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Hot off the Press - NEWS

Sony must pay Grosse Pointe firm $25 M in patent royalties on digital camera technology
February 5, 2003

This story was reported by Bloomberg News regarding the jury finding that Sony had infringed on technology patents owned by St. Clair Intellectual Property Consultants Inc. The quoted text of the story follows.

Sony Corp., the world's second-largest consumer electronics maker, was told by a jury to pay $25 million in royalties to a patent-licensing company for using protected digital camera technology.


After a two-week trial in Delaware, federal court jurors concluded that Sony infringed four patents owned by St. Clair Intellectual Property Consultants Inc. The patents are for cameras that work with Apple Computer Inc.'s Macintosh personal computers and International Business Machines Corp. computers and clones that run on Microsoft Corp.'s Windows software.

Ronald Schutz, a lawyer for closely held St. Clair, had asked for $171.4 million in royalties on $3.01 billion in Sony's digital camera sales since 1998.

"The jury spoke," St. Clair co-founder Edmund Chung said. "That's the American way." Grosse Pointe, Michigan-based St. Clair bought the patents, awarded since 1992, for $65,000 in 1995, according to trial testimony.

Sony spokesman Greg Dvorken in Park Ridge, New Jersey, said the company disagrees with the decision, "but the case is ongoing and we plan to challenge validity of the patents at the appeals level."

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American depositary receipts of Sony, second only to Matsushita Electric Industrial Co. Ltd. in consumer electronics sales, fell 26 cents to close at $38.20 in New York Stock Exchange composite trading after falling to a 52-week low of $37.66 earlier in the day. The shares have fallen about 19 percent in the past year.

Among Sony's bond issues are $500 million in 4.95 percent notes due in 2006, according to Bloomberg data.

Sony lawyer Sidney David told jurors the Japanese company's cameras work "in a totally different manner" from the St. Clair inventions, and that the IBM and Apple computers, not the cameras, process the data into video images.
Sony, with $21.1 billion in fiscal 2002 sales, makes the PlayStation2 and is the world's biggest maker of video games.

According to court exhibits and testimony, Sony sold about $900 million in digital cameras during fiscal 2001 and now sells about $100 million a month, capturing 28 percent to 30 percent of the market.

St. Clair sued Tokyo-based Sony in August 2001, claiming the Japanese company's products infringe equipment and processes invented by Marc Roberts, Matthew Chikosky and Jerry Speasl for the multiple-format images.
The inventors will split the jury award with St. Clair, Schutz said during the trial.

David said that, even if Sony did infringe the patents, a "reasonable royalty" would be less than $5.73 million because formatting is only one of many features on its cameras.



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