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Richard Lomas  

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  • VirnetX Obfuscates The Truth: Stock Worth Under $1 [View article]
    Multiple re-exams by the USPTO have already been dismissed after the CAFC ruling. These key patents will not be invalidated. VPNoD has been found to violate those patents. You can try to minimize the value of the patents but VPNoD is embedded in the OS and is utilized extensively. If VPNoD were removed from IOS, Apples enterprise customers would be irate. There would have to be modifications to FaceTime again bringing up customer satisfaction issues like the last time Apple tried to remove dependence on Virnetx patents. iMessage would require a major rewrite and not be able to maintain the security that customers want. Your obvious hit piece is meant only to drive prices down for all your short friends. Without Virnetx patents Apple will not be able to support LTE-A.
    Oct 1, 2014. 07:46 AM | 11 Likes Like |Link to Comment
  • Post CAFC Value Of Virnetx [View article]
    The 1% to 2% royalty rate in their existing licenses applies to the smallest salable unit. If apportionment is used, a higher percentage much be used as well. I'm sure VHC's legal team is at work utilizing the information from the CAFC to develop an iron clad royalty value. You either use an apples to apples royalty agreement or you apportion and set the rate that way. I expect that each approach will yield a similar royalty rate.
    Sep 25, 2014. 09:55 AM | 1 Like Like |Link to Comment
  • Post CAFC Value Of Virnetx [View article]
    It took me several times reading it as well but when I finally realized what was being said, it became crystal clear. This is an extremely important ruling for Virnetx.

    Thank you for your further explanation.
    Sep 22, 2014. 03:03 PM | 1 Like Like |Link to Comment
  • Post CAFC Value Of Virnetx [View article]
    I have read it many times. I think it is clear in the case of comparable licenses the use the smallest salable unit, then the smallest salable unit is the base.
    Sep 22, 2014. 10:17 AM | 2 Likes Like |Link to Comment
  • Post CAFC Value Of Virnetx [View article]
    The base us the smallest salable unit. See below.
    Sep 22, 2014. 10:15 AM | Likes Like |Link to Comment
  • Post CAFC Value Of Virnetx [View article]
    If you read Section C, page 33 to page 36 of the CAFC opinion, it is clear that the CAFC considers 4 of the 6 licenses to be comparable to the current litigation claims against Apple and the other two are sufficient close. These licenses are applied to the smallest salable unit not apportioned to some arbitrary smaller portion.

    For example:
    Customer x is a professional photographer and buys a photo editing package for $100. He uses 90% or more of the features of the software package.
    Customer y is takes pictures for his own use and only needs a few features of the photo editing package, approximately 10%
    Does customer y get to pay only $10? No!

    Customer y can decide to buy the package or not just like Apple could have decided not to use Virnetx patents if they weren't willing to pay for them.

    The best indicator of a items worth is what others are willing to pay for it. In this case the average is a 1.5% royalty.

    This is what the CAFC says in section C
    Sep 22, 2014. 10:13 AM | 5 Likes Like |Link to Comment
  • VirnetX: Some Positive Takeaways From Appeals Court Ruling [View article]
    See my answer above to Dale Korpi
    Sep 21, 2014. 08:32 AM | Likes Like |Link to Comment
  • VirnetX: Some Positive Takeaways From Appeals Court Ruling [View article]
    In the CAFC ruling, the paragraph quoted above indicated that the CAFC believes Weinstein's presentation on existing contracts was a viable approach for determining the penalty/royalty rate. Further on in the ruling the following paragraph is the CAFC's summary of Weinstein's presentation.

    “Weinstein’s first approach began with the lowest sale price of each model of the accused iOS devices containing the accused features. J.A. 1616–23. Weinstein then applied a 1% royalty rate to the base, derived from a VirnetX policy of seeking to license its patents for at least 1–2% of the entire value of products sold and several allegedly comparable licenses. J.A. 1595, 1613–14. This theory yielded a $708 million demand, consisting of $566 million for products including both FaceTime and VPN On Demand, and $142 million for those including only VPN On Demand. J.A. 1622–24, 1644.”

    The key is “1–2% of the entire value of products sold “. There is no apportionment in this approach. This 1 to 2 percent would be applied to the whole value of the products that infring.

    The amounts listed above would double Apple's penalty from the original trial and they are calculated at 1% royalty rate. In then next trial if I were Virnetx, I would be asking for the average paid by the 6 other companies which is more than 1.5% and let Apple argue that they should receive a discount for using Virnetx patents without paying for them.

    The CAFC is basically saying if you have an existing price established by the market, that is the best indication of the value of the patents.
    Sep 21, 2014. 06:50 AM | Likes Like |Link to Comment
  • VirnetX: Some Positive Takeaways From Appeals Court Ruling [View article]
    The second quotation is part of the judgement and clearly states that existing licenses are the best way to determine value. Existing licenses are for smallest salable unit. I don't think that is a problem.
    Sep 19, 2014. 03:57 PM | 1 Like Like |Link to Comment
  • VirnetX: Some Positive Takeaways From Appeals Court Ruling [View article]
    Virnetx is cheap only for a short while. I think we will see significant recovery within 3 months, just my opinion, but I think (hope) more positive news will be coming.
    Sep 19, 2014. 03:55 PM | Likes Like |Link to Comment
  • VirnetX: Some Positive Takeaways From Appeals Court Ruling [View article]
    The CAFC clearly said that Weinstein's approach of using existing licenses we appropriate. What Weinstein's approach was follows:

    “Weinstein’s first approach began with the lowest sale price of each model of the accused iOS devices containing the accused features. J.A. 1616–23. Weinstein then applied a 1% royalty rate to the base, derived from a VirnetX policy of seeking to license its patents for at least 1–2% of the entire value of products sold and several allegedly comparable licenses. J.A. 1595, 1613–14. This theory yielded a $708 million demand, consisting of $566 million for products including both FaceTime and VPN On Demand, and $142 million for those including only VPN On Demand. J.A. 1622–24, 1644.”

    And this does use the smallest saleable unit which in this case is the phone. I believe it is very clear what the CAFC is saying. There is no better indication of patent value than what they have already sold for.
    Sep 19, 2014. 02:24 PM | 1 Like Like |Link to Comment
  • VirnetX: Some Positive Takeaways From Appeals Court Ruling [View article]
    The CAFC has provided guidance on how to calculate the royalty.
    “With those principles in mind, we conclude that the district court here did not abuse its discretion in permitting Weinstein to rely on the six challenged licenses. To begin with, four of those licenses did indeed relate to the actual patents-in-suit, while the others were drawn to related technology. Moreover, all of the other differences that Apple complains of were presented to the jury, allowing the jury to fully evaluate the relevance of the licenses. See J.A. 1600, 1650, 1678–82. No more is required in these circumstances.”
    The Weinstein calculations that are referenced here are:
    “Weinstein’s first approach began with the lowest sale price of each model of the accused iOS devices containing the accused features. J.A. 1616–23. Weinstein then applied a 1% royalty rate to the base, derived from a VirnetX policy of seeking to license its patents for at least 1–2% of the entire value of products sold and several allegedly comparable licenses. J.A. 1595, 1613–14. This theory yielded a $708 million demand, consisting of $566 million for products including both FaceTime and VPN On Demand, and $142 million for those including only VPN On Demand. J.A. 1622–24, 1644.”

    This provides a much larger penalty the previously awarded. It is clearly what the CAFC is suggesting.
    Sep 19, 2014. 01:09 PM | 1 Like Like |Link to Comment
  • VirnetX Is Worth Well Under $1 Per Share [View article]
    VHC should be over $20 after the ruling. Rather than listening to someone who has written a hit piece to drive the stock price down, read the CAFC ruling. The CAFC validated VHC's patents and also validated that Apple infringes those patents. Using the method that CAFC is clearly recommending in their ruling which is quoted below, Apple's royalty is likely to increase significantly.

    “With those principles in mind, we conclude that the district court here did not abuse its discretion in permitting Weinstein to rely on the six challenged licenses. To begin with, four of those licenses did indeed relate to the actual patents-in-suit, while the others were drawn to related technology. Moreover, all of the other differences that Apple complains of were presented to the jury, allowing the jury to fully evaluate the relevance of the licenses. See J.A. 1600, 1650, 1678–82. No more is required in these circumstances.”

    There are 6 companies that have royalty agreements with an average in excess of 1.5%. That is far more than the original award of .5%. Apple did Virnetx a favor appealing the ruling, they will now get a higher rate. You better cover your short position quickly or you might get trampled as investors recognize the real value of Virnetx.

    The ruling: http://1.usa.gov/1picOLb
    Sep 18, 2014. 12:49 PM | 2 Likes Like |Link to Comment
  • VirnetX Is Worth Well Under $1 Per Share [View article]
    VPN infringement has been settled by the CAFC. Apple infringes. Only damages need be set in the remanded trial. Facetime infringement will be retried but apple can't argue that patents are invalid as the CAFC has ruled them valid.
    Sep 17, 2014. 04:46 PM | 5 Likes Like |Link to Comment
  • VirnetX's Royalty Triumph Is Excellent News [View article]
    After numerous challenges to the patents, not on of VHC's patents has been invalidated. They have been validated in three trials and in numerous re-examinations as the USPTO. If you're short and relying on the invalidation to drive the price down, you're going to be disappointed.
    Mar 10, 2014. 01:11 PM | 10 Likes Like |Link to Comment
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