In a tentative Markman order handed down late July 12 by U.S. District Judge James Ware, some claim terms in Acacia Research Corp.’s streaming media patent group claim were deemed indefinable, while others were held definable on Acacia’s terms.
Adult Internet challengers to the patents believe that the tentative ruling could yet pave the way toward a final ruling that they did not infringe the controversial Digital Media Transmission patent group and that the patent itself might be invalid, said two attorneys among the challengers’ legal teams.
Acacia, however, said that the Markman order still showed a solid case for patent infringement against the adult Internet defendants, and that on those terms Ware held indefinable Acacia intends to bring forth expert testimony to show otherwise in due course.
Acacia executive vice president Robert Berman said it was not unusual in Markman orders to “win on some issues and lose on some issues. And this case seems to be no different.” New Destiny/Homegrown Video chief Spike Goldberg and VS Media chief Greg Clayman, who have been co-leading the adult Internet’s challenge to the DMT patent claims, said they were extremely pleased with the Markman order.
“It looks like the judge went with Acacia on the remote locations and the digital decompressor [terms],” Foley & Lardner attorney Victor de Gyarfas, one of the challengers’ legal team, told AVNOnline.com. “He made it clear [earlier] that he was going to go with Acacia on that one. But with a lot of the others, he did seem to go with us, especially the unique identification code, the identification coding means, and the sequence encoder, and the library means.”
Fish & Richardson attorney Jonathan Singer said that that could prove crucial for the challengers. “It points both to possible non-infringement and possible invalidity,” he told AVNOnline.com. “We’re pleased with the results.”
“We still have a long way to go to finish this case up,” Goldberg told AVNOnline.com. “But this certainly is going to put Acacia into a very defensive mode instead of an offensive mode. For those people who have seen [the challenge] this far, they should be very proud of themselves.”
Ware also ordered both sides to meet and confer in a telephone conference August 17 on the next steps in the case, including scheduling additional motions from either side. The sides have until August 6 to file a joint statement that includes each side’s intended further motions in light of the July 12 ruling.
Berman said that based on the terms Ware did define, Acacia still has several claims the adult Internet is infringing, “and the law holds you only need to infringe one claim to be held liable for patent infringement and injunctive relief. On those claims the judge believes or intimated may be indefinite, we expect to present expert testimony convincing the court that those terms are in fact definite.”
Acacia also believes that on one prime point the case is closed: whether the patent claims apply to the Internet. “Based on our reading of the judge’s interpretations,” Berman said, “we believe that they do. We believe that that issue has been put to rest and that they do apply to the Internet.”
But Goldberg and Clayman – who suggested Berman’s comments equaled “spin, spin, spin,” as Clayman put it – felt a critical point had been proven: Not only did some of the adult Internet’s claim that key patent terms as Acacia described them could not be defined, but the adult Internet also survived the most uphill portion of the challenge, “and now,” as Clayman put it, “[Acacia is] faced with an uphill battle. When you put us all together, we’re not such a David, after all.”
“I seem to remember Acacia saying we wouldn’t even get this far, these were the best patents ever and would stand up in any court, and we were the absolute fools not to take their [licensing] offer,” Goldberg said. “As of today, I would think the low-hanging fruit has given Acacia quite the stomachache.”
Acacia had argued that the term “library means for storing items having information” is not a means-plus-function limitation, as Ware noted in his opinion, “because sufficient structure for performing the claimed function is disclosed in the claim.” The challengers countered that sufficient structure is not “recited” in that part of the patent claim, and that storing items containing information should be held to mean that the library means require things containing information easily accessible for the transmission system’s use.
“Although the [patent] specification discloses musical instruments and books being stored in the source material library,” Ware wrote, “it does not enable retrieval of such items, much less conversion of such information in the items into the required input format acceptable by the conversion means.”
Ware also ruled that “identification encoding means” could not be defined because no corresponding structure in the patent specification links to the functions recited in the claim, and, if the court adopted that finding as its final conclusion in due course, it would render indefinite seven claims in a key portion of the patent.
FightThePatent.com’s Brandon Shalton said the ruling is “pretty much looking bad” for Acacia, enough to cause him to predict the defendants might get an ultimate non-infringement verdict. “If [Ware]’s saying some of these terms don’t apply how Acacia claims it,” Shalton said, “then the defendants aren’t infringing. It’s very good for the defendants and very bad for Acacia.”
Acacia planned a conference call later in the morning July 13 in the wake of the Markman order.
The Markman order came down shortly after Goldberg and Clayman, for the Joint Defense Group, circulated an open letter to the adult Internet industry calling for help with the legal costs of the Acacia challenge, saying group members have already topped $1 million in attorneys’ fees to date in a case involving the kind of law that usually pulls hourly attorney fees between $400-600.
“We need your help to build our war chest,” the open letter said, “so that we can fight to win. Acacia is on the run, but they have $50 million in the bank to keep fighting. If they can outlast the Joint Defense Group in this battle, then there will be no one in the industry to stop their attack. The result of this battle will have implications for everyone: big or small, adult or mainstream.”
The letter also reiterated the New Destiny/VS Media argument that Acacia’s business model involves acquiring patents rather than inventing them, and enforcing them by any means necessary. The letter also needled several adult Internet players who have signed DMT licenses and settled potential litigation from Acacia for fear that joining or staying in the challenge would cost them more in the long run. “Those settlements helped make Acacia more confident and strengthened their resolve to take further aggressive steps to achieve their business plan,” the letter said.
But the letter’s authors also noted other adult Industry players who sat on the sidelines “as well as on their hands and checkbooks” watching and waiting. These, the authors continued, were Webmasters, owners, and others making substantial money but “remain(ing) steadfastly silent and reluctant to step up to the plate, despite knowing that this threatens the entire adult entertainment industry.” And it was time, the authors said, for those people to join the fight.
“Now is the time for all Webmasters, studios, and others in any way related to the adult Internet to do the right thing. Even if you settled or are not immediately affected or threatened by Acacia’s alleged patent claims, you must help the cause!” the authors said. “Groups like ours are empowered when our peers demonstrate support with financial assistance not just empty rhetoric.”
