This article is a follow-up to my most recent update on Document Security Systems (DSS) because of a significant recent development. For those not familiar with DSS, the company is a leader in anti-counterfeit, authentication, and mass-serialization technologies. DSS's specialized security programs are designed to protect against product diversion, counterfeit, theft, and other costly and damaging occurrences. DSS provides turnkey security solutions to corporations, governments, and financial institutions around the world. DSS is establishing a strong IP position with more than 160 patents and over 50 foreign counterparts and expects to increase its patent portfolio to 200 to 300 patents in a year or two. This is up significantly from 12 patents in 2012.
DSS is building its patent portfolio in three verticals:
- Brand Protection (its core expertise area)
- Software and Internet
- Hardware and peripherals
On January 13, 2014, Judge Susan Illston stayed the Markman hearings on the patent infringement lawsuits against Facebook (NASDAQ:FB) and LinkedIn (NYSE:LNKD) pending the outcome of the Alice Corp. vs. CLS Bank case. Following the June 19, 2014 Court's decision fellow SA contributor Markman Advisors commented on a June 20, 2014 article:
"The Supreme Court of the United States has issued its long-awaited opinion in Alice Corp. v. CLS Bank Int'l (No. 13-298). This case was highly-anticipated by investors in high-tech companies, holders of stock of patent assertion entities, and the patent bar. It was expected to answer the highly contentious question of whether software can be patented. The decision was anticipated to have a significant impact on software tech giants such as Google (NASDAQ:GOOG) (NASDAQ:GOOGL), IBM (NYSE:IBM) and Apple (NASDAQ:AAPL), who are among the largest patent-filers."
"In addition to the prospective impact on tech giants, the decision was expected to impact numerous patent assertion entities whose share prices are predicated upon expected revenue from pending or anticipated patent litigations. These include Document Security Systems (NYSEMKT:DSS), Finjan Holdings (NASDAQ:FNJN), CopyTele (OTCQB:COPY) and Worlds (OTCQB:WDDD), among others. Some of these companies have asserted software patents. For instance, in the case of DSS, Facebook (FB) and LinkedIn (LNKD) managed to have DSS' cases stayed on the grounds that the Supreme Court's Alice decision could make the case go away overnight. Did that happen? It doesn't look like it, and we can expect DSS to continue to try its case forward. Has the Alice decision eviscerated scores of software patents? As with many things in life, the answer is it's complicated. The impact of the Supreme Court's decision will be felt on a patent-to-patent basis."
Fast-forward to July 16, 2014, the same judge Illston granted the request by lawyers of DSS-owned Bascom Research, LLC, Facebook, and LinkedIn to schedule a case-management conference to determine the path forward. The conference has been set for 3:30 PM on August 8, 2014. The court document also states that a joint statement shall be filed one week ahead of the conference (August 1, 2014). It is likely that one of the main outcomes of the conference will be the rescheduling of the Markman hearings. The company expects these hearings to take place in 3Q 2014.
DSS has been very quiet following the hiring of IR firm Liolios on May 5, 2014. In the press release announcing this development, DSS CEO Jeff Ronaldi commented:
"Over the last year, we have achieved several strategic goals, including profitability in our core production business and expanding overall gross margins, as well as building, strengthening and monetizing our IP portfolio,"
"Given our momentum and positive outlook, we believe DSS shareholders will benefit from an experienced team of investor relations professionals focused on increasing awareness of our story in the financial community. Liolios Group brings a track record of assisting companies like DSS, which have a dynamic operating business founded on strong intellectual property, to enhance shareholder value."
It appears that the main focus of Liolios, and the only one up to this point, has been to expose DSS to institutional investors. On May 29, 2014, DSS presented an update to institutional investors at the Third Annual Marcum MicroCap Conference.
More recently, the company announced that it will present at the 3rd Annual Gateway Conference to be held in San Francisco on September 4, 2014
Shareholders like myself have been expecting an update from the company on the Facebook, LinkedIn, Coupons.com, Lenovo USA lawsuits and recent activity related to increased marketing activity on core products like AuthentiGuard and others. Presumably, we will hear from the company after the August 1, 2014 joint statement ordered by the court on the FB and LNKD cases.
Disclosure: The author is long DSS. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
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