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Hearing On JPEG Compression Patent Set

Forgent Networks day in court could eventually lead to hundreds of millions of dollars in licensing fees.

A California federal district judge will hold a so-called Markman hearing March 9 in which evidence on the legal standings of claims in a patent on JPEG compression will be heard.

Forgent Networks holds a patent--No. 4,698,672--on digital image compression used in digital image devices such as digital cameras, PDAs, cellular telephones, printers, scanners, and certain software applications that compress, store, manipulate, print, or transmit digital images. The company, which obtained the patent when it acquired Compression Labs in 1997, has collected $105 million in licensing fees, representing more than 90% of Forgent's revenue in the past four years.

Forgent has sued more than 30 companies to collect licensing fees, including some of the biggest names in IT and photography. Since the filing of the litigation, more than a dozen companies that were defendants have entered into license agreements.

Critics contend those companies were browbeaten into paying licensing fees to avoid costly litigation, that the patent is too broad, and that others developed such compression technology either before or simultaneous with Compression Labs. Besides, they say Forgent acted like a patent troll, waiting years before aggressively enforcing the patent.

Nonsense, responds Forgent CEO Dick Snyder, saying it takes years to identify companies that use the compression technology.

That's what the court will decide. If the judge narrowly interprets the claims in the patent, the defendants could say the claims don't affect what they do. A broad interpretation should help Forgent at a trial. Much is at stake.

Snyder says Forgent identified 1,100 companies it says uses its compression technology, and a victory in the lawsuit could generate hundreds of millions of dollars for the tiny company. If Forgent gets a favorable opinion, it's likely to seek a summary judgment on patent infringement.

According to the Web site biojudiciary.org, a Markman hearing can influence patent litigation significantly. By deciding claims construction, courts could decide the ultimate merits of a patent case without the need for trial. "If the patent claims are construed so as not to cover the defendant's product or process, dismissal of the case is in order," an article on the Web site says. "Conversely, if the facts regarding the defendant's product or process are undisputed, claim construction in favor of the plaintiff allows for summary judgment on infringement or settlement."

Defendants include Acer America, Agfa, Apple Computer, BancTec, Canon USA, Concord Camera, Creative Labs, Creo, Creo Americas, Dell, Eastman Kodak, Fuji Photo Film USA, Fujitsu Computer Products of America, Gateway, Hewlett-Packard, IBM, JVC Americas, Kyocera Wireless, Matsushita Electric of America, Microsoft, Mitsubishi Digital Electronics America, PalmOne, Panasonic Communications of America, Panasonic Mobile Communications Development of USA, Ricoh, Savin, Sun Microsystems, Thomson SA, TiVo Toshiba, Veo, and Xerox.

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