September 23, 2004, 11:38 AM — Wireless vendor Symbol Technologies Inc. has told us it will be seeking a big license fee from all Wi-Fi equipment vendors for an infringed patent. And according to one manufacturer, Proxim Corp., it stands a good chance of getting it.
Last week, Proxim gritted its teeth and paid US$23 million damages awarded by a jury to Symbol in 2003. Patents owned by Symbol could affect any 802.11 access point, said both companies.
"The patent that was found to be infringed, is a standard feature on every 802.11 access point," said Ben Gibson, vice president of marketing at Proxim. The feature -- power save -- is built into standard Wi-Fi chipsets but, according to the jury's decision, does not infringe the Symbol patent until the chipset is built into a system. This means that every other Wi-Fi system vendor could be in line for a letter from Symbol's legal team, asking for six-percent royalties.
This could amount to tens of millions a year for Symbol. The Wi-Fi market -- the greatest part of which is access points -- was $658 million in the last quarter, according to analysts Synergy Research Group Inc.
Symbol, for its part, is talking about a licensing program rather than a lawsuit-fest. "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," Symbol's general counsel, Peter Lieb, told Techworld. "There are a lot of companies who need our technology, and it is only right that we get fair royalties."
Lieb said that some companies are already paying licensing to Symbol, but would not say who they are, or which companies Symbol was approaching next. Licensing would be a minor part of its business compared with shipping products, he said: "If the amount of licensing revenue become significant, we will disclose it," said Lieb. "The lion's share of our revenue is always going to be in sales of products and services."
Ironically, the legal battle was started by Proxim, which sued Symbol in 2001 over its own impressive stack of patents, and was counter-sued by Symbol. Both suits were settled -- in Symbol's favor -- in 2003, and Proxim has now decided not to go fighting. "We had a choice whether to continue to fight the litigation," said Gibson. "Given the size of the jury verdict, it was important for us to decide to move. We didn't want a one-time financial event of $26 million hanging over our head. To appeal, we would have had to post a bond for a large part of that."