Sendo Patent Suit Shines Light On More Patent Problems
By Mike Masnick, Wed Mar 23 23:45:00 GMT 2005

The latest legal battle over patents helps to highlight one of the major problems with standards efforts and patents: everyone wants a standard, but only if their patents are included. It doesn't encourage innovation. It slows it down.

Whatever happened to the days of make a product, sell a product? Instead, it seems like everything is about intellectual property these days -- often at the expense of the very innovation it's supposed to encourage. While standards bodies are formed for the sake of widening the overall pie, many companies now participate with the sole purpose of patenting some of the technology involved, or making sure that existing patented ideas get included in the standard. This way, they figure, they can get some of the take out of a tollbooth that's set up for anyone who uses the technology. This isn't encouraging innovation. It's making it more expensive.

It's the dirty little secret of the standards process, but it's getting some added attention this week as the details come out about Ericsson's decision to sue Sendo for patent violation over Sendo's use of GSM technology without licensing patents from Ericsson. Sendo clearly admits that it's making GSM phones in violation of the patents in question. However, it's protesting the terms by which Ericsson is trying to license the patent. Even so, Sendo's CEO claims he was surprised by the suit, considering the company's still negotiating with Ericsson on licensing the patent.

However, it appears those negotiations were going sour anyway, as Sendo reported Ericsson to the European Competition Commission claiming that the company was being unreasonable in its licensing demands. Many believe the lawsuit is a response to the complaint: seeing it as something of a "if you're going to report us for being bullies, then we're going to sue you" type of response. Others believe it's more likely that Ericsson is actually looking to buy Sendo, and this is part of the (not so friendly) negotiating strategy.

Either way, it's yet another patent battle where some companies are finally showing that they're getting sick of so-called reasonable and non-discriminatory (RAND) patent agreements in standards bodies. The idea behind RAND agreements is that some patented technology has to end up in various standards, and the companies don't want to give them away for free. Instead, they agree to price them "reasonably and non-discriminatory," which basically just means that there's now an entrance fee for any company that wants to work with the standard. However, the success that some companies have had in milking this RAND patent process via standards means that companies are getting greedier in getting their share.

Standards bodies no longer revolve around the best technology and the most likely to succeed in the market -- but battles over whose patented technology gets into the standard. It's the same process that has more or less stalled out the UWB standards effort.

The point of having a standard is to broaden the entire market. It opens up many more opportunities for everyone. If companies really focused on open standards and pushing out innovative products there would be more money to go around. Instead, everyone gets less innovation at a slower pace, a smaller overall pie and lots and lots of lawsuits. At least the lawyers are happy.