October 02, 2002
JPEG gets litigious; AOL sees users fleeing in Latin America; those blue screens cost you far more than you might think; alternative materials find a home in product design; and Lindows users slam the new operating system.
Front End
Mind Your Graphics
Only a dozen or so years after the Joint Photographic Experts Group finalized its JPEG digital graphics standard, another company has stepped up to invoke patent rights on the technology. And of course, it wants to collect royalties. In July, Forgent Networks and its subsidiary Compression Labs announced "sole and exclusive right to use and license" JPEG technology, dating way back to 1987. Until now, the standard has largely been assumed to be free of encumbrances such as royalties. No more: Forgent has already collected lump sum payments from Sony and another, unnamed electronics manufacturer. A company spokesperson says Forgent is continuing to pursue licensing arrangements with this patent. (And well it should; in Forgent's most recent quarter, IP licenses accounted for more than two-thirds of its revenues.) The affair virtually mirrors the 1994 furor over the GIF format, when CompuServe and Unisys announced that software developers would have to pay royalties to Unisys based on a patent covering the LZW compression algorithm. Unisys still requires a 0.45% to 0.65% royalty on products sold that include this algorithm and flat fees from some Web site operators.
In response to the Unisys strong-arming, the Internet community flocked to JPEG, but now that refuge is disappearing. While Forgent (formerly known as VTEL) lacks the stature and muscle of a company like Unisys, desperate times for the troubled company may lead it to take desperate legal action. John Delaney, with law firm Morrison and Foerster's technology practice, cautions that should your company receive notice of patent infringement from Forgent, the matter should be taken seriously and referred to counsel. Delaney adds that patents, once granted, are presumed valid unless proven otherwise in court, and companies that willfully ignore a cease-and-desist or royalty demand letter may be liable for triple the amount Forgent originally requested. Unfortunately, most companies will likely end up paying the royalty or fighting the patent in court. Even switching to other graphics formats may not be an option. Critics point out that new formats like PNG are far from universally supported. And while they are presumably royalty-free, they may unknowingly contain patented algorithms (much like JPEG) that could be enforced sometime in the future.
—Christopher Null Rethinking Mass Appeal
America Online may have made its name leading the masses to the Net, but beyond our borders, it's a different story. Faced with possible Nasdaq delisting and elusive profitability, the company's Latin American subsidiary, AOL Latin America, has repudiated its stateside sibling's strategy of disckrieg—the indiscriminant bombardment of mailboxes with sign-up CDs. "Now that we've gotten to a scale that's large," says Fernando Figueredo, vice president of corporate communications for AOL LA, "we've stepped back and tried to encourage the quality of members." Toward that end, the company announced a number of initiatives on June 28 "to better target higher value members and to focus on improving collections." In other words, deadbeats get disconnected. One consequence of these moves has been a 10 percent decline in the company's membership base during the second quarter. David Joyce, an analyst with Miami-based investment bank Guzman & Company, contends that AOL LA's strategy is sound. "In the U.S., cable operators also disconnect the no-pay or slow-pay customers," he says. But as Figueredo observes, what works in the U.S. doesn't always translate abroad. He points to the fact that credit cards, for example, are not as widely used in Latin America. In Brazil, the company estimates that as of March 2002, 62 percent of its subscribers pay using boletos bancarios, a costlier transaction. AOL LA sends each member a boleto (a kind of bill) and the member pays the boleto at a local bank, which in turn sends the payments to AOL LA's designated banks. The company's annual report notes "collection rates from members opting for the boleto payment mechanism have been lower and less timely." Design and content also need to be different, Figueredo explains, noting that what works for Brazilians may not be appropriate for Mexicans or Argentineans. Budget accordingly. So while America Online may dream of a global empire, every conquest is local. In Latin America, it's hard enough just following the money. —Thomas Claburn The All-Soy Internet
Why did the chicken cross the road? So Richard Wool wouldn't pluck its feathers to use in a new line of microchips. Wool, a professor of chemical engineering at the University of Delaware and the director of the school's Affordable Composites from Renewable Sources (ACRES) program, is on a federally funded mission to create new variations of industrial products using inexpensive bio-based materials. Finding new uses for natural materials is fairly old hat. Henry Ford experimented with soybeans in automobile part fabrication, while George Washington Carver found extensive scientific value in the peanut's chemical versatility. And now the ACRES program, with a $30 million grant from the Department of Energy, is combining agricultural, chemical engineering, and environmental preservation studies to incorporate natural sciences within industrial manufacturing. "The main purpose of this grant is to expand on the ACRES basic research and to develop the corporate infrastructure to mass produce bio-based materials in collaboration with industry, national labs, and partner universities," says Wool. The ACRES projects to receive funding include the conversion of castor seed oil to plastic; the conversion of soy seeds to adhesives, resins, and composites; and the optimization of grain for bioproduct processing. But for the computer industry, Wool's use of chicken feathers has set off good-natured clucking. Wool has filed a patent in which chicken feathers replace silicon as the primary component of microchips. The design of the feather (ultra-light but quite sturdy) not only enables the transmission of electrons within a microchip, but also it can provide faster speeds. The feathers offer stronger air channels than silicon, thus increasing the rate of electrical signal transmissions within the microchip. The benefits here are actually twofold: While turbocharging computers with faster microchips, Wool's design would also open a new market to Delaware's poultry farmers to sell the feathers from their kitchen-bound birds. —Phil Hall Lindows Faces Lynching
Having won another round in its legal fight with Microsoft, the Lindows operating system (www.lindows.com) claims to be ready for the mainstream home PC marketplace. But initial reviews and user reactions have been less approving than federal court judges. As the first batch of ultra-low-cost Lindows PCs from Microtel go on sale at Walmart.com for under $300, initial reactions to the product have been scathing, especially among hard-core open source fans on sites like Slashdot. Most point out that while Lindows does run, it runs sluggishly. "I have 486s that can open Word documents faster," says one user who preferred to go by the handle "Sparkie." And media reviews have complained about the lack of documentation and support. However, comments about Lindows's Click-N-Run Warehouse feature—which lets users browse and download open source applications from around the Web—have been positive. For now at least, it looks like Microsoft Windows has little to fear from Lindows, thanks mainly to the much tougher court of public opinion. But Linux devotees are still holding out hope, particularly after Walmart.com's recent move to also carry PCs preinstalled with Mandrake Linux, as well as bare PCs with no OS at all. "At least now there's an alternative," says another user who prefers to go by "Restil." "And the company that's promoting it doesn't rely on a monthly infusion of venture capital to keep running. At some point, there will be someone that looks at the price and realizes that it's worth the learning curve to save a few bucks." —Annette Cardwell
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