[Scott Coffman, president of AEBN, one of the industry’s leading video-on-demand and technology companies, has issued a rare statement on the occasion of the invalidation last week by a federal court of the “streaming media” patents owned by Acacia Research. Because of the potentially serious consequences to the industry had the patents been upheld, and also the number of years—and amount of money—spent challenging them, we are reprinting Coffman’s congratulatory remarks in full. — Ed. Note]
“Acacia Research Corporation through its subsidiary Acacia Technologies Group is a company that buys up patents, bundles them together and then searches out and sues businesses that it argues are in violation of their patents. In 2002, Acacia started sending notices to everyone across the adult industry asserting that any company streaming audio or video were violating their intellectual property. They chose the online adult industry to go after because they saw us as low hanging fruit that would not want to go to court but would rather quickly capitulate and just pay their licensing fee.
“Several large companies did settle and paid for a license from Acacia, even if they didn’t believe the suit had merit, because they felt the cost of defending against the litigation would be too expensive. Over the long term though, this cost had to be weighed against the greater good, the cost of all adult online companies having to pay some percentage of their sales as a licensing fee. The other long term and potentially greater cost would have been saying to all other loosely related patent holders that Acacia was right, that the adult industry was an easy mark, not willing to band together and spend money to defend against unwarranted lawsuits. This would only have lead to much more bully litigation.
“I had a very good view of this battle since AEBN was one of the first companies targeted by Acacia. Standing firm, we decided not to pay but had no strategy on how to fight this type of litigation. At that point Greg Clayman from Video Secrets and Spike Goldberg from Homegrown Video stepped up and decided that not only were they not going to pay but that they were going to fight all of Acacia’s patent claims. They created the Adult Defense Fund, recruited a small number of companies and told Acacia in no uncertain terms that they picked the wrong industry to come after. Not only were those of us in the ADF not paying for a license but that we were going to invalidate their patents in court. In fact, it was now Acacia that would be on the defensive.
“Fast forward to 2009. After spending millions of dollars over the last seven years in fighting Acacia, their patents were invalidated. All of the companies that contributed financial support to this cause deserve tremendous credit for standing up not only for their own business but for the entire industry. But two stand above the rest.
“The leadership of Greg and Spike, who spent not only their companies’ money and resources but who more importantly invested their own time in defense of us all cannot be overstated. They deserve the credit and the appreciation of the entire adult industry and I want to personally thank both of them for everything they did in this landmark victory over Acacia.
There has been and always will be challenges to our industry and this positive result demonstrates the strength and capability we have when we work together.”
