Neonode Inc. - patent case burns the soul and sparks discussion

[timontti]

I’m quickly setting up a thread for this after the work week. To save time and my own energy, I won’t do a long introduction, but will instead just gather a bunch of links. The discussion is currently a bit fragmented across different threads. Everyone can look into it themselves then.

Suffice it to say, there is definitely risk involved here, but in my opinion, there is a very good chance of success.

Sources:
This is perhaps the most important write-up. Everyone should, of course, consider for themselves how much weight to give it. In my opinion, the current state of the case is well-justified here, and you can tell the analyst has been following the case for a while.

https://www.redeye.se/research/1035054/neonode-the-lawsuit-is-alive-with-better-chances-than-ever

Recent videos on the side:
As I understand it, at least one more is coming.

https://www.redeye.se/research/1039931/neonode-interview-with-andreas-iwerback-part-1-samsung

https://www.redeye.se/research/1040006/neonode-interview-with-andreas-iwerback-part-2-apple

Discussion:
The case is sparking discussion for and against. I’ve picked out a few comments here.

Criticism:

Analyst’s response to the criticism:

Twitter users following the case:

https://fxtwitter.com/MadMomentum
https://fxtwitter.com/Iwerback

Last and least, I’ll add a couple of my own posts from this week. I.e., why I have invested in this.

https://keskustelut.inderes.fi/t/kurssien-ja-niiden-muutosten-kyselyt-kauhistelut-ja-hehkuttelut-osa-3/43884/6445?u=timontti
https://keskustelut.inderes.fi/t/kurssien-ja-niiden-muutosten-kyselyt-kauhistelut-ja-hehkuttelut-osa-3/43884/6483?u=timontti

I updated this for myself yesterday based on that RE table, so I could estimate in some range what the current price might include. As a reminder, that royalty per phone is, of course, a key variable.

So Samsung with treble damages:

Samsung without treble damages:

It should be noted that for me, this is a clear “either-or” case. Either the patent yields a good result or it doesn’t. Personally, I’m mainly interested in the Samsung case for now. I’m not assigning any positive value to the business operations regarding the share price, nor have I delved deeper into it. You shouldn’t copy me in this case; instead, DYOR and make your own decisions, etc.

I personally judge the sources used by RE to be reliable enough that the presented probabilities are, in my interpretation, certainly in the right ballpark. That’s why I consider this a very likely winner, at least regarding this Samsung case. I haven’t planned any long-term investment (years) for this. Additionally, regarding the numbers, I’ve estimated for myself that <10 USD is my personal buy level, and purchases have indeed been made there. As the outcome of the Samsung case (likely through a settlement), I believe the company will get 10-50 USD/share into its coffers, depending on the final result. There are many variables: royalties per device, the law firm’s cut, etc. Still, in my opinion, this has an “asymmetric risk/reward” when you don’t pay too much for the stock itself.

Feel free to disagree with my opinion on the other side of the screen; in fact, you should. Have a nice autumnal weekend.

edit. closing joke.

Have you ever wondered what a patent expert looks like after loading up on an insane amount of shares from a dollar, knowing a 10-50x payday is close? The guy is struggling to suppress his smile in interviews.

[StockTycoon]

Those royalties in the Excel seem quite high (even without triple damages), so perhaps the market is already pricing in a level that is clearly 10% higher.

[o11]

Iwerbäck stated that there are settlement talks likely ongoing, and that an eventual settlement could come within days or at least the next couple of weeks.

Has it been explained anywhere else why Iwerbäck believes that the settlement would be finalized so soon? Especially compared to that recent RedEye estimate of mid-2025.

[Tokarczuk]

In Iwerbäck’s opinion, the schedule for the discovery phase and the final trial should have already been released. Since it hasn’t, he believes it is an indication that settlement negotiations are currently underway.

Iwerbäck sees a settlement as being in Samsung’s interest as well, as the damages awarded in court could be triple compared to a settlement. Additionally, US judges push for settlement solutions.

[timontti]

Neonode: Interview with Andreas Iwerbäck – Part 3, Google

[Tokarczuk]

Ingressi tuohon Timontin linkkaamaan tänä keskiviikkoaamuna julkaistuun videoon. Lihavointi minun.

Redeye has interviewed patent expert Andreas Iwerbäck about a potential lawsuit against Google. Iwerbäck does not believe that Google, as the provider of Android, would be considered to have infringed on Neonode’s patent. The reason why is that the slide-to-unlock function is often put on the user-interface software, rather than on the operating system. Last, Iwerbäck summarizes that there are likely settlement talks for both Samsung and Apple and that a settlement with Samsung could come any day now.

[timontti]

40-minute podcast on the topic

42. Är vi nära en uppgörelse mellan Neonode och Samsung? Med Felix Lindberg

[o11]

NEXTY Electronics Selects Neonode’s Touch Sensor Module Technology for the...

The agreement includes an upfront technology access fee and future royalties and is estimated to have a value of US$2–3 million over the next four to five years.

A press release regarding actual business operations – not that it’s likely to be a major point of interest for anyone here.

[CitizenJ]

@timontti

42. Är vi nära en uppgörelse m... – Direktionen – Apple Podcasts

If someone proficient in Swedish listened to this, a short summary would be appreciated

[timontti]

Speculation is circulating today regarding the chart below. I think it explains the price plunge at the open.

https://t.co/wzHjH0Oiy5

https://x.com/MadMomentum/status/1839313616585330773

The filings can be followed here:

https://www.courtlistener.com/docket/17232604/neonode-smartphone-llc-v-samsung-electronics-co-ltd/?filed_after=&filed_before=&entry_gte=&entry_lte=&order_by=desc

[timontti]

So the possibility of a settlement is likely a bit smaller now.

[o11]

So, it seems Iwerbäck’s thesis that any settlements would be closed in the coming days has run aground, if he indeed based his view mainly on the absence of the order in question. And apparently, there was a logical reason why the order was only issued today, which would have been clear if one were more familiar with US litigation processes. If I’m interpreting this correctly.

[Denny]

Yeah, if this is anything like domestic procedures, it seems the case was in mediation (a settlement hearing in Finland), where they tried to find a settlement solution led by a different judge (I’ve been in these a couple of times). Since one wasn’t reached within a certain timeframe, the case returns to the original judge. However, if there are any similarities to how things work in Finland, many cases still end up in a settlement agreement even after this stage. The lawyers and their clients will be processing the mediation hearing and what was discussed there. The party that feels they are in a weaker position afterwards might very well make a settlement offer before the actual trial.

I don’t know how in real-time this page updates, but at least you can examine the course of events so far.

https://portal.unifiedpatents.com/ptab/case/IPR2021-00145

edit. Wait, I wonder if that’s related to the same thing after all. Could it be that there are several different matters in this Neo and Samsung case? As I understand it, the documentation and numbering for each case follows a chronological order.

The mandate from today that Timont just linked is document no. 42.

And yet, on the site I linked, a mandate from July was already document no. 77.

Well, since I’ve put a couple of grand on the line for this “hobby,” I’m happy to dig into this some more…

[CitizenJ]

The analyst is still on board with a heavy weighting.


And at least as of yesterday, also Iwerbäck

[Denny]

When you ignore the red eyes and the Swedish gel-haired types and actually get down to business, this is quite an interesting case. I read those appeals court decisions from July and last month. In both, they wipe the floor with Samsung’s stories, and the latter opens up the actual subject of the dispute in nice detail, so even a layman can form an opinion. These indeed overturned the district court’s decision and brought Neonode’s patent infringement claim against Samsung back to life.

https://cafc.uscourts.gov/opinions-orders/23-1464.OPINION.7-18-2024_2352477.pdf

https://cafc.uscourts.gov/opinions-orders/23-2304.OPINION.8-20-2024_2370165.pdf

There isn’t much sensible and analytical discussion to be found about the case, and a surprising number of parties have quoted Iwerbäck’s thoughts quite directly without doing much research of their own. As I understand it, Iwerbäck has built the idea of making a profit on Neonode on the basis that it would reach a settlement with Samsung and receive significant compensation, with other options being worse. And that seems to be how the market thinks, as no agreement was reached in mediation today and the share price is diving. There might be some statistics to support the idea that the probabilities of receiving compensation during mediation were better than after mediation ended unsuccessfully, but there is also another option. Namely, of course, that Samsung offered some compensation in mediation, but Neonode told them to shove those peanuts where the sun doesn’t shine and “see you in court.” At least based on those appeals court statements, it’s easy to understand if Neonode is feeling confident. I’m still at the beginning of looking into this, but reflecting on other legal cases, I wouldn’t be surprised if Samsung came up with new proposals before the trial, even one that Neonode accepts. I suppose even in the US, everyone fundamentally wants to avoid a trial, because in the end, it’s always a bit of a coin toss there too.

edit. Corrected a typo, i.e., of course Neonode is the one accusing Samsung of patent infringement.

[timontti]

[StockTycoon]

Neonode is likely asking for at least ten times what Samsung would be willing to pay. However, Samsung has significantly more experience in patent litigation and perhaps some confidence that even with triple damages, the compensation will remain lower than Neonode’s request. The longer this saga lasts, the better the situation is for Apple.

[CitizenJ]

@StockTycoon

Neonode is likely asking for at least ten times what Samsung would be willing to pay.

It’s unlikely they are this far apart. Pricing is ultimately quite straightforward given the previous licensing agreement.

[StockTycoon]

From Samsung’s perspective, the €2/device technology licensing fee agreed upon in 2005 for Windows CE devices is way too high, as they relied heavily on Neonode’s code back then, and its significance has since decreased with the generations of Android devices. They are now trying to get away with paying considerably less. Time will tell to what extent they succeed (and whether it helps that the '993 patent, which formed the basis of the previous license, has since been invalidated).

[Tokarczuk]

A comment like this was also found after the US market closed yesterday. Since I’m not familiar with the US legal system myself, it’s hard to say for sure either way. However, the author considers yesterday’s mandate good news; it narrowed Samsung’s room for maneuver.