<SEC-DOCUMENT>0001019687-13-004750.txt : 20140722
<SEC-HEADER>0001019687-13-004750.hdr.sgml : 20140722
<ACCEPTANCE-DATETIME>20131206215716
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001019687-13-004750
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20131206

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ACACIA RESEARCH CORP
		CENTRAL INDEX KEY:			0000934549
		STANDARD INDUSTRIAL CLASSIFICATION:	PATENT OWNERS & LESSORS [6794]
		IRS NUMBER:				954405754
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		500 NEWPORT CENTER DRIVE
		STREET 2:		7TH FLOOR
		CITY:			NEWPORT BEACH
		STATE:			CA
		ZIP:			92660
		BUSINESS PHONE:		9494808300

	MAIL ADDRESS:	
		STREET 1:		500 NEWPORT CENTER DRIVE
		STREET 2:		#
		CITY:			NEWPORT BEACH
		STATE:			CA
		ZIP:			92660
</SEC-HEADER>
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<TYPE>CORRESP
<SEQUENCE>1
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>Acacia
Research Corporation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>500 Newport Center Drive</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.25in; text-align: center"><B>Newport Beach, CA 92660</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.25in; text-align: center">December 6, 2013</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"><B>VIA EDGAR CORRESPONDENCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Securities and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Division of Corporation Finance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">100 F Street, N.E.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Washington, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt">Attention: Patrick Gilmore, Accounting Branch Chief</P>

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    <TD STYLE="width: 6%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="width: 7%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>Re:</B></TD>
    <TD STYLE="width: 87%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>Acacia Research Corporation</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>Form 10-Q for the Quarterly Period Ended September
    30, 2013</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>Filed November 7, 2013</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>&nbsp;</B></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"><B>File No. 000-26068</B></TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in">Dear Mr. Gilmore:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">Set forth below are the responses of
Acacia Research Corporation (&ldquo;we,&rdquo; &ldquo;our&rdquo; or &ldquo;us&rdquo;) to Staff comments made by letter dated November
12, 2013 (the &ldquo;Comment Letter&rdquo;), in connection with the Form 10-Q for the Quarterly Period Ended September 30, 2013
Filed November 7, 2013 (the &ldquo;Form 10-Q&rdquo;). The Company&rsquo;s responses are preceded by a reproduction of the corresponding
Staff comments as set forth in the Comment Letter, and each response contains a reference to the page number(s), as applicable,
where the responsive information may be found in the Form 10-Q.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><U>Item 2. Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><U>Consolidated Results of Operations </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><U>Comparison of the Results of Operations for the Three and
Nine Months ended September 30, 2013 and 2012 </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><U>Operating Expenses </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"><U>Other Operating Expense, page 25 </U></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><I>1.</I></TD><TD><I>We note here and from your third quarter 2013 earnings call that you recorded $3,506,000 in other expenses related to the
resolution of a dispute with one of your prior law firms over legal fees. Please tell us how you assessed the likelihood of the
outcome of this dispute (e.g., probable, reasonably possible, or remote) and what procedures you undertook to estimate the loss
prior to filing your Form 10-Q for the quarterly period ended September 30, 2013. In this regard, please tell us what consideration
was given to disclosing the disputed matter in your previous Forms 10-Q for the quarterly periods ended March 31, 2013 and June
30, 2013, as well as your Form 10-K for the fiscal year ended December 31, 2012. Refer to ASC 450-20-25 and ASC 450-20-50.</I></TD></TR></TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B>Company Response:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">We respectfully submit that we considered and assessed
the likelihood of the outcome of this dispute (e.g., probable, reasonably possible, or remote) in accordance with the guidance
set forth in ASC 450 in connection with the preparation and filing of our Form 10-K for the fiscal year ended December 31, 2012
and our Forms 10-Q for the quarterly periods ended March 31, 2013 and June 30, 2013. The dispute related to the amount of contingent
legal fees related to a revenue agreement executed in March 2011. We originally calculated and expensed the contingent legal fees,
totaling $231,000, in accordance with the underlying retention agreement in March 2011. The law firm disputed the amount and returned
the contingent legal fee check to us. We maintained an accrual of $231,000 through the settlement of the arbitration in October
2013. At each balance sheet date, including December 31, 2012, March 31, 2013, and June 30, 2013, and at each respective financial
statement filing date, we considered whether it was probable that an asset had been impaired or a liability had been incurred and
whether the amount of loss could be reasonably estimated. The procedures we employed at each balance sheet included the following:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Obtaining information from external and internal counsel regarding the status of the arbitration proceedings.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Discussing our positions and defenses with respect to the matter, and whether there had been any substantive changes or developments
in the arbitration proceedings from period to period.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Updating our understanding of the other party&rsquo;s claims and counterclaims.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Determining whether in our opinion our defenses were and / or continued to be meritorious and whether the other party&rsquo;s
claims were meritorious or substantive.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Consideration of arbitration proceeding activities as of any particular balance sheet and financial statement filing dates
and our thoughts regarding potential impact on the arbitrators judgments and assessments.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Determining whether any potential loss amount could be estimated, based on relevant facts and circumstances.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Updating our original assessment of the risk of a material loss being remote.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">For each of the balance sheet dates referenced above,
our analysis and consideration of the arbitration pursuant to the guidance set forth in ASC 450 resulted in the following:</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>For the time period from September 20, 2012 (Arbitration filing date) through June 30, 2013, the arbitration proceedings were
not far enough along to provide any evidence that our preliminary assessment of the risk of material loss being remote was anything
other than reasonable and appropriate given the underlying facts and circumstances. Nor during this time period was there sufficient
information to determine a reasonable estimate of, or a reasonable range of potential loss. This was due to the preliminary stage
of the proceedings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 48px">&nbsp;</TD>
    <TD STYLE="width: 24px; text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">We continued to be of the opinion that the other party&rsquo;s claims were frivolous, baseless, inaccurate and without merit.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">Our legal defenses to the claims at issue in the arbitration were very strong and meritorious. We planned to and anticipated seeing the arbitration proceedings through to conclusion in our favor, or in any event with no material loss.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">We intended to vigorously defend the arbitration.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">During the periods referenced above prior to the third quarter of 2013, we were unwilling to, and had no intention to settle at any material amount due to the frivolous nature of the claims.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">No arbitration related activities or results as of the filing of our Quarterly Report for the period ended June 30, 2013 led us to believe that a material loss was probable.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">The other party was making outlandish, baseless monetary claims and the settlement demands they made had no chance of being discussed or remotely considered by us.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; font-size: 10pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="text-align: left; font-size: 10pt">We maintained an immaterial $231,000 accrual for any exposure.</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">We filed our Quarterly Report on 10-Q for the quarterly
period ended June 30, 2013, on August 7, 2013. As of August 7, 2013, we had no intention of extending an offer to settle the arbitration
and were not contemplating negotiating a settlement with the other party, due primarily to the factors discussed in the bullet
points above. On August 15, 2013, we attended a mediation for the arbitration case, during which the arbitration case was not settled.
On August 20, 2013, subsequent to the mediation, for strategic purposes, we decided to extend an offer to settle the case to (1)
provide the arbitrator with an objective indication of the prevailing party under Section 998 in the event of a favorable outcome
for us, (2) contemplate and anticipate legal fees and costs associated with the arbitration hearing itself, and (3) reduce the
risk and exposure associated with any arbitration proceeding. The $3.5 million offer was based on our estimate of the costs associated
with continuing with the arbitration proceedings through to a verdict, including legal fees to our defense attorneys, consultants,
expert witnesses, administrative costs and other estimated costs. Even at the time we extended the offer we expected to proceed
with the arbitration hearing based on the posture of the parties in the arbitration up through the mediation date. That is, based
on the posture of the parties as of August 20, 2013, we continued to assess the likelihood of a material loss to be remote given
the facts and circumstances, consistent with our assessment as of August 7, 2013, the filing of our report for the quarterly period
ended June 30, 2013. The August 20, 2013 offer expired unaccepted as we had anticipated. As such, we respectfully submit that it
became reasonably possible that a loss may be incurred at the time we extended the offer on August 20, 2013, as described above,
which was subsequent to the filing of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013. We renewed
our offer on October 9, 2013 for the reasons stated above. The other party accepted the offer on October 9, 2013, resulting in
the $3.5 million charge recorded and the related disclosures included in our report for the quarterly period ended September 30,
2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">Given our assessment that a material loss was remote
during fiscal year 2012 and as of the filing of our quarterly reports for the quarterly periods ended March 31, 2013 and June 30,
2013, and our inability to reliably estimate a material loss or range of potential material loss as of the filing of our report
for the quarterly period ended June 30, 2013, we continued to provide the following general disclosure regarding commitments and
contingencies that we may be exposed to in the ordinary course of business:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">COMMITMENTS AND CONTINGENCIES (Page 10, of our Form
10-Qs for the periods ended March 31, 2013 and June 30, 2013, and page F-26 of our Form 10-K for the period ended December 31,
2012)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in"><I>Patent Enforcement and Other Litigation</I>. Acacia
is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the
ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on Acacia&rsquo;s consolidated
financial position, results of operations or cash flows.</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><I>2.</I></TD><TD><I>Please tell us specifically what services the prior law firm provided related to these disputed fees and your consideration
in determining whether the nature of these services represent a cost of revenue. </I></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in"><B>Company Response</B>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">We respectfully submit that the law firm was retained
under a contingent legal fee arrangement, and as a result, were paid a contingent fee based on net revenues associated with the
underlying patent portfolio. Contingent legal fees are expensed in the consolidated statements of operations in the period that
the related revenues are recognized and are included as cost of revenues. We calculated and paid the law firm their contractual
contingent fees on the applicable net revenues in March 2011. We maintain that the contingent legal fees associated with the revenues
recorded in March 2011 were calculated correctly and paid in accordance with the contractual terms of the underlying retention
agreement between our subsidiary and the law firm. These contingent legal fees were correctly recorded as costs of revenue in March
2011. In the third quarter of 2013, management viewed the $3.5 million amount paid as an amount paid to settle the arbitration,
avoid the cost of going through the arbitration process and reduce the risks and exposure associated with any arbitration proceeding.
The $3.5 million was not determined based on net revenues for any specific period or in reference to any underlying retention agreement
provision. We respectfully submit that managements&rsquo; view was that the amount paid to settle the arbitration was not a direct
cost of revenues recorded in the current or any of the prior reporting periods. As such, the amount was included in operating expense
as a settlement amount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"><U>Income Taxes, Page 25 </U></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><I>3.</I></TD><TD><I>We note from page F-22 of your Form 10-K for the fiscal year ended December 31, 2012 that your effective tax rate was 40%
for fiscal year 2012, excluding the release of the valuation allowance. We also note from your disclosures in Forms 10-Q for the
quarterly periods ended March 31, 2013 and June 30, 2013 that your effective tax rates were 39% and 40%, respectively. Please tell
us what consideration you gave to disclosing the reasons for the increase in your effective tax rate for the quarterly period ended
September 30, 2013. </I></TD></TR></TABLE>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in; text-indent: -0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B>Company Response: </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">We respectfully submit that we considered disclosing
the following reasons for the increase in our effective tax rate for the quarterly and year-to-date periods ended September 30,
2013:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Decrease in annual forecasted earnings based on actual earnings to date</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Slight decrease in estimated annual permanent nondeductible excess compensation subject to income tax limitations</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">A reconciliation of the federal statutory tax rate
to the estimated annual effective tax rates as of June 30, 2013 and September 30, 2013, were as follows:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: -11pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As of June 30, 2013</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As of September 30, 2013</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: -11pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(238,238,238)">
    <TD STYLE="width: 32%; text-align: left; padding-left: 0pt">Statutory federal rate</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">13,565,095</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">35.0%</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 13%; text-align: right">3,637,766</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 13%; text-align: right">35.0%</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0pt">State taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">224,192</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.6%</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.5%</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(238,238,238)">
    <TD STYLE="text-align: left; padding-left: 0pt">Non-deductible permanent items</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,350,731</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.1%</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,841,966</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.7%</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0pt; padding-bottom: 1pt">Change in valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(298,073</TD><TD STYLE="text-align: left; padding-bottom: 1pt; border-bottom: Black 1pt solid">)</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-0.8%</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(202,030</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-1.9%</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(238,238,238)">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,841,945</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">40.9%</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,432,289</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52.3%</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in">We did not disclose the decrease in annual forecasted
earnings separately, because actual year-to-date earnings are discussed elsewhere in our filing. The decrease in year-to-date earnings
compared to projections in prior quarters had a significant impact on expected tax benefit for the period and year-to-date.&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in"></P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; font-size: 10pt; width: 0.5in"><I>4.</I></TD>
    <TD><I>We note that you have incurred losses for the quarterly periods ended June 30, 2013 and September 30, 2013. We also note that your revenue for the nine months ended September 30, 2013 decreased by 37% compared to the comparable period in fiscal year 2012. Please tell us how you determined that the tax benefits generated during the nine months ended September 30, 2013 can be realized or recognizable as deferred tax assets at the end of fiscal year 2013. Refer to ASC 740-270-25. </I></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt; text-indent: 0.5in"><B>Company Response:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in">Based on revenue estimates and forecasts we determined
that the current year tax benefit will be realized in the fourth quarter of 2013 due to significant contract revenues that management
considers to be probable to be recognized in the fourth quarter which will result in the Company reporting net income
for the year ending December 31, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">We acknowledge that:</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we are responsible for the adequacy and accuracy of the disclosure in the filing;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action
with respect to the filing; and</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">Should you have any questions regarding
the responses set forth herein, or require any additional information, please do not hesitate to contact me at (949) 480-8300,
or Mark Skaist, the Company&rsquo;s outside legal counsel, at (949) 725-4117.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in">Very truly yours,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in">ACACIA RESEARCH CORPORATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in"><U>/s/ Clayton J. Haynes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in">Clayton J. Haynes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in">Chief Financial Officer and Treasurer</P>



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