Tuesday, August 2, 2011

The Supremes

In the most recent PR here, we have this nugget that seemed to warrant more research:

Defendant’s Burden
"Alleged infringers have the burden of establishing invalidity. In June 2011, the U.S. Supreme Court unanimously reaffirmed the long-standing principal of U.S. patent law that an alleged infringer can only overcome the presumption of validity by demonstrating invalidity with “clear and convincing evidence.”


The SkunK decided that he would see what those who do not have anything to do with the GreenShift litigation thought about this ruling.


Background of the ruling.  SEE HERE

I encourage all to read the entire article but here are some SkunK chosen excerpts below:
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"Microsoft petitioned the Supreme Court for certiorari to consider whether an accused infringer that challenges patent validity based on prior art not considered by the USPTO during prosecution must overcome the 35 U.S.C. §282 presumption of validity by “clear and concurring evidence” or whether some lower standard of proof will suffice."

"The U.S. Court of Appeals for the Federal Circuit squarely rejected Microsoft’s argument . . ."

"The Supreme Court of the United States unanimously rejected Microsoft’s plea to modify the clear and convincing evidence standard of proof required to invalidate a patent." 

"However, the Federal Circuit, in setting its rule, took note of the “the deference that is due to a qualified government agency presumed to have properly done its job.”


"The Supreme Court said this strict invalidity standard always applies, even when evidence before the fact-finder was not previously available to the USPTO during the examination process."


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SkunK's thoughts.

MicroSoft's losing argument seems to have been that a patent should be declared obvious since the patent official did not have a certain prior art before them when they issued the patent.  They thought the burden of proof to find it obvious should be lessened.  The patent infringement defendants in our COES case seem to have a position even weaker than the losing Microsoft argument.  The COES Defendants in our case have submitted their prior art arguments and GreenShift took those arguments to the patent office for review. The patent office saw the evidence - The COES family of patents stood the test. 

"The USPTO has considered all of the defendants’ alleged prior art materials and invalidity arguments and, by allowing the ‘231 Patent Application, the USPTO has determined that the defendants’ materials and arguments are insufficient to establish invalidity."

When you look up deep pockets in the dictionary, there is a picture of MicroSoft.  They certainly did not have to pinch pennies to provide the absolute best in legal work - and they still lost based on law.   

Now maybe the COES defendants have thoughts of winning their case with an argument before the Supreme Court - with a case that seems weaker than what MicroSoft already lost?  Do they think the court is going to be swayed by evidence that the patent office has already deemed insufficient - when they failed in the Microsoft case to be swayed by evidence that the patent office did not even review???  

SkunK

23 comments:

nobody123789 said...

I think that most people believe that GERS will prevail. The important question is whether KK can leverage this reality into an early cash settlement that is not fettered by additional lengthy maneuvering. KK has announced to the entire world through SEC filings and emails that GERS does not now have adequate cash flow to pay its bills. Therefore, it is likely that the Q2 filing will not be too glamorous. GERS faithful need significant positive news before the R/S. The candidate appears to be an early settlement. Can he get it?

Neil said...

Nobody,
I take issue with your statement that "the Q2 filing will not be too glamorous". I keep repeating myself, but cash flow is not the same as revenue. Revenue may well be outstanding, and so may profitability. So things will look stellar if that is what happens. However, as I tried to show in my cash flow spreadsheet, in the early days of implementation (including GERS current model with a long gestation period from signing contracts), cash flow lags revenue. This might mean some short term problems, but we're nearly at the inflexion point imo. I would actually be surprised if the qtrs results are not good as I believe KK delayed the R/S until after the reporting date so that the good news will weigh on the R/S aftermath.
We shall see in a couple of weeks...

Anonymous said...

I wonder how many patents are issued and then revoked. Then who pays the costs involved? Thanks Skunk thats interesting stuff!

Anonymous said...

Come on Neil, do you really think that net income will be larger in Q2 than in Q1? Remember the one time bonus?

Neil said...

Unlike some of the cheerleaders, I have never said that revenue would exceed Q1 (quite the opposite), I just said that it could be very good (adjusting for the one time bonus is within that context). I am expecting somewhere in the range $5m to $6m revenue for the qtr, though I think there is room for upside surprise in that number. This would be not far short of the Q1, even without the bonus, if it transpired.

Anonymous said...

Here's a quote from Green Plain

We did see good growth opportunities in our Marketing and distribution segment as we focus on expanding Blend Star’s platform and as we become more active in the bio fuels and blended fuel markets. We believe the opportunities for downstream fuel distribution are substantial.


Can you say patent pending blender pumps? Wait, doesn't Sunoco have 4,900 gas stations?

Anonymous said...

Does anybody have a clue who signed up this year in regards to the 5% of the industry?

Anonymous said...

could you corporate finance types explore this topic?..please....any chance for KK to line up a better finance deal based on the improving balance sheet?,,,,prior to the reverse split....like have a factor pay off YAGI and end the dilution and just face the higher interest rate???
larry

Slashnuts said...

http://www.bluetoad.com/publication/?i=48881

Read Pages 8 and 9.

If Glacial Lakes is in fact part of the unannounced 400 million gallons of licenses, I'm convinced GERS would see huge equipment sales from the deal.

Slashnuts said...

Man, are we just way ahead of the curve or what?

"Ethanol Plants Could Produce Additional Types of Fuel


The U.S. ethanol industry could expand beyond just ethanol and distillers grains production and could also produce other types of fuel as well, according to an article in Ethanol Producer.

Luca Zullo, principal of VerdeNero LLC, told attendees at the recent Biomass '11: Renewable Power, Fuels and Chemicals Conference in Grand Forks, N.D. about a vision to build a "diversified biorefining industry" from the current corn ethanol industry.

Zullo's biorefining model would retain the current ethanol and distillers grains production and keep the front end of plants unchanged. However, the proposal would add two additional technologies to existing plants, one of which is already ready for commercial production.

Minnesota-based JetE is already converting low quality corn oil with waste vegetable oils and fats when available into green diesel and jet fuel. A second technology from California-based GRT is still in the development stage and uses ethanol as feedstock to produce hydrocarbon fuel."





http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/ag/blogs/template1&blogHandle=ethanol&blogEntryId=8a82c0bc301f591e01318b8e1d600fa0

http://www.ethanolproducer.com/articles/8019/building-on-the-success-of-corn-ethanol-to-corn-hydrocarbons

http://www.verdenerollc.com/

nobody123789 said...

I'll raise you Slash:

Maybe ADM is now in the market for COES? How would that fit with your view of the good ship GERS?

http://money.cnn.com/video/markets/2011/08/02/mkts_am_adm.cnnmoney/

Anonymous said...

Does any of this even matter? If we get our shares cut 1/1000 then 3,650,000 becomes 3650. It would have to get to like $5 before it would even be worth celebrating. I don't see a reverse split benefitting anyone unless they still have like multi millions of shares. For cryting out loud. 3650 shares is nothing. Like two years ago I had 36,500,000 shares and after reverse split reverse split reverse split it's goning to be 3650. I feel like the impending doom is being sugar coated. Anyone else share the same opinion?

Neil said...

"Does anyone else share the same opinion."
No. The absolute number of shares is immaterial. Your wealth in GERS stock will be the same the day after the split as before (assuming no change in market price).

nobody123789 said...

However, the likelihood of the same percentage growth in a dime stock is lower than for a sub penny stock. I think that is what he trying to say.

Skribe said...

Wow!, that was a lengthy read. I thought my posts were long.

Miss Priss said...

Neil and Nobody thanks for sharing your opinion. Nobody you hit it right on the head. The point that I was trying to make was that if they reverse split us, which history suggests they will, then our ability to make massive profits will be greatly dimensioned. For example, let's just pretend that miraculously this stock can one day get to $1. Then common sense says that if you had 36,500,000 then you would be a millionaire. If they cut us down to 3,650 which is the amount of shares that I will own if they reverse split again then I will only get 3,650 dollars which isn't even a great vacation. So that is where I was going with my previous comment. GERS might be getting great opportunities with the reverse split, but we the stock holders are fixing to take it up the ass again so that KK can keep his New York apartment next to Mariah Carey. I, personally, am not happy with that. I am not going to sell of course becuase I already have this fucking stock, but I definately think we, the stock holders, are getting the shaft. Despite that, I would like to thank the Skunk for his continued efforts in keeping this blog. Hell, the people who read this thing are probably the majority shareholders. Peace out everyone and have a great weekend!

BillV said...

Miss Priss,
You are going to make money on this stock. To be upset that you are not going to get a 1000 to 1 return is just rediculous. If I can get a 2 to 1 return on my investment, I will be extremely happy. Perhaps you should sell now and go to Vegas.

Neil said...

Miss Priss,
I still think you are misunderstanding this. Let's assume the market value of GERS the day before the split is $1.2 million, similar to today. Assume you hold 10 million shares before the split at $0.0001, which becomes 10 thousand at $0.1 after split. Assuming no further dilution, the market cap of GERS does not change and stays at $1.2m the day after split, and your holding remains $1,000. Now assume that the positive developments that we all hope for actually happen and the market value for GERS goes to $120 million (not unreasonable). The mv will now be 100 times what it was, as will your shareholding, whether your shares are pre- or post- reverse split. This is all contingent on no more dilution, but assuming this the R/S makes no difference whatsoever to your future holding.

nobody123789 said...

BillV,

This is not the NYSE. Most people do not dabble in penny stocks with the goal of just doubling their money. They come to these gambles knowing that they are like the lottery; very high risk and a very low probability of winning. But they are not looking for a double. The possibility of a tenfold or greater return is still much higher with a sub penny stock than a dime or a dollar stock. This has nothing to do with the fundamental relationship between the float and the market cap. Sub penny stocks are just more explosive and in the rare circumstance there is ignition, buying panics drive the PPS to proportionately inordinate higher levels for sub penny than more expensive shares. Doesn't make actuarial sense but is true non-the-less

BillV said...

Don't get me wrong, I plan on making a good chunk of change here, but to expect to make multi-millions of dollars off of a $3000 investment is not realistic. I've invested in gers for about 3 years now. Been through what will be the third R/S, but I continue to invest because I know gers is going to make me a handsome profit. And, again, I will be ecstatic to make double my investment. I set realistic expectations and if those are exceeded, all the better.

Neil said...

BillV, I think your expectations will be exceeded here, provided that management does not engineer a way to take out third party shareholders like us for no reward.
This thing is priced for bankruptcy. I can give many examples of speculative stocks that have market cap in the hundreds of millions with less propects than GERS. So I think once a re-rating occurs and some of the uncertainties related to dilution and debt are ironed out you'll see the market cap/stock price respond. It won't be doubling to $2.4 or tripling to $3.6m as this is still effectively bankruptcy pricing. It will be multiples of revenue and profit which could realistically put it in the hundreds of millions. In other words once this becomes a ten bagger, it will very quickly become a hundred bagger. All IMO of course.

nobody123789 said...

After a little digging and talking to IP attorneys it appears that the USPTO review and approval is not the issue. GERS could easily lose this case on appeal on claims construction grounds. All this means no short term cash influx and why KK needs the 1000:1 for further dilution. Here is what I found:

"In the context of determining infringement (and not whether the patents themselves are valid) If the court of appeals believes that the trial court got the claim construction incorrect in the Markman hearing, it can reverse the trial court's decision, irrespective of the holding in Microsoft because claim construction issues are decided as a matter of law and are reviewed with no deference to the trial court. About 1/3 of claim constructions are reversed at the appellate level, so there is little incentive for clients to settle once they have already absorbed the cost of discovery (which is far and away the largest cost of a litigation) if they have even a belief that the claim construction was wrongly decided.

In other words, the question of whether a party is likely to settle after a Markman hearing goes more to whether that party believes that the Court of Appeals for the Federal Circuit (or the Supreme Court) will reverse the claim construction (because that forms the basis of the finding of infringement), and less about whether the party believes that it can successfully rely on affirmative defenses, such as that the patent is invalid."

OOPS!

Skribe said...

I think the Judge will not grant the alleged infringers their request to alter the meanings of various terms. I believe the Judge will side with GreenShift leaving the terms to their original meanings. The USPTO backs GreenShift on the original meanings of those terms. In my opinion the judge will side with GreenShift, the patent will not be altered, as the alleged infringers request because unaltered it proves them guilty of infringing. Futile?

 
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