I think you basically have the idea right concerning the lawsuit. POWI holds key patents protecting their intellectual property, and MOT has developed technology that POWI considers an infringement to one or more of these patents.
Since the technology is new (integrating power into a single chip), and represents emerging technology, it is difficult to really call a spade a spade here. For example, just because Lotus popularized the spreadsheet with 123 way back when, competitors by default did not lay down and concede the market to them. You rembember the famous "look & feel" case Lotus brought against the first competitor who attempted to emulate Lotus' "intellectual property".
The example is not quite analogous, but the root argument will probably boil down to a couple key issues:
1. Exactly how SIMILAR is MOT's product(s) to POWI's?
2. Does MOT have documentation to substantiate independent design on their part, claiming they simply worked out a similar solution to a product they also saw as being economically viable?
3. Who has the better lawyer team, and what are the implications of a short vs. long & drawn out case? A delayed resolution usually works to the benefit of one party, many times the culprit who attempts to avoid the fallout, or is trying to buy enough time to delay a decision to the point it no longer matters.
4. What is the foundation POWI is building their case on; is it based on prior rulings with clear precedent, or are they attempting to cover new ground in the matter? Clear precedent would surely work to the POWI's advantage, who could argue "look judge, this has been dealt with before, and the decision reached back then is just as valid as it is now in our case".
5. The unknowns for a casual observer are always far greater than the knowns, so what we understand is simply the tip of the iceberg; there are technological factors, time considerations, and who knows what else that will be introduced by both parties in their arguments.
6. What are MOT's intentions with the technology? Will they implement it internally, or will they attempt to market the product, and directly compete with POWI in the open market?
My read is that POWI has a well prepared case, and that MOT may simply attempt to stall, bury POWI in legal fees, and regardless use their size to their best advantage. I think it will probably be settled, POWI will retain their patent protection, and MOT will license the technology or negeotiate a long-term arrangement of some sort with POWI. They could always buy POWI, in the event they felt like it, unless legal considerations prohibit such action.
POWI has the stuff, and MOT knows it. It is almost irrelevent that MOT is also a prime customer of POWI's, unless it is MOT's intention to directly compete with POWI. If MOT wins a right to use the technology only for internal use, there is enough demand to more than offset the loss of business. If MOT becomes a direct competitor of POWI's, well then thats a matter of two companies slugging it out, and as usual in a business war there is no guarantee the best man will always win.
I'm long on POWI, going to ride this one for quite a while too, because as you mentioned TinySwith promises to deliver extreme value to customers, as well as end users. It is a product who's time has come, and I believe the POWI's defense of their intellectual property will succeed, just as it did for Lotus, and countless other plaintiffs in the past.
Regards, JB
P.S. Without trying to be funny or inconsiderate, I completely understand the foray outside your prior investing arena, especially ITWO, CA, etc. and maybe some others soon to come like BMCS, who has recently been accused of juggling numbers to meet revenue projections. You should look to companies that possess proprietary products, solve real problems that can be applied in many areas, and have been able to create positive cash flow, rising earnings, high margins, all while keeping debt at or near the $0 level, Sounds like you found one, I whole heartedly support your choice!
P.S.S. Hey Todd!!!!! Yeah you, the one who struck gold yet again very early in the game. I hope your business is doing well, because you sure deserve it. You still stand out as one of the most helpful, intelligent, and considerate people who helped me become a little more stock aware. Thank you :o) |
