Acacia Goes After E-Learning

According to a statement released by Acacia, 24/7 University, Inc. marks the patent holder's first licensee from the online education sector, a relatively new territory for Acacia in addition to online adult entertainment, online music, online movies, and in-room hotel entertainment.

The deal was brokered on the heels of a mass mailer sent out to the majority of nationwide colleges and universities, similar to Acacia's first warning shot to adult companies a year ago.

24/7 University, based in Dallas, is a privately held company that provides streaming media education in partnership with traditional seminar and video-based training courses. The company has been in existence for four years, and according to its president, Dellin Hinkle, 24/7 is considered a small but profitable organization compared to many publicly traded e-learning institutions.

Hinkle spoke with XBiz at length, although he was careful to abide by the confidentiality clause in his contract with Acacia.

Hinkle told XBiz that his company, which is built entirely on streaming online video, was first contacted in August of this year, and while he is aware that Acacia has been rousting the majority of the e-learning industry to license its streaming media properties, he considers his deal with Acacia a good business decision, in light of what would have happened if he had chosen not to sign with them.

"Everyday business owners face issues that could change their cost structure," Hinkle told XBiz. "We were involved in a significant amount of negotiations with Acacia before both parties would sign and we considered it just something we had to do."

According to Acacia's Executive Vice President of Business Development Robert Berman, while he would not disclose the exact terms of the deal with 24/7, Acacia is looking for somewhere between 1 to 2 percent of revenues generated from "distance learning" courses that contain audio or video content.

And while that number appears seemingly benign, in the case of smaller, less successful e-learning companies, a fee like that could prove a daunting sum and could lead to bankruptcy, a source told XBiz.

"The comment that we can bankrupt certain small universities is ridiculous," Berman said. "The amount of money we are talking about is not significant."

Berman added that based on Acacia's research, the licensing fees for most online learning institutions, depending on how much audio and video streaming technology is used, could be as little as $5,000 per year.

"We are at various stages of discussion with many different companies," Berman told XBiz. "Many of the companies are in stages of due diligence and we expect to be signing additional licensing in the future."

Berman also added that Acacia is currently pursuing several fortune 500 companies for patent infringement.

According to Berman, universities that use Acacia's patented DMT technology in cases where teachers and professors put material online for students to review, or when colleges and universities use streaming technology for virtual campus tours, would come under a separate fixed-fee agreement with the patent holder.

"We have said all along that our licensing program is not just about the adult entertainment industry," Berman told XBiz. "It plays nicely in the press to say we're going after the small guys, but we're not. The adult industry was first because they have made a lot of money off of our technology for many years."

There has been some talk that colleges might group together and stand up to Acacia's patent claims in court, in a similar way to a group of adult entertainment companies that refuted the patent holder and are still in the process of litigation. But no concerted effort has yet materialized.