Parkervision Finally Heads to Washington D.C (and Gets a Rude Reception?)
May 11, 2015 (Mimesis Law) — One of the harsh realities for investors in “patent stocks” (companies whose value is primarily tied to their ability to generate litigation or licensing revenue from their patents) is that the road to a victory in court is often a rough one. Parkervision (PRKR) investors have learned this the hard way over the last few years. The highs and lows are magnified for those patent stocks like Parkervision, where the value of the company is intrinsically tied to success or failure in a case against one or more mega-infringers. We call these “boom or bust” situations and PRKR’s case against Qualcomm clearly fits into that category. And with Friday’s Federal Circuit oral argument, an event we have been flagging as possibly important for investors, it appears like Parkervision is heading into “hail mary” territory — especially since the consensus quickly emerged that the argument went negatively for the company.
The market’s reaction to that sentiment was immediate, and punishing for Parkervision. But it pales in comparison to the company’s roller-coaster ride around the actual trial with Qualcomm. First, a jury finding of infringement sent shares soaring. Then, a disappointing damages award of $172M, when the company sought $1B +, sent shares downwards. The action around damages is indicative of the dangerous waters that companies like Parkervision swim in — since $172M is a patent mega-verdict, but the market still punished the company. Yet the real disaster for Parkervision happened when the judge that oversaw their trial decided to throw out the jury verdict. Of course the stock took a hit, but at least investors were able to hold out some hope that the Federal Circuit would reverse that decision. As Friday’s action shows, the early sentiment from the Federal Circuit oral argument did Parkervision no favors.
So what’s left in this story? At this point, Parkervision needs to hope that the Federal Circuit throws them a lifeline. Unfortunately for the company, it is unlikely that Qualcomm will settle in the interim, so investors must hope that the Federal Circuit reverses the grant of non-infringement–otherwise Parkervision will remain a cautionary tale for investors who want to buy a patent litigation lottery ticket.
Recent Patent Litigation-Influenced Moves
Kudelski Group (KUD)
When you make as money as Apple does, you’re often destined to be the target of varied patent infringement suits. From all sorts of patentees, ranging from sole inventors to fellow multinational conglomerates. Investors can rest assured that companies like Apple have well-considered policies and protocols for dealing with each new infringement suit and a willing coterie of expensive outside counsel ready to handle whatever new battle arises. On this occasion Apple has been sued for patent infringement by a Swiss entity, the Kudelski Group, which had purchased 4000+ patents and applications from a company called OpenTV. OpenTV’s patents are generally directed to downloading and streaming video content, and the accused iTunes functionality relates to movie rentals through iTunes that are streamed to users. According to the Complaint, some big companies such as Disney, Cisco and Google have already taken licenses. It will be interesting to see how Apple chooses to deal with this new case — as Kudelski will be angling for a big-money “portfolio” license.
Horizon Pharma (HZNP)
With all the recent talk about Bass and IPR’s lately, it can be important to remember that branded and generic pharma companies have a well-rehearsed patent-based dance that they play out the vast majority of the time — we can call it “doing the Hatch-Waxman.” This settlement between Horizon Pharma (HZNP) and Perrigo is a classic example of a generic challenger filing an ANDA, taking a place in line in terms of challenging the patent or patents blocking generic competition, and then settling with the patent owner for the right to launch at some pre-determined date. Generally the earlier the ANDA filing relative to other generics, the more likely that a settlement will be more favorable for that generic — or the more likely that the generic will forge ahead with the litigation process in order to try and knock out the patents in the way. Sometimes a reminder of business as usual is worthwhile, and we will continue to monitor HZNP’s efforts to protect Pennsaid using its patents.
The Week(s) Ahead — Expected Events
Acorda (ACOR) Response in IPR’s filed by Bass in early February
And that’s a wrap. Hopefully you have had a chance to catch our video “Markman Minutes” (available HERE) on what we consider the biggest current patent stories of interest to investors. As always, we want your feedback and suggestions, so feel free to send it along to firstname.lastname@example.org or to @markmanadvisors on Twitter. You can also visit our website at www.markmanadvisors.com. Questions from the readership are always welcome as well; we will try to get you answers in future issues of the Markman Note.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at email@example.com. All suggestions are welcome.
Main image via Flickr/Ron Cogswell.