Goodwill and Other Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Other Identifiable Intangible Assets [Abstract]

Goodwill and Other Identifiable Intangible Assets

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

Acacia’s only identifiable intangible assets at September 30, 2012 and December 31, 2011 are patents and patent rights. Patent-related accumulated amortization totaled $51,762,000 and $36,331,000 as of September 30, 2012 and December 31, 2011, respectively.

Acacia’s patents and patent rights have remaining estimated economic useful lives ranging from one to nine years. The weighted-average remaining estimated economic useful life of Acacia’s patents and patent rights is approximately eight years. The following table presents the scheduled annual aggregate amortization expense as of September 30, 2012 (in thousands):



Remainder of 2012	$	7,572
2013	30,003
2014	29,749
2015	29,273
2016	28,387
Thereafter	101,333
Total	$	226,317

For the nine months ended September 30, 2012 and 2011, Acacia paid patent and patent rights acquisition costs totaling $64,960,000 (excluding the acquisition of ADAPTIX) and $2,805,000, respectively. The patents and patent rights acquired have estimated economic useful lives of approximately one to eight years. Included in net additions to capitalized patent costs during the nine months ended September 30, 2012 and 2011 are accrued future patent acquisition costs totaling $8,000,000 and $825,000, respectively, which were incurred pursuant to the terms of the underlying patent acquisition agreements. Accrued future patent acquisition costs are amortized over the estimated economic useful life of the related patents acquired.

Refer to Note 8 to these consolidated financial statements for additions to patents and goodwill in connection with Acacia’s acquisition of ADAPTIX and the related application of the acquisition method of accounting.

During the nine months ended September 30, 2012 and 2011, certain operating subsidiaries recovered up-front patent portfolio acquisition costs from applicable net licensing proceeds prior to the scheduled amortization of such up-front patent portfolio acquisition costs, resulting in the acceleration of amortization expense for the applicable patent related assets. Accelerated amortization expense related to the recovery of up-front patent acquisition costs totaled $152,000 and $534,000 for the three and nine months ended September 30, 2012, respectively, and $730,000 and $4,069,000 for the three and nine months ended September 30, 2011, respectively.

During the nine months ended September 30, 2012 and 2011, as provided for in the underlying agreements, certain of Acacia's operating subsidiaries elected to sell or terminate rights to certain patent portfolios, resulting in accelerated amortization expense for the patent related assets totaling $3,023,000 and $101,000, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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