3Com Shares in U.S. Ethernet Innovations’ Patent-Related Proceeds

Those of you following the deepening mystery of whether 3Com Corp. is affiliated with U.S. Ethernet Innovations – a firm formed expressly to pursue patent licensing and litigation related to Ethernet technologies originally developed by 3Com – will recall that a 3Com executive earlier this month explicitly disavowed any direct affiliation between the two companies.

When asked on October 16 whether his company is or was affiliated with U.S. Ethernet Innovations, Gene Skayne, a VP of Finance at 3Com, said the following:

“US Ethernet is not affiliated with 3Com. We sold them some patents earlier this year.”

While there is no dispute that 3Com sold patents to U.S. Ethernet Innovations, the ongoing relationship between the two companies has been more difficult to pin down.

In a comment connected to an earlier blog post on this site, Dan Newman, a communications strategist at public-affairs consultancy SCN Strategies, conveyed a statement from David Kennedy, CEO of U.S. Ethernet Innovations (USEI), that directly refutes 3Com’s claim of there being no relationship between the companies.

Said USIE’s Kennedy:

“Earlier this year USEI’s parent company purchased 35 U.S. and foreign patents (‘the Ethernet Patent Portfolio’) from 3Com. As a result, the parties have a contractual relationship related to USEI’s ongoing licensing program, with numerous obligations flowing back and forth, including 3Com’s right to receive a significant portion of the royalties derived in connection with the licensing of the Ethernet Patent Portfolio.”

Further to that statement, U.S. Ethernet Innovations reports that 3Com has not relinquished rights to revenue derived from licensing or litigation pertaining to the patents in question.

Responding to USEI’s statement, John Vincenzo, 3Com’s vice president of corporate marketing, said the following:

Earlier this year, 3Com sold certain patents that were no longer core to its operations. As part of the patent sale, 3Com retained a license to the patents and the potential to receive a limited percentage of proceeds related to the licensing of the Ethernet Patent Portfolio — which is common practice. 3Com was not involved in the formation of U.S. Ethernet innovation, has no ownership interest in the company, and has no other affiliation with USEI beyond a limited cooperation obligation to provide information related to the status and history of the patents. 3Com has no control over the litigation USEI recently filed.

In summary, then, 3Com apparently was not involved in the formation of U.S. Ethernet Innovations and does not own a stake in USEI. Nonetheless, 3Com does provide USEI with patent-related information and retains the right to receive proceeds derived from licensing of and litigation pertaining to USEI’s patent portfolio.

As reported by Network World earlier this month, U.S. Ethernet Innovations recently launched patent-infringement suits against Acer, Apple, Asus, Dell, Fujitsu, Gateway, HP, Sony, and Toshiba.

3Com presumably will share in any proceeds that might flow from that litigation.

2 responses to “3Com Shares in U.S. Ethernet Innovations’ Patent-Related Proceeds

  1. Thanks for clarifying this matter to your readers.

  2. Interesting comments. USEI’s CEO states that 3Com “to receive a significant portion of royalties” and then 3Com’s VP states “limited percentage of proceeds related to licensing”…seems conflicting. And while 3Com said they were not involved in the formation of USEI, they surely new the intentions of the buyer as they are participating in the future royalties…via USEI’s business model. Additionally, 3Com “owned a stake” in USEI they’d be a party to the lawsuit. What would be interesting to know is how was the purchase of the 3Com portfolio funded or is USEI just paying 3Com based on future royalties collected via USEI’s file and hopefully settle strategy.

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