A couple of you guys, who I typically agree with, have prompted an SGE novel.  Hey, you did it to yourselves!

First, the "fat boys' thing.  Mattel isn't fat?  DirecTV isn't fat?  And some of the others, since 12/18/07, aren't fat?  IMO, the numbers from those, which will never be specifically known, are probably much higher than most suspect.  DirecTV....  Where would their business be without our tech?  Threat of injunction?  It would totally destroy their business.  No subsciber would sit idly by, with a blank TV screen, for any period of time.

The re-exams.  IMO, way too much weight is being placed on this.  First, the patents were already granted once.  The the re-exams are ex parte - very one-sided - our side.  Is anyone disappointed with the Moore response on the '584?  An outstanding presentation of a very strong set of arguments.  Followed by 25 new claims.

43 licensees, each with in-house and probably contracted legal and engineering support reviewing our patents and every conceiveable escape.  They paid.  And the Js paid.  And IMO the price has gone up every step of the way.  Why did the T3 sue?  IMO, purely because of the price demanded for licenses.

As for why our PPS is what it is: Swartz.  While I, like probably everyone else, feel a bit baffled by the S&L selling at this point in the game, hasn't it been "this point in the game", generally, for the past two years?  But he has kept on selling, first to convert warrants, then to just reduce his position.  Obviously, his agenda does not revolve around PTSC.  And, IMO, he has been very "gentle" in executing his plan.  From his prospective, he's making more money than he probably ever imagined from his investment, even at 39 cents.

From our prospective, it's a terrible shame, NOW and up until NOW and for the near term future.  But I don't think anyone could effectively argue how his "departure" and going about it is not a "necessary evil".  We want him gone, he wants to be gone so he can pursue HIS agenda, and there's no other way to get there from here.  That is, unless he just dumped the whole thing all at once.

Now, back to the whole re-exam thing.  We've got TPL and its expertise working it.  High-price talent, and probably worth every penny.

But here I'll divert to one thing that really turned my head.  DirecTV.  Formerly a piece of Hughes Aircraft's Network Systems division, then became its own division.  Hughes, formerly (15-20 years ago) the largest private employer in the state of California (~130,000).  The secret to their success?  Up until the mid-1980s, it was a bottomless pit of money - thanks to Howard (our Lord, who art in heaven, Howard be thy name).  Money to buy the best talent, to innovate.  Hughes was, and continued to be (after it's total acquisition by GM) a very "patent happy" company.  They sought out the best and brightest engineering talent.  My bro-in-law was a recruiter with Hughes, making frequent scouting trips to the top engineering schools.  Bring them in, teach them, groom them.  The company revolved around its engineering talent. 

At the Hughes subsidiary where I spent 12 years of my career, the power of the engineering/scientific staff was truly amazing.  The company catered to these people - their wish was the company's command.  I saw company plans (those 5-year plans), long in the making and in the process of being executed at great expense (and those plans being very wise from a business perspective) suddenly sidetracked because the engineering/scientific staff said "no". 

And I saw, to my great frustration, top engineers consistently make contractual foul-ups, over and over, the same foul-ups, and foul-ups that could get the subsidiary (at least) shut down, and not even get a reprimand - not even a slap on the wrist.  Frustrating to me because I was the manager of contracts compliance, and had to deal with the Gov't auditors every time.  They were too valuable, and their attitude was "I don't care about what the contract says, I want to build something cool, with added features not specified in the contract but that will make the unit perform better".  Can you say "overrun"?  But my little subsidiary was "sole source" for a whole bunch of products.  The Gov't couldn't buy them anywhere else (i.e., the overruns where worth it in the overall scheme of things - looking ahead).

I say all of this to make one point.  Hughes engineers/scientists were good - among the best.  And there was constant patent application activity.  Even at my little R&D subsidiary (2,800 people), we consistently filed for 10-15 new patents every year.  We had an on-site patent attorney.  At higher levels, a large staff dedicated to filling patents and performing patent research.

So then what happened?  Hughes, under GM, started getting whittled down.  Massive layoffs, though not so much of engineers.  And the top engineers naturally migrated to the parts of the company that retained the funding for innovation.  Eventually, DirecTV was a target employer.  And, eventually, GM sold off its entire defense-oriented business to Raytheon, and the top talent in all areas either volunteered for layoff (as I did, saving two subordinates from forced layoff) or migrated.  All that was left of Hughes was its Space and Com division (up until the mid-1990s, 80% of all satellites floating around were produced by this division - my subsidiary contributing some.  The satellites - the basis for DirecTV), Hughes Network Systems, and DirecTV.  Now all have been sold off.  But where do you think many of the top engineers ended up?  And the top patent people?

So DirecTV buys a license for the MMP.  Any holes in those patents?  Any work-arounds available?  I think not.  And that's one of 43 organizations.

So, just based on personal experience/knowledge, the DirecTV signing was IMO a major event.  And it probably involved more money than anyone suspects.  IMO, there are two things of import in determining the value of a license:  Volume of infringing product, and criticality of the technology.  For DirecTV, the volume isn't all that great in contrast to many of our other licensees.  But the criticality?  Huge.  Everything.  And the validity of the patents?  I leave that to you to consider....  I've solidified my opinion.

FWIW, and it better be something - these novels are time consuming!

SGE