Patent landrush threatens Wi-Fi standards

Tim Berners-Lee demands royalty-free fix

We have examined before how patent lawsuits are threatening to stifle the adoption of wireless standards. Symbol, fresh from an intellectual property victory over rival Proxim, is the latest to assert sweeping licensing rights in 802.11 technology, while VIA is seeking to extend its proposed ‘intellectual property pool’ to WiMAX.

With the emerging WiMAX and RFID wireless technologies both subject to major patent claims, as well as numerous intellectual property disputes in Wi-Fi, the arguments are growing louder that standards are kept royalty-free. This would basically give companies – particularly start-ups – the choice of keeping their inventions proprietary and seeking to build a de facto standard with a full royalty revenue stream, Qualcomm-style; or donate the innovations to industry bodies for free, but with the hope of creating a far larger market in a shorter timescale, in which to sell products and services.

Call for royalty-free standards

Tim Berners-Lee, inventor of the World Wide Web and director of the W3C standards consortium, is one of the high profile supporters of the royalty-free view. Speaking at MIT’s Emerging Technologies Conference this week, he said it was important that the web, whether wireless or not, is not “tripped up by software patents”.

"If you want a good laugh, go look at patent applications," he said, claiming that all companies developing products in emerging markets feel threatened by the possibility of a sudden patent lawsuit that could change their cost base entirely. "You could never find out what patent could possibly apply to what technology," he said. "You could never guess what things people might have the gall to say they have patented already. It really is a universal fear."

Symbol’s move

Hard on the heels of WiMAX vendor Wi-Lan asserting its intellectual property rights in OFDM technologies used in both 802.16 and 802.11a, wireless switchmaker Symbol is claiming that the patents concerned in its Proxim dispute are included in all Wi-Fi products.

This means that all the vendors could, in theory, be liable for royalty payments Proxim had to pay $23m in damages and 2 per cent royalties, though other vendors would owe 6 per cent says Symbol.

Cisco has already been sued by Wi-Lan and, with its deep pockets, is the obvious target for any form of royalty hunting. However, if it does not choose to pay up voluntarily, getting aggressive with the giant would also carry a serious risk for Symbol, since Cisco has greater resources than Proxim to fight the basis of the patent claims and try to get the recent rulings reversed. Proxim gave in largely because, to continue the legal battle, it would have had to post a bond for a large part of the $26m it now owes, and, given its recent financial tribulations, did not want that additional pressure.

If Symbol decides, like Wi-Lan, to chase large numbers of vendors, it raises the issue, once more, of how far such actions will hold back the WLan market. While vendors have the right to defend their intellectual property, equipment makers could find themselves paying several percentage points in royalties on so many aspects of the product that it becomes price prohibitive to launch one at all.

Symbol holds 702 patents. The one at issue here concerns power management in a frequency hopping environment and, according to Proxim, is a standard feature in every 802.11 access point. According to the recent jury decision, Symbol’s patent is only infringed at the point that a chipset is built into a system, so it will be the equipment makers, not the chipmakers, that are faced with demands for royalties, which Symbol is setting at 6 per cent. That could add up to a revenue stream of tens of millions of dollars a year.

Symbol is keen not to be over aggressive and said it only resorted to lawcourts when Proxim “made an enormous effort to stop our licensing effort. They failed, and our entitlement to a six-percent royalty has now been tested and validated by jury and judge”, as Symbol's general counsel, Peter Lieb, told Techworld.

Ironically, Symbol also expects to gain licensing revenues from some patents it has acquired from Proxim. The latter handed over some patents, also in the power management field, to reduce its royalty burden from 6 per cent to 2.3 per cent. These last until 2014, while Symbol’s own expire in 2009.

Via’s WiMAX licensing program

One company that has been active in trying to find a middle ground between inventors’ intellectual property rights and the rapid uptake of standards is Via Licensing, a subsidiary of Dolby. Earlier this year it proposed bringing 802.11 patent holders together in a unified system that would streamline the process of licensing Wi-Fi technology and collecting royalties. Now it is aiming to set up a similar scheme for 802.16. Via this week issued a call for essential patents related to 802.16, with the aim of identifying the owners of those patents that are “necessary for the practice of the IEEE 802.16 standard.

Essential patents are understood to be issued patents that have one or more claims that would necessarily be infringed by the implementation or use of the IEEE 802.16 standard”. Via then plans to convene the claimants of these patents, to work out common and “fair” licensing terms. Such a process has the advantage, while not going as far as royalty-free standards, of at least making licensing more transparent to equipment makers.

Pressurizing patent holders to show their hand upfront and agree on common terms removes the nervousness that many smaller players feel – as alluded to by Berners-Lee – that patent suits or royalty demands will appear unexpectedly and force a major shift in the business plan. The other main carrot is lower litigation costs, since the group will provide a one-stop shop for patent licenses, saving the holder having to get protection from each vendor individually.

Via Licensing has created a business in administering licensing programs, or patent pools. It has formed similar groups for the MPEG 2, MPEG 4 and H.264 consumer electronics standards and in March branched out into Wi-Fi, with the aim of stemming a wave of destructive lawsuits that was rising in the 802.11 world – including those between Proxim and Symbol, Agere and Intersil, and Standard Microsystems and Wayport.

Another development that may reduce licensing costs in wireless is the tendency of major players to offer their technologies royalty-free in order to encourage the adoption of their inventions by the IEEE. This has been particularly visible in the bitter battle to provide the 802.15.3a standard, based on UltraWideBand, with both contenders making promises of free technology if their platforms are adopted.

Copyright © 2004, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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