Chronicle article: A Patent Claim That May Cost Millions

[Ann Okerson <ann.okerson@yale.edu>]

Of possible interest..

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This article is available to subscribers online at this address:
http://chronicle.com/weekly/v50/i11/11a03501.htm

Excerpts from the issue dated November 7, 2003

  A Patent Claim That May Cost Millions

  By SCOTT CARLSON

  Few people have heard of Acacia Research Corporation, but
  John H. Payne III has given the company a lot of thought ever
  since it threatened the heart of his courses at the University
  of Virginia.
  
  Acacia has sent Virginia and other colleges a letter making an
  audacious claim: that the company owns long-forgotten patents
  covering the use of sound and video on the Web and is entitled
  to 2 percent of the revenue from courses that use such
  technology. The patents, which expire in 2011, cover the
  concept behind storing and transmitting sound and video, not
  the technical details.
  
  [SNIP]
  
  Risks of Litigation
  
  Acacia's demands, which have also been issued to companies
  that use the technology, have made college officials wonder
  about the future of online video and audio, two Internet
  features that many have taken for granted until now. They say
  that Acacia's licensing demand, backed by the threat of
  lawsuits, would add a huge new expense to colleges' technology
  programs, which are already running under tight budgets. And
  officials say that such costs could force colleges to stop
  adding new media features to course sites, which could hamper
  innovation in higher education.
  
  College lawyers are scrambling to figure out how to respond to
  Acacia, and in the meantime they're saying little. It's
  possible that they will find a silver bullet that will shoot
  down Acacia's claims. 
  
  But they don't seem to have found it yet, and more and more
  colleges are getting letters from the company. Some college
  lawyers have hinted that they might fight Acacia's patent in
  court, but doing so could be an expensive and risky process.
  Acacia has already won some battles outside of higher
  education: It persuaded dozens of online pornography
  companies, as well as a popular online radio station and a
  major pay-per-view video company, to sign licensing agreements
  that turn over portions of their revenues.
  
  Ben Rawlins, general counsel for the Oregon University System,
  which received letters from Acacia, says that although the
  licensing claims ask for only 2 percent of gross revenue, a
  seemingly small proportion, that fee would hit colleges hard.
  "When you're talking about your entire distance-ed budget, 2
  percent of that on an annual basis would get up there," he
  says.
  
  Chilling Effect
  
  Acacia, based in Newport Beach, Calif., owns 5 U.S. patents
  and 17 international patents that it says cover the transfer
  of various kinds of media over the Internet, a process often
  called "streaming." Acacia says the patents cover many
  instances in which audio and sound files are digitized,
  compressed, stored on servers, and then streamed to other
  computers for decompression and playback.

  [SNIP SNIP SNIP much more, fascinating stuff!]
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Copyright 2003 by The Chronicle of Higher Education