QPSX Achieves German Litigation Milestone
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.
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