Re: [Patents] Voice of patenting business

["Brandon Shalton" <brandon@fightthepatent.com>]

My writeup of Acacia's Q1 2004 Earnings call.

http://www.fightthepatent.com/v2/DosTowers.html

The Dos Towers: ACTG Q1 Conference Call

Written by Brandon Shalton  - 21-April-2004


Much like the epic book and the movie of the L-rd of the R-ngs (I don't want
to attract fans of the movie and the book to my website when they do a
google search), there is a battle going on for the licensing of patents in
Middle Internet.

Acacia Research has clearly demonstrated their business model in acquiring
or partnering with patent holders to attempt to "solicit" and "market"
companies to pay-up on patent infringements.

For those following this saga, Acacia's interpretations of the DMT patent is
just as imaginative as T-lkien's writings.
Acacia targeted the Internet Tower first, more specifically Adult
Entertainment websites, as being the "low hanging fruit"** to be able to
"dip their beaks"**.

Out of the 120 licenses that they are proud about, 100 are from Adult
Entertainment websites. The following non-porn companies have been revealed
in press releases (CinemaNow, Disney, General Dynamics Interactive, Grupo
Pegaso, LodgeNet, NXTV, Oral Roberts University, T. Rowe Price, 24/7
University and Virgin Radio) which leaves ten others not released.

Out of 47 Adult Entertainment companies targeted, eleven are in court,
defending their companies and the Internet from the M-rdor of Patent
licensing companies.

The second Markman Hearing brought more debate and discussion over the words
and definitions that Acacia is using from the patent. Several more Markman
Hearings are scheduled with some outcome by late summer.
It is believed by the current defendants and myself that the judge will rule
that the DMT patent does not apply to the Internet. This would mean an
eventual non-infringing verdict for the defendants, but not invalidating the
patent.
This now means that cable and satellite companies would be the only areas to
go after, and admittedly, are really the "low hanging fruit" because they
are so heavy and plump in financial sweetness.

Evidence of this push towards cable is observec by three attorney firms who
had contacted me for information concerning prior art and the Acacia Saga as
they are being "solicited" and "marketed" to license the DMT patent.
A shareholder on the conference call asked about the possibilities of
litigation with cable companies. Paul Ryan responded that there is the
possibility of litigation and that they would hope to have some licensees in
the cable industry that might impact other cable companies decision to just
settle. While laymen like me call that "Sweetheart deals", in the patent
licensing world, it's called "most favored nations clause/status".

While the good guys had defeated the first Tower and marched onward to the
Second tower in the movie, in this modern day saga, it is the story of a
band of lawyers with patent infringement weapons that now target the Cable
Tower.

Will the cable industry band together and fight against what an EFF attorney
said was an "absurd patent", or will a large cable company be offered the
sweetheart deal that helps to deliver the rest of the cable industry?
Who will be the first to sell-out or settle, finding it cheaper to license
than to fight? Who will make it a business decision to rollover, rather than
band with other targeted companies?

In the conference call, the V-Chip patent was brought up. Acacia had derived
over $25M in licensing before Sony invalidated the patent. In seeing history
repeat itself, it's easy to see how smaller cable companies can be picked
apart to license, until the Sony of the cable industry steps in to squash
it. By then, Acacia will have filled up its coffers with money extracted
from companies.

V-Chip patent was round one. DMT Patent is round two. There will be
additional rounds that could make this Saga run longer than the six episodes
of St-r W-rs (that is unless the FTC or SEC has something to say about it).
While the Farce lies within this website and in these articles, it
illuminates the growing problems that business and innovators face and will
face when confronted with broad patent interprations that seek to add a
patent tax onto the cost of doing business.

The two paradoxes in this particular case is this:

1) How can a patent that has 160 other patents that referenced the DMT
patent, be able to broadly apply itself? Case in point: InterVu has patents
on client-server streaming technology that references the DMT patent. A
company that uses InterVu's patented technology could find themselves
infringing on a broader patent (DMT patent).

2) How can USA Video's inventor have a patent that has overlaping claims as
the DMT patent? Both patents were granted within a year of each other, which
leads one to wonder about the obviousness issue.

If only the whole season were but a dream.


** phrases attributed to Robert Berman, General Counsel of Acacia Research



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