There’s been quite a bit of buzz in the industry over Forgent’s threat to sue 31 reputable companies over the JPEG patent they hold (allegedly). I’m referring to Forgent Networks Sues 31 Companies for Patent Infringement and Forgent Sues Over JPEG Patent. After Wired published an article on this whole saga I decided to offer my perspective on the ordeal as a former Forgent employee.
The name of Forgent Networks, formerly known as VTEL, may not ring a bell to lots of people, yet practically everyone in the industry is affected one way or the other by this Austin, TX based sweatshop.
Back in June of 2002 Forgent Networks acquired the company I worked at, Global Scheduling Solutions (GSS) (see the June 2, 2002,
Wainhouse Research Bulletin. Seeing their horrible management style I wanted out from day one even though GSS was partly my creation too. At the end of 2002 I resigned in favor of a startup company and never regretted this decision ever since.
If you take a look at Forgent’s stock history you will easily see Forgent has been falling apart ever since. There are numerous articles on the Internet about Forgent’s failures and I won’t bother collecting them here.
Here’s what peculiar. According to Hedy Baker, a spokesperson for Forgent at that time,
The company discovered the patent when restructuring and looking into its assets, Baker said. “When we realized we had it, we launched a licensing program and started to talk to manufacturers of devices whether the method is used,” she said.”
Go back and re-read the previous quote. They didn’t know they had the patent all along! What’s the word I’m looking for… Oh, “dumb asses”. This kind of sloppiness is very typical for Forgent. But I digress…
Right off the bat, after the valuable discovery, Forgent goes after Sony and another un-named manufacturer. Sony caves in and forks over $15M without a fight. Forgent stocks soar, life is peachy, Sony is pissed. The industry is pissed. Slashdot is burning with flames. The outcry is incredible in uniformity: “Get your f@#$^&g hands off JPEG!”
The rest is interesting. The hype dies off, Forgent’s stock goes back down and hits record low, the flagship product—Alliance—isn’t pulling it hard enough. Forgent is going on the offensive again in desperation. Stock jumps up and down with every threatening press release. But mostly down. Check out Yahoo! Finance for rock-solid proof. Forgent’s way of dealing with trouble? Reduce headcount (read “sack people”):
The company has reduced operating expenses
by approximately $1.3 million per quarter by reducing headcount.
And then a historical thing happens: Forgent Earnings Conference Call (Q2 2004) available at Yahoo! Finance. This is truly great! This is where investors realize what an unsuccessful hoax Forgent has been all along and start ripping the management open. I encourage you to download and listen to it. I’d like to quote one of their biggest investors addressing the company president, Dick Sneider:
“You have shown NO ability whatsoever to grow any business in 15 years of this being a company. I mean you didn’t show ability to grow videoconferencing, you have shown no ability to grow service business, you haven’t shown an ability to grow software, why do you think you will be successful now?”
At which point Mr Sneider, being a person of little brainpower, basically tells him to shut up and cuts him off. Hilarious! Two days later, March 11, 2004, Wainhouse releases a bashing report. Stock keeps plunging. I’m encouraging you to read this one too.
Well, now that you’re in the know, it comes as no surprise that Forgent initiated a whole new pissing contest. This time around two things strike me as very odd:
- The company’s spokesperson, Michael Noonan, said those 31 companies refused to license the technology from them. Now, does it seem weird to anyone?
- According to the same guy Sony forked over $16M, but it was an agreement! That’s right, they weren’t sued. This time around it’s litigation we’re talking about.
My sincere wish is that a couple of the sued companies combine their efforts and sue the s@#$ out of Forgent over the phony patent claim.
The good news among this debacle is that the patent expires in 2006 which doesn’t leave Forgent much time to collect loot considering how long litigation takes place. It’s a shame that a software company never got their act together, wrecked lives of many of its employees, put them on the job hunt again, and ended up chasing everyone threatening to sue them because they are no good for anything else. Shame.
I’m done. Discussion is open. Flame me all you want.
P.S. Don’t take seriously whatever comes from that guy, Noonan. On an evolution chart he may well be placed next to a prehistoric jellyfish—no brain, no spine.
