'Patent trolling' firms sue their way to profits

“I think it’s stupid that this type of policy is legal and profitable,” said Dan Ravicher, the group’s executive director.

Forgent dates to the mid-1980s, when it was VTEL Corp., a maker and designer of videoconferencing equipment. VTEL performed a series of acquisitions, culminating in 1997 with Compression Labs Inc., which created and owned the 672 patent.

In 2001, the company was renamed Forgent, and executives decided to focus on intellectual property.

“At that juncture we really decided it was best from a shareholder perspective to at least for the foreseeable future, focus ourselves around being a patent company,” Snyder said.

Forgent’s earnings, largely dependent on revenue from the 672, have fluctuated wildly over the years. The company’s stock has ranged from $1.10 to $3.27 a share in the last year and recently posted a second quarter loss of $500,000.

Forgent, which has about 30 other technology patents waiting in the wings, is already moving ahead with its next potential profit generator: U.S. Patent No. 6,285,746, which relates to how digital video recorders to allow playback during recording.

EchoStar Communications Corp., Motorola Inc., TiVo Inc. and 12 other companies have been named as defendants in the case. A federal judge has set a mediation date for next month in U.S. District Court in Marshall, Texas.

In Austin, Snyder, 61, sips from a coffee mug as he acknowledges the money won’t come in forever. Though it will be enforceable retroactively, the 672 expires in October.

Snyder sees part of that future in the company’s tiny NetSimplicity division, which makes scheduling software for businesses.

“Forgent’s really a company that’s in transition,” he said. “We got ourselves into this current mode of licensing because it’s been very fruitful for us. We see that as good return to the shareholder and good return on the R&D investment we made. But eventually, patents expire, so we will need a business in the future that’s sustainable.”

MORE FROM U.S. BUSINESS

U.S. business Section Front

Madoff's Mets jacket sells for $14,500   NYT: Drug firms raise prices ahead of reform Ex-Madoff computer programmers arrested Ford: New police cruiser to replace Crown Vic No front-runner for next Bank of America CEO Report: Playboy in talks to be sold Intel to pay AMD $1.25 billion to settle lawsuits Medical marijuana business is growing ... up What a steal! Madoff’s homes get price cut Applied Materials to cut 1,300 to 1,500 jobs U.S. business Section Front   Add U.S. business headlines to your news reader: