The Acacia Technologies Group (stock symbol ACTG) concluded its fifty-minute Fourth Quarter Earnings Conference Call last week, and the event left all of those people listening (shareholders and non-Acacia fans alike) wondering, “Where’s the beef?” In a proverbial equivalent to the battle of “tastes great” versus “less filling”, the viability of Acacia’s DMT patent didn’t get any super-sizing from this fourth quarter call..The Acacia Technologies Group (stock symbol ACTG) concluded its fifty-minute Fourth Quarter Earnings Conference Call last week, and the event left all of those people listening (shareholders and non-Acacia fans alike) wondering, “Where’s the beef?” In a proverbial equivalent to the battle of “tastes great” versus “less filling”, the viability of Acacia’s DMT patent didn’t get any super-sizing from this fourth quarter call.
The first half of the call was spent discussing Combimatrix (stock symbol CMBX), Acacia’s sister company, which was the bathroom break until the real no-show started. The only interesting part of the CMBX portion of the conference call was a question that was asked about the $50 million shelf filing to potentially raise money for working capital. It’s interesting to note that Acacia has $33 million in cash, but feels the need for up to $50 million more for its sister company.
From the Fourth Quarter Earnings Filing:
“The Acacia Technologies Group continued to roll out its Digital Media Transmission technology licensing program and entered into 72 new licensing agreements in the fourth quarter, bringing total DMT licensing agreements to 115,” commented Chairman and CEO, Paul Ryan. “Fourth quarter licensing revenues increased to $481,000, from $186,000 in the previous quarter, and do not include fourth quarter license fees due from a number of licensees, which will be recognized as revenues when received in the first quarter of 2004. All of our license agreements provide for recurring payments.”
There were numerous mentions of how companies were utilizing the DMT “technology”, from Web sites to cable companies, noting the billions of dollars being spent on the use of digital audio and video. An interesting point here… there is no “technology” per se that is the DMT patent; the patent is merely an idea for a process of downloading audio/video.
How is it, then, that so many companies have been creating technology (servers, software, codecs, etc.) for delivery of audio/video, and yet few have ever heard of or read about the DMT patent? How were audio or video files being distributed on BBS systems years before the inventors filed their patent? How can companies like Microsoft, Real, and Apple create audio/video delivery mechanisms without ever reading the blueprints for the DMT patent? If the DMT patent is so ground-breaking and “pioneering”, why aren’t the inventors extremely rich? Those answers and more are what we will find out from the conclusion of the current litigation being fought by the adult industry defense group.
Other tidbits from the conference call: Paul Ryan (CEO) and Chip Harris (President) said that Acacia filed a lawsuit against OnCommand after spending a lot of money in negotiations for licensing yet not coming to an agreement. Acacia also filed eight new lawsuits in December 2003, since the original 39 targets have been reduced to nine. The eight new defendants got rolled into the current nine, with the effect of creating one big lawsuit. No additional potential lawsuits were mentioned in terms of companies from other industries.
Acacia management paraded 24/7 University as a new licensee from the “e-learning” sector, but failed to point out that the licensing was paid in peanuts and cashews; the exact details are not known. Some early signers got a “most favored nation’s provision” (as Ryan put it) for signing, which just translates into “sweetheart deals”. So those who have been saying that there were no “sweetheart” deals, well, they were right… instead there were sweetheart “most favored nation’s provision” deals.
Ryan commented that Acacia knows about all prior art claims that will be used by the defense in an attempt to invalidate the DMT patent, and that Acacia has no concerns based on what they’ve seen so far. Famous last words that we’ll revisit at the conclusion of this patently absurd case when the defendants prevail. Ryan also added that there wouldn’t be any results from the Markman Hearing until June, and FightThePatent.com concurs with this assessment.
The questions were few, and those asked were sugarcoated. There was no mention about the possibility of expanding operations in Europe, as was reported in the third quarter conference call. There was no pressing of where additional revenue would come from. The overall tone seemed to be nervous and cautious. In fact, very little was said – probably due to a combination of the current litigation and the real potential that the SEC or FTC could be watching Acacia due to its questionable tactics that certainly have raised many eyebrows.
The uneventful fourth quarter earnings conference did not trigger a spike in Acacia stock buying, and those shareholders who thought they were striking gold should now be looking out for the cry from the Titanic: “Iceberg ahead!”
To read the latest news about patent abuse cases and the Acacia fight, visit http://www.FightThePatent.com/.
