Leading technology commercialisation company QPSX Ltd (ASX:QPX) today announced that its European subsidiary had achieved a significant milestone in its Munich District Court action against Deutsche Telekom and Siemens. The Court's decision is another important step towards the resolution of the litigation or an early settlement.
In April, 2001, QPSX Europe GmbH, a wholly owned subsidiary of QPSX and European licensee, filed a DM125 million (A$115 million) writ against Siemens and Deutsche Telekom for infringement of QPSX's German patent covering its important Segmentation and Reassembly ('SAR') technology. The lawsuit is an integral part of a wider licensing program launched by QPSX Europe, targeting negotiations with leading European manufacturers and users of Asynchronous Transfer Mode ("ATM") telecommunications equipment.
In today's decision, the Court agreed with a QPSX Europe proposal to bring evidence in support of licensing activities being undertaken by QPSX Europe with equipment manufacturers and vendors in the region. Company representatives keenly welcomed the opportunity, on the 19th September, 2002, to outline the nature and extent of its accelerating licensing program.
"The achievement of this milestone is not only significant for the German litigation", QPSX Europe General Manager Matt Callahan commented from Munich this afternoon, "it substantially increases the pressure on other potential licensees to take an earlier strategic licence to gain competitive advantage".
Mr Callahan also pointed out that while not the central focus of the European licensing program, the impact of the litigation, particularly the June 6th decision, has already lead to an increase in activity for QPSX Europe's licensing team. In the week leading up to the decision, the licensing team entered new discussions with two of the top five European ATM manufacturers and discussions with other vendors in Germany and other European countries are scheduled in coming weeks.
In July 2001, the company announced the first SAR licensing deal, with European telecommunications giant Ericsson. The agreement specified a royalty bearing license for the technology, including the German SAR patent, and is expected to deliver substantial royalties. Negotiations with Ericsson are being continued by QPSX Europe with a view to expanding the coverage of a SAR licence beyond the products covered by the initial agreement to the wider Ericsson product portfolio.
QPSX Europe has been advised that following the presentation of the evidence outlining the extent and nature QPSX Europe's licensing activities, the Court would proceed to refer outstanding technical issues to a court appointed expert. The industry expert will assist the Court in understanding the nature and extent of the usage by the defendants of the patented technology and will explore the use of SAR in equipment manufactured by Siemens, as well as equipment used by Deutsche Telekom.
QPSX Europe's legal counsel confirmed that the Court's decision to hear evidence concerning QPSX Europe's licensing activities and then to proceed with the appointment of an expert, would provide an additional incentive for the defendants to settle the case, rather than risk an unfavourable expert report.
"QPSX Europe has demonstrated its resolve and capacity in pursuing patent enforcement in conjunction with a wider licensing program and we will continue to ensure that wherever possible, license negotiations are amicable and not unduly drawn out," Mr Callahan said.
QPSX Europe has engaged German law firm Frohwitter, which specialises in all aspects of intellectual property, including procuring, enforcing and licensing of patents in Europe and the United States. In conjunction with QPSX Europe and it's US based licensing partners, Frohwitter's intellectual property lawyers coordinate and direct the patent litigation and prosecution.
The company has minimised its exposure to the costs and risks associated with litigation by sourcing up to US$4 million of funding from Lloyds to support the action. This amount is considerably higher than the anticipated costs of the current litigation. In addition, a US venture capital partner is contributing 25% of QPSX costs. The company's cash at bank remains strong and is forecast to be $3.7M at June 30 2002, with an annual expense rate forecast at $1.5M.
QPSX selected Germany to launch its SAR licensing program and appointed QPSX Europe as licensee following extensive legal and financial advice. However, Germany and the UK represent only 10% of the world market. A second licensing phase in North America, with a market some eight times larger than the initial market addressed by QPSX, is currently being planned.
QPSX invested over $29 million in cell switch technology which paved the way for the adoption of its patented SAR technology in the International Telecommunications Standard (IEEE 802.6) - a first for an Australian company. Subsequently, SAR became embedded in the broadband Asynchronous Transfer Mode ("ATM") communications protocol.
"SAR technology is fundamental to broadband telecommunications. It provides a foundation for ensuring quality of service for Internet communications. QPSX's intellectual property is utilised in core telecom switch infrastructure over which the majority of Internet traffic flows," Graham Griffiths, QPSX Chief Executive Officer said.
QPSX
The QPSX group's focus is the profitable commercialisation of a range of technologies on a global basis. QPSX works with research institutions and companies across Asia Pacific to identify and then capture value in such technologies. This value is realised by QPSX, its licensees and commercial partners through products that shape the future within their global markets.
QPX Price at posting:
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