Experts estimate industry could save billions of dollars each year in inventory and logistical costs with RFID. Trouble is, privacy advocates see RFID as a massive invasion of privacy. They say the technology would let retailers, marketers, governments or criminals scan people -- or even their houses -- and ascertain what they own.

To win the hearts and minds of consumers, retailers and food and drug companies may portray the technology as an antiterrorist tool. They say the technology can help them keep precise track of all goods and help in recall efforts should their products be contaminated or laced with poison during a terrorist attack. [...]

They also may get legal protection under the Safety Act of 2002 -- a tort-reform law that offers blanket lawsuit protections to makers of antiterrorism devices, should those devices fail during a terrorist attack.

"If we get a declaration from Homeland Security that this is the step we need to take to protect the food supply, that's the step it will take to move this technology forward," said Procter & Gamble supply-chain executive Larry Kellam at an RFID industry conference in June. [...] "We have been working with legislators to make sure the right regulations are in place to make RFID tags commercially feasible," said Stephanie Childs, a spokeswoman for the Grocery Manufacturers of America, which lobbied on behalf of the food and drug companies and retailers.