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Sony to Pay InterTrust $28.5 Million Patent Fee (Correct)
By Minoru Matsutani


(Sony corrects to say InterTrust will receive royalties in the future in second paragraph. The story originally ran on May 23.)

Tokyo, May 23 (Bloomberg) -- Sony Corp., the world's second- largest consumer-electronics company, agreed to pay $28.5 million to InterTrust Technologies Corp. for its patent on technology that prevents copying of digital content.

Sony, which is trying to spur earnings by marrying its hardware and media businesses, will pay royalties proportionate to revenue derived from the downloading of digital material in the future in addition to the one-time fee, spokesman Masanobu Sakaguchi said. InterTrust shares rose 63 cents, or 50.4 percent, to $1.88 in early trading. InterTrust reported sales of $8.43 million last year.

Entertainment companies are losing money to bootleggers who reproduce and sell their content illegally. Sony, whose music business recorded sales of $4.42 billion for the year ended March 31, produces songs by artists such as Jennifer Lopez, Ricky Martin and Earth, Wind & Fire.

``We are delighted that Sony, the world's leading consumer electronics provider, will use our inventions to develop new formats and platforms for electronic media distribution,'' InterTrust Chief Executive Officer David Lockwood said in statement. ``I believe that this agreement will help enable the next phase of market development for consumer media.''

InterTrust may also ask Sony's rivals such as Toshiba Corp. and Matsushita Electric Industrial Co. to pay similar royalty fees. The three Japanese companies sell portable digital music players that use memory cards to store music and photos in digital format.

The fee will boost earnings at Santa Clara, California-based InterTrust, which has never posted a profit, the Wall Street Journal said earlier in its report about the agreement. Sony's decision to pay may also have a broader impact on the industry, the paper said, without elaborating.

In April last year, InterTrust sued Microsoft Corp., claiming the world's biggest software maker's Windows Media Player infringed on its patents. InterTrust expanded the lawsuit in June 2001 to claim Microsoft also violated a patent relating to the secured transfer of music and video to portable devices, such as MP3 music players.

Redmond, Washington-based Microsoft denies the allegations, and last year in the New York Times accused the company of ``patent terrorism.''

http://quote.bloomberg.com/fgcgi.cgi?T=marketsquote99_news.ht&s=APPG8dhM_U29ueSB0

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