Patent specialist BTG PLC is seeking millions of dollars in royalties from GSM SIM card manufacturers following a decision by the European Patent Office (EPO) that went in its favor (see BTG Wins Patent Case).

The EPO upheld its decision, originally made in 1998, to award a patent to BTG relating to technology that allows mobile operators to securely update SIM card settings "over the air." An example of this would be adding new roaming details to the SIM card. The award had been contested by SIM card vendors Schlumberger, Gemplus SA (Nasdaq: GEMP), and Giesecke & Devrient GmbH, and network operator Swisscom AG.

Now BTG will be approaching these companies to talk about royalty settlements for SIM cards already shipped that use the technology in question and to discuss the future. In the meantime, some champagne could well be in order at BTG, a company that specializes in helping companies "commercialize" their inventions.

"This is a big result for us and the inventors," Simon Fisher, BTG's technology manager, tells Unstrung. And how much is this decision worth? "It's hard to put a number to it until we have negotiated with the companies concerned. We need to dig into the detail and see who needs a license," he adds.

Oh, go on, give us a number. "It's too early to say, really. We have to pinpoint which [SIM cards] have this technology, what value the technology adds to those cards, and then agree a royalty rate," says Fisher. It's going to be millions of dollars, though, isn't it? "That would be fair." Cue the sound of corks popping.

While BTG has done the intellectual property grunt work, the technology was developed by a small U.K. company called Celltrace Communications Ltd. BTG acquired the IP from Celltrace and manages it on a revenue-share basis. Fisher says the percentage of revenue that goes to each party will depend on the agreements struck with the SIM card vendors.

There are still many details to be pinned down. First of all, the whole process could get tangled in red tape again, as the likes of Gemplus and Schlumberger now have two months to appeal the EPO decision.

In addition, it is unclear just how many SIM cards use the technology in question. BTG is basing its projections -- "We have some figures in mind" -- on data from Schlumberger. "In 2001, 160 million powerful, high-end SIM cards were shipped, and it's estimated that 560 million will be shipped during this year and next," says Fisher. One of the details BTG has yet to determine is how many of these incorporated the patented code in question.

The BTG guys are sure they will be seeking royalties from companies that either "made, used, or sold" products that included the technology in the countries covered by the EPO. These countries are Austria, Switzerland, Belgium, Denmark, Germany, Spain, France, the U.K., Greece, Ireland, Italy, Lichtenstein, Luxembourg, the Netherlands, Portugal, and Sweden. BTG has patents filed for this technology in other territories.

As Unstrung went to press, there was no response to requests for comment from either Gemplus or Schlumberger, though we are sure they were not busy celebrating the decision.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com