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Victor
I wasn’t quite clear so is this the footnote to which you were referring:
5 Although Sycurio suggests that PCI Pal redacted portions of that email chain to misrepresent the extent of the meet and confer process, the reality is that PCI Pal redacted portions that it believed Sycurio may deem confidential because they relate to Sycurio’s and its private equity owner’s belief that the litigation would devalue PCI Pal and make it an easier acquisition target. Regardless, the emails show that Sycurio never substantively responded.
It is a close-run thing between Mr Silverleaf and the US lawyers as to which is doing the better job for Livingbridge/Sycurio in postponing the inevitable!
I think Simon Hollingsworth’s bonus pot for 2024 and beyond will be rather empty. And still no sign of Wol.
Victor,
Thanks. A ringing endorsement of Mrs Justice Bacon from the Court of Appeal. I bet Lord Justice Arnold will hear the Sycurio appeal as well and I bet he will ask why Mr Silverleaf is wasting the Court of Appeal’s time.
Https://casetracker.justice.gov.uk/getDetail.do?case_id=CA-2024-000006
Very predictable
Victor,
Yes, I had noticed the “s” on expert, too. The only one I was aware of was Mr Willis, whose evidence was helpful to PCIP on claim construction.
I can’t believe Mrs Penn would have been drafted in for her “expertise”, so, like you, I wonder who he/she/they are?
Given the track record so far, how can we be confident that he/she/they wouldn’t breach a confidentiality agreement as a result of being overcome by, for instance, “inadvertency” or “brain frog”? I don’t think we can be; unfortunately.
Victor
Thanks for posting that as I had forgotten that it was due. Seems like the start of the trial could be at least 9 nine months away as fact discovery in the case will run for 6 months after the Case Management Plan is filed (impliedly the plan should be filed soon) and expert discovery a further 3 months after the end of fact discovery. So, on that basis, if the full time allocation is taken, the trial would not start until late 2024 or early 2025.
The name Yale is associated primarily with high intelligence (Yale University) or good security (Yale locks). I assume one or both organisations must have finally complained about Livingbridge’s use of the name Yale in its “Midcos”; hence the recent name changes. Livingbridge and its main executive on its Sycurio investment, Simon Hollingsworth, are associated with a high level of stupidity (for bringing the patent cases) and low levels of security (the breach of the confidentiality agreement in April
2022 in which both Lvingbridge and Sycurio executives participated).
So from now on any company wishing to be associated with stupidity and occasional security incontinence should at least have the word “Livingbridge” or “Sycurio” in its name.
Victor
That’s a great selection of documents for anyone wanting to know the key points, and well done for finding a free copy of the Markman ruling . Now even those who were reluctant to fork out $5 can read it.
As you say, it would be interesting to have other people’s views.
Victor
I would be interested in your views on the Markman ruling. In my view, while Sycurio prevailed on the preponderance of minor points, PCIP won on the big point of the definition of a call processor. Sycurio were clearly worried about this after the UK court case as the flurry of US filings after the UK court hearings in June shows. Footnote 7 in the ruling also looks very ominous for Sycurio as the US case progresses. What do you think?
Hi Adam
As the document is 37 pages long, written in legalese and costs a mere $5, why don’t you do yourself what you ask Victor to do? He does enough for this board without being asked to do unpaid work for other people.
Interestingly Mr Silverleaf did pipe up to say that the case had been brought by Sycurio/Livingbridge after consulting an expert—and no prizes for guessing who!!!—and the 19th Earl of Devon, who is also a barrister and a partner in Michelmores. The 19th Earl of Devon is otherwise known as Charles Peregrine Courtenay.
So: clearly yesterday doesn’t lay to rest the long-standing claim from PCIP’s board that the case was unfounded and brought for ulterior motive. I am sure that Livingbridge/Sycurio will be breathing a sigh of relief that a member of its team has not yet jumped ship and provided a witness statement that might have given firm evidential footing to PCIP’s board’s claim.
The usually unctuous Michael Silverleaf KC, Sycurio’s brief, was out of sorts at High Court yesterday during the Form of Order hearing in the Sycurio v. PCIP case. Bereft of his junior and constantly pestered by post-it notes from Nick Viney, Sycurio’s CEO, who deigned to turn up to court to witness his firm receive another judicial kicking, Mr Silverleaf never hit his straps.
From the moment, quite early in the day, when he addressed the redoubtable Mrs Justice Bacon as “your Lordship” he was batting on an exceptionally sticky wicket.
Mrs Justice Bacon was visibly unimpressed as Mr Silverleaf and Richard Davis KC, PCIP’s brief, spent the morning bickering over how costs should be calculated for the provisional cost award. It was not an edifying watch. Both men gave the impression of ageing heavyweights. When a task of devilishly difficult mathematical complexity came up—diving 102 by six—neither man had his abacus with him so the calculation was beyond reach.
On the substance of the day, Mrs Justice Bacon refused Mr Silverleaf’s application for appeal, meaning that Sycurio has until 8th January 2024 to file leave to appeal directly with the Appeals Court, should it chose to do so. It would seem that Mrs Justice Bacon is able to read easily Mr Silverleaf’s tell: the strength of his arguments is inversely correlated to their complexity.
On the cost side, because of Michelmores, Sycurio’s lawyers, not doing their job properly and choosing as their key trial witness a non-expert expert, Mrs Penn, whose evidence on technical matters Mrs Justice Bacon rejected at trial, PCIP was awarded part of its costs on an indemnity basis (ie, the standard cost recovery uplifted by about 25%. This is a punishment for poor litigation conduct).
As I didn’t have my abacus with me either, I can’t entirely vouch for the accuracy of what follows. It would appear that PCIP will be entitled to an interim provisional cost award of around £1m, which will paid into an escrow account at their solicitors. This money will be released from escrow to PCIP on the earlier of the Appeals Court’s determination of any application by Sycurio to appeal, or 5th February 2024. Although it would appear that Sycurio will be able to make an application to the Appeals Court to “stay” the release from escrow if its application for leave to appeal has not been determined by 5th February 2024.
PCIP’s KC, Mr Davis, said in court that the whole infringement case was speculative, thin and opportunistic that had been brought for ulterior motives, about which he had hints. But (and obviously) Mr Davis did not have a witness statement from Sycurio/Livingbridge about what these motives might have been. As a result, Mrs Justice Bacon was quick to say that he didn’t need to go there.
“We are responsible for running the vital national IT systems which support health and social care, and the collection, analysis, publication and dissemination of data generated by health and social care services to improve outcomes for patients”.(https://www.england.nhs.uk/about/what-we-do/)
Personally, I think it’s a tad problematic to sit as a deputy chair on such a body when one of your firm’s holdings, expert in data security, has just breached a confidentiality agreement by hearing details about a competitor’s technology, which were obtained by launching UK patent infringement proceedings, based on evidential thin air. But, evidently, it’s OK for NHS England.
And where’s Wotton?
One person who would be able to give a clear insight into Livingbridge’s culture is Ken Wotton. Mr Wotton is managing director, public equity, at Gresham House Asset Management, PCIP’s second largest shareholder with 9.2%, who, rightly, turned down Livingbridge’s hostile bid for PCIP. Mr Wotton knows Livingbridge exceedingly well. From January 2013 to May 2014, he was a partner in Livingbridge EP LLP, and from June 2014 to November 2018 he was a partner in Livingbridge VC LLP. The two designated members of Livingbridge VC LLP were/are Mr Kolade and Ms Egan. Don’t be too shy to give us your views on what has gone on here, Mr Wotton. Other PCIP shareholders would love to hear your unvarnished opinions. Do you not have an ethical duty to call out this type of behaviour. If not, why not?
Cover-up or clean-up?
The smell emanating from 100 Wood Street, Livingbridge’s London HQ, is not a very unpleasant one, and could grow worse as more details emerge. Mr Kolade needs to clean house--and quickly. A scapegoat won’t do.
Roll up, roll up: 10:30am tomorrow The Rolls Building, court 2
Livingbridge EP’s principal activity is to provide “investment management and advisory services” and is “the operator and manager of a range of private equity investment vehicles, structured as limited liability partnerships” (ie, Livingbridge’s funds). These include Livingbridge 7 Global LP, which is the ultimate owner of Sycurio.
The people with the real power in a LLP are the so-called “designated members” (ie, they are the head honchos). Livingbridge EP has two designated members: Wol Kolade and Sheenagh Egan. Mr Kolade is the managing partner and head at Livingbridge. He sits on the investment committee and chairs the supervisory board. “His role encompasses overall responsibility for the leadership and strategic development of Livingbridge, senior-level involvement in winning deals and active involvement in selective key investments”. (See https://www.livingbridge.com/people/wol-kolade).
Ms Egan sits on the management board which is responsible for the strategy of the firm and day-to-day management of the business (see https://www.livingbridge.com/people/sheenagh-egan) and also on the supervisory board. She is Livingbridge’s COO.
Livingbridge’s investment committee must also have approved the decision to have a tilt at PCIP, which at the highest bid price (90p), would have cost well in excess of £70m, once all the prospective bid’s costs were included.
As Mr Hollingsworth is still a partner in the LPP and a director of Yale Topco Ltd and Sycurio Ltd, it is difficult to avoid the conclusion that Mr Kolade and Ms Egan condone his actions.
Bear in mind the breach of confidentiality in April 2022 by a firm supposed to be experts in data security. There is no suggestion that Mr Kolade or Ms Egan sanctioned or approved of the breach of confidentiality. But they preside over a culture at Livingbridge under which this breach happened.
A month before the breach, Mr Kolade, a Tory party donor, was appointed as a Deputy Chair of NHS England. According to its website, one of NHS England’s responsibilities is: (see part 6)
5. Having had his bluff called by PCIP, Mr Hollingsworth and Sycurio/Livingbridge’s UK lawyers, Michelmores, faced a rather large problem. The case could not be brought to trial without expert written evidence. As Mrs Justice Bacon made clear in her judgment it was Michelmores’ responsibility “to ensure that the expert had the necessary expertise and is aware of the duties imposed on an expert witness”. Clearly Michelmores didn’t discharge its responsibilities properly in choosing Mrs Penn as Sycurio/Livingbridge’s expert. So: Michelmores either made a gross error of judgement, which just happened to enable Sycurio/ Livingbridge to bring it case to court; or it informed its client Sycurio/Livingbridge (ie, ultimately Mr Hollingsworth) that it had doubts about Mrs Penn’s suitability as an expert witness and was instructed to press on regardless. Either way it doesn’t reflect well on Sycurio/Livingbridge/Mr Hollingsworth: either they didn’t ask enough questions about Mrs Penn, or they rolled the dice, gambling on a pre-trial settlement or other solution (ie, takeover attempts 2-4 in March-May 2023), just before the trial. That is all-in!
6. Mr Hollingsworth managed to revive long-standing but suppressed resentment on the part of Eckoh Plc, the other big player in the PCI DSS space, over the patent infringement proceedings Sycurio had brought against it in 2013. (These were settled in 2015 by means of a confidential licensing agreement.) Since September 2021 Eckoh (and PCIP) have filed opposition to three of Sycurio’s European patents. The European Patent Office has already revoked one of Sycurio’s patents; its decision on two more is still to come.
Before going any farther, let’s take a step back lest Livingbridge is tempted to present all this as an aberrant freelance frolic on Mr Hollingsworth’s part. Mr Hollingsworth has clearly not acted on his own; Sycurio’s investment committee must have approved the initial investment in Sycurio in June 2021.
Mr Hollingswoth was made a partner of Livingbridge EP LLP only in April 2022, the month of the breach of the confidentiality agreement (most probably with Mr Hollingsworth present). (see part 5)
It would be highly invidious to list again all of Mr Hollingsworth’s (and Livingbridge’s) mistakes, misjudgements, and dubious actions, so let’s do it. (Of course, some of this is based on supposition):
1. He bought the wrong company at the wrong price and at the wrong time. For £110m, the toppy price Livingbridge paid for Sycurio at the top of the market in June 2021, Livingbridge could have offered 150p a share for PCIP, an offer that surely would have been accepted.
2. He miscalculated that patent infringement proceedings, brought in September 2021 to distract PCIP’s management, drain its cash resources and potentially gain access to PCIP’s technology secrets, would cause PCIP to roll over and accept a settlement by way of confidential licence agreement. This, Sycurio/Livingbridge could have spun as a victory.
3. When he realised that he had bought a duff company with a duff management team, he decided to switch to a back-up plan to buy PCIP, which would solve several rather large problems in one go: it would cover up the duff investment, it would bring on board a top-notch management team to run the enlarged group, it would eliminate a competitor, it would gain access to superior technology and it would mean the end of the patent case, an obvious bluff, based on evidential thin air.
4. In April 2022, once mediation had failed and an initial offer to buy PCIP had been rebuffed, Sycurio held its now infamous board meeting—attended by unnamed Livingbridge personnel (but most likely to have been Mr Hollingsworth and his Livingbridge sidekick, Curtis Kahn). During this meeting, confidential information about PCIP’s technology, details of which Sycurio had obtained thanks to the patent case, were discussed in front of certain people in breach of a confidentiality agreement. (It is worth remembering that the confidentiality breach was disclosed to PCIP only in May 2023 by Sycurio’s US lawyers, not by Sycurio/Livingbridge themselves. Assuming that Sycurio/Livingbridge’s US lawyers have high ethical standards, it must be assumed that the breach was disclosed as soon as the US lawyers became aware of it, and at the US lawyers’ insistence. That is a measure of how serious it was. Not to have done so could have caused considerable reputational damage to the US lawyers. The question about how the US lawyers became aware of the egregious breach of the confidentiality agreement remains an open one.) (see part 4)
Perhaps most anxious of all and almost certainly absent from the court, as he was during the trial, will be Simon Hollingsworth, a 40-yr old Livingbridge executive (see https://www.livingbridge.com/people/simon-hollingsworth). Mr Hollingsworth sits as a non-executive director on the board of Yale Topco Ltd, a Jersey company at the top of the chain through which Livingbridge 7 Global LP, one of Livingbridge’s funds, controls its investment in Sycurio Ltd, of which Mr Hollingsworth is also a non-executive director.
Mr Hollingsworth is the person at Livingbridge with responsibility for the investment in Sycurio. He was one of the people behind the takeover attempts of PCIP. For instance, on 17th April 2023, a month or so after Sycurio had made its third attempt to buy PCIP, Mr Hollingsworth (and Sycurio’s CEO) met with PCIP’s CEO and soon afterwards repeated Sycurio’s bagatelle offer of 90p per share. After that Sycurio, through unnamed M&A advisors, most probably at Mr Hollingsworth’s instigation, went hostile by directly contacting PCIP’s two largest shareholders, Canaccord and Gresham House, who between them then held 27.4% of PCIP.
It's my hunch that, as this story unfolds, Mr Hollingsworth might be getting a call or two from journalists on national newspapers. If so, it might well be far beyond the capabilities of even London’s finest PR lickspittles to put any positive spin on his role or, for that matter, Livingbridge’s.
Before examining the “highlights” of Mr Hollingsdworth’s involvement, let’s take a step back and look very briefly at some of the guff that Livingbridge trumpets about itself:
“Livingbridge is a collection of driven people from incredibly diverse operational, financial and entrepreneurial backgrounds. Each going all-in, from day-one. It’s the only way we know.”
At least Mr Hollingsworth lives up to his firm’s billing: as we will see, nobody could accuse him of “not going all-in, from day-one”. What he, high on hubris, no doubt imagined would be a career-enhancing move—Livingbridge’s acquisition of Sycurio--looks to have turned into a career-limiting move and, hopefully, will end as a career-finishing move when Livingbridge’s behaviour becomes more widely known and its reputation tarnished. (see part 3)
PCIP shareholders, of whom I am one, will have been having a relaxing weekend, as will have PCIP’s management team. Tomorrow is, in effect, their/our big day in court: Mrs Justice Bacon will decide whether to grant Sycurio/Livingbridge leave to appeal her crushing judgment, and the amount and timing of the provisional cost award in PCIP’s favour.
Discussed in open court will be PCIP’s senior lawyer’s witness statement revealed on this blog last weekend, the main headline of which was that Livingbridge made four attempts, one hostile, in the period March 2022 to May 2023 to buy PCIP on the cheap after having battered its share price through launching patent infringement cases in both the US and UK in September 2021 that rest on nothing more than evidential thin air.
PCIP has also filed other, but confidential, witness statements with the court. What on earth do these statements say?
The briefs representing PCIP will be Richard Davis KC and his junior, Ed ‘two brains’ Cronan, a rising star IP legal circles, who was PCIP’s junior counsel during the trial. Mr Davis was brought in by PCIP after the trial to replace Guy Tritton, whose cross-examination skills are renowned but no longer needed as the case moves to a different stage. Mr Tritton’s relentless and (rightly) merciless cross-examination of Sycurio’s non-expert expert on technical matters, Mrs Penn, a 70-yr old dyslexic widow in ill health, on her written evidence was the piece de resistance of the trial, and will continue to give Mrs Penn nightmares for a very long time to come.
Mr Davis spearheaded PCIP’s reply to Sycurio/Livingbridge’s preposterous (and ultimately fruitless) attempt to amend the wording of the patent almost as soon as the trial had finished.
On the Sycurio/Livingbridge side, the weekend will have been less relaxed. The trial was not one of the finer moments in a distinguished career for Michael Silverleaf KC, Sycurio/Livingbridge’s brief, whose grandiloquence is inversely proportionate to his height.
In her judgment, with rather acid understatement, Mrs Justice Bacon, who gave no weight to Mrs Penn’s expert evidence on technical matters, wrote: “That is no doubt why, in his closing submission, Mr Silverleaf placed almost no reliance on Mrs Penn’s evidence. He contended that he did not need to do so, because he could make his submissions on the basis of the undisputed materials and PCI-Pal’s own evidence. That was an unfortunate position to end up in, given the scope of Mrs Penn’s written evidence. For the reasons set out below I consider that Mr Silverleaf’s submissions on technical points could not be maintained without evidential support, which ultimately he did not have”. (see part 2)
Victor,
Remarkable self-restraint from Dentons: a mere 29-pages!! There must be a few good Xmas parties to go to. Let’s see what the EPO says in due course. I know where my money is. The score should be 3-0.
I think maybe Mr Viney finds the truth a difficult concept.
" The instruction of Ms Penn, and the presentation of her First Expert Report, caused considerable difficulty. It was plain and obvious that she was not the appropriate person to assist the court. She disclaimed any expertise “in the technology” yet went on to comment in detail on the technology. The language she used invited cross examination on her expertise. However, PCI Pal could not risk an “all or nothing approach”. This meant that even though it seemed obvious that Ms Penn was not qualified to assist the court, PCI Pal had to prepare for trial on the basis that she might be.
The team at Shepherd & Wedderburn, which included me, had to take time to work through, with both counsel and experts, the numerous points that Ms Penn presented and determine whether and how to reply. Rather than being able to neatly consider Mr Leung’s evidence with Mr Robinson and Ms Penn’s evidence with Mr Whittaker both PCI Pal’s experts had to give their views on what was in Ms Penn’s report, as she was the only witness from Sycurio giving evidence on patent validity and infringement.
These highly unusual circumstances to the client team also meant that we had to spend more time with the client team talking through the approach to the trial and the risks involved.”
That’s all…….for now.
"I infer from that email that either Sycurio did not have expert input before issuing proceedings, or had received expert input from Ms Penn and were looking to replace her, or considered that her expertise in VoIP and SIP technology was insufficient.
PCI Pal first had notice of the experts selected by Sycurio on 6 July 2022. My assumption when I saw that Sycurio had instructed Ms Penn and Professor Leung was that Professor Leung would speak to the technical aspects of the Patent concerning VoIP telephony and implementation in a call centre, and Ms Penn would speak to payment processing. They would in effect mirror Mr Robinson and Mr Whittaker. From looking at Mr Leung’s background, an obvious weakness was that he had no practical experience of actually implementing a telephony system in a call centre that was taking payments. This is reinforced by Ms Penn when she says:
“As is apparent from Professor Leung’s report, telephony and computer engineers are not engaged in the development of payment systems. Nor do they have knowledge of the needs of the payment card industry or its security requirements.”
However, when I received Sycurio’s first expert reports it was immediately apparent that this was not the approach that was taken. Professor Leung’s evidence was limited to a very technical, and essentially non-controversial explainer of the background technology. There was a critique of the PPD, but PCI Pal were able to respond to that critique with further explanations.
Ms Penn’s report made it clear that she was taking the same approach as she did in the case against Eckoh. She said: “I have reviewed the expert reports I gave in that case and have incorporated elements of them in this report as appropriate. My opinions regarding the patent and the invention have not changed since I gave evidence in the Eckoh Litigation.” “I became familiar with the Patent during my previous experience acting as an expert witness in the Eckoh Litigation. I note that some of the points being made by PCI-PAL in the present case rely on prior art documents, some of which were also cited in the Eckoh litigation. In the course of preparing this report, I have reviewed what I said about that prior art in my reports in that case. My views about the relationship of the invention of the Patent to that prior art have not changed.”
She also made clear the basis upon which she was (apparently) approaching the Patent: “I do not have expertise in the technology and operation of call processors and computers which might be required to implement the process of the Patent. Nor do I consider that such expertise is necessary to understand or evaluate the invention of the Patent and whether it is likely to be an effective solution to the requirements of PCI DSS. That expertise is needed only once the decision has been made that it is worth considering use of the invention to provide the underlying technical implementation.”
(continued in