Does anyone here have any intelligent speculation on why we have not yet seen any initial office action from the USPTO on the reexam of the '135 Patent? Have I missed something? At this point there appears to be nothing for VHC to respond to.
That's it. We dug up a whole lot of information on royalty rates, what determines essential patents, the process companies go through once patents are on a data base, the effect of cross-licensing versus licensing from a non-ETSI member (no cross-licensing), etc... A wealth of information that we shared and read and debated.
I personally was not satisfied with VHC's patents being on the database alone. It was critical to understand WHY they declared them essential. And what companies would do after these patents from a non-member were on the data base. What would be the effects for companies who tell VirnetX to stick it, just come after us.
This is why 3G litigation and any reexams these patents go through now is so valuable. I have consistently said, I welcome the 3G litigation and reexams as opportunities for VirnetX to show how bullet proof these patents really are. Combine that with research on whether the work flows in the TS 33 specification mean VHC patents are essential, and It leads to me to believe VHC has a stranglehold on security for 4G devices. Worth every bit of a 1% royalty that they are seeking.
Between flyers, myself and several others here, we have spent considerable amount of time on these very items. Trying to find every hole we can find in VHC's armor. That's what drives our research.
I posted the link a long time ago:
It appears the link is no longer valid. I downloaded the PDF however back when I found it so I do have a copy.
First, if you go search my posts, you will find responses to anything you are asking. I will kindly address a few more points however.
I have a document on declared royalty rates for several companies for 4G LTE Advanced. The 1-2% that VirnetX seems substantial. And it is. That's why the potential value of this company is enormous. And those numbers will make the 3G litigation settlements look like pennies.
Is 1-2% a lot? You have the opinion that it is. I don't.
Here's why. If you don't understand how 4G architecture is different from 3G, then I suggest you go start reading. The way information flow is handled will change significantly. Before, security (TS 33) was optional for several reasons. In 4G, security is no longer optional. And device to device security will be paramount. Again, go research my (and flyers) old posts for information about why security in 4G is so critical.
Is 1-2% too much to pay for security protocols that ensure communications from device to device are not going to be hacked?
Again, my opinion is no. The 1% will be a minimum royalty, which is what Larsen clearly explained would be given to the likes of mammoth companies with large products and volume. 1% minimum.
The revenues based on this number alone are staggering.
Once the 3G litigation is cleaned up, the waterfall effect on 4G licensing will be satisfying to watch. And yes you're right. With extremely low overhead and critical IP that everyone will need, what a beautiful situation to be in. VirnetX is a unique company that you don't find everyday.
After all that work, you throw out the 1-2% number.
For something that people are supposedly not going to put effort into ("Charlie, go out and find out how much we have to pay to make these handsets"), a 1-2% royalty is a lot to ask.
Let's put that number into perspective: QCOM, for all the R&D they've put into their stack of patents, has garnered 2-5% of 3G royalties.
Against this, you expect people to pay up 1-2% without even asking why - because it's apparently too much work for their lawyers.
In a business with 30% gross margins, and 0-10% operating - that 1-2% becomes pretty significant.
If you were running that handset business, you'd take one of two options:
1. Pay some lawyer $10,000 to figure out why the hell we should be paying VirnetX 1% of our revenues.
2. Counter-offer with a more manageable 0.1-0.2% to get rid of what seems to be a minor annoyance.
If it's minor - accept a low royalty rate. If it's important, expect scrutiny.