April 8, 2005 4:00 AM PDT
Patent litigants target DVRs
The Austin, Texas-based maker of licensing and scheduling software owns four patents it claims give it the right to collect royalties on computers or similar devices, such as those made by market leader TiVo, that record, store and play back video- and audio-transmitted signals.
While three of the patents primarily involve videoconferencing systems, patent No. 6,674,960 specifically addresses recording television signals to a computer.
Forgent Networks, which has netted more than $100 million dollars in fees on its so-called JPEG patent, holds additional patents that it says give it rights to royalties on DVR technology.
It's unknown whether patents held by others predate Forgent's claims, which would thereby invalidate them. But Forgent's DVR patent plans could potentially roil a good number of tech companies.
The patents also predate patents and other intellectual property owned by other companies, Forgent Chief Financial Officer Jay Peterson said in an interview.
"You'll see activity on the DVR (digital video recorder) patents in the next three to nine months," he said. "We've got an early file date."
The patents haven't been tested in court, and it's unknown whether patents held by others predate Forgent's claims, thereby invalidating them. Nonetheless, Forgent's plans, considering the company's history, will likely roil a large swath of tech companies, as well as invigorate the rancorous debate between intellectual-property activists and patent holders.
The popularity of DVRs has made TiVo a household word--and a constant topic of takeover discussions on Wall Street--in just a few short years. DirectTV, Comcast and other broadband companies also offer DVR services, making them potential licensees, or defendants.
The computer industry has also jumped into the DVR game with Microsoft's Windows XP Media Center multimedia software. Nearly every major PC maker sells a unit with that version of Windows.
Still, DVR shipment numbers remain relatively small compared with PCs, which reached a record 177.5 million units in 2004, according to IDC. 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 popularity of DVRs and the fanaticism of their owners currently far exceeds estimates of the size of the market for the technology. Shipment numbers may increase as cable and satellite giants duke it out for subscribers using DVRs, but video on demand is another programming tool that service providers will use in addition to DVRs.The problem with patents
When it comes to DVR patents, enforcement is still somewhat up in the air. Many of those in the market are watching a case between two of the early DVR entrants: TiVo and EchoStar. The companies have been embroiled in a patent infringement case since January of last year.
While the applicability and viability of the DVR patents have yet to be determined by a court, one subject that will likely be a major issue of discussion is the date of Forgent's patents. The U.S. Patent and Trademark office granted the company's four patents in 2001 and 2002; the patent applications were all filed in 2000 and 2001.
The applications, however, derive from earlier, abandoned applications that stretch back to May 1991. Compression Labs, which Forgent acquired in 1997, filed the original applications.
TiVo filed the applications for some of the primary patents in 1998. The company has a number of patents, and recently acquired some from IBM. "Prior art" invalidates subsequent patents.
TiVo representatives declined to comment for this story.
The expense, scope and potential liability of patent and intellectual-property litigation has prompted calls for patent reform from a number of parties, although concrete solutions seem hard to come by. Some have called for an end to patents on software. Others have said that patent offices need to provide a method for early dispute resolution and better patent screening.
"The real issue is that we should only grant patents for truly new and nonobvious inventions," said Adam Jaffe, dean of Arts and Sciences at Brandeis University and co-author of "Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation and Progress, and What to Do About It." "More examiners are needed at the patent office," Jaffe said.Anatomy of a patent
If anything, Forgent has the wallet to put up a fight. Approximately four years ago, the company reviewed its patent portfolio and came across U.S. patent No. 4,698,672 awarded to Compression, which purportedly gave the company a patent on a method for compressing motion (that is, video) or still files.
Initially, Forgent tried to sell the patent to Compaq Computer to give it a counterclaim in its suit against MPEG LA, which revolved around motion compression patents. The deal fell through and Forgent more closely examined its claims
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