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Acacia: The Company Tech Loves to Hate

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For a company that makes no products, Acacia Research spends a lot of time fighting over patents in court. Acacia has filed at least 337 patent-related lawsuits in its 18 years. To make money—sales are expected to rise to $68.8 million this year, from $34.8 million in 2006—Acacia acquires patents from inventors and then seeks fees from companies that it says infringe on those patents. Because Acacia licenses technologies it doesn't design or distribute, it is known as a "nonpracticing entity."

Executives at many tech companies—and their investors—call Acacia and its peers a different name: "patent trolls."

"We're on the very front end in an explosion of frivolous litigation that's going to put a damper on innovation," says Brad Burnham, a partner at venture capital firm Union Square Ventures, who says about one-third of his firm's portfolio is being targeted by patent trolls.

Critics say trolls assert patents that are too broadly defined or that cover ideas that existed before the patent was granted. Many say the entire U.S. patent-granting system needs reform. But for inventors who by themselves can't take tech companies to court over meaningful innovations, the Acacias of the world may play a vital role.

From BusinessWeek
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