WAP licensing flap: Geoworks says it holds patent on wireless protocol

The hard-luck gold miner is at it again. Geoworks, developer of a failed graphical user interface for PCs in the early 1990s, has its sights set on a new revenue vein: the Wireless Application Protocol.

Last week, the Alameda, Calif.-based company announced that it owns patent rights to pieces of WAP and the wireless markup language (WML) and, as a result, plans to charge a licensing fee for the technology's use. Those affected would include practically any company implementing WAP and WML in its products and services.

Although intellectual property tariffs are old hat for telecom infrastructure companies, Geoworks' broad claim - and the public nature of its announcement - roiled WAP Forum members and software developers alike. Many said the nonproprietary nature of WAP is crucial to its taking off as a standard in the U.S.

"We have our folks looking at the merits of their claims, but I think it's a big mistake to be threatening the development community," said Chuck Parrish, executive vice president of Phone.com, a maker of browser and server software based on WAP specifications. "Even if [Geoworks] does have technology it could charge for, I think it's a bad business decision."

Phone.com, Geoworks and more than 200 other companies are members of the WAP Forum, an organization led by wireless giants Ericsson, Motorola and Nokia. The group jointly developed the protocol using technology from several different companies. By participating, WAP Forum members don't cede their commercial rights to intellectual property. The forum has a process for examining the validity of IP claims and ensuring that WAP technology is licensed on a fair and reasonable basis. But until now, no WAP member has published a schedule of royalty fees.

The flexible user interface patent owned by Geoworks, which the company says applies in the U.S. and Japan, was granted in 1994. It specifies how an application alerts the operating system to its user interface needs. According to Geoworks, WAP version 1.1, which allows wireless devices to pull information from Web pages in a text format that is readable on a small screen, is partly based on the patent.

Geoworks offers two types of licenses: an application license for companies that originate, host or serve WML applications and a platform license for companies that develop or sell software platforms based on the spec. The annual fee for both is $20,000. Platform developers also must pay a royalty of 10% of revenue per user, with a minimum charge of $1 per user. Companies with less than $1 million in gross annual revenue "may be eligible for a fee waiver," according to the white paper that details the patent. The deadline to comply is July 1.

According to data from The Yankee Group, by 2004, more than 52 million WAP handsets will be shipped in the U.S. alone. Even at $1 per user, the patent could mean big money for Geoworks, a company whose current run rate is about $12 million.

"It is too early and would be irrational to predict the revenue impact of this program to our company," said Dave Grannan, Geoworks' CEO. Grannan acknowledged that Geoworks is walking a fine line and said he does not want to burden the many grassroots developers that have embraced the WAP platform. "At the same time, we want fair compensation for the R&D investment we've made."

The patent is based on an idea, not a technology, and it has little prospect of sticking if the matter goes to court, critics in the development community said. Nevertheless, WAP Forum members such as Ericsson and Nokia are taking the claim seriously and have postponed comment until their legal eagles can review the documentation.

"I would not be surprised to see one of the large players contest this," said Eddie Hold, senior analyst at Current Analysis. "They could refuse to pay Geoworks or even buy them out just to shut them up. The cost of buying Geoworks would be minuscule compared with the potential revenue stream."

"The Geoworks claim could have a negative effect on the market in the short term, but the industry will find some way to settle this issue," said Naqi Jaffery, mobile communications analyst at Dataquest. In the meantime, the attendant publicity over Geoworks' claims affords WAP greater visibility, he said.