Search giant Yahoo has decided to take a license out on the so-called JPEG patent with Forgent Networks. Under the deal, Yahoo will pay Forgent royalties but be dismissed from the pending patent suit taking place in the U.S. District Court for the Northern District of California.
The suit, which involves several remaining defendants, revolves around U.S. patent number 4,698,672. Forgent acquired the patent when it bought Compression Labs in 1997. During an audit of its intellectual property portfolio in the early 2000s, company officials first realized that the patent, in their belief, embodied a method for compressing photographs that was being used by digital camera makers and others.
Several companies have taken licenses out with Forgent. The patent has brought Forgent over $100 million in royalties. If successful in the suit, the patent could be worth close to $1 billion, according to Forgent execs.
"The patent, in some respects, is a lottery ticket," said CFO Jay Peterson in an interview earlier this year. "If you told me five years ago that you have the patent for JPEG, I wouldn't have believed it."
Forgent has also filed suits this year against several cable operators over a different patent.