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To: pat mudge who wrote (12509)	8/3/1999 7:29:00 AM
From: Glenn McDougall	Respond to of 18016

IBM, 3Com to share access to patents Deal aims to deflect suits: The first such agreement IBM has made public Simon Avery Financial Post MOUNTAIN VIEW, Calif. - International Business Machines Corp. and 3Com Corp. announced plans yesterday to share all their networking and communication patents in response to the industry's ever-increasing speed of development. IBM will gain access to 3Com hardware and software patents, which include "wired" hand-held computers, analog and digital modem technology, network interface cards, network hubs, routers and switches, as well as know-how for transmitting voice over the Internet. In return, 3Com will have licensing rights to IBM's server network technology, Web caching, network management and virtual private networks. Even though the two companies make competing products, officials from both said sharing proprietary knowledge will not damage their competitiveness. "In the high-tech world, no one has exclusive know-how," said Tony Baker, director of intellectual property and licensing for IBM's technology group. "You are not empowering the other person any more than they would be empowered by their own innovation. What you are doing is speeding up the process." Neither IBM nor 3Com would confirm the value of the arrangement, but one news report put it at approximately $1-billion (US). "I like that number, but I can't comment on it," Mr. Baker said. Edward Barbini, a spokesman for Santa Clara, Calif.-based 3Com, said the deal would probably involve "dozens" of patent exchanges. Investors have beaten down the value of 3Com shares this year as rivals Cisco Systems Inc., Lucent Technologies and Nortel Networks have made strong gains in the marketplace. Although 3Com has introduced a number of new products recently, the firm's top line is overly weighted with lower-margin products such as network interface cards," said Todd Hanson, senior networks analyst at the research firm Dataquest. "3Com could probably use a shot in the arm with the depth and breadth of IBM research," he said. "They were probably feeling the need for the backing of a partner to be able to leverage off large-scale research projects." IBM, based in Armonk, N.Y., is consistently one of the biggest producers of patents in the U.S. In an effort to stem patent litigation, IBM has many other large-scale patent-sharing arrangements, but the deal with 3Com is the first IBM has agreed to make public, Mr. Baker said. It is the first total portfolio, patent cross-licensing deal for 3Com, added Jean Myer, manager of strategic relations for 3Com's network systems unit. "One of the things developers have to worry about is, are they spending time on dreaming up smart ideas and suddenly finding that they are infringing on someone else's patent," Ms. Myer said. "This now gives them much more freedom to develop."