FTC, N-Data settle unfair trade case

The Federal Trade Commission today settled charges against Negotiated Data Solutions, which it said was competing unfairly in licensing patents under the venerable Ethernet network standard dating from the mid-1970s. The commission noted that Ethernet is "used in nearly every computer sold in the [United States]."

Negotiated Data Solutions, known as N-Data, licenses patents originally owned by National Semiconductor. That company's NWay technology lets an Ethernet device automatically detect and optimize local-area network communication with any other vendor's device.

National Semiconductor in 1994 agreed to license the patents to vendors for a one-time $1,000 fee. N-Data, however, has "threatened to raise prices for an entire industry" by charging vendors royalties far in excess of the one-time fee after they committed themselves to the NWay technology, FTC said.

Kent Cox of FTC's Office of Competition estimated today that the collective damages involved in the case might total "a ballpark figure of $20 million a year over 13 years, from six years before the date of complaint until 2014, when the patents expire."

N-Data consented to the ruling.

The IEEE 802.3 Ethernet standards continue to evolve. Institute of Electrical Engineers working groups are developing standards for network transmission as fast as 100 gigabits/sec. Worldwide, the Ethernet device market is forecast to total more than 6.7 million units by 2009, according to ARC Advisory Group.

Ethernet connectivity has been moving outward from conventional network switches and hubs to individual devices, such as new types of network-addressable weapons, sensors and vehicles being procured by the Defense Department in addition to automation and control equipment.

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