It was just a year ago when excitement started to really gain traction concerning the stocks of companies that were suing large mega corporations for patent infringement of their protected, respective technologies. After Vringo's (VRNG) recent victory over Google, investors began to search for the next possible multi-bagger and it appears the early birds are targeting Worlds Inc. and their lawsuit (explained here) against game giant Activision Blizzard. With the upcoming June 27th Markman hearing (aka patent claim construction hearing) rapidly approaching, I had a few questions for (OTCQB:WDDD)'s CEO that would ultimately sway my decision to be one of the early birds.
Question: Obviously when approaching the very respected law firm of Susman Godfrey L.L.P. about taking your company's case against Activision Blizzard on a contingency, they would need some time to evaluate the case before giving you an answer. How long was it before they decided to take the case ?
TK: Susman Godfrey spent nine months reviewing our case before they came back and said, "We'll take it." They had a team of experts extensively review our patents and prior art work and they also studied the court records of our case against NCSoft that was ultimately settled out of court for an undisclosed sum. We received three additional patents covering prior art and the assumptions of validity were greatly enhanced.
Question: Of the seven patents that your company has been awarded, how many of them are you claiming were infringed upon by Activision Blizzard ?
Question: How many claims of infringement are you making against Activision Blizzard ?
TK: There are 59 claims across five patents.
Question: What is your company's monthly cash burn ?
TK: About $20K to $25K per month and with last Thursday's filing whereby we raised $302K, we have enough cash for the next twelve months based upon the high end of our capex needs.
Question: Can investors look forward to any future patents besides the seven you've been awarded ?
TK: We believe so.
Question: There was recent blog chatter that either management of Vringo or certain large investors in Vringo or both had engaged in conversation with your company about investing. Is this true ?
TK: I can't comment about any such conversations.
Question: Does your company foresee any such problems concerning "laches" and the ability to seek damages before the original filing of the suit against Activision Blizzard ? The same sort of roadblock that Vringo encountered, including "willful infringement" action ?
TK: No, as we are the original founders of our technology unlike the technology that Vringo bought from Lycos and secondly, we've had past discussions with Activision Blizzard's CEO, Robert Kotick, concerning a possible JV with Worlds Inc, so he was aware of our patents many years ago, yet made the decision in our opinion to willfully infringe upon our patented technology.
Question: In giving potential investors a chance to critique the current valuation versus the potential valuation based upon successful litigation, tell me about your current share structure.
TK: After Thursday's filing, we have approximately 82 million fully diluted outstanding shares and the float is somewhere between 20 to 25 million.
Question: Knowing that your company is seeking damages for many years prior to the filing of the lawsuit against Activision Blizzard and potentially many other MMOG gamers, what about the timeline of damages going forward ?
TK: Damages being sought forward from today are in the range of six to seven years out and we cannot comment at this time about future potential defendants.
Question: Susman Godfrey L.L.P. has been very successful in recent litigation against some of the world's largest corporations such as Comcast, Alcatel, Samsung, Oppenheimer, Xilink, Avnet, Microsoft, Alcoa, IBM, Oracle, SAP, Ariba and many others. Have they had any experience in dealing with Activision Blizzard ?
TK: Yes, as they sued Activision Blizzard previously on behalf of Paltalk and an out of court settlement was reached on the eve of the trial for an undisclosed sum.
Conclusion: Although nothing is ever 100% guaranteed, I absolutely love the set-up here heading into the Markman hearing. For anyone who has an ounce of speculative blood in their body, they MUST at least have some sort of stake in WDDD for what could be potentially huge upside gains, especially with a current fully diluted market cap of $21 million here at a PPS of .265 in comparison with Vringo's elevated market cap of over $250 million. The company has enough cash for the next year and with Susman Godfrey in Worlds' corner after having already beat Activision Blizzard once before, this factor alone does indeed provide a meaningful margin of safety. I also believe that Vringo management, large Vringo investors or both are in talks with Worlds Inc. and if confirmed, that's an additional huge boost, not only for the stock price, but awareness.
Disclosure: I am long OTCQB:WDDD.