Patent office to re-examine JPEG patent

The Patent Office will look at the JPEG patent again--and it could cause one company to lose a whole lot of money.

Michael Kanellos
Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
3 min read
The U.S. Patent and Trademark Office will re-examine the validity of the so-called JPEG patent held by Forgent Networks, an action that could deprive the company of its multimillion-dollar revenue stream.

The Patent Office granted the review at the request of the Public Patent Foundation, which says it is a not-for-profit legal services foundation interested in protecting the public against harm caused by patents. The president of the group is Dan Ravicher, a patent attorney, while Eben Moglen from the Free Software Foundation is a director. Last year, the group says it got Pfizer to narrow patent claims on Lipitor.

The organization could not be reached for comment and its Web site does not state who funds it.

The Patent Office accepts many requests for re-examination. In 70 percent of the cases, the Patent Office will make some sort of change, said the foundation, although many of the changes stop short of invalidating the patent.

Forgent has become one of the more successful intellectual property firms to emerge in the last few years. The company acquired U.S. Patent No. 4,698,672 (known as the '672 patent) when it bought Compression Labs in 1997. When the company audited its patents, it began to believe that the '672 patent covered the JPEG compression technique used in digital cameras and PCs.

Rather than fight, many camera makers have agreed. Forgent has collected around $105 million in royalties from different electronics and software companies. A case in which Forgent is suing PC makers is pending in U.S. District Court in San Francisco. Forgent executives have said the patent could be worth up to $1 billion.

If the patent is deemed invalid, the company would not be eligible to collect future royalties or pursue lawsuits on the patent. Forgent would not have to disgorge previous royalty payments, said a Forgent spokesman.

"We began investigating the '672 Patent in 2001 and have spent more than three years enforcing our property rights. We have not found any convincing arguments of invalidity, including the recent claims, and as a result we are confident in the patent, and look forward to an efficient re-examination," Richard Snyder, CEO of Forgent, said in a statement.

Patents have become one of the more contentious issues in the technology world. Open-source software developers and others claim that patents unfairly prevent them from bringing products to market. In the past 15 years, patent litigation has greatly increased, according to various companies and academics.

Patent holders strongly disagree and assert that many so-called patent reformers--often large companies or competitors--merely want to freely use inventions created by other companies. Patent holders claim that costs in the patent system have been driven up by companies that stonewall on legitimate licensing deals. Forgent, for instance, also owns a patent for video compression that it licensed to a standards body. That patent brings in about $1 million in revenue per year for the company.

Many companies seem to be on both sides of the debate. Hewlett-Packard, for instance, complains that patent claims against it have tripled in the last few years. At the same time, HP has begun to more aggressively license its own patents and has seen royalties quadruple in the same time frame.

Forgent is not the only company facing re-examination headaches. Earlier this week, the Patent Office invalidated many patents owned by NTP. Those patents have been upheld by several courts. A recent story in the Toronto Globe and Mail said that Research In Motion got Republican Speaker of the House Dennis Hasert and other representatives to prod the Patent Office about a re-examination of the BlackBerry patents.

"RIM's reviews had jumped the queue at the notoriously apolitical Patent Office, surprising even experienced Washington intellectual property lawyers," the Globe and Mail story stated.