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In the following circuit a 120 ohm termination resistor is placed across the Rx+ and Rx- data lines connected to a RS485/422 transceiver. The transceiver is protected up +/- 60V.

schematic

simulate this circuit – Schematic created using CircuitLab

I want voltage protection on these lines up to 24V. This would mean a user could possibly connect 24V directly across the 120 ohm resistor resulting in 4.8 Watts power disapation. Safe design practice would be to add at least around 50% tolerance to my resistor meaning a need a resistor rated around 7W.

Based on my searching a 7W resistor means moving to a large through hole part. The board space I have is very limited and this is undesirable.

Is there any alternatives to this problem?

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You could AC-terminate the pair, as described in this application note, but take care to read the caveats.

http://www.ti.com/lit/an/slla070d/slla070d.pdf

@Ignacio's suggestion of using a polyfuse as part of the termination resistor might be a better general solution.

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    \$\begingroup\$ The poly fuse is a nice idea...(but I always feel like I'm walking a tight rope when trying to design one in.) Maybe one of those zener polyfuse combo's.. I've used one for an over voltage fault protect and it seemed OK. \$\endgroup\$ – George Herold Oct 29 '14 at 19:28
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    \$\begingroup\$ Oops.. You'd need two back to back zeners, you don't want to short the signal. :^) \$\endgroup\$ – George Herold Oct 29 '14 at 19:38
  • \$\begingroup\$ There are Bi directional TVS diodes for such voltages. \$\endgroup\$ – Lior Bilia Oct 30 '14 at 13:40
  • \$\begingroup\$ @SpehroPefhany I'm a little apprehensive about the limited data speeds but still a helpful answer and thanks for the link to a great reference document. \$\endgroup\$ – RSmaller Oct 30 '14 at 15:48

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