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FTC Smacks Down Company That Tried To Exploit Ethernet Patents

from the good-for-the-FTC dept

Over the last few years, it's been well documented that there's plenty of money to be made in using patents to shakedown companies who actually make products. Apparently, this is a bit of a problem for companies that hold onto patents that were actually licensed at more reasonable rates in the past. Take, for example, a company named N-Data, that had bought some patents pertaining to Ethernet back in 2003, from a spin-off from National Semiconductor. National Semiconductor had negotiated a deal with the IEEE that allowed anyone to license these patents for $1,000, in order to make sure its technology was included in the standard. However, N-Data, who was well aware of this deal, felt that now that it owned the patents, it could ignore that agreement and try to force companies using selling Ethernet products (now a widely accepted standard, of course) to pay a lot more than $1,000. Luckily, the FTC has stepped in and told N-Data to knock it off, pointing out that it needed to live up to the agreement between NatSemi and the IEEE, noting that if N-Data were allowed to ignore the agreement, it would throw into doubt an awful lot of technology standards that include similar patent licensing terms. It's interesting to note, however, that the decision by the FTC wasn't unanimous -- and FTC chair Deborah Platt Majoras voted against the decision, suggesting that forcing N-Data to actually agree to an agreement with the patents it bought would somehow unfairly be protecting large corporate interests. Who knew that actually living up to what was agreed to as part of a standards setting process was actually big company welfare?
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Filed Under: ethernet, ftc, patents
Companies: n-data, national semiconductor

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  1. identicon
    Joe Smith, 24 Jan 2008 @ 9:36am


    It looks like the lawyers for IEEE should have been a little more careful or the case would not even have made it this far. Seems to me that IEEE and similar organizations need to take an encumbrance on or partial assignment of the patent in these circumstances otherwise they might have a problem enforcing the deal if the patent holder goes bankrupt and the creditors sell the patent to a troll.

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