Studio Streaming: Sinister Purpose
Posted Sep 29, 2004

Back in the mid-1980s, one of the most bizarre copyright lawsuits of all time played out in California. Saul Zaentz, who owned Fantasy Records and copyrights to all the songs John Fogerty had written and released on the label when he was with Creedence Clearwater Revival, sued Fogerty for ripping off the guitar riff from CCR's "Run Through the Jungle" for his 1985 hit "The Old Man Down the Road." That's right: John Fogerty was sued for sounding too much like himself. After getting grilled about the musical similarity between the two songs, Fogerty finally said, "Yeah, I did use that half-step. What do you want me to do, get an inoculation?"

After listening to Fogerty play the two songs and describe his writing process, the jury decided in his favor. Had the jury decided that "Old Man" was indeed a ripoff of the earlier song, Zaentz would have had a legitimate case: Fogerty may have written "Run Through the Jungle," but the singer handed over his copyrights to Zaentz when he was green and hungry for fame, as part of the band's original deal with Fantasy. Under copyright law, that song—along with "Fortunate Son," "Proud Mary," "Who'll Stop the Rain," and everything else Fogerty wrote for CCR—belonged to Zaentz, not the songwriter.

As crucial as copyright and other intellectual property laws are, their execution is sometimes not only absurd but in direct opposition to the very spirit under which they're enacted. Everybody knows John Fogerty wrote those songs and Zaentz had nothing to do their creation. But in a music-biz version of the labor vs. management struggle, Zaentz held all the cards.

That's the kind of situation that holding companies like Acacia Research thrive on. Acacia doesn't create technology. Instead, it purchases the rights to patents that are the result of other people's work, then proceeds to collect licenses from anyone who's using the technology covered by the patent. The company first cashed in when it acquired Soundview Technologies, developers of the V-Chip TV-content screening device. By the time the FCC mandated the technology's installation in new sets, Soundview was running out of money and so sold the patent to Acacia, which went on to earn $26 million in one-time licensing fees. The patent expired in 2003, and an appeals court recently ruled that Sony and other manufacturers were not infringing on Acacia's V-Chip patent with their screening devices.

Acacia surely saw that coming, and by the time the V-Chip patent expired, the company was attempting to collect licensing fees on five other patents involving what the company calls "a system of distributing video and/or audio information [that] employs digital signal processing to achieve high rates of data compression sent over standard telephone, cable, or satellite broadcast channels for later playback and optional recording." In other words, streaming audio and video. This time, Acacia got an early start when it invested in Greenwich Information Technologies, which received the patents in the early 1990s. In 2001, Acacia bought Greenwich and its patents outright.

Since then, the company has pursued patent licenses not from firms like Microsoft and Real that create media players but from content providers that range from Disney and Radio Virgin to a slew of adult video sites. On its face, there's nothing wrong with that. Acacia owns the patents and, as anyone who's watched the stock market since the 1980s knows, a good part of our nation's economy is built on venture capitalists' making money off of other people's creations. (Then again, Karl Marx had this figured out long before Oliver Stone.) We can argue about whether that's a moral or ethical way to make money, but that closing bell's still gonna ring at the end of the day.

Plenty of companies—nearly 170 at press time—decided it's cheaper to license than fight. Those that fought were exactly the ones Acacia probably expected to not raise a stink: a group of adult Internet sites who argue not that Acacia's claim to the patents is invalid, but that the patents themselves were improperly granted. In a case that's made its way to U.S. District Court in California, a judge handed down an initial ruling that, for the most part, went against Acacia. In fact, the judge went so far as to encourage the adult sites to move for summary judgement on significant portions of the suit, an uncommon move that all but admitted the court would side with the Web sites—not on every count, but on enough that the sites were considering the ruling at least a partial victory.

Those within the streaming industry have been following Acacia closely since 2003. By August 2004, the Acacia case received national attention when the New York Times decided it was worthy of coverage. Predictably, those outside the industry took notice, and people for whom streaming is only a tiny part of their business—like videographers and studios who put short video clips on their Web sites—began wondering if they'd be next on Acacia's hit list.

While the Acacia case is certainly worth paying attention to, it's far from worthy of a "sky is falling" panic for anyone but those for whom streaming is a major part of their business, and it would be alarmist and irresponsible of EMedia to treat it as such. That doesn't mean you shouldn't take it seriously if you receive a letter from Acacia offering a licensing agreement for any streaming you might provide. By all means, contact your attorney. But don't assume that just because Disney and some cable companies—all of whom can afford to pay the fees and get on with their business—signed agreements, that it's the right move for you. Because sometimes, as John Fogerty found out, intellectual property law is a whole lot trickier than simply saying "I created it; it's mine."