Acacia Research Corporation released its full-year 2021 and Q4 earnings last week, reporting $51.3M in licensing and related patent revenue during the fourth quarter-which it said was driven in large part by the licensing of its Wi-Fi 6 portfolio. The announcement was followed in short order by two new suits asserting patents from the same portfolio, filed by Acacia's Atlas Global Technologies LLC this week against D-Link and Unizyx (Zyxel).

The Wi-Fi 6 campaign

Atlas Global's April 4 complaints filed against D-Link ( 2:22-cv-00103) and Unizyx (Zyxel) ( 6:22-cv-00355) in the Eastern and Western Districts of Texas, respectively, assert an identical set of nine former NEWRACOM patents. The NPE has previously asserted overlapping sets of those same nine patents, plus a tenth (see a patent assertion grid here), against defendants ASUSTek, OnePlus, Samsung, SerComm, and TP-Link. With them, Atlas Global has targeted compliance with the 802.11ax networking standard by a long list of accused products including adapters, cameras, desktop computers, e-readers, laptops, mini PCs, motherboards, smartphones, set-top boxes, and televisions-and as in the recent complaints against D-Link and Zyxel, various networking devices (i.e., access points, gateways, routers, and stations).

Atlas Global's patents-in-campaign were among the over 200 US patents that the NPE received from chip maker NEWRACOM in February 2021. Formed in 2014 by a group of individuals from the Electronics and Telecommunications Research Institute (ETRI), NEWRACOM is described in Atlas Global's complaints as a "major contributor" to the 802.11ax-2021 standard, citing a 2018 IAM Industry Report that ranked NEWRACOM "as the world's fourth most active technical contributor to the 802.11ax Standard, behind only Qualcomm, Intel, and Huawei".

Atlas Global began its campaign in August 2021, suing ASUSTek (headquartered in Taiwan) and Sercomm (also based in Taiwan) in the Western District of Texas and Samsung (headquartered in Korea) in the Eastern District of Texas. Last November, the NPE added a suit against OnePlus (based in China) in West Texas and another, against TP-Link (also Chinese), in East Texas. While the NPE's campaign has been somewhat bogged down by challenges related to service on foreign defendants-covered by RPX here-by the end of 2021, Atlas Global had resolved one of its cases: In November, Acacia announced a license agreement with Samsung, ending litigation against the company by early December (and two days before Atlas Global assigned five of its NEWRACOM patents to Samsung).

Acacia's financials

This past week, Acacia reported IP revenue of $51.3M for the fourth quarter of 2021, compared to $4.4M during the same period in 2020. In a March 31 earnings call, Acacia's CFO Rich Rosenstein attributed that increase to the "successful licensing" of Acacia's Wi-Fi 6 portfolio-results which, according to CEO Clifford Press, "reinforces [Acacia's] confidence about achieving future licensing agreements". When questioned by an analyst, Press called the transaction "foundational" and "extremely important in validating the importance of the portfolio and the value of it".

Acacia's IP business generated $76M in revenue for the year ended December 31, 2021, up from $29.8M for the full year of 2020. Other than the agreement with Samsung announced in November, the company did not provide any details about licenses and settlements signed in 2021, other than saying that a few were inked ("including one large settlement") in Q2. As reported by RPX here, more than a handful of patent infringement cases were dismissed during that quarter.

Acacia has been relatively quiet on the litigation front so far this year, filing just two new cases (the Atlas Global suits against D-Link and Zyxel), and it has not announced any new patent acquisitions since picking up the NEWRACOM portfolio in 2021.

During Q&A with analysts on March 31, CFO Rosenstein said that Acacia's goal is "to acquire one or more operating companies" in 2022. In Q4, the company announced that it had acquired Printronix Holding Corp., described as "a leading manufacturer and distributor of industrial impact printers, which are also known as line matrix printers, and related consumables and services". Acacia reports paying $33M in cash for the business.

Also last year, Acacia made a bid to acquire Comtech Telecommunications, described as a "global provider of next-generation 911 emergency systems and secure wireless communications technologies", for $790M in cash.

First reported by Reuters on November 1, Acacia's offer to buy Comtech was confirmed in an 8-K filing the following day, in which Acacia disclosed that it had submitted a private proposal to acquire 100% of the outstanding shares of Comtech for $30 per share in cash.

Acacia's bid came as Comtech was facing pressure from Outerbridge Capital Management, one of its major shareholders, to "refresh" its board of directors and consider a potential "whole or partial sale" of the company. Apparently referring to an October 25 letter from Outerbridge to Comtech's board, Reuters reports that "Comtech angered Outerbridge last month when it announced a deal to sell a $100 million stake in itself through a PIPE deal to hedge funds Magnetar Capital LLC and White Hat Capital Partners LP. In a PIPE deal, investors buy a publicly traded stock below its currently traded price".

Comtech issued a press release in January stating that its board had unanimously rejected Acacia's unsolicited offer.

Acacia itself underwent an activist investor-led transformation in 2018, when Sidus Investment Management and BLR Partners prevailed in a proxy campaign for changes at the company, including the election of their director nominees, Clifford Press (cofounder of the investment company Hyde Park Holdings) and Alfred Tobia Jr. (cofounder of Sidus Investment Management) to the company's board. Shortly after Press and Tobias joined Acacia's board in 2018, an executive turnover began, with the ousting of Acacia's president, CFO, and general counsel, and the eventual departure of each of its remaining directors.

A strategic shift-initially characterized as an "absolute return asset management strategy"-followed, part of which has involved a renewed focus on patent portfolio acquisition and assertion. That acceleration continued through Acacia's partnership with hedge fund Starboard Value, opening up access to as much as $500M in new capital.

Acacia's company's cash, cash equivalents, and equity investments totaled $670.7M at December 31, 2021, compared to $274.6M at December 31, 2020. Shares of Acacia's stock were trading at $4.58 at the close of business on April 8, giving the company a market valuation of $207M.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.