In the 1980s, an inventor named Ronald A. Katz secured approximately 50 patents related to the technology that links a telephone to a computer. Since the early 1990s, Ronald A. Katz Technology Licensing LP and its affiliate A2D LP have gone after companies using his computer-telephony integration (CTI) and interactive voice response (IVR) technologies-collecting an estimated $1 billion in licensing revenue.So far, Katz has settled with dozens of companies in the computing, telecommunications and banking industries. The legal teams of giants such as American Express, AT&T, IBM, Microsoft, Sprint and Verizon have capitulated to his demands.

That's because he's not doing anything illegal, according to sources. "There's nothing even immoral in what he's doing-because he paid for those patents," notes Frank Cuypers, head of intellectual property for Zurich-based Swiss Re.

By the time many of Katz's patents expire in 2009, he could conceivably collect another $1 billion-or more. And some of that money will come from insurers' coffers.

In fact, several Swiss Re customers already have been contacted by Katz, Cuypers says. And, according to A2D LP itself, Nationwide, The Principal Financial Group, and Prudential Financial Inc. have license rights under the Katz portfolio.

Basically, "if you have a call center and you have some kind of interactive voice response system, you are infringing on his patent," notes Phil Hargrove, vice president, intellectual asset management at GE Insurance Solutions, the Kansas City, Mo.-based insurance unit of General Electric.

Essentially, whenever a customer calls a company and is prompted to enter an account number-enabling the system to find that customer's records in a database and present them to a service representative, Katz's technology is used, notes Michael Callaghan, CEO of Opus Group LLP, a Chicago-based performance optimization firm.

"If you think about how often you do this and how ubiquitous this technology is, Katz is literally redefining patent law in the United States," he says. "His will be the most successful patent infringement initiative ever in this country."

What can insurers do to protect themselves against Katz? Understand their exposure, according to Callaghan, whose company offers Katz liability assessment solutions.

"There are many cases of 'false positives' in the Katz world," he says. Those occur when a customer calls a company-to obtain the phone number for the billing department, for example-and Katz's technology isn't actually used to adjudicate the call.

Insurers can defend their position by "getting into the muck" of every one of those transactions to determine their exposure. That includes exactly what types of calls they received, exactly how often, and exactly what the average time per call is, explains Callaghan. He claims Opus Group has been able to reduce companies' liability to Katz by 40% to 60%.

"Otherwise, Katz can come in and say, 'You guys have CTI and IVR technology. I know you take 1 million calls a day. I know they take 6 minutes apiece. I'm going to charge you 'x' cents per minute for all those calls. You owe me $40 million. Period.'"

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