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Trying to balance the cost-saving benefits of RFID with consumers' privacy concerns, IBM's Watson Research Center has developed a technology dubbed Clipped Tag.

Set to ship this week, the tags, made by partner Marnlen Management, will allow consumers to shorten the range of RFID from feet to inches -- reducing privacy concerns -- by simply snapping off a portion of the tag's radio antenna.

Anxiously Awaited

Retailers and manufacturers see RFID as a way to lower costs by tracking inventory more accurately at the store level, using the tag as a form of a permanent receipt for returns and recalls, or to catch shoplifters. Also, because RFID tags do not have to be aligned with a reader as do bar codes, they could be a competitive differentiator from other retailers due to quicker check out times.

However, a typical RFID tag has a range of 30 feet, and it is possible that a consumer product using an embedded RFID tag could be read without the knowledge of the consumer.

"If you tear off a part of the antenna it would have to be held up to a reader," said Paul Moskowitz, a member of the Watson Research Center and one of the inventors of the Clipped Tag.

Retail industry representatives have long talked about using the tag on products so that mall shoppers might be called on their cell phones as they pass a store from which the tagged item was purchased offering them a discount.

New Avenues Open

With pharmaceutical products, patient privacy is protected by HIPPA [Health Insurance Portability & Accountability Act], another cause of concern. Prescription medicine may be the first to be tagged at the item level, in which case a tagged prescription could easily be associated with a person and read by someone other than the pharmacist.

Dr. Ann Cavoukian, the Information and Privacy Commissioner of Ontario, Canada, who said the clipped tag concept solves a problem she has wrestled with for years: how to protect a consumer's privacy while still offering them the benefits of RFID technology.

Technology currently exists to kill an RFID tag at the point of sale. However, Cavoukian said it also kills the post sale benefits of an RFID tag.

Data Trail

But tags that are perpetually embedded in an item can easily link purchases with consumer's personal information through credit or loyalty cards.

"You could create a data trail relating to all of your purchases and activities that could then be developed into a personal profile, and from that you could create an infrastructure for surveillance," said Cavoukian.

Clipped tags with shortened antennas gives consumers control to exercise warranties or recalls because it is essentially deactivated when out of range of the point of sale reader and reactivated when returned to the reader.

Capability Still Growing

With the exception of pharmaceuticals, item-level RFID tagging is still years away, said Moskowitz, who estimates there are about 1 billion RFID tags currently being made for pallet and cases, while there are about 100 billion cases created worldwide per year.

"The manufacturing capability of tags is only about 1 percent of all pallets and cases. It will be a long way before we can label 2 trillion retail items," said Moskowitz.