July 14, 2005 11:02 AM PDT
Forgent sues cable companies over DVR patent
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Patent litigants target DVRsApril 8, 2005
The lawsuit, filed in the United States District Court for the Eastern District of Texas, centers on U.S. patent No. 6,285,746. Forgent claims that the patent describes how to build a computer-controlled video system that can play back video while recording.
The 15 defendants include Cable One, The Washington Post Company, Charter Communications, Comcast, TimeWarner, EchoStar and other cable carriers and media outlets. Those companies all offer DVR services to subscribers.
More defendants, though, are almost inevitable, and could include companies that make DVRs, or PC makers that market home computers for recording TV.
"We're going to continue to look at where this is being used," Forgent CEO Dick Snyder said in an interview. Forgent earns about 15 percent of its revenue from selling software and 85 percent of its revenue from royalties, licensing fees and lawsuits.
DVR shipments in the United States totaled 4.4 million in 2004, and the market is expected to grow to 10.7 million by 2008, according to research firm IDC. The Forgent patent in question won't expire until 2011.
Earlier in the year, Forgent executives said they had reviewed the company's patent portfolio and planned to seek royalties and take legal action.
One of the major issues in court will be the date of the patent. The patent application was filed in 2002, but it relates back to an abandoned patent application filed in May 1991, Forgent said. TiVo and other DVR companies filed patent applications in 1998.
Snyder added that the company has other patents that could be infringed by DVRs, but they are not part of the current suit. In April, the company touted patent No. 6,674,960 as the patent that it might build a case around.
Though most people haven't heard of Forgent, there's a good chance they've indirectly given the company money. After struggling to sell videoconferencing systems, Forgent began to examine its patents in 2000. In the patent portfolio acquired from Compression Labs in 1997, it discovered a patent it alleged covered JPEG, the popular compression standard.
Since then, Forgent has amassed more than $100 million in royalties from camera makers, software developers and others on the JPEG patent, No. 4,698,672.
Generally, the royalty fees on devices such as digital cameras, where compression is essential, are about 1 percent, according to Forgent execs. A digital camera bought for $500, therefore, brings Forgent $5.
A trial pitting Forgent against several PC companies is currently under way in California.
The patent in the DVR suit was actually developed internally when Forgent was known as VTEL and tried to sell videoconferencing equipment.
In the DVR suits, Forgent will be represented by Godwin Gruber and The Roth Law Firm, both of Texas. Forgent will retain up to 60 percent of all licensing revenue and up to 60 percent of all litigation proceeds from the '746 patent after expenses.
Snyder further added that he is interested in the patent legislation currently pending in Washington and supports the idea of reform.
"There are certainly a lot of frivolous actors out there," he said. "I support the idea that only legitimate inventions get patents."
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