Good afternoon, and welcome, ladies and gentlemen, to the Acacia Research fourth quarter earnings release conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. I will now turn the conference over to Mr. Paul Ryan. Please go ahead, sir.

Thank you for being with us today. Today's call may involve what the SEC considers to be forward-looking statements. Please refer to our 8-K, which was filed with the SEC today for our forward-looking statement disclaimer. In today's call, the terms we, us and our, refer to Acacia Research Corporation and it's fully owned and majority owned operating subsidiaries. All intellectual property acquisitions, development, licensing and enforcement activities are conducted solely by certain of Acacia Research Corporation’s wholly and majority owned operating subsidiaries. With us today are Chip Harris, President of Acacia; Dooyong Lee, Executive Vice President; and Clayton Haynes, our Chief Financial Officer. Today, I will give you an overview of the progress we are making in building the business, and Clayton Haynes will provide you with an analysis of our financial results. We will then open the call for questions. Acacia Research revenues for 2009 were a record $67.3 million, up 40% compared to $48.2 million in 2008. Acacia subsidiaries partnered with patent owners and acquired control of 30 new patent portfolios during 2009 for future licensing. We ended the year with over a 138 patent portfolios. We began generating revenue from 12 new licensing programs in 2009 and have now generated revenues from 60 different licensing programs. Acacia's fourth quarter revenues were $19.9 million, our second highest revenue quarter to date compared to $18.3 million in the year ago period. During the fourth quarter, Acacia generated revenues from 32 new licensing agreements covering 21 different technologies, including initial revenues from four new licensing programs. Cash and investments increased during the quarter by $8.6 million to $53.9 million at the end of the year. Acacia's net loss decreased $11.3 million in 2009 compared to $13.8 million in the prior year. Non cash charges were $11.7 million compared to…

Thank you, Paul, and thank you to everyone joining us for today's fourth quarter and year end 2009 earnings conference call. As indicated in today's earnings press release, on a consolidated basis, fourth quarter 2009 license fee revenues totaled $19,858,000 as compared to $18,267,000 in the fourth quarter of 2008. Fourth quarter 2009 revenues included license fees from 32 new licensing agreements covering 21 of our technology licensing programs as compared to 20 new licensing agreements covering 15 of our technology licensing programs in the fourth quarter of 2008. Fourth quarter 2009 revenues included initial license fee revenues for our multi-dimensional database compression technology, document generation technology, internet radio advertising technology and virtual server technology. For a summary of additional technology licensing programs generating revenues during the fourth quarter of 2009, please refer to today's press release and 8-K filed with the SEC. Currently on a consolidated basis, our operating subsidiaries have generated revenues from 60 of our technology licensing programs. License fee revenues continue to fluctuate from period to period based on the various factors discussed on previous earnings conference calls and in our periodic filings with the SEC. Consolidated trailing 12 months revenues totaled $67.3 million as of the December 31, 2009 as compared to $65.7 million at September 30, 2009; $63.4 million as of June 30, 2009; and $56.1 million as of March 31, 2009 and $48.2 million as of December 31, 2008. While I am discussing revenues for the quarter, I would like to briefly discuss a change in accounting policy that was made during the fourth quarter of 2009. Effective October 1, 2009, Acacia elected to change its method of accounting for its term license agreements, to recognize revenue when delivery of a license has occurred which is typically at the time of execution of…

Thanks Clayton. And operator, can you open up the call for questions please?

Thank you, sir. The question and answer session will begin. (Operator instructions).Our first question comes from the line of Jonathan Skeels of Davenport, please state your question.

Hey guys, a couple of quick questions, first on the accounting change, there were only two term licenses signed in 2009, correct?

The significant term license – yeah, there certainly were two significant term licenses that were signed during 2009. On of our portfolios, we do have a fair amount of additional term licenses but those would not be deemed to be significant term licenses.

Okay. And then next I guess on the Oracle agreements that were signed toward the end of the quarter, I guess that was kind of the first time you have signed multiple agreements with one licensee kind of that one time. Is this something we should see more of going forward and are you seeing companies now looking to settle multiple suites at one time as opposed to may be handling them more on a kind of a case-by-case basis in the past, can you just talk about that?

Hi, Jonathan, this is Paul. I expect going forward that probably we will do a number of deals like that based on discussions we're currently having with companies. As we scale the business, obviously the more portfolios we have and the more matters that relate to certain companies. I think that increases that potential. Couple of years ago, when we only had one or two licensing programs that may affect a company, it was less likely. Now that in some cases where were have seven, eight, nine portfolios, it's much more likely that we will probably achieve multiple settlements simultaneously or within a confined timeframe with company, so I think that probably will be an increasing trend.

And then I guess also kind of on that point, the licenses you signed with Microsoft earlier this year, one of them was settled fairly quickly from when you had originally acquired the portfolio, I think it was a little less than a year. Can you talk about whether or not you're seeing time to generating first revenue improving across the board or do you expect I guess to see that time to first revenue improve going forward?

It depends on the portfolio. Certainly, I think when we're settling multiple matters with an individual company, it’s probably going to be more likely in the future that some of those earlier stage portfolios may get sold at the same time. I think there is a growing dialog between our licensing people and some of the people at the companies that we're licensing that will probably facilitate that.

And then one more and I'll let someone else on. You added 30 new portfolios during the year, I think that's up from 20 new portfolios in 2008. Can you talk about your expectations for 2010 and whether or not you think I guess that number will continue to kind of accelerate going forward?

Yes. I would think if anything, it would probably be above that level going forward. We're seeing an increased level of activity. So I certainly, if there is changes, it will probably be to the plus side.

(Operator instructions). Our next question comes from Mark Argento of Craig-Hallum Capital.

Few questions around, kind of the size and scope of some new IP that you're bringing into the company. I know in the press release here, you talk about kind of the shift from smaller inventors to kind of midsize and now some larger tech companies in particular. The one that you allude to in the press release here today, is that the same one that you guys mentioned earlier in the press release, the Asian consumer electronics guy, or is this incremental to that announcement?

Well, I think what we put in the press release is there has been six recent licensing agreements that cover patents that were invented by major technology companies. So it’s not a singular one, but certainly some of the announcements we've made recently for much larger portfolios, I think one of them was 90 plus patents and applications and another one was 50 plus. Yes, there's definitely an increasing appetite for large technology companies to generate a return off their R&D. And I think they've seen companies like IBM and Qualcomm generate huge returns, and I think now there is a growing number of technology companies who want to achieve the same kind of returns for their shareholders. And fortunately, with our track record, we're an ideal outsource patent licensing company for them to go to. So I think it will be an additional business. Our core business certainly has been the small companies and the individual inventors and universities and research centers, so certainly this is not to replace that. But in addition to that I think it will become an increasingly sizeable portion of our business and many of these portfolios are much deeper around core technologies these companies have developed. So, hopefully it may make it a little easier on the licensing side as well given the depth of the portfolios.

Great, and in terms of activities in some of your competitors or collaborators and the buying clubs out there, how do you see your relationship relative to the buying clubs? And is that ultimately a potential source of business for you guys going forward as well?

Well, as the asset class continues to emerge, there's more business models building around it. And certainly as you are aware, we have done transactions with various buying clubs and we will continue to do so if it economically makes sense for us and our IP partners and then certainly I would expect going to be many cases where that will make sense. And so we -- we're in the business of licensing IP and to the degree there are new entities out there that are in the business of awarding licenses to Haiti [ph], we want to work with them. So we think it's a very helpful trend and I think there may be opportunities to, alluding to the earlier question, where you could get multiple deals done with multiple companies simultaneously and, particularly, maybe even earlier stage portfolios. Obviously, as a public company, we're quite visible. The buying clubs and other entities are now monitoring our press releases relative to portfolios we're bringing in and quite frankly we are getting overtures on those at much earlier stages now, where companies individually and buying clubs are coming to us earlier, wanting to begin to negotiate prior to litigation, which that would be helpful because obviously we're short in time to money.

That's an interesting trend. I know you guys reported some capital in 2009 of $8 million or $9 million; I don't have the exact number. But going forward, do you see that number going up, staying the same? What are your thoughts in terms of capital deployment for better economics?

It will probably stay about the same. Actually, we'll start with some companies where we would like to deploy some more capital. Once we get interested in a portfolio, I think a lot of companies then gear toward wanting less of our capital at a higher percentage on the back end quite frankly. Sometimes your success indicates that if we get interested in a portfolio, then oftentimes the negotiation is counter intuitive. Companies will want to take less cash up front and have a bigger back end. So basically our normal deal is 50-50. If we can use capital to buy down points and on the other side, wants capital, we're more than happy to supply it. We think it's accretive to our shareholders. So there'll be cases where we will do that but I don't think it'll probably be out of the range of what we're doing currently.

Sure, and any updates on the calendar for 2010, the court calendar? Any more visibility into some of the key cases? I know that the e911 or location based services, any visibility there in terms of when we could potentially see some court action there?

Well, the date is obviously based on motions move around quickly. I think maybe on a separate call, you know as a analyst, we can try to give you some guidance and some updates. But we're kind of hesitant because with the frequency of motions outstanding, certainly we've got a couple of cases that are near term, that look like they may go to trial, if not settled in April, which is the Google case on performance pricing. And then we've got another case with Red Hat and Novell basically which covers the original Xerox graphic user interface patents. So those are kind of the two nearest term but there are some motions right now and some discussions. So it will remain to be seen whether they get settled or go to trial. Those are the two nearest. But for a complete calendar, may be we can talk later ,today and you can kind of go over and do that, because it’s going to be time consuming.

Our next question comes from the line of Bennett Notman of Wisco. Please state your question.

I guess first one for Clayton. Can you talk about maybe what the net impact of the accounting change was on the fourth quarter of 2009?

Sure. Because the approach for applying the change in accounting was basically retroactive as of January 1, there was no net impact on the fourth quarter. Basically what happened, if you recall back to the first quarter and the third quarter conference call, we had a sizeable increase in deferred revenues related to some term licenses that we had executed during those timeframes. Basically, the impact of the accounting change during 2009 was basically to push back those revenues to the first quarter and basically the third quarter of 2009, hence no significant impact in the fourth quarter of 2009. If you take a look at the table that was included in the press release today, it will show the specific impact on all of our financial statement line items for first quarter, second quarter, third quarter of 2009.

But all the revenue generated, the $19.9 million in the fourth quarter was all revenue generated in that quarter. There wasn't any…

Correct. There was no impact of a change in accounting in the fourth quarter.

Okay, does that answer your question, Bennett?

Yes. And I guess I was sort of thinking that had you not made the change, the fourth quarter might have been $1 million or $2 million higher just because of the allocations that they would have got from those prior term licenses that would have fallen in the fourth quarter.

Yes, there would have been some monies that would have come in the fourth quarter from those on an amortized basis.

About 600,000 topline was the scheduled amortization. But to the extent, we are no longer amortizing those earlier deals, all of those revenues were pushed back to the previous quarters.

And then just your comment on legal expense being down 2010, 2009, and I know it's hard to quantify it, but if we look at the legal calendar that you've got coming up, any ideas of what percentage of that investment you've already made? Because obviously the last couple quarters, legal expense has been running high, and if we're just paying in advance for what we're going to see in 2010, I'm just trying to get a feel for to what extent that's already happened?

A large portion of the expenses in the second half of 2009 apply to cases scheduled for 2010 because you bring on the experts and consultants, usually 6, 9 or 12 months in advance of trial dates. So a big chunk of those expenses have already occurred. And we going forward in 2010, all of our contingency cases, there is none that we are paying hourly for in 2010. So there is no direct charges, so it’s really all third party and consulting. So we expect there will be a significant decline year-over-year based on where we are now. And I would say roughly around the $10 million level, is probably realistic for 2010, which will be down $4 million from the last year.

Okay, great. And then the 138 portfolio number that you guys report for the current active portfolios, is that net of any portfolios that have gone away because you've licensed everybody or that they might have lost in court, or you determined they're not (inaudible).

Yes, that's a net number. Yes, that’s a net number of active programs that can generate licensing revenue.

And then last question, just your thoughts on what we should expect out of Yahoo. Will that be something that is likely to be a long, drawn-out affair? Is that something that is likely to be resolved in 2010? I know again, these are hard to talk to, but to the best of your ability.

Yeah, the schedule right now, we expect, I believe they have to file their appeal brief, if they are going to do so and we expect they will by April 19th. And then I believe we have 30 or 45 days to respond and then it gets on the calendar at the Fed circuit. So my guess would be it'll probably be sometime in the fall where the arguments would be heard and the determination would be made.

(Operator instructions). Our next question is a follow-up question from Jonathan Skeels with Davenport. Please state your question. Jonathan Skeels - Davenport & Company: Could you talk about, obviously I guess in 2010 the court calendar is an active one and I assume that you are in the process of starting to schedule some court dates for 2011. I guess, do you have any sense as to how active that 2011 calendar will look compared to 2010?

I would say by the time we get to that area, probably about the same, based on the same level of activity. I think we're getting more or large companies wanting to engage and may be do multiple settlements. So but then you have to settle everybody, not to go to trial, but I would think many of these trials are going to wind up with only one remaining defendant. Oftentimes, the largest market share and the rest will be settled out, but I would expect probably about the same amount as we’ve got scheduled for 2010.

This will conclude the question-and-answer session. I will now turn the call back to Mr. Ryan.

Okay, I want to thank you all for participating. If you have any specific questions, please feel free to give me and Clayton or Rob Stewart a call, and otherwise look forward to talking with you on our first quarter call. Thanks.

Ladies and gentlemen, if you wish to access the replay for this call, you may do so by dialing 800-642-1687 or 706-645-9291 with confirmation code 49908261. This concludes our conference for today. Thank you for participating and have a nice day. All parties may now disconnect.