By Naomi Graychase

December 07, 2006

Take a look at some of the details and reasoning behind the court decision that has much of the Wi-Fi industry on edge.

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Last month, the Commonwealth Scientific and Industrial Research Organization (CSIRO), Australia’s national science agency, received a major victory in its fight to defend its patent on certain elements of wireless LAN technology.

The case began in February of 2005 when CSIRO sued Buffalo Technology for patent infringement. It ended — for now — on November 15^th when Judge Leonard Davis issued a summary judgment in favor of CSIRO. Summary judgments, which indicate that there are no disputable facts in a case, are unusual in patent law, and this result is something like a home run for CSIRO. However, since Buffalo has indicated that it will appeal — and five other major corporations have sued in two separate suits to invalidate the patent — it’s only a home run in the first inning. There’s still a long way to go.

Bruce Sunstein, a prominent intellectual property lawyer in Boston, says, “If the patent owner loses any one of these battles, the patent owner will be in trouble. The patent owner has to keep winning. Each company is entitled to its own battle.”CSIRO’s attorneys estimate that more than 100 companies are currently infringing on the patent. If so inclined, each one of those companies would have the right to fight CSIRO’s patent in court.

Currently, two suits are underway in San Francisco — featuring Intel, Dell, Microsoft, Hewlett-Packard, Netgear, and Apple — and Buffalo has promised to appeal the judgment in its case, which means that CSIRO could soon find itself fighting on three fronts.  At an average cost of $4-$7 million per trial, the price of pursuing its right to royalties on the technologies covered in its patent is substantial. But so are the potential gains.

Daniel Furniss, lead counsel for CSIRO in both the Buffalo case and the declaratory judgment action brought by Intel, Dell, Microsoft, H-P, and Netgear in San Francisco, says that the patent applies to more than 200 million units already sold. The patent was granted in 1996 by the US Patent and Trademark Office and applies to core technologies found in 802.11a and g standards.

Since the court battles are still in the early going, the potential impact of the patent is hard to calculate. But, according to a study by JupiterResearch, in 2005, 65% of home networks were wireless, and by 2010 more than 49 million American households will be using wireless LANs. Since 802.11g, the dominant standard since 2004, is covered by the patent, many manufacturers could find themselves either ponying up for lawsuits, or forking over royalties. For now though, it seems, the only people profiting from the patent are the lawyers on either side.

The patent in question, US Patent 5,487,069, covers “a wireless LAN, a peer-to-peer wireless LAN, a wireless transceiver and a method of transmitting data, all of which are capable of operating at frequencies in excess of 10 GHz and in multipath transmission environments.” Specifically, it covers “a combination of techniques which enable adequate performance in the presence of multipath transmission paths where the reciprocal of the information bit rate of the transmission is short relative to the time delay differences between significant ones of the multipath transmission paths. In the LANs the mobile transceivers are each connected to, and powered by, a corresponding portable electronic device with computational ability.”

According to Sunstein, a strong patent is one that includes broad claims and takes into account prior inventions. In order to be granted a patent, an invention must be new and non-obvious. The CSIRO patent includes 72 claims.

“If you look at the text version of this patent,” says Sunstein, “they at least cited a handful of US patents of things that are old and some literature and IEEE articles — that’s not bad; that’s pretty good. [A patent holder] wants broad claims, but [it also] wants patents where a fair amount of old things have already been considered. It’s subject to a requirement that it cover only new things; if old things have been considered, it’s harder to prove that what’s covered in the patent is not new.”

CSIRO reportedly chose Buffalo as its test case because Buffalo’s parent company would not come to the table for discussions. The November 15^th judgment, which upheld CSIRO’s patent, proves the test case had merit, but CSIRO, aware of the long and costly road ahead remains cautious in its optimism.

“This is an important win because the Judge has supported CSIRO’s position comprehensively,” says CSIRO Chief Executive Geoff Garrett. “We are obviously very pleased. However, it is only a brick in the wall — CSIRO still has a long way to go.”

Among the things the court can decide is a reasonable royalty rate. One report estimated that in the Buffalo case, CSIRO would be owed less than $2 million — a mere fraction of what it spent on the first phase of the legal battle.

CSIRO has petitioned for a change of venue, to bring the San Francisco suits to Texas to be tried by the judge who is already familiar with the patent and the technology it covers. The plaintiffs in those suits, of course, want the suit to stay where it is — far away from the judge who ruled so clearly in favor of CSIRO’s patent. A ruling on the change of venue is expected to be handed down before the end of the year.