In an attempt to get more colleges and universities to pay royalties on revenue-generating distance-education programs that include the use of streaming video, Acacia Research Corp.–the company that claims to own the patent on streaming video technology–will issue a revised licensing proposal to schools, eSchool News has learned. The letter, which schools should begin receiving this week, marks the latest salvo by Acacia in the fight for streaming video and audio technology ownership on the internet.

The letter comes because schools have been slow to respond to Acacia’s initial requests for royalty payments. Though a few academic institutions reportedly have acquiesced and entered into agreements with the company, the majority of schools thus far have resisted. Paying up to a 2-percent royalty for every audio and video clip streamed by students and professors is ridiculous, they assert, and threatens the very existence of distance-education programs in America’s schools.

Amid the schools’ concerns, Rob Berman, Acacia’s general counsel, said the company reworked its original proposal, issued in July, to provide a more school-friendly licensing structure.

Under the original agreement, Acacia had demanded a minimum payment of $5,000 from any school that uses streaming video or audio for “educational purposes,” including online and traditional courses, virtual campus tours, sporting events, and promotional spots for prospective students.

The latest proposal reduces the annual minimum fee to $1,000 and provides schools with a choice of two payment options. Schools can either pay the company $2 for each distance-education enrollment or 7 cents per audio or video download. Schools that do not offer revenue-generating online services containing streaming video and audio–and distance-education programs that enroll less than 500 students or stream less than 14,000 audio and video downloads per year–do not have to pay for a license, according to the letter.

Acacia eventually plans to send similar letters to all 4,000 colleges and universities in the country informing them of the company’s patents and its demands, Berman said.

Though a handful of universities and eLearning service providers, including Capella Education Company, Chapman University, Oral Roberts University, Park University, and the online 24/7 University, already have inked agreements with the company, more than 40 universities and several digital-rights groups banded together earlier this summer to fight Acacia’s patent claims. Critics called the patents “bogus” and recommended that schools let the situation play out in court before opening up their checkbooks to the little-known company from Newport Beach, Calif.

Berman said the new agreement should be much easier for schools to swallow. In an attempt to be more understanding of the financial burden additional licensing fees would place on educational institutions, he said, Acacia decided to soften its stance–giving schools one more chance to meet the company’s demands.

But not everyone sees Acacia’s new licensing offer as an act of good will.

“I think … this is one gift horse you must look in the mouth,” wrote Johns Hopkins University general counsel Wes Blakeslee in an eMail message to eSchool News. The Baltimore-based research university is one of many schools that have yet to give in to Acacia’s demands.

With its new offer, Berman says, Acacia has done pretty much all it can do to soothe lingering concerns.

“People just don’t want to pay for things, period,” he said, adding that when it comes to patents, he believes there exists a double standard in the education community. Berman said he finds it morally reprehensible that universities, which reportedly make upwards of $1 billion a year off their own protected inventions, would be unwilling to pay for the right to use someone else’s patent.

“Colleges and universities are making a lot of money off of the patents they are issuing,” he said. “How can they expect people to respect their own intellectual property if they don’t respect the intellectual property of others?”

But the situation is more complicated than that, contends Jason Schultz, an attorney for the Electronic Frontier Foundation (EFF), the Washington-based digital-rights group that recently said it would ask the U.S. Patent and Trademark Office to reconsider Acacia’s patents.

Though Schultz admits the newer, sweeter offer is tempting for schools looking to avoid a costly legal skirmish, he feels the letter is proof that Acacia is having second thoughts about the strength of its patents.

“This really is an indication that Acacia’s claims are much weaker than they had originally thought,” he said. By reducing its demands, he said, Acacia is demonstrating the kind of eleventh-hour desperation that often comes before these sorts of claims wind up in court.

Unlike when Alexander Graham Bell wowed the world and won a patent for inventing the telephone, Schultz said, Acacia is laying claim to a technology that was around in research labs at IBM and places like Cambridge University long before Acacia’s patent was issued in 1991. Though the patent predates the internet, he said, it doesn’t necessarily predate the concept of streaming media. If the schools can prove that, he explained, then they have a pretty good chance at discrediting Acacia’s patent.

“It’s kind of hard to believe that they invented this thing and never showed it to anyone,” Schultz said.

Acacia, once a relatively obscure technology research firm, began making waves late last year when hundreds of colleges and universities received letters from the company requesting royalties for every video streamed across the internet.

Before targeting schools, Acacia took its claims to providers of streaming media in the business world, reaching more than a dozen settlements with online entertainment companies–from small-time purveyors of digital pornography to the giant Walt Disney Co. By latest count, 174 companies had signed licensing agreements with Acacia.

In August, Acacia sent a second wave of letters to colleges demanding that they pay royalty fees or risk getting sued (see story:

The letters came on the heels of a federal district court ruling that called into the question the strength of several of Acacia’s patents. But that ruling, issued as part of an ongoing legal dispute between Acacia and a consortium of internet pornography providers, did little to dampen Acacia’s pursuit of royalty payments from schools.

Berman said the ruling merely called into question some of the terms used in select patents and did not actually invalidate the patents themselves.

“The whole thing was really sort of blown out or proportion by people who don’t really understand what the law is all about,” he contended.

A final ruling isn’t expected in that case until at least the end of the year.

In the meantime, digital-rights groups such as the EFF have vowed to continue the fight.

EFF’s Schultz found it particularly disturbing that Acacia would try to compare its video-streaming patent to the types of patents sought by universities and other research associations.

When universities receive patents, he said, those agreements are the result of committed researchers and scientists who invest both time and money into products that benefit society.

In Acacia’s case, he said, “They are not contributing to society one iota. They don’t make anything.”


Acacia Research Corp.

Electronic Frontier Foundation