Acacia Research Reports Third Quarter 2007 Financial Results.

NEWPORT BEACH, Calif. -- Acacia Research Corporation (Nasdaq:ACTG) today reported results for the three months ended September 30, 2007.

"Acacia Research revenues for the third quarter of 2007 were $9,544,000 compared to $8,424,000 in the year ago period. Trailing 12-month revenues were $47,900,000 compared to $35,800,000 at the end of the third quarter of 2006," commented Acacia Research Corporation Chairman and CEO, Paul Ryan.

"Acacia Research reported a third quarter GAAP net loss from continuing operations of $4,674,000 or $0.16 per share, including non-cash charges totaling $3,555,000. Cash and cash equivalents and short-term investments were $55,414,000 as of September 30, 2007 compared to $44,998,000 as of December 31, 2006."

"Acacia Research's subsidiaries entered into 27 new licensing agreements in the third quarter and generated revenues from 7 different licensing programs. We also acquired control of 7 new patent portfolios in the quarter and now control 81 patent portfolios. Acacia Research continues to build its leadership position in patent licensing and our acquisition of new patent portfolios is increasing opportunities for future revenue growth," concluded Mr. Ryan.

Acacia Research Corporation Consolidated Financial Results

For the Three Months Ended September 30, 2007 and 2006

Results from Continuing Operations

Acacia Research Corporation reported consolidated third quarter 2007 license fee revenues of $9,544,000, compared to $8,424,000 in the third quarter of 2006. Third quarter 2007 license fee revenues included license fees from 7 of the Company's technology licensing programs, including its DMT[R] technology, Credit Card Fraud Protection technology, Multi-Dimensional Bar Code technology, Portable Storage Devices with Links technology, Image Resolution Enhancement technology, Pop-up Advertising technology and Rule-Based Monitoring technology. To date, the Company has generated revenues from 25 of its technology licensing programs.

Trailing twelve-month license fee revenues were $47.9 million as of September 30, 2007, as compared to $46.8 million as of June 30, 2007, $55.3 million as of March 31, 2007, $34.8 million at December 31, 2006 and $35.8 million as of September 30, 2006.

The third quarter 2007 net loss from continuing operations was $4,674,000, as compared to $1,047,000 in the third quarter of 2006. Included in third quarter 2007 results from continuing operations are non-cash charges totaling $3,555,000, comprised of non-cash stock compensation charges of $1,869,000, non-cash patent amortization charges of $1,451,000 and a non-cash impairment charge of $235,000 related to the write-off of a patent-related asset during the quarter. Third quarter 2006 results from continuing operations included non-cash charges of $2,307,000, comprised of non-cash stock compensation charges of $985,000 and non-cash patent amortization charges of $1,322,000.

Third quarter 2007 marketing, general and administrative expenses increased to $5,454,000, including non-cash stock compensation charges of $1,869,000, from $3,560,000, including non-cash stock compensation charges of $985,000, in the comparable 2006 period. The net increase was due primarily to the addition of licensing, business development and engineering personnel since the end of the comparable 2006 period and an increase in other personnel costs, an increase in employee non-cash stock compensation charges related to the issuance of additional equity based incentive awards to new and existing employees, an increase in patent acquisition and business development related research and consulting costs and an increase in corporate, general and administrative costs. The overall increase in marketing, general and administrative expenses is reflective of the continued growth and expansion of the Company's intellectual property acquisition, licensing and enforcement business and related ongoing operations. These increases were partially offset by a decrease in consulting expenses due to the expiration of the consulting agreement with the former CEO of Global Patent Holdings, LLC, in January 2007.

Operating expenses for the third quarter of 2007 and 2006 included inventor royalties expenses of $2,672,000 and $1,837,000, respectively, and contingent legal fees expenses of $2,997,000 and $786,000, respectively. The majority of the Company's patent portfolios are subject to patent and patent rights agreements with inventors containing provisions granting to the original patent owner the right to receive inventor royalties based on future net revenues, as defined in the respective agreements, and may also be subject to contingent legal fee arrangements with external law firms engaged on a contingent fee basis. The economic terms of the inventor and contingent arrangements, if any, vary across the Company's patent portfolios. As such, inventor royalties and contingent legal fees expenses fluctuate period to period based on the amount of revenues recognized each period and the mix of specific patent portfolios generating revenues each period.

The third quarter 2007 increase in inventor royalties expense and contingent legal fees expense was due in part to the increase in license fee revenues recognized in the third quarter of 2007 compared to the third quarter of 2006, as discussed above, and also reflects the impact of the mix of patent portfolios with varying economic terms generating the revenues during the respective periods. A portion of third quarter 2006 revenues were comprised of license fees from patent portfolios with a lower average inventor royalty percentage and without a contingent legal fee arrangement associated with them. As a result, lower than average inventor royalties expense and no contingent legal fees expense were incurred on revenues from those specific patent portfolios, resulting in the sharply higher percentage fluctuation in inventor royalties and contingent legal fees expense from the third quarter of 2006 compared to third quarter 2007, as compared to the percentage fluctuation in license fee revenues for the same periods.

Third quarter 2007 patent-related legal expenses were $2,027,000, compared to $2,354,000 in the comparable 2006 period. Patent-related legal expenses include patent-related prosecution and enforcement costs incurred by outside law firms engaged on an hourly basis and the out-of-pocket expenses incurred by law firms engaged on a contingent fee basis. Patent-related legal expenses fluctuate from period to period based on patent enforcement and prosecution activity associated with ongoing licensing and enforcement programs and the timing of the commencement of new licensing and enforcement programs in each period. Patent-related legal expenses include case related costs billed by outside counsel for economic analyses and damages assessments, expert witnesses and other consultants, case related audio/video presentations for the court, and other litigation support and administrative costs. We expect patent-related legal expenses to continue to fluctuate quarter to quarter based on the factors summarized above, in connection with our current and future patent commercialization and enforcement programs.

Discontinued Operations - Split-off of CombiMatrix Corporation

In January 2006, Acacia Research Corporation's board of directors approved a plan for its then, wholly owned subsidiary, CombiMatrix Corporation, to become an independent public company. CombiMatrix Corporation's registration statement on Form S-1 was declared effective by the Securities and Exchange Commission on June 8, 2007. Following the redemption period required by Acacia Research Corporation's Restated Certificate of Incorporation, on August 15, 2007 (the "Redemption Date"), CombiMatrix Corporation was split-off from Acacia Research Corporation through the redemption of all outstanding shares of Acacia Research-CombiMatrix common stock and the distribution of new shares of CombiMatrix Corporation common stock, on a pro-rata basis, to the holders of AR-CombiMatrix stock as of the Redemption Date (the "Split-off Transaction"). On the Redemption Date, every ten (10) shares of Acacia Research-CombiMatrix stock outstanding on August 15, 2007, was redeemed for one (1) share of common stock of CombiMatrix Corporation. Subsequent to the Redemption Date, Acacia Research Corporation no longer owns any equity interests in CombiMatrix Corporation and the two companies operate independently of each other.

As a result of the consummation of the Split-off Transaction, the assets, liabilities, results of operations and cash flows of CombiMatrix Corporation have been eliminated from the continuing operations of Acacia Research Corporation and Acacia Research Corporation does not have any continuing involvement in the operations of CombiMatrix Corporation. As a result of the Split-off Transaction we have disposed of our investment in CombiMatrix Corporation, and therefore, in accordance with guidance set forth in SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," Acacia Research Corporation's consolidated financial information included herein reflects the assets, liabilities and results of operations of CombiMatrix Corporation as "Discontinued Operations." Consolidated financial information presented for the comparable prior year periods have been restated to conform to the current period presentation. The Split-off Transaction was accounted for by Acacia Research Corporation at historical cost, and accordingly, no gain or loss on disposal was recognized. Acacia Research Corporation received a private letter ruling from the IRS with regard to the U.S. federal income tax consequences of the Split-off Transaction to the effect that the Split-off Transaction will be treated as a tax-free exchange under Sections 368 and 355 of the Internal Revenue Code of 1986, as amended.

Financial Condition

Total assets related to continuing operations were $74,375,000 as of September 30, 2007 compared to $65,390,000 as of December 31, 2006. Cash and cash equivalents and short-term investments totaled $55,414,000 as of September 30, 2007 compared to $44,998,000 as of December 31, 2006.

Business Highlights and Recent Developments

Business highlights of the third quarter and recent developments include the following:

(Note: Acacia Media Technologies Corporation, Acacia Patent Acquisition Corporation, Diagnostic Systems Corporation, Disc Link Corporation, Financial Systems Innovation LLC, InternetAd Systems LLC, and Vdata LLC, are all wholly owned subsidiaries of Acacia Research Corporation):

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A conference call is scheduled for today. The Acacia Research Corporation presentation and Q&A will start at 1:30 p.m. Pacific Time (4:30 p.m. Eastern).

To listen to the presentation by phone, dial [phone] for domestic callers and [phone] for international callers, both of whom will need to provide the operator with the confirmation code 3738064. A replay of the audio presentation will be available for 30 days at [phone] for domestic callers and [phone] for international callers, both of whom will need to enter the code 3738064 when prompted.

The call is being webcast by CCBN and can be accessed at Acacia's website at www.acaciaresearch.com.

ABOUT ACACIA RESEARCH CORPORATION

Acacia Research's subsidiaries develop, acquire, and license patented technologies. Acacia Research's subsidiaries control 81 patent portfolios covering technologies used in a wide variety of industries including audio/video enhancement & synchronization, broadcast data retrieval, computer memory cache coherency, credit card fraud protection, database management, data encryption & product activation, digital media transmission (DMT[R]), digital video production, dynamic manufacturing modeling, enhanced Internet navigation, image resolution enhancement, interactive data sharing, interactive television, laptop docking station connectivity, microprocessor enhancement, multi-dimensional bar codes, resource scheduling, spreadsheet automation, and user activated Internet advertising.

Information about Acacia Research is available at www.acaciatechnologies.com and www.acaciaresearch.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the recent economic slowdown affecting technology companies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments and general economic conditions. Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Forms 8-K and 8-K/A, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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