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IBM, 3Com in $1 billion pact

IBM and 3Com announce a cross-licensing agreement valued at more than $1 billion, covering an extensive portfolio of networking and communications technologies.

IBM and 3Com announced a cross-licensing agreement valued at more than $1 billion, covering an extensive portfolio of networking and communications technologies.

The two companies said they will license one another their patent portfolios "to enable each company's development teams to bring products to market faster." IBM and 3Com already make extensive use of each other's technology--including chips, routers, hubs, and modems--and the two companies have high-level ties.

The deal is estimated at well more than $1 billion, said one source familiar with the agreement.

The sharing of intellectual property is part of Big Blue's strategy to "increase revenue by getting our innovations out of the IBM Research Division and into the marketplace faster," an IBM spokesperson said. IBM has generated almost 9,000 U.S. patents in the past five years and is one of the most prolific breeders of patents among technology companies.

Once again, the agreement involves IBM's fast-rising Technology Group. Seen as a key to the company's future growth, the division has also cut multibillion-dollar deals with Dell Computer, Acer, and EMC in recent months. The Technology Group oversees development and marketing of hardware components including hard drives, liquid crystal displays, and chips.

"The joint efforts of the two technology leaders will result in new [technologies] to access networked information in new and creative ways," said Bruce Claflin, president and chief operating officer of 3Com, in a statement. "By sharing patents, 3Com and IBM have greater freedom to develop exciting new products and compete in new information technology market segments," he added.

Claflin is one of the driving forces behind this agreement. He was formerly head of IBM's PC business.

"IBM and 3Com have enjoyed a successful business and technology development relationship for over seven years, including collaborating on the IBM [communications] hubs, Ethernet LAN switches, PC modems, network interface cards, and IBM's custom chip development and manufacture for 3Com CoreBuilder products," the companies said in a statement.

IBM also recently announced that 3Com would be using the PowerPC 405GP chip to reduce "system-on-a-chip" design and development time.

Under the terms of the cross-licensing agreement, each company will receive a license under all patents that relate to their specific field of interest. IBM's portfolio includes fundamental patents on a wide range of networking technologies including "server access, server load balancing, web caching, ATM/Ethernet/Token Ring technologies, network interface cards and network management, policy-based networking, and virtual private networks, among others."

3Com's portfolio includes hardware and software patents on handheld connected organizers, network interface cards, analog and digital modem technology, network hubs, routers and switches, broadband networking technology, voice over IP, and LAN telephony.