Tucson, Arizona-based Cyberheat was originally one of the 13 defendants that are counter-suing Acacia and part of a group of 39 adult companies that originally stood their ground against the patent holder when it first initiated patent infringement litigation back in early 2003.
At one point the group of adult entertainment defendants included Larry Flynt Publications, Wicked Pictures, and Vivid Entertainment, all of whom have since settled with Acacia.
Quentin Boyer, director of marketing for Cyberheat, told XBiz that his company was first contacted by Acacia at the end of 2002 and that he, along with the vast majority of online adult companies, ignored the warning to license Acacia's streaming technology for as long as they could.
Cyberheat rode the wave with the counter-litigants until very recently, Boyer told XBiz. Infact, they contributed to the legal defense fund right up until the end of 2003.
"Our decision was based on a risk assessment we did," Boyer told XBiz. "It was not an easy decision by any stretch of the imagination. We had to look at what we are risking if we fight and lose, compared to what we are on the hook for if we license now. We have nothing but respect for those who are staying in the fight."
Boyer added that if Acacia were to win, the defendants in the case will be responsible for subscription revenues that date back to 1997, in addition to whatever costs are incurred during what could be a very lengthy litigation process.
"This is not a sweetheart deal, by any means," Boyer told XBiz. "The royalties are pretty significant. But it is a sum that is a lot lower than what we would have had to pay to stay in the game, or to come out on the losing end. It is with a lot of regret that I make the announcement personally. I would have liked to continue the fight, but this is a business decision."
Today's licensing agreement brings the number of Acacia's licensees, for adult online and several other industries, to 114 agreements, and according to Robert Berman, executive vice president of business development for Acacia, there are several other adult companies on the verge of signing agreements with the patent holder.
"We are happy to add Cyberheat and the Topbucks program to our list of leading adult entertainment companies that have entered into licenses with Acacia," Berman told XBiz. "It is ironic that early licensees like Trade News Corporation and Hustler apparently took heat on the chat boards for "selling out" by signing license agreements with Acacia. The truth is that all of these companies hired lawyers to study the patents, and made educated decisions to protect their future rights to offer audio/video content. They were all adamant about protecting their customers, and their affiliates. No affiliate information was ever given to Acacia and these companies all made sure that their affiliates were also covered for sending traffic to their sites."
"With more than 4,500 adult websites covered, signing Acacia licenses has quickly become the norm for the industry," Berman continued. "People on chat boards know nothing about what is going on in the litigation, and nothing about patents. It is easy to villanize others when it is not your business that is on the line."
Berman also clarified some rumors that had been floating around the Internext showroom floor, in particular that between five and six companies had been served by Acacia while the show was in progress.
According to Berman, no Acacia papers were served directly at the show, although Berman was unable to confirm whether he or any other representatives for Acacia made it to Internext this year.
"Litigation is a long, tough process and you have to have the gumption for it," Spike Goldberg of Homegrown Video told XBiz upon hearing the news that Cyberheat had signed with Acacia.
Goldberg is one of the counter-litigants against Acacia, a process that he feels is still going strong, especially with the Markman hearing set for Feb 6.
"You have the right to change your mind," Goldberg said. "But if this is Acacia's big announcement after their big drop dead date, then once again, I ask Berman, where's the beef? I see no one validating these patents, I just see them paying the licensing fees, which has nothing to do with validating their patents."
