SAN JOSE, Calif. AT&T will pay unspecified fees to a small licensing company which owns rights to a 16-year-old patent it claims covers fundamental cellphone technology. The deal is one of many intellectual property agreements between large corporations and a rising tide of small firms created solely to license one or more patents.
Digital Technology Licensing LLC (DTL; Suffern, N.Y.) has filed suit against Sprint, T-Mobile and Verizon as well as handset and base station maker Motorola. Earlier this year the company struck licensing deals with Ericsson, Nokia and Samsung, all for unspecified licensing fees.
"The licensees have requested confidentiality of terms which is normal in these proceedings," Paul Lerner, general counsel of General Patent Corp. International (GPCI), a management company which owns a stake on DTL.
DTL owns U.S. Patent No. 5,051,799 which describes a so-called digital output transducer. The patent covers the adaptive multi-rate codec and other cellular communication standards used in GSM and UMTS cellular networks, technology that assures backward compatibility of cellphone handsets and base stations, according to the company.
The patent describes a small, low cost and low power transducer for a handheld device that can transmit "sound, vibration, or other varying energy over a medium, such as a cable, optical fiber, or by radio waves," according to the patent. It was filed by three developers in February 1989 and granted in September 1991.
The developers--Jon D. Paul, Mark D. Clayton and Anthony M. Agnello--folded a company they formed and in 2003 brought the patent to GPCI. "We were approached by the people who owned the patent and who felt there were companies infringing on it," said Lerner.
DTL was formed to handle licensing of the patent. It sued Cingular Wireless for infringement on its GSM network in April 2006 in the Eastern District of Texas. When AT&T Mobility acquired Cingular, DTL filed suit against it for infringement on its UMTS network in November 2007 in New Jersey.
"We are pleased to have been able to reach an amicable settlement with Cingular," said Lerner. "Now we can focus on licensing the rest of the industry," he added.
GPCI has stakes in a group of companies managing as many as eight separate patents or patent portfolios in various areas. A related company, IP Holdings LLC, provides merchant banking and financial services for IP litigation and brokerage services.
The AT&T deal came a week before the case was scheduled to go to trial according to an attorney for DTL who said the company had been in litigation on the case for two years.
Many large companies are calling for patent reform, in large part to reduce the threat of IP litigation and licensing from small companies such as DTL that they call trolls. Individual inventors and others say such reforms could undermine the patent system that rewards innovation.