E-patents.au – September 2002

E-patents.au – September 2002

E-patents.au – September 2002

A Newsletter from the Information Sciences Group of Davies Collison Cave

Recent patent news in the ICT industries

  • Forgent Networks Inc., a US company, has identified value in its US Patent No. 4,698,672 while reviewing its intellectual property portfolio. Forgent claims the patent covers a compression technique used in the creation of JPEG images. Although there is only about four years left until the patent expires, the company is pursuing licensing fees from companies implementing JPEG technology, which is of course now somewhat embedded as an industry standard. Forgent has recently announced a licensing deal with Sony for an undisclosed amount.
  • Palm Inc. has been in the US courts again. Recently, Palm was on the wrong side of a patent infringement decision involving Xerox, as reported in the last e-patents.au newsletter. However, this time around Palm, and Handspring Inc., successfully defended themselves against a patent infringement lawsuit filed by NCR in relation to a patent for a device to work with a docking station.
  • Imation Corp. and Quantum Corp. have settled an ongoing lawsuit over data storage tapes for use in Quantum’s DLT tape drives. It has been reported that Quantum will make a US$5M cash payment to Imation, but that Imation will pay ongoing royalties to Quantum.
  • nCube, a video-on-demand provider company, won a recent patent infringement case against its competitor SeaChange International. nCube’s patent covers video server technology that allows cable operators to enhance a digital video server with additional hours of video storage. SeaChange was ordered to pay about US$2M in damages and a 7% royalty on sales of infringing products.
  • A recent case in the UK High Court highlighted that it is not possible to avoid infringing a claim in a patent to a computer system, by siting part of the system outside the country where the patent has effect. The Court held the effect in the country, not the physical location of each element in the claim, was determinative. This case is important because, as the number of patents for computer systems grows, there may be a tendency to try and circumvent certain patents by locating one or more elements of a claimed system outside the country where the patent has effect. This judgement has shown that such an approach may not avoid infringement, at least in the UK.
  • Adobe has won a patent lawsuit against rival Macromedia. Adobe’s patent for tabbed palettes, which allows users to rearrange the work space on a PC screen, was found to be infringed by Macromedia’s user interface for its flash web animation tool. A jury awarded Adobe US$2.8M in damages.
  • Google has been sued in the US over its adplacement tools on Internet search results pages. Overture Services has filed a patent infringement suit alleging Google is infringing Overture’s Patent No. US 6,269,361 which relates to bid-forplacement products and pay-for-performance search technologies.
  • It has been estimated that IBM, the world’s largest number of patents holder, made about A$3 billion last year from selling patents and from patent royalties. Japan’s NEC Corp., which leads Japanese companies in the number of patents held, is seeking to emulate IBM’s success by establishing a specialised office to market it’s patents and create a new business revenue stream.

Patent insurance

A typical problem faced by small to medium size companies in protecting important patented technology is the expense of patent litigation. Insurance for key patents has emerged as a possibility for some companies. Although not overly common, some insurance companies will provide insurance against patent infringement litigation.

Generally, this involves a detailed analysis of the technology and the patent. Examples of patent insurers include Dexta Corporation (www.dexta.com.au), Lloyd’s of London and GE Reinsurance Corporation. Premiums for patent insurance tend to be higher than other forms of insurance, however, insurance can allow a company to fight a patent infringement lawsuit to protect its patent rights against a larger company, without being financially exhausted. Another benefit is the detailed validity analysis made by the insurer which, if positive, can provide a company with confidence in the strength of the patent for licensing purposes. On the other hand, the high cost of insurance premiums may mean that it is better for a company to manage litigation risks without patent insurance.