Patently Absurd? Streaming Users Face Acacia Patent Fight

The company, which currently owns five patents in the US (the oldest dating from 1991), was also granted patents for use in 14 European based countries in January, 2004. Last year, Acacia sent letters to numerous adult Internet sites and radio webcasters demanding a license fee for the utilization of this technology. Not wanting to limit their reach, Acacia is now also going after universities, streaming media service providers, content portals, and Fortune 1000 corporations. Even if your corporation does not stream audio and video from its website and simply links to websites that do, Acacia claims that also violates their patent.

Some industry companies who received letters from Acacia are being told they owe licensing fess which amount anywhere from 2-5% of their revenue--and Acacia has won some injunctions in court supporting its claims. Streaming media industry companies and those corporations using streaming media must now decide how to react to Acacia's claims--and fast. In court documents, Acacia said they have sent out over 10,000 letters informing companies they are infringing on their patents.

The Patent Business
Acacia appears to have made a business of buying patents and then using the threat of massive legal action to force companies into paying them licensing fees. In September 2002, the company lost a patent lawsuit against Sony, Sharp, and Toshiba for the V-Chip, another patent that Acacia owns. Acacia is waiting for a separate ruling on a related antitrust lawsuit before deciding whether to appeal the V-Chip ruling.

Acacia's streaming media licensing efforts are based on five patents, all of which cover basically the same thing: patents#5,253,275, #5,550,863 and #6,002,720 are "open continuations" of patent #5,132,992, an "Audio and Video Receiving and Transmission System," which was issued in July 1992. The fifth patent, #6,144, 702, is described as a "division" of the '992 patent and was approved in November of 2000.

The '992 patent abstract reads as follows: "A system of distributing video and/or audio information employs digital signal processing to achieve high rates of data compression. The compressed and encoded audio and/or video information is sent over standard telephone, cable or satellite broadcast channels to a receiver specified by a subscriber of the service, preferably in less than real time, for later playback and optional recording on standard audio and/or video tape."

The patents do not mention the Internet as a transmission medium. All five patents were assigned to H. Lee Browne and Paul Yurt; Browne later did business as Greenwich Information Technologies LLC, which Acacia first invested in and then bought outright in 2001.

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