Marathon Patent Group (MARA), the patent licensing company run by CEO Doug Croxall, posted a much wider net loss in 2015 as revenue fell 11% and litigation and other expenses increased 62%.
Los Angeles-based Marathon said its net loss in 2015 ballooned to $16.94 million or $1.19 a share, from $3.15 million, or 16 cents.
Revenue from licensing fell 11% to $18.98 million from $21.4 million. Total expenses increased to $44.7 million from $27.6 million.
Croxall said in a statement the lower revenue reflected Marathon’s decision to stay disciplined and seek an attractive royalty payment as opposed to discounting expectations to meet year-end goals.
The lower revenue also may reflect the growing reluctance of infringers to negotiate a license given the perceived advantages they have to invalidate patents in the courts and through the inter pares review and covered business method review processes. The U.S. Supreme Court’s infamous Alice decision effectively ended software as patentable subject matter. The high court and the Couert of Appeals for the Federal Circuit also have been increasingly skeptical of large damages awards and of enforcement actions filed by non practicing entities.
Despite those headwinds, Croxall said Marathon’s 2016 activity is off to a strong start.
“We have already had three patent infringement trials, all of which we are awaiting final rulings. In addition, we currently have 10 more scheduled trials throughout the balance of the year covering 12 defendants. We believe the current trial schedule for 2016 has the potential to trigger significant revenue events.”
Among Marathon’s upcoming trials is Rensselaer Polytechnic Institute and Dynamic Advances LLC against Apple Inc., which is scheduled to begin May 2 in the Northern District of New York. The suit involves RPI’s U.S. Patent 7,177,798, entitled “Natural language interface using constrained intermediate dictionary of results.” Marathon's wholly-owned subsidiary Dynamic Advances is the exclusive licensee of RPI's '798 patent.
The company noted that on March 10 in Germany, its wholly-owned subsidiary, TLI Communications GmbH, had separate first instance infringement hearings against Flicker/Yahoo! Inc., Pinterest Germany GmbH, Pinterest Inc., and Tumblr Inc. The Munich District Court I is scheduled to announce its infringement decision for Flickr/Yahoo! Inc. and Pinterest Germany GmbH on or around April 21.
Marathon’s wholly-owned subsidiary, MedTech Development Deutschland GmbH on April 13 has a first instance infringement hearing against SAM, G-21 s.r.l.
The company ended the year with cash and cash equivalents of just $2.56 million.
Earlier this week, Marathon said had acquired 3D Nanocolor Corp., a developer of electro-magnetic film, which used to be called Caldera Technologies, using intellectual property licensed from Hewlett-Packard.
Marathon said it has provided an initial round of seed capital described as de minimus. The renamed 3D Nanocolor also has commitments from outside investors for development and growth capital. The outside investors were not identified.
With the formation of a new subsidiary to commercialize a product Marathon has joined a growing cadre of patent licensing companies that has launched new products to bring in much needed revenue and potential profits. Other licensing companies to launch similar efforts include Vringo Inc. (VRNG) and Finjan Inc. (FNJN).
"It is not surprising to see yet another licensing company (joining the likes of Vringo, Itus, DSS, and Pendrell) looking to diversify its business model away from straight IP licensing," said Mark Gober, a director at 3LP Advisors in Silicon Valley.
"These companies have learned the hard way that it’s exceedingly difficult to generate substantial returns in a timely manner in today’s IP monetization environment. They’re all looking for new ways to generate revenue. Will the new models work? We’ll have to wait and see."
In other news, ParkerVision Inc. (PRKR), the patent licensing company run by CEO Jeffrey Parker, posted a narrower net loss for 2015 driven by lower expenses related to staff reductions.
The Jacksonville, Florida-based company’s net loss for 2015 was $17.1 million, versus a net loss of $23.6 million for 2014. After adjustment for the 1:10 reverse stock split, net loss per common share was $1.74 for 2015, as compared with a net loss per common share of $2.45 for 2014.
As of Dec. 31, the company had cash and available for sale securities of $2 million. During the first quarter of 2016, ParkerVision sold unregistered common stock to an accredited investor in a private placement transaction for $1 million, and also received $11 million in funding from Brickell Key Investments (BKI), the majority of which is to be used for the payment of legal fees and expenses in connection with patent-related proceedings.
The BKI funding is expected to finance the initiated proceedings with the International Trade Commission against Apple, LG, Samsung and Qualcomm for unfair trade practices.
ParkerVision is represented by the law firm of Mintz Levin, Cohn, Ferris, Glovsky and Popeo, P.C., a Boston-based full-service law firm with a strong patent litigation practice and extensive experience in ITC cases.
The company said all district court infringement actions against Apple, LG, Samsung and Qualcomm have been stayed pending resolution of the ITC action.
—To reach the reporter responsible for this story, please contact Dan Lonkevich at 707 318-7899 or at firstname.lastname@example.org