Australia's Biggest Patent Troll Goes After AT&T, Verizon and T-Mobile

Forget the IRS -- the real tax man for America's tech industry these days is the Australian Commonwealth Scientific and Industrial Research Organization (CSIRO). This lab holds foundational patents on Wi-Fi technology, and last year settled to the tune of $250 million with American firms like Microsoft (MSFT), HP (HPQ) and Dell. Now they've taken things too far. CSIRO just filed a new suit against third party companies like AT&T (ATT), Verizon (VZ) and T-Mobile (DT), who simply sell devices that involve Wi-Fi.

The patent in question dates all the way back to 1977, when CSIRO researcher John O'Sullivan was looking to get a better picture of exploding black holes. The math equations he wrote then were later adapted for the growing field of computer networks and formalized into an Australian patent in 1996, long before Wi-Fi became common. "We realized this was going to be big," O'Sullivan told a British paper, "but I don't think any of us realized how big." Researchers deserve to be rewarded for their hard work and ingenuity, but even the local press thinks CSIRO has gone a little money mad. "There's a good case to be made that Australia's peak science body is turning into a patent troll," wrote Renai LeMay in Australian Personal Computer. "The agency is not only ruining its own reputation with the technology sector ?€" which, no doubt, will be loathe to work with it ever again -- but also Australia's reputation in the global technology community."

That's an emotional argument, but there is a legal one as well. Over at Techdirt, Mike Masnick raises several interesting points about CSIRO. The key to a solid defense for the wireless carriers who sell Wi-Fi enabled devices would be the concept of patent exhaustion. Under this principle, the patent is exhausted, or rendered moot, after the first sale. That would protect the carriers who sell, but don't manufacture phones.

In some ways that makes this case more important than its predecessor, because Wi-Fi technology will soon be an omnipresent part of our lives. If CSIRO wins again, what's to stop them from going after industries like transportation or healthcare, which are increasingly incorporating Wi-Fi into their products? As Trevor Choy, an intellectual property lawyer, told the British press, "The widespread usage of the technology means that a few cents per customer could easily add up to a lazy billion or more."

Image from the Free Thinker