• United States

Sony, Philips to buy DRM company, InterTrust

Nov 13, 20022 mins
Intellectual PropertyWi-Fi

InterTrust Technologies, a digital rights management software company, is to be bought by Koninklijke Philips Electronics NV and Fidelio Acquisition Company LLC, a company formed by Sony of America, a subsidiary of Sony, the companies announced Wednesday.

As part of the agreement, which is subject to shareholder and standard regulatory approvals, Fidelio will acquire all of the outstanding common stock of InterTrust for approximately $453 million on a fully diluted basis or $4.25 per share, the companies said in a statement. The deal is expected to close in early 2003.

InterTrust, of Santa Clara, holds 26 DRM U.S. patents with approximately 85 patent applications pending worldwide, according to its Web site.

The company sued Microsoft in April 2001 for alleged patent infringement, and in June of this year expanded its allegations to involve 11 patents, 144 claims and more than 190 infringement scenarios InterTrust believes Microsoft violated.

The original suit, filed with the U.S. District Court for the Northern District of California, claims that Microsoft’s Windows Media Player and other products infringed upon InterTrust’s DRM patents. Other Microsoft products added to the suit include Windows XP, Office XP, and its .Net platform for Web services.

In May, Sony agreed to license InterTrust’s current and pending patents for the purpose of creating DRM technology for its digital media products and services, in a deal valued at over $28.5 million.

The beleaguered 12-year old InterTrust has been posting heavy losses, including a second quarter net loss of $15.7 million and a first quarter net loss of $12.4 million. Earlier this year, InterTrust cut its workforce from 115 employees to 35 employees.

InterTrust is due to release its third quarter results for the period ended Sept. 30, on Thursday.