This could not have been a happy weekend for some of the major WiFi players. A Texas court last week ruled that WiFi patents owned by the Commonwealth Scientific and Industrial Research Organization (CSIRO), Australia's national science agency, were infringed on. CSIRO claims that its patent covers a core method for transmitting wireless signals which use OFDM modulation. Hundreds of companies making products which include this wireless networking technology were anxiously waiting for the court ruling, and their anxiety now appears justified as they face the possibility of patent infringement lawsuits.
The CSIRO was granted its patent (#5487069) ten years ago, but only last year turned to sue Buffalo Technology for patent infringement. On Friday, Judge Leonard Davis of Austin, TX, in a summary judgment, ruled on the side of the plaintiff. The court will soon determine how much Buffalo owes in damages. Geoff Garrett, CSIRO's CEO, said, "We are obviously very pleased. However, it is only a brick in the wall - CSIRO still has a long way to go."
As we reported last year, CSIRO decided to take legal action because it was beginning to feel the pinch of deep budgetary cuts pushed by Australia's government. The organization had been trying unsuccessfully for several years to convince companies to pay, but as the search for new sources of income to support its research activities became more urgent, the organization decided that time has come to turn to the courts (CSIRO has been granted more than 3,500 patents in different areas). If it wins but some of its cases, CSIRO will be entitled to hundreds of millions of dollars in royalties. Note that CSIRO's patent rights involve 802.11a/g/n, but do not apply to 802.11b.
Last year, Microsoft, Intel, HP, Dell, and Netgear asked a federal court in San Francisco to rule that CSIRO's patent claim was invalid, but the judge in the case decided to wait until the suit in Texas was resolved before making his ruling. Now that the Texas court has ruled, the San Francisco court may find it easier to rule in favor of the Australians. The five companies were able to convince the San Francisco judge, though, that the fact that CSIRO is a non-U.S. entity does not make it immune from legal action against it. Stay tuned.
All this cannot be good for WiFi. "One reason that WiFi has proliferated as it has is because it's reached a point where it's incredibly cheap, so it's easy to just stick a WiFi chip in a consumer electronics device," says ABI Research's Stan Schatt. "But if the cost of the technology goes up to pay for the license, even a little bit, it could throw off the economics."
For more on the CSIRO case
-see Marguerite Reardon's C|net News report
More: FarPoint's Craig Mathias is sanguine: "It takes a very long time to go through the legal process.... I don't see any immediate impact on the wireless industry as a result of this case. And to be honest, it's not even definitive that other judges or courts will uphold this patent and also find it valid." Quoted in Reardon's C|net News report