|
Notices |
Legacy Archived Main Board Business chat and general industry chat. All participation is welcome. Dont post your fucking spam here. |
|
Thread Tools | Display Modes |
10-27-2003 | #1 |
Administrator
Want to see your own Advertising Here!
Join Date: Oct 2002
Posts: 11,618
|
http://www.technologymarketing.com/mc/cont...tent_id=1899661
Patent Wars Marketing patent rights can be a real headache. Marketing patent rights can be a real headache. Chances are you've never heard of Acacia Research Corporation. Prior to the dot-com crash, Acacia was a minor-league Internet incubator based in Newport Beach, Calif., and the owner of a handful of forgettable companies, like now-defunct online broadcaster Soundbreak.com. Since then, Acacia has transformed itself into a budding intellectual property company, with its main revenue coming from a patent for the v-chip, a technology that allows parents to censor television content. Today, Acacia's most potentially valuable asset is a patent which, according to the original filing, describes "a system of distributing video and/or audio information [that] employs digital signal processing to achieve high rates of data compression sent over standard telephone, cable or satellite broadcast channels for later playback and optional recording." In other words, the firm believes they own the concept of streaming media. Acacia hopes to get online broadcasters, on-demand hotel movie providers, adult Internet firms, cable companies and even large entertainment-oriented sites such as AOL and MSN to pay Acacia a royalty anytime anybody downloads audio or video on demand. In doing so, Acacia hopes to secure a revenue stream of some $200 million a year, without writing a single line of code. Beats incubating marginal dot-coms, eh? Acacia's plans to prosper through intellectual property is nothing new. Patents have always been a source of extra income for high-tech firms. Many technology companies encourage their engineers to file patents, which they hope will end up as significant assets in the overall corporate portfolio. However, mining the gold from a potentially valuable patent can a daunting task, involving corporate image, executive credibility and managing public relations in the face of legal tussles. Marketing patent rights is not for the faint of heart. Depending on Patents Just ask Acacia CEO Paul Ryan. He has assembled what he calls an "all-star team" of executives and lawyers who have extensive experience pursuing patent claims. Most of his team comes from Gemstar-TV Guide International, Inc. (New York City), a company that licenses patents for interactive program guide services and products to companies like AOL Time Warner. With his team of lawyers, Ryan has determined that Acacia's patents are strong enough to hold up in court. "Acacia has done extensive due diligence to determine that our patents are valid," he says, adding that the original patent and the 17 others that are based on it have been cited by "hundreds" of subsequent patents, proving the validity of Acacia's claims. Technology Marketing asked PatentRatings LLC of Newport Beach, Calif., an independent patent research and rating service, whether Ryan was blowing smoke. Its response suggests that Acacia is sitting on a potential gold mine. "The numbers appear to indicate that these patents are quite strong," says CEO Jonathan A. Barney, noting that one of Acacia patents "was probably one of the early pioneer patents in this area." Patent attorney Bruce D. Sunstein of Bromberg & Sunstein LLP, Boston, who is not involved with streaming media issues, points out that Acacia's earliest patent has more than 30 prior references and cites two IEEE articles, an indication that the original patent filer (now long gone from Acacia) did his basic research. "On the scale of things, that's pretty good," says Sunstein, who characterizes it as "a pretty serious patent." You'd think, given the patent's apparent credibility, that all Ryan needs to do is tell the firms infringing on his patent to pony up with a hefty license fee. But it's not that simple. Enforcing patent rights can cost millions, especially if the patent owner has to drag potential infringers into court. While Acacia does have some $40 million in cash on hand (enough, in Sunstein's words, to "fund a lot of lawsuits"), the last thing Ryan wants is a series of legal battles that could take years before Acacia sees any real revenue. And that's where the marketing of patent rights comes in. Marketing Momentum Ryan and his team of executives decided it would be better for their firm if they could get other companies to pay up without the hassle of forcing them to do so through a lawsuit. To encourage this, Acacia priced the license fees at the low end of the scale to encourage early adoption. "We're only asking two percent of the revenue from streaming media firms, and we are willing to give price breaks to those who sign up early on," says Ryan, who adds that this royalty structure compares favorably with the massive fees often demanded in similar situations. Acacia also decided that alleged infringers would sign up more quickly if it looked as if everyone else were jumping on the bandwagon. Ryan launched a rollout plan that involved convincing a host of smaller firms to sign up, and the subsequent publicizing of those signings in order to create a sense of momentum for Acacia's claims. "The likelihood of people licensing the technology increases with the number of people who have already licensed it," explains Acacia's patent attorney, Roderick Dorman of Hennigan, Bennett, Dorman LLP in Los Angeles. As a side benefit, a flood of licensees would create positive publicity that might boost the price of Acacia's stock. Ryan initially targeted three markets: Internet radio, online adult entertainment and on-demand hotel movies. All three of these markets share a similar characteristic—the lack of a dominant player who might be tempted to fight Acacia's claims. By selecting fragmented markets rather than going after big players like MSN or AOL, Acacia hoped to avoid getting embroiled in a debilitating legal battle. "My approach is to get some deals done and get some goodwill," says Rob Berman, Acacia's senior vp of business development. "I don't want to end up in the bowels of legal hell." At first, everything looked copasetic. Acacia won some quick victories, which the firm publicized through press releases and interviews. Los Angeles-based RadioFreeVirgin.com signed a licensing agreement, as did Grupo Pegaso, a Mexico-based media firm. Acacia managed to get eight small online adult entertainment firms to pay licensing fees. It looked as though Acacia might build the momentum that it needed to establish its patent. "Everything is helpful in terms of velocity and momentum and credibility," Ryan bragged at the time. Then things started getting sticky. Wrenches in the Works Ryan had hoped that other Internet radio firms would follow Virgin's lead. Instead, Acacia's claims raised the ire of Internet activist Michael Roe, the CEO of Radioio.com, who has a history of fighting for his industry. In 2002, for example, Roe led an industry coalition that successfully lobbied Congress to exempt radio from provisions in the Digital Millennium Copyright Act that would have levied a per-listener charge for every song broadcast. "I could barely believe it," he says about the day he received the letter from Acacia. "It was like a consumer of Windows 2000 getting a letter asking for money because of a patent that Microsoft violated." Rather than paying up, Roe issued a press release calling Acacia's claims "absurd" and accusing the firm of "extortion." Roe's accusation that Acacia was "targeting smaller business entities" got more publicity than Acacia's victories, resulting in coverage in a spate of recording industry publications. That was just the start. Even if the Internet radio business seemed determined to fight, Acacia hoped that the adult entertainment industry would be low-hanging fruit. After all, online adult entertainment is a fragmented and apparently incoherent set of companies, full of business amateurs who, Acacia hoped, would probably rather pay a percentage than get hauled into court. Unfortunately for the company, that was not the case. Going after the adult firms was a spectacular miscalculation, according to Greg Piccionelli, an Internet attorney with Los Angeles-based Brull, Piccionelli, Sarno & Vradenburgh, who often represents adult entertainment firms on first amendment issues. "Many of these Internet firms have ties to the larger adult entertainment business, which generates as much as $40 billion each year, more than the entire professional sports industry," he explains. The larger adult firms banded into a coalition and refused to pay. Acacia then initiated patent infringement litigation in the U.S. District Court of the Central District of California against 39 adult entertainment companies. The coalition responded by retaining the services of Fish & Richardson, which handles more patent litigation than any other U.S. law firm. "Our clients feel very strongly that they do not infringe these patents and that these patents are completely invalid, based upon preliminary reviews of the prosecution history of the patent, the technology of the clients, and the prior art that was not disclosed at the patent office," says attorney Juanita Brooks. The case is now making its way slowly through the courts, squelching Ryan's hope for some easy cash and a quick PR victory. So much for marketing momentum. Waiting for the Payoff For Ryan the situation is clearly frustrating. "These companies will end up spending more on litigation than if they just paid the fees," he fumes. Attorney Dorman is equally dismissive of the adult entertainment firms. "These companies are so used to people challenging their business on first amendment grounds that they constantly feel victimized," he says. "They're not sophisticated enough to realize that this patent action is just standard procedure in mainstream businesses." The sour grapes belie the undeniable fact that, regardless of whether Acacia's patent holds up, the aggressive stance of the adult entertainment industry has thrown a wrench in the company's aggressive plan. Acacia now faces a possible repeat of its experience with the v-chip, where an industry consortium of consumer electronics firms successfully fought the patent in a drawn-out legal tussle. While Acacia eventually got license fees from a number of manufacturers, three giants—Sony, Sharp and Toshiba—held out until the U.S. District Court in Connecticut ruled against Acacia last September. Now the manufacturers who settled with Acacia look like chumps, a lesson that those fighting the streaming media patent are unlikely to overlook. The question now is whether Acacia can afford to fight a drawn-out battle. The company has some $40 million in cash, but its burn rate (without the extra expense of litigation) is around $4 million to $5 million a year. Patent lawsuits can cost anywhere from $1 million to $3 million to litigate, and if every industry proves as scrappy as the adult entertainment folks, Acacia could find its war chest shrinking before it can make good on its claims. Indeed, there's no sign that the on-demand hotel movie companies, for example, intend to comply with Acacia's demands. (Both LodgeNet and On Command declined to comment for this story.) Meanwhile, Acacia's Media Technology group has almost no income. While Acacia noted in its most recent quarterly report that it had entered into 18 license agreements for its streaming media technology, that amount wasn't enough to stem a $1.5 million quarterly loss. It's a poor performance for a company that's already in trouble. License revenues for the v-chip fell from around $10 million a quarter in 2001 to a measly $43,000 a quarter in 2002. To make matters worse, the licensing deals that Acacia has struck for its streaming media patent are apparently too small to produce much revenue. One of the eight adult entertainment deals that Acacia is touting won the company only a one-time $500 payment, according to Farrell Timlake, president of adult site Homegrownvideo.com. But the real indicator that Acacia's strategy is stalled is the company's moribund stock (Nasdaq: ACTG), which has been hovering at under $1.50 a share, cumulatively less than Acacia's cash on hand. The strategy isn't flying with investors. Acacia may eventually prevail, of course, but the firm must now cope with a long, difficult fight that's already become both a PR hassle and a damper on the company's stock. There's no doubt that intellectual property and patents can be a substantial corporate asset for a technology-oriented company. Just ask IBM, which files more patents than any other company in the world. However, before you dig through your corporate archives to find some hidden patent gems, it might be wise to remember that marketing that potential asset into hard, cold cash isn't always as easy as it sounds. TM Geoffrey James (www.geoffreyjames.com) is a frequent TM contributor and the author of numerous books. By Geoffrey James June 01, 2003 |
10-27-2003 | #2 |
Eternal Newbie
Respin bullshit press Your Comments Are Welcomed
Join Date: Oct 2002
Location: Inside your monitor
Posts: 2,850
|
Excellent article.
There's that phrase "low hanging fruit" again, and their lawyer actually stating that this industry isn't "sophisticated enough" to understand. :grrr: I like how Berman told him that they offered low fees, but it looks like he omitted the fact that these fees are based on GROSS income. Edit: It was Paul Ryan that was quoted as saying that, not Berman. Last edited by Carrie at Oct 27 2003, 06:14 PM
__________________
Need a kick-ass design done quickly? I recommend Sex Creator - they absolutely ROCK. |
10-27-2003 | #3 |
Members
Join Date: Aug 2003
Posts: 119
|
Very interesting....
__________________
Contact GonZo for a banner in your signature. |
10-27-2003 | #4 |
Eternal Newbie
Respin bullshit press Your Comments Are Welcomed
Join Date: Oct 2002
Location: Inside your monitor
Posts: 2,850
|
I just sent a letter off to the author of that article inviting him to revisit the situation and do a follow-up. I gave him a few tasty tidbits of information and a number of URLs to visit, including Oprano.
Here's hoping what I told him is enticing enough for him to dig around a bit and write another article on the subject.
__________________
Need a kick-ass design done quickly? I recommend Sex Creator - they absolutely ROCK. |
10-28-2003 | #5 |
Members
Join Date: Jan 2003
Posts: 309
|
What are the penalties for saying you did "Due Diligence" knowing that you did it so badly that untrained webmasters could find holes?
__________________
A mix of Amateur, Retro, Teens, UK Porn Stars, UK Page 3 girls and Hairy Pussy. All shot by me in the 80s and 90s. ICQ 213327873, Skype paulmarkham1 |
10-28-2003 | #6 |
Members
Join Date: Aug 2003
Location: Calgary Alberta Canada
Posts: 156
|
An absolutely awesome article ...
the best I have seen so far. going to foward some links and reread it a few times ...
__________________
<A HREF="http://www.FightThisPatent.com" target="_blank" >FightThisPatent.com</A> & <A HREF="http://www.IMPAI.org" target="_blank">IMPAI.org</A> Why would you want to tell Acacia who your customers are - every month - month after month? |
10-28-2003 | #7 |
Guest
Posts: n/a
|
any of you guys got "the letter"?
|
10-28-2003 | #8 | |
Members
Want to see your own Advertising Here!
Join Date: Oct 2002
Location: Hills of N. GA
Posts: 10,823
|
Quote:
I've never done business with Matrix and didn't have my badge scanned at Internext, so it will be interesting to see if there's one waiting for me. |
|
10-28-2003 | #9 |
Eternal Newbie
Respin bullshit press Your Comments Are Welcomed
Join Date: Oct 2002
Location: Inside your monitor
Posts: 2,850
|
I got "the letter".
It's occupying an honored spot under my ashtray.
__________________
Need a kick-ass design done quickly? I recommend Sex Creator - they absolutely ROCK. |
10-29-2003 | #10 | |
Payserve SUX
Join Date: May 2003
Posts: 1,988
|
Quote:
spaz |
|
10-29-2003 | #11 |
Eternal Newbie
Respin bullshit press Your Comments Are Welcomed
Join Date: Oct 2002
Location: Inside your monitor
Posts: 2,850
|
I smoke so I can't have a parrot (I'd really like to have a blue & gold macaw, though). But my ashtray is an antique pink glass, does that count?
__________________
Need a kick-ass design done quickly? I recommend Sex Creator - they absolutely ROCK. |
10-29-2003 | #12 |
Members
Join Date: Oct 2002
Posts: 931
|
My sister and brother in law had a blue & gold macaw. She had a great vocabulary and was funny as hell... She was in love with my brother in law though, and always tried to attack my sister when she'd walk by the cage. heh
|
10-29-2003 | #13 |
Members
Join Date: Oct 2003
Location: Ft. Lauderdale, FL, USA
Posts: 654
|
Great article.
__________________
I am available for Consulting, Design, Traffic, Marketing and SEO for adult and mainstream. Contact: kevin@kevingodbee.com ICQ: 271-024-660 Web 3.0 Internet Consulting |
Bookmarks |
|
|