How the Aussie government "invented WiFi" and sued its way to $430 million

April 5, 2012

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The importance of CSIRO's work in the history of WiFi... according to CSIRO.

US consumers will be making a multimillion dollar donation to an Australian government agency in the near future, whether they like it or not. The great majority won't even know about it—the fee will be hidden within the cost of a huge array of tech products. After the resolution of a recent lawsuit, practically every wireless-enabled device sold in the US will now involve a payment to an Australian research organization called the Commonwealth Scientific and Industrial Research Organization, or CSIRO.

In the culmination of a nearly decade-long patent campaign, CSIRO has now scored a $229 million settlement from a group of nine companies that make a variety of wireless devices and chips, including Broadcom, T-Mobile, AT&T, and Lenovo. The settlement was reached last week just before the companies were scheduled to face a jury in Tyler, Texas—a location with a growing reputation for patent lawsuits.

CSIRO (commonly pronounced “si-roh”) adds this lump sum to the $205 million it received in 2009, when a settlement with 14 companies was struck midway through another East Texas trial. Soon after that, CSIRO began boasting to the Australian press that WiFi was a homegrown invention. By suing over its patents, it anticipated an additional "lazy billion" out of tech products sold in the US. Ultimately, this didn't quite happen—but CSIRO is about halfway there.

Haven't heard of CSIRO? It's no mistake. While the organization has been eager to brag to the Australian press about its big-money exploits in US courts, CSIRO has been circumspect about its lawsuits in the US. When it began its litigation campaign in 2005, CSIRO considered filing under the name "Government of Australia" but decided that would be "too provocative," according to a cable about the issue published by WikiLeaks. CSIRO also considered filing a case at the US International Trade Commission—a move that could have resulted in a ban on the importation of wireless devices—but realized that step was "too drastic," according to a US diplomatic official.

CSIRO started out by making a stunning $4-per-device royalty demand. The number may have looked small buried within the cost of a $2,000 laptop but it would have significantly increased the price of a $20 router or a $10 wireless card. The ultimate settlement payments aren't anywhere near that high—especially when you consider around 700 million WiFi-enabled devices were shipped in 2011 alone—but the demand was high enough that CSIRO officials reached out to US diplomats. They wanted to emphasize the $4 gambit was "an opening figure" that CSIRO did not "expect to get in the end."

Now that we're paying the real bill, it's fair to ask: who exactly are we paying? And why?

WiFi according to CSIRO

CSIRO was founded in 1926 as the Australian government’s research lab. During World War II it focused on issues like food preservation. Today, the company works in a wide range of research areas: food security to environmental science, chemistry to energy exploration, even mineral science. CSIRO still receives most of its budget from the government; similar in some ways to the National Institute of Health in the US. The company has 6,400 employees (the majority of whom are scientists) at 55 different sites throughout Australia.

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