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Not So Fast, Buster


News: Analysis & Commentary: PATENTS

NOT SO FAST, BUSTER

TRW Inc. was in the stratosphere. On Apr. 26, the company proudly announced that it had received two crucial U.S. patents for Odyssey, a proposed $2 billion, 12-satellite network. Its lofty goal: to dominate communications from a broad swath of the heavens--a 5,000-mile-wide band between the Van Allen radiation belts (chart). Patents in hand, the company hoped to build a cost-effective, lucrative entry into the potentially explosive satellite-phone business.

Trouble is, TRW doesn't actually have the patents yet. Its bragging, plus heated protests from Inmarsat, an international consortium that wants to launch satellites at the same altitude, caught the attention of the U.S. Patent Office, which had "allowed" but not awarded the patents. On May 12, the examiners decided to take a second look. Says Frederick R. Schmidt, the patent-examining group director who yanked the TRW patents: "We don't issue patents when there's a question with the prior art"--that is, when a new idea may not be new.

Now, examiners may reject some of the claims or force TRW to submit narrower versions. That would be a blow to TRW and its partner, Montreal-based Teleglobe Inc. In addition to Inmarsat, it faces well-heeled rivals in the race to offer global, satellite-based phone service. The $3.4 billion Iridium consortium, led by Motorola Inc., proposes a 66-satellite network. Globalstar, a venture of Loral Corp. and Qualcomm Inc., plans a $2 billion, 48-satellite system.

FEWER "BIRDS." Against those rivals, TRW is pitting a good idea: Lofting its satellites into a higher orbit would let them see more of the earth's surface so that fewer "birds" would be required for global coverage. But can a company patent the use of outer space? Inmarsat, which TRW once tried to recruit as an Odyssey customer, says that's what TRW is trying to do. Inmarsat's U.S. signatory, Comsat Mobile Communications, has said TRW's claims are like Boeing trying to patent air travel at 30,000 to 50,000 feet.

Inmarsat has its reasons for opposing the patents. Its system would employ the same space--although in order to serve air and sea customers, its satellites would cover the earth uniformly, while TRW would focus on populated areas.

TRW isn't commenting on Inmarsat's plan. In fact, it isn't saying anything: Afraid of antagonizing patent examiners, TRW has gone silent on its applications. With its premature celebrations, though, it may have endangered the real thing.By Peter Coy in New York


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