On August 12, 2013, Cyanotech filed its Form 10-Q for the quarter ended June 30, 2013, in which it disclosed that legal expenditures as a component of general and administrative expenses had increased from those reported in the same quarter in 2012. The Company has since received questions regarding the cause of the increase in legal expenditures. That increase was primarily the result of the Company researching, preparing and filing petitions for review by the Patent Trial and Appeal Board (“PTAB”) of the validity of a patent which claims to apply to certain uses of astaxanthin.
On June 28 and 29, 2013, the Company filed two Petitions (“Petitions”) for Inter Partes Review by the PTAB within the U.S. Patent and Trademark Office(1). The Petitions contest the validity and enforceability of Patent No. 5527533 (“Patent”). Separately, the Company is contesting both the validity of the Patent and its alleged application to any of the Company’s advertising, marketing and sale of astaxanthin products in patent infringement proceedings filed against Cyanotech on June 29, 2012 in the U.S. District Court for the Middle District of Florida under Case No. 5:12-cv-366(2). The Company’s objective in filing the Petitions with the PTAB in the last quarter was to expedite resolution of the Company’s invalidity claims.
Who in the Company received questions and how were they forwarded, and what else has the co. responded to?
Why doesn't CYAN TREAT ALL SHAREHOLDERS THE SAME?
They don't and they have made it APPARENT.
Essentially it is alleged patent infringement lawsuit filed by Valensa and Univ. Illinois vs. Cyanotech, published in Pacific business news on 07/13/12.) But Cyanotech has claimed benefits of Bioastin that have been known in the public domain as also found in publications. The patent in question is supposed to expire this year anyways. I do not understand how Valensa has a case, but evidently they are trying a latch ditch attempt to squeeze out money since their patent is expiring. In my opinion of course.
Actually, I don;t think your conclusion necessarily derives from the premise of your post.
The 8-K indicates that they received inquiries. The 8-K does not state that they answered those inquiries.
If they DID answer those inquiries, then Reg FD gives them a short period of time in which to make those disclosures to the general public.
Typical such disclosures might be made by a Press Release, but the filing of an 8-K is a completely acceptable method (to the SEC, not necessarily to "Mom & Pop investors).
So, here we have it, finally: some disclosure on the nature of the legal proceedings currently underway.
Inter-Partes Review replaces the old Inter-Partes Reexamination, which used to take up to five years to get a ruling (so legal cases often proceeded without it). In the new Review process, the PTAB has one year from the June 28, 2013 filling date to decide, which date can get a one six-month extension. That means we may not hear the PTAB decision until June 28, 2014, or even until January, 2015. Likely the legal case will wait to hear the PTAB decision before proceeding further, so there could still be a trial and appeals after that in the following years even if the company lost the review. This PTAB case may mean that further legal costs of any significance will be held in abeyance until the decision of the Patent Board, which would be a nice breather for the current fiscal year quarters to come. Right now I'm not going to worry about this issue; it's too far in the future, and besides, the company could win its case.