TMO Reports - Apple Sued Over JPEG Patent; Damages Possibly "Millions"

by , 6:30 PM EDT, April 22nd, 2004

Videoconferencing company Forgent Networks, Inc. filed suit Thursday against 31 defendants, including Apple Computer, for using its JPEG digital image compression patent without paying a licensing fee. In making the announcement, a company spokesman said damages could end up being in the millions of US dollars for each company.

Among the other companies being sued include, Adobe Systems, Agfa, Canon USA, Eastman Kodak, Fuji Photo Film USA, Fujitsu Computer Products of America, Hewlett-Packard, IBM, Macromedia, PalmOne, Savin, Toshiba and Xerox.

The lawsuits come after almost a year of negotiations with the defendants to forge licensing agreements. "Continuing licensing discussions with both companies just didn't appear to be productive and therefore we felt litigation was the only answer." Michael Noonan, a company spokesman, told The Mac Observer, Thursday.

Noonan said damages have yet to be set for each defendant, but they will be substantial.

"The amount of the damages will depend on each of the defendants products and their associated revenue. Those numbers will be decided upon after expert testimony and through (legal) discovery...It is fair to say that we could end up asking for damages in the millions of dollars," said Noonan. "We have licensed 30 other companies to use our patent and that has generated almost US$90 million in revenue."

The 1987 patent relates to digital images and how they are reduced down in size. The technology is known as JPEG (pronounced "jay-peg"), and stands for Joint Photographic Experts Group, the original name of the committee that wrote the standard. The JPEG technology is best known for use with digital still photos, but is widely used elsewhere in set-top boxes used to display images on a television, to literally thousands of other hardware and software products.

Forgent Networks acquired the original developers of JPEG, San Jose-based Compression Labs Inc., in 1997. Before that, Forgent was primarily known as a maker of video conferencing hardware under the name Video Telecom, or VTel. After continuing declining revenues, the company changed its name and management in August 2001. It was then that the company became a video technology firm focusing on software and patents. Its portfolio includes nearly 50 patents.

The company remained quiet about its JPEG patent, allowing usage of JPEG compression unhindered, until July 2002 when it began to enforce its patent rights after signing a multi-million dollar license agreement with Sony Corp. Although Forgent would not divulge the exact amount of the agreement, it is thought Sony paid between $17 million and $18 million.

As for Apple, Noonan said negotiations have gotten nowhere and Apple will now have to pay up.

"Our technology is an integral part of JPEG and Apple uses JPEG in their devices and software. Apple has been using our methods and materials and they have been stealing our intellectual property, in our opinion. This needs to stop," he said.

An Apple spokesperson was not immediately available for reaction to the Forgent lawsuit. Historically, Apple has refused comment on pending litigation.