Markman Hearing Begins

Gretchen Gallen
SANTA ANA, Calif. -- In what promises to be a prolonged series of hearings that could continue on through the end of summer, the first session in the Markman hearings began at the Ronald Reagan Federal Building on Friday to a packed house of defendants, bystanders, and patent attorneys, all curious to see who will be the victor in the most recent landmark case facing the adult entertainment industry and numerous other industries that utilize streaming audio and video technology.

The proceedings were slow, painstaking, and focused mainly on rules and definitions that pertain to Acacia's claims to Digital Media Technologies (DMT), a process that relates to audio and video transmission and receiving systems.

The first of the many issues addressed by the Honorable Judge James Ware in the Markman process is how Acacia's patents pertain to the Internet. The ongoing courtroom analysis was whether or not the definition of remote locations means a location that is only remote from the transmission system, which would apply to the Internet, or whether remote locations means remote from a user, which cannot apply to the Internet.

"We had a very good day," Spike Goldberg of Homegrown Video told XBiz. "It was the first step in a very long process, but it was a good step. There is still no question in my mind that when the patent was made it was never intended for the Internet."

Acacia's Executive Vice President of Business Development Robert Berman felt that the day went equally well for his company. "The judge asked some good questions, and as long as he follows the law, we will prevail," said Berman. "We have said all along that it's going to be a long process and we look forward to continuing to present our case in court."

While the courtroom was filled with attorneys from each side of the case, there were numerous other attorneys and patent specialists attending the hearing for reasons unknown, many of whom refused to reveal the companies they were affiliated with or the reason they were attending, aside from an interest in the patent issue at hand.

There was some speculation that some of the Internet industry's biggest players were snooping around the courtroom to see how things played out in the first round of Acacia v. New Destiny Homegrown, the results of which could have resounding effects on the entire Internet industry and possibly the digital media industry as well.

The hearing was scheduled to review four different claims within Acacia's U.S. patent collection but managed to only cover one claim over the course of four hours. Typically eight or more terms define each patent and an individual patent can theoretically include any number of claims, each being a 'separate invention.'

According to a patent attorney attending the hearing who refused to reveal his name, each of Acacia's five U.S. patents consist of an estimated 121 claims. He expressed surprise that the judge had focused solely on a single element within Acacia's patent claims, rather than going after several issues that pertain to the patents.

It is conceivable that the judge can rule on those eight claims after discussions are complete, depending on his preference.

One principal point of reference that was argued between the defense and the plaintiffs was a recent ruling on a voice and data lawsuit settled only three day ago by a U.S. Court of Appeals between Microsoft Corp. and Multi-Tech Systems in which the court ruled that Microsoft had not violated Multi-Tech's voice-digitization patents.

Multi-Tech Systems, which sells modems, routers, and VoIP gateways, filed a series of lawsuits in 2000 against Compaq Computer, Dell, Gateway, and ten Internet telephony companies alleging patent violation.

Multi-Tech claimed that four of its patents broadly cover the use of computers to transfer data, voice or video in packet form through dial-up modems or high-speed connections to the Internet, including VoIP conversations. And while the appeals court did not conclude that Multi-Tech's patents were entirely invalid, the judge ruled negatively that the patents covered Internet traffic and that Microsoft had violated them.

The consensus is that the Markman process, while specific to dealing directly with the definitions of the patent terms, excluding the discovery process, could lag on longer than the defendants, plaintiffs, and judge had previously realized. In some cases, Markman hearings can last as few as 3-4 days, a source told XBiz.

Even Judge Ware quipped that it seemed the "steam has moved away" from the initial push to get this part of the hearing over with, considering the amount of scheduling conflicts among the opposing attorney groups.

Judge Ware also suggested that a technical advisor be brought on board to smooth out the edges of an otherwise extremely tech-oriented case. He also invited both the defendants and the plaintiffs to consult with their own technology experts of choice.

According to Berman, it could be until May before the initial eight claims are even discussed.

It was noteworthy that very few defendants appeared in court, namely Spike Goldberg himself and Timothy Umbreit, vice president of Cybernet Ventures, the latest company to join Homegrown's defense group. Also in attendance was a representative for ProAdult.

According to Goldberg, the absence of defendants was intentional.

"I am here so that the rest of us can continue working and making money," he told XBiz. "We all work hard for a living. It's not like we all have a golf day to enjoy ourselves."

Goldberg added that the defense group, which currently represents 11 adult industry defendants, is still looking for donations to support a substantial and time-consuming lawsuit that could ultimately affect the entire online adult industry.

"As a defense group, we're always looking for some help," Goldberg told XBiz. "As IMPA, we're a group of people concerned about the industry as a whole. They are separate issues."

The next Markman hearing in Acacia v. New Destiny Homegrown will take place on April 9th, followed by three consecutive days in May.