Did Acacia just get fucked?

MikeFold · 10-15-2003

an interesting post from the yahoo finance board....
re: acacia
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Notes Posted On -- Tuesday May 21,2002

RIDING THE DIGITAL REVOLUTION - Part 1

Last Tuesday I attended the annual meeting of `favorite` Acacia Research Corporation (ACRI) $8.43. Much of the post meeting presentation by management was devoted to providing for the first time to Acacia`s shareholders their patent enforcement strategy. Recall that (ACRI) has a suite* of `pioneer` patents on the process of digital streaming that cover the transmission pathways that link; digitization, encryption & encoding, compression, storage, transmission, receiving and play-back. The patents that date back to January 1991 are importantly `open continuation` i.e. you can add to them, and that prevents design arounds.* 5 US patents, 16 international patents, 137 claims.

Some needed history. In 1990, walk on water, Sarnoff Research Center, then a subsidiary of RCA, (now GE), executed a thorough literature and prior art search of existing patents for Greenwich Information Technologies the originators of the patents. Sarnoff found no `prior art`.

This is also a grabber - In 1994 Bell Atlantic, (now Verizon Wireless) did a pilot program of video on demand, `VOD`, over phone lines. Bell Labs researched the patents for them and found that Greenwich was the beneficial owner of the key patents. Bell Atlantic then made a royalty agreement for an option on the VOD patents, whereupon subsequent and substantial payments were paid to Greenwich.

More good stuff. Back a ways, in 1996, (ACRI) buys 30% of Greenwich, then the remaining portion last year. That`s after hotfooting it to 4 major law firms to have them try to bust the patents. There unanimous opinion after months of extensive research was - bullet proof - that indeed the patents encompassed the process involved in the method of digital streaming, audio and VOD. They also found nothing prior in the literature and the patents were `cited` over 200 times.

Now consider the spectacular success of the Gemstar (GMST) patent licensing program. The stock flew from $2.00 to $100 on the back of their single patent on set-top boxes. Importantly 4 of the executive Gemstar attorneys who orchestrated that undertaking are now at (ACRI) readying to enforce their patents. Scuttlebutt is that the now `Acacia 4` thinks that these patents are way stronger than the one they successfully enforced and licensed for Gemstar. Recently 2 more Gemstar executives who ran Europe and Asia, plus a key engineer have joined the hunt. At one point Gemstar wore a market cap of $9 Billion.

Word is that the (ACRI) team is already knocking on doors in the beginnings of licensing / royalty agreements. Important here is the fact that (ACRI) seems to view this endeavor as the setting up of strategic partnerships rather than an aggressive adversarial pursuit of giant lump sum payments. I.e. A penny or so on this application, a penny or so on the next one; and on and on, thru the complex of the associated technological pathways involved. These small nominal fees would not affect their `partners` business models yet they add up to a cumulative royalty stream in the mega millions.

Their goal is to become a very lean money making machine with exceptional 95% + gross margins and low expenses. Once the program is underway you presumably need a walk up, an accountant to count the take and a few attorneys to make sure there`s no one cheating. Head count at Acacia Technologies, that`s the `patent portfolio` side of the company, is only 17, so you get the `drift` and the potential bonanza.

10-15-2003	#17
MikeFold Members Join Date: Oct 2002 Posts: 325	an interesting post from the yahoo finance board.... re: acacia ---------------------------------------------------- Notes Posted On -- Tuesday May 21,2002 RIDING THE DIGITAL REVOLUTION - Part 1 Last Tuesday I attended the annual meeting of `favorite` Acacia Research Corporation (ACRI) $8.43. Much of the post meeting presentation by management was devoted to providing for the first time to Acacia`s shareholders their patent enforcement strategy. Recall that (ACRI) has a suite* of `pioneer` patents on the process of digital streaming that cover the transmission pathways that link; digitization, encryption & encoding, compression, storage, transmission, receiving and play-back. The patents that date back to January 1991 are importantly `open continuation` i.e. you can add to them, and that prevents design arounds.* 5 US patents, 16 international patents, 137 claims. Some needed history. In 1990, walk on water, Sarnoff Research Center, then a subsidiary of RCA, (now GE), executed a thorough literature and prior art search of existing patents for Greenwich Information Technologies the originators of the patents. Sarnoff found no `prior art`. This is also a grabber - In 1994 Bell Atlantic, (now Verizon Wireless) did a pilot program of video on demand, `VOD`, over phone lines. Bell Labs researched the patents for them and found that Greenwich was the beneficial owner of the key patents. Bell Atlantic then made a royalty agreement for an option on the VOD patents, whereupon subsequent and substantial payments were paid to Greenwich. More good stuff. Back a ways, in 1996, (ACRI) buys 30% of Greenwich, then the remaining portion last year. That`s after hotfooting it to 4 major law firms to have them try to bust the patents. There unanimous opinion after months of extensive research was - bullet proof - that indeed the patents encompassed the process involved in the method of digital streaming, audio and VOD. They also found nothing prior in the literature and the patents were `cited` over 200 times. Now consider the spectacular success of the Gemstar (GMST) patent licensing program. The stock flew from $2.00 to $100 on the back of their single patent on set-top boxes. Importantly 4 of the executive Gemstar attorneys who orchestrated that undertaking are now at (ACRI) readying to enforce their patents. Scuttlebutt is that the now `Acacia 4` thinks that these patents are way stronger than the one they successfully enforced and licensed for Gemstar. Recently 2 more Gemstar executives who ran Europe and Asia, plus a key engineer have joined the hunt. At one point Gemstar wore a market cap of $9 Billion. Word is that the (ACRI) team is already knocking on doors in the beginnings of licensing / royalty agreements. Important here is the fact that (ACRI) seems to view this endeavor as the setting up of strategic partnerships rather than an aggressive adversarial pursuit of giant lump sum payments. I.e. A penny or so on this application, a penny or so on the next one; and on and on, thru the complex of the associated technological pathways involved. These small nominal fees would not affect their `partners` business models yet they add up to a cumulative royalty stream in the mega millions. Their goal is to become a very lean money making machine with exceptional 95% + gross margins and low expenses. Once the program is underway you presumably need a walk up, an accountant to count the take and a few attorneys to make sure there`s no one cheating. Head count at Acacia Technologies, that`s the `patent portfolio` side of the company, is only 17, so you get the `drift` and the potential bonanza.