Sun, Kodak Settle For $92M In Patent Dispute Involving JavaSun, Kodak Settle For $92M In Patent Dispute Involving Java

Sun Microsystems Inc. Thursday settled its software patent suit with Eastman Kodak Co. for $92 million. Sun said the resolution of the suit assured the Java community that Java users would not be affected by Kodak's legal action.

The settlement came just as the penalty phase of the two companies' trial was set to begin. On Oct. 1 a federal district court jury in Rochester, N.Y., decided that Sun's Java technology violated three patents Kodak holds that govern object-oriented software. Kodak acquired the patents in 1997 when it bought Wang laboratories for $260 million.

Eastman Kodak had been seeking $1.06 billion in royalty payments from Sun, a figure the company said represented half of Sun's earnings on the Java programming language since its inception in 1995.

A Sun spokeswoman says Sun settled the case in part to avoid raising concerns among its customers about whether the patent dispute posed a threat to the Java programming language and its supporting technologies, known as Java 2 Enterprise Edition.

"We are eager to put this punitive litigation behind us, to have reached a decision in the best interest of our stockholders, customers and employees," said Jonathan Schwartz, Sun president and CEO in a statement.

The spokeswoman says Sun will receive full license rights to the Kodak patents and any customer holding a Java license from Sun will be covered by the Sun/Kodak licensing agreement.

Enterprise users of Java, however, seldom purchase a Java license from Sun because they are using Java for their internal applications and operations rather than distributing it in commercial products. In some cases, Java plays both a supporting and direct role within companies producing goods and services that rely on a Java infrastructure. A distribution company, for example, might have Java in its inventory application and its truck scheduling system. Both can be tied to services for which it charges customers. A Kodak spokesman declined to say whether the company plans any additional legal action concerning its software patents.

"We are pleased that the Court has validated these fundamental Kodak patents and we now look forward to building a more productive relationship with Sun, with whom we have enjoyed a close partnership for nearly two decades," said Willy Shih, Kodak senior vice president, in a statement.

Sun was wise to settle rather than let proceedings drag out and uncertainty build as it appealed the jury's decision, says John Rymer, software analyst at Forrester Research.

After a string of losing quarters, Sun didn't want doubts about Java to threaten its own financial future, Rymer adds. "Sun is in transition. It's righting the ship, restarting growth," he says. Under those circumstances, it was worth the settlement to convince the world that Java isn't going away, he says.