Monday, March 27, 2006

A different definition of patent troll

If you're like Forgent, you are a patent troll, according to a recent article. The text is Forgent and other companies with similar strategies -- often called "patent trolls" by critics -- amass intellectual property portfolios and file suits against other businesses, accusing them of infringement.

The article continues:

Forgent's biggest earner -- generating $US108.4 million in settlements and licence fees in the past three years -- has been US Patent 4,698,672, issued in 1987 and obtained in an acquisition. At the heart of the so-called 672 patent is something ubiquitous in the technology world: the JPEG format for digital pictures.

Although JPEG is used in countless electronic gadgets and software programs since the 1980s, it wasn't until two years ago that Forgent sued 44 companies, including some of the hi-tech sector's largest players.

Fogent said they were using the patented compression technique covered in the 672 without paying a licencing fee.

Thirteen companies have settled, including Yahoo. More than 50 others not involved in Forgent's lawsuit have agreed to pay unspecified royalties for using the patent, including RIM, and Forgent has notified more than 1000 other companies they may owe royalties.

RIM won't disclose the price, but spokesman Mark Guibert says negotiations with Forgent resulted in a "reasonable agreement".

The trial for the remaining defendants -- among them Apple, Dell, Hewlett-Packard, IBM and Microsoft -- is pending in the US District Court in San Francisco. Dan Venglarik, an intellectual property attorney with Davis Munck Butrus in Dallas, who is not involved in the case, says Forgent's tactics have far-reaching impact. Many smaller companies especially will be likely to settle rather than dispute Forgent's claim because of the high costs of litigation, which could easily top $US3 million.

"If the numbers make sense, companies are going to be inclined to settle to avoid the risk," Butrus says.


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