Acacia purchase creates Net patent powerhouse

http://news.com.com/Acacia+purchase+creates+Net+patent+powerhouse/2100-1030_
3-5494119.html?tag=nefd.top

Acacia purchase creates Net patent powerhouse

Published: December 16, 2004, 12:44 PM PST
By  <mailto:jborland@cnet.com?subject=FEEDBACK:Acacia purchase creates Net
patent powerhouse> John Borland 
Staff Writer, CNET News.com
 

In the streaming media business, a letter from Acacia Research usually means
one thing: the threat of a patent lawsuit. 


Now, the little-known but litigious company is expanding its horizons with a
move that promises to substantially increase its profit potential while
bringing new patent headaches to the high-tech industry at large.

On Thursday, the company agreed to buy Global Patent Holdings, an umbrella
company whose various divisions, including
<http://dw.com.com/redir?destUrl=http%3A%2F%2Fwww.techsearch-llc.com&siteId=
3&oId=2100-1030-5494119&ontId=1023&lop=nl.ex> TechSearch, have sued or
struck patent licenses with Intel, Sony, Samsung and a myriad of smaller
technology companies. 

The deal would create a patent powerhouse which would own small pieces of
dozens of different technologies, many of which are fundamental components
of everyday Internet and personal technology businesses. The company said
more acquisitions are likely. 

"We will continue to acquire additional portfolios, as Acacia moves towards
its goal of becoming the leading technology licensing company." 
--Paul Ryan, CEO, Acacia

"We will continue to acquire additional portfolios, as Acacia moves towards
its goal of becoming the leading technology licensing company," Paul Ryan,
Acacia's chief executive officer, said in a statement. 

Acacia's intellectual property division produces no products and runs no
services, although an associated company does create biotechnology and
genomics products. But it has largely become famous in streaming-media
circles for its litigiousness, cutting a swath through the online porn
industry and even taking on cable giant Comcast in pursuit of licensing fees
over technology it says covers the basic method of delivering video bits
over the Net. 

Those efforts have been largely successful. Although many of the lawsuits
remain outstanding, it has settled with more than 227 companies, including
Disney. 

Patent experts said the company's actions are part of an evolution in the
technology world, where large, diverse patent portfolios are being
consolidated into new licensing-focused businesses whose sole purpose is to
extract fees from other going concerns. 

Former Microsoft Chief Technology Officer Nathan Myhrvold has founded a
secretive Seattle-based company called
<http://dw.com.com/redir?destUrl=http%3A%2F%2Fwww.intellectualventures.com%2
Fhome&siteId=3&oId=2100-1030-5494119&ontId=1023&lop=nl.ex> Intellectual
Ventures that,
<http://dw.com.com/redir?destUrl=http%3A%2F%2Fwww.msnbc.msn.com%2Fid%2F64786
91%2Fsite%2Fnewsweek&siteId=3&oId=2100-1030-5494119&ontId=1023&lop=nl.ex>
according to Newsweek, has raised $350 million to pursue a similar strategy.
It has already accrued close to 1,000 patents. 

The last few years have seen an upswing in patent lawsuits brought on the
basis of basic Internet technologies, ranging from buying music using a
computer to Acacia's own assertion of rights to Web streaming technology. 

Most of these have been launched singly, by independent companies with just
one or a few individual patents. While potentially quite profitable, these
lawsuits are expensive to pursue, and companies such as Acacia and
TechSearch may be seeing efficiencies in consolidation. 

"This is becoming a business in the sense of products, markets, and supply
and demand," said Greg Aharonian, a patent consultant who is a frequent
critic of overreaching patent demands. "It will attract new entrants, with
consolidation, and winners and losers like any business." 

TechSearch has been a persistent figure in intellectual property 

circles at least since
<http://news.com.com/Intel+hit+by+500+million+lawsuit/2100-1023_3-214048.htm
l?tag=nl> suing Intel on the basis of an obscure chip patent in 1998. It has
won licenses from electronics giant Sony and others for products that play
MP3 CDs. 

Early this year, it sued the New York Times, ESPN and other Web publishers,
<http://news.com.com/Patent+owner+stakes+claim+in+Net+ad+suit/2100-1024_3-51
36909.html?tag=nl> asserting rights to some types of "interstitial"
advertising including pop-up and pop-under Web ads. 

 
<http://news.com.com/Symantecs+big+bid+for+clout/2009-7350_3-5494272.html?ta
g=nefd.top>  

According to Acacia, the transaction also will give it patents relating to
peer-to-peer communications, spreadsheet software, image resolution or
enhancement, interactive simulation systems and dozens of other
technologies. Eleven of the patent portfolios being acquired have been at
least partially used in licenses and have generated more than $40 million in
revenue, the company said. 

Acacia is paying $5 million in cash and 3.9 million shares for Global Patent
Holdings. The deal is expected to close early next year. 

Earlier in the year, Acacia purchased rights to the process of redirecting
Internet log-ons, as is commonly done at Wi-Fi hot spots in hotels and
coffee shops.