Forgent Settles with Macromedia Over JPEG Infringement, Sets Sights On TiVo and MP3 Players

Last week Macromedia settled with Forgent over JPEG patent infringement issue. Today Forgent creates “enhanced intellectual property” site to provide “information on Forgent’s intellectual property program and the litigation.” Tomorrow, Forgent may go after TiVo and MP3 players.

On 23 April 2004 The Design Weblog first reported on Austin, Texas-based Forgent Networks, Inc.’s claim of infringement on its  U.S. Patent #4698672, which covers the compression algorithm in JPEG images, and the lawsuit filed by Forgent against software makers whose products read or wrote JPEG files.

Among those named in the suit were: Adobe Systems Inc., Agfa Corp., Axis Communications Inc., Canon USA, Concord Camera Corp., Creative Labs Inc., Dell Inc., Eastman Kodak Co., Fuji Photo Film Co. U.S.A., Fujitsu Computer Products of America, Gateway Inc., HP, IBM, JASC Software, JVC Americas Corp., Kyocera Wireless Corp., Macromedia Inc., Matsushita Electric Corp. of America, Oce’ North America Inc., Onkyo Corp., PalmOne Inc., Panasonic Communications Corp. of America, Panasonic Mobile Communications Development Corp. of USA, Ricoh Corp., Riverdeep Inc., Savin Corp., Thomson S.A., Toshiba Corp. and Xerox Corp.

In the intervening time, several companies have settled with Forgent and been removed from that list. Most notable are Adobe Systems, Inc., who settled for an undisclosed amount in early July, and now Macromedia, Inc. Last week San Francisco-based Macromedia, maker of web mainstay, JPEG-making products, Freehand, Flash, and Fireworks, settled out of court with Forgent for an unspecified amount.

“We believe that the patent continues to have significant value, and we will continue to license and litigate against those who we believe are infringing but have not yet agreed to a license,” vice president and chief financial officer Jay Peterson told the Austin American-Statesman in July.

That “significant value” has netted Forgent $100 million USD in settlements thus far—90% of its revenue—and with more than 40 defendants remaining. As we reported in April, Forgent claims to have received $90 million in licensing deals prior to filing its suit, and $45 million subsequent to that but preceding the Macromedia settlement. Included in the $90 million are two licensing deals worth approximately $15 million each negotiated with Sony and “an unnamed digital camera maker.”

So lucrative is the litigation regarding the alleged JPEG patent infringement that Forgent has spun it off into its own profit center. In Forgent press releases regarding the matter can be found the phrase:  “the intellectual property business has generated…”

According to reports on Forgent’s Intellectual Property website, which opened today, Forgent is looking for other patents of “significant value.” In addition to scrutinizing the company’s 40-plus other patents for potential infringement, the small scheduling software company has set its crosshairs on TiVo, whose digital recording technology, Forgent claims, is based upon Forgent patented technology.

Even more troubling for software and hardware makers is the recently revealed Forgent belief that its JPEG compression patent may apply to MP3 players. In a Dallas County state district court filing, as reported by the Statesman and republished on Forgent.com, Forgent holds a patent for a “personal video recorder” that the Statesman hypothesizes could lead to litigation against makers of hardware and software that playback video.

Says Forgent chairman and CEO, Richard Snyder: “We are committed to the intellectual property program and our objective remains to protect our intellectual property assets from infringement.”

When the JPEG patent expires in October 2006, Forgent should still be quite busy building its “the intellectual property business” and pursuing its primary source of revenue:  litigation.

Pariah Burke writes the Design Weblog and Magazine Design Weblog for Weblogs, Inc., and is a contributing writer to the Nanopublishing Weblog.