Friday, October 10, 2014

Acacia Q3 2014 Preview

Acacia Research Group (ACTG) Q3 2014 in Review

Disclaimer:  I have not been compensated to publish this preview by any company discussed. All information is based on publicly available information and all opinions/conclusions are my own. This preview is only for informational purposes. Please contact a registered financial agent before making any financial decisions.
Link to PDF version on  for better formatting.


Acacia continued to be very active in Q3 2014, although I am of the opinion that it will be a “bridge” quarter moving into Q4 2014 and 1H 2015 where activity is sure to accelerate with a numerous amount of trial dates and Markman hearings.  My opinion is the quarter will not be a blowout as it was in Q2 2014.  There were a number of dismissals in Q3 although estimating revenue from these agreements continues to be very difficult.  My gun to the head guess would be in the $25-$30M range.  Key highlights:
-       RPX and Innovative Display agreement has led to a number of dismissals on the docket, which included Apple, Acer, Canon, Verizon, T-Mobile, Nikon, and Best Buy.  A Markman opinion was also issued.

-       Blackberry and Microsoft were also able to reach agreements through mediation with Innovative Display.

-       Sharp licensed with Acacia under three portfolios, which included Adaptix.

-       Arthrex licensed with Bonutti Skeletal.

-       Progressive Semiconductor licensed with Marvell and later was issued a Markman opinion in their case against Qualcomm.

-       Markman opinion issued in LifeScreen v Cordis on August 12, 2014.

-       Signal Enhancement had their case stayed with Broadcomm pending the outcome of the Inter Partes Review that was filed.  The case was settled per the PTAB docket.  It is not known if there was any revenue attached with the settlement.

-       There were a number of Inter Partes Reviews filed across a handful of portfolios in the quarter.  There were no final decisions that I was able to locate on the database.

-       Adaptix Markman opinion was issued in case with Huawei and ZTE.

-       Light Transformation Technologies Markman opinion issued on the ‘959 patent ruling all asserted claims invalid.

-       Markman hearing scheduled for 9/29/2014 was taken off the calendar because of settlement agreements in the Online News Link portfolio.

List of Q3 case dismissals, * = my estimate of a likely larger than average agreement:
Adaptix – Sharp 8/20/2014 *
Auto-Dimensions – Autodesk 8/21/2014
Battle Toys – Lego 9/2/2014 – 8K
Bonutti Skeletal Innovations – Arthrex 7/8/2014 *
Brandywine Communications – Consolidated Communications Holdings
Cellular Communications Equipment – Sharp 8/20/2014 *
Computer Software Protection – Mathworks 7/1/2014
Delaware Display Group – Amazon 9/5/2014 *
Gametek – Rockyou 9/3/2014
Innovative Display – MiTac Digital 7/9/2014, Acer 8/22/2014, Apple 8/26/2014, Canon 8/6/2014, Verizon 9/3/2014, T-Mobile 9/3/2014, Best Buy 9/9/2014, Blackberry 9/16/2014, Microsoft 9/16/2014, Nikon 9/27/2014.  Many of these dismissals/settlements should be covered by the RPX agreement dated 8/19/2014 *.
Progressive Semiconductor Solutions – Marvell 8/15/2014 *
Saint Lawrence – Tecnotree OYJ 7/22/2014
Signal Enhancement – Broadcomm 7/25/2014
Super Resolution Technologies – Nikon Corp 7/24/2014 Stayed pending Settlement – 9/23/2014 Agreement announced *
Video Streaming Solutions – Microsoft 7/1/2014
Wireless Mobile Devices – Sprint 7/11/2014 * , AT&T 7/17/2014 * (Only a docket entry, no filing for AT&T

Q3 2014 Partnerships and New Litigation Filed

A new subsidiary named In-Depth Test LLC, filed suit against five targets during the quarter. The patents cover semiconductor testing and were acquired / partnered with a company called Test Advantage Inc, located in Tempe Arizona.

Intersil Corp

Maxim Integrated Products
Vishay Intertechnology
Linear Technology Corp
Fairchild Semiconductor Corp

A new subsidiary named Nexus Display Technologies filed suit on July 11th, 2014 against nine targets. The patents originated from Silicon Image Inc.

Credit Card Fraud Control Corporation filed two suits on July 21, 2014 and three more suits on September 10, 2014:
Chase Paymentech Solutions
First Data Corporation
Elavon Inc
MaxMind Inc

CeraMedic LLC filed suit against three companies between July 23rd and August 1st. The patents originated from Fraunhofer-Gesellschaft in the late 90s and were transferred to Acacia in February 2014. The patents relate to ceramics used in hip replacements.
Smith & Nephew
DuPuy Orthopaedics
CeramTec GMBH

Data Engine Technologies filed suit against Google on September 2, 2014.
Liefeport Sciences filed suit against C.R. Bard on September 3, 2014.

Industrial Print Technologies filed suit against two companies on September 12, 2014:
O’Neil Data Systems

Cellular Communications Equipment filed suit against six targets on September 15, 2014:
Boost Mobile

Parthenon Unified Memory Architecture filed suit against Samsung on September 22, 2014. The patents originated from ST Microelectronics. Acacia announced a partnership with an unnamed leading semiconductor on April 15th, 2014.


Markman Opinions issued in Q3 2014:

Patents 6,755,547, 7,300,194, 7,384,177, 7,404,660, 7,434,974, 7,537,370, and 8,215,816 asserted with 12 claim terms in dispute. 

Patents 6,473,349 and 6,862,208 asserted with 5 claim terms in dispute.

Patents 6,947,748 and 7,454,212 asserted with 5 claim terms in dispute. The opinion was issued on September 19, 2014.

Patent 8,220,959 asserted with 11 claim terms in dispute. The opinion was issued on July 11, 2014.

Patents 5,709,704 and 6,214,025 asserted with 9 claim terms in dispute.  The opinion was issued on August 12, 2014.
Q4 2014 Events:
Endotach v Cook was scheduled for trial on December 3, 2014.  It has been moved to March 30, 2015.
Markman Opinion should be issued in Body Science v A&D Engineering, Lifewatch Services, and Polar Electro.  Hearing was held on July 31, 2014.
Cellular Communications Equipment Markman hearing remains on schedule for November 18, 2014 in EDTX.
Optimum Content Protection v Microsoft Markman hearing is set for November 6, 2014 in EDTX.
Cell & Network Selection v Blackberry, Nokia, Sprint, T-Mobile, and Verizon Markman hearing is set for November 13, 2014 in EDTX.

Questions for the Q3 Conference Call:

-       Impact on monetization from the Innovative Display Markman opinion, which claim 1 of the ‘547 patent was ruled indefinite?

-       Plans to appeal the claims construction order in Light Transformation Technologies?

-       Were there any final decisions at the PTAB with Inter Partes Reviews that have reached final decisions or were not instituted in the quarter?

-       Any color on the pipeline and when to expect additional intake?

-       Results from the litigation with Adaptix in Japan?

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