The Impact on Radio Is Unclear, But One Streamer Says It Could Be Costly to Stations
Patent DetailsThe U.S. Patent Office issued Patent No. 5,132,992 to Greenwich Information Technologies in 1992 for its Digital Media Transmission technology. Greenwich was acquired by Acacia Media Technologies Corp. in 2001.
Overall, Acacia’s DMT patent describes an audio and/or video transmission and receiving system with specific features allowing the user to control the access and playback operations of the selected material.
Filed in 1991, the patent states: “At the present time, only a video cassette recorder (VCR) or a laser disk player (LDP) allow a viewer to enjoy control over selection of particular audio/video material. Using either a VCR or an LDP requires the viewer to obtain a videotape either by rental or by purchase. Remote accessing of the material has not yet been integrated into an efficient system.”
The DMT patent covered that “efficient system.” According to the patent, different types of audio and/or video media material are given a unique identifier. The media material is then formatted into a predetermined format, compressed, stored and transmitted to a remote location.
Once the compressed media material is received at the remote location, it is stored, decompressed and played back by the user. Playback controls in the reception system allow the user to fast forward, rewind, stop or pause the playback of the media material.
“We are not willing to make a broad statement that every radio station that streams is necessarily covered by our patents,” said Robert Berman, Acacia vice president of business development and general counsel.
“Before contacting a Webcaster, we have our engineers look at what it is the company is doing, and we make a determination of whether they’re utilizing our technology or not.”
In addition to its existing 137 U.S. patents claims, the company has hundreds of additional claims pending in continuation patent applications currently being examined by the U.S. Patent Office.The letter to Michael Roe began in a manner reminiscent of the “Greetings From Your President” military draft notices from the 1960s.
“Congratulations on the success of radioio. We appreciate your efforts to legitimately bring music and videos to the online community while respecting the intellectual property rights of artists, composers and publishers.”
The letter Roe had received from Acacia Media Technology Corp. in late January informed him that the company owns certain patents “covering the transmission and receipt of digital audio and video content via various means.”
It invites the recipient to enter into a licensing agreement with Acacia. Roe, operator of top-rated Internet station radioio, was incensed.
“It is legal extortion,” he said. “When someone says to you, ‘You need to pay me for this, and yeah, you could fight it, but it would probably just be cheaper to just pay me,’ that’s legal extortion.”
Roe issued a press release and posted the Acacia documents on radioio’s Web site. The story was picked up immediately by trade and general press.
Acacia’s Vice President of Business Development and General Counsel Robert Berman said Roe and others are free to go to the press as they like, but that the patents are valid and enforceable.
“Our research has indicated, and has been confirmed by others, that these are in fact the pioneering patents in the industry for the transmission and receipt of digital audio and digital video content.”
At least one Internet radio operator, Radio Free Virgin, agrees with Berman. After researching the situation, RFV signed Acacia’s standard license agreement that calls for royalty payments of 0.75 percent of gross revenues from music Webcasting operations. (Music-on-demand Webcasters are charged a royalty of 1.5 percent.)
An Internet radio station grossing $250,000 a year that chose to license Acacia’s patent would have an annual bill of $1,875. A music-on-demand operator would pay twice that amount.
Acacia’s is not the first such patent infringement notification RFV has received.
“We get barraged by requests for payment for things that we generally find to be totally unworthy of even a phone call,” said Zack Zalon, RFV general manager. “To date, over three years, we’ve never once had a situation where we believed that we were infringing on anyone’s patent, until now.”
Roe believes Zalon made a business decision – that it would be cheaper to pay the license royalties than to fight in court. He said he believes their thinking went: “Hey, we’re big and we need to make some sort of agreement about it.”
He thinks both radioio and RFV were targeted because of their high profiles in the Arbitron Measurecast ratings, and because Acacia didn’t think they had the means or will for fight it. What if AOL Time Warner, for instance, were served with the same request?
“What they’d do is drag them into court and fight it. It would drag on for years, or at least a year or more, and Acacia would go away,” he said.
But Roe suggests the big players take notice.
“Clear Channel needs to take notice of what’s going on, because if (Acacia is) able to successfully press this claim against us, they certainly will use that, or they will attempt to leverage that to get a claim against Clear Channel or anyone who’s using the Internet to transmit digital audio or video.”
Brian Parson, Clear Channel Interactive’s director of technology, told Radio World that the company had not received a similar notice from Acacia.
Roe also raises the question of whether the technology providers, RealNetworks or Microsoft among them, should be the targets of the patent infringement action.
“If Acacia has a patent on the method of, or the process of transmitting audio or video over the Internet, then that’s a claim that they should take up with those entities.”
Berman said this is not the way patent law works.
“Just because you get a product from a third party such as Microsoft or Real or Concurrent or anybody else, doesn’t necessarily mean that your using that product in certain ways won’t infringe on intellectual property rights owned by others,” he said. “Under the patent law, the user of the technology is liable.”
Internet radio stations that have their streaming done by a service bureau should not think they are absolved of the patent royalty obligation.
“The bottom line is that the Webcaster radio station is benefiting from the use of our technology, and under the law you cannot use somebody’s intellectual property without a license,” said Berman.
He said that when an Internet radio station licenses the technology, it automatically covers their third-party suppliers.
Zalon said that in licensing Acacia’s patents, RFV gained access to some additional technology.
“We found things in their patent that we currently are not utilizing, but may utilize in the future.”
“In addition to our existing patents,” said Berman, “we currently have hundreds of other claims pending in front of the patent office that we are confident will be upheld. So our coverage is only going to get better over time.”
He said these later patents will be grandfathered into license agreements signed earlier.
When can other Web streamers expect to hear from Acacia?
“We don’t have a particular schedule,” said Berman “We’ve already been in touch with and we’ve sent mailings out to several different Webcasters with marketing materials and copies of our draft license agreement.”
Acacia shouldn’t expect radioio and Michael Roe to go quietly.
“We had three extremely high-profile attorneys and law firms in the realm of patent and intellectual property law volunteer their services,” he said, who are willing to take his case for free.
“They see that if we lose, that it affects their big paying clients.”