It's no easy feat to build tech products or to persuade customers to buy them. But at least one company seems to have found a way to capitalize on technologies once they start growing: Forgent
Forgent more euphemistically calls its approach an "intellectual property licensing program." But tech companies that have been the subject of Forgent's enforcement may have less flattering words to describe it.
What Forgent does is perfectly legal under the patent system. But should patents be used solely as a way to get other companies to pay a licensing fee? Shouldn't a company offer some value other than a lawsuit? This is a big debate in tech, and Fool contributor Dave Mock has written an excellent article addressing these issues.
Forgent certainly values its program, which accounts for 85% of its revenue. The company does also have a software product called NetSimplicity, which allows for scheduling of conference rooms for things like catering. But it is a niche business -- and fairly small for the company.
There's no doubt that enforcement is its primary focus. Just last week, Forgent filed lawsuits against 15 companies for alleged infringement of patents that cover digital video recording technologies. Of course, the defendants, among them Time Warner
True, DVR is not a new technology. TiVo
Well, it seems that the company's strategy may be to wait for a technology to grow and then get a piece of the action through licensing fees.
If that's the strategy, it hasn't been much of a success for shareholders. The stock has languished for some time. Last quarter, the company suffered a net loss of $1.2 million, while revenues fell from $1.6 million to $1.2 million. On the other hand, it has about $20 million in the bank. But with other key numbers falling, perhaps it's no surprise why Forgent is looking to rake in the bucks by going the patent-enforcement route.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.