Thursday, December 16, 2004

Acacia to acquire IP assets of Global Patent Holdings

Acacia is a well-known patent holding company. It is currently in litigation against a group of internet pornography sites over their use of certain (streaming video) internet technology (see earlier post on IPBiz).

The acquisition by Acacia, and earlier by JGR of Commerce One IP assets, illustrates some issues with Judge Posner's patent race imagery. The acquired patents derived from some other people who "won" the patent race, but didn't otherwise effectively use the patents (Commerce One was in bankruptcy). Winning in the IP world requires a lot of effort post-patent, and far more money than in any perceived race to obtain the patent. If patent lifetime were decreased, it would likely increase the amount of money spent marketing to increase the return per year on the patent. As to which expenditure better fosters technical innovation, I would pick pre-patent research and development over post-patent marketing (and would not advocate Posner's proposed cross-the-board drop in patent life; now as for so-called software patents, hmmm...)

From a press release:

Acacia Research Corporation announced on Dec. 16, 2004 that it has signed a binding Letter of Intent to acquire the assets of Global Patent Holdings, LLC, a privately held patent holding company based in Northbrook, Illinois, which owns 11 patent licensing companies including TechSearch, LLC ( The acquisition would give the Acacia Technologies Group control of companies with 27 patent portfolios, which include 121 U.S. patents and certain foreign counterparts, and cover technologies used in a wide variety of industries. Eleven of the patent portfolios have been partially licensed and have generated over $40 million in non-recurring, gross licensing revenues to date.

The total cost of the transaction is expected to be $5 million in cash and approximately 3.9 million shares of Acacia Research--Acacia Technologies stock, at closing, and an additional $2 million in cash to be paid over two years. The transaction is expected to close within 45 days, pending completion of final due diligence by Acacia.

**from IPBiz on August 16, 2004 ***

But a group of porn companies, led by and represented by Fish & Richardson, a well-known intellectual property law firm, have banded together to fight Acacia. Their suit is pending in federal court in California and likely will not be resolved until next year.Last year Technology Marketing magazine hired PatentRatings, a consulting firm in California, to independently analyze the strength of Acacia's patents, using a computer algorithm that compares patent claims. The company said that Acacia's patents were "very solid."[The significance of an algorithm to "compare" patent claims, in the context of a validity investigation, remains to be seen.]


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