New Acacia Deadline

Gretchen Gallen
Many adult websites that have been caught in the high beam of Acacia Research Corp. are not out of the woods yet.

After shutting down approximately 42 websites over the weekend owned by adult site operator Go Entertainment, Inc. for violating a court order, Acacia will be taking off the kid gloves by Nov. 30 of this year and raising its royalty rates.

Newport Beach, Calif.-based Acacia Research, parent company of Acacia Technologies group, has been at the forefront of the adult world lately over a group of patents the company owns that enable the transmission and receipt of digital audio and video content over the Internet. This streaming technology is commonly used by many adult entertainment websites.

Since firing the initial warning shots at the adult entertainment industry in July 2003 for patent infringement, Robert Berman, senior vice president of business development, told XBiz that Acacia has been offering special deals to all adult sites that step forward and license the technology they were formally using for free. Those introductory deals have included certain waivers for past patent infringement and discounted royalty rates based on gross revenues.

But all that is about to change, Berman told XBiz.

"We've been waiving a lot of royalties occurring prior to July 2003, royalties that the law says we may be otherwise entitled to," Berman said. "But as of Nov. 30 of this year, we are going to raise our royalty rate and no longer offer waivers for past infringement. This is not an ultimatum, just a change in policy."

Berman added that his company is giving the adult industry fair notice of the royalty hike and that a signed agreement needs to be received by Nov. 30 in order for companies to continue to take advantage of Acacia's introductory rates and waivers.

Acacia recently licensed its DMT technology to Trade News Corp, the owner of CECash and Cyber Erotics; Matrix Content; Interactive Gallery, a wholly owned subsidiary of New Frontier Media Corp.; and Cyber Entertainment, a subsidiary of Dellwood Holdings, which owns operates more than 100 adult websites.

Acacia currently holds 41 licensing agreements for its DMT technology, with several more on the way, Berman told XBiz.

"We have done exceptionally well with our licensing program and given the [adult] industry ample time to make a decision on whether to license our technology," Berman said. "Although we will still offer licenses after Nov. 30, we will no longer offer the advantages given to our early licensees."

Acacia has also made recent revisions to its licensing agreements based on comments from early licensees, which are available for viewing at the company's website.

In reference to Go Entertainment, Inc., which is now an Acacia licensee, Berman told XBiz: "Our intent is not to shut down websites, it is to license them. But in instances where sites continue to use our technology without a license, we will use all powers within the law to stop them."