27 January, 2008

Neomedia's patents in 2D Barcode



Neomedia (for their Gravitec division) have a bunch of patents (all carefully listed on Neomedia's website) in the 2D Bar Code area. Fundamentally, their inability to capitalize on their (pretty weak) patents are holding up the market that has blossomed around QR Codes in Asia (where Denso / Toyoto have the patent, but aren't enforcing it).

There's a comment from StreetStylz (whose blog has lots of commentary on Neomedia) with an analysis of Neomedia patents in this area.
Too many Patent Experts and legal representatives have looked at the core patents (mainly the Huedtz patents) and have not figured out a way around them; Motorola, Symbol, Qualcomm, Digital Convergence's legal team, Cross Pen, etc.
Another comment mentions:
USPTO has principally agreed with the EFF that all 95 of NEOMs claims in the patent need to be reexamined, not just a few of the claims. And this one patent is the core of the other patents. So if this patent is thrown out, the other patents that he claims NEOM holds are pretty much worthless as well, because they all use a similar process for their core operation.

12 comments:

streetstylz said...

Arthur,

There are two primary methods of 2D barcode symbology encoding: direct encoding (Japan) and indirect encoding (patented by NeoMedia).

In a direct encoding method, the target information itself is directly encoded within a 2D barcode. The code reader on the mobile phone translates the code data and takes an immediate local action.

Indirect encoding is the process of linking the target information to an index (364528) and putting that unique identifier into a 2D barcode. The code reader on the mobile phone reads the 2D code and sends the code data over the Internet to a central resolution server that will tell the mobile phone what action is associated with the index.

When you say NeoMedia's patents are weak, it needs to be clarified that Digital Convergence (:CueCat) and Symbol (Motorola) have both licensed NeoMedia's patents. Digital Convergence licensed for $100 million in 2000. However, NeoMedia only received $10 million of that before Digital Convergence went out of business shortly after the dot.com bubble burst.

Years later, NeoMedia successfully won a major legal battle against Virgin Entertainment -- who licensed NeoMedia's intellectual property portfolio. NeoMedia's patents have proven their value and worth in true time tested fashion. Just ask the fine folks at Lucent Technologies.

One would certainly think that patent #6,199,048 has been under the microscope over the years, and has been looked over with a fine-toothed comb. Especially for prior art in the preceding patent infringement cases with Virgin, AirClic, and LScan.

That being said, NeoMedia is not holding up the market. Companies such as Kaywa, 3GVision, Nextcode, and Semacode use the direct encoding method and do not infringe on NeoMedia's patents.

Therefore, there is a wealth of market share out there waiting to be capitalized on.

Which company will succeed? Which encoding method will mobile carriers agree on? Which encoding method will the CTIA: Code Scan Action Team adopt? How will the Mobile Codes Consortium (MC2) play into all this with their recent support from the OMA and the GSMA? Will the CTIA Code Scan Action Team join up with MC2, GSMA, and the OMA to form a united front and set global industry standards?

What will win out in the end ... direct or indirect encoding?

Best regards,
Sean

brewskih said...

Arthur,

Your comments were quite accurate.

Streetstylz mentions that the patents must of been under intense scrutiny by the likes of Airclic, L-Scan, and Virgin, and he is correct. What he did not mention though is that Airclic filed a counter claim against the validity of Neomedias patents. So apparently they were willing to challenge the patents as well.

It never got to that point, because like the Virgin and L-Scan cases, an out of court settlement was reached, and both Airclic and Neomedia agreed to dismiss their respective suits.

These patents have never been ruled on by the courts as Streetstylz and others at one time represented as fact. The out of court settlements netted no lump sum revenue to Neomedia's quarterly financial reports, which can be verified as I have done, by looking at the settlement dates in the press releases by Neomedia, and they looking at their quarterly reports following those dates.

So the question is, did these companies agree to settle out of court, because there was no real cost to them, as opposed to paying huge legal fees to defend themselves?

The real issue is the EFFs request for reexamination. The USPTO found that prior art submitted by the EFF raised serious doubts about all 95 claims in Neomedias patents, and had they had this prior art at the time they reviewed the partent application, their decisions may have been different.

The entire finding of the USPTO can be found on the EFF website. They address every claim, one by one, and state why they feel on each claim, that the prior art may have impacted their decision at review time.

The issue of Digital Convergence is another mis-representation as well. The company agreed to a 10 year licensing agreement for 100 million dollars over the 10 year period, and went bankrupt just months later. The fact is there is no evidence that Neomedia ever recieved a dime from this agreement. The licensing agreement was announced October 19, 2000. The first payment was due on 41 January 2001 of 3 million dollars. When that payment didn't get made Neomedia issued a promissory note bearing interest due by April 30 2001. When the promissory note was not paid Neomedia filed a law suit against Digital Convergence. Neomedia took a 7.5 million dollar write off on their books due to this contract. So they clearly did not get the 10 million that Streetstylz claims they received.

Here are the links to the Neomedia press release and the USPTOs decision when deciding that all 95 claims have serious or substantial issues of patentability based on the prior art they did not have access to at the time the patents were awarded.

http://w2.eff.org/patent/wanted/order_granting_reexam_neomedia.pdf

http://www.neom.com/86.html?&tx_ttnews[tt_news]=222&tx_ttnews[backPid]=170&cHash=f102896010

brewskih said...

I should have provided the link to the SEC filing made by Neomedia in 2000, to add clarity to just how the over 100 million deal was structured with Digital Convergence.

It wasn't a 100 million cash deal. It was a cash/equity deal. The first year digital Convergence was required to pay 8 million in cash and the balance of 15 million could be in company stock. Each year afterwards for the remaining 9 years, Digital Convergence was required to pay a minimum of 3 million cash and the balance could be company stock for a total of 10 million a year. So the actual cash value over 10 years was 36 million dollars if Digital Convergence so desired, and the remainder was stock.

As I pointed out, just 3 months later Digital Convergence defaulted on the first payment of 3 million dollars, and before Neomedia could collect Digital convergence went bankrupt.

Here is the SEC link that outlines the deal

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=375377&Type=HTML

Anonymous said...

Arthur,
You need to take everything Brewskih writes with a grain of salt. He claims to be an self learned expert in everything.

If you read the EFF petition, you can readily determine that most of the petition is B/S, taking aim at everything but nothing specific. I think the kitchen sink is also included in their petition.

One thing is very clear from reading your blog, and Brewskih's rant (Brew is a disgruntled NEOM shareholder who mastered the art of purchasing his shares high, on the way down, so he has an axe to grind about lost home equity funds used to gamble on NEOM stock).

There are a couple of statements which you made which in you blog which are not correct (never mind the pointless allegations of Brewskih, as his blinded by anger agenda, has always been devoted to his own self motivations).

In a reexamination by the USPTO, regarding a specific patent's claims, the USPTO, as standard procedure, always reviews all of the claims of any specific reexamined patent claim, not because of the opinions stated in the EFF petition. There is a very good reason for this USPTO procedural rule, which you do not appear to be aware of.

The reason the USPTO reviewes all of the specific patent's claims is based on the fact that the suspect prior art issues submitted by the EFF can not be resubmitted, as prior art for this specific patent at any future date, after the USPTO ruling. This rule, in it's self, is a valid rule of reasoning for reviewing all of the specific patent's claims.

If you had read the EFF's petition, you might have learned that the EFF is, in effect, challenging the USPTO, in the EFF's petition. How so? Well the challenge is in NEOM's rejected and corrected claims. The EFF reviewed all of NEOM's USPTO specific patent's rejected claims, and the EFF submits that NEOM's amended/corrected patent's claims do not warrant the USPTO approval of specific amended/corrected patent's claims.

Justly or not, I am not certain that you realize that anyone can petition or request a reexamination of a patent, including the patent holder, regarding their own patents.

I suggest that you read and comprehend the USPTO rules and regulations, and perhaps read the EFF petition, if it is your desire to earn the respect of your readers, otherwise, you may find yourself in much the same catagory as "ole Brewskih", who under normal circumstances might deserve some pity, for his recklessness and inability to manage his finances, if he wasn't so venomous.

Regarding all of the other B/S about the AirClic's out of court settlement with NEOM: Ole Brewksih is not an accountant either. He can't find his way into financial statements. The AirClic settlement payment is in NEOM's financial statements. Perhaps he may now spend the rest of his life looking and searching for same. Perhaps he is so blinded by anger, or so inept, he never recognized how to trace sources of income.

This is my first time to read your blog. I hope to see some future improvements in seeking the truth.

I support Streetstylz's statements. You could learn much from this person in seeking the truth.

Anonymous said...

Correction - previous reference to Airclic should be Virgin in lieu of Airclic

brewskih said...

Anonymous, or should we say Beam11, your rant is pointless.

Your education on whether the USPTO reviews all claims or some claims in a patent review is ridicules at best. At lets not forget to inform others you too are a Neomedia shareholder, who has pumped that company for 2 years now. And everytime you have been challenged on your supposed facts you run and hide until the dust settles.

So lets look at the facts. Regardless of the USPTO policy on how they conduct reexams, in this case they had no choice but to review all 95 claims, because the EFF challenged all 95 claims, and not just some of the claims.

The USPTO,, opined in the preliminary review that the prior art submitted was new information to them, that they did not have access to, when they considered and approved the application for patent.

The USPTO also opined in their preliminary findings, that had they had this information at the time, it may have had a substantial impact on their decision to award the patent to begin with. The USPTO also stated why they felt this prior art cast substantial doubt on Neomedias 95 claims, claim by claim in their preliminary findings.

You might not like these facts, but they are as they are, and thats why I posted the link to the source of my facts, unlike you have done in your rant.

Bottom line is the USPTO themselves found substantial doubt on all 95 Neomedia claims, during their initial review process that took some 60 days or so to conduct, before ever deciding whether a reexam was warranted or not.

As for financial accounting, its funny how you throw that out there now. To date you and your group, have not been able to show any proof of any substantial settlement amounts in the patent suits against all 3 companies mentioned in Neomedias financial reports. I see you modified your initial response to change it to you found some revenue from Virgin. You care to share with us the amount of revenue you were able to uncover, and provide your source? Because the amount was miniscule, compared to what the legal fees would of been for these companies to challenge Neomedia as I pointed out. But I am glad to see you changed it from Airclic, because as I pointed out Airclick was prepared to challenge Neomedias patents, and voluntarily dismissed their suit just as did Neomedia.

And as to financials, it was I who raised the red flags on the financial situation of Neomedia in late 2005. It was your group who claimed those financials did not matter because NEOM was a speculative stock. Guess who was right on that issue as well, when the pps went from .36 a share down to where it is at now at sub penny level? So don't tell me because you are a supposed accountant, who knows how to read financials and who doesnt. Lets not forget you couldn't even figure out from Neomedias SEC filings when Cornell?Yorkville was converting preferred stock, and others had to point it out to you after you claimed they were not.

The entire length of your post was merely an attempt to discredit me, which you failed deeply in doing. I see in that other forum, you invited your buddies to come and join into the fray in this blog, calling it a CATFIGHT.

The links to my comments are there for anyone to read the FACTS, and your personal attacks will not change that.

And no I am not disgruntled with my investment in Neomedia. I am disgruntled with shareholders like yourself, who claim to have all the facts, and anyone who disagrees with your group, goes under attack by the entire group. I am disgruntled with all the misinformation your group puts out across the web, then attacks anyone who tries to correct it.

And if you haven't noticed, my initial response to this blog, was not a personal attack on anyone, but on the information they were putting out, unlike your response, which attempts to bring in my financial situation etc., to discredit what I wrote. Thats the difference between someone interested in straightening out the facts, and a stock pumper worried about their investment. One sticks to posting about the issues, while the other attempts to discredit by personal attacks to obscure the real issues and facts.

Dean Collins said...

Posted first at;
http://deancollinsblog.blogspot.com/2008/07/us-patent-office-rejects-all-ninety.html

Oh Wow breaking news - It's a great freaking day for the EFF :)

U.S. Patent Office Rejects All Ninety Five NeoMedia Patent Claims
http://theponderingprimate.blogspot.com/2008/07/us-patent-office-rejects-all-ninety.html

Hey Streetstylz and all you other Neomedia flunkies - when you read this post think of me :)

This is a really big deal - 95 out of 95 patent claims all rejected, wow this is too cool and has put a smile on my face for the whole weekend.

Wonder what Ogilvy (and others) are thinking backing the wrong 'indirect' technology now. When Neomedia go bankrupt or are countersued out of existence all those marketing campaigns will cease to work and all the time and effort invested will be wasted.

Direct connect 'license free' QR codes are the way to go - paying license fees for a technology that Denso open sourced and made free in the 1990's is just dumb.

For those of you that want to read more detail check out the EFF site that links directly to the USPTO ruling
http://www.eff.org/deeplinks/2008/07/u-s-patent-office-rejects-all-ninety-five-neomedia


Regards,
Dean Collins
www.Cognation.net

James G. said...

The USPTO today completely validated all 95 claims of Neomedia's barcode lookup patent. The previous "rejection" was a non-final rejection. Today the dispute has been completely resolved since this is a final decision.

http://biz.yahoo.com/bw/090218/20090218005480.html?.v=1

streetstylz said...

NeoMedia Wins Patent Reexamination !!!!!!

http://finance.yahoo.com/news/NeoMedias-Barcode-Lookup-bw-14397693.html

:)

Anonymous said...

Either the EFF doesn't understand the patent review process or they misrepresented it when they claimed they "won" a victory!

Facts below :-)

NeoMedia’s Barcode Lookup Patent Approved

Mobile Advertising Industry Looks Forward to Next Growth Phase

ATLANTA--(BUSINESS WIRE)--NeoMedia Technologies, Inc. (OTC BB: NEOM), the global leader in camera-initiated transactions for mobile devices, announced today that the United States Patent and Trademark Office (PTO) has ruled in favor of NeoMedia in the reexamination of its U.S. Patent No. 6,199,048, System And Method For Automatic Access Of A Remote Computer Over A Network. All ninety-five claims of this Barcode Lookup Patent have been confirmed as being patentable by the PTO.

The PTO’s re-validation of this patent provides tremendous opportunities for companies in the mobile advertising space, allowing them to unify and quickly move forward to implement new applications and services.

“This is excellent news for NeoMedia as it allows us to move forward with our vision to create strong partnerships and synergies to align all companies for the next growth phase,” said Iain McCready, chief executive officer of NeoMedia Technologies, Inc. “We are committed to building a fully involved and collaborative ecosystem of agencies, mobile operators, and vendors who recognize the potential of mobile barcode advertising.”

"We are pleased that this patent has withstood the intense scrutiny of the PTO's re-examination process, in which numerous additional prior art references were considered in detail by the PTO Examiners before confirming all ninety-five claims as being patentable", said Tony Barkume of Barkume & Associates, P.C., patent counsel for NeoMedia. "The approval indicated by the PTO in its Notice of Intent to Issue a Re-examination Certificate has confirmed the strength and validity of the '048 patent in the face of such a heightened challenge."

In keeping with its vision and commitment to developing an interoperable global ecosystem, NeoMedia is licensing its technology to foster innovation in the creation of exciting new mobile barcode applications and services for the advertising industry.

NeoMedia embraces the development of open standards for 1D and 2D barcode technologies, and provides a global infrastructure to resolve these barcodes across multiple carriers. The company’s ecosystem ensures that all parties involved in the transaction are accurately compensated by pre-defined business rules. Through NeoMedia’s complete solution, media & advertising companies, consumers, businesses, mobile operators and OEMs can harness wireless networks to perform commerce more easily and securely, and ensure monetization can occur reliably and accurately.

About NeoMedia Technologies

NeoMedia Technologies, Inc. (OTCBB: NEOM) is the global leader in mobile barcode scanning solutions. Our technology allows mobile devices with cameras to read 1D and 2D barcodes and provide “one click” access to mobile content. Combining this technology with advanced analytics and reporting capabilities revolutionizes the way advertisers market to mobile consumers. NeoMedia provides the infrastructure to make 2D camera barcode scanning and its associated commerce easy, universal, and reliable – worldwide.

The company’s mobile phone technology, NeoReader, reads and transmits data from 1D, and 2D barcodes to its intended destination. Our Code Management and Code Clearinghouse platforms create, connect, record, and transmit the transactions embedded in the 1D and 2D barcodes, like web-URLs, text messages (SMS), and telephone calls, ubiquitously and reliably. NeoMedia provides the industrial and carrier-grade infrastructure to enable reliable, scalable, and billable commerce. NeoMedia was founded in 1989, and is based in Atlanta, USA. It currently has 30 active patents spanning 13 countries, with 29 additional patents pending.

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. With the exception of historical information contained herein, the matters discussed in this press release involve risk and uncertainties. Actual results could differ materially from those expressed in any forward-looking statement.

http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090218005480&newsLang=en

Anonymous said...

I have learned not to trust or rely on the EFF's PR's regarding the success of its patent-busting project.

Clearly, the EFF was way off base last summer when it claimed it had achieved a victory against Neomedia as a result of the USPTO issuance of an explicitly "non-final" rejection of all 95 claims in Neomedia's 048 patent.

From those premature PR's to the words the EFF uses (like "bogus" and "lame") the organization comes off as emotional and immature. One has to wonder how sophisticated the EFF really is.

Anyone remotely familiar with the detailed mechanics of USPTO's ex parte review process would/should know that a "non-final" rejection of all the claims in the challenged patent is very often the initial outcome. The process is set up in such a way as to discourage the patent holder from responding to the challenge at the first stage.

Indeed, many experienced patent lawyers advise their clients not to respond to the challenge itself, but to wait for the "non-final" rejection and then to challenge that. This "waiting" strategy has the advantage of locking the original ex parte challeger (in this case, the EFF) out of the process once the initial non-final rejection has been issued.

This is s very solid legal strategy for a patent holder that is interested in the best ultimate outcome; the disadvantage is that -by not responding to the initial chllenge - the USPTO has to make its initial "non-final" decision solely on the basis of what the challenger has submitted. Therefore, the patent-holder must often endure an initial "non-final" rejection.

Kudos to Neomedia's lawyers for their professional conduct of this process.

Also, as for EFF's recent spin PR that the patents were somehow "narrrowed": well, that "narrowing" had - in practice - already occurred some years ago as a result of the Neomedia/Airclic litigation. The new consolidation of the 95 claims into 89 claims with some modification is - in essence - an incorporation into the patent of the results of that litigation. Bottom line: the patent now more clearly covers what Neomedia wants and intended it to cover.

Anonymous said...

It is Dec of 2010. Any thoughts as to if its a good time to buy?