In Streaming Video Dispute, Company Aims at Colleges, Universities

After a recent legal setback, a California company that claims its patents cover the streaming video technology used by adult Web sites is boosting efforts to collect money from colleges and universities. Acacia Media Technologies Corp. has sent letters to dozens of colleges claiming the schools' use of streaming video in areas like distance learning and video lectures violates company patents. The message: Pay up, or risk getting sued.

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After a recent legal setback, a California company that claims its patents cover the streaming video technology used by adult Web sites is boosting efforts to collect money from a very different group of streaming video users: colleges and universities. Newport Beach, Calif.-based Acacia Media Technologies Corp. has sent letters to dozens of colleges in recent days claiming the schools’ use of streaming video in areas like distance learning and video lectures violates company patents. The message: pay up, or risk getting sued. “Certainly for colleges that do a lot of distance education, this could be a major problem,” said Steve Worona, director of policy and networking programs at EDUCAUSE, an association of campus information technology centers. Several colleges say the letters make even broader claims, extending beyond distance learning to cover almost anything a college does that involves moving audio and video files on computer networks. Washington College in Chestertown, Md., was told by Acacia that a minimum annual license fee of $5,000 was likely to cover the company claims it’s owed. But Acacia said the deal is only on the table until Sept. 15. Afterward, the price might go up and Acacia might sue for past infringement. The school calls it extortion. “I think it’s kind of like highway robbery or blackmail,” said Billie Dodge, director of information technology at the college of 1,400 students. It uses streaming video for things like making lectures available online and showing alumni sports highlights. While some companies that have agreed to licenses with Acacia pay hundreds of thousands of dollars per year, Bob Berman, the company’s general counsel, said he doubts any university streams enough video to owe that much. It’s only fair, he said, that colleges pay up. “Many colleges have patented technologies that their research departments have gotten issued,” he said. “On the one hand, they like the revenue they make from their patents. On the other hand, they’re saying we should allow them to ignore ours.” Acacia’s digital media patents, granted to the founders of Greenwich Information Technologies in the 1990s, weren’t enforced until Acacia bought them in 2001. Acacia has since secured dozens of licensing deals with companies ranging from adult entertainment sites to The Walt Disney Co. It has also sued large cable and satellite providers. Last year, Acacia sent an initial round of letters to a number of colleges, seeking similar licensing deals. A handful signed agreements, but most have resisted. Now it appears to be making another big push. Berman declined to say how many schools had been sent letters in what he acknowledged was a “second wave.” But as of Friday, at least 48 colleges had notified the American Council on Education that they’d received letters and asked for advice on how to respond. ACE and the Electronic Frontier Foundation, a legal group that opposes Acacia’s patent claims, are both advising colleges not to pay. “There’s a lot of scared schools out there,” said Sheldon Steinbach, general counsel for the ACE. In a preliminary ruling in Acacia’s dispute with adult entertainment sites last month, a federal judge ruled that several terms in Acacia’s patents were indefinite, a verdict that could weaken potential Acacia cases against other streaming video users. Now, critics of the company are saying that it’s trying to make a fast buck off schools nervous about litigation before a federal judge makes a final, potentially crippling ruling in that case. “Honestly, I think it’s a sign of desperation,” said Jason Schultz, a staff attorney at the Electronic Frontier Foundation. “Acacia knows the hammer is coming down on its patents, and it’s going to extract as much as it can before the apocalypse.” Berman denied that, noting several of the company’s claims were not hindered by the ruling. Schultz called the company’s tactics “a threat to the future of education.” “Acacia wants to extract a toll on each and every lesson that a student learns over the Internet,” he said. “I think that’s despicable. Universities are under enough pressure in their budgets right now to try to pay for everything. The last thing they need to do is give a pound of flesh to some tech company that doesn’t even make a product.” Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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