January 4, 2016

IP HAWK
Acacia Research Group (ACTG)

David Hoff
iphawk@outlook.com
@theiphawk
http://theiphawk.blogspot.com

VoiceAge LG Mediated Settlement

Thoughts From the Hawk

On December 3, 2015 a mediation document was filed in Acacias United States VoiceAge subsidiary, Saint Lawrence
Communications. The document filed in the District of East Texas provided notice to the court that VoiceAge and LG mediated a
settlement on December 1, 2015. An 8K was filed this morning disclosing the agreement.

VoiceAge is a marquee portfolio for Acacia and should yield a strong licensing rate. The company has been very successful litigating
the patents in Germany that has resulted in a number of settlements. Acacia started filing cases in the United States at the end of 2014
to add negotiating leverage in their licensing campaign.
A Markman hearing in the US case was scheduled for today, December 4, 2015, which was canceled. A decision in the German case
was estimated for early February 2016. While estimating patent licenses by agreement can be difficult, reasonable estimates can be
drawn from publicly available information:

Matt Vella (CEO) on the Q1 2015 earnings conference call stated they were licensing the VoiceAge portfolio at rates ranging from
$.20 to $.40 per unit.

I estimate LG will ship around 100 million units in the United States, Western Europe, and Japan for a period between 2012 through
2019. A sell side report was issued in Q3 2015 indicating the number could be up to 500mm units although the region and time
period was not disclosed. I do concede my number could be ultra conservative.

Two large deals have already been signed in the VoiceAge portfolio, Samsung ($29mm estimate in Q2 2014) and Sony ($19mm
estimate in Q1 2015). I am not aware if Samsung had German litigation filed although they had a US case filed, which was settled
in 14 days from the case being filed. Sony had German litigation, which I believe VoiceAge won the trial and a US case that was
filed and settled in 23 days.

Conclusion
This agreement should be the largest during Q4 2015. I am very confident the agreement will yield a strong licensing rate and a high
number of units shipped resulting in a $20m+ license. There is a possibility the actual number comes in much higher than my
estimates. The agreement was signed before the Adaptix trial result, so I do not expect the company settled on the cheap.
Key Data
Price

$4.29

TTM Revenue

$118.57mm

Market Cap

$212.59mm

Shares Outstanding

50.74mm

Float

48.68mm

52 Week Range

$3.82-17.22

3 Month Avg. Volume

725,448

I am long ACTG. I have not been paid to prepare or disseminate this report by Acacia Research Group or any company discussed. All information has been obtained from
public sources. All opinions are my own. Please consult a financial advisor before making any financial decisions.

January 4, 2016

IP HAWK
Acacia Research Group
VoiceAge LG Mediated Settlement

David Hoff

David Hoff
iphawk@outlook.com
Founder
@theiphawk
iphawk@outlook.com
http://theiphawk.blogspot.com

Conservative Model
Defendant

Estimated
Units Covered

HTC

50,000,000

LG

100,000,000

Motorola

40,000,000

ZTE

60,000,000

Current Litigation Status

US Initial Pleadings
Germany Infringement
US Initial Pleadings
Germany Infringement
US Initial Pleadings
Germany Infringement
US Initial Pleadings
Germany Infringement

Estimated Royalty

.20 Estimate

.40 Estimate

.20-.40

$10,000,000

$20,000,000

.20-.40

$20,000,000

$40,000,000

.20-.40

$8,000,000

$16,000,000

.20-.40

$12,000,000

$24,000,000

$50,000,000

$100,000,000

Estimated Royalty

.20 Estimate

.40 Estimate

.20-.40

$30,000,000

$60,000,000

.20-.40

$80,000,000

$160,000,000

.20-.40

$12,000,000

$24,000,000

.20-.40

$20,000,000

$40,000,000

$142,000,000

$284,000,000

Total

Aggressive Model
Defendant

Estimated
Units Covered

HTC

150,000,000

LG

400,000,000

Motorola

60,000,000

ZTE

100,000,000

Total

Current Litigation Status

US Initial Pleadings
Germany Infringement
US Initial Pleadings
Germany Infringement
US Initial Pleadings
Germany Infringement
US Initial Pleadings
Germany Infringement

I expect the actual results will fall somewhere between my proposed conservative and aggressive models. Hitting the exact number
is very difficult and is subject to a number of factors including patent strength, patent validity, smartphone units which use the
technology, legal decisions, patent office decisions, etc. The goal is for Acacia management to have enough negotiating leverage in
order to sign an agreement and for a licensee to have enough pressure points to actually write a check.

I am long ACTG. I have not been paid to prepare or disseminate this report by Acacia Research Group or any company discussed. All information has been obtained from
public sources. All opinions are my own. Please consult a financial advisor before making any financial decisions.

January 4, 2016

IP HAWK
Acacia Research Group
Disclosure

David Hoff

David Hoff
iphawk@outlook.com
Founder
@theiphawk
iphawk@outlook.com
http://theiphawk.blogspot.com

Disclosure: I, David Hoff, own stock in ACTG. I wrote this report myself, and it expresses my own opinions. I have no business
relationship with any company whose stock is mentioned in the article. I own Acacia shares.
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