[Am-info] Forgent claims JPEG patent

[Fred A. Miller]

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Forgent claims JPEG patent
=20
By Robert Lemos=20
Special to ZDNet News
July 23, 2002, 4:30 AM PT
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A small videoconferencing company is laying claim to the ubiquitous JPEG
format, igniting a backlash from some consumers and from a standards
organization.=20
Austin, Texas-based Forgent Networks posted a press release to its site
earlier this month claiming to own a patent covering the technology behin=
d
JPEG, one of the most popular formats for compressing and sharing images =
on
the Internet. According to the firm, the devices covered by the patent
include cameras, cell phones, camcorders, personal digital assistants,
scanners and other devices.=20

It took a little more than a week for the statement to find its way to th=
e
Joint Photographic Experts Group (JPEG) committee, which denounced any
attempts to derive fees from the standard.

=20

"It has always been a strong goal of the JPEG committee that its standard=
s
should be implementable in their baseline form without payment of royalty
and license fees, and the committee would like to record their
disappointment that some organizations appear to be working in conflict
with this goal," Richard Clark, managing director of U.K.-based Web
software company Elysium and the head of the U.K. JPEG delegation, wrote =
on
the committee's behalf.=20

Patent claims are common in the technology industry--the real trick is to
persuade companies to pay royalties. Scores of dot-com companies, for
example, claimed to own key e-commerce patents in the late 1990s, and the=
ir
shares often soared when their patents were granted.=20

But most companies failed to generate enough royalties to keep them out o=
f
bankruptcy court, much less generate million-dollar paydays.=20

In Forgent's case, because the claim strikes at the heart of a widely use=
d
consumer technology, it sparked an immediate response from an array of
people.=20

"Maybe this type of patent nonsense will finally get more companies to se=
e
that open standards are in fact a safer way to build their products," a
member of the Slashdot community wrote in one of more than 1,200 comments
posted on the tech news and discussion Web site.=20

Such responses have followed other questionable claims to Internet patent=
s,
such as Amazon's infamous 1-Click patent and British Telecom's claims to
have created hyperlinking.=20

Patent "in the ballpark"
So, is Forgent taking a shot in the dark at generating some royalty reven=
ue
or does it have a legitimate claim?=20

In this case, Forgent's patent No. 4,698,672--or "672" as it is being
called--appears to stand up to initial technical scrutiny, said Rich
Belgard, an independent patent consultant. It has both a solid technical
pedigree--created by a research scientist well known in the image
compression community--and apparently applies to the JPEG technology.=20

"It's in the ballpark of reality," Belgard said.=20

Moreover, the firm has been able to persuade two Japanese companies to an=
te
up cash.=20

In April, it signed a deal to license the patent for $15 million with a
large, though unnamed, Japanese digital camera player, according to compa=
ny
filings and to an industry expert.=20

In May, Forgent signed a "multimillion-dollar patent license" with Sony f=
or
the compression technology, the company said in a press release and in
filings with the Securities and Exchange Commission. Jeffrey Dabbs, a
research analyst with San Antonio-based financial research firm Kerchevil=
le
& Co., estimates the actual fee to be between $17 million and $18 million=
=2E=20

"They think there is $100 million that they can get from Japanese
companies," said Dabbs, who owns stock in Forgent.=20

A patent miracle?
The focus on patents is relatively new for Forgent, a company that for mo=
re
than 20 years had been known as Video Telecom, or VTel, before changing i=
ts
name in August 2001.=20

A patent deal nearly two years ago that resulted in $45 million payoff
whetted Forgent's appetite for the world of intellectual property. Since
then, a new management team has taken the company from a maker of
videoconferencing hardware with declining revenue to a video technology
firm focusing on software and patents. Its portfolio includes nearly 40
patents, with another 35 in the works.=20

The claim to JPEG technology ownership arose from a data compression pate=
nt
that Forgent acquired from videoconferencing hardware maker Compression
Labs in 1997, said Ken Kalinoski, chief technology officer for Forgent.=20

If he's right, it couldn't come at a better time for the company, whose
revenue has hit the doldrums. In 1997, the company collected $200 million
selling high-end video conferencing solutions and services, but for the
latest year, ending July 2001, sales fell to $38 million.=20

In a corporate restructuring and management shakeup, the company exited t=
he
video hardware business in August 2000 and slashed more than 250 jobs.=20

Kalinoski believes patent 672 has incredible potential. However, while
Forgent has gotten two companies to sign its licensing agreement, sooner =
or
later the patent will be contested. Kalinoski believes the company is rea=
dy.=20

"This is not a willy-nilly scenario that has come up," he said. "There ha=
s
been six months of due diligence as to what this patent is all about."=20

Patents filed on Internet technology and business practices have taken of=
f
in recent years and are nearly always contentious.=20

Two years ago, Unisys accelerated its program of collecting royalties on
the Graphics Interchange Format, or GIF, another popular format for
graphics on the Web. Unisys started pursuing licensing in earnest after t=
he
Web caught on with mainstream consumers, and it reached agreements with
Microsoft and AOL in 1996.=20

Other companies have resorted to a controversial tactic of applying for
patents while pushing the technology in question in standards committees.=
=20

In 1995, Dell Computer agreed not to enforce its patent rights for the
technology included in the VL-bus graphics standards, as part of an
agreement with the Federal Trade Commission. The FTC had charged Dell wit=
h
pushing for the adoption of a technology in the standards committee,
without disclosing when asked, that the company held a patent.=20

Sun Microsystems and Rambus have both been investigated for similar actio=
ns.=20

Who was first?
Forgent didn't do any of the original work of the patent that they now ow=
n;
that was done by Compression Labs' Wen-Hsiung Chen and Daniel Klenke.=20

Chen, who joined Cisco after selling Compression Labs and a second firm t=
o
the networking giant, published several papers in the 1970s and 1980s on
image compression and transformation. Some experts credit him with the
creation of a specific kind of image manipulation--the discrete cosine
transform--used in the JPEG format.=20

Yet he or others may have published all the components of the 672 patent
more than a year before the application date for the patent. Known as pri=
or
art, such publications can undermine a patent.=20

"There is a lot of work around that can predate the Forgent patent," said
the JPEG's Clark. "Most of the JPEG standard was pretty well formulated b=
y
the time this patent came out."=20

While Chen and Klenke applied for 672 in October 1986, the same year that
the Joint Photographic Experts Group was formed, the push for the standar=
d
had begun more than four years earlier. Three international standards
bodies--the International Organization for Standardization (ISO), the
International Telegraph and Telephone Consultative Committee (CCITT), and
the International Electrotechnical Commission (IEC)--had begun the search
for an image compression standard in 1982.=20

Clark of the JPEG group said Chen may have sat on one of the committees.=20

Chen could not be reached for comment, but Kalinoski of Forgent denied th=
e
claim and stressed that he believed that Chen never took part in any
committees. "We have had those discussions with Wen and absolutely he has
confirmed that he had no part in those standards discussions."=20

Even if he had, it's unlikely his participation would be considered
improper, said patent expert Belgard.=20

"Even if he was on the committee, if there was no rule (prohibiting paten=
t
applications on the standard), then...it's not illegal," he said.=20

That leaves the question of prior art as the issue that will determine
whether the patent is valid.=20

While the debate rages, Forgent refuses to slow its royalties effort.
Kalinoski said the company is looking for more royalties from other digit=
al
camera makers and the company is looking at companies in other industries
as well.=20

One certainty: Forgent has a wide swath of the Internet in its sights, as
it will consider any company that doesn't pay to use JPEG a pirate.=20

"This is very analogous to the music industry, who have said that the
people who have been using our methods and materials have been stealing o=
ur
intellectual property and this needs to stop," Kalinoski said. "We are ju=
st
asking for the same thing."=20

- --=20
Never forget: At Microsoft, the engineering department are the=20
Ferengi... The marketing and legal departments are the Borg!
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