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March 23, 2005

Ericsson sues Sendo over patents

The world's largest supplier of wireless infrastructure equipment, LM Ericsson Telefon, has announced it is suing UK mobile phone maker Sendo for infringements on its GSM and GPRS handset technology patents.

By CBR Staff Writer

The Stockholm-based giant said it had no choice but to take the legal action in Germany, the Netherlands and the UK, as Sendo had not signed a licensing agreement with it.

The Swedish firm is seeking damages and an injunction against the continued sale and marketing of Sendo’s mobile phones.

We believe that Sendo is using Ericsson patented technology, but they have so far not signed a license agreement with Ericsson. Under these circumstances we have no choice but to take Sendo to court, said Kasim Alfalahi, vice president of Patent Licensing.

Ericsson said it is committed to make its technology available to all in the industry who desire to use it on fair and reasonable terms through licensing. Most of the world’s manufacturers of GSM/GPRS mobile phones have already joined the Ericsson patent licensing program, it said.

Basically, all we ask is that companies who use technology invented by Ericsson compensate us for this, the same way we are prepared to compensate others for our use of their technology, Alfalahi said.

Birmingham, UK-based Sendo sells mobile phones to mobile operators that need tailored designs and software. Customers includes the UK’s Vodafone Group and Spain’s Telefonica.

The company itself is a tiny player in the worldwide global handset market, selling only 5 million handsets last year, in a market that totalled 684 million units in 2004. Yet despite its small size on a global basis, Sendo has racked up sales of $420m and a staff of 300.

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The company was founded back in 1999 by CEO Hugh Brogan. Speaking to BBC News, Brogan said the firm was prepared to pay a fair and reasonable royalty. The legal action was unprovoked and unnecessary and took Sendo by surprise, he added.

Meanwhile, he also confirmed that the company had been in negotiations with Ericsson about the technology in question.

Sendo has also made a complaint to the European Competition Commission about the way Ericsson sets licensing rates for unaffiliated companies. In a letter to the Commission, Sendo accused Ericsson and others of operating a cartel, and that they were misusing the European Telecommunications Standards Institute (ETSI) and its licensing regime.

Sendo is no stranger to legal action, and this is now the second time it has gone up against an industry goliath. In September last year, it reached a settlement with Microsoft, after Sendo had accused it of stealing its technology and customers.

That dispute centered over intellectual property rights and contractual obligations regarding the Windows Mobile Smartphone platform. As part of the settlement deal, Microsoft relinquished its stake in the company (Sendo was thought to have given Microsoft about 5% of its equity in July 2001 in return for an investment to help speed up the roll-out of new products). Other terms, including any monetary compensation, remained confidential.

The dispute had begun in December 2002, after Sendo launched a suit against Redmond claiming that it had illegally passed on to Asian OEMs intellectual property that Sendo had developed around the Windows Smartphone operating system (then in its Windows Powered Smartphone 2002 incarnation) and its hardware integration.

This was followed by a countersuit by Microsoft in February 2003, which accused Sendo of failing to meet contractual obligations with respect to the aborted Z100 handset. The Z100 should have been the first Windows Smartphone to reach the market but was beaten to that honor by Orange’s launch of the High Tech Computer -designed SPV – in October 2002.

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