The four stock trading days that followed a federal judge’s weakening of its streaming media patent litigation against adult Internet companies weren’t good for Acacia Research Corp., with shares falling to $3.62 on the high-tech NASDAQ composite at the end of the trading week July 16.
Acacia stock dropped from about $6.25 to $3.91 the day following U.S. District Judge James Ware’s tentative Markman ruling, then returned almost to $4 a share July 14, before dipping around $3.75 the next day, then returning near the $4 per share level before closing the week at the $3.62 per share price.
Electronic Frontier Foundation staff attorney Jason Schultz told AVNOnline.com the stock drop was one of several indications that Acacia was now on the defensive concerning its Digital Media Transmission streaming media patent group.
“One significant factor now is that, if the judge ultimately invalidates the claims he finds suspicious, it will make it a lot less expensive for the (challengers to the patents) to focus on the few remaining claims and defeat those,” Schultz said. “I think it does shift the landscape quite a bit.”
The EFF recently released results of a survey it conducted among Internet users to find the patents Netizens deemed the ten most frivolous in cyberspace and, without revealing the actual number results, found Acacia’s DMT topped the list. The EFF’s so-called Patent Busting Project will involve volunteers examining and investigating the DMT patents and others the survey deemed frivolous for prior art and other vulnerabilities.
Ware’s Markman ruling, which held some of the claim terms in the DMT patent group undefinable while others were definable on Acacia’s terms, told the EFF “a couple of things,” Schultz said.
“First, that the judge has strong doubts as to the validity of Acacia’s patents overall,” he said. “And… [that] he’s not deterred by the nature of the [challengers’] business. He’s not biased at all based on the fact that the [challengers] put out adult entertainment, which I think was one of the things Acacia was hoping for.”
Schultz also said EFF was satisfied that Ware’s Markman order validated a criticism EFF had about Acacia for a long time: that enough of the DMT claims were vague and broad enough “that it’s just unreasonable for them to think that their patent covers as much as they think it does. I think the judge’s finding on the definiteness is an indication that Acacia’s position is just too extreme.”
He acknowledged, though, that Ware could yet uphold the remaining patent claims. “That’s always a risk,” he said. But I think the overall tenor of the [Markman] order is one of suspicion toward the validity of [the DMT patent group] as a whole. The judge was fair, but invitations to bring motions to invalidate patent claims are rare.”
Acacia said after the rulings that nothing in the ruling would keep it from continuing to approach prospective DMT licensees “that we have identified as potential infringers,” and that whatever Ware ruled in terms of indefiniteness, Acacia still has “several other claims [that] are not indefinite and we believe are being infringed.”
The judge has raised issues of indefiniteness,” Ryan told the conference, “and he wants to hear expert testimony. The parties weren’t allowed to introduce such testimony [in the earlier Markman sessions], and our goal is to convince the court that these terms in the claim are not indefinite. Regardless of the outcome of these terms, we have several other claims that are not indefinite and we believe are being infringed.”
