Document Security Systems (DSS) is an anti-counterfeiting, authentication, and anti-fraud provider. They are also asserting their social networking Bascom portfolio against Facebook (FB) and LinkedIn (LNKD), with a Markman scheduled for February 2014. The Bascom portfolio has already secured 3 settlements with Novell (NOVL), BroadVision (BVSN), and Jive (JIVE).
In a move that has flown under the radar by investors was a portfolio DSS acquired in September 2013 that covers Bluetooth technology. DSS acquired 2 patents titled "Personal Data Network". DSS also acquired 10 patents from Cypress Semiconductor in October 2013. Jeff Ronaldi - CEO made the following statements on the Q3 Conference Call:
"Thus far, in the third quarter we closed on two additional IT investments for a total of $2.5 million. To elaborate, in July we purchased two patents for $500,000 that cover methods and processes related to Bluetooth devices. In September, we purchased 10 patents for $2 million that relate to the methods and processes in the semiconductor industry.
In conjunction with these patent purchases, the company received over $1 million in external commitments from co-investors. These co-investors are consistent with strategy discussed on our last earnings call of aligning with outside investors who have dual interest in IT investment. These outside investors clearly demonstrate confidence in DSS's ability to appropriately manage and monetize the acquired assets.
We consider the Bluetooth and semiconductor investments valuable because of the synergies with our existing operations. We believe that the Bluetooth patent has potential for commercialization. We have already started to integrate hardware and peripherals and the DSS's R&D and Digital platform with the goal of developing dedicated devices that run AuthentiSuite.
Thirdly, Technology Management's recent acquisition of two IT portfolios meets our goals of making additional investments by the end of the year. In addition to diversifying our IT portfolio, management believes that these IT acquisitions have high growth and potential for high return. We expect to continue to diligently increase our IT investments overtime."
DSS started the monetization campaign last night, November 26, 2013, by filing a patent lawsuit against Apple, Inc (AAPL) in East Texas. The lawsuit asserts the Bluetooth patents 6,128,290 and 5,699,357 both titled "Personal Data Network". The alleged infringing products include iMac computers, iPod product line, iPhone product line, and iPad product line. DSS is further asking for an injunction, damages, and a reasonable royalty.
This new lawsuit presents a potential sizeable revenue opportunity as the infringing products have generated tens of billions of dollars, which DSS will ask for a piece of. I expect this case to draw significant interest in the future by both the media and investors as more information develops.
Shares have rebounded off recent lows and I expect further share appreciation as the new Apple case continues to develop and as the February 2014 Markman hearing nears.