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Forgent settles JPEG patent cases

Settlement for $8 million covers all remaining claims, although it's considerably less than originally sought.

Forgent Networks has settled its lawsuit concerning the so-called JPEG patents for $8 million, a fraction of what the company initially sought.

The company, an intellectual property firm that licenses communications technology and software for business meetings, announced on Wednesday that it has reached a settlement with all of the remaining claims in the cases involving U.S. patent number 4,698,672. The company said that the JPEG standard--the image compression mechanism used in digital cameras and PCs--infringed upon the patent, which Forgent acquired in 1997.

About 60 companies, including several camera makers, had already cut licensing deals with Forgent. These deals have brought it around $110 million in royalties. Every time a digital camera gets sold, Forgent gets a few dollars because of these deals.

PC makers, however, balked at licensing deals, which led to the lawsuit. The suit originally involved about 45 defendants, but 15 settled before this final settlement.

Forgent claimed in the past the patent was worth around $1 billion. The litigation, however, did not go smoothly for the company. The U.S. Patent and Trademark Office agreed to review the validity of the patent in February. Legal fees have also eaten into the company's bottom line. In June, a court limited the scope of the claims emanating from the patent.

Wednesday's two-paragraph release on the settlement stated that the company could not discuss the terms of the settlement, but a spokesperson later said that the settlement came to $8 million.

Patent reform has been a major issue in Washington and Europe for two years and there has been no shortage of vitriol and hyperbole around the issue. Large companies say they are being besieged with lawsuits. Small inventors, however, say that large companies merely want to steal their inventions. The term "patent troll" has become a well known, emotionally laden phrase, although the definitions of who is and who isn't a patent troll vary wildly. As one lawyer put it, a patent troll is usually "the other guy."

Many companies, such as Hewlett-Packard and IBM, have interests on both sides of the issue. The two companies have loudly complained about the spread of litigation while increasing their own efforts to garner more royalties from their patent portfolios. All sides have been able to demonstrate fairly convincing arguments for their opinions; as a result, reform efforts have been difficult to devise.

Forgent isn't out of the patent licensing business yet. It is currently pursuing claims against cable companies over a patent that it says covers technology inside digital video recorders.