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Potts,
Although I welcome the move, I suspect that it is driven by small short term punters.
The news overnight was exciting but I am would feel much more at ease if the price rises in the share price were supported by concrete news such as production of the keyring or an update on the cap raising ( Shiner repeatedly made a mention of this), or a verdict by the Judge whether Smartmetric s patent is infringed ( hopefully due sometime next month, if I m correct).
I am still very optimistic about the medium and long term prospects of this company .
Good luck to all holders
R.
LMU , great to see you back on board :)
Potts,
Late Night Mike in full swing
Hunting for trolls
Tuesday, 16-Apr-2013 16:45 Email | Share | Bookmark
Hunting For Trolls
Hunting For Trolls
Just a last year, placing bets on shell companies seeking to sue large organizations for patent violation saw virtually zero interest. Turn the page and a yr later we find a virtual "troll" casino at hand. Finding the next possible hottest lawsuit victor within the troll space has the focus of many on Wall structure Street, especially as soon as the recent success regarding both Vringo, Inc. and also VirnetX Holding Corp., two trolls which have taken on huge firms and come away victorious.
Back on September 17th, I profiled a pair of companies in this room, one of them being Vringo along with the other, Worlds Incorporated., so today I'm going to revisit these two together with two others.
VirnetX Having Corp. (VHC) is a company which amazingly sports an impressive $1.69 billion (sure Air Jordan SC, I said billion) dollar market cover with just 13 workers and just this past Comes to an end (better known as "Speculation Friday" upon his show), John Cramer (Mad Money) told his audience there's "huge upside potential" in the investment. Why ? Well for starters air jordan 18, VirnetX was awarded more than $368 million dollars by the jury in a circumstance against Apple Corporation. (AAPL) for infringement of four patents. Immediately after the consensus, the company filed suit in opposition to Apple once again as many of Apple's products were not included in the initial suit due to their release dates.
Back on September 1st, VirnetX won a great order at their Markman Experiencing against both Avaya, Inc. and Siemens Enterprise Communications Inc. and just 1 day later the company declared a licensing cope with both NEC Corporation as well as NEC Corporation of America, phrases not disclosed apart from a one-time fee becoming paid along with long term royalties on sales.
Previous in July, Mitel Cpa networks Corporation (MITL) signed any licensing deal with VirnetX air jordan 6, furthermore an upfront payment accompanied by future royalties plus May of this year, Aastra USA decided to steer clear of litigation as well.
Additionally involved in litigation together with VirnetX is Cisco Techniques, Inc. (CSCO) and their tryout date approaches. To see status of all the measures taken against over named companies linked to either ongoing litigation or settlement/licensing, see web page 9 of the business's latest 10Q.
VirnetX has $52 thousand in cash, thus they're well funded, but there's over 20 million shorts gambling against the company's achievement and eventual court rulings, so I watch this stock because very risky, but in addition potentially very satisfying. The next catalyst will be the court's final ruling around the victory against Apple company.
Vringo, Inc. (VRNG) is a firm that just whooped up on Yahoo Inc. (GOOG) amongst many large corporations, as being a jury ruled throughout Vringo's favor back on November 6th, citing patent infringement and also handing down a monetary award against every single defendant plus continuous royalties against certain events. The company's intellectual property is made up of over 500 patents along with patent applications turning around telecom national infrastructure, internet search and cell technologies. Vringo is a organization that your grandmother offers probably heard of at this point, as it seems like there is no less than two posts written each day about it unfolding story, mostly regurgitated information from the long and small side, explaining precisely why their side is correct and why the business will either flourish or dive according to settlements, licensing deals along with possible is of interest.
With the stock now hovering around $3.00 and trading in an extremely less volatile manner, the next catalyst can come from Judge Jackson's last ruling in the Yahoo and google case and if he chooses to alter the jury judgment, as many have described the jury must have awarded $158 million coming from Google instead of $15.7 million. It's not unexpected the jury appears to have made a mistake, as most jury pools are certainly not derived from the sharpest instruments in the shed.
Let's also not forget that whenever the November advantageous verdict, Vringo immediately charged ZTE Corp. in several countries and obviously their leverage to get a possible settlement may be bolstered.
With a $251 million market cap, I like the stock below, but you might have to have patience. Even though the company has plenty of cash, there is still plenty of pants in the stock (around 11 million), although the short interest appears to be on the decline after the firm's recent first triumph. We've seen plenty of important bear raids in the past i suspect we'll observe several more before all is said and accomplished.
Another reason I like your stock here is as a result of my recent dialogue with Eric Rice, Chief Revenue Officer pertaining to Mimvi, Inc. Rice has nothing but praise with regard to Perlman and his team along with thinks the company has a bright future with all the ability they have. Mimvi, Inc. is an up and coming firm that's been called "The Google of Mobile Iphone app Search" and I'll speak about Mimvi more in depth on as time goes on, but they themselves are an organization to be on the search for, as they're utilizing Microsoft Corporation (MSFT) to develop products and services associated with Windows Windows Azure together with their Windows Mobile Eight platforms. Mimvi is in the process of applying for several patents that may be incredibly valuable addressing search and professional recommendation along with core calculations, not to mention a variety of future obvious applications and industry secrets under their belt. Whilst resident bears are convinced that Mimvi has no patents and that most technology is wrapped up in the hands of the company's Chairman CVO, Kasian Franks tells me in which his outdated patents have been transferred to Seeqpod, his aged company that offered a meaningful threat to the music industry. The patents ended up then ultimately received by Sony's "Intertrust" division and therefore are now water under the bridge and not highly relevant to what Mimvi is doing these days. Early short-sellers in this unfolding account also repeatedly point out Mimvi will be raising $2.8 million at .12 and Franks states that not only is certainly not true, they may not actually need to raise this money at all with the method things are progressing along with Microsoft. Franks can be as excited as a little one in a candy store, saying "Google search is archaic and what Mimvi brings to the table now is unique and will customize the world."
Worlds Inc. (ATVI). While some other patent trolls have seen their particular market caps burst to the upside on hopes of an final big payday, Worlds' present value sits within the $10 million range. The business's lawsuit claims that will Activision's "World of Warcraft" and "Call involving Duty" video games have each infringed on Worlds' patents that confirm a system and strategy enabling users to activate in a virtual space and including computer architecture in the 3-D atmosphere. Worlds' powerful legal counsel, Max Tribble has several impressive wins under his strip, including cases versus Microsoft, Dell, Oracle and IBM.
I have reliable resources that tell me celebrations associated with Vringo are taking an in depth look at Worlds as much as making an initial investment, thus making this story that much more interesting to follow.
SmartMetric, Inc. Federal Appeals Court around both Visa, Incorporated. (V) and Master card Incorporated (MA), whereby SmartMetric's patent for any information card inserted inside a card reading gadget was upheld. The company's Chief executive officer, Chaya Hendrick, stated, "The implications are enormous and that your court's ruling means that anytime a company in the USA besides SmartMetric uses a smart card inserted into a gadget like a bank ATM or a cash register in a store, they are in violation of our patent.In Air Jordan 11. The lawsuit versus Visa and MasterCard is scheduled with regard to trial next September, assuming settlement has not been reached by then.
In the meantime, SmartMetric announced last week the soon-to-be launch of their Healthcare Keyring that can store emr and connect to any Personal computer USB in the world. Hendrick informed me in a telephone appointment last week that there are 25 people in California, Argentina and also Israel working rapidly night and day in preparation of the highly anticipated launch. Hendrick also declared that other biometric engineering products will be approaching.
With a market cap of $21 million, SmartMetric is another name to watch tightly going forward for prospective upside as both Visa and Master card have continually fought unsuccessfully in their endeavours to suppress material related to the discovery procedure during the course of litigation. I would urge those considering hunting for the next effective troll to take a closer look with SmartMetric.
???????:
Medical Keyring
Been trying to access www.medicalkeyring.com.
Can t get access. Is this a good sign i e site is being revamped or .......
Kind words Shiner , thank you.
Pottsville, agree with you but the story is getting out there and that s a positive for us, long time holders of stocks in this company.
I currently see two good things happening.
1)More activity on the legal front ( thanks badbilly for keeping us up to date).
2)The rise in the share price ( slow but steady on still moderate volumes ) could suggest that the cap raising is going well and as a result the company could soon start to produce, market and sell the medical keyring.
Good luck to all holders!!
Happy reading
Why SmartMetric, Inc. (SMME) Has An Edge On Its Patent Battle With Visa And MasterCard 0 comments
Apr 4, 2013 5:31 PM | about stocks: SMME.OB
SmartMetric is a biometric security solutions company. Its principle product, Biometric Datacard, is a portable biometric identity and transaction card with the capability to securely store personal information for use by personal, government, and corporate customers.
This fall SmartMetric will head to court and toe up to Visa and MasterCard as the company sues the credit card giants for patent infringement of the company's contactless biometric technology.
The suit was filed in August 2011, in which SmartMetric alleges that Visa and MasterCard have infringed on the company's "464" patent, which covers "contact" and "contactless" smart card technology specifically when used on ATM and banking cards. Both credit card companies have started issuing data cards and credit cards with contactless technology, which SmartMetric contends is in direct violation of its patent.
The first tussle of the current suit was immediate as Visa and MasterCard filed a motion that would prevent SmartMetric CEO and product inventor Chaya Hendrick from viewing certain material under discovery while allowing SmartMetric's lawyers access. SmartMetric argued that the motion was unfair in that it excluded the person most familiar with the technical analysis of the product at stake.
The District Court of California sided with SmartMetric and on December 3, 2012, issued a ruling against the motion and set the hearing for September 2013.
SmartMetric is confident that a trial by jury, which the company itself requested, offers the opportunity for the company to present and win its case. In a recent press release, Hendricks asserted "when the 12 good Citizens of California are presented with the facts of our case up against the legal might of Visa and MasterCard that justice will prevail."
Trial by jury was fruitful for small-cap IP company Vringo, Inc. (NYSE MKT: VRNG), which is currently in similar litigation with Google, AOL, Gannett, Target, and IAC Search & Media, as well as with ZTE and Microsoft. While the suit with Microsoft has been somewhat of a circus with various errors, disagreements, and a lot of waiting, a jury did recently find that the company's patents are valid and were infringed upon. Now, VRNG is in settlement discussions with Microsoft regarding the computer company's Bing search engine.
Investors should take careful note of the court's decision to toss out Visa and MasterCard's motion to exclude Hendrick from viewing certain material as it suggests the material in question may be pertinent to SmartMetric's allegations. Not to mention the nature of the motion insinuates there is information the card companies believe is worth protecting.
By this point, SmartMetric has considerable amount of research on hand to present its case before a jury. It knows its position, knows its argument, and knows them well. The company will hash it out with Visa and MasterCard in September 2013.
For more information on SmartMetric, visit smartmetric.com
Please see disclaimer on the QualityStocks website: disclaimer.qualitystocks.net
Stocks: SMME.OB
Much appreciated billybobski,
Story is getting bit more exposure.
Lots to look forward to in the next 2 to 6 months.
Fasten your seatbelts!!!
Duke,
Daniel Ravicher of Seeking Alpha has referred to VRNG in one of his articles on SMME.
Below a recent article on VRNG and their infringement case.
Vringo: How Much Is A Settlement With Microsoft?
Apr 1 2013, 16:29 | 70 comments | about: VRNG, MSFT, includes: GOOG, YHOO
Disclosure: I am long VRNG. (More...)
For those who don't know, Vringo (VRNG) is an IP company currently in litigation with Google (GOOG), Microsoft (MSFT), and ZTE. Google has been the main focus thus far, and has been discussed in detail here and here. There have been possible decimal place errors, laches disagreements, possible new trials, and a very long wait (still ongoing) for the judge to rule on the forward royalty rate. However, VRNG did have a jury rule that its patents are valid and infringed upon, which gives it an edge as it now sues Microsoft's Bing search engine. Clearly Microsoft agrees, as Vringo and Microsoft are now in settlement discussions. As we all wait for the judge to rule in the Google case, I think it is important to analyze what sort of settlement may be reached against Microsoft. Will it only be $50 million? Or maybe $1 billion? Will it add $1 or $5 to the stock price? How can somebody possibly buy or sell Vringo on this new development without first taking the time to at least value the settlement? There are numerous variables at play that could vary wildly, but through the following analysis, I hope to give a reasonable range of expectations as well as my personal opinion.
Before I begin, I want to list a few assumptions that I will be making, which I don't believe are too controversial:
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The settlement will be in the form of a one-time payment that includes both past and future damages. No running royalties (the patents expire in 2016 anyway).
Bing began in mid-2009, the patents end in mid-2016 -- this is a 7 year period.
There will be no laches issue since Bing began within the past 6 years.
The patents will only apply to U.S. Revenues.
Lawyers' fees will be 20% and taxes are 35%
Now that the assumptions are over with, there are three main factors to calculating the settlement amount: Applicable Revenues, Royalty Rate and Settlement Negotiations.
Applicable Revenues
There are two methods of estimating the applicable revenues. The first is to look through Microsoft's quarterly SEC filings and estimate the portion that is U.S.-based. The second is to look at the total U.S. market size and break out Microsoft's market share. Both give relatively similar numbers (fortunately).
Firstly, let's look through Microsoft's quarterly filings. Microsoft breaks out its search revenues in its 10-k under the header of Online Services Division (OSD).
(click to enlarge)
The above chart shows Microsoft's OSD revenues since Bing's inception (from SEC filings). They have been averaging approximately a 15% growth rate per year, but I am going to conservatively assume only a 10% growth rate, which gives us the following chart detailing annual revenues from 2009 through 2016:
(click to enlarge)
This amounts to a grand total of $23.37 billion. The biggest issue with this data is that it includes global revenues, not just U.S., and Microsoft does not break it out geographically. From the suit against Google, we know that Google's U.S. revenues account for about 50% of total revenues. We also know that Bing is significantly more competitive in the U.S. than it is globally, and therefore we can assume that approximately 75% of Bing's revenue is from the U.S. This lowers our total revenue base from $23B to approximately $17.53 billion. Note that this includes both Bing's revenues and the amount that it receives from Yahoo, since Yahoo is powered by Bing (which hits Microsoft as revenue and is then paid out to Yahoo).
The second method is to look at the total U.S. search advertising size.
The above chart shows that total U.S. search advertising is estimated at $19.76B in 2013. From Microsoft's most recent 10-k, we know that they have approximately 26% of the U.S. market through Bing and Yahoo combined (approximately 14% and 12%, respectively). This amounts to $5.14B in revenues per year. However, there are many reports that state that Microsoft actually only receives around half of the revenue per ad as Google, and therefore, I will conservatively cut this number in half to $2.57B for 2013. Applying this same 13% rate to each year, we come to a total of $17.4 billion in total revenues, which is very similar to the $17.5B mentioned above.
Therefore, I believe that the appropriate amount of applicable revenues is $17.5B
Royalty Rate
Now we must determine the appropriate rate to apply to these revenues. Against Google, Vringo claimed that it was owed 3.5% of 20%-40% of Google's U.S. revenues. The idea was that it had shown that when Google switched its algorithm to the new algorithm, which infringed on Vringo's patents, there was an immediate and noticeable jump in revenues of approximately 20%-40%. In general, Vringo argued that it was focusing on the low end of this range so as to appear less greedy. However, we have no idea what sort of damages it is claiming against Microsoft, and therefore, I think it is reasonable to use the "3.5% of 20% of revenues" damages claimed from Google as a starting point.
Applying this to the $17.5B, we would come to an estimate of $123 million. I believe that this is a reasonable "low-end" of the range that both companies might have in mind when they enter settlement negotiations. Why is this just the low end? Because Bing started using Vringo's patents from the very beginning, and therefore, it isn't completely unreasonable to assume that damages should be applied to 3.5% of 100% of Bing's revenues. This would, of course, invoke the Entire Market Value theory, which brings up its own issues. In order for the Entire Market Value rule to apply, VRNG would have to be a practicing entity (it isn't) and be claiming to have essentially invented search (it didn't). Therefore, I think that 100% is much too high, while 20% serves as a reasonable floor. So where should the ceiling be? While Bing started using Vringo's patents from the beginning, Yahoo (YHOO) didn't switch over to Bing's services until the end of 2010, so we can attempt to look at its revenues to see if there is a noticeable 20%, 50%, or even 80% jump in revenues. Below is Yahoo's net search revenues by quarter, starting in 2008:
(click to enlarge)
At first glance, it is quite obvious that Yahoo was in trouble and it is easy to see why it began working with Microsoft in early 2010. However, since Bing was fully integrated starting at the end of 2010, revenues not only stopped its decline, but began to grow once again. This is despite continuing to lose market share. Therefore, I don't think it would be unheard of for Vringo to argue that it deserves 3.5% of 75% of the total revenue, which would amount to a total settlement of $460 million. We now have a range of somewhere between $123 million and $460 million.
Settlement Negotiations
Going into the settlement, Vringo might be arguing for $460 million, whereas Microsoft argues for zero, and they eventually meet somewhere in the middle (or even below) at around $150-$200 million. However, Vringo once again has a small edge here in the form of Willful Infringement. In 2003, one of Microsoft's own patents was rejected due to prior art from Vringo's patents (link). This proves that Microsoft was well aware of Vringo's patents and could cause the judge to double or even triple the damages. Given this, the true range of damages is from $123 million to $1.38 billion on the very high side. Since this is still pre-trial, Microsoft will have a lot of bargaining power, and I think it will eventually settle in the $300-$400 million range, which is what it would have to pay if Vringo won 3.5% of 20% of revenues, tripled for willful infringement, thus allowing Microsoft to save the risk of having to pay damages on more than 20% of revenues. Another way to look at this is to say that Microsoft is only paying damages on 3.5% of 60% of revenues, and saves the risk of paying more than 60% as well as paying any additional multiple for willful infringement.
So what does a $300-$400 million win for Vringo mean? This is a gross valuation, and after lawyer's fees and taxes, it will only amount to $150-$200 million, or about $1.30 to $1.70 per share on a fully diluted basis. Given that Vringo's valuations never really reflected the Microsoft suit, I wouldn't be surprised to see the stock jump $1-$1.50 on this news, perhaps higher with short covering.
If you have any questions, please use the comments section below. I know that many people will think my numbers are too low, but if that is the case, then simply treat them as conservative. If, on the other hand, you believe they are significantly too high, please let me know why and what your calculations are. As I mentioned in the beginning, there are numerous variables at work here that could have drastically different valuations. I estimated numbers where needed, and it is very possible that I am completely wrong. However, to my knowledge, there is no other solid attempt at estimating the value of a MSFT settlement, so I hope to use this analysis as a starting point.
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About this article
Welcome CHAYA !
Great to have you here and very helpful to give us a bit more detail of where the company is at re infringement case.
By doing so, you take a lot of speculation and guesswork out of this forum, a very welcome move.
Is this contribution to this forum a "one off" or can we expect to see you here more often? Are you here to answer our questions and give some more background info to where the company is at re production, legal( as you did today) etc or do you plan to organise more regular conference calls to give investors an opportunity to stay well informed?
Again, a big thank you for clarification on the latest legal news
R.
HELP!!! Please come back LMU
It appears you have left us to explore other interests
DW,
I guess it depends what is at stake. By now it is not a secret to anyone what Smartmetric is after. At least 500 mio per company was my impression from the conf call. Top that up with ongoing royalty fees for another 7 years ( I vagually remember that the patent expiring in 2020). Don t hang me up on that please as I m only half certain about that fact.
All in all the CC companies might be looking at losing 1 billion dollar each.
So it all depends what is worth more to them I guess . Going public with some numbers, supporting their case or risk losing 1 billion dollar each?
Best is that they get producing ? selling keyrings and cards and if they manage to take home a big amount of money from this infringement case, it would be a dream come true making us all very very wealthy :)
R
Shining Light,
Regret that I never commented on your posts. I really appreciate your views on this company. I read that you have shown a lot of patience and loyalty towards Chaya and Co and all you have received in return is a diminishing investment. It would have infuriated me and I admire you for the diplomatic and often funny way in which you expressed your discontent.
Fingers crossed that this year will put a smile on our faces.
R.
T9
At this stage , the CC companies do not appear to have the intention to settle. Maybe their move to flood Patrick Bright with documents can be seen as a tactics to unsettle Smartmetric and to open up talks to accept some kind of settlement before trial, I don t know to be honest.
I wish for a settlement but to bet on it would not be wise and I imagine that that is the stance Chaya takes. She just has to get on with her business and produce key rings and biometric cards to make this a revenue company.
As became apparent in the conf call, selling 1 mio keyrings per year could lift the market cap of this company to a multiple of where it is today.
I realise that the first keyring still has to be produced and sold but I do think that a successful cap raising will most likely make this happen in the not to distant future.
R.
T9,
I found that to be one of the most revealing issues of the cc. Just for the ones who didn t listen in, Chaya expected the trial to last for 2 weeks. If the jury judged in SMME s favour,she expected an appeal by V/MC . Chaya did not expect that a judgement on an Appeal would last more than 3 to 4 months. She expected the Appeal to be on the amount of the damages claim.
If anyone who listened in had a different understanding, please correct me. If my understanding is right, September is the month to watch for us.
I hope the cap raising is succesful,allowing for the roll out of the first revenue raising product, the medical keyring.
R.
CHAYA CHAYA
A round of applause for a great performance
It sounds that you had a less positive impression of the conf call. What exactly did you get out of it and what did you ask Ms Hendrick?
Thanks for letting us know. I didn t have the time to participate so always good to hear some feedback.
22.5 cents feels like a steal :)
An investor conference call!!! A great idea
SmartMetric, Inc. Announces Investor Conference Call Hosted by Company President and CEO Chaya Hendrick
Date : 02/21/2013 @ 12:44PM
Source : MarketWire
Stock : Smartmetric, Inc. (QB) (SMME)
Quote : 0.2 0.03 (17.65%) @ 11:05AM
SmartMetric, Inc. Announces Investor Conference Call Hosted by Company President and CEO Chaya Hendrick
Print
Alert
Smartmetric, Inc. (QB) (USOTC:SMME)
Intraday Stock Chart
Today : Thursday 21 February 2013
Click Here for more Smartmetric, Inc. (QB) Charts.
SmartMetric, Inc. (OTCQB: SMME) has announced today it will host an investor conference call set to begin at 4:15 p.m. Eastern Standard Time on Monday, March 4th.
In discussing the conference call, the President and CEO of SmartMetric, Ms. Chaya Hendrick, stated, "We have a commitment to our shareholders as well as the investment community for maximum disclosure and communication, and for that reason we are looking forward to discussing our recent exciting developments on this conference call. Due to the high number of potential listeners and participants, we urge anyone that has a specific topic they wish to be addressed on this call to submit it immediately to: http://constellationaa.com/contact-us/."
To hear the conference call as it takes place:
1(800) 697-5978 US Toll Free
1(630) 691-2750 US Toll
Passcode: 7926924#
A recording of the call will be available on our website shortly after the call takes place.
Thanks BB,
In the Dec 12 press release, Hendrick stated how important it was for her to have access to confidential information.
Are we seeing the start of the unraveling of the patent infringement issue?
Unclear why you expect the sp to move up from here.
Cheers
R.
Great article by Daniel Ravicher ( Seeking Alpha)
Payment Technology And A Potentially Lucrative Hedge
January 16, 2013 | about: SMME.OB, includes: MA, V, XLK
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SMME.OB over the next 72 hours. (More...)
Payment technology is a viable business, even during a worldwide slowdown. Enterprises that make their money through it are not exposed to the same default risks as lending institutions, and results have been terrific. A microcap company known as SmartMetric (SMME.OB) has intellectual property ("IP") for charge cards, a type of product identified with industry titans Visa (V) and MasterCard (MA). It is seeking a share of their revenues at court. Though the concerns for anyone who would consider putting their money behind SMME.OB are exceptionally high, there could be an astonishing reward. Perhaps more prudently, the company may also be used as a hedge for those enjoying returns on their tech investments.
An invention is being asserted: U. S. Patent 6,792,464 ("'464"), issued to Chaya Hendrick, CEO of SmartMetric. Sixteen other patents currently cite it, including Hendrick's '860. Application in the USA is listed as occurring in February of 2000, with a filing date in 2001 and issuance in 2004. It is only valid here. According to the USPTO, it would expire 20 years after the earliest filing, apparently in February of 2020.
Generally speaking, the '464 is for chip and pin cards that connect to a computer system and network. Its listed background art is captivating. The patent defines "Contact" cards that are inserted into a reader and have a microchip that makes contact with it to exchange data, and "Contactless" cards that do not have an exposed chip and communicate with a reader using an internal antenna.
Contemporary Commercial Development
Today, nearly 13 years after issuance of the '464, the wider industry is implementing EMV, an acronym for "Europay, MasterCard and Visa, the companies that in 1994 initiated the development of [its] specifications." The technology increases security and "Global interoperability." There is contention that merchants are likely to prefer legacy swipe readers. However, for several reasons, measures are being employed to speed upgrading. Hendrick elucidates: "Banks put transaction limits on the use of wireless cards...it's easy to pick up card data that is sent wirelessly."
Visa is a top company, and has rewarded stockholders with a 60% rise over the past 52 weeks. It is now using incentives, and also liability policies, to encourage chip issuance and adoption in the USA. Effective October, 2015, a party not using EMV would be liable for fraud. Visa is also waving compliance validation requirements. SmartMetric provides another perspective,
Visa [has] mandated that all ATM and retail reading machines have to be able to accept contact cards...most, if not all, of the retail reading machines sold over the last five years are chip ready...all they need is a software update that can be done remotely.
Visa specifically instructs its clients not to use "Contactless-only" chip cards. Further, as of July 11, 2012, magnetic stripe technology must be supported on a dual-interface card, which works with contact chips, magnetic stripes, and contactlessly (Visa PayWave). Dual-interface is heavily used in the marketplace.
MasterCard, Visa's rival, has performed nearly as well: its stock shows a 54% gain over the past year. Its shift is described here. Like PayWave, MasterCard's contactless PayPass probably should continue to be non-infringing with regard to the '464. According to SMME, "If it doesn't have a chip that is read on insertion into a reader then it doesn't fall within the patent..."
MasterCard is also offering a new M/Chip so that its customers can meet "The EMV standard." Its marketing materials say "The consumer inserts his or her card into the terminal or ATM, or taps their phone or clicks and pays online. That's it. Safer, simpler and smarter." The company also describes how payments work,
1) Card authentication takes place either online by using dynamic encryption or offline by protecting against counterfeit cards...
3) Transaction authorization is completed either online with encryption technology or offline by using issuer-determined risk parameters.
The North American Card market continues to develop, though some project a slowing overall rate. According to the International Card Manufacturer's Association's Card Manufacturing Magazine,
Chip cards will continue to displace lower priced traditional magnetic cards, thereby fortifying the dollar mix...North America will experience some modest declines, however financial cards will remain strong in anticipation of EMV and debit and prepaid growth.
Industry professionals interviewed by the Magazine provide additional pertinent information about business. To quote Barry Mosteller, Director of R&D, CPI Card Group,
A Visa representative has said that 20 to 60% of cards will need to be EMV by 2015...While many EMV issuers continue to...issue dual interface for...high value members do not be surprised if contact only volumes dwarf dual interface until the contactless infrastructure grows in the US.
Keith Yeates, President, Bristol IT Technologies, believes that
The advancement of EMV in North America will limit the number of card manufacturers participating in the secure financial card market and those select few will enjoy the growth it will bring. The larger card manufacturers will get larger at the expense of some smaller players in the area.
The Patent Infringement Lawsuit
A case has been ongoing for years. I have only become aware of this matter recently, several months after an April 11, 2012 Court of Appeals for the Federal Circuit decision. According to SmartMetric, the appellant court has sent its findings back to the lower district for continuation of a hearing. Thus, for the ongoing suit, the '464 patent is only valid for swiping a card into a data card reader; and for use on public and private networks, such as the internet and intranet. Seeking Alpha's Dan Ravicher offers insight in his April, 2012 article, saying there is a case on credit card readers; however, he may not have purveyed a fully-inclusive description. Also, there have reportedly been two Markman rulings favorable to the plaintiff, one after July, 2012.
SmartMetric is likely fortunate to be represented by the preeminent Patrick Bright, of Wagner, Anderson & Bright. He has had a lengthy career in IP law. He is also known for working on contingency. Pertaining to fees, Hendrick says, "We do not need to raise funds for the legal costs...[they] are being covered from outside the company so we can take this to the Supreme Court."
There is a new judge on the case (No. CV 11-7126 MWF (FMOx)), Hon. Fernando M. Olguin, recently promoted from magistrate. After rescheduling on December 2, 2012, trial is now set for September 3, 2013 against MasterCard and Visa. (Discovery cutoff is March 13, the Pretrial Conference and Motions in Limine deadline is August 12, and the last day for Settlement Conference is June 14, 2013.)
The venue is the United States District Court, Central District of California. A 2011 PwC Patent Litigaton Study finds that it is a favorable place for patent claims, ranked fifth for overall success at 35.3%, just ahead of the Eastern District of Virginia. There is a 71.4% positive outcome rate at trial. The defendants must be trying to conclude the matter before it falls into a jury's hands.
For some background on SmartMetric, its business is security from, and protection against, identity theft. The company's technologies include a fingerprint scanner device that accesses health records. It expects one million to five million unit sales of a medical key ring. It also offers various other products and "[Has] even been approached by a government that is looking at using their cards as national ID."
A 2006 decision makes it more challenging for an entity that does not practice use of its technology to prevent the sale of another company's item that is found in violation of a patent. Relevantly, SmartMetric informs that "Visa argued to the court in their last filling that yes they viewed [us] as a competitor." Yet, an injunction is probably of little concern, and might be stayed pending years of appeals. Also, the defendant(s) can contersue. More broadly, regarding settlement leverage, Hendrick explains:
Yes big leverage...What would it be worth to say American Express or Diners to advertise that it is the only card that can be used around the world...that is if we give them an exclusive license and lock out Visa and MasterCard...Also, if a transaction is taking place in London but it connects to say the Visa network in anyway in the USA, it infringes in our opinion.
Perhaps the London part is what Ravicher was getting at?
A June 6, 2012 news release says there are already 1.5 mln relevant cards. The company states that all of the chip and pin EMV products Visa and MasterCard are issuing to replace existing cards unlawfully use its technology. Another question for SmartMetric is whether or not a dual-interface offering may also infringe. The answer is "Yes a dual-interface card does infringe...Contactless cards default to contact if in the first attempt to read the contactless...[it] fails."
Risks
It is easy to be incredulous toward a claim that the industry behemoths lack proper licensing, particularly when EMV is named for them. A concern for me involves any patent that Visa or MasterCard somehow has not disclosed. The defendants have supplied 25,000 pages of documents, 1,000 pages of them being germane (and some of the most damning evidence is said to be in the respondents' own records). Still, they are trying to withhold other requested materials; and certainly possess valuable trade secrets. If new patents are introduced that can be used to initiate reexamination of the '464 at the United States Patent and Trademark Office (USPTO), then a standard tactic for the defense is to stay the trial. Further, it would probably be easier to show invalidity at the USPTO because a lower standard of proof is required.
Also, only one patent is being asserted and there are many potentially successful defenses against it. A demonstrated ability to work around any finding(s) could free the MasterCard and Visa from their responsibility to pay a royalty. Let me add that there is a catch to a workaround as revised methods can easily violate other intellectual property rights--belonging to a new and different party.
There are many risks to investing in micro cap companies and SmartMetric is one. Shares can be less liquid, having wide spreads and low volumes. Also, their pricing can be volatile, changing substantially without any news or event that otherwise materially affects the stock. When such a corporation's equity trades over-the-counter, added concern is indicated because financial standards are typically lacking and the business tends to be unproven.
The company's most recent 10Q describes dilution risk (If they can raise money at all). Also, 200,000 shares of Class B Preferred Stock have been given to Applied Cryptography, Inc. ("ACI") in exchange for patents. The paperwork says ACI can purchase the property back and has not chosen to do so as of September 30, 2012. On a January 4, 2013 phone call, investor relations advisor Nuwa Group has said SmartMetric owns the patent in total for its lifetime. Further clarification, preferably written, would be helpful.
Speculative Upside
Popular investor tactics for IP assertion stocks involve using options for events such as a hearing. Consider VirnetX (VHC), which has gained over 11,000% since 2005. Television personality, and former manager of a successful hedge fund, Jim Cramer, currently recommends deep in the money calls for its trial with Apple (AAPL), and alternatively suggested a calendar spread trade in the past. While there are no options available for SMME.OB, shareholders could be rewarded with terrific gains this year.
For those interested in hedging against patent risk, Mark Cuban's results after obtaining over 1,000,000 shares of Vringo (VRNG), the winner of a recent patent infringement trial with Google (GOOG), have been amazing. VRNG is up 235% in the past 52 weeks, which is off of the following chart, while GOOG is showing a 15.15% gain. The wider Technology Select Sector Index (XLK) is up 12.16%. V and MA are respectively the XLK's 11th and 13th largest holdings; AAPL is first and GOOG is fourth (AAPL has underperformed VHC).
GOOG Chart
GOOG data by YCharts
Anyone who took a stake in VRNG because they like the story, after its March 14, 2012 merger and prior to Cuban, may be enjoying a 103% return. Contrastingly, just ahead of the October trial, the Citadel Investment Group hedge fund appears to have essentially used an options straddle and bought stock.
Quantifying a monetary value for any award resulting from the ongoing case is beyond the scope of this article. Though SmartMetric has not publicly stated any amount, Hendrick says $100 mlns+ is "Where our head is." The '464 should be valid for over seven years in the future, and a royalty for its duration, in exchange for licensure, might provide annual revenues many times the company's current market cap. Actual earnings acceleration, or the ability to assert other claims that could be at least as lucrative, involves separate questions.
SMME.OB stock has been trading at around $0.20. I am considering using a $0.17 or $0.18 limit order in an attempt to purchase hundreds of shares, and to buy again below $0.15. While there are plenty of things that could go wrong before trial, the situation seems to be such that a favorably ruled motion or buy-in by an important party could easily send the stock's price higher. If nothing else, a $0.02 gain would amount to at least 11.11% appreciation using a sell order at $0.20.
Conclusion
Technology, specifically when used for payment, is a healthy line of business that can be profitable for stakeholders. Companies in the sector, and virtually all other corporations, remain exposed to IP lawsuits that investors can actually hedge against by owning businesses focused upon licensing activities. In fact, some of the big winners in the stock market are IP companies.
For those who reasonably prefer to entrust their money to Visa or MasterCard, ease of use and security of payment cards are highly important. Thus, the functions that are believed to be most effective for safely and globally carrying out transactions deserve attention. Though growth may slow in the United States and North America, steps are being made toward assuring lawful and seamless worldwide use for consumers.
Sources:
"Stock Talk Live," SmartMetric online presentation and interactive question and answer session. 1pm, Tuesday, January 7, 2013. Some grammar in SmartMetric quotations has been changed.
Card Manufacturing Magazine, "A Year In Cards." December 2012. Volume 22, No. 8. CMA Publications Group: Princeton Junction, New Jersey.
Additional disclosure: I have initially been contacted by a representative of SMME.
This article was sent to 34 people who get email alerts on SMME.OB.
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About this article
Happy to see the share price move above 20 cents again. Hope it will be the start of a promising and exciting year ahead.
Still a bit confused about the Medical Keyring. The website still promotes selling through retailers and clinics, the "shop now" and "order" button don t function and the selling price for the keyring is still at 79$, more than 10 $ cheaper than the price mentioned in the press release.
Curious when the judge will decide on the renewed attempt by the CC companies to block the CEO's access to information.
Looking forward to happy days ahead.
R.
BB,
I imagine that the CC companies must be pretty annoyed that a one person company with nothing other than a patent ( called a patent troll I think) wants to stick its nose in their multi million dollar business.
R.
Wouldn't it be great if that would be the conclusion of this long running battle.
Reality is that MC/Visa are a force to be reckoned with. Still holding my breath on the outcome and timeline.
Combined market cap Visa/MC 150 bio+ employees 15000
Smartmetric market cap 20 mio employee 1
R.
Thanks Joe,
It appears that your enthousiasm for this company is mainly about the patent they hold and the possibility of a large settlement/win in the courts.
Any thoughts on how long it might take before this infringement issue between SMME and V+MC will be finalised?
R.
Guess DR is the correspondent you are referring to.
Thanks for keeping us informed.
Unfortunately I missed the session. Would you mind telling us what you picked up as highlights of the presentation.
R.
LMU,
I do a bit of song and dance too with my mob.
Even thinking of joining Patrick Bright in defence of Smartmetric on the day the trial starts.
dg,
I believe that there is a market for the medical keyring.
It has the potential to be an excellent alternative for expensive cloud based ehealth systems currently trialed in several countries.
It also has potential to be a great device for interstate and intercontinental patients dealing with chronic illness.
I also believe that there is a need for more secure card payment system see clip
http://youtube.googleapis.com/v/lLAFhTjsQHw%26sns=em
The infringement issue is in it's 3rd year and will be coming to a conclusion next year.
One of the parties tried to settle the matter in late 2010.
A couple of Markman hearings and an Appeals Court decision later and the issue has not gone away. Smartmetric is hanging in there so they must feel confident about the final result.
I guess that Visa and Mastercard must start to feel the heat of a trial date coming closer every day.
Hope that answer your question why I don t mind to be long SMME around current levels.
R.
PS You may also add a pretty sunny outlook on life to the mix.
Tx Badbilly,
All indications are there that it will be a struggle to mass produce in 1stQ.Grrrr
Duke ,
News is spreading fast, it has now reached Botswana.
Mr Sahara Mafia is blogging about it :)
http://www.kitguru.net/forum/worldwide-tech-news/17120-new-usb-key-safely-stores-persons-medical-data.html
LMU,
Faith,It's all over now, Patience, Sounds of Silence ( hope you are not referring to activity in the manufacturing plant),I get the feeling that we are drifting back in time .
Back to the future.
Did the announcement of the medical key get your tick of approval?
Just curious.
R.
Btw you cannot go past Van Morrison's ( my long time favorite artist) version of It's all over now, Baby Blue
dg,
When you bought into SMME, I imagine 5 yrs ago,you bought into a company with only the prospect of production and sales at some stage. Now you have an added advantage that there might be the benefit of a windfall profit as a result of a settlement/trial.
Within 6 months to 1 year we will know the results of both events.
Two shots at making money in the next 6 to 12 months is the reason for me to stick with my investment.
One year from now , I guarantee you that you will see my name back on this forum and I hope to see you too as , I hope, by than a happy contributor.
GL
R
Outch, that hurts.
I hope that the long awaited production + conclusion of legal dispute will give a boost to the share price and turn things around for you.
GL
R
I hear what you are saying and I admit that I do have some concerns too.Purely out of interest, what keeps you invested in this company?
Exciting news
Sounds like a but great product but would love to hear more detail such as the way this will be marketed etc etc.
They made a start pfffff, been a long wait
Biometric Safeguarded Electronic Medical Records Protected by SmartMetric Biometrics
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Smartmetric, Inc. (QB) (USOTC:SMME)
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Today : Wednesday 14 November 2012
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Is your medical privacy being protected while providing 24/7 access to your vital medical records whenever and wherever you may need them? SMARTMETRIC, INC. (OTCQB: SMME) today announces the release of an electronic medical records storage product that will allow for the capture and storage of a person's complete medical history and files giving medical care givers instant access to a patient's vital medical history. The President and CEO of SmartMetric, Inc. M/s Chaya Hendrick, speaking from the company's manufacturing center in Buenos Aires, Argentina, said today that the SmartMetric medical history storage product is a plug and play device that will allow Doctors to gain valuable medical information so prompt and often life saving treatment can be started immediately when a patient arrives at an emergency room or clinic.
If the patient is unconscious then the device has an emergency on off button that will display on the device the person's medical condition, medication the patient is taking and quantities. Also included is the patient's blood type, allergies if any and any other important medical information that would assist any Doctor in providing immediate life saving treatment. After the patient has been stabilized then he or she is able to swipe their fingerprint on the medical keyring fingerprint sensor and hand it over to the attending Doctor. The Doctor then simply takes the portable electronic medical records device to any computer, say at the nurses' station, and plug it into the computer USB port and up on the screen will pop up access to the patients complete medical history.
The Company President & CEO, M's Chaya Hendrick said today the wonderful thing about this portable device is that it is designed to plug and play on a PC. It does not need special software to be installed on the hospital's computer nor does it need special training as the user interface is intuitive allowing for easy to follow menus that will provide rapid access to the patient's complete medical files.
No matter where in the World the patient may travel they will have the security of knowing that if anything happens they will be secure in knowing that their full medical history is with them. And also secure in knowing that this information is held on their own computer storage system that no one else can access or get use of. Access is only granted after the owner of his or her medical information swipes their fingerprint over the SmartMetric, Inc. Fingerprint sensor.
The SmartMetric Keyring Medical Records system gives the user absolute portability while not exposing sensitive patient record information to hackers or others who would like to get a hold of a person's private medical history.
The SmartMetric fingerprint activated Health Insurance Card with complete medical history stored inside the card and is only accessible after patient swipes their finger over the fingerprint sensor and a positive fingerprint match is made.
Smartmetric now on Facebook
The photos of the machinery and its operators are quite impressive.
BBoski
Just guessing that the buys refer to the no.of shares bought at the market offer price at the time and the no of sold shares, the no of shares sold at the market bids at the time of selling
The ??? trades remain a mystery to me.
LMU
A lot of investors still appear to be singing and dancing to Bob Dylan's song, It all over now, Baby Blue.
17 cent offered today, what a difference a day makes :(
I still have not changed my views about this company and remain optimistic about it's future.
R.
Price action and volume today suggests that we might be in for some happier times
GL to all holders
LMU
I don t think that this is the time to go luke warm on the company. With such delicate technology, it can t be expected to set up a fully functional manufacturing facility in just a matter of weeks or months.(I remember reading in one of their pr's that the heat used to laminate the cards had been/was a challenge.)
Whatever the reason for the delay is,I prefer it to happen now and getting the manufacturing process right instead of rushing into production and running into unforeseen issues later.
Shamus makes a good point about the share holding of the CEO. She has every interest of making this a very successful company with her holding of close to 50 mio shares.
R.
Magic Fingers,
Thanks for that info, I was not aware of the change of date.
It Gives the CC companies a bit more room to breathe but it does not take away that there is no way out of a trial for them, except, maybe, for a settlement.
I am still surprised that the possibility of a settlement or positive trial verdict has been largely ignored by investors, other than the happy few on IH :).
Let s hope this will all change when production and sales are under way.
Cheers
R.