With a Dec. 1 deadline approaching, Yale must decide whether to start paying royalties on video streaming technology or run the risk of facing a costly lawsuit.
Acacia Research Corporation, which holds a patent on the transmission of video and audio data, sent letters to universities nationwide this fall threatening legal action if the schools do not agree to pay a flat fee for use of the technology. At Yale, the royalties would apply to activities ranging from in-class video screenings to audio downloads from University Web sites, but some experts have argued that the company’s patent is illegitimate and will not withstand an ongoing review by federal courts.
Yale Deputy General Counsel Susan Carney said University lawyers are investigating the validity of Acacia’s patent as the administration decides whether to cooperate with the company’s request, which was conveyed in a letter the Counsel’s Office received Oct. 31.
“We’re studying the situation and trying to figure out what to do,” she said. “We have to do a cost-benefit analysis once we have a clearer idea of the merits of their claim.”
A federal court in San Jose, Calif., is currently evaluating the scope of the patent to determine whether Acacia has the right to sue the universities for infringement. The court is not expected to rule within at least six months, but in the meantime Acacia has given the schools until the end of the month to accept a flat fee, said Karlton Butts, Acacia’s vice president for licensing.
Butts said the company formulated its royalties proposal after negotiating with representatives from universities.
“We’re trying to resolve this amicably,” he said. “If the patents are found valid and enforceable, then the schools will pay a lot more on royalties than they would pay in this agreement.”
Under the offer, which is scaled to each university’s enrollment, Yale would pay $4,000 annually for the right to download or stream audio and video files on campus, Butts said. Schools that reject the proposal will have to pay significantly more if the court upholds the patent, he said, but the exact figures will depend on the court’s ruling and how Acacia chooses to enforce it. If the court finds that the universities willfully infringed on the patent, Acacia may seek triple damages, he said.
But Jason Schultz, an attorney with the consumer watchdog group Electronic Frontier Foundation, said he thinks the court is more likely to find that the patent is too vague to be considered valid. The letters are simply an attempt to bully universities into submission, he said.
“They’re offering what a lot of these shakedown artists offer, which is a letter that says, ‘for the low, low, low price of $5,000 or something like that, you can have a license to my patents,'” Schultz said. “Acacia is not in a very good position to beat the universities on this, but I understand the universities have better things to do than spend time and money fighting patent trolls.”
Butts declined to state how many universities have accepted Acacia’s offer, but he said the response has been “positive.”
Yale Director of Academic Media and Technology Charles Powell said the patent, if upheld, will cover all of Yale’s activities that involve the transmission of digital media. Powell said that while he cannot not speak to the legal merits of the case, he was surprised Acacia is demanding royalties on technology that Yale already pays tens of thousands of dollars per year to use.
“Almost everything we do, we’re paying licensing fees for media services,” Powell said. “It’s not clear to me why I owe Acacia money on something I already pay a license on to Real.”
University faculty said media streaming has become a valuable teaching tool. Biology professor Thomas Pollard said video footage has made his biology classes more engaging.
“The professors can talk and wave their hands, but it’s so much more interesting for students to see it themselves,” Pollard said. “It’s all about presentation and showbiz.”