Acacia Reaps $12.4M from Yahoo! in Patent Infringement Case

NEWPORT BEACH, Calif.—The company that both adult and tech companies love to hate has prevailed in a patent lawsuit with Yahoo! Inc.

The $12.4 million final judgment awarded Acacia subsidiary Creative Internet Advertising Corporation stems from its May 15, 2009, trial verdict and corresponding $6.6 million damages.

“In the final judgment signed on February 1, 2010,” Acacia said in a press release issued Wednesday, “the District Court for the Eastern District of Texas awarded enhanced damages for willful infringement of $4.5 million. The District Court also awarded prejudgment interest of $1.1 million as well as supplemental damages bringing the total award to approximately $12.4 million.”

According to TechCrunch, “Yahoo’s messenger program with IMVironments—which revolves around interactive backgrounds that users can add to IM conversations—infringes Acacia’s U.S. Patent Number 6,205,432, filed by a trio of inventors and published back in 2001.”

The patent is described as:

“An advertisement system and method are provided for inserting into an end user communication message a background reference to an advertisement.

“In some embodiments, the background reference causes an advertisement image to be tiled, or watermarked, across an end user screen behind the text of an e-mail message or public posting.”

TechCrunch doesn’t pull any punches on Acacia, though, referring to it as “being in the business of suing companies rather than producing products or services.”

Business Week, in a profile published Feb. 1, also takes a close look at Acacia, calling it “The Company Tech Loves to Hate.”

“Executives at many tech companies—and their investors—call Acacia and its peers … 'patent trolls,'" writes Rachael King, arguing that “trolls assert patents that are too broadly defined or that cover ideas that existed before the patent was granted.”

Business Week also says, however, that many small inventors rely on companies such as Acacia to marshal resources they don’t have in order to protect their inventions. For adult companies, however, Acacia from the beginning—starting way back in 2002—was nothing more than a bully out to enforce “streaming media” patents that many considered were not worth the paper they were written on.

In the end, after many years of litigation undertaken by a handful of adult companies brought together by Video Secrets and Homegrown Video under the umbrella of a group called the Adult Defense Fund, the remaining “streaming media” patents were invalidated last year by a federal court in Northern California.

AEBN’s Scott Coffman wrote at the time, “The leadership of Greg [Clayman] and Spike [Goldberg], 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.”

Despite that victory, the Yahoo! lawsuit and verdict should remind the industry that Acacia, and its business model, are far from moribund, and that until real changes are made to the way the under-funded and under-staffed U.S. Patent Office decides which patents are to be awarded the awesome protection of the U.S. government, “patent trolls” will continue to enforce through litigation both worthy and unworthy patents.