Netlist Inc., an Irvine-based storage equipment maker, has concluded its patent infringement argument against chip giant SK Hynix Inc. before the U.S. International Trade Commission in Washington D.C.
The case, filed in September, alleges that the South Korean company infringed on five Netlist patents related to memory and server technology, and seeks to ban the import of certain SK products into the U.S. that generate billions in annual revenue.
An administrative law judge will issue findings to the ITC on Oct. 10.
“It’s a big deal for them, and it’s a big deal for us,.” Netlist Chief Executive C.K. “Chuck” Hong told the Business Journal.
SK Hynix is the world’s third largest chipmaker, with 2016 revenue of $14.2 billion. Netlist, which has been embroiled in litigation for years, on May 16 reported first-quarter revenue doubled to $9.4 million with a loss of $3.3 million.
Netlist opted for the costly ITC proceedings due to its brisk pace of resolving disputes. Hong said Netlist has spent “tens of millions” on legal fees, partially financed through New York-based TRGP Capital Management LLC.
“It’s a huge investment,” he said.
TRGP will receive payment only if a successful resolution with SK Hynix is reached. The return is based on their investment.
An ITC ruling does not provide monetary rewards but has the power to halt imports. Netlist is seeking monetary damages and other related fees through separate patent lawsuits.
Its board adopted a short-term stockholder rights agreement in April that prohibits a sale of the company during the ongoing proceedings and prohibits existing or new shareholders from surpassing a 15% ownership stake if they had not reached that threshold before the agreement.
An independent valuation conducted by Berkeley Research Group Valuation Services LLC in Northern California last month propped up Netlist shares to $6.50, a benchmark it plans to market in seeking monetary damages.
“We believe we’re undervalued,” Hong said. “In negotiations we’ll point to that as the cap.”
After its first-quarter release, Netlist traded at about $1.20 per share, which amounts to a $74 million market cap. The company last traded above $6.50 in 2007.
Global Growth
Security software maker Identillect Technologies Corp., which lists its headquarters in Vancouver and has its executive team in Lake Forest, has listed its common shares on the Frankfurt Stock Exchange, its third listing in a publicly traded market.
The company, which makes software that enhances email security, is now trading under the symbol 8ID as it aims to drum up awareness in major European financial hubs.
Its common shares are also listed on the TSX Venture Exchange in Toronto, and the Over-The-Counter U.S. exchange, where its market value is about $6 million, or 8 cents a share.
“Identillect has done this for global growth,” Chief Executive Todd Sexton told the Business Journal.
The company specializes in email encryption services and is part of OC’s expanding cyber security hub.
It projects revenue between $1.3 million and $1.5 million this year, according to Sexton.
The company has raised about $3 million since its inception in 2010.
Cybersecurity Survey
OC cyber security executives may want to take note of a new bleak study from the International City/County Management Association.
The Cybersecurity 2016 Survey, which queried more than 3,400 government chief information officers, found that nearly a third reported an increase in cyber attacks in the past 12 months. Among the public sector CIOs’ most pressing concerns: an inability to pay competitive salaries (58%); insufficient number of staff (53%); and lack of funding (52%).
The snapshot comes during an explosion of private cybersecurity jobs in OC led by software security makers Cylance Inc. and CrowdStrike Inc., which have added hundreds of positions in the last few years at their Irvine headquarters, fueled by strong demand and a deep chest of VC funding.
