General Electric: A Hidden Patent Play Possibility...
Seeking Alpha Analyst Since 2010
Today the most hyped investment discussions are concentrated to the Facebook IPO and similar stories. But the little investor nearly never has the chance to participate in time at such occurrences - he's always to late. Fortunately sometimes there is such a seldom possibility for the little, but brave investor.
The story of www.sightsound.com initiates in the early 90tees. Sightsound has valid patents for online commercial audio & video download. But in contrast to "theoretical" patent trolls Sightsound has practically implemented the patents in functioning music- and film/video download business already more than 10 years ago!
In 1998 Sightsound accused the former market leader in music download N2K/CDnow (Bertelsmann) concerning the illegal use of their patents. The defendants try to achieve a summary judgment against the patents, but the Judge of the Pennsylvania Western District Court refused to these claims (case 2:98-CV-118) and Sightsound got a settlement in February, 2004. Part of this was that CDnow and N2K acknowledged that the United States Patents 5,191,573; 5,675,734; and 5,966,440 are valid and enforceable!
In 2004 Sightsound accused the new music download market leader Roxio/Napster. Napster's only defense was to try a delay using the USPTO reexamination process. After all the years Sightsound knows that there's no chance for a little innovative company to get paid for their innovations without a big partner, who was able to handle the costly patent litigation steps. This partner was found 2005 in General Electric ( https://seekingalpha.com/symbol/ge ). End of 2010(!) the USPTO has closed the reexamination process and all concerning Sightsound Patents were valid! GE reopened the Roxio/Napster case (Pennsylvania Western District Court, case 2:04-cv-01549) and some days ago in May, 2012 there was also a settlement between the parties in this case!
In 2011 GE/Sightsound also accused the current music download market leader Apple concerning the same patents (Pennsylvania Western District Court, case 2:11-cv-01292): http://www.patentlyapple.com/patently-apple/2011/10/sightsound-technologies-aims-at-itunes-and-iphone-in-new-lawsuit.html
Because of the long story with a lot of detailed evaluations and many positive decisions (Court, USPTO Reexamination etc.) it will be hard for Apple to avoid license payments. And then there's not only Apple: Amazon, Google/YouTube, Yahoo, Microsoft, Facebook etc. complete the list.
Long Story - but finally a very good chance for GE/Sightsound to make really money. Sightsound owns not only the 3 reexamined patents, but in summary 50 national and international patents.
The patents are valid not only for music download, but also for all commercial online Audio & Video content, like music download, video/film download, online audio & video advertising, commercial online audio & video games and so on...
In 2011 alone in the USA this is already a market of more than $10 billion revenues, in 2015 researchers assume between $30 and $50 billion revenues worldwide.
Assumed a minimal license rate, a so-called FRAND license (Fair, Reasonable and Non-Discriminatory) GE/Sightsound can earn 1-2% of these commercial download revenues and so you can imagine the potential of these patents. No wonder, that GE was interested some years ago and an valid indicator for the potential and strength of these patents, because GE has one the most professional patent licensing departments worldwide.
And now after all the explanation I come back to the "little investor".
The contract between GE and Sightsound contents that GE and Sightsound get each 50% of the net revenues of the model. Sightsound self has a bunch of private owners (founders, some investment companies etc.) and one owner is a little German entertainment company Intertainment AG which is registered at German exchanges like Xetra or Frankfort (share ID 622360), so everyone can indirectly participate at the Sightsound story: http://www.boerse-frankfurt.de/de/aktien/intertainment+ag+ag+DE0006223605
Intertainment AG currently still held 10% of Sightsound (information given January 2012 on the annual shareholder meeting). Clearly there are always risks, but this is a seldom chance for a little investor to participate on a big patent play.
Thanks for your attention and please excuse my "broken" English (I'm a German IT engineer, contact: info@zentrader.de ).
Disclosure: I am long GE.
Additional disclosure: I am long Intertainment AG, Germany (WKN 622360)
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