20:17 • 06 Oct 2008
Technology for Hire
Patenting your products isn’t just about protecting them from the plagiarism of competitors. They are also valuable business assets, which can be sold or hired for profit, as Rob Berman of Acacia Technologies Group explains to Vincent Powell.Increasingly, technology companies are discovering a new worth in their IP Rights. In a sector where innovation is the key and advances are occurring rapidly, patent licensing has gradually emerged as a profit-generating asset that until now has been significantly undervalued and under-priced. For those yet to encounter its potential, patent licensing is the practice by which companies share their lucrative patents with others in return for a handsome licensing fee or access to rival technologies. Such arrangements can be a highly successful way of raising revenue and of generating profits, and it is a system that has proved especially attractive to companies with patents in the technology sector.
A model licence
One company that has begun to exploit its IP Rights through patent licensing is the California-based Acacia Technologies Group. It is the holder of key patents for ‘streaming media’, the practice by which video or audio files are ‘broken’ into smaller blocks for quick transmission over the Internet, cable, satellite and other wireless systems, and then reassembled for viewing or listening.
The business potential of such IP Rights is impressive to say the least, and with corporate business, cable TV, e-learning and adult entertainment companies all knocking on the door for licensing opportunities, it should come as no surprise to discover that Acacia licenses its digital DMT (Digital Media Transmission) technologies to media and electronics companies for a healthy sum.
But it’s not as simple as it may first sound, says Rob Berman, executive vice president and general counsel at Acacia. ‘In order to protect our patents and the profits we could – and should – be making from them, a large part of our job is spent educating the industry that we hold the patent rights for such technology,’ he tells me. ‘As a result, we employ a team of researchers who are charged with monitoring and searching for infringing activity.’
It’s an approach to IP watching that seems to be paying off. In February 2004, Acacia signed a licensing agreement with Walt Disney, allowing them to use Acacia’s video-streaming technology. This was followed by similar agreements with Playboy and Bloomberg, and 25 cable TV companies, 12 of whom signed up in August 2004 alone.
| ‘Patent licensing has been building for some time and it is still a growing market. Companies like IBM, AT&T, and Texas Instruments have been making billions of dollars licensing their technologies for years. It is time for even the smallest of inventors and companies to catch onto the trend.’ |
Such agreements come as a result of a licensing strategy that critics have accused of being overly aggressive. But Berman insists that Acacia takes a fair approach to the licensing out of its technology. ‘We license our products industry-wide at reasonable rates. And yes, we do actively identify and contact companies who we feel are infringing our IPR, but we try to enter into a licensing agreement with them without litigation. Of the 178 DMT licensing agreements we’ve entered into, only 25% of those agreements were as a result of litigation.’
If talks do not result in satisfactory licensing agreements, however, Acacia do not shy away from bringing litigation to recoup what they feel they are owed. In late 2005, US courts are due to make their final decisions in the lawsuits brought by Acacia against five of the largest cable and satellite TV operators in the US – Charter Communications Inc, Comcast Corp, Cox Communications Inc, DirecTV Group Inc, and EchoStar Communications Corp. Acacia claim the patents for the media transmission software used by each of these companies, and, according to the Los Angeles Times, should Acacia be successful, the royalties they will be owed could total more than US$100 million per year.
A lesson to be learned
As patent licensing becomes a more common (and acceptable) method to make revenue from IPR, the approach of Acacia may well prove justified. ‘Patent licensing has been building for some time,’ observed Berman ‘and it is still a growing market. Companies like IBM, AT&T, and Texas Instruments have been making billions of dollars licensing their technologies for years. It is time for even the smallest of inventors and companies to catch onto the trend.’
GETTING STARTED
1. What should I license?
Do you want to hold onto your core IP technology to ensure a competitive edge? If so, aim to license your non-core IPR instead.
2. How aggressive should I be?
Each licensing approach is different depending on whether you are approaching from an infringement or a commercial perspective. Speak to your patent attorney about the best steps in each case.
3. How much money can I make?
Determining the value of your patent depends on a range of factors: granted or pending rights, the number of patents you own, the scope of the first independent claim and technology disclosure, prior art and inventive step. Get legal advice on its value before you approach a potential licensee.
4. How can I keep my licences secret?
By setting up a Non-disclosure Agreement with your potential licensee before negotiations start, you can ensure any deals are kept under their hat, whether they are signed or not.
5. How much should I give away?
Ask your legal expert for advice on exclusivity and non-exclusivity issues.
To find out more about Acacia Technologies Group visit www.acaciatechnologies.com
This article first appeared in IP Review, issue 9