Acacia Reports $740,000 in Third Quarter Licensing Revenue

NEWPORT BEACH, Calif.- Acacia Research Corporation released its third quarter earnings report Thursday for its two operating groups, Acacia Technologies Group and CombiMatrix, indicating that despite a great deal of public uncertainty over the validity of its patents, licensing revenue continues to climb at a steady pace.

Third quarter revenue for Acacia, ending Sept. 30, was reported at $2,240,000, including $740,000 in licensing revenues from Acacia's Digital Media Transmission technology licensing program, which covers streaming audio and video over the Internet and via cable and satellite systems.

Licensing fees in the same quarter for 2003 were reported at $186,000.

The company's revenue numbers also include $1,500,000 in deferred revenues from the licensing program for the television V-chip, which was recently shot down by a U.S. Court of Appeals for the Federal Circuit, dismissing Acacia's claims of copyright infringement against a group of television manufacturers.

Total assets for Acacia were $34,926,000 as of Sept. 30, compared to $39,978,000 in Dec. 2003. Cash and cash equivalents and short-term investments totaled $30,364,000, down from $33,201,000 in December.

At its quarterly earnings conference call with shareholders, Acacia executives said that the company had entered into 41 new licensing agreements during the three-month quarter, which included six cable and television licensing deals. Since the end of the quarter, the company signed an additional seven more agreements, bringing the grand total of DMT agreements to 188, executives said.

"We also recently commenced the licensing program for our Internet Access Redirection technology which is used at wireless hotspots," Chairman and CEO Paul Ryan told shareholders, referring to a recent letter-writing campaign the company launched to inform wireless operators that they are infringing on Acacia patents and owe licensing fees for redirecting Internet registrations used at wireless hotspots.

Acacia's third quarter results include non-cash patent amortization, asset depreciation and stock compensation charges totaling $824,000 versus $1,417,000 in the comparable 2003 period.

The company's consolidated revenues with CombiMatrix for the quarter were $2,993,000 versus $367,000 in the comparable 2003 period, and consolidated net loss was $5,390,000 versus $5,832,000 in the comparable 2003 period.

In the post-Markman hearing process of patent litigation between Acacia and the Joint Defense Group – representing more than a dozen adult industry defendants – a hearing took place on Oct. 12 in San Jose, Calif., during which Judge James Ware heard oral arguments on Acacia's motion for a class-action lawsuit against the entire adult industry, and a motion filed by Acacia to dismiss tort claims.

The next scheduled hearings for Acacia versus the online adult industry are scheduled for Dec. 2 and 3, during which Ware will hear motions for summary judgment to invalidate two of Acacia's five U.S. patents.

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