US Federal Trade Commission to Defend the Ethernet Standard

The United States Federal Trade Commission had to step down in a legal dispute that was about to prevent any computer user from taking advantage of the Ethernet standard. Or at least, it would have prevented the users from freely using the old and beloved port.

N-Data, one of the zillions of companies that do not produce anything at all, attempted to grab hold of some old patents related to the Ethernet standard, in order to jack up a royalty fee for its use. If the scheme had succeeded, worldwide users would have had to pay various amounts of money each time they connected to the Net.

The Federal Trade Commission accused the Chicago-based Negotiated Data Solutions company of reneging on a "licensing commitment to a standard-setting body and thereby was able to increase the price of an Ethernet technology used by almost every American consumer who owns a computer." This is an extremely harmful practice that could cripple the entire Ethernet standard.

The mentioned technology is related to the " Ethernet autonegotiation of speeds and capabilities between different devices" such as switches, hubs and routers. The legal owner of the patent was National Semiconductor that stipulated in an IEEE meeting that the company would only charge a one-time fee of $1,000 for each issued technology license.

N-Data took over the Nway patents and attempted to jack the fees more than specified in the $1,000 agreement. Since the Ethernet is a common standard in nowadays' computing, the company "was able to demand higher royalties than the industry otherwise would have paid for the technologies,"stated FTC in a report.

Since N-Data does not produce any hardware, it is referred to as a "patent troll". Therefore, N-Data has been forced by the FTC to obey the National Semiconductor offering of $1,000 per license. The "patent troll" said that it will donate all the proceeds from the $1,000 standard patent license to environment-oriented non-profits.