US company holds exclusive rights to JPG’s

In Image by Fredy Ore

Visiting Zeldman.com I came across this article of a US company holding the exclusive rights to the use of JPGs.

Their rights are currently applied to client only (recieving) the JPG format, eg. browsers, pda, mobile, etc. not the broadcast rights or transmission of the JPG format, although they are pursuing the acquisition of broadcast rights also.

Summary of article (2002)

JPEGs are not free: Patent holder pursues IP grab
Andrew Orlowski, The Register, July 18, 2002

Forgent Networks, a Texas-based video conferencing company formerly known as VTEL, is seeking royalties for the transmission of JPEG images based on a 1986 patent (Patent 4,698,672) acquired through its 1997 purchase of Compression Labs.

The company claims exclusive rights to license the patent, targeting devices like browsers, PDAs, digital cameras, phones, and scanners that receive JPEGs, excluding satellite broadcasting. Sony Corporation has already licensed the patent, and another unnamed company paid Forgent $15 million, a significant portion of its $22 million quarterly revenue.

Forgent is pursuing additional licensing deals but acknowledges uncertainty about securing them on similar terms. The company had not responded to inquiries at the time of the article’s publication.

Update:

Outcome JPEG Patent (U.S. Patent No. 4,698,672) and Related Licensing Deals

The 2002 announcement by Forgent Networks (formerly VTEL, which acquired Compression Labs in 1997) to enforce royalties on JPEG image transmission under this 1987 patent (filed in 1986) sparked significant controversy, lawsuits, and scrutiny. Often labeled a “patent troll” effort, it targeted devices like digital cameras, phones, scanners, and browsers. Here’s a chronological summary of the key outcomes:

Initial Licensing Success (2002–2004)

  • Forgent secured deals with approximately 30–60 companies, primarily in Asia, Europe, and the U.S., generating $90–110 million in royalties.
  • Notable examples:
  • Sony: Paid a multi-million-dollar one-time fee (reported as $16 million in some accounts) in May 2002, aligning with the article’s mention of Sony as an early licensee.
  • An unnamed company paid $15 million in the quarter referenced in the 2002 SEC filing.
  • These revenues focused on camera makers and other hardware vendors, with Forgent claiming the patent covered a key discrete cosine transform (DCT) algorithm in JPEG.

Escalation to Lawsuits (2004–2005)

  • After negotiations failed, Forgent sued 31 companies in April 2004, including Apple, IBM, Dell, Kodak, Xerox, HP, Canon, and Adobe, alleging infringement in the U.S. District Court for the Eastern District of Texas.
  • A consortium of 21 companies countersued in July 2004 to invalidate the patent.
  • Microsoft filed a separate lawsuit in April 2005.
  • In June 2005, the USPTO rejected 19 of 47 claims based on prior art, upholding the rest but signaling weakness.

Patent Invalidated and Litigation Ends (2006)

  • In February 2006, the USPTO re-examined the patent at the request of the Public Patent Foundation (PUBPAT), which uncovered undisclosed prior art known to Compression Labs.
  • On May 26, 2006, the USPTO ruled the broadest claims invalid for being anticipated by prior art (e.g., 1970s–1980s publications predating the 1986 filing), violating disclosure duties. This made reinstatement unlikely (70% of such re-exams lead to modification or revocation).
  • In June 2006, a court ruled the patent applied only to video compression, not still images like JPEG, gutting its scope.
  • November 1, 2006: Forgent settled all remaining JPEG lawsuits for $8 million—far below its $1 billion claim—covering claims against PC makers and others.

Long-Term Resolution (2006–2007 and Beyond)

  • The patent expired in October 2006, ending any further enforcement.
  • Total earnings: Over $110–$105 million from licenses, plus the $8 million settlement, but offset by legal fees. Forgent shifted to other patents (e.g., ‘746 for video systems).
  • The JPEG committee and experts (e.g., Independent JPEG Group) had long argued invalidity due to prior art, echoing the GIF patent disputes with Unisys.
  • No ongoing enforcement; JPEG remains royalty-free today, with no similar claims succeeding.

This saga highlighted patent trolling risks, influencing later reforms, but Forgent profited substantially before the patent’s collapse.

References

1. Initial Licensing Success (2002–2004)

2. Escalation to Lawsuits (2004–2005)

3. Patent Invalidated and Litigation Ends (2006)

4. Long-Term Resolution (2006–2007 and Beyond)