Perpetual Innovation

Category: Apple

  • Invest in the Future of Self-Driving Cars and EVs

    When you look at the future of cars
    (and trucks) there’s a couple things that you can learn from the Jetsons. Yes,
    the cartoon characters of the future. Self-driving. Not limited by Gravity. 

    There are several things that would
    be reasonable to expect in the future of autos:

    1.     1.      Huge
    computing capabilities.
    2.      
    Mountains
    and mountains of data.
    3.      
    Lots
    of sensors.
    4.      
    Vehicles
    that can talk to each other, directly and indirectly. Kind of the Internet of
    things on (mobile) steroids.  (If the
    traffic ahead is stopped, it would be good to know before you get there.)
    5.      
    Electrification
    on the way to sustainable/renewable transportation.
    6.      
    Self-driving
    7.      
    New
    vehicle uses and business models.

    Although there is much overlap, we’ll
    focus on only two points at the moment, but from a stock-and-market
    perspective: the self-driving car and batteries (range).     Look at the article on IntellZine from 2017: Intel and Mobile Computing: An Eye on BIG Computing on the Move.

    Autos and Self-Driving. Everybody thinks of Tesla related
    to self-driving, but there are others. See excellent Wikipedia     Self-Driving article.  Lots of investors are trying to jump into the
    early stages and even the late stages of this market. But let’s start with
    Tesla.

    Tesla’s market cap at the end of
    2020 exceeded $650B, making it larger (based on stock value) than the top 10
    automakers     combined. In an industry that is expecting to sell only 14.5
    million units in 2020, it is a little hard to justify this crazy high market
    pricing. The Price-Earnings ratio is 1,300; but based on expected earnings, the
    PE is more rational for a growth stock at 160 times. However, if the rapid
    growth (130% yoy revenue growth) continues, the PEG ratio is closer to 1.3. For
    a smaller company expecting 100% or more revenue growth for several years is
    not impossible in some cases, but for a larger company going into a maturing
    industry, not so likely. So, buy tesla at these elevated levels at your own
    risk.

    The Tesla car has been referred to
    as an iPad on wheels. Much of the smarts behind the Tesla user interface is
    from Apple. Apple is by far the largest company in the world with $2.3T market
    cap. So, wouldn’t it be interesting if Apple decided to get into the Electric
    car business, as rumored (but not officially announced) in December 2020.
    Apple, in the meanwhile is developing their own chip sets so they can separate
    themselves from the big chipmakers, chips that are more efficient and faster.
    At the same time, Apple is partnering with manufactures of sensor technologies.
    Apple appears to be designing its own break-through battery technology. The
    current (announced) plan appears to be an Apple car release in 2024. (See the
    Reuter’s     article
    about this    .)

    So let’s see, the key 3 ingredients
    to the car of the future are: the software, the user interface/ecosystem, and
    the battery. Throw in the ability to market and sell. Anybody can manufacture
    the car, well, anyone with the factor and skilled factory workers. Apple looks
    like a safer buy even at a PE of 44 and 33 forward PE (back out the $100B cash,
    though). The PEG ratio is way high 3.3 because of -7% revenue growth last
    quarter, but it has historically been about 2.0 which is very reasonable for a
    mature but growth company.

    The other way to play these trends
    is to go for the break-through technology companies in the battery and sensor
    space. A couple that have gone absolutely nuts after a reverse merger this year
    are LAZR and (QS). QuantumScape (QS) has patented technologies and manufactures
    solid-state lithium-metal batteries, especially for the auto industry (up about
    1,000% over 6 months). Luminar Technologies (LAZR) designs, builds and sells
    long-range lidar products for autonomous driving (up about 300% since
    Thanksgiving). Both have stabilized a little, so consider buying them on
    weakness.

    Related to battery technology is
    fuel cell. Fuel cell technology functions like a battery or a battery backup,
    all you need is hydrogen. This year, fuel cell technology has gone absolutely
    bonkers. FuelCell (FCEL) is up from $2 to $12 in a month. Bloom (BE) is up from
    $5 in March to $30. Plug Power (PLUG) is up from $5 in June to $35 in December.
    Over the years you could have lost a lot of money owning these companies; maybe
    the time for fuel cell is finally arriving.

    In short, if you love Tesla, go buy
    the car. Lots of companies can, and will make the cars of the future, including
    electric and self-driving. The Tesla company does have room to grow in lots of
    directions (Trucks, Solar, HVAC), but there is already a MASIVE amount of
    growth already priced in.

     

  • Efficient Infringement 2: Which is Bigger Toll? EI or Patent Troll?

    In
    Part 1 on February 13, “    Inequality
    finds a place in IP where Efficient Infringement Runs Wild    ,”
    we emphasized the David vs Goliath nature of patent holding startups trying to
    get justice against a mega-tech infringer. 
    Infringement is somehow legally transformed because it is efficient – an
    odd attempt at rationalizing an illegal action. (Note the new location of our
    IP Zine and all past blog posts are at     www.IntellZine.com.) 
    Well, just as we acknowledge that, “hope springs
    eternal,” as Apple’s appeal in an infringement case was rejected (Bloomberg/LA
    Times, Feb 24, 2020).  The US Supreme
    Court refused to consider the tech giant’s attempt to avoid paying upwards of
    $1B in patent damages to VirnetX Holding Company, a Nevada company with less
    than $2M in annual revenue.  VirnetX
    somehow managed to tough it out for a decade trying to get Apple to pay
    royalties on patents for secure communications technology.
    Of
    the long list of things to fix in IP law, efficient infringment is certainly
    one of them.  Somehow, infringement cases
    must be settled far more rapidly than today’s decade long slogging through the
    mud.  The market disappears in ten years,
    there is no longer revenue available to fight over.
    From The LA Times, “The high court denied Apple’s
    petition arguing that a $439-million judgement from the first of two cases
    brought by VirnetX was ‘grossly excessive’ and should be thrown out… A second
    case not currently before the high court, resulted in a $503-million verdict
    over the same patents and newer Apple products.” (    https://www.latimes.com/business/technology/story/2020-02-24/apple-rebuffed-supreme-court-billion-facetime-patent)  
    This ruling was nearly one month after a federal jury
    in Los Angeles ruled that Apple and Broadcom must pay $1.1B in damages to
    Caltech for infringing on WiFi patents.  That’s
    right, California Institute of Technology (    http://www.caltech.edu/),
    the university in Pasadena California! What’s a school gonna do with patent
    technology anyway? Apple was ordered to pay $837M, Broadcom Inc $270.2M.  “It’s the biggest jury verdict of any kind so
    far in 2020 and the sixth largest patent verdict of all time, according to
    Bloomberg data.” (    https://www.latimes.com/business/story/2020-01-29/caltech-wins-a-1-1-billion-jury-verdict-against-apple-and-broadcom)
    Apple’s strategy is based on maintaining the Company’s high profit margin which
    demands fighting for years in various courts. 
    Does “efficient infringement” ring a bell here?  (The $838M won by Caltech is about one day of
    sales and 1.5% of the company’s $55.3B net profit in 2019.)
    Apple and Broadcom lose Caltech infringement case
    But wait, there’s more. Apple’s appeal to the US
    Supreme Court did not go well for Apple. On March 13, 2020, the US Supreme
    Court rejected the opportunity to review the case (originating in Texas, of
    course). The final settlement that Apple agreed to pay was $454M to VirnetX.  Now down to about half a day of sales and
    0.8% of the company’s net profit in 2019. Roughly $1 for each of the 400M
    devices that VirnetX claims patent infringement. (See     here
    for one discussion of case-closed.)
    So, Apple argues, essentially, “efficient infringement”,
    which we will return to in a second. But VirnetX has been ungraciously referred
    to as a Patent Troll, a Nevada corporation operating out of a Troll Hole in
    Texas. Here’s an example of articles during the decade by Zack Epstein in the
    NY Post:     https://nypost.com/2018/04/11/apple-ordered-to-pay-half-a-billion-dollars-in-damages-to-patent-troll/
    Patent
    Trolls    . The more derogatory term, but sometimes more
    accurate, is patent troll; other
    related terms are patent holding company
    (PHC), patent assertion entity (PAE),
    and non-practicing entity (NPE).
    Wikipedia has a good, but not especially strong, page on     Patent Trolls.
    The advantage of going back to Wikipedia is that it is dynamic and usually is
    updated perpetually by people. This Apple case is in the article, but not
    updated for 2020. Anyone can update, so please consider going and improving the
    article.
    There is the dilemma to choose between the lesser of
    two evils: the     toll
    of the patent troll     or the stealth of efficient infringement.  It
    is hard to support VinnetX, and the tolls of patent trolls.  Our values state that deliberate attempts to
    extort money on less-than-honorable pretenses cannot be condoned.  We have     several
    blogs posts about Patent Troll     and their negative
    impact on innovation and economic productivity. 
    On the other hand, efficient
    infringement     is the result of a deliberate – with malice of foresight –
    corporate strategy.  It is callous and
    predatory.  It is practiced by companies
    that are unquestioned technical powers and have major share in their
    markets.  They have uncommon market power
    and use it with against rivals.  In
    particular, these companies prey on start-up entrepreneurs if their new
    technology is a threat or an opportunity.
    Neither party is honorable in any way, but the greater
    of the evils is efficient infringement. 
    It would be a more positive impact on innovation if efficient
    infringement became too expensive by way of damages to risk continued
    practices.  The courts need to look just
    at the question of infringement and the issue of market power to make this
    call.
    These efficient infringement courtroom dramas go on
    and on, and on and on. A decade in this case. 
    Get the picture?  As one of
    several high-tech giants that are apparently doing the same, Apple doesn’t
    anticipate any significant downside. 
    When served a rare injunction, it just moves up the justice stepladder
    until, if necessary, it reaches the summit. 
    To be sure, The Supreme Court’s refusal to hear its appeal must have
    come as a shock.  But, will this change
    behavior?  Not likely.
    Here is another way to cast a harsh spotlight on
    efficient infringement.  The House of
    Representatives should hold hearings when these cases like these reach the
    public eye.  The CEO of the infringing
    company must be subpoenaed to testify whether or not efficient infringement is an accepted corporate policy; does the
    company’s board and CEO approve infringement and willingly will pay damages,
    eventually.  Today, a CEO can hide behind
    legions of lawyers. Being forced to testify in person just might, might change
    strategy.  In addition, Congress should
    make egregious efficient infringement a
    felony, Grand Theft – Intellectual Property punishable by 5-7 years in prison
    and forfeiture of revenues and fines for the key decision maker(s): Chair, CEO
    and CFO.  When enforced, efficient infringement will become a
    relic of a lesser past.
    Here is an afterthought. It is obvious that corporate
    lobbying and campaign contributions have removed any possibility of
    Congressional action to strongly deal with infringement today.  As the economy reopens, many things will
    change.  It would very much benefit the
    entrepreneur if the legal system enforced IP laws to protect the new technology
    inventions we will need.
    #Patents #EfficientInfringement #Infringement
    #PatentTroll #Apple #PAE #NPE

  • Jury Awards Apple $539 Million in Samsung Patent Case – The New York Times

    Jury Awards Apple $539 Million in Samsung Patent Case – The New York Times:

    The do-over award to Apple from Samsung on the patents law suit (and damages) is down to $539M from the original $1B. Here’s info on the original infringement ruling of $1B. VentureBeat has a good take on this as well.

    The war chest of patents — world wide — is massive in order to play in the smart phone and tablet space!

    ‘via Blog this’

  • When your IP gets the boot, AAPL boots IMG

    WoW.
    Imagination Technologies (IMG) dropped about 70% over the last day or so as Apple says that they will no use IMG’s graphics processing (GPU) technology much longer. The stock dropped from a high of about $300 US to a low of $76. It dropped $180 in today’s trading, stabilizing at about $90. You might have an issue when the largest company in the world says they don’t intent to buy your products much longer, especially if they are your largest customer.

    Read about it here.

    Apple says that they will take other approached to get their graphics. IMG says that will be hard to do with their intellectual property protection.

    IMG is very similar to ARM Holding who makes the technology, not the products. But last year ARM got gobbled up by SoftBank (which owns Sprint), so Great Britain is becoming even less great the day or so after BrExit (wondering if any relation there). IPZine blogged about ARM holdings not holding out here.

    Yes, intellectual property will be an interesting problem for the UK as they work out the divorce agreement(s) with the EU.

  • China’s Patent-Lawsuit Profile Grows – Troll Tolls Too – WSJ

    China’s Patent-Lawsuit Profile Grows – WSJ:

    China as a focal point of Intellectual Property, in the patent office and in the courts.

    This law suit by WiLAN is interesting to see how the “assertion” of patents can move and shift.

    Here’s a little background on WiLAN from Wikipedia.

    As you can see the company originally developed stuff so it would not be categorized as a Non-Practicing Entity (NPE), or Patent Troll in the ungracious term that is sometimes more appropriate for NPEs. WiLAN seems to be moving more steadily into the troll category.

    Now with a war chest of some 3,000 patents+pendings, WiLAN is a strong international force.

    In 2013 Daniel Fisher describes the Texas case where WiLAN had its core patents to the suit invalidated in “how to bag a patent troll“. The stock (on the Toronto exchange) fell 33% to $3.25. In 2014, Apple won again in California.

    Apple has won several law suits against WiLAN including a 2016 verdict. Look at the 6mo & 10yr stock chart on Yahoo, where it dropped from $3.40 to $2.30 in a few days at the end of July 2016. It now trades at $1.80.

    The Investor profile is not so good, even with the Samsung licensing deal last year.

    WiLAN continues to build its patent portfolio.

    One of the things that a Patent Troll never wants to do, is actually go to court. Patents can be invalidated, remedies can be diminished, and the golden goose can give up the ghost.

    Gotta love the trading symbol that starts with WIN (WIN.to).

    There are several things that WiLAN could do to make it a much more legitimate player, and less of a troll. But those involve capital investments in R&D to invent, manufacturing to produce, sales and marketing to sell. That’s a different business model. As long as investors are happy with investing in trolls, the trolls will rein supreme within their little serfdom of bridges.

    ‘via Blog this’