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

• By Terry Calhoun
• 08/18/04

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.

In some respects this is even more reminiscent of that old scam, predating the public Internet, where companies would simply send out invoices for photocopier toner and other products that were never in fact ordered, hoping that some administrator at a large company or organization would just go ahead and pay the invoice. Please don't do that without careful investigation first. There are three very good places to turn, either for more information or more help. They are the Electronic Frontier Foundation (EFF), the American Council on Education (ACE), EDUCAUSE, and StreamingMedia.com.

The Electronic Frontier Foundation's Patent Busting Project - www.eff.com

The EFF believes that the U.S. Patent Office frequently d'es an inadequate job of documentation in patents in the software and Internet area, partly due to the fact that what is called "prior art" - that is, evidence and documentation of prior inventions - is poorly documented and widely distributed. After all, IT folks tend to invent it and use it, not invent it and write academic papers about it. The EFF has actually named Acacia as the number one "most wanted" company for "crimes against the public domain; willful ignorance of prior art; egregious display of obviousness. The EFF is quite eager to hear from colleges and universities willing to assist in their initiative. Here is their info page on patent issues - www.eff.org/patent/ - and here is their list of "most wanted" patent abusers - http://www.eff.org/patent/wanted/.

The American Council on Education (ACE) - www.acenet.org

Sheldon Steinbach, vice president and general counsel at ACE says of Acacia's methods that they amount to "an extortion trap." Wes Blakeslee, associate general counsel at Johns Hopkins, has created a group of institutions willing to join together and fight legally against Acacia's claims with regard to higher education. We spoke with him on the phone while preparing this article and he was grateful that ACE has agreed to assist in coordinating that effort. If you want to join the other colleges and universities in their fight, contact ACE. That contact is best made by your institution's legal counsel if at all possible. A guide to contacting pertinent people at ACE is here: http://www.acenet.edu/contact.cfm and here is an ACE article on the issue: http://www.acenet.edu/hena/readArticle.cfm?articleID=1017.

StreamingMedia.com - http://www.streamingmedia.com/patent/

This organization is perhaps the leading online location for resources and links to resources documenting the effect of Acacia's claims in a variety of industries.

Now, it is possible that Acacia sent its demand letter to legal counsel for your institution, perhaps to IT staff, even to faculty, as has happened at some colleges. In many places, the letter was probably filed or tossed. In other places, there may be people stressing out or, worse, perhaps getting ready to sign on the dotted line and write a check. It is my opinion (Note that this is not legal advice.) that anyone concerned about the impact on their institution should visit the StreamingMedia.com site and the EFF for information. If your institution has received a demand for a licensing agreement, I hope that you have your legal counsel contact ACE. The fight needs to be fought, but it is not a fight that any one institution needs to fight on its own!