Porn Valley- Acacia Research, the controversial intellectual property firm that claims to own a patent on most forms of Internet video streaming, wanted a fight with the porn industry.

Now it’s got one.

In a preliminary ruling last week known as a Markman Order, the California federal judge overseeing several of Acacia’s patent-infringement cases agreed that while seven of the underlying definitions that form the basis of the company’s patent claims were likely valid, 12 other terms or phrases were debatable. The judge also took the usual step of inviting the defendants–several porn firms–to file for a summary judgment in the case.

But which side won the first round of the battle depends on who’s talking. If you believe the porn industry and Wall Street, which knocked 37% off the stock of Acacia’s lead subsidiary, Acacia Technologies Group (nasdaq: ACTG – news – people ), on the day of the judge’s ruling, the parent company was dealt a crippling body blow.

“I couldn’t be any happier,” says E. Michael “Spike” Goldberg, chief executive officer of the company that owns HomeGrownVideo.com, a site featuring videos of amateur performers engaging in sex acts. After being slapped with one of Acacia’s lawsuits last year, Goldberg has since become one of its most outspoken opponents, and has helped to make Acacia a rallying cry for opponents of sweeping technology patents.

“Acacia is now on the defensive,” Goldberg boasts. “They’re fighting for survival. Godzilla got his eye poked.”

Actually, Acacia isn’t especially troubled by the ruling, at least in public.

“Quite frankly, we’re not unhappy with the definitions of the Markman Order,” says Paul Ryan, Acacia Research’s chairman and chief executive officer. According to Robert Berman, Acacia’s chief legal enforcer, it just needs one claim to be left standing for the patent to remain valid and enforceable.

“It’s not like the more claims, the more money you win,” says Berman, who blames the free fall in the stock on an “overreaction” by investors.

“A vast oversimplification,” retorts Jonathan Singer of Fish & Richardson, the prestigious intellectual property law firm defending the porn firms in the case. “It’s a heck of a lot more complicated than that. If my stock was down, I’d be spinning away too.”

At the heart of the dispute is Acacia’s ownership of five U.S. and 31 foreign patents, which, the company claims, cover all forms of pay-per-view and Internet audio and video streaming (see: “A Patent On Porn”). As of now, Berman says, the company has signed 151 licensing agreements with companies that include The Walt Disney Co. (nyse: DIS – news – people ), LodgeNet (nasdaq: LNET – news – people ), T. Rowe Price (nasdaq: TROW – news – people ) and Virgin Radio, which collectively have produced $1.3 million in royalties for Acacia since last year.

But it’s the companies that haven’t signed agreements that have given Acacia the most aggravation, especially the porn outfits. Unlike Comcast Communications (nasdaq: CMCSA – news – people ), Cox Communications (nyse: COX – news – people ), Charter Communications (nasdaq: CHTR – news – people ), DirecTV Group (nyse: DTV – news – people ), EchoStar (nasdaq: DISH – news – people ) and several other firms that Acacia also dragged into court last month, the porn companies have tried to portray their fight as a David and Goliath battle of mostly small businesses against a corporate bully. To help their cause, several porn firms banded together and enlisted Fish & Richardson to defend their case, in addition to trotting out busty porn superstar Jenna Jameson to draw more unwelcome attention on Acacia.

The controversy has inspired a small brushfire of opposition to the patent process, even among agitators outside of porn. Something called the Electronic Frontier Foundation recently named Acacia to its “ten most-wanted patents” list, a rogues’ gallery the group describes as “the worst Internet and software-related patents in the U.S.” Among Acacia’s “crimes against the public domain” are the company’s “laughably broad patent” and an “infringement campaign that threatens to chill freedom of expression.”

Acacia’s Berman dismisses such criticisms as a “byproduct” of the fact that it first targeted porn peddlers, a noisy industry that predictably draws “eyeballs” to its cause in more ways than one. He also suggests some gadflies have attempted to profit from the fight. Berman singles out the individual behind Fightthepatent.com, for instance, for having tried to raise $250,000 from porn companies so he could agitate about Acacia full time.

“Cottage industries have formed,” Berman marvels.

“Completely ridiculous,” huffs Brandon Shalton, a fledgling Internet entrepreneur who started Fightthepatent last August out of his home near Austin, Tex., to publicize the Acacia battle. While acknowledging that he did try to raise $250,000, he says it was for the purpose of starting a foundation, not for his personal benefit. Whatever the case, he dropped the idea after finding lukewarm support.

“I didn’t take a dime from anyone for this,” Shalton says. In the meantime, he continues to run the Web site while skewering Acacia on the company’s Yahoo! (nasdaq: YHOO – news – people ) stock message board.

The sideshow is especially distracting for Acacia since the company is trying to convince investors that it has more going on than just a dirty fight with the porn industry. Acacia boss Ryan would prefer to talk up the other, separately traded part of Acacia, CombiMatrix (nasdaq: CBMX – news – people ), which owns a portfolio of biotech patents that have recently garnered some key contracts with the U.S. Department of Homeland Security.

“They’ve got a lot of exciting stuff going on,” Ryan says. Unfortunately for PR purposes, there’s no sex involved.