BCYP vs. Living Social: Missed Filings, Changed Timelines, Hmm…

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Aug 4, 2013 MARKET 27 5553 Views

Some of the selloff during the past week prompted us to do some more digging in this case, but we were perhaps more motivated because the dates in the last judge’s order seemed not to entirely add up given a Markman in just a few weeks. We reexamined the full docket and pulled up an entry simply titled “order” which was filed in mid-June. Most of these orders give some sense of what the order relates to in the filing title. Like many, we picked up the recent activity related to extended times to file and followed from there after what has been a pretty dull docket for some time. The “order,” was in fact a scheduling update that pushed the Markman in this case back to February 11, 2014. We feel a bit foolish for not catching this sooner and apologize that we didn’t. This is one of the reasons we don’t try to follow all of these patent cases (the bigger reason is that all cases, and patent portfolios, are obviously not equal). We do note that this scheduling change was not announced by either of the parties to the suit which itself is a bit strange. 

It turns out that the sides jointly motioned for this change. One can make up several stories as to why Living Social would be motivated to agree with this. For starters, it moves the hearing back almost six months so perhaps as the defendant delay is good. Also too, Living Social will have an opportunity to see how Groupon and the other individual defendants do at their joint Markman hearing against Blue Calypso on November 7th. On the other hand the reason for the move is because Blue Calypso is asserting more patents in the suit which would appear to be a disadvantage for Living Social (and one could fairly ask whether the original patents in suit were strong enough for Blue Calypso to prevail).  Also, by moving into the number two spot so to speak, Living Social may unwittingly relinquish some of the strategic imperative of controlling its own destiny in relation to these patents.

There is yet another way to think of this and that is that these sides are cooperating with one another in the interest of reaching an amicable conclusion via a settlement and licensing deal. We still think it is highly unusual that both sides missed dates which were ordered relative to key filings pointing to where, specifically, the Living Social technology infringes Blue Calypso’s patents as well as the response to the Amended Complaint from Living Social. Very soon after we first pointed that out we saw the first settlement with Mylikes. We won’t be surprised to see others prior to this hearing, or for that matter prior to the Groupon, IZEA, Foursquare and Yelp Markman, in early November.  We have written previously about the strategic reasons that one or more of these companies would not want to be at the mercy of a strong competitor and invite you to review those.

Finally, and to be clear, we do speculate that there may be an eye toward something else other than litigating these patents on the part of Blue Calypso and Living Social. This discovery does nothing to dissuade us in that opinion and in fact does quite the opposite. We can guarantee nothing of course and people need to do their own due diligence. Time will tell.

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27 Comments for "BCYP vs. Living Social: Missed Filings, Changed Timelines, Hmm…"


Bill

Posted on Sunday 4th August, 2013, 2:15pm

Reply

Hi EDVA,

Gil K. has posted the following link on another of your update post’s. Any comment? Thanks-Bill

From Gil K.
See link below. Please discuss the implications. Thanks.
http://news.priorsmart.com/foursquare-labs-v-blue-calypso-l8Rr/

    edvapatent

    Posted on Sunday 4th August, 2013, 2:30pm

    Reply

    That filing is pretty much standard operating procedure for a defendant. I can’t think of any patent case where the defendant doesn’t claim that the patents are invalid. We will see motions for summary judgement and claims the patents are obvious as well. The good news is that these patents are/were well prosecuted and very solid. They have a long shelf life as well. Looking forward to the days and weeks ahead here.

      Zippy

      Posted on Sunday 4th August, 2013, 3:01pm

      Reply

      Hi EDVA,

      Now that we know the Markham Hearing for Living Social is pushed to Feb next year, does BCYP have enough capital to take them through the Markham Hearing for Groupon, Yelp, etc. and all the way next year during jury trial and Hearing for Living Social, or is dilution looking imminent to raise capital? What are your thoughts?

      Thanks.

        edvapatent

        Posted on Sunday 4th August, 2013, 3:20pm

        Reply

        I had an email exchange several weeks back on that very topic with the COO Ken Johnsen. He assured me they had enough capital to last through 2013. Having said that I’m not inclined to just take people’s word for that. If someone showed up with a few million bucks looking to invest I’m not sure the answer would be “no.” Raising money now, however, would appear to be not so smart. The share price is ridiculously low given two Markman hearings coming up within six months and one settlement already under their belt. If they were to do a raise it would make much more sense to do it when the price appreciates considerably, not now.

Gil K.

Posted on Sunday 4th August, 2013, 4:34pm

Reply

So, no BCYP court activity until November, right?

    edvapatent

    Posted on Sunday 4th August, 2013, 5:01pm

    Reply

    No BCYP hearings until November! THere will be plenty of activity in terms of filings however. I also think we will be surprised by at least one other settlement prior to November. And yes that is a guess, but it is an educated one when considering all of the various factors. Stay tuned…

      Gil K.

      Posted on Monday 5th August, 2013, 6:20pm

      Reply

      I don’t remember reading about this here. Did I miss something?

      “In an unexpected order (available at pacer.gov) by U.S. District Court Judge Michael Schneider on July 19, 2013, the court consolidated all defendants (Groupon, IZEA, Yelp, Foursquare, MyLikes) into the one lead case, “Blue Calypso, Inc. v. Groupon, Inc.” for all pretrial purposes, including discovery and claim construction. Therefore, instead of having five separate cases, he ordered one lead case with Blue Calypso as the plaintiff against the five defendants. This is good news for Blue Calypso and bad news for the defendants. With this order, the judge ruled that all motions filed prior to consolidation must be refiled in the lead case to be considered by the court.

      Therefore, defendants like Yelp must now basically start from scratch in their effort to defend against the patent infringement suit brought by Blue Calypso. But in the case restart ordered by the judge, defendants are now battling against a much stronger plaintiff (Blue Calypso) than they argued against in their initial filings…”

      http://seekingalpha.com/instablog/814251-natty-greene/2097112-why-yelp-may-settle-with-blue-calypso-over-patent-infringement

        edvapatent

        Posted on Monday 5th August, 2013, 6:41pm

        Reply

        No, but we did. Thanks for the comment/update.

          Gil K.

          Posted on Monday 5th August, 2013, 7:31pm

          EDVA, some folks, including myself, are quite dismayed that Blue Calypso opted to not report the consolidation news. This is IMO very important news and serves BCYP well. Perhaps there is a good explanation, but it sure makes one wonder – this is surely not an oversight. The omission must have been deliberate. So why? New PR firm, high priced execs, not much business, stock tanking, and no mention of this important news. What’s cooking?

          edvapatent

          Posted on Monday 5th August, 2013, 8:22pm

          I completely understand that Gil. I don’t want to defend not reporting what surely seems material news (and perhaps subconsciously and erroneously my group relied on the fact that they would) but I have maintained and still believe that they are in the process of frying other, more important, fish. I point to the missed filing deadlines and awkward response we got to a very benign query a couple weeks back. These are the things that sort of re-engaged us as the dockets themselves did not have much in the way of discovy items to talk about. We know about the additional patents being asserted and we agree with the author Natty Greene who added an excellent article on the subject. Whether it is Yelp or Living Social or even Groupon who strikes a settlement next, there is no way to know for sure but something seems to be going on that is distracting this company. We happen to believe that it is something important but it might not be. Time will tell. The PR firm, in fairness, may not be up and running yet so the most we can say there is perhaps one should have been up and running by this point anyway. I think the jury is still out on the execs but they do seem to have put together a decent team together and perhaps there is just not a lot for them to do. I don’t think you can make too much out of their core business because, like Vringo, they will be most profitable prosecuting their IP. Anyway, the net net is that BCYP is going to be a winner for the reasons that we, and others, have already discussed…patents and legal representation. I know that may be a jaded and cold way to look at this but we suggest that it is the right way. Thanks for your comments Gil, they are much appreciated!

Gil K.

Posted on Sunday 4th August, 2013, 7:00pm

Reply

Thanks EDVA.

Looking over various websites including their own I find quite a number of high level folks, including A CEO, Vp-Sales, CTO, Director of Client Services, Creative Director, Vp-Sales Development, a number of programmers, a subsidiary in Costa Rica, plus a Board of Directors, an Advisory Board, etc. Looking at what’s been accomplished to date – the patents, the litigations, internal operations, etc. it is hard to see what all these very talented folks are spending their quality time on. The income to date has been very low, so what is being done in terms of sales development? What all is being created beyond the initial platform? What are the prospects for substantial income beyond royalties and settlements?

Your insights are much appreciated.

Mike

Posted on Monday 5th August, 2013, 5:08am

Reply

You should probably stay out of the Patent Litigation stock game. You are basically 0 for 3. I believe that you are an effective writer, that knows just enough about these patent stocks. I don’t see any difference between you and a paid Pumper.

    edvapatent

    Posted on Monday 5th August, 2013, 12:50pm

    Reply

    Everyone is entitled to their opinion. But for the record, I am about to be one for one. Vringo has been and will be a winner. I called that from the start and stood by it when obvious manipulators were writing stories, positive or negative, and then changing their minds overnight. The other two haven’t even had a Markman hearing yet and I stand by what I have said. I apologize when I am wrong but frankly if I am it is usually about a facet of a case that I have speculated on and I say so.

    If someone wants to judge me because they have very short time horizons, which from your message it appears you do, so be it. I’m not looking to curry yours or anyone else’s favor. If people appreciate my insights, great. If they don’t, that’s ok too. One last thing. I am always enthusiastic about the stocks we are involved in or we would not be in them. If that makes me a pumper so be it. I like Worlds and Blue Calypso very much for numerous reasons, most of which we have laid out in the public domain. They are risky investments by nature as any investment where you stand the possibility of making multiples on your returns usually is. I am not underestimating people’s ability to understand that. The companies that are prosecuting these cases make some mistakes themselves which is always going to happen to a degree when trying to navigate these waters. There is not much a non-insider can do about that. I get, and my team gets, much more than you know my friend. Stick around until the 9th inning and then let me know what the score is.

      Bill

      Posted on Monday 5th August, 2013, 3:54pm

      Reply

      EDVA,

      Thank you for providing us so much material and well thought out analysis to help us make an informed decision. I appreciate it very much!!

      Bill

Gary Gerhart

Posted on Monday 5th August, 2013, 1:24pm

Reply

Well said EDVA! Everyone should read your DD which obviously is very extensive and provided at no cost and do with knowing penny stocks are risky by nature.

    vamsi

    Posted on Monday 5th August, 2013, 3:00pm

    Reply

    @Mike its still 1 of 1 (Vringo). other 2 are pending for MH.

    edvapatent

    Posted on Monday 5th August, 2013, 3:06pm

    Reply

    I appreciate that Gary!

David

Posted on Monday 5th August, 2013, 5:23pm

Reply

I’ve always admired your writing style, enthusiasm, and apparent transparency. However, your missing of that Court Order only reminded me of my failure to do due diligence when it comes to being influenced by writers I was hoping had done theirs. Ultimately, my bad, not yours. Still like the story. We shall see what w,e shall see.

    Megaton

    Posted on Monday 5th August, 2013, 8:54pm

    Reply

    EDVA, thank you again for your informative coverage on BCYP. I am looking at the long term outlook on this stock, but, undoubtly the fall in pricing still has me a little uneasy. It’s not the fact that court proceedings get continued or delayed (I know as I work in one)…it is the company NOT letting its investors know about it as mentioned by Gil K that both surprises and bothers me. That’s a major mistake for the PR department to make especially as the company is approaching the major Marksman Hearings that could change its outlook completely. EDVA, always looking forward to reading your coverages on BCYP. I guess one can look at this as another buying opportunity.

David

Posted on Tuesday 6th August, 2013, 1:12am

Reply

I just wrote to the company, asking why they did not consider the consolidation of cases; and the rescheduling of the Markman as market events worthy of a press release. If and when I hear back from them, I will post.

David

Gil K.

Posted on Tuesday 6th August, 2013, 1:40am

Reply

EDVA, since you have personally already spoken with the CFO, perhaps a call from you in addition to David’s written contact might further underscore the importance we attach to this. We are all itching for more transparency, if possible.

Gary Gerhart

Posted on Tuesday 6th August, 2013, 7:58am

Reply

Perhaps the “Quiet period” do some ongoing negotiations is the reason for the silence. The Mylikes settlement is a material event that would have to come out in a PR and did. Just speculating but thats the only reason I can come up with.

    regan

    Posted on Tuesday 6th August, 2013, 2:28pm

    Reply

    Stock was up to 36 cents in April, and since then has had a non-diluting equity raise, the recruitment of a fairly high-powered CEO, and the settlement with a company (MYLIKES) that likely will be talked-about IPO once it ever becomes public.
    Companies with a similar focus of Blue Calypso also make money — and I personally don’t think the stock is solely about the lawsuits, even if the lawsuits can contribute lots of additional income.
    The company will definitely be bought at some point — and its CTO will leave to build another start-up, no doubt — and it’s all just a matter of when. If some of my other stocks become profitable, I will buy more shares.

      edvapatent

      Posted on Tuesday 6th August, 2013, 2:44pm

      Reply

      I agree there is money to be made in the space Regan (after all look who BCYP is suing) but for now the primary focus is the IP prosecution. Thanks for your comment…

    edvapatent

    Posted on Tuesday 6th August, 2013, 2:45pm

    Reply

    I have speculated that more negotiations are ongoing and I know I am not alone in that. Time will tell.

Bill

Posted on Wednesday 21st August, 2013, 2:25pm

Reply

thoughts on BCYP/Living Social joint motion to dismiss with prejudice that was ordered and signed on 8/19/2013..check PACER

    edvapatent

    Posted on Wednesday 21st August, 2013, 3:14pm

    Reply

    Saw it thanks Bill…this is one of those examples of trying to make sense of what we are seeing in light of the previous moves by the parties. Not quite ready to make any statement but do appreciate you reaching out. Thanks.

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