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IP issues overshadow technology debates

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Analysis The wireless industry has reached that stage where intellectual property issues threaten to overshadow real technology debates. Too many bright start-ups, many facing shake-out and failing to gain significant market presence through effective sales, are turning instead to their patent portfolios and the 'Qualcomm model' of deriving revenue from other companies' licensing fees.

Actions range from the ludicrous - T-Mobile seeking to patent the word 'hotspot' - to the sweeping: Nomadix patenting the splash page mechanism that WISPs employ to redirect users to a log-in page. Last week, Calypso joined the crowd, seeking to enforce a newly-granted patent surrounding Wi-Fi/cellular roaming.

Via attempts to unify Wi-Fi patents

Now Via Licensing is aiming to bring together patent holders in a unified system that will streamline the process of licensing Wi-Fi technology and collecting royalties, but there are fears that such a move could increase prices in the extremely cost-sensitive WLan market.

Via, a subsidiary of Dolby Laboratories, formed similar groups for the MPEG 2, MPEG 4 and H.264 consumer electronics standards. It says an 802.11 program would bring together organisations with patents considered essential to the Wi-Fi standards, and these as-yet unnamed companies will meet for the first time on 14 April in Tokyo.

The objective is to cut down on destructive lawsuits between competing holders of 802.11-related patents, such as those between Proxim and Symbol, Agere and Intersil, and Standard Microsystems and Wayport.

Of course, the success of such a initiative would depend on most of the key patent holders agreeing to join. The 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.

For vendors, such a system reduces the fear of being sued when they launch products. This fear is very real and can be a make-or-break factor for a smaller supplier in the increasingly low margin wireless market - especially as more and more companies seek to build a Qualcomm-style revenue stream.

Calypso's claims

The latest to enter the fray is Calypso, with its new patent on a technology for roaming between cellular, Wi-Fi and Bluetooth networks. There are no details yet of how Calypso's patented technology, which is included in its own ASNAP platform, differs from the host of other seamless roaming solutions being developed by large and small suppliers.

Calypso claims it enables users' mobile devices automatically to connect to the fastest or cheapest available network though it is targeting its products not at end users but at carriers that have cellular systems and hotspots, allowing them to offload capacity from one to the other.

Calypso is best known for its cellular/Wi-Fi videophone, the C1250i. It also plans a handset that uses television cable as backhaul for voice over Wi-Fi services, giving cable TV operators a new source of revenue. The C1250i, and its accompanying video-optimised access points, use its ASNAP technology, which supports real time video at 20Mbps.

The company believes it has achieved the holy grail of the patent holder - the ability to go after the biggest names, with a strong enough case to encourage them to dig into their deep pockets for licensing fees, not lawyers. It has named Ericsson, Motorola and Nokia as vendors infringing on its patent and aims to start chasing them soon.

However, other companies offer alternative roaming mechanisms - Birdstep is one that claims its technology does not use any Calypso IP - and so some suppliers may decide to get round Calypso by adopting a different platform. Birdstep says its approach is based on mobile IP, as standardised by the IETF eight years ago.

The risks of patent chasing

In other words, Calypso is taking a huge risk, one probably borne out of a need for quick revenue. Its videophone and other technologies, while attracting some interest - notably in China - have failed to secure significant operator support as yet and the market for roaming is fledgeling. But in the quest for cashflow the company risks alienating large vendors and driving them towards other technologies.

Few companies ever got rich on patents alone. UltraWideBand pioneer Pulse~Link, which has a wide collection of patents surrounding long distance UWB, expects to make revenue from this IP but is convinced that it could not make a strong business without launching products too.

Qualcomm itself would not have a successful business model were it to drop its actual chips and rely just on its CDMA portfolio, and it does not just license patents but adds significant value to its licensing program in the shape of know-how and methods, which only come through real experience of a market.

Patent law may exist to encourage innovation by protecting inventors' rights, but it can often have the opposite effect, embroiling companies in expensive and bitter - and often frivolous - legal battles to the detriment of their real business. We have seen Synchrologic, the strongest of the enterprise wireless middleware independents, being acquired by rival Pumatech as a direct result of losing a patent lawsuit.

Research in Motion has frittered piles of cash and shareholder value on a string of lawsuits, both suing competitors such as Good and being sued by the intellectual property company NTP, which has no products at all but subsists entirely on licensing fees associated with a collection of patents (but which could, conceivably, put RIM and its much-loved products out of business).

Of course, it is important to defend IP from theft. But too often, companies are fending off rivals in the courts because they have been unable effectively to do it on the open market, with the old-fashioned techniques of strong product development, robust channels to market and good marketing. Such battles raise prices and postpone, rather than avoid, shake-out and may even lead to the 'wrong' players - from the user's point of view - surviving.

© 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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