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You clearly have overlooked the obvious.
I have access to these documents, and what I have stated is accurate and will be confirmed.
You are 100% accurate. The 6 claims are untouched, the CAFC is only considering appeal of claims invalidated by the PTAB. Nothing more by statute is legally under their purview
The company does not have to seek shareholder approval to issue additional shares, that is basic corporate prerogative with board approval.
Regarding 101 challenges at the CAFC either by the judges or Bungie, that is out of the purview of both parties by law, ie it's not going to happen. I have confirmed this with Wayne Helge on a call today.
Similarly, the appellate Judges cannot revisit and invalidate the claims that survived the IPR, that is also outside of their legal authority.
All note holders are long term qualified/ investor shareholders with large positions, they don't want dilution or legal default action, it's not in their best interest so they will rollover the notes with a warrant kicker above market. IMO
Wayne Helge of Davidson Berquest handled the IPR and the appeal, his record on IPR's is one of the best in the country. Susman does not handle IPR's only patent litigation and were intimately involved with Helge in preparation of the IPR briefs and appeal. These are 2 top law firms that work together on Worlds behalf.
Alpha still hasn't responded on my offer to wager 1 million shares on a favorable outcome on the appeals and 101. If he's so certain of a negative outcome, that could be a free 1 million shares for someone who doesn't own 1 share currently. Very telling!
Older Article from EDVA on damages
Worlds litigation: There are 55 claims at issue in the Worlds Inc. vs. ATVI case covering five patents. In light of what happened to Vringo, must investors worry about a successful laches defense in the Worlds case? Nope. Worlds does not face the prospect of a laches defense as laches requires a longer period between the earliest date of constructive notice and the filing of an infringement suit. Anything greater than six years may be considered an unreasonable delay.
In Vringo's case, the Lang-Kosak '420 Patent was issued ten years prior to the filing of the complaint and the Lang-Kosak '664 Patent was issued seven years prior to the complaint. The date of constructive notice for Google cited by Vringo was in 2004, still over six years from when the complaint was filed. While time is only one of the elements that factor into a judge's decision, it is considered something of a prerequisite for even attempting a laches defense. The earliest constructive notice cited by Worlds of the patents in suit is February 20, 2007, the day the '690 patent was granted. The original complaint against Activision was filed on March 30, 2012. The patent statute states "no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action" (35 USC section 286). A successful laches defense, by way of differentiation, means that no damages will be awarded prior to the date of complaint but that fire-breathing dragon may be checked off the "unwelcome surprise" list here.
Worlds has claimed that the infringement by Activision has been willful. Under 35 USC section 284, if a jury finds that infringement has been willful, the judge may offer enhanced damages of up to 3X any jury award. Worlds CEO Thom Kidrin stated in a February interview that he had past discussions on a joint venture with Activision CEO Robert Kotick but that Mr. Kotick and Activision decided instead to willfully infringe.
Games in suit: World of Warcraft (WOW) launched in November 2004. Call of Duty (COD) launched in November 2006. Since we know the earliest date of constructive notice being asserted by Worlds is the grant date of the '690 patent, we review revenues from February 2007 forward.
Estimated damages (what Worlds is likely to seek):
To skip to the actual damages chart immediately click here. Background commentary follows below:
The two Activision game franchises in suit have accounted for $15.1b in revenue for Activision between 2007-2012, an average of about $2.5b a year. WOW $7.1b: (2007-2009: source: 3/1/10, 10-K p. 11, 42 & 2010-2012: source: 2/27/13, amended 10-K p. 11, 46) COD $8b: (2007-2012: source: 2/27/13, amended 10-K p.8).
Should this case make it to trial, it is likely to be scheduled sometime during the first half of 2014. We assume a final order by the court at the end of 2014. Each franchise released a new update toward the end of 2012 and we postulate that $3b is a reasonable total addition for these two games in 2013. 2014 remains flat (no growth). There is a bit of guesswork in trying to divine trial dates and final orders but the substantive points remain valid. To that end, over 90% of patent suits settle before trial (Georgetown law journal v. 99 p. 667) and we have some confidence in saying that Activision, should they lose this Markman, can ill afford to play the scorched earth game that Google (with seemingly unlimited funds) has played with Vringo.
A damages expert will need to decide to what portion of Activision's revenue a royalty number should be ascribed. After observing the VRNG trial firsthand I am reasonably convinced that Dr. Becker, Vringo's damages expert, could have settled on the high end of his apportionment (apportionment being the percent of the defendant's revenue that plaintiff feels is attributable to the patented invention) range (40%) and that is the number we would be discussing today instead of 20.9%. His apportionment went "unanswered" by Google other than to simply deride it as fantastical by utilizing "experts" quickly exposed on the stand as something short of expert by the litigation team from Dickstein Shapiro (plaintiff counsel). Quinn Emanuel, counsel for Google, seemed to fear that offering their own number might be seen as tacit admission of infringement, or if the number they offered departed too much to the downside from the norm, they would be viewed unfavorably.
45% Apportionment: We believe Worlds will seek an apportionment in the 40-55% range if its argument for implementation of the Entire Market Value Rule (EMVR) proves fruitless. Because the nature of the infringing element(s) are such in the Worlds case that they could be considered a central reason for game participation, absent EMVR (explained in detail here), we see an apportionment argument for 45% or better (of U.S. revenues which we approximate to be 50% of worldwide over the damages term).
The reason for this, and the reason we think too that an EMVR argument may prevail, is that the Worlds invention may well be compared to a 3-D theme park ride in which one feels like an active participant in the experience. While the "theme" of the rides may change, just as games do, we think any well-crafted survey would reveal that the "active participant" feature is the primary reason for participation, which sure sounds like what a "scalable architecture for a 3-D virtual world" seems to provide.
What royalty would a damages expert for Worlds suggest to a jury? It seems logical that a royalty might land anywhere from 3-10%, perhaps more due to the commercial success of these particular games and/or any relevant contract for royalties. Our model utilizes 7% which is somewhat paltry in comparison to contractual evidence which we provide later in this article. Using this data point we get $332M in past damages. If Susman Godfrey (Worlds counsel) makes a convincing case for willful infringement, the award may be trebled (which our chart assumes) leaving $997M. We do not currently see how infringement will be separated in this case from willful infringement; therefore we submit that if there is infringement at all, it will be deemed willful.
What about a future royalty? The '690 patent does not expire until August 2020. Using $3b per year in revenues (with a conservative 3% growth rate) for the two games, a 45% apportionment and a 7% royalty we get another $296M on U.S. revenues. Collectively, total damages would be approximately $1.29 billion. Project 35% for Susman Godfrey ($452.5M) and Worlds is left with $840.5M of which another 35% goes to pay taxes, netting them $546M. But wait, Worlds has approximately $41.5M in net operating losses that we project will reach $43M by the end of 2014. Therefore, $797.5M will be taxed. The net-yield with an after tax add back of $43M becomes $561M (this calculation may be performed several ways).
What about other infringers? The MMORPG Market is expected to grow to $17.5 billion in 2015 (source: Superdata Research & Newzoo 2012) from about $13.8 billion in 2013. We expect that Worlds will aggressively pursue license agreements in the event of successful litigation, most likely closely following a successful Markman order.
Should Worlds successfully license to companies producing half of these revenues (beginning in 2014 until the patents expire), they will profit from nearly six years of licenses. Following the same apportionment and royalty formula from the Activision case, this would yield another $126M annually on average. We calculate another $319M to Worlds after legal and taxes, which would add another approximately $4 to Worlds share price at current outstanding share levels.
We suggest this is a calculus that Activision may be focused on if they lose the Markman. They could offer Worlds $250-275M to purchase the patents in suit, (and any other of the continuation patents to the '690), and have a fairly strong likelihood of recouping that money through licenses instead of facing prolonged and potentially costly litigation. For Worlds and its longtime investors it would offer a clean exit at an attractive multiple.
Should Worlds win the Markman and be forced to play this out, we see the potential for a $10 stock based solely on awards in the Activision case. A prevailing Worlds' motion for application of the EMVR would have Katy barring that door - $10.55b x 7%, yielding $738.5M in past damages. Treble that per the willful argument above and we have $2.2b in past damages alone with another $658M in future royalties.
We are not really suggesting this is going to happen; on the contrary we take a fairly conservative line in our calculations. We suggest only that there is a path to such a number. The question for investors is whether a billion dollar award is achievable in this case? It certainly appears so, in no small part because Worlds has prosecuted its patents carefully and has strengthened its hand through what it learned from its previous litigation with NCsoft. Given this, we view Worlds as the preferred high-growth investment in this space and we suggest, at minimum, that investors take a hard look here.
Caveats:
1. The sensitivity analysis at the bottom of our damages chart reflects the percentage likelihood that the litigation does not support our specific case for Worlds. It also reflects our thinking between a 45% apportionment (more likely) and the EMVR (less likely).
2. There is some question, which we continue to explore and debate internally, regarding Activision revenues from Europe and Asia and whether some percentage of those revenues may be subject to a damage award in this case. We believe that Susman Godfrey may be examining this very issue. Given what may not be a insignificant number of overseas players of WOW & COD connecting through U.S. servers, there may be a legal basis to conclude that this infringement occurs in the U.S. and as such would be subject to damages. A quote from the "faq page" of a service called Smoothping, which claims to offer a faster way to play multiplayer online games like World of Warcraft, appears below. The internet is rife with international players discussing connecting through U.S. servers for these games.
"For International players, your best option might be where your traffic first enters the USA. For example, if you are from Australia and play on a WoW Server located in Chicago, you might find you have better in-game latency connecting to a Smoothping Los Angeles server, rather than our Chicago servers. If you are from Brazil and play on a WoW Server located in Chicago, you might find you have better in-game ping when connected to a Smoothping New York server, rather than our Chicago servers."
We include several links to documents, one which is commentary on the royalty arrangement struck between Activision and NetEase (based in China) for rights to host and distribute the World of Warcraft game, the other a contract made public during legal proceedings between the founders of Infinity Ward and Activision. The contract is between Bungie and Activision Publishing (subsidiary controlling Call of Duty). Each provides insights into how Activision values its games. In the Bungie deal (summarized here) we see significant revenue sharing and incentives to create games, which they can only hope will be as popular as World of Warcraft and Call of Duty. In the NetEase deal, it is reported that Activision was granted a 55% royalty, giving us a sense of what licensing the game rights is worth to Activision. We feel certain that Susman Godfrey will use these and other examples like them to draw comparisons between how they are valued and how the architecture central to the operation of these games should be valued.
Fed. Circ. Reverses Judge's Nix Of Memory Patent Under Alice
A split Federal Circuit on Tuesday reversed a lower court’s decision that a Visual Memory LLC patent asserted against Nvidia Corp. was invalid under Alice, finding the patent was not directed to an abstract idea but to a patent-eligible improvement to computer memory systems.
First of all the potential profitability of products does not mean a thing in the legal framework of the federal courts. Second development is expensive so I suppose your risk alert regarding potential dilution should be further leveraged with additional substantial costs for software development to satisfy your own interpretation for not being an NPE.
You are correct that Kidrin has been the only employee since 2007, however he has funded software development through contractors for years. The development of DMC Worlds, MTV, Pearson Education all while he was the only employee, I know for a fact that there is currently ongoing software in development for augmented reality and head mount 3D.
Speak to Kidrin as I have.
Worlds does not fall under the definition of an NPE, the company developed the patents, why you constantly insist it is so only raises questions of your true motives.
Worlds has and is developing software, as it has since 1994. Kidrin is the CEO of Worlds the original developer of the patented technology.
Kidrin nor Worlds didn't buy the patents, he is a shareholder in the company that created and filed the original patents in 1995.
If the Federal court was inclined to rule WDDD's patents invalid she would have issued the ruling and disposed of this case not agree to stay it and then kill it after a PTAB appeal. That is a ridiculous assumption.
Or through a settlement or sale of MRMD stock which you forgot to conveniently mention
Again you state the AIA has been killing Patents for over a decade, it hasn't been law for that long son.
Wrong again, Worlds developed and refined the technology over 20 years and released many products. This in no way conforms to the very definition of an NPE you cited.
Accept that you know very little but pretend you know a lot.
Worlds is NOT an NPE, they developed the technology and filed the patents. Still operate Worlds Chat the longest running 3D chat service on the internet for over 22 years.
The judge dors not determine what a fair royalty should be, the % is determined based on damage expert witness reports across the industry and how central to the operation of theses games are the infringed claims as technically defined in the expert reports to the court.
No, the company had to raise money through the notes to fund the IPR and appeal. This is not with Susmsn Godfrey and not a contingency arrangement since there is no revenue generated from a successful IPR.
I have spoken with Kidrin and you are promoting incorrect legal analysis.
Bungie cannot now challenge the valid claims as the time period to do so has lapsed, they can ONLY reply to the appeal brief issues not reopen the entire PTAB ruling. That is the law reaffirmed by Wayne Helge, Worlds PTAB lawyer whom I also spoke with.
I have no idea who you are and what your so called risk analysis is all about but I do know that you don't know what the law is that you are spouting on about. 100% disinformation.
The CAFC will not kill these patents as you repeatedly suggest is a possibility. They ONLY will rule on the claims being challenged on appeal, that is the scope of their legal mandate, not a fishing expedition on patent validity. 101 cant be considered for invalidity as this is not a challenged position by Bungie and cannot by law be introduced unilaterally ad hoc by the CAFC.
Worlds came through the IPR with 7 claims of the asserted claims against Activision intact, non of those claims have been challenged by Bungie and cannot be challenged at this point in time, Bungie can only respond to Worlds appeal brief on the challenged claims that the PTAB invalidated noting more, Period!
No judge will be reading Worlds SEC filings. Investors read those, judges don't peruse. They only read briefs prepared by council on the legal issues before them. Whether Worlds continues to develop it's technology has absolutely no bearing on the merits of the patents validity.
You are totally mistaken, Worlds not only pioneered the MMOG methods and technology of the 10 patents but did it for Steven Spielberg's Starbright Foundation in 1995. The other products that the company developed were David Bowie World, WWF World, Aerosmith World, Dmc World, contracts for British Telecom, IBM, MGM, Nifty Serve and Toppan in Japan.
To say they did nothing but file with the USPTO demonstrates a total lack of due diligence.
As far a further technical development, the company spun out its technology to WORX now MRMD as a 1 for 3 dividend for shareholders in 2012 who have benefited with a s/p of $.65.
I understand that the technology is currently under development with a spinout forthcoming as per SEC filings.
Research before posting incomplete or inaccurate statements.
Alpha, your reply ignores the fact that a 101 hearing has been fully briefed and held at the Federal Court, that ruling has not been released due to the case being stayed. Had the court found a 101 invalidity of Worlds patents it would have released the ruling even if stayed to dispose of the case and save the time and expense of the IPR.
Yes the PTAB and CAFC have been patent killers since the AIA was enacted however the trend over the past year has been an increase of reversals of PTAB rulings by the CAFC. In fact the EnBanc hearing by CAFC was a result of the related third party issue being used as a back door for attacking patents by infringers and rising to an intolerable level of appeal
Filings and Amicus briefs by injured parties that a number of CAFC judges determined this issue had to to addressed by the full court.
SCOTUS agreeing to Cert on the conditionality of IPR's as an article 3 separation of powers issue is indicative of an overall trend in the pendulum swinging back in favor of patent holders.
History is important to offer balanced analysis however recent trending indicators has to factor into a full current analysis of WDDD's opportunity moving forward.
There have been no judges assigned to the CAFC appeal at this point.
Regarding 101, this issue was already argued at the Federal District court but the IPR was filed just prior to Judge Casper's ruling so the ruling was stayed.
Imo if these patents were invalid under 101 Judge Casper would have ruled so and that would have terminated the IPR. Based on the court's oral arguments on these patents and the courts statements during those arguments which indicated she didn't buy Activision's position plus her Markman ruling already issued favorable to Worlds claim language on the software methodology it is highly unlikely the these claims will fall under 101.
Federal Circuit courts tend to rule on 101 in a consistent pattern and this MA Circuit has ruled favorably for patent holders on other 101 software challenges.
To your question of potential impact of Wifi One/ Broadcom. The issue raised En Banc (before all the federal appeal judges) is if related third parties (i.e Bungie) in Worlds case, can't file an IPR without disclosing their relationship to the defendant (Activision) and whether discovery to prove that relationship and them acting as a proxy should have been permitted by the PTAB. If the Federal circuit rules in favor of third party review and challenges it could throw out the entire IPR rulings and Worlds could regain some of the claims invalidated by the PTAB.
Worlds has appealed on the same issued and cited the Wifi case and related cases in it's brief. worlds fact pattern is better than Wifi in that it produced a contract between Activision and Bungie with clauses that require Bungie to clear all IP for game publishing.
In either case the Federal Appeal court could throw out the entire PTAB ruling.
In addition the US Supreme Court is going to hear arguments in Oct. on the constitutionality of the whole IPR scheme which could also throw out the PRAB rulings.
Why don't you do some of your own DD and report back.
From IP Watchdog Gene Quinn
the United States Supreme Court granted certiorari in Oil States vs. Greene’s Energy Group, et al. From a substantive standpoint, this dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB). By taking this case the Supreme Court will once and for all address the constitutionality of having an Article I tribunal extinguish patent rights.
There were three questions presented by Oil States in the petition for writ of certiorari. They were:
1. Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
2. Whether the amendment process implemented by the PTO in inter partes review conflicts with Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.
3. Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.
The Supreme Court granted certiorari only on the first question, whether inter partes review violates the U.S. Constitution by extinguishing private property rights through a non-Article III forum without a jury.
The grant of certiorari in this case is particularly noteworthy given that the United States was asked by the Supreme Court for its views and opined in its brief that the petition should be denied. Generally speaking, the Supreme Court accepts the recommendations of the Solicitor, but this marks the second time in just several weeks where the Solicitor has recommended the Court decline certiorari in a patent case only to have the Court take the case any way. The other case where the Solicitor recommended the Court not get involved was SAS Institute v. Lee, dealing with the issue of whether the PTAB must issue a final written decision with respect to any claim that is challenged, as is actually required by statute. For more on that case see SCOTUS to hear SAS Institute v. Lee.
The argument that inter partes review is unconstitutional can be traced back all the way to 1898 when the Supreme Court issued its decision in McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898). In that case the Supreme Court held that once a patent is granted it “is not subject to be revoked or canceled by the president, or any other officer of the Government” because “t has become the property of the patentee, and as such is entitled to the same legal protection as other property.”
Since September 16, 2012, when the PTAB became operational and post grant challenges made available under the America Invents Act (AIA), the USPTO has been doing precisely what the Supreme Court in McCormick Harvesting said was prohibited – revoke patents. Therefore, the Supreme Court will either need to explicitly overrule McCormick Harvesting, implicitly overrule McCormick Harvesting while trying to convince themselves that the case remains good law and is consistent with AIA post grant procedures, or the Court will need to find inter partes review unconstitutional.
The phrasing of the question taken by the Supreme Court could be quite telling. Over the last several years 8 of the 9 Supreme Court Justices have signed on to an opinion that has recognized that a patent confers either an exclusive or valuable property right. Thus, it would hardly seem a stretch to suggest that the Court, or at least the required four Justices necessary to take a case, have some reason to suspect that the extinguishing of a exclusive, valuable property through a non-Article III forum without a jury violates the Constitution.
In Horne v. Department of Agriculture, Chief Justice John Roberts writing for the majority that included Justices Scalia, Kennedy, Thomas, Alito, as well as Ginsburg, Breyer and Kagan with respect to Parts I and II, approvingly quoted from James v. Campbell a 19th century case that unequivocally states that a patent confers upon the patent owner “exclusive property” rights. Moreover, in a dissent written by Justice Alito and joined by Justice Sotomayor in Cuozzo Speed Technologies v. Lee, footnote 6 calls a patent a “valuable property right.” Still further, in 2014, Nautilus v. Biosig Instruments, Justice Ginsburg, writing for a unanimous Court called the patent grant a reward of a patent a “property right” and “like any property right, its boundaries should be clear.” She was quoting the earlier Festo case, which had also been a unanimous 2002 decision. Thus, the Roberts Court has repeatedly identified patents as a property right, exclusive and valuable in nature. Indeed, a property right that is similar to other property rights. Combine this with the many Supreme Court cases from generations ago that routinely describe patents in inventions being equivalent to patents in land, and it seems as though there is real reason to suspect that the Supreme Court could rule inter partes review unconstitutional.
While many will undoubtedly have varied opinions as to the importance of this decision by the Court to take this case, the truth is that any decision by the Supreme Court in Oil States simply cannot make things any worse for patent owners than they already are. Patents rights are currently be extinguished by an Article I tribunal that fundamentally refuses to provide even a modicum of due process. The PTAB refuses to consider evidence timely submitted, they refuse to allow amendments despite the statute saying there is a right to amend, they refuse to issue final decisions on all the claims challenged, they make up their own standards rather than follow statutory tests, there are no judicial rules of ethical conduct for PTAB judges, PTAB judges decide issues where there are serious conflicts of interest, and much more. Therefore, things could hardly get any worse, yet Oil States presents the very real possibility that the Supreme Court will rule that post grant proceedings at the USPTO violate the Constitution.
There will undoubtedly be much more written about this issue in the months to come. It will not be argued until the October 2017 term of the Court, with a decision sometime before the end of June 2018. Stay tuned!
The U.S. Supreme Court agreed Monday to decide whether America Invents Act reviews violate the U.S. Constitution, throwing the future of the popular system for challenging patents into doubt.
[Law360 Intellectual Property] <https://www.law360.com/ip?nl_pk=410e2b57-391b-4c0b-9f18-f270ba33671e&utm_source=newsletter&utm_medium=email&utm_campaign=ip> INTELLECTUAL PROPERTY<https://www.law360.com/ip?nl_pk=410e2b57-391b-4c0b-9f18-f270ba33671e&utm_source=newsletter&utm_medium=email&utm_campaign=ip>
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Correct, it was formerly WORX but not part of the Activision litigation.
MRMD is the spin out co from WDDD.
They are real and growing strong.
They did NOT lose the case against Activision, that is still ongoing in WDDD which owns 7.5% of MRMD
I agree 1000%, my point is that the market is giving no value to the IP and that the holdings in MRMD is of more value than the WDDD shares with all the IP upside, hence my remark that the market is clueless on the real under valued share price of WDDD
Yes since it was $.15 I keep loading up.
Worlds holding in MRMD is now worth more than the patent litigation, the market is clueless.
Haven't received anything. Have you?
MRMD up to $.60. WDDD asset now worth over $3.6 Mil. Worth more than 1/2 of WDDD current mkt cap.
Market is asleep and unaware!
The initial filing was to notify CAFC that Worlds intended to appeal the IPR ruling. The Friday filing was the main brief of the appeal laying out the specific legal issues,arguments and precedent case law of the appeal to the PTAB's analysis and decisions.
Bungie will reply in 45 days to this brief and Worlds will respond to that reply in 30 days and then the CAFC will set oral arguments within 60-90 days with a decision late fall or winter.
Filed Friday, announced Monday.
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