IP: U.S. claims rights to JPEG format used by millions

[Dave Farber <dave () farber net>]

U.S. claims rights to JPEG format used by millions
2002-07-30 / New York Times / By John Markoff
SAN FRANCISCO 

A small Texas videoconferencing company is shaking up the consumer
electronics and computer industries with claims that it has a patent that
covers parts of the JPEG data-compression standard that is used widely in
digital cameras, printers, scanners, personal computers and on the Internet.

Forgent Networks, based in Austin, announced this month that it had
succeeded obtaining royalty licensing payments regarding the patent from the
Sony Corp. and a second unnamed Japanese digital-camera maker.

Moreover, the company said that it was pursuing the patent, which is to
expire in 2004, with as many as 50 other companies. Forgent declined to name
the companies; industry analysts have said, however, that the patent could
be worth US$100 million to US$300 million if it is upheld.

The dispute is an echo of previous disputes over data-compression
technologies, which are used in computing to shorten files so that they
transfer more quickly and take up less storage space. In 1999, for example,
Unisys began pursuing patent royalties on the mechanism used in the Graphics
Interchange Format, or GIF standard. (The company has driven many users to
competing public-domain standards, but it is still licensing the standard.)

Forgent asserts that its patent covers parts of the technology that is used
in the JPEG digital still-image compression standard that was defined by the
Joint Photographic Experts Group in 1990. The group, an independent body,
sets rules for exchanging digital information. The JPEG algorithm is built
into the basic circuitry of digital cameras and is widely used in software
in the personal computer industry.

It is the most common format for sharing photos on the Web and by e-mail
because it can display high image quality and a large number of colors in
relation to file size.

Forgent, which employs about 200 workers, acquired the patent when it merged
in 1997 with Compression Labs, a Silicon Valley company that specialized in
data compression and videoconferencing.

But Forgent did not pursue the patent until its new chief executive, Richard
Snyder, directed his staff to explore the value of the company's portfolio
of 40 patents. 

"Forgent was desperately trying to find new traction and new business," said
Snyder, who had been with Hewlett-Packard's inkjet printer business.

He said that Forgent had spent almost a year and more than US$1 million to
make certain that its claims were viable.

The patent, which originally dealt with compressing digital video, was
issued in 1987, but it was unused until the company began combing through
its patents. 

The Forgent strategy is, on the surface at least, different from another
frequently debated tactic in the intellectual property arena, known as a
submarine patent. In that tactic, a patent is applied for and then adjusted
during the application process, so that it takes aim at competitors when it
is finally issued. 

Since Forgent started to pursue the patent, the situation has touched off
widespread opposition, and Snyder said he had been caught off guard by the
reaction. 

A number of consumer advocates and industry experts said that they were
skeptical about whether the Forgent patent could be properly applied to the
JPEG standard as well as whether the patent should have been issued in the
first place. 

"I view this as a disaster if it holds up," said Mark Nelson, an independent
expert on compression technology who is the co-author of "The Data
Compression Handbook" (M&T Books, 1995).

A spokesman for Sony acknowledged that it had licensed the Forgent
technology but would not disclose the amount of the agreement nor discuss
why it had decided to seek a license.

Forgent was successful in licensing the Japanese consumer companies because
they were "notoriously distrustful of American law," said David Farber, a
University of Pennsylvania computer scientist who worked on compression
technologies while he was at Bell Labs in the 1960s. He said he believed the
patent was not enforceable.

Given the size of the deals reached so far, it is unlikely that the patent
would have an impact on the price of consumer digital cameras, said Alexi
Gerard, president of Future Image, a digital photography newsletter based in
San Mateo, Calif. 

"This is definitely something that people industry have noticed, but I don't
think they have panicked yet," he said.

Nelson said that he had been contacted by lawyers representing a Silicon
Valley company six weeks ago in an effort to oppose the patent, No.
4,698,672, titled "Coding system for reducing redundancy."

The JPEG standards group has also said publicly that it is engaged in
assembling information that would invalidate the patent.

"People are looking at the patent itself to see how it might apply to the
JPEG standard, and I think the opinion of most of the experts at the moment
is that it doesn't," said Greg Colyer, a member of the JPEG group. The group
said it was aware of patent claims made by Philips and Lucent Technologies
that might also affect the JPEG standard. 

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