Article 2 of 5
Patents May Raise Price of
By Don Clark
The Wall Street Journal
(Copyright (c) 1993, Dow Jones & Co., Inc.)
Software patents could turn the information highway into a
Compton's NewMedia, the largest seller of software on
CD-ROM disks, will disclose today that it has received a
fundamental patent on multimedia programs that store and
retrieve graphics, sound and animation as well as text. The
company, a unit of Tribune Co., could use the patent to seek
royalties on competitors' CD-ROM sales, as well as similar
search-and-storage methods used with interactive television.
And Compton's isn't the only company asserting broad claims
to innovations in software. TestDrive Corp., Tektronix
Inc. and Starsight Telecast Inc. are seeking to enforce
fundamental patents as well. If successful, such efforts could
raise costs in the multimedia business and reignite a
long-running debate over whether patents encourage or
discourage innovation in the fast-moving software field.
Compton's licensing plans will be outlined tomorrow at the
Comdex trade show in Las Vegas. Analysts think the patent
could spur a battle with Microsoft Corp., another big force in
CD-ROMs that is challenging Compton's in the market for
multimedia encyclopedia software.
"This has to be the big news in the industry for some time
to come," said Jonathan Epstein, publisher of Multimedia
World, an industry magazine based in San Francisco. "People
are going to have to take this seriously and consider whether
they want to knuckle under and pay royalties to Compton's,"
added Ronald Star, a San Francisco patent attorney.
Last week, TestDrive , a 25-employee company in
Santa Clara, Calif., announced a patent on a promising
technique that lets computer users try multiple programs on a
CD-ROM before they buy them. If they like one, they may give a
credit-card number to the software supplier and receive a code
that gives full use of the software. Nathan Schulhof,
TestDrive 's chief executive, believes the patent will
also cover systems for controlling electronic delivery of
movies, music and other data to the home.
Tektronix, based in Beaverton, Ore., has won a patent on
software that uses indexes to display video images. Starsight
Telecast, a company in Fremont, Calif., has sued two
competitors over patents for on-screen menu systems that may
become crucial for navigating through expanded TV services.
"Not only will there be toll takers on the information
highway itself, but on the on ramps leading to it," said
Ronald Laurie, an attorney in Menlo Park, Calif., who
specializes in technology law.
Software patents are a relatively new battleground. Most
disputes in the business have focused on copyrights, which
protect artistic expression, such as the appearance of
computer-screen displays. But a Supreme Court ruling in 1981
cleared the way for the use of patents, which give 17 years of
exclusive protection to an invention after an examination by
the U.S. Patent Office. To receive a patent, Mr. Laurie noted,
a program must include an original process and a detailed
description of how to implement it.
Compton's says it fulfilled both requirements in 1989.
CD-ROMs, which resemble compact disks and offer very large
storage capacity, had until that point mainly stored textual
information, said Stanley Frank, Compton's chief executive
officer. To search the disks, users typically typed in a word
or group of words and were presented with a list of references
that contained the words.
For its multimedia encyclopedia, Mr. Frank said, Compton's
set out to develop a system that stored graphics, animation
and sound, and allowed users to search through the database by
means of graphics as well as text. A mouse pointing device let
a user click on a map of the world to find information about a
place, for example, or on a timeline to research history.
The company applied for the patent in October 1989, just
after the release of Compton's Multimedia Encyclopedia. The
patent, described as a "multimedia search system using a
plurality of entry means which indicate interrelatedness of
information," was granted Aug. 31. Only programs sold after
that date could infringe on the patent.
Compton's, which distributes about 150 CD-ROM titles
created by it and 20 affiliated developers, plans to license
the invention widely. Mr. Frank said software developers may
use the technology if they enter into a distribution
relationship or joint venture with Compton's, or if they use
its authoring software. Others may pay a small royalty; Mr.
Frank would not immediately disclose the amount, but people
familiar with Compton's plans expect the fee to be 1% to 2% of
"In no way do we want to be preventive or punitive," Mr.
Frank said. "We want to work with everybody to continue to
grow this vibrant and exciting industry we've developed."
But others don't expect a warm response to Compton's plan.
InfoTech, a market-research concern in Woodstock, Vt.,
estimates that there will be 7,183 CD-ROM titles in print by
the end of this year. Many of them use graphical
information-storage techniques similar to Compton's. "There
will be anger and disbelief, because there will be a lot of
products that have been on the market that overnight become
unlawful," said Patricia Thayer, a patent attorney in San
Microsoft is considered a likely target for Compton's
because of its strong CDROM sales, which include a multimedia
encyclopedia called Encarta that competes with Compton's
flagship product. Tom Corddry, Microsoft's business unit
manager of multimedia publishing, said he couldn't comment on
the significance of the patent until Microsoft had time to
Patent attorneys predicted that competitors will attack
Compton's patent by finding earlier inventions that would
prove the company's work was not original. That may not be too
difficult, because the database area has produced so many
products over the years, said David Binney, a patent lawyer in
As more such patents emerge, programmers' already-thin
profits could be squeezed by the need to pay royalties to
several patent holders. "It strikes me that things are a
little crowded already," said Robert Barr, an attorney in Palo
Nick Arnett, a consultant who is president of Multimedia
Computing Corp. in San Jose, Calif., argued that Compton's
patent could discourage vital research needed to make it
easier to search through growing masses of digital
information. "Information navigation is the single largest
obstacle," he said. Such broad patents "are going to be a
significant deterrent to the real growth of the industry."
A public outcry recently caused Optical Data Corp., a
company in Warren, N.J., to give up any plan to enforce a
patent on videodisk technology used in the classroom. William
Clark, the company's chairman, said Optical Data put the
patent in the public domain in reaction to fears that the
company would file suits against teachers. "There was a huge
outburst, and we retreated," he said.