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Patent Wars Will Move to Wireless

As its licensing push gathers momentum, Acacia Technologies is setting its sights on the telecommunications and wireless industries.

Newport Beach, Calif.-based Acacia began making waves last summer when it claimed it pretty much owned streaming media. Ever since, it's been on an aggressive licensing campaign, moving steadily up the food chain.

Acacia said its digital media transmission (DMT) patents cover the transmission and receipt of digital content via the Internet, cable, satellite and "other means"; it believes they apply to such things as some basic programming functions, pay-per-view, audio and video on demand, streaming audio and video, and digital ad insertion.

In May, Verizon began rolling out fiber-to-the-premises technology in a Dallas suburb, promising to deliver high-speed data, voice and video products to customers. It plans to move the service into nine states by year's end, according to a spokesperson, and to introduce video products in some form next year.

Video on demand could be a moneymaker for Verizon and other telcos, but it put the company squarely in Acacia's sights.

Acacia CEO Paul Ryan said his company already had contacted Verizon about licensing DMT, because its former parent, Bell Atlantic, had licensed the patents in 1994 when it was doing field trials for video on demand in Virginia.

Verizon Wireless was on Acacia's hit list, along with the rest of the wireless industry, as it moves to deliver mobile media to cell phones and other handheld devices over next-generation networks.

With Verizon's announcement, Ryan said, "It looks like the telcos will come in."

Last year, Acacia caused panic when it got an injunction shutting down five X-rated sites featuring streaming video.

By now, the company claims it has licensed approximately 95 percent of the hotel in-room entertainment industry, along with the top adult entertainment players. Next, it focused on news, sports and information Web sites, with the Walt Disney Co. and Playboy Enterprises inking licenses. The company charges either 1 percent of revenues or $1 per subscriber, and boasts some 123 license agreements.

Earlier this week, Acacia filed patent infringement suits against nine cable and satellite companies, saying their services rely on technology covered by its DMT patents. The latest companies to receive Acacia's paper include Comcast, Charter Communications , The DirectTV Group, Echostar Communications , Cox Communications and its wholly-owned subsidiary, Hospitality Network.

While Ryan believes the patents apply to software, such as Windows MediaPlayer and RealPlayer, Microsoft and RealNetworks dont need to lawyer up. Acacia considers them contributory infringers, but he said, "The people really making money are the media companies. The proliferation of the RealNetworks and Microsoft players is obviously an advantage to our licensees and us."

Ryan said Acacia tries to make it easy for licensees by providing full documentation of the DMT patents, along with an analysis of how their specific operation infringes.

"We go to them and say, 'If you disagree with our analysis, let us know and we'll go away.'" Ryan said. "We haven't had any companies that were able to demonstrate we were wrong."

Ryan said it typically takes six months to a year to go through the process. Sometimes, he said, a company is willing to go to court and fight the patent in the hope that its claims might at least be narrowed a bit. Meanwhile, other companies wait to see the result of the suit before they make their licensing decisions.

"Until there's a lawsuit on the table forcing the decision, the proclivity is to just wait and see if they ever sue us," Ryan said. "Oftentimes, the legal process is part of the negotiating process."

Acacia also handles licensing of the V-chip technology, which lets people block violent programs from their televisions. Without Acacia's help, Ryan said, "The inventor of the V-chip would have been stonewalled by the industry and never made a penny off this technology that saved them millions."

Look for more waves from Acacia this year. Ryan said Acacia is negotiating with other intellectual property owners looking for some legal muscle.

"There are many tech companies," he said, "that started in the Internet craze that have important [intellectual property] and busted business models."