Equal Time
by Spike Goldberg, HomeGrownVideo.com
I have put my faith in the judicial process, and believe that ultimately, the court will agree with the position my company has taken.
At the outset, I must draw some contrast between Berman's comments and my own. Unlike Berman, I am not an attorney. I am just a small business owner who has been sued by Acacia. Unlike Acacia, my business has a product and provides a service. Unlike Acacia, my company's business model is predicated on serving our customers, not threatening patent infringement lawsuits in the hope that the recipient of those threats will pay rather than fight. Unlike Acacia, my company is built on technology and techniques, its basis a concept we developed, and not on patents purchased from a company that never used the technology. Because I have never believed that my company infringes on Acacia's patents, I could not in good conscience pay the licensing fee Acacia demands of me. I never ignored the correspondence I received from Acacia, I simply did not believe that I should pay 4% of my business' gross revenue for technology my company does not use. My company is not in business to provide Mr. Berman a pot of money into which he can "dip his beak," nor does my company need a business partner who contributes nothing of value.
I find Berman's claim, "I am not a patent attorney, and I'm not an engineer. I think I have the ability to explain things in rather non-technical terms, because I don't have an engineering, technical type of background," very amusing. If only Berman's statement were true. Acacia did not invent the technology covered by its "DMT patent," and as such, neither Mr. Berman nor anyone else at Acacia seems to understand what those patents cover. When my company asks about what Acacia believes its patents cover, we got only the vaguest of answers, and then were sued without warning. Acacia told the Court one thing in getting an injunction against some companies early on in this lawsuit, and is now telling the Court something else. Acacia told my company and many of the other defendants in this lawsuit what it believed their patents covered, and then changed their tune when they submitted pleadings in the recent Markman proceedings. Acacia's ever-shifting view of its patents has made me even more sure that the position my company took was just and right, and this is why I recommend that anyone who finds himself or herself in the same situation I did owes it to themselves to seek the advice of a qualified patent attorney rather than taking anything Acacia tells them on faith.
I found Berman's discussion of Acacia's V-Chip patent telling. He said, "We started licensing those patents several years ago against most major TV manufacturers, and to date have licensed about two thirds of the industry, generating just over $26 million." But, as anyone who has followed that case knows, Berman failed to mention that those patents were held invalid by a court of law. Berman is also notably silent regarding the fact that H. Lee Brown, one of the listed inventors on Acacia's DMT patents was the CEO of Soundview Technologies, the company from whom Acacia purchased its invalid V-Chip patents.
Berman makes the point, "Before purchasing the other two thirds of the company, we did a tremendous amount of due diligence on these patents, in terms of validity, and enforceability." This leaves me to ask one question, if Acacia really has spent so much time investigating the validity and enforceability of its patents, then why does it refuse to share that information with the people who it is asking to pay licensing fees? Could it be that those reports aren't as flattering as Berman would like us to believe? We know that back in 1992, the listed inventors asked scientists at the David Sarnoff Research Laboratory for their opinion on the "inventions" disclosed in their then-pending patent application. Not surprisingly, their response is not included in Acacia's media information.
The general principles of the system outlined in the patent document appear to be technically correct, though lacking in specific details particularly at the subsystem level. While the document may serve as a useful starting point for further development, significant additional design / simulation / prototyping work will be required for a meaningful proof-of-concept. Based on our review of published material on this topic [see reference list & attached papers], we do not consider the overall system architecture to be novel in a scientific / technological sense. Similar concepts for storing, accessing, transmitting and displaying compressed video and audio information are widely understood by researchers in the telecommunication and multimedia fields. In some cases, these concepts have also been demonstrated in practice, such as the MPEG-based video-on-demand / interactive multimedia prototype currently being shown at Bell Communications Research, Morristown, by Dr. A. Gelman. Other video-on-demand system architectures (e.g., Bellcore) are considered to be further developed than the Greenwich system since they are associated with more technical detail, particularly in the areas of compression and transmission.
Berman refused to answer the very valid question by the Klixxx Webmaster Magazine interviewer Ed Rampell, as to why Acacia waited for ten years to start threatening companies with these patents. The reason is clear-Acacia wanted to wait until companies invested billions into making the Internet and other forms of Pay-Per-View work, before letting anyone know of Acacia's plan to try to attach those efforts. Acacia also knew that companies and individuals were sending compressed audio and video files over telephone lines, cable, and fiber, years before the Acacia patents were filed. Acacia waited until now in the hope that such invalidating evidence of early use would be forever lost.
Spike Goldberg is the CEO of Homegrownvideo.com, which has been the leading provider of amateur adult content since 1982. The Homegrown empire encompasses Homegrowncontent.com, Homegrownvideo.com and Homegrowncams.com, and has been instrumental in the development and support of IMPAI.org. You can reach Spike directly via spike@homegrownvideo.com.
HOMEGROWN VIDEO
Established in 1982, Homegrown Video is the original amateur XXX company. Truly made by the people, for the people, Homegrown Video has featured thousands of regular everyday people in their most intimate moments in what is now the world's longest running adult video series. Featuring performers of all shapes and sizes, Homegrown Video was a pioneer in celebrating niches such as hairy bush, plump, mature, and cream pie. Bringing our exciting mixture of fun, sex and exhibitionism to the Web with homegrownvideo.com, helped expand the amateur revolution so prevalent in the adult industry today.
IMPA
The IMPA is a non-profit organization, created in response to the maturing needs of the online industry. Now more than ever, we must all organize in order to strengthen our position as a viable industry that can protect itself against present and future threats to our continued commercial success.
Our goal is to help fight against predatory practices which impede lawful commercial efforts, while seeking to standardize the manner in which we accomplish these efforts within our industry.
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Berman also sidestepped the question of whether Acacia is treating non-adult companies in the same manner Acacia treats the adult industry. The truth is that companies such as AOL, Time Warner, Real Networks, Apple, and Microsoft have the money to mount a serious defense against Acacia's patents, which I believe is why Acacia has not brought suit against them. From day one, I believe Acacia's plan was to harvest the "low hanging fruit," as they view the adult industry. While Acacia's plan to convince companies that it is cheaper to pay them a royalty than fight has worked against some smaller companies, and while some other companies have cut sweetheart deals, the fact remains that Acacia has succeeded with slightly more than 100 companies out of the thousands it has threatened. Obviously, Acacia miscalculated when it came to assume that "adult entertainment companies are generally not sophisticated at all in the areas of patents." The adult industry, through the actions of dozens of companies like mine, educated itself on the issues, hired skilled attorneys, and is hopefully convincing Acacia and others that it is willing to fight in court for what it believes is wrong, and will not roll over out of fear that it cannot get a fair shake because some members of the public have a negative perception of adult entertainment. While Berman is correct in his statement that many of us do not have experience managing law firms, this is because our businesses are built on proprietary concepts and technology we develop for ourselves, and not on litigation. Despite our inexperience, we hired the premier intellectual property law firm in the nation, and have been very pleased with the value we have received from them. Certainly, our bills are far less than Acacia's reported $1.4 million in legal fees during the first nine months of 2003.
Berman makes much of the fact that Acacia's license agreements contain "a provision that if at any time these patents are held to be invalid and unenforceable, the licensee can stop paying royalties." Of course, Acacia knows that it cannot enforce patents that are found invalid or unenforceable, but that is only half the story. What Berman didn't say is that if the Court decides that some or all of the companies that are in litigation do not infringe, that decision would not require a finding of invalidity or unenforceability. In fact, such a decision would not necessarily let any of the companies who decided to pay Acacia off the hook, and Acacia might insist that they continue to pay and pay. While Berman would like everyone to believe that its patents cover all forms of downloading and streaming information--"All the methods we have looked at for streaming audio and video over the Internet are covered by our patents"-the fact remains that companies prepare their content in many different ways. To infringe on Acacia's patents, a company needs to use very specific systems and methods. In court, we will show that we do not use any of those systems or methods.
Berman claims, "No special treatment at all was given to Dot Ventures or Trade News, compared to any of the licensees that have entered into license agreements with us. I believe CECash is a domain name of one of these companies." What he fails to mention is that CE's deal was less than 1% of an adjusted gross, and a most favored nation status, meaning they would always get the lowest rate possible. Never believe for a second that Acacia is going to give you and everyone else the same shake they gave the bigger companies. In order to make this work they must make the cost low enough so that it is not worth spending the money in a legal fight. Remember their favorite slogan: It's cheaper to settle than fight.
Along the same line, Berman tries to scare companies into licensing when he threatens, "Because we're also talking about past damages that can go back as far as six years. And, if it's held you intentionally infringed these patents after receiving notice, there's a potential the court will award three times damages, which will be set by the court. We're confident these damages would be far in excess of the licensing fees we're asking for, at least preliminarily. And, we would be within our rights not to license them, and then they couldn't stream video. That's a risk they're taking as well." But damages are not certain no matter what Acacia believes. Acacia will need to prove that its patents are infringed, while not arguing they are so broad as to be invalid. Even if Acacia manages to do so, it will need to convince a jury of the value of its patents. While Berman makes much of the possibility that Acacia could be awarded treble damages, a high standard indeed, he fails to mention that Acacia might be ordered to pay the Defendants' attorneys fees if Acacia loses. Berman also knows that Acacia will have an uphill battle convincing a court to issue an injunction (assuming Acacia wins) because Acacia freely licenses its patents.
In the end, I believe the truth will prevail, and the position of my company, and the other companies in the joint defense group will be vindicated. While Acacia has tried mightily to delay the Court's decision on whether Acacia's view of its claims is correct, in order to gain time to continue to threaten other companies into licensing and paying, Acacia's days of uncertainty are numbered.
Editor's Note: Ed Rampell's interview with Rob Berman from Acacia also appeared in this issue. To read this interview in full, please view it in our Legal Issues section, under the title of: Acacia's Rob Berman: The Carrot and Stick Shtick.
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