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District Court Delivers Blow to Acacia

On July 12, U.S. district judge James Ware announced the first results of the Markman hearings in the Acacia Media Technologies v. New Destiny Internet Group, et al. patent infringement case. While the Markman Order does not invalidate Acacia’s Digital Media Transmission (DMT) patents, it shows weak spots in patents that some regarded as bulletproof.

In patent litigation, Markman hearings are used for claim construction. Typically, the plaintiff and defendant set out a list of claim terms whose definitions are in dispute. To clarify the meaning of these terms (and subsequently the scope and validity of the patents), a trial judge weighs evidence and definitions as presented by the plaintiff and defendant and makes a ruling in the form of a Markman Order.

According to experts, the news for both Acacia and the defendants, all part the adult entertainment industry, was mixed. "Acacia got the construction on remote locations that they wanted," says Marc Kaufman, a patent attorney from Washington, D.C. firm Nixon Peabody who sat on the the Acacia panel at this year’s Streaming Media East. "On the other hand, they did not get the construction they wanted on identification and sequence encoding. It doesn’t strike me as a huge victory for either side."

Out of the19 disputed terms, Robert Berman, executive VP of business development and general counsel for Acacia, says, "For seven of the terms, the court adopted Acacia’s proposed definition; for five they adopted the defendants’. For three, the court said that they needed more information from experts. For four they came up with their own definitions."

One of the most significant passages in the order addresses the definition of "identification encoding means." The order states, in part: "The Court invites the Defendants to file a motion for summary judgment that the term `identification encoding means’ is indefinite, rendering claims 1, 3, 4, 5, 9, 10, and 11 of U.S. Patent 5,132, 992 to be invalid, respectively, pursuant to 35 U.S.C. 112." Thus, if a motion were made to move to summary judgment, it would mean that Acacia would have to defend against an assertion that the patent office erred in determining that the patent satisfies Section 112 when it issued the patent. Kaufman says it's rare for an issued patent to be declared invalid based on failure to comply with 112. "If the patent office deems that the patent satisfies 35 USC 112-i.e., to contain an adequate disclosure of the invention-most courts will defer to that," says Kaufman.

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