID), will allow logistical tracking of products throughout the distribution chain, revolutionizing the product distribution process well beyond the current bar code technology. The converting industry will be part of that revolution as major retailers and the government begin mandating its use.

Because some groups have raised concerns about EPC and RFID use, however, it is important to make sure converting industry members understand fully the technology, its benefits, limitations, and potential issues surrounding its use.

EPC involves a unique serial number embedded in a microchip or tag, which can be attached to pallets, cases, or even products. Using RFID technology, the EPC code can be read by sensors over short distances, usually under 6 meters. The enabling wireless technology that allows this to happen, RFID, already is familiar to many of us. The devices that allow us to sail through tollbooths on busy highways use RFID tags, for example.

With EPC systems, tagged pallets, cases, or products can be tracked throughout the distribution chain, allowing for a host of benefits to businesses and added convenience for consumers.

Benefits include streamlined logistical management and anti-theft and anti-counterfeiting protection as goods move through the distribution chain. This alone is expected to potentially save billions of dollars. EPC systems should allow better management of shrink and assure product freshness and quality. They could support warranty registration and facilitate product safety or recall announcements; help facilitate checkout at the retail level; and ultimately provide the basis for many other beneficial applications and uses, from “smart” appliances that tell you when you need more milk, to reminders to refill your prescriptions.

Cost and technological considerations, including the current absence of universal agreement on global standards applicable to the communications technology, will limit expansion of EPC use. Equally importantly, education is needed to ensure consumers understand and accept the technology. Privacy advocates have expressed fear that through EPC tags, enormous quantities of individually identifiable data will be collected and shared with participants in the distribution chain. Some seek to ban or restrict the introduction of EPC systems, while others are asking for safeguards.

Ultimately, some of the most beneficial uses of EPC systems, such as smart appliances, medication reminders, or product safety notifications, will — as with toll booth passes — require the collection of personal data. Thus, businesses understand there are legitimate privacy concerns and are working to develop recommendations on fair information practice principles applicable to personally identifiable information collected, used, or shared through EPC systems.

There are a number of basic premises underlying the conceptual approach to EPC privacy:

  1. The collection of personal data always must be fair and lawful. Understanding what types of information can be collected lawfully is made more complicated by the fact that in today's global economy, tagged products will move through different countries and regions.

  2. Consumers have the right to be informed about the use of EPC tags, through, for example, placing a notice on the product or package.

  3. Personal data must be maintained in a secure fashion.

  4. Consumers must be provided with reasonable access to their personal information.

Industry is working to incorporate these and other fair information principles into a set of self-regulatory guidelines. In fact, industry guidelines will be essential to assure that fears about how technology might be used do not result in ill-advised, restrictive regulations that prevent consumer and business benefits from being achieved.

At least initially, many products will include EPC tags only at the pallet level, but if costs decline, item-level tagging on products or packaging will be more common. This means, of course, that converters and their customers will need to understand how EPC systems are being used, familiarize themselves with self-regulatory guidelines designed to safeguard consumer privacy, and adopt appropriate EPC privacy policies and procedures.



Sheila A. Millar, a partner with Keller and Heckman LLP, counsels both corporate and association clients. Contact her at 202/434-4143; millar@khlaw.com; packaginglaw.com.



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