Beware of offers of indemnification

GreenShift counters ICM PR with devastating Press Release!

Infringement Was Not Denied
. . . Cardinal doesn’t deny that its ICM-designed corn oil extraction system is infringing GreenShift’s patent claims.

ICM’s Claims Were Rejected
. . . – the PTO considered and rejected the materials raised by ICM prior to the issuance of GreenShift’s first two patents in October 2009. Any producer that relies upon ICM’s continued claims of invalidity does so at its own peril.

Royalties Are Accruing
GreenShift has a statutory right to reasonable royalties for every pound of corn oil extracted with GreenShift’s technologies beginning as early as February 23, 2006, the publication date of GreenShift’s first patent.

Do Your Due Diligence
Ethanol producers are cautioned to fully investigate the facts and applicable patent laws as they relate to the viability of any indemnity, particularly under circumstances where the indemnitor’s exposure is multiplied by the number of indemnified producers and the ongoing infringement of each.
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See it ALL Here. (GreenShift Press Room) and Here (Biofuels Journal) and here (RFC Express - Federal Court Access) and here (News Blaze) and here (Forbes) and here (Europe)

SkunK

PS.  The SkunK, as an investor, is interested in that last point.  I guess Ethanol Producers - well all parties involved here - might be interested.  I think what it is saying is we might have about 40 Ethanol Plant infringers.  If One supplier installed half - or twenty units - and each unit was in full operation on average for two years - after the patent was published (23 Feb 2006) and prior to the patent being issued (13 Oct 2009) we would have 20 x 2 or about 40 years of straight line royalties.  If we figure that any settlement after issue (13 Oct 2009) is three times royalties - and say this thing was settled on Monday - over half a year past the issue of the patent - we would add more than an additional 20 x 3 x .5 = 30 years of additional royalties.   So with these rough numbers one can see that a single infringing supplier might be already on the hook for 70 years of indemnification.

A single year of Corn oil extraction might look like this.  Lets be conservative and say production was only 700,000 gallons a year.  (Less than half of GreenShifts proven yields).  At an average of $1.75 (cost has been much higher over large chunks of this period) we have 1.225Million in income and at a twenty percent rate - about $245,000 in royalties per year/plant.  This would put each hypothetical Ethanol parts supplier trying to cover each of their twenty plants on the hook for $17.15M before we even look at fines, additional damages, lawyer costs of both sides, etcetera, etcetera.

Since the SkunK believes we are now in the treble damages area - continuing to infringe in the face of an Issued Patent - any supplier who is claiming to cover some 20 plants in this scenario  - does so at a rate of an additional $245,000 x 3 x 20 = $14.7M a year. 

The question arises, at some point, what is the end game here?  If you were facing treble damages in payments as a patent infringer - wouldn't you want to hurry this to court to get a settlement either way?  If you were to win - better win early and rid yourself of this patent stuff.  If you were to lose you could at least limit your potential treble damages to a smaller period of time.  Limit potential risk.  Limit needless risk.  But Risk to who?

The Ethanol Plant Stakeholders must have a lot of question.  If you were to lose - who pays the court costs? The damages, the treble damages, the fines, both sides lawyer costs?  To what limit?  When the judge says your plant has to pay - not the equipment supplier - and twenty other plants and the parts suppliers themselves are looking for help to make huge accrued royalty payments - Who gets covered first from that offers of indemnification?  Did your plant give up the option to couter sue the parts supplier for not disclosing the GreenShift Patents in order to get a promise of indemnification?

It seems that only the government has a unlimited supply of money - and everywhere except the government - choices might have to be made.