A few comments on patents and IP, a subject most investors (myself
included) and analysts know almost nothing about. Tack on the
usual alphabet soup here, IMO, FWIW, ROFLMAO or whatever....
In my experience, most questions about IP begin and end with "is it
patented?" or some question about the level of protection. A short
answer by management or analyst usually satisfies and the discussion moves
quickly on to more easily understood and familiar
topics like cash flow, revenues, expenses and new products etc. In the case
of development companies like Mvis, you are not, in any case, going to get
much more than a short answer. The reason is simple ---- very little of
the company's IP will be in the public domain
and for obvious strategic reasons the subject is nearly off limits. In the
case of Mvis, something like 80% of the patents and pending
patents remain undisclosed at present, so only the tip of the iceberg is
visible. In time, of course, disclosure will increase, but so will
the size of the iceberg, so an investor is always going to be well behind
the curve.
I am not saying don't bother to look. All I am suggesting is that we should
all recognize just how little we can actually see and factor
this into our judgement. You can talk to management all day long and learn
almost nothing more. They are not going to tell us more
than the bare beginnings of what we want to know. That's why we are
probably better advised to look carefully at the quality of the
team creating the IP, particularly the track records of key people. With
Lewis, Lippert, Gross and Dunfield we are off to a good start.
As a further observation, I think it is fair to rate the fact Mvis has its
own, in house IP counsel (Casey Tegreene) as a significant plus.
If nothing else, his presence is a statement of just how serious the
company is about building on and protecting the ideas of its key
people. Casey is the very busy architect of the IP strategy and with his
combined legal and EE background he can talk the language
of the rest of the team and pull their thoughts together. He brings focus
and considerable talent to the process of building a major IP asset, every
day, all day. I happen to think this is very important. Perhaps by analogy
I can create some sense of why....
The Mvis team is out there surfing the bow wave on a number of new
technologies --- VRD itself, MEMS, light sources, optics, to
name the obvious. This is an incredibly exciting place to be. The action is
fast and opportunities are enormous, but fleeting. In an
all too real sense, the race does go to the swift, those who are quickest
to
recognize the utility of fast breaking developments and
stake claims to the gateways controlling the paths to the future. Make or
break; top talent wanted.
Suppose, for example, you are an early explorer, riding the leading wave of
a new exploration boom in the services of your king.
You land on an island and in the distance you can see the coast of a much
larger land mass and in the far distance beyond the
outline of mountains. You claim the island for your king right away, of
course. Then maybe after a drink or two and feeling a little
bolder, what the hell, claim the coast as well, right? You haven't got
there yet, but you can see it, so claim it. Then maybe after
another drink those mountains might start to look larger, so make the claim
bigger, take them too. But before taking a snooze,
sober up and claim everything --- the island, the coast, the mountains and
the full extent of all that lies beyond the mountains, all
the way to the far ocean. If you don't, the explorer coming right behind
you will!
Put another way, suppose you came up with the idea for a liquid based shock
absorber for a car and decided to file a claim to a
shock absorber using a damping liquid. You just claimed the island. You
left out air based shock absorbers --- the coast and the
mountains. If you rewrote the claim to cover damping fluid based shock
absorbers (including air and nitrogen) you would be adding
some significant territory. But if you were really smart, you would claim a
a shock absorber that also included a damping mechanism
with a square law response, claim a motor vehicle instead of only a car and
claim a port within a chamber to selectively pass a
damping fluid. Now you are adding alot of new territory --- airplane
suspension systems, motor cycles, a square law response
spring structure, a conveyor belt tensioning system etc, etc. We are off at
a full gallop on the far side of the mountains, going god
only knows where. And that is precisely the point.
If you are the king, you want your explorer to file the most sweeping,
creative, broad based fundamental claim he and his brightest
companions can possibly imagine. This is what surfing the bow wave is all
about and why the subject is hugely important.
The bow wave provides the first view of new territory and allows for the
broadest claims --- claims limited only by what is
already out there and the ability of the surfer to conceive of the future
applications for the core technology unfolding just ahead.
Skill and imagination can really pay here.
In Mvis's case, if a patent application relates to ways of improving
picture quality and removing image distortion, then the application
describes and claims how the basic invention
applies to both image display and image capture
and also claims basic components, various systems incorporating the
components and methods of creating and capturing images.
A single application may thus carry a great many claims. And one piece of
IP interlocks with
another. Claims relating to image correction, exit pupil expansion or fiber
feeding apply regardless of the scanner involved, building
a network of moats, fences, mine fields etc, all designed to create barriers
to entry. Some of the smaller claims may well turn out in
time to be as significant as the core patents. One doesn't know right away,
since one can't see beyond the distant mountains all
the way to the far ocean or anticipate all future uses.
The process of trying to broaden claims and make them more creative applies
everywhere, including pending patent applications
held by licensors with whom Mvis is working. Overall the idea is to build
as substantial an IP portfolio as possible, covering the
company's core technology to and beyond currently targeted markets, the
whole of which will be significantly greater than the sum
of all the parts.
To say the least, this is quite a challenge. Getting to a key invention
first is what the IP battle is all about, but how the claims are
actually made and the way they are put together in portfolio is what will
determine the likelihood of winning the war. There is a lot
of sophisticated strategy involved in this fascinating and extremely
critical process.
I have only had a small glimpse of what this subject is all about and how
it pertains to Mvis, and in any case, am not capable
of more than an intuitive guess, based on the people, about how this will
all turn out. I can see the tip of the iceberg the same
as the rest of you, but none of us on the outside can know much about the
much larger mass below the surface. Clearly it's
growing quickly and those responsible for its growth make up a very
talented, creative and skilled team. As I've said before,
a bet on Mvis is ultimately a bet on its people. I think they are pretty
damn smart. I'll leave it at that.
GMG |
