The rights of U.S. schools and colleges to use a powerful new tool for enhanced communication and instruction are at risk, because a little-known California company claims it owns the patent on what enables streaming video. The company has already sent demands for royalty payments to several U.S. universities.

Newport Beach-based Acacia Research Corp. seems to have a message for schools: Either stop the transmissions now, or prepare to pay the company as much as 2 percent of the revenue generated from courses that employ such technology.

The threat became real when some colleges and universities–including Johns Hopkins University in Baltimore, the University of Virginia, the University of Wyoming (UW), and a number of schools in the Oregon State University System (OSUS)–began receiving “cease-and-desist” letters from the company.

Legal experts from these and other schools say the royalty demands could spell trouble for revenue-generating distance-education programs, which are relied upon to connect students across great distances while appealing to pupils with vastly different learning styles. If the royalty demands exceed the profits generated by such courses, they say, the practice could become cost-prohibitive, adding a debilitating expense to schools’ already waning technology budgets.

Education observers fear demands for a percentage of revenues might be merely a prelude to demands for licensing fees from all schools and universities that use streaming video, regardless of whether the technology generates revenue.

To skirt a potential disaster, legal counsel for universities across the country have begun looking for ways to insulate their institutions from potential lawsuits. But while much is being debated, nothing has been decided, a fact that has college lawyers contacted by eSchool News largely mum on the topic of strategy.

Lawyers have been so tight-lipped, in fact, that officials from the University of Virginia and the Johns Hopkins University declined to go on record with eSchool News about the letters. Those who are willing to talk, however, say they are concerned.

Ben Rawlins, general counsel for the OSUS, said the proposed 2-percent royalty claims would result in a significant amount of money for the state’s universities and could be enough to threaten the existence of video-streaming and distance-learning programs in some institutions, but he declined to comment on the validity of Acacia’s patents or on the university’s defense, stating, “Everything is still under consideration.”

For universities, Rawlins said, the question is whether the technology has been around long enough for it to be considered in the public domain, or whether Acacia has the right to claim collective control over the broader use of the technology itself–mainly, the process by which audio and video are transmitted across the internet–as opposed to a specific hardware device or media player used to make such transmissions possible. OSUS reportedly is consulting with patent lawyers to further investigate the company’s claims.

Meanwhile, Acacia’s crusade is gathering steam. On the heels of more than a dozen settlements reached last year with a swath of online pornography providers–all of which use streaming video to broadcast racy images to customers’ computer desktops–the company has set its sights on academia, claiming it’s entitled to a slice of the revenues schools reap from ballooning enrollments in distance-education classes that use the technology.

Acacia’s general counsel and senior vice president for business development, Robert Berman, did not return repeated telephone calls from an eSchool News reporter before press time. But Berman told the Chronicle of Higher Education for a Nov. 7 story that the patents–which were first granted in 1991 and sat dormant throughout the dot-com bust–were finally ripe to make the company some serious money.

“Money wasn’t being made using streaming media at the time,” Berman told the Chronicle. “If you remember, everything on the internet was free, and people were just figuring out how to use the technology.”

Today that has changed–especially in education, where teachers and professors at all levels of schooling have employed the tool as a means to increase interactivity among a growing contingent of students weaned on the technology.

According to industry research firm Quality Education Data, video streaming is the No. 1 technology being evaluated for use in K-12 schools this year. It also has become increasingly popular among universities, where streaming video is used not only to extend the boundaries of the traditional college campus but also to broadcast sporting events and even conduct online campus tours.

One school that has sought to take full advantage of the technology is the University of Wyoming, which since 1999 has been using streaming video and audio as part of its UW Outreach School, otherwise known as Online UW, to reach students via the internet.

“I think (Acacia’s claim) has some really severe repercussions for universities, whether you’re talking about (classes) on campus or about distance learning,” said Mike McElreath, director of technology for the UW Outreach School. Online UW uses a platform designed by distance-education provider eCollege.

A teacher at the university, McElreath said streaming video has become an integral part of a course he teaches on documentary history. Educators, he said, also rely on the technology for video conferencing and virtual meetings, among other things.

If the patent issue isn’t resolved, McElreath predicted, additional royalty payments–coupled with already tight technology budgets–could “create a huge barrier to delivering courses and professional development across the internet.”

Other distance-learning experts agree. Diana Zilberman, who heads up the Maryland Distance Learning Association, said royalty payments could stunt the growth of new innovations for this type of technology in schools.

“If institutions were forced to pay such royalties, the cost would become a real impediment,” Zilberman wrote in an eMail message to eSchool News. “It’s hard to say if today’s colleges that use distance-learning related technologies can offset currently high technology licensing costs with tuition fees.”

Banding together

To share the legal burden awaiting them, a number of universities that received cease-and-desist letters from Acacia reportedly have banded together to discuss the best possible strategy for beating Acacia’s claims.

University counsel refused to reveal the names of institutions participating in the consortium, but internet lawyer Harvey Jacobs of Washington, D.C.-based Jacobs and Associates said seeking a communal legal defense would be a smart move by the schools.

The idea, he said, would be to share the legal costs and combine strategies in what could be a long and costly litigation. Such an alliance could seek to ensure that no single defendant would bear the full brunt of Acacia’s legal assault.

As to Acacia’s delayed claims on its alleged patent rights, Jacobs said the company’s decision to sit on its patents until the technology matured is not uncommon. “This represents a classic example of a company exploiting its patent portfolio,” he said.

In all, Acacia has entered into 47 different licensing agreements for its video and audio streaming patents. Thirteen others are currently in litigation. Apart from universities and adult-content providers, Acacia also has initiated patent infringement claims against companies that supply video on demand to hotel rooms.

Strangely absent from Acacia’s hit list, however, are the major providers of this technology to schools. Streaming video companies in the education market, such as United Learning and AIMS Multimedia, as well as Microsoft Corp. and streaming audio-video giant RealNetworks, all say they’ve yet to receive any form of legal notification from Acacia asking them to pay royalties for the services each provides to schools and other customers.

Jacobs–who is an attorney specializing in internet and trademark law rather than patents–said that while Acacia probably could send cease-and-desist letters to these companies, it has a better chance of procuring revenue-generating licensing agreements if it trains its efforts on end-users, such as schools, many of which lack the legal clout to match Acacia’s corporate attorneys. Companies such as United Learning–which is owned by Discovery Communications–are more likely to fight the claims in court, he said, a process that could cost Acacia more money than it’s worth.

Whether Acacia eventually chooses to go after these companies with its patent claims likely will depend on how these claims hold up against schools. And that will depend on the strength of the company’s patent, which has to demonstrate definitive ownership over what amounts to a widely used and extremely broad conceptual technology, experts contend.

Jacobs said the debate is analogous to the man who holds the trademark for the term “internet.” While the word is often referenced in its trademarked form with a capital “I,” it would be unlikely that a judge would award the trademark holder royalties for the repeated use of the term across the web, simply because it has passed into the vein of public use and is no longer considered proprietary, he said.

Whether video streaming has crossed into that realm has yet to be decided. But even if schools are forced to pay royalties for using the technology, it doesn’t necessarily mean the end of streaming video in education. Schools still would have the option of reaching licensing agreements with the patent holder. They also could look for ways to cut down on the amount of videos streamed by copying the content onto a CD-ROM and making it available that way, Jacobs suggested. Of course, this practice would raise legal questions of its own.

Legal experts in the public and private sectors alike agree that solutions to patent-infringement claims have been slow to catch up to the evolving nature of the internet.

“It’s like trying to drive a thumbtack in with a sledgehammer,” Jacobs said. “Technology is way ahead of the legislative curve.”

See these related links:

Acacia Research Corp.

Maryland Distance Learning Association

University of Wyoming Online