District Court Delivers Blow to Acacia

After the announcement of the Markman Order, Acacia Technologies’ stock price dropped more than 30%. "The market tends to overreact based on the early spin," says Berman. In a conference call with investors, Acacia asserted its belief that it still has six valid claims by which they can use to demonstrate patent infringement (see Acacia’s official statement). Acacia only needs to have one of its claims ruled valid to be able to pursue patent infringement litigation.

Even if this current litigation against the adult entertainment industry renders Acacia’s patents invalid, FightthePatent.com (enterpreneur Brandon Shalton’s one-man crusade against patent abuse) believes that current and pending licensees of Acacia’s patent may have trouble breaking free from their licensing agreements. Kaufman concurs that this might be the case, depending on the language of the licensing agreements. Berman, however, says the agreements specifically provide that if the claims are ruled invalid, then the licensees can stop paying.

"Are we 100% thrilled with the court ruling?" Bergman continues. "No. Are we devastated? No. In most Markman cases you win some terms and you lose some."

Assuming the defendants file a summary judgement, it will most likely be several months before this litigation moves to trial, depending on how many other motions are presented. In the meantime, this case may evolve into a class action lawsuit. According to Berman, Ware suggested a class action suit might be more appropriate, due to sheer number of adult entertainment companies—tens of thousands, according to Berman—and Acacia submitted a motion requesting the New Destiny Internet Group, et. al. suit be converted to class action. The judge has yet to rule on that motion, Berman says.

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