<SEC-DOCUMENT>0001019687-14-000433.txt : 20140722
<SEC-HEADER>0001019687-14-000433.hdr.sgml : 20140722
<ACCEPTANCE-DATETIME>20140210163232
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ACCESSION NUMBER:		0001019687-14-000433
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20140210

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
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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">February 10, 2014</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>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 61pt; text-align: right"><B>Re:</B>&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><B>Acacia Research Corporation</B></TD>
</TR>     <TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="text-align: justify"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-right: 0; margin-bottom: 0"><B>Form 10-K for the Fiscal Year Ended December 31, 2012</B><BR>
<B>Filed February 28, 2013</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-right: 0; margin-bottom: 0"><B>File No. 000-26068</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</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 January
14, 2014 (the &ldquo;Comment Letter&rdquo;), in connection with the Form 10-K for the Fiscal Year Ended December 31, 2012 Filed
February 28, 2013 (the &ldquo;Form 10-K&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-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><U>Item 7. 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"><U>Critical Accounting Policies </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"><U>Valuation of Long-lived and Intangible Assets, page 33
</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 your disclosure on page F-12 that you review patents for potential impairment on a quarterly basis, and use the
expected undiscounted future cash flows to evaluate them for recoverability. Please tell us how you determine the expected undiscounted
future cash flows for your patents. Please also tell us how you determine the estimated fair value of the patents. In your response,
please include the valuation technique and assumptions you used to determine the estimated fair value and also, given the significance
of the patents on your balance sheet as of December 31, 2012, tell us your consideration for including this information in your
critical accounting policy disclosure. Refer to Section V. of SEC Release No. 33-8350. </I></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in"><B><U>Company Response</U></B>: To determine the expected
undiscounted future cash flows for our patents we generally utilize the &ldquo;Income Approach&rdquo; as described by ASC 820,
focusing on the future income-producing capability of the patent portfolios over the remaining economic useful life of the patent
portfolios. The underlying premise of this approach is that the value of an asset can be measured by the present worth of the net
economic benefit (cash receipts less cash outlays) to be received over the remaining life of the asset. The steps followed in applying
this approach include estimating the expected after-tax cash flows attributable to the asset over its remaining life and converting
these after-tax cash flows to present value through &ldquo;discounting.&rdquo; The discounting process contemplates an estimated
rate of return that accounts for both the time value of money and investment risk factors. The cash inflows considered are comprised
of an estimate of licensee fees expected to be generated over the remaining estimated economic useful life of the patent portfolio
from potential future licensees. Estimated license fees are typically estimated based on an estimated reasonable royalty rate for
the applicable technology applied to estimated market share data for potential future licensees. Estimated cash outflows are based
on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license
fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio&rsquo;s licensing
and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including,
status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage
and other pertinent information that could impact future net cash flows.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">We respectfully submit that we considered disclosure
of information concerning the estimation of the fair value of our patent portfolios in &ldquo;Management&rsquo;s Discussion and
Analysis of Financial Condition and Results of Operations-Critical Accounting Policies,&rdquo; as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in"><B><I>Valuation of Long-lived and Intangible Assets</I></B>
(Page 33 of the Form 10-K, Paragraph 2)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">&ldquo;If a potential impairment exists, a calculation
is performed to determine the fair value of the long-lived asset. This calculation is based on a valuation model, which considers
the estimated future undiscounted cash flows resulting from the use of the asset, and a discount rate commensurate with the risks
involved. Third party appraised values may also be used in determining whether impairment potentially exists. The estimated fair
value is compared to the long-lived asset&rsquo;s carrying value to determine whether impairment exists.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in"><B><I>Accounting for Business Combinations &ndash;
Acquisition Method of Accounting</I></B> (Page 34 of the Form 10-K, Paragraph 2)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">&ldquo;We assess fair value for financial statement
purposes using a variety of methods, including the use of present value models and may also reference independent analyses. Amounts
recorded as intangible assets, including patents and patent rights, are based on assumptions and estimates, as of the date of acquisition,
regarding the amount and timing of projected revenues and costs associated with the licensing and enforcement of patents and patent
rights acquired, appropriate risk-adjusted discount rates, rates of technology adoption, market penetration, technological obsolescence,
product launch timing, the impact of competition or lack of competition in the market place, tax implications and other factors.
Also, upon acquisition, based on several of the estimates and assumptions previously described, we determine the estimated economic
useful lives of the acquired intangible assets for amortization purposes.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">We will enhance future disclosures to include additional
information about how we determine the estimated fair value of patents assets, including valuation techniques used in the analysis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><U>Comparisons of the Results of Operations for Fiscal Years 2012,
2011 and 2010 </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><U>Revenues and Other Operating Income </U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt"><I><U>Revenues, </U></I><U>page 35</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>2.</I></TD><TD><I>We note your disclosure regarding the significant licensees that account for a significant amount of your revenue for each
year presented. Please tell us the terms, in number of years, for each of the agreements with these licensees. Please also tell
us your consideration for disclosing this information as this could be considered material information in understanding of the
company&rsquo;s results of operations as well as trends or demands in future periods. Refer to Section I. of SEC Release No. 33-8350.
</I></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in"><B><U>Company Response</U></B>: We respectfully submit
that the majority of our revenue agreements provide for the payment of contractually determined one-time fees in consideration
for the grant of certain intellectual property rights for patented technology rights owned by our operating subsidiaries. The majority
of our revenue agreements pertain to intellectual property rights granted on a perpetual basis, extending until the expiration
of the related patents. Pursuant to the terms of these agreements, our operating subsidiaries have no further obligation with respect
to the grant of the non-exclusive licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied
obligation on our operating subsidiaries&rsquo; part to maintain or upgrade the technology, or provide future support or services.
Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables
upon execution of the agreement.</P>

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

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">For fiscal year 2012, 2011 and 2010, the significant
licensees disclosed in our Form 10-K were all related to revenue agreements which provided for a one-time payment of a paid-up
fee for the intellectual property rights granted. For these specific licensees included in our significant licensees disclosures,
the agreements generally provided for the grant of the licenses, covenants-not-to-sue, releases, and other deliverables upon execution
of the agreement, with the licenses, and releases being granted primarily on a perpetual basis.&nbsp;&nbsp;As such, the earnings
process was determined to be complete and revenue was recognized upon the execution of the agreement, when collectibility was reasonably
assured and all other revenue recognition criteria were met. Historically, term license agreements have not been a material component
of our operating revenues, with the majority of license agreements being paid up, perpetual license agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt 0.5in">Based on the above, disclosure of term related information
for the significant licensee disclosures was not deemed applicable.</P>

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

<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: 0.5in"><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>

<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: 0.5in"><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 4in">Very truly yours,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">ACACIA RESEARCH CORPORATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in"><U>/s/ Clayton J. Haynes</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">Clayton J. Haynes</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">Chief Financial Officer and Treasurer</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 4in">&nbsp;</P>



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