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For years adult entertainment Web sites fought alone against a patent enforcer that demanded a portion of their profits. Now they’ve been joined on the battlefield by more than a dozen cable and satellite companies. Acacia Media Technologies Corp., a patent holding company in Newport Beach, Calif., says adult entertainment companies and the cable industry are infringing its patents for transmitting and receiving video and audio content. In 2002 the company separately sued 15 companies, including New Destiny Internet Group, Adult Entertainment Broadcast Network and Club Jenna, in the Central District of California. And then last year it filed a series of suits against cable and satellite companies in four other districts. The cases have been consolidated before U.S. District Judge James Ware of San Jose, Calif., who is scheduled to hold an evidentiary hearing in September. Among the swarm of patent disputes in the courts, In re Acacia Media Technologies, 05-01114, stands out because of how broadly Acacia interprets its patents and how widely the company has cast its net. Acacia alleges that “anyone who transmits video or audio material over cable or satellite or the Internet is infringing their patents,” said Jonathan Singer, a partner at Fish & Richardson who is representing the bulk of the adult entertainment companies. “They picked up the patents off the ash heap and are trying to make a pile of money.” But Robert Berman, Acacia’s general counsel, said his company is protecting the rights of unsophisticated inventors by buying their patents and then seeking licenses from corporations. Morrison & Foerster partner Harold McElhinny, who represents EchoStar Communications Corp., said Acacia is running a precision operation. “It meters its actions and demands on the cost of litigation to get licenses and payments from as many people as possible without having to test the scope or validity of their patents,” McElhinny said. San Francisco’s Keker & Van Nest is also involved in the litigation, representing Comcast Corp. McElhinny said Acacia has not put a dollar figure on the amount of royalties it is seeking. Acacia is also trying to enforce the patents against universities. It sent a series of letters to hundreds of universities demanding that they pay a licensing fee for transferring audio and video files. Wesley Blakeslee, associate general counsel of Johns Hopkins University, said Acacia initially requested a minimum payment of about $5,000 per year against a transmission fee and has recently indicated it would consider a fixed fee. Blakeslee declined to say how the universities have responded to the letters. Two issues have to be addressed, he said. “Are you using audio and video files, and how do you use them? Acacia’s patents are quite specific” about how the files are to be used. Acacia Media Technologies is the patent licensing and enforcement division of Acacia Research Corp. The company owns 30 patent portfolios, including 128 U.S. patents covering a variety of industries, and has been aggressive in suing companies for infringement. According to a recent Securities and Exchange Commission filing, Acacia has 19 suits pending. In April, Acacia added Intel Corp. and Advanced Micro Devices Inc. to the list of companies it has sued for allegedly infringing its computer memory cache coherency technology. Acacia claims the technology is used in “core logic chipsets,” which had sales of $4 billion in 2003. Acacia has sued Dell Computer Corp. and Lexmark International Inc. over its image resolution enhancement patents. It has sued Gap Inc., Williams-Sonoma Inc., Costco Wholesale Corp. and others for infringement of its credit-card fraud protection technology. Companies, particularly those in the software and computer industries, have been trying to rein in litigation by patent holding companies like Acacia, which they refer to as patent trolls. They argue that since patent trolls don’t produce or sell products, they should not be given an injunction in an infringement suit. Earlier this month U.S. Rep. Lamar Smith, R-Texas, introduced legislation to overhaul the patent system. At the urging of the Business Software Alliance, he included a provision that would require courts to take into account whether a patent holder has suffered irreparable harm when courts decide whether to issue an injunction. Language was dropped from the draft version of the bill that had directed courts to take into account whether the patent holder is commercializing the invention. In lobbying against this provision, Peter Detkin, managing director of Intellectual Ventures, itself a patent licensing shop, has argued that only 2 percent of patent cases in the past five years were filed by entities that don’t sell products. Detkin says Acacia filed half of those suits. But Berman, Acacia’s general counsel, said it’s irrelevant whether a company makes a product. “These inventors we partner with don’t have the means or know-how to enforce their patents,” he said. “For years companies have been running over them. It’s not until they partner with someone like Acacia that these companies start paying attention.” Acacia has 25 employees, six of which are lawyers, and Berman said the company is looking to hire more licensing attorneys. The company boosted its portfolio when it acquired Global Patent Holdings in January. That company owned 11 patent licensing companies, including Northbrook, Ill.-based TechSearch. TechSearch gained notoriety several years ago when it sued Intel for $2 billion to $7 billion and sought an injunction to stop the company from producing its Pentium processors. Founded as a venture capital firm in 1996, Acacia first gained attention when it acquired the patent on the V-Chip — content-filtering technology that the Federal Communications Commission required to be included in TV sets with screens of at least 13 inches. Berman said the V-Chip patent, which expired a couple of years ago, generated $26 million in licensing revenue from television manufacturers. Acacia now wants to cash in on its audio and video streaming patents. Berman said nearly 300 companies have licensed the patents, including 107 cable companies. But those that have chosen to fight rather than license may get the patents declared invalid. Ware issued an order last year in the adult entertainment case, finding that terms in two of the patents were indefinite and inviting the defendants to file a motion for summary judgment on grounds of invalidity. Acacia, which is represented by Los Angeles’ Hennigan, Bennett & Dorman, subsequently asked the court to consolidate that case with all the suits against the cable industry. And at Acacia’s request, Ware agreed to reconsider his previous ruling on the meaning of the terms in the patents.

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