Patent Depending: Today's Hearing Could Seal Fate Of Streaming Media
- by Kate Kaye , February 6, 2004
"It's a crucial day for the industry," declares Dan Rayburn, executive-VP of StreamingMedia.com, an online resource for the streaming media industry, where he has been evangelizing the case against Acacia. Rayburn is concerned that "people just see it as an adult issue" and don't realize the impact a ruling in favor of Acacia could make.
Acacia Technologies group, several calls to which went unanswered at press time, has entered into 114 DMT licensing agreements with a variety of companies. In addition to countless adult entertainment firms, on-demand film companies such as On Command and LodgeNet Entertainment Corp., as well as online streaming music companies like radioio and Radio Free Virgin, have received letters from Acacia regarding licensing fees. LodgeNet has agreed to license Acacia's patents.
Acacia has also set its sights on colleges such as the University of Virginia and three Oregon University System schools. Universities often stream content on their web sites, including lectures, campus video tours, and radio station transmissions.
"We think there's a likelihood that Acacia will prevail," predicts Zack Zalon, general manager of Radio Free Virgin. The digital broadcasting company has paid licensing fees to Acacia since November of 2002. Acacia's DMT licensing fees are generally based on a percentage of a licensee's revenues. Radio Free Virgin has received dozens of patent claims that its attorneys have determined to be spurious. "This is the only patent that has any level of specificity regarding streaming media," Zalon contends.
Zalon's assessment sounds like heresy to the anti-Acacia contingent. To them, Acacia may as well claim to own a patent on air. Many contend that the patent-holder is going after easy targets, small streamers, and cash-strapped educational institutions that can't afford legal battles, and therefore will buckle under Acacia's pressure to pay up.
It's "legal extortion," insists Michael Roe, founder of radioio and principal of ioMedia. About a year ago, he received a letter from Acacia that stated, "Our goal is to enter into a licensing agreement with radioio." Soon after, Roe went public, publishing a copy of the letter to his site and sending an official statement to a mailing list that he says includes "the who's who of the media with regard to digital content." After that, Acacia "basically backed off." Since then, Roe has "talked to everyone from Microsoft to Apple" in an attempt to "wake up the industry."
Roe worries that Acacia will continue to raise its fees as more companies agree to license the use of its patents. He and others believe that the burden of the fees could lead to the demise of many small streaming media outlets and curb use of streaming media by firms that can't afford to--or refuse to--pay.
Technology firms and contractors that enable or produce streaming media could, in turn, be adversely affected. Take streaming media advertising, for instance. It has yet to catch fire in any significant way, and extra fees could stunt further growth. However, that won't be the case if Radio Free Virgin's post-licensing fee experience is any indication. "We did over three times more ads in 2003 than we did in 2002," boasts Zalon.
"The more court cases Acacia has under their belt, the more potential they have to do a lot of damage. If that happens I'm buying Acacia's stock," quips Paul Maloney, editor of RAIN (Radio And Internet Newsletter), facetiously.
The question is, could cases such as the one being heard today be playing into the patent-holder's hands? After all, if courts begin to rule in favor of Acacia, precedents will be established that enable the company to go after the real kingpins like Microsoft, Apple, major movie studios, and more.
