Paul Ryan runs what is by most definitions a patent powerhouse — and a controversial one, at that.
As chief executive of Acacia Technologies, Ryan is in the business of acquiring and enforcing patents. With the increasing proliferation of Internet technologies, Acacia has rung up the register. Over the years Acacia has patented proprietary its digital media transmission technology to a veritable Who's Who of blue-chip tech companies in the streaming media business. It has also patented a technology that lets parents filter television broadcasts according to ratings criteria.
The company's profit potential has helped propel Acacia shares close to their 52-week high — this in an otherwise ragged stock market.
But Acacia's activities have inevitably raised hackles in some quarters of the technology business. The Electronic Frontier Foundation, for instance, has lampooned Acacia on its Web site for "crimes against the public domain" because of what the Internet rights organisation terms "laughably broad patents".
No doubt the company has acquired a reputation for hardball tactics, ultimately settling lawsuits against more than 200 companies to protect patents that it says it owns. Ryan, who dismisses suggestions that Acacia is simply in business to extort fees from other companies, recently spoke with ZDNet UK's sister site CNET News.com.
Q: We ran a profile on your company about a year ago and the lead paragraph was something to the effect that in the streaming media business, a letter from Acacia usually means one thing: the threat of a patent lawsuit. Does it bother you that Acacia has earned that sort of reputation?
A: Well, that's not our reputation among large companies. We recently did three licences with IBM, three with Sony, we announced one with Intel, and with Lenovo. So, we are licensing the major companies in the world. Patented technologies we have partnered with the small companies that have developed these patented technologies but simply don't have the scale or the expertise or experience to go out and licence the patents themselves. So, we're an outsource patent licensing company. We have the same people in place that IBM's licensing department would — except we're available on an outsource basis, and we're serving a large need for those companies.
Would it fair to say that Acacia builds portfolios in order to later extract settlements from others?
No. Actually companies come to us that have patented technologies but simply do not have the scale or the experience to licence themselves, and they engage us basically on a partnership basis. We go out and perform that function and split the revenues with them. So we're not targeting any particular areas, it's the companies that come to us with their patented technologies and if we feel that there's significant opportunity for licensing for that company to generate revenues for them, then we will become their partner.
There are those who believe that there are entities — they call them patent trolls. This is used as a derogatory adjective, but I'm sure you're familiar with the term.
Sure, absolutely.
Do you think those entities exist?
Well, there are various definitions. I think it's a little bit disingenuous for companies that, in effect, steal other people's property by not licensing it and then call the party that developed the technology "the bad guy". It kind of turns the world upside down... The term has been widely disseminated and used against companies generically that own patented technologies, which I think is a little unfair.
You guys are a patent licensing company. I've lost count, how many patents do you have currently?
It's over 150. There's a total of 47 different patent portfolios, and we've begun generating revenues from 17 of those so far.
And how did you acquire them? These aren't things you've furnished seed money to develop, are they?
Some of the original ones were. The television V-Chip — we provided the entrepreneurs, we funded the company that developed that technology. But the vast majority of the new partnerships we're entering into…
Talkback
In short: (software) patents cripple innovation and (local) markets. It's the old: 'money makes more money' story. Basicaly it's an arms race. If you can fund more weapons then your opponent then you're more likely to win the war. In general only a very select group of people benefit from warfare. The rest looses.