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Court Upholds Claim Construction Findings Against Acacia Technologies

In 2003 and 2004, Acacia Technologies’ efforts to license its Digital Media Transmission (DMT) patents garnered much attention as the firm pushed forward with its claims that these DMT patents covered nearly all forms of on-demand digital video distribution. While Acacia has continued to expand its successful DMT licensing campaign—307 licensees and counting—2005 was a slow year in the patent infringement case Acacia first brought against online adult entertainment companies in February 2003 and later against satellite and cable providers in separate cases. These cases will ultimately decide the validity of Acacia’s claims regarding the scope of their DMT patents.

The primary reason for the slowdown in Acacia’s DMT litigation has been the consolidation of the adult entertainment companies, satellite companies, and cable companies into a single case. While there are benefits to having one set of hearings instead of three, Jonthan Singer, principal of Fish & Richardson P.C. and lead counsel for New Destiny Internet Group, one of the adult entertainment companies in the case., doesn’t believe that expediency was at the core of Acacia’s request for bringing the cases together under one roof. "To have all the parties there does make the process more efficient, but in my view, the desire to consolidate all the cases was a stalling tactic by Acacia," he says. "Once the court had construed the claims in the summer of 2004, Acacia didn’t like the writing on the wall, and wanted the judge to reconsider. He gave them a chance, but ultimately decided to stick with his initial findings. [See District Court Delivers Blow to Acacia for a more in-depth reporting of those findings.]

Representatives for Acacia did not respond to requests to be interviewed for this story.

Because of the logistics involved with bringing the cases together, the only ruling by presiding Judge James Ware since summer 2004 came on December 7, 2005. In that ruling, Judge Ware upheld his earlier findings that two of Acacia’s claim terms—"sequence encoder" and "identification encoder"—were indefinite and therefore invalid, arguably representing a win for the adult entertainment defendants. "It strengthens our case significantly. We had filed summary judgment motions on invalidity based on the same theories the court adopted last month. This was a vindication of the motions we filed in the fall of 2004," says Singer.

Acacia has already announced that it plans to appeal the Court’s decision on the indefinite terms, and with good reason. "Our clients were sued under two patents [out of the five DMT patents]. The judge’s ruling, we think, makes one of those patents totally invalid," says Singer, which would mean that the adult entertainment defendants would be halfway towards clearing themselves of the accusation of patent infringement.

The significance of this ruling shouldn’t be overstated, though, as even if the adult entertainment defendants do win their case and get both of the patents that they’ve been accused of infringing ruled invalid, it may not have an impact on Acacia’s overall DMT licensing and litigating efforts. "My clients could win, get both patents ruled invalid, and it might not have any impact," says Singer. "All five have to be ruled invalid."

This is an especially important aspect of this case, as many of Acacia’s DMT licensing agreements require that all five patents be ruled invalid in order for DMT licensees to be released from their obligations to paying a licensing fee.

Up next in the case is essentially more of the same. "I think there will be more requests for legal determinations in terms of what the patents mean. In the short term, that’ll be the precise next step," says Singer. "Judge Ware’s preference is to do all the legal stuff first and decide what these patents really mean, then decide if these patents are being infringed or should be ruled invalid."

A special hearing is scheduled for February 24 "to accommodate potential motions and further claim construction proceedings," according to the official Dec. 7 ruling.

Needless to say, no matter how significant this latest ruling was, there’s still a long ways to go before this already nearly three-year-old litigation reaches some sense of closure. As Acacia’s general counsel and COO Robert Berman put it in a company press release that followed this ruling, "We’re in the second inning of a nine inning game, and it could go to extra innings."

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