Will AudioHighway make the same wrong moves?
The following article is analogous to the position that AudioHighway may very well be in and discusses potentially overly broad patents.
The link is below with the full article thereafter.
wired.com
Virtual Reality, Real Trouble
by Craig Bicknell
3:00 a.m. 20.Jul.99.PDT
By all accounts, Interactive Pictures has
some pretty cool virtual reality
technology.
Using the company's IPIX software, VR
photographers take wide-angle
photographs and stitch them together
into 3-D panoramas that Net surfers can
figuratively step into. All it takes is an
IPIX browser plug-in.
Read more in IPO Outlook
Enter an IPIX "photobubble" of Yosemite
National Park, for example, and you can
marvel at soaring El Capitan, then wheel
around and check out the oak tree right
behind you. You can stare straight up
into the sun, or inspect the grassy turf at
your feet.
IPIX has patented its technique for
creating the bubble images, and sold both
its software and finished photos to
customers in the real estate, travel, and
e-commerce industries. While it's still
losing money, IPIX hopes to parlay its
technology into a US$67 million initial
public stock offering the first week of
August.
There's just one problem, say IPIX
competitors and VR developers. The
patent that IPIX has built its business
around is bogus. Worse yet, foes say,
IPIX has filed a string of lawsuits alleging
patent infringement, stifling the entire
industry, and alienating the developers
and photographers it needs to survive in
the long run.
"People hate them," said a highly
respected VR developer who declined to
be identified. "The legitimacy of their
patent is zero, and they're going after
anyone who's trying to make
improvements."
The furor in the VR community came to a
head in April, after an IPIX lawyer sent a
threatening legal notice to German
physics professor Helmut Dersch,
accusing him of illegally posting an IPIX
photo of the Grand Canyon.
It turned out that Dersch had created
the image using software he had designed
as a hobby. He fired back a nasty note
and published the IPIX letter on his Web
site. He then kept a public chronicle of
the ensuing exchanges.
The IPIX letter to Dersch, coming on the
heels of previous IPIX legal action against
corporate competitors, outraged many VR
developers. One group organized an IPIX
boycott, and mailing lists bristled with
invective against the company.
"To invest in IPIX, in my opinion, is to
invest in doing business with the devil,"
wrote one VR photographer.
IPIX declined to comment in detail about
the controversy, citing the Securities and
Exchange Commission requirement that
limits communications prior to an IPO. In
a brief statement to Wired News, it said it
was working toward an amicable
resolution with Dersch. "However," the
statement concludes, "the company, with
firm patents in place, is also required to
protect its proprietary information."
IPIX was granted the controversial patent
back in 1993, when it was going by the
name TeleRobotics International.
Essentially, the patent covers spherical
images created using fisheye camera
lenses. Using a fisheye lens, a
photographer can shoot a 180-degree
image, or all of the scenery in a
half-sphere in front of him. IPIX's
software lets photographers weave two
complementary 180-degree photos into a
360-degree panorama.
The problem with the patent, say
experts, is that the techniques it covers
were well known and well publicized years
before the patent was granted.
"Cartographers and photogramatists have
been familiar with the principles of image
projection onto three-dimensional
surfaces for years," said Andrew
Davidhazy, chairman of the department of
imaging and photographic technology at
the Rochester Institute of Technology.
In particular, a widely read 1986
academic paper published in an Institute
of Electrical and Electronics Engineers
journal covered all the basic techniques
later patented by IPIX, experts say.
Because there was substantial "prior art,"
IPIX competitors contend that the patent
does not stand the test of law.
That's what David Ripley, CEO of IPIX
competitor Infinite Pictures thought,
anyway. When IPIX sued Infinite Pictures
in 1996 for patent infringement, Ripley
confidently headed to court in IPIX's
home state of Tennessee.
To Ripley's dismay, a jury found in favor
of IPIX and ordered Infinite Pictures to
pay $1 million in damages.
"We went to trial against a Tennessee
company before a jury of Tennessee
folks," he said. "We had a biased jury, but
frankly, in their defense, patent law
should never go before a jury. Those
people's eyes were glazed over, and they
didn't have a chance of understanding
what was going on."
Infinite Pictures plans to appeal to the
Federal Circuit Court this fall, and Ripley
is confident his company will prevail.
He may have cause for optimism, patent
lawyers say.
"The federal appeals court often
overturns jury cases," said Robert Sachs,
a partner in the intellectual property
division at Fenwick & West, a Palo Alto,
California, firm that specializes in law for
high-tech companies.
The IPIX patent, he said, is written in
overly vague language. The drafter of the
IPIX patent didn't specify precisely how
the components of the patented IPIX
system interconnect, instead using
general language such as "means for
receiving digitized signals."
Such broad patents have fallen out of
favor with the appeals courts, Sachs
said. Because IPIX accused Infinite
Pictures not of literally infringing on its
techniques, but of making equivalent
technology, IPIX may have a hard time in
the appellate court.
"I would not want to bet a company on
this patent," Sachs said.
But IPIX has bet its future on the patent.
If it loses, it will be in big trouble.
Unlike most software companies, which
simply sell their products for a one-time
fee, IPIX has built its business around a
per-use model. Every time a photographer
uses IPIX software to save an image, he
has to pay IPIX either $25 or $100,
depending on whether the image is of
high or low resolution.
It hasn't yet become a profitable plan.
IPIX had a loss of $13.2 million on
revenues of $2.7 million in 1998. As of 31
March, it had an accumulated deficit of
$27.7 million and just $19,000 in cash.
And it expects the losses to increase
after the IPO, as it expands its sales and
marketing efforts.
At the moment, many photographers are
willing to pay the fees, if grudgingly,
because IPIX is the fastest, easiest way
to make a spherical image.
"Their advantage is ease of use," said
Scott Highton, a pioneering VR
photographer who helped both IPIX and
Apple Computer develop VR software. If
there were any viable alternative,
however, even if were more cumbersome,
photographers would gladly take it, he
said.
Viable alternatives may be on the way --
whether or not IPIX prevails in its patent
suit. Several companies, including Infinite
Pictures and Panoscan, have introduced
new technology that lets users create
spherical images without using fisheye
lenses.
"There are other kinds of technology that
can provide better virtual environments,"
said Ken Turkowski, a senior research
scientist at Apple Computer and a virtual
reality pioneer. "IPIX can't touch those
whatsoever." |
