Supplier Product Costs Go Up; More Suits Could Be on the Way
DALLAS Out-of-court settlements of a touchscreen patent claim against automation suppliers likely will add to the cost of what broadcasters pay for their systems.
However, the dispute over alleged patent infringement is not over yet. Sources familiar with the situation say additional automation suppliers could be sued after the new year begins.
Media Digital Corp. Inc. reached agreements in October with ENCO Systems, Radio Computing Services, Broadcast Electronics and Prophet Systems, which is owned by Clear Channel. The agreements cover the touchscreen systems those companies sell. Media Digital had alleged in the suit that those audio management systems contain touchscreen technology retained in a patent assigned to John Connell, formerly of MediaTouch and now president of Media Digital.
Media Digital filed the complaint in U.S. District Court for the Northern District of Texas in May alleging patent infringement by five broadcast equipment companies (RW, July 16).
Broadcast Software International, owned by Cumulus, is the lone remaining defendant in the suit; it had until early December to file an answer to Media Digital’s complaint in court.
“I’m satisfied with the progress we’ve made and feel things have been settled fairly,” Connell said. “We continue discussions with BSI with hopes of a conclusion.”
Under the agreements, Connell said he could not disclose the dollar amount of the settlements.
The original complaint stated, “Media Digital has been irreparably damaged to an extent not yet determined.”
Prior to the filing of the patent infringement suit, one supplier of touchscreen automation equipment, Scott Studios Corp., agreed to pay Media Digital a royalty of $300 for each touchscreen system it sells. The company also agreed to pay a $50,000 retroactive fee, said Dave Scott, president of Scott Studios Corp. and its sister company, Computer Concepts Corp.
Because of the agreement, Scott said, no suit was brought against Scott Studios. A source said it’s likely similar arrangements were offered to the five defendants in this case.
According to court documents, all claims against ENCO Systems, Radio Computing Services, Broadcast Electronics and Prophet Systems/Clear Channel were “dismissed with prejudice.” This precludes Media Digital from taking this specific legal action against the companies in the future.
ENCO Systems released this statement: “ENCO acknowledges no infringements on the Media Digital patent claims. However, in the interest of avoiding a long, expensive legal action, we have agreed to settle out of court. This settlement includes a per-touchscreen fee that will be passed on to broadcast customers.”
Prophet Systems President Kevin Lockhart stated, “While we do not believe we infringed on the Media Digital patent, we sell very few touchscreens and couldn’t justify the cost of continued litigation. Due to Media Digital’s lawsuit, customers requesting touchscreen functionality will now be forced to pay an additional amount to cover royalty costs. The terms of the settlement are confidential, but include a royalty payment to Media Digital for each system sold using a touchscreen controller.”
In an earlier interview with Radio World, Scott said he believed the MDC patent was invalid, but “agreed to the royalty fee payment as the less-expensive resolution” when compared to a lawsuit.
RCS and BE declined comment for this story.
Scott said Media Digital went after his company first because of its prominence in the digital systems marketplace.
“We absorbed the settlement quickly as a service to our customers. To expect our customers to retreat to using a mouse or trackball and lose the ability to use a touchscreen would be unrealistic.”
The original patent application, titled “Computer TouchScreen Radio Station Control System,” was filed with the U.S. Patent and Trademark Office in 1985. After several continuation applications, Connell was issued the patent in 2000.
The patent abstract describes the system in part as “a computerized audio or video signal control system controlled by an announcer and having a display of the available signal sources and scheduled events.” Claims contained in the patent also referred to a “touchscreen means for displaying information and for receiving input information.”
Sources close to Media Digital believe more automation suppliers could be receiving notification from Media Digital regarding the touchscreen patent after the first of the year, including Smarts Broadcast Systems.
“Anyone selling a touchscreen system could be open to litigation,” the source said.
Connell is a 63-year-old entrepreneur who founded MediaTouch in 1984 with the help of several investors. He sold the company in 1995.
Media Digital Corp. is based in Salem, N.H., and sells touchscreen systems to the mobile DJ entertainment industry.