The $100 Million Fight Over JPEG
JPEG was created to solve a boring problem: photographs were enormous and computers were terrible at storing them. Then, years later, someone tried to claim the technology behind it.
JPEG is one of those technologies that became so ordinary that nobody thinks about it. Open a photograph, attach one to an email, upload one to a website and there is a decent chance JPEG is involved somewhere.
It was never supposed to be a billion-dollar business. That is precisely what makes the story so strange.
JPEG was designed to be boring
In the 1980s, digital images had a problem. Photographs required huge amounts of storage, while computers and networks had very little of it. A group of engineers formed the Joint Photographic Experts Group to create a common way of compressing photographic images.
The goal was interoperability. Cameras, computers, printers and software from different companies needed to understand the same format. JPEG's compression system combined techniques including the discrete cosine transform, quantization and entropy coding to make photographs dramatically smaller while keeping them recognisable.
It worked spectacularly well. JPEG spread everywhere, becoming one of the foundational image formats of the internet.
Then someone found a patent
Compression Labs, a company involved in video compression, filed a patent application in 1986. It eventually became known as the “'672 patent”.
For years, almost nothing happened. JPEG continued spreading while the patent sat quietly in the background.
Then Compression Labs became part of a company called Forgent Networks. In 2002, Forgent began asserting that the patent gave it licensing rights connected to JPEG technology.
The timing was almost comically perfect. The internet had spent more than a decade turning JPEG into a universal standard before anyone came knocking for money.
Suddenly, JPEG was worth millions
Companies using JPEG now had an unpleasant choice. Fight a patent dispute over technology embedded in products they had been selling for years, or pay for a licence.
Some chose to pay. Sony reportedly agreed to a deal worth around $15 million. Other major technology companies followed.
By the middle of the 2000s, the patent had generated more money for Forgent than anyone would have expected from a forgotten piece of intellectual property.
Then came the lawsuits
Negotiations eventually turned into litigation. Forgent's subsidiary sued dozens of technology companies, including household names such as Apple, IBM, Kodak, Adobe, Canon, Panasonic and Microsoft.
The dispute became a much bigger question than a single patent. If a technology becomes part of an open standard and an entire industry builds around it, how much power should a patent holder have years later?
That question mattered because JPEG was not some obscure piece of software. It was already everywhere.
The challenge nobody expected
The Public Patent Foundation challenged the patent and asked the US Patent and Trademark Office to reexamine it.
The argument was devastatingly simple: earlier work appeared to contain technology relevant to the patent claims. Some of that prior art was connected to work done at Compression Labs itself.
In other words, the dispute was no longer just about whether JPEG infringed a patent. It became a question of whether some of the patent claims should ever have existed in the first place.
The patent starts falling apart
In 2006, the Patent Office began rejecting important claims during its reexamination. At the same time, court decisions narrowed the scope of what the patent could realistically be used against.
The entire strategy was losing its foundation.
Later that year, Forgent settled with several major companies and abandoned its remaining litigation. The patent had expired, and the JPEG campaign was effectively over.
Explore the timeline
The whole saga makes more sense when compressed into the same format JPEG was built to create: a few important moments instead of several decades of corporate paperwork.
The patent is filed
Compression Labs files the patent that will eventually become the centre of the JPEG patent dispute.
JPEG outlived the entire fight
The strangest part is what happened afterwards.
JPEG did not disappear. Browsers did not stop supporting it. Cameras did not abandon it. Billions of existing photographs did not suddenly become unusable.
The format simply carried on.
The patent dispute became a footnote in JPEG's history while JPEG itself remained one of the most recognisable image formats ever created.
Why this still matters
Modern file formats are built on layers of standards, implementations and intellectual property. When a format becomes universal, the distinction between an open technical standard and privately controlled technology becomes extremely important.
JPEG survived because the ecosystem around it was already too large to simply switch off. The episode remains a useful reminder that some of the most important technologies in computing are the ones nobody notices until somebody tries to put a price tag on them.