Ladies and gentlemen, this is the operator. Today’s conference is scheduled to begin momentarily. Until that time your lines will again be placed on musical. Thank you for your patience. Good afternoon and welcome ladies and gentlemen to the Acacia Research second 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 at the end of 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/or its wholly and majority-owned operating subsidiaries. All intellectual property acquisition, development, licensing and enforcement activities are conducted solely by certain 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 analysis of our financial results. We will then open the call for questions. Acacia’s second quarter revenues were $15 million bringing first half revenues to $55 million and trailing 12-month revenues to a new record $90.8 million. During the second quarter, we brought in a record 12 new pattern portfolios for future licensing and with 23 portfolios, new portfolios in the first half, we are on pace for a record year for new portfolios. This is significant because historically there has been a very high correlation between new patent portfolios and future revenue growth. In fact, over the past five years there has been an 85% correlation among our three key performance metrics, which are new patent portfolios, new revenue producing licensing programs and revenues. During the quarter, we continued the recent trend of expanding our business platform by partnering with large companies and leading research institutes based in the US, Europe and Asia. Examples of our new partnering activity in the quarter were patents for GPS technology from a Fortune 100 company, patents for video…

Thank you Paul, and thank you to everyone joining us for today's earnings conference call for the second quarter of 2010. As indicated in today's earnings press release, on a consolidated basis, second quarter 2010 revenues totaled $15 million as compared to $14.4 million in the second quarter of 2009. Second quarter 2010 revenues included license fees from 89 new licensing agreements covering 22 of our technology licensing programs as compared to 22 new licensing agreements covering 16 of our technology licensing programs during the comparable prior-year quarter. Refer to today's earnings press release for a summary of technology licensing programs contributing to revenues during the quarter and a summary of the technology programs generating initial license fee revenues during the quarter. We continued our trend of revenue growth with consolidated trailing 12-month revenues totaling $90.8 million as of June 30, 2010, as compared to $90.2 million as of March 31, 2010, and $63.4 million as of June 30, 2009. Currently, on a consolidated basis, our operating subsidiaries have generated revenues from 75 of our technology licensing programs, up from 53 technology-licensing programs as of the end of the comparable prior-year quarter. 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. Our average margin defined as gross license fees, less inventor royalties and payments to non-controlling interests and contingent legal fees for the portfolios generating revenues during the period was approximately 59% for the second quarter of 2010 as compared to 49% for the comparable prior year quarter. Average margins continue to fluctuate period to period based on a mix of patent portfolios that generate revenues each period, the terms and conditions of license agreements executed each period and the…

Thank you, Clayton. Operator, can you open the call up for questions, please.

Thank you, sir. (Operator Instructions) Please standby for your first question. Our first question comes from the line of Mark Argento of Craig-Hallum Capital. Please state your question. Mark Argento – Craig-Hallum Capital: Hi, good afternoon guys.

Hi Mark. Mark Argento – Craig-Hallum Capital: Could you talk a little bit now, I know you in your prepared remark you had mentioned that it sounds like there is a lot of other large IT players operating companies that are reevaluating how they are looking at the IP in terms of single deals or more kind of bulk deals or multiple license deals. Do you think that - has that had any impact on kind of your day-to-day business in terms of our guys waiting, you are kind of waiting, they kind of work through some deals versus actually booking the onesey-twosey deals that you’d normally see in the quarter. So is that – could that lend some additional lumpiness for the quarters going forward? That’d be, I guess my first question. And a follow-up to that would be what are there any additional trends that you are starting to see emerge now? I know for instance NTP has just sued I believe Apple and Google recently. How are the big guys looking at IP from a business positioning or strategy perspective? And how are you guys seeing that change over the last year, two or really three years or since you’ve been in the business I guess?

Okay, let me take a crack, initially at the first question. Yeah, certainly we are engaged in some discussions and negotiations with certain large companies that could result in multiple licensing offers and to some degree we under certain circumstances kind of will freeze the licensing process while we are engaging in those negotiations. So, it is possible that in some circumstances it could slow it down slightly. We’re trying to negotiate a larger contextual deal with a large company, but hopefully as we saw in the first quarter and as hopefully we will in subsequent quarters see the results of some of those structured licensing deals, they will be worth doing it from our shareholders standpoint. On the second question, I think certainly those companies; there are a lot of suites certainly in the smartphone area. I think companies are becoming less resistant or less shy about engaging. Certainly, Apple and even Microsoft to some degree and other companies now are getting fairly aggressive in asserting their IP. Again, I think the trends you are seeing where companies like Micron are outsourcing huge portions of their patent portfolios to third-parties, we think those are the kind of trends that will increase as more and more companies realize they really have a fiduciary obligation to realize the financial return from their R&D investments and so we continue to see that trend emerging. Mark Argento – Craig-Hallum Capital: You brought in a lot of IP over the last two quarters, in terms of your expectations and the time to money of being able to monetize those newer, bigger pieces of IP. Do you expect those, kind of the time to money on those to be longer, shorter, then kind of see your average over the last couple years?

Well, it really depends on the total dollar amount that’s appropriate for the licensing. Obviously, the larger dollar amounts on some of these new portfolios, practically we’ve seen from an historical basis it takes a little bit longer to negotiate those deals where larger dollar amounts are involved and certainly we have a lot of new portfolios and if you just look at the cell phone market, we’ve got portfolios to cover over the air programming, we’ve got portfolios to cover location-based services, we’ve got portfolios to cover the mobile synchronization of cell phones. So we’ve done a lot of portfolios that impact a certain number of companies that are in that business and these are significant portfolios that we think deserve significant payments and that always takes a little bit longer than the ones that are smaller payments. Mark Argento – Craig-Hallum Capital: And then in terms of the amount of activity, not only on the licensing side, but of course on the patent acquisition side and it is in the pipeline of additional new potential patents or IP under management. Does that look as robust as your licensing pipeline?

Absolutely, probably even more so. We’re engaged in a number of discussions including some discussions where we would probably take over the management of very large portfolios of patents from large companies and we think that will continue to be a significant trend. I think companies are looking at us appropriately as a very specialized patent licensing company that makes sense to outsource in certain circumstances and so we are engaged in discussions and we see that as an increasing trend and certainly a larger and growing component of our business. Mark Argento – Craig-Hallum Capital: Great. Any updates to the legal calendar? I know you guys don’t have one that you proactively put out there, but are there any large cases that are set to go to trial here the next quarter or so?

[Inaudible] the present moment I believe is the one with Software Tree against Red Hat and Novell. I believe that dates October 12, I think that’s the next significant date that I’m aware of on a fixed trial date. Mark Argento – Craig-Hallum Capital: Great. Thanks for your time. Appreciate it.

Okay. Thank you, Mark. Mark Argento – Craig-Hallum Capital: Bye-bye.

Our next question comes from the line of Jonathan Skeels of Davenport and Co. Please, state your question. Jonathan Skeels – Davenport: Guys, can you talk about gross margin from the quarter, obviously there are nearly 60%, which is well above, absent the first quarter well above the range you’ve seen historically. Are there certain portfolios where you’re economics are much more favorable than the 50-50 split?

The short answer is yes, but I would let Clayton give you a more sophisticated answer than that. Certainly, we have certain portfolios where we’ve negotiated sometimes with upfront payments where the splits are higher components to us, but Clayton why don’t you address in a more sophisticated…

Yes, that’s basically the primary driver. It’s based on the very specific portfolios that are generating revenues during any particular period of time and in a lot of cases we’ve been able to negotiate the lower backend percentages to inventors in exchange for upfront payments. But, it’s really a function of the different portfolios that are generating revenues each period.

Hey Jonathan, this is Chip. I think what we’re seeing out there is the value that we offer to an IP owner, it’s significant and we’re able to cut better and better deals, where appropriate we take in some of our capital, shareholders capital and bought bigger back-ins, but as you remember going back years ago we were probably in the mid-thirties, we moved it to the mid-forties with the goal of getting it consistently over the 50% margin. So, I think it’s just an execution that we’ve been able to deal and we said that we thought we would accomplish in years past. We are actually seeing the successful implementation of that goal. Jonathan Skeels – Davenport: And just on competition, I mean are you guys seeing any competition out there in terms of partnership with some of these larger companies?

Sure, I mean you don’t have to look very far, you look at the Micron deal where they went into partnerships with a very high profile Pat Litigator from a New York based law firm. A very talented guy and they decided that the best course of action for a large portion of their patents were to basically assign them to that new company, the guys has put together. So, you see a lot of companies trying to decide what their IT strategy is going to be. I think that what’s happening in the smart-phone is really indicative of what’s going on. It’s become very litigious, very hot area, but I think the big manufacturers realize that the commoditization of the actual handsets and sales starts right away and the only way they could really defend their margins is through the use of IT. So, it just shows that more and more companies are becoming more and more sophisticated with regard to IT. Now are we going to get every deal? No, but we think the more companies really start to do an analysis of their IT and how they are going to monetize it, opens up huge opportunities for us. And our goal very simply for us, you know in the second part of this year to put together one big huge corporate deal like that Micron debt that we think will be very substantial returns for our shareholders going forward. Jonathan Skeels – Davenport: And on the structured type licensing deals, can you just maybe talk about what helps to drive the discussions there, is it the rate of new portfolios and maybe the quality of new portfolios you are bringing in that gives you some confidence that you can sign additional deals like that?

I think it’s a combination of both, I think the rate in which we’ve got probably the best business development staff out there that really understands where it is, what is it’s worth, and how to get a hold of it and it’s not unlike the money management business. If you have been a successful money manager for years and years and years, and you have put up big numbers, it’s always easier to attract assets; we are starting to find out. We don’t really have to go out and sell anybody on our ability to monetize IT anymore. As we have said before in the past, three years ago, four years ago almost every deal that we brought in, we mind internally, that which means we looked at the IT and we found it, we called it, we called people and try to convince them that we are the right person to monetize your IT. Nowadays I would bet that over half of the deals we take on and it’s a bigger number too, as evidenced by the 25 we have done in the first six months this year come to us, they come through people like you, through our shareholder base, through other licensees, it comes from a lot of different places and it’s that maturation of the asset class that patterns are plus the new interest that everybody has and realizing how valuable that is, not everybody knows how to monetize it and they are looking more often than not at companies like Acacia and there are a lot of us out there to help them with that process. We are really bullish on this whole business development opportunity that’s coming in.

Jonathan on the structured deal side, obviously the bigger portfolios we have and new one is coming in is driving behavior, but the companies that we have licensed multiple times that are logical candidates to do this, the decision is really being driven by desire on their part of achieving some kind of financial budgeting certainty and to reduce their internal and external cost associated with these repeat litigations, which really are kind of a waste for both companies and to basically eliminate the risk of large quarter losses. So, the companies on the other side, that we have traditionally done a lot of licensing with that we begun having these discussions with about having a structured relationship, those are the motivating factors for those companies. Jonathan Skeels – Davenport: And then lastly as the business continues to grow, you guys are generating some cash, the cash balance continues to grow. Can you just update me on the strategy or the thinking there?

Sure, the cash I think grew another $2 or $3 million this quarter, we mentioned on the last call, we kind of moved up our parameters to about the 100 million level, we think that’s an appropriate amount of cash given the discussions we are having with some multinational companies, regarding taking over significant components of their portfolios for licensing. They obviously want to partner not only with a company with a good licensing track record, but one that’s got a very solid financial base. So, we think that level of capital is appropriate given the nature of partnering relationships that we are in discussions with. Jonathan Skeels – Davenport: Great. Congratulation on a good quarter.

Okay, thanks Jonathan.

(Operators Instructions) Our next question comes from the line Harry Haskell Junior a private investor. Pleases say your question. Harry Haskell – Private Investor : Hey Paul as you had to describe the talent that your company has, would it be that you can figure out a better patent that can bring you more money from your people or what is the talent that you really have?

The talent is in the teams, that has really had a multidisciplinary team approach or where you have patents savvy engineers combining with very talented patent attorney’s combined with very experienced licensing executives who basically can look at the patent portfolio and realistic assess its licensing and revenue potential, and you really need all those disciplines working together, and I think that there is no question that we have the most talented team that’s out there, and now that this team has been working together for a number of years, they are just very good at what they do. There is nobody better in handicapping what the value of patents are that people actually have to go out and license them in generate the revenues. So, I think we have a very realistic approach. So, that’s the talent is being able to look at patent portfolios and first of all determine whether there is real licensing opportunity, the significant revenue opportunity and then validate that licensing opportunity and then grow out and execute on it and you would need these teams, we’ve built them over the past few years and they working together extremely well. Then those teams in turn have groups consulting experts, technical experts, damage experts that now that they reference. So we’ve just built very specialize expert teams in the patent licensing business.

And those teams are, to expand them you do through contractors rather than adding your own personnel.

Well right now we have indicated that we think, we can continue to grow the business significantly with our existing internal personnel and one of the reasons we can do that is a lot of our engineering and licensing, and patent attorneys had been able to leverage networks of outside consultants who are highly specialized and that we can call on when we need them without having that continuing overhead. So, it’s I think the intelligence of leveraging the talent pools the way we have.

Okay thanks Paul.

Surely.

Our next question comes from the line of Marilyn Patterson a private investor. Please speak your question. Marilyn Patterson – Private Investor : I was wondering if you could give some color as to why you feel you may be losing the trial cases that you lose. Is it the lawyers incompetent, can you give some feedback to that?

I think over the course of time probably our average will be about the same as everybody else in the industry, which had a trial level as kind of 50-50. These trials are in front of juries, lay juries and there are highly sophisticated technical and legal issues involved, even those sophisticated people in the business will tell how unpredictable jury or words can be. So, I think probably overall we have got very good legal talent lined up and I think the portfolio is certainly the one that we brought in the last year too and many other ones that, if they do go to trial I think we probably have about the same success with other companies do in there patent enforcement business.

Marilyn, here is how I look at. Our best portfolios never go trial. People settle, we probably if you consider that is part of the process we won 25, lost two and lost three, so it’s a little different. Our whole goal is to have arm’s length licensing programs. The litigation is a costly necessity with a lot of companies out there, but when you consider the portfolios that we have licensed everybody with very little litigation. People tend to be realistic and you settle those out when you had -- and so those are really wins for us. So, to go all the way through we have a huge difference of an opinion of what it covers. So, I would think that we are far better than the average, but if you just look at when you walk into trial and when a jury of nine or 11 people come out with it, it’s a little misleading just to say well you are going won one and you have lost a couple. So, it’s not as easy as just picking that. Marilyn Patterson – Private Investor : The ones that do go to trial, they seem to tend to be larger and do you suppose that they are letting them go to trial, the company with the idea that they have a 50% chance of winning versus just paying upfront.

Sure, that can impact. The cases that typically go to trial are the larger dollar ones and you are exactly right. It’s usually because if it’s a 50-50 opportunity and a company can invest $10 million or $15 million in a trial to avoid a $100 million royalty, economically a lot of companies will make that decision. So, certainly if the larger cases, the larger potential dollar cases that tend to go to trial for that reason.

I think that’s sometimes misleading too, because we have one family of patents that has generated over $100 million in its lifetime and never been to trial. So, it’s hard just to say that’s an absolute. It could be the position of the potential licensee or just not going to settle with anybody, we’ve had defendants go to trial for a very small amount and it ends up benefiting us with a huge amount of many x’s times what we wanted from them. Its so many subjective factors, it’s hard just to say, while you have been to three trials and you lost two of those three, you got a problem there. We don’t look at it that way. Marilyn Patterson – Private Investor : Okay, well thank you so much for your input, I appreciate it.

Surely, Marilyn Patterson – Private Investor : Okay. Good bye.

(Operator Instructions) Our next question comes from the question comes from the line of Phil Limero of Limero Capital. Please post your questions.

Hi guys, This is Ashok for Phil, I just had a quick question about, you guys had 89 new licensing agreements entered into this quarter, yet the top lined showed $15 million or so which was light compared to the past few quarter. Was there any sort of any deferrals that were going on, deferred revenue?

The answer to your question, Ashok is there was one large licensing agreement, the credit card fraud technology that I think that was over 35 companies that licensed that simultaneously for fairly small dollar amount. There was a portfolio that we brought in that we basically, I think we licensed 130 companies thus far, but the settlement amounts given to the nature of the technology intended to be fairly small. So, that has changed the average.

What percentage would say roughly going to be, new licensing agreements were from that credit card fraud which has expired correct. You were just sort of …

It depends. It actually expired three years ago, but again to show our tenacity in the marketplace, we have continued to enforce those patents to companies that we put on notice prior to expiration. I would say, Clayton I don’t know if you got the numbers, but I think about half the deals in the quarter were related to that one portfolio alright?

I think it’s about 40 of people.

Could you also just define overall again when you use the terminology, licensing programs and then versus patent portfolios, these are the metrics. Can you just give us a definition overall at these again?

Sure, it would relate to one technology and generally we have a patent portfolio in some cases, patent portfolios relate to different technologies but, we count them in a patent portfolio that we have partnered with. So, basically our metric is, if we have partnered with a company on two patents or 30 patents we consider that a patent portfolio and obviously revenue producing licensing programs are the category, once we have initiated the program and have begun licensing in generating revenues from that program.

Okay. Alright, great. Thank you.

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

I want to thank you all for being with us this quarter. If you have any questions after the call, feel free to either give myself or Chip or Rob Stewart, and Investor Relations a call and if not, we look forward to speaking with you next quarter. Thank you.

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 82701473. This concludes our conference call for today. Thank you all for participating and have a nice day. All parties may disconnect.