[nylug-talk] Patent Infringement Lawsuit Filed Against Red Hat & Novell

[Ruben Safir]

Acacia Research, Linux Patent Adversary, Has Long Litigation History

As of the company's most recent quarterly earnings, Acacia counts 33
lawsuits to which it or one of its 50 subsidiaries is a party.

By J. Nicholas Hoover InformationWeek October 12, 2007 05:00 PM

Linux distributors were sued for the first time this week over their
operating systems. But despite recent rhetoric, Microsoft (NSDQ: MSFT)
wasn't the plaintiff. Instead, the suit against Red Hat and Linux came
from a subsidiary of Acacia Research Corp., a company that calls itself
the "leader in patent licensing."

Acacia's no stranger to patent litigation. As of the company's most recent
quarterly earnings filed on Aug. 6, Acacia counts 33 cases to which it or
one of its 50 subsidiaries is a party. The defendant lists read like a
Who's Who of world business, ranging from information technology to air
conditioning companies to candle-makers. There's Toshiba,Intel (NSDQ:
INTC), CostCo, Circuit City (NYSE: CC), Abercrombie & Fitch, Barnes &
Noble, U-Haul, The Yankee Candle Company, The Sherwin-Williams Company,
Comcast (NSDQ: CMCSA), Verizon (NYSE: VZ) Wireless, The Trane Co.,
Symantec (NSDQ: SYMC), Gateway (NYSE: GTW), eBay (NSDQ: EBAY), and the
list goes on.

The company has generated millions in licenses for V-chip technology,
multimedia synchronization, Digital Media Transmission, credit card fraud
protection and laptop connectivity. Acacia's made headlines for years
with threats and lawsuits in streaming media, e-commerce, interactive TV,
e-learning, and even online pornography.

Acacia has also been on a buying spree of late. In the six months before
August, it bought patent portfolios that include technologies in picture
messaging, storage management, vehicle anti-theft, encryption, parallel
processing, auto-completion of text messagies, digital advertising,
smart card systems, work order generation systems, management of imaging
devices, network monitoring, DNA purification, flash memory, high-end
computer graphics, and RAM design.

The company, which is listed publicly on Nasdaq, had revenues of
$5.865 million in the last quarter and $25.185 million in the previous
quarter, entirely on the backs of "license fees" with no products and
services revenue and no research and development expenses. Despite the
mountain of litigation, much of Acacia's money comes from relatively few
licensees. Three licensees taken together accounted for a total of 49%
of Acacia's revenues in the three months ending June 30, 2007.

The largest expenses in the last six months were all patent-related,
from $2.436 million spend on "legal expenses " patents," $17.528 million
on "inventor royalties and contingent legal fees expense " patents,"
and $2.630 million on patent amortizations. Earlier this year, Acacia
split off its only subsidiary with any real products or services, biotech
company CombiMatrix. Acacia does pay royalties to original patent owners
on some of the patents it holds.

Though its Web site says it owns or controls the rights to 81 separate
patent portfolios, Acacia claims it doesn't just buy up patent rights
all for itself. "Our clients are primarily individual inventors and
small companies with limited resources to deal with unauthorized users
but include some large companies wanting to generate revenues from
their patented technologies," the company states. Acacia's Web site
includes testimonials from inventors who seem to be grateful that,
in their estimation, Acacia is looking out for the little man.

An early string of commentary appeared to link Acacia with Microsoft. Less
than two weeks before filing suit against Red Hat and Novell, Acacia
announced the hiring of Brad Brunnell from Microsoft, where he had been
a general manager for intellectual property licensing. Acacia had hired
another Microsoft manager earlier this year. However, Acacia subsidiaries
are also in the middle of two lawsuits against Microsoft, one for the
acceleration of program launches with the aid of RAM cache and another
for data encryption technology. Meanwhile, one of the defendants in the
Linux suit is Novell, with which Microsoft has signed a patent-protection
agreement.

In response to questions about the Linux lawsuit, the Linux Foundation
said in an e-mail: "Novell (NSDQ: NOVL) and RedHat will respond to this
claim with the same energy and effectiveness as we saw Novell and IBM
bring in their response to the allegations made by SCO.' As in SCO,
we have confidence that in the end the court will reach a just and
right result.

"This case will aid those of us who are advocating the cause of patent
reform by demonstrating the wasteful drain that the current process
imposes on innovative activities.' We are committed to continuing our
vigorous support for meaningful amendment of the software patent laws."


--
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"Yeah - I write Free Software...so SUE ME"

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"> I'm an engineer. I choose the best tool for the job, politics be damned.<
You must be a stupid engineer then, because politcs and technology have been attacted at the hip since the 1st dynasty in Ancient Egypt.  I guess you missed that one."

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