Acacia: Not a Plant, But Some Think It Is a Parasite

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Acacia: Not a Plant, But Some Think It Is a Parasite

8/18/2004

By Terry Calhoun

Last year, Johns Hopkins University received a slick package of information and a cover letter from Acacia Research Corporation requesting that the university shell out about 2 percent of its annual revenues to license streaming technologies from Acacia. Initially, it wasn't even clear to the folks at Johns Hopkins that there was in fact a demand being made - they thought it was just some slick advertising for a company's services.

Not so. Acacia is basically not a technology company. As put by Dan Rayburn, executive vice president of StreamingMedia.com, it's "a company full of lawyers. They acquire patents and then sue." Now they're targeting smaller higher education institutions in the apparent hope that they will both pay and agree to licensing arrangements that might stick them with legal liabilities even when Acacia's patents are found to be invalid. This is an outrageous scam and it is my hope that every college and university will join together in a united front to resist Acacia's demands and eventually invalidate those ridiculous patents.

Why is this so outrageous? Well, it's because the patents - first granted to another company in 1991 - are by many experts' opinions invalid in the first place. They basically claim to cover just about any use of online streaming technologies and could possibly even extend to the sharing of any files across large networks. Anyone with a rational mind and an understanding of the development of modern information technology knows that there was no one organization that invented enough of all that to legitimately hold a patent on it. In fact, most of us were doing things like that long before 1991.

Acacia was hit hard by a negative court ruling on its patents recently and, although the ruling did not outright reject the validity of Acacia's patents, that ruling was followed by an onslaught of demand letters from Acacia to a host of smaller colleges and universities insisting on a September 15 deadline to sign a $5,000 annual licensing fee agreement or face larger licensing fees. The recent negative court ruling wasn't black and white, yet f'es of Acacia point to the fact that Acacia's investors certainly thought it was a bad hit. Acacia's stock plummeted in value. Some believe that Acacia followed with thousands of letters to smaller institutions in the hope that those institutions will pay the cheap $5,000 licensing fee without carefully investigating it. Others warn that institutions who sign that agreement may remain liable over time for it even if Acacia's patents are invalidated.

To me, this is a scam similar to those used by spammers who send out millions of messages hoping for a lucrative return from some small percent of responses. The larger demand to Johns Hopkins last year was met by a comprehensive letter back to Acacia asking for more information and clarification. That was followed by deafening silence from Acacia. Now, Acacia is after smaller numbers from a larger quantity of institutions and focusing on those smaller institutions which might not have benefit of in-house legal counsel and who may find it cheaper to pay up than to object.