U.K. retailer to pay royalties on non-SigmaTel MP3 players

Dylan McGrath

EE Times

(03/10/2006 2:00 PM EST)

SAN FRANCISCO — Techsplosion Ltd., a U.K. consumer electronics retailer/distributor that markets several lines of MP3 players, will pay royalties on portable audio devices sold that are not based on chips from SigmaTel Inc., in accordance with the terms of an agreement announced Friday (March 10).

After a short transition period, Techsplosion will pay a 4 percent royalty on the sale of MP3 players that are not based on SigmaTel, according to the agreement, under which Techsplosion joins SigmaTel`s global licensing program.

The agreement is related to SigmaTel`s claims of patent infringement by China`s Actions Semiconductor Inc. SigmaTel filed a formal complaint with the International Trade Commission (ITC) one year ago, alleging that Actions infringed multiple patents in the design of system-on-a-chip (SoC) controllers for portable digital music players.

SigmaTel (Austin, Texas) has, through its licensing program, been pursuing firms that manufacture and distribute MP3 players containing Actions chips, which SigmaTel maintains violate patents that it holds in China, Korea, Europe and the U.S. SigmaTel wants these companies to pay royalties on MP3 players sold that do not contain SigmaTel chips, but not on those that do.

When SigmaTel announced an expansion of its global licensing strategy early this year, the company said it would intend in all cases to first persuade firms to pay royalties on non-SigmaTel-based MP3 players, but that it would not hesitate to purse legal action against firms that decide not to participate in the licensing program.

Last year, in a similar arrangement, SigmaTel reached a settlement with Sonic Impact Technologies, a San Diego-based MP3 player supplier, which agreed to begin exclusively using SigmaTel portable SOC in all designs for a period of two years. Sonic Solutions also agreed to pay SigmaTel royalties on all past and future Sonic Impact MP3 player shipments containing Action`s chips.

In a statement issued by SigmaTel Friday, Amar Kapoor of Techsplosion said the company intends to require in the near future that all of its players be SigmaTel-based.

``We respect the impressive IP portfolio that SigmaTel has established and wish to honor those patents in our business via a royalty for any non-SigmaTel-based player sold in the future,`` Kapoor said.

``SigmaTel`s business is based on innovation and our continued success is based on our ability to protect that innovation,`` said Ron Edgerton, SigmaTel president and CEO. ``The agreement with Techsplosion guarantees that consumers in Europe will continue to benefit from the best portable audio technology available in the marketplace today.``