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Yahoo pays to settle JPEG technology for posting digital images
[December 16, 2005]

Yahoo pays to settle JPEG technology for posting digital images

(San Antonio Express-News (KRT)) Dec. 16--Forgent Networks announced Thursday that it has signed a deal with Yahoo to license its patented technology for posting digital images on the Internet.

The Austin-based company holds patent No. 4,698,672, the coding behind the JPEG compression technology. Nicknamed '672, it's the most widely used technology for storing photos in digital cameras, printers, scanners and personal computers on the Internet.

"We are pleased with the terms of the settlement; beyond that I can't say much," said Kiersten Hollars, spokeswoman for Yahoo. The terms were not disclosed.

Forgent has collected more than $105 million in licensing fees from the patent from 50 companies including Casio, Olympus and Nokia since it began enforcing its patent four years ago. Forgent also develops scheduling software, but the bulk of its revenue now comes from patent enforcement activity.

The Forgent case is also a trend in the technology industry of "patent mining," with NTP and Research In Motion, the provider of the popular BlackBerry wireless e-mail and paging services, being the most high-profile case lately. The two companies are negotiating to resolve the patent dispute, but a jury has found that BlackBerry has infringed on NTP's patents for wireless communication.

Patent enforcement happens in all industries, and the latest slew of technology patents is not unusual, said Robert J. Tosti, patent attorney and partner in Edwards Angell Palmer & Dodge LLP in Boston. Some companies, such as Forgent, have formed business models around pursuing licensing arrangements for existing patents, but there are not many of them, Tosti said.

"It may be that they found a Rembrandt in the attic," Tosti said.

Forgent began enforcing its portfolio of technology patents in 2001 and got its first deal with Sanyo for $15 million, and then Sony for $16 million.

Forgent has litigation pending in a Northern California federal court against more than 40 companies, including Apple Computer, Eastman Kodak, International Business Machines, Dell and Xerox for infringement of the '672 patent. So far, seven defendants in that lawsuit have signed license agreements with Forgent.

One that hasn't is Microsoft Corp. On April 15, Microsoft sued Forgent alleging that its patent is invalid. The lawsuits have been combined and a hearing is set for Feb. 13 in San Jose, Calif.

"Our preference is to come to a business arrangement, but unfortunately in some cases you have to go to court to enforce your rights," said Michael Noonan, Forgent's director of investor relations.

Forgent, formerly known as videoconferencing company VTEL, bought the '672 patent when it acquired Compression Labs in 1997. The patent originally dealt with compressing videos, but it has other far-reaching claims, Noonan said.

The Public Patent Foundation, a New York-based nonprofit, has asked the U.S. Patent Office to re-examine the issuing of patent '672 to Compression Labs. It contends that the patent covers "prior art," or an existing idea, and that it should never have been issued.

However, "We've seen all of these arguments before," Noonan said.

In addition to the '672 patent, Forgent has litigation pending against 15 cable companies, including Time Warner, for infringement of U.S. Patent No. 6,285,746 in East Texas district court. A hearing in that case is set for July. That patent, which expires in 2011, relates to a computer-controlled video system allowing playback during recording.

Even once the patent expires, Forgent plans to go after companies that have been using its technology since 1987, when the patent was issued.

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