October 27, 2005 3:20 PM PDT

RIM inks deal for JPEG patent

BlackBerry wireless device maker Research In Motion inked a deal on Thursday to license part of the JPEG file format patent from Forgent Networks, the companies said.

The one-time perpetual license covers all of Waterloo, Ontario-based RIM's BlackBerry devices and its BlackBerry Connect messaging service, which allows wireless always-on access to e-mail and corporate data on portable devices. Financial terms of the agreement were not disclosed.

Short for "Joint Photographic Experts Group," JPEG is a lossy compression technique for color images and widely used for displaying photographs and graphics on Web sites.

Forgent spokesman Michael Noonan noted that the Austin, Texas-based software maker may have discounted its usual rate for RIM in the same way that it did for Sony in 2002, when the Japanese entertainment company paid $16 million to freely use JPEG technology. Usual royalty rates for Forgent's JPEG patent vary between a quarter of 1 percent and 1 percent of the retail cost of the device, hardware or software, Noonan explained. RIM's license is all-inclusive to avoid a cost breakdown of each device with RIM's technology.

While 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, the company began to examine its patents in 2000. In a 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, also known as the '672 patent.

Generally, the royalty fees on devices such as digital cameras, where compression is essential, are about 1 percent, according to Forgent executives. A digital camera bought for $500, therefore, brings Forgent $5.

A patent infringement trial pitting Forgent against approximately 40 PC companies including Apple Computer, Dell, Hewlett-Packard and IBM is currently under way in California.

RIM was not part of the litigation, but one of about 1,100 other companies that Forgent claims have technology that infringes on its '672 patent. Forgent has been in "friendly business negotiations" with several of the companies it has contacted, including Microsoft, Noonan said.

Forgent sued Microsoft for patent infringement in the U.S. District Court for the Eastern District of Texas in April after Microsoft went to court asking for a declaratory judgment that it didn't infringe the Forgent patent.

 

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