Small PC vendors are being hit with huge bills for patentinfringements. infringement as IBM cracks down on its intellectual property for the first time.
Some patents go back as far as 1981 when IBM first patented the standards for the "IBM compatible PC", confirmed a spokesman for IBM. But until now, IBM has shown little interest in collecting royalties from small vendors as it does from large companies like Compaq and Dell. The company's change of heart could mean hard times for small local PC makers.
Paul Kinsler, managing director at UK firm Mesh Computers, confirmed that IBM had made contact for the first time six months ago but that negotiations will not be finalised until next week. "It's an enormous blow," he confirmed.
"You can't argue with patents."
Other vendors complained about IBM's method of debt collection. IBM approached each vendor and cut deals on an individual level, rather than instituting one payment level across the board. Vendors remained tight lipped as to the terms of the deals but rumoured prices varied greatly.
"Some are paying $5 per PC while some are paying as much as $10 or $20," one OEM claimed.
IBM defended this method by saying that the case differs with each vendor by the volumes of PCs manufactured over the years and by the number of patents infringed by each. Cross-licensing deals may also be cut depending on what intellectual property could be offered in exchange.
Keith Warburton, head of the UK Personal Computer Association, agreed that there is little that his members can do. He does not believe there will be any casualties among the larger players like Mesh and Elonex, but foresees hardship for vendors with a smaller turnover and less cash in the bank, particularly those which have been trading for a long time.
Page 17 of IBM's 1997 annual accounts estimates the income from "a nice piece of intellectual property" at $1 billion annually (#0.61 billion), which excludes cross-licensing deals.
- Siemens Nixdorf agreed last week to abide by the conditions of the Video Electronics Standards Association (VESA) to license, "under reasonable terms and conditions", its patent for power-down technology. If any VESA member deems the charge to be unreasonable it will go to arbitration.
The firm denied allegations that it had kept the patent under wraps until it became incorporated into VESA's Display Power Management Signalling (DPMS) standard.
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