Message: "Less than four months later, Sony agreed to pay $40 million"
Ampex soars on strength of patents
San Francisco Business Times - January 7, 2005
In July 2004, the company filed complaints with the International Trade Commission and a federal district court, asking them to stop the sale and import of Sony digital still cameras because of alleged violations of Ampex patents on digital image and storage and retrieval devices.
Threatening to separate Sony from millions of snapshot-loving Americans proved effective. Less than four months later, Sony agreed to pay $40 million to use Ampex patents to manufacture and sell digital tape recorders, cameras and other products through April 2006.
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After that, licenses provide for running royalties based on sales of products and to what extent they use Ampex patents.
A settlement with Eastman Kodak Co. may be forthcoming. In October, Ampex sued Kodak before the ITC and federal courts, which means its products, too, could be banned from American shelves. (Though headquartered in Rochester N.Y., Kodak manufactures its products in Asia, Europe and South America.)
Ampex's patent wrangling could slow if litigation becomes too costly. But this appears unlikely, as its Sony litigation wrapped up quickly, incurring only moderate legal costs. More likely, technological advances could allow companies to design around Ampex's patents, or, as Dexter said, "an entirely new technology comes out and supercedes all this."
Whatever happens on the licensing front, Ampex's business continues to chug along. Ampex Data Systems makes high-performance mass data storage systems, recorders and professional video products for government programs. The unit poured between $3 million and $4 million into accounts that were mostly hollow
Ampex had more than $75 million in debt before its recent settlements. It's using settlement revenue to pay off $60 million of that, saving $8 million in annual interest. Less than $16 million of the debt will remain. "By the end of the first quarter, it may be gone," Dexter said.
West, who is releasing a report later this month on "What if" scenarios in Ampex's future, applauded the move.
"They pay down debt and a lot of good things can happen in terms of value to stock holders," West said. "It's a credible company with patents on technology they've had for a very long time. This is not a company that bought patents just to sue."
Adrienne Sanders covers technology for the San Francisco Business Times.
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