Company and College Lawyers Agree on License Terms, But Not on Whether Colleges Should Sign One

By SCOTT CARLSON

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Information Technology
Company and college lawyers agree on license terms, but not on whether colleges should sign one

Acacia Research Corporation, which claims to own patents covering all online audio- and video-streaming technologies, has hammered out a new higher-education license agreement in negotiations with college lawyers.

But the lawyers said that they were still deeply skeptical about the company's patent claims and its business model. They said they did not necessarily recommend that colleges sign the agreement.

Acacia has sent patent-infringement letters to some colleges over the past two years, including a number of smaller institutions. It is encouraging institutions to sign the new agreement before December to take advantage of the new terms -- and, the company says, avoid possible litigation.

The terms, which were announced on Wednesday, were developed with the help of Wesley D. Blakeslee, associate general counsel for the Johns Hopkins University, who has taken a lead role in organizing a higher-education response to Acacia's demands. But he said no one should assume that Johns Hopkins would sign the agreement itself.

Mr. Blakeslee said the new terms, which permit colleges with fewer than 1,000 students to license the technology free, were developed in part to benefit "lots of small schools that don't have access to legal advice as to whether they are or are not in violation of Acacia's contracts, that don't have access to legal advice as to whether Acacia's patents are or are not valid."

"There are a lot of people who believe, frankly, that what they do does not infringe on the Acacia patents," he said. "And if they believe that, they are probably not going to take the license."

Initially, Acacia had asked the colleges to which it sent the letters for 2 percent of revenues generated from courses that use streaming media. But colleges balked at that demand, saying that such a figure was exorbitant and would be difficult, if not impossible, to calculate.

The new terms are more straightforward. Colleges would pay a flat fee based on their enrollment of full-time students. Colleges with 1,000 to 5,000 students, for example, would pay $1,500 a year, while colleges with 15,000 to 20,000 students would pay $5,000.

Colleges with fewer than 1,000 students would pay nothing as long as they filled out a waiver provided by Acacia on its Web site. Both the license agreement and the waiver form are available online.

"We have had some success licensing colleges and universities, but frankly we haven't been as successful in that area as we would have liked," Robert A. Berman, general counsel and chief operating officer for Acacia, said in an interview on Wednesday. He said the company had spent several months getting input from colleges through Mr. Blakeslee and Sheldon E. Steinbach, vice president and general counsel at the American Council on Education.

"Basically we reached out to these guys and said, Look, let's get together and work out something that we think is fair for both sides," Mr. Berman said.

"They made a strong case to us that for budgetary reasons this was going to be a hardship on the schools," Mr. Berman said. "We wanted to take a position of not imposing a hardship, but still receiving something for the use of our technology."

He said that letters were going out to all colleges and universities on the company's list, urging them to sign the deal before December 1. This is "one last chance" for colleges, he said, but he would not detail what steps Acacia would take if colleges don't rush to sign the agreement.

This is at least the second time that Acacia has revised its offer to colleges. Last year, the company offered to exempt colleges with fewer than 500 students from licensing fees, and to set the fee for colleges with more than 500 students at 7 cents a stream or $2 per distance-learning student.

That offer had followed a ruling handed down in a lawsuit between Acacia and a group of online-pornography companies in U.S. District Court, in which the judge found terms in Acacia's patents indefinite and invited the pornography companies to seek to resolve the case without a trial. Acacia is still engaged in litigation with the pornography companies.

Even now that Acacia has revised its terms again, it is not clear that larger institutions are going to sign on.

"I don't know that I in good faith could take this to the university and say that we have to sign this," said Turan Odabasi, a lawyer who handles patent issues at the University of Nebraska at Lincoln. He has read the district-court ruling and was "less than impressed" with Acacia's position, he said. He also noted that, to his knowledge, the university had not yet received a letter from the company.

Georgia K. Harper, a lawyer at the University of Texas at Austin, said she had not read the new agreement yet. But whether Acacia has a strong patent claim, she said, is still "the $64-million question."

"For anyone who is not terribly risk-averse, waiting and seeing is going to be a reasonable strategy," she said.

Her impression was that some of the major things that Mr. Blakeslee had been able to accomplish "were aimed at the smaller campuses and ones that are more fearful of what would happen if they were sued."

Mr. Blakeslee said that some colleges and universities are worried about facing legal action by Acacia. "One of the ideas behind this was to try to hammer out something that would be appropriate if someone wanted to sign a license," he said. "Having the opportunity to sign up and not pay a fee was thought to be a good thing. And that's the only thing you can read into this."

Mr. Blakeslee said colleges must carefully assess whether they want to sign the license agreement. "I made it very clear that I was not making any opinion whatsoever on whether or not someone should sign," he said. "This has nothing to do with whether Hopkins will or will not enter a license agreement, or whether anybody else should."

• Company That Claims Controversial Patents Offers Colleges New Licensing Plans (9/17/2004)

• Colleges Join Forces to Fight Company's Patent Claims to Certain Online Audio and Video Technology (9/3/2004)

• Acacia Loses a Round in Court Battle to Enforce Audio- and Video-Streaming Patents (7/30/2004)

• Advocacy Group Challenges Patents on Internet Technology (7/16/2004)

• For-Profit College's Deal With Company That Claims Patent May Set a Precedent (6/4/2004)

• Colleges That Transmit Sound and Video Online Reluctantly Discuss Strategy for Answering Patent Claim (2/6/2004)

• A Patent Claim That May Cost Millions (11/7/2003)

• Company Tells Colleges That Its Patents Cover Video and Audio for Online Courses (10/17/2003)