A patent, any good patent attorney will tell you, isn't a right to do something, it's a right to keep others from doing it. If your invention is a good one, they'll pay you for the privilege of using it for the patent's 20-year life. If they don't license your patent voluntarily but apply its innovation anyway, you have two choices: back off, or sue for infringement. Which way you go depends largely on how much money you've got-if you decide to go the legalistic route, you'd better have a couple of million dollars to start you on your way.
Captain Carl Elam was an inventor with more good ideas than money. Back in 1983, repelled by what kids could watch on TV, he and another U.S. Air Force officer, Dale Leavy, designed a system that would let parents block certain types of programs. Eighteen years later, the V-chip, as such a system would come to be called, hit it big when the U.S. Congress ordered that all new televisions include content-filtering technology. By then, though, out of money, the two inventors had sold their patent. They ended up with a quarter of the fees that TV manufacturers eventually paid for licenses. Raking in most of the V-chip dough was a small band of venture capitalists at a California company called Acacia Technologies Group.
For Acacia, it was just the beginning. Today, the company has an expanded portfolio of patents, the technical and business savvy to spot other valuable patents, and a small but tenacious legal staff. Most important, it has a war chest big enough to finance legal adventures that just might have as big an impact on patent law as on the future course of a host of Internet-related technologies. And it's looking for new prospects all the time.
From the V-chip, whose key patent expired last year, Acacia has moved on to the potentially much more lucrative world of streaming media, the basic technology by which sound and video is delivered to personal computers or digital televisions via the Internet or a cable box. Acacia claims to own patents that cover virtually every aspect of transferring digitally encoded media from a server to a customer. A few examples: the downloading of songs to computers and MP3 players such as Apple's iPod, the streaming of video to a PC, the digital distribution of motion pictures to hotel rooms, even the use of a TiVo digital video recorder.
If Acacia's patents are valid and as broad as Acacia thinks they are, thousands of companies-including titans like Time Warner, Disney, Microsoft, and Sony-and maybe even hundreds of millions of users will have to pay Acacia directly or indirectly. Cable, satellite, and Internet service providers, video-on-demand companies, music sites, the new Web radio enterprises, pornographers-almost anyone delivering digital video or audio across a network will be liable.
"The breadth of their claims is stunning," says one patent attorney who has followed the Acacia case closely, Bruce D. Sunstein, of Bromberg and Sunstein LLP, in Boston. "If you look at the potential targets, they include software providers like Microsoft, RealNetworks, and others, at least for contributory infringement, and possibly every cable provider and satellite provider, too. I suppose I'm a contributory infringer if I download some media content and look at it."