Sun, Kodak Settle Patent Lawsuit

Sun Microsystems (Nasdaq: JAVA) has settled its long-fought patent infringement case with Eastman Kodak (NYSE: EK) , heading off a jury decision on the penalty.

Faced with the prospect of paying damages of more than US$1 billion in federal court, the software giant reached an out-of-court agreement late last night, according to court papers filed this morning.

Kodak sought a lump-sum payment of $1.06 billion. That figure would have consumed half of Sun's profits from computer servers and storage units loaded with Java sold between 1998 and 2001. The terms of the settlement were not disclosed.

Kodak declined to comment on the case. Sun did not return calls seeking comment on the dispute, which came to a climax on October 1 when the jury found that Sun violated a patent that Kodak acquired when it bought Wang Laboratories in 1997.

Liability Determined

The three patents focused on object managers that handle the communications between two or more applications to identify each other and the data formats the two applications have in common.

A U.S. District Court judge for the Western District of New York ruled that Sun had violated a Technology License and Distribution Agreement by distributing and using Java's Remote Method Invocation, Interface Definition Language and Java Applet Environment.

The implications of the ruling could change the face of the software industry, Steve O'Grady of research firm Red Monk told LinuxInsider. He expects other companies to start combing through their patent libraries to copycat Kodak's coup.

"Now we're faced with a world in which OpenOffice may suffer simply because of the threat of potential patent issues and Linux still has 283 potential infringements looming over its head," O'Grady said.

Patent Questions

With hundreds -- or even thousands -- of other projects out there, it raises an important question: Should software be patented at all?

Most industry observers would agree that patents are necessary to protect the innovator and innovation. However, O'Grady said, if patents are awarded for functions and features that are so broad at a base level, then innovation is stifled.

There's a lot in question in the wake of the Sun-Kodak settlement. It's difficult to speculate, for example, just how the settlement and its ripples could affect developers and the Java community.

But one thing is certain, O'Grady said: "The Kodak settlement will certainly affect Sun's financial fortunes as well as potentially Java as a platform itself."