Acacia Battle Paid Off for Adult Defense Fund

SAN JOSE, Calif. — When U.S. District Judge James Ware invalidated Acacia Media Technologies' remaining patent claims over streaming media technology, the bottom line was clear: It signaled how a group of focused but stubborn online adult companies could unite and bust egregious patent claims.

The six-year battle that pitted Acacia vs. the Adult Defense Fund started as a “rag-tag motley crew of dirty little porn people to unite,” Homegrown Video President Farrell Timlake told XBIZ.

“No one else back then took up the fight against such a well-funded bunch of attorney patent pirates whose legal cannons had silenced many companies and universities into surrendering to their demands,” he said.

“We stood up — specifically Homegrown Video and Video Secrets — and created a defense group that faced innumerable challenges, from those in the adult industry that advocated settling, to group members that left and settled, to companies that traitorously pretended to be our allies but then made backroom deals with Acacia.”

Timlake said that the Adult Defense Fund’s challenges were enormous and that it overcame and endured every obstacle along the way.

“We paid the price and learned many lessons and created strong bonds in the adult community,” he said. “Now, those efforts have paid off.”

AEBN President Scott Coffman remembers how Acacia would buy up patents, bundle them together and search out and sue online adult businesses.

Coffman said Acacia started sending notices to online adult companies in 2002.

“They chose the online adult industry to go after because they saw us as low-hanging fruit that would not want to go to court but would rather quickly capitulate and just pay their licensing fee,” he said. “Several large companies did settle and paid for a license from Acacia, even if they didn’t believe the suit had merit, because they felt the cost of defending against the litigation would be too expensive."

“Over the long term though, this cost had to be weighed against the greater good, the cost of all adult online companies having to pay some percentage of their sales as a licensing fee," he said. "The other long term and potentially greater cost would have been saying to all other loosely related patent holders that Acacia was right, that the adult industry was an easy mark, not willing to band together and spend money to defend against unwarranted lawsuits. This would only have lead to much more bully litigation."

Coffman said that AEBN — one of the first companies targeted by Acacia — decided to stand firm and not pay licensing fees.

“At that point Greg Clayman from Video Secrets and Spike Goldberg from Homegrown Video stepped up and decided that not only were they not going to pay but that they were going to fight all of Acacia’s patent claims,” he said.

While the online adult industry is smiling over Ware’s ruling, most expect Acacia to appeal it.

“Acacia may be down, but it is not out of the fight since they plan to appeal,” Timlake said. “If and when they do, then they will realize that their toughest adversary has not given up an inch.”