Bloomberg News

Microsoft Claims Acacia Patent Suits Breach Licensing Pact

November 20, 2013

Microsoft Corp., (MSFT:US) the world’s largest software maker, filed a lawsuit today claiming patent-licensing firm Acacia Research Corp. breached a contract between the two companies.

The complaint was filed today under seal in federal court in Manhattan and a public copy wasn’t available.

Acacia, which buys patents to generate a profit from licensing revenue, filed seven lawsuits last month against Microsoft in Delaware, Illinois and Texas. In the past, the two companies have reached agreements, including a 2011 deal over e-mail messaging and one in 2010 over patents for smartphone technology.

“Acacia’s lawsuits are the worst kind of abusive litigation behavior, attempting to extract payment based on litigation tactics and not the value of its patents,” Microsoft Deputy General Counsel David Howard said in a statement.

Acacia, which reported $115.5 million in sales for the first three quarters, doesn’t sue in its own name, though it has filed hundreds of lawsuits. Instead, it forms a unit to handle a specific portfolio and then the unit -- named for the technology it covers -- files the suits. In its annual report, the Newport Beach, California-based company said it had 143 “technology licensing programs.”

The lawsuits (MSFT:US) filed in October against Redmond, Washington-based Microsoft include one for light-emitting panel assemblies and another for a way to control the use of licensed software.

Adam Handelsman, a spokesman or Acacia, had no immediate comment on the suit.

Troll Suits

The Government Accountability Office found that 19 percent of all patent lawsuits filed between 2007 and 2011 were by companies often derided as trolls, whose sole business is to buy up patents and then demand royalties. With changes in legislation that limited the number of defendants in a single suit, that number increased even more in 2012.

Congress is considering proposals that would limit some litigation practices by patent-licensing firms. The provisions being considered include a requirement that patent owners provide more details about both what the patent covers and how its infringed, disclose who benefits financially from the litigation, and make the loser in a case pay the winner’s legal costs.

The case is Microsoft Corp. v. Acacia Research Corp. (ACTG:US), 13-cv-8275, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • MSFT
    (Microsoft Corp)
    • $45.74 USD
    • 0.58
    • 1.27%
  • ACTG
    (Acacia Research Corp)
    • $17.81 USD
    • 0.45
    • 2.53%
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