Intel sues N-Data over Ethernet patent claims

An Ethernet patent dispute is again rearing its ugly head in court this week as Intel has filed suit against patent licensing firm  Negotiated Data Solutions (N-Data) looking to indemnify Intel customers against any royalty claims N-Data is looking to grab.

    The case stems from a patent claim N-Data currently has against one of  Intel's biggest customers, Dell. In court papers filed in Texas, Intel said it is looking to get a permanent injunction "barring N-Data from enforcing the Patents-in-Suit against Intel, Dell, or any other Intel customer."  Intel goes on to claim N-Data has intentionally interfered with Intel's prospective business relationships and economic advantage.

Intel says N-Data's patent claims were settled when the patents involved were originally held by National Semiconductor Corporation. In 1994 National made a commitment to an electronics industry standard setting organization, the IEEE, that if the IEEE adopted a standard based on National's patented NWay technology, National would offer to license the technology, for a one-time, paid-up royalty of $1,000 per licensee, to manufacturers and sellers of products that use the IEEE standard.

    NWay technology lets  two devices at opposite ends of a LAN link exchange information and automatically configure themselves to optimize their communication. This process is known as autonegotiation. Standardizing on a single autonegotiation technology let devices made by different manufacturers work with one another and with different generations of Ethernet equipment.

    Igniting this dispute was the fact that in January that the US Federal Trade Commission settled a complaint against N-Data saying the company was  trying to collect huge license despite a prior, paid up agreement.  The FTC said  N-Data, allegedly violated federal law by engaging in unfair methods of competition and unfair acts or practices regarding its enforcement of certain patents against makers of equipment employing Ethernet which is the industry's ubiquitous communications standard. As alleged in the FTC complaint, N-Data obtained the patents knowing about National's prior pledge and after the industry became committed to the standard, but N-Data has refused to comply with that commitment and instead has demanded royalties far in excess of that agreement.

As part of the FTC settlement N- Data agreed to limits on how much it can collect on its patents. That settlement will protect consumers from higher prices and ensure competition by preventing the company from charging higher royalties for the technologies used in the Ethernet standard, the FTC said. 

But here's the current rub: Intel says  N-Data shouldn't be allowed to collect anything from Intel customers.

    As you might expect, N-Data disagreed with Intel's claims and said it would respond to the allegations in court, according to a report on Bloomberg.com.  "N-Data is confident that its position is correct and is looking forward to a favorable resolution.'' the company told Bloomberg.com.

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