Cabrio03
5 months ago
This is a repost from Algobloffer on Reddit from a year ago about the Paltalk lawsuit.
PCSC Paltalk Update 2/21/23
Paltalk Holdings, Inc. v. Cisco Systems, Inc., WebEx Communications, Inc. et al
Texas Western District Court
Judge: Alan D Albright
Case #: 6:21-cv-00757
Nature of Suit: 830 Property Rights - Patent
Cause: 35:271 Patent Infringement
PCSC Paltalk Update 2/21 β Nothing in the process has changed our position (see #4 below) on the merits. The hedge with our initial report was standard in that the litigation process often yields surprises as it plays out and there remained key determinants that were unknowable until each stage was complete. The results are:
1. Venue (no changes, advantage Paltalk) - Paltalkβs first big victory in this process was having the case assigned to Judge Albright, who is widely known in patent litigation circles due to his background litigating patent disputes as an attorney and for his efficiency in handling patent litigation since being appointed as a Judge. The first full year after his appointment to the bench saw almost 25% of all patent cases filed in Judge Albrightβs district but a July 25 order from West Texasβs chief judge now distributes all Waco filed patent cases among a pool of 12 judges around the district (including Judge Albright). This is the most favorable venue for Paltalk by far and making it through the process without a change of venue is a big win for Paltalk.
2. Claims Construction (Markman hearing β advantage Paltalk) - a big win for Paltalk in that Judge Albrightβs order used Paltalkβs definitions for 3 of the 4 disputed claim terms and for the 4th used the plain and ordinary meaning from Paltalk's own filing that the claim applies to all "PC-based equipment". See 1-4 below for the details.
1 - The court has ruled in Plaintiff's (Paltalk) favor on the definition of "multiplexed stream" that applies to claims 1,2,6 and 7. Defendant's (Cisco) submission of a more limited definition was rejected.
2- the court has ruled that Plaintiff's claim term of "PC-based equipment" that applies to claims 4 and 9 will have its plain and ordinary meaning per Defendant's filing.
3 - the court has ruled in Plaintiff's favor adding Structure: Mixer 118 in figures 1 and 2 for claim 7 that Defendant proposed to exclude.
4- the court has ruled in Plaintiff's favor adding Structure: Mixer 118 in figures 1 and 2 for claim 8 that Defendant proposed to exclude.
This was a big win for Paltalk and led many to speculate that Cisco might seek to settle the case in the aftermath. No settlement offer was disclosed but the claims construction definitions measurably increased the likelihood of Paltalk prevailing in court.
3) USPTO Ruling (Cisco Rejected β advantage Paltalk)β Ex Parte Reexamination process; the Examiner rejected Ciscoβs arguments that all asserted claims of U.S. Patent No. 6,683,858 are invalid in light of certain prior art. Historically, this process has been a powerful tool for defendants seeking invalidation of a patent and has resulted in negative implications for the patent owner nearly 80% of the time through either cancellation or by narrowing the claims. Cisco got completely rejected, gaining in neither respect and would have actually been better off if they hadn't gone this route. This was the biggest win for Paltalk in the litigation process thus far.
4) Merits of the Case (Generally - advantage Paltalk) β we believe very strongly that Paltalkβs U.S. Patent No. 6,683,858 was being infringed by Webex since soon after the company was acquired by Cisco. This patent offers a method of providing audio conferencing for a plurality of clients using varying equipment and protocols. The method depicted in the diagrams for the β858 patent are designed to allow for βcross platform collaborationβ so everyone on the conference call can communicate regardless whether they are on a PC, Mac, landline or mobile. Cross platform collaboration was a widely known weakness of WebEx when Cisco acquired the company in 2007. TechCrunchβs Michael Arrington says it best in one of many articles written detailing the acquisition that points to WebExβs need to improve βcross platform collaborationβ as a key factor (See βCisco Buys Webex for $3.2 Billionβ here) saying βWebex is still ubiquitous (I am asked to view a WebEx presentation almost daily), but itβs expensive and bulky. And if you arenβt on a newish Windows PC, thereβs a good chance it isnβt going to work properly.β And just as a practical matter, anyone old enough to remember doing a WebEx (before Cisco acquired them) with many users who were using different platforms likely remembers how difficult and sometimes impossible it could be. The infringing functionality appears to have been added to Webexβs products in the years soon after their acquisition by Cisco.
5) Recent Cases in Judge Albrightβs courtroom β earlier this month Parkervisionβs infringement suit vs. Intel was settled at the start of the trial for $25m. A settlement of this size by a big tech defendant (Intel) vs. a Non-Practicing Entity plaintiff (Parkervision) sets an interesting backdrop for the next trial of a small company vs. big tech defendant in this courtroom. Paltalk is a much stronger Plaintiff for a jury trial than Parkervision in that Paltalk actually uses its patented technology for a business purpose and has for the better part of two decades. Some would call Parkervision a patent troll because most of their revenue comes from suing companies for infringement of their owned patents, though we think there are others that better fit that description. Regardless of how you view Parkervision, such a settlement sets a really good tone for a stronger plaintiff case vs. an even larger (Cisco is 2x size of Intel) defendant with a track record for litigation conduct that leads to enhanced damages.
Bottom line β the litigation process has been very favorable to Paltalkβs prospects since our last update. We believe these interim developments increase the probability of a Paltalk verdict and extend the potential range. This should materially impact the likelihood and amount of settlement offers prior to a trial verdict. In our view settlement remains the most likely outcome.
Jerry_Jacobs1
3 years ago
From PCC - 11/24 - Buy Paltalk (PALT) - Paltalk approached by suitor may be other indications of interest. Timing of recent sell off suggests stock may be being suppressed by parties seeking to buy the company cheap, seizing on weakness following stock sale to maneuver it lower. PALT sold stock to have cash for acquisition(s), will be entering NFT space and we expect this to be transformative. No intel on target (Props NFT WIP?) but could have Q4 impact and balance sheet transformed in 22.
The skinny - Paltalk sells "virtual gifts" that can only be gifted (not sold) inside the network, with sale of $10.5m+ over last two years, but even higher annual sales prior to merger with Snap. Execs say drop-off was due in large part to focus shift to blockchain dev. Expect sharp revenue spike when NFT version goes live and resources allocated to that line. If demand for $5m+ for virtual stickers that can only be gifted inside the network, how many will they sell of NFT version that can be traded and sold for profit on NFT exchanges? These have near 100% margins, expect to double virtual goods (both stickers and NFT version) sales upon intro but we think that may be conservative given what was sold in prior years and retail demand for NFTs in primary and secondary markets.