The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Yes, let’s hope PCIP is awarded most of it costs. Hopefully Sycurio will have to repay all the licence fees it has received sonce 2015 from Eckoh and two other firms as the patent was never valid. Can’t wait to see what its press release says!!
May ignominy descend on the executives at Livingbridge who initiated the proceedings. A great example of how to wipe huge chunks off the value of a company they paid nearly £110m for. No ethics and flat track bullies.
If I were PCIP’s US lawyers, when deposing Cooper-Davis and Jackson, I would be asking them about the composition of the roughly £423,000 of expenses incurred by Elync in 2007 and 2008 and who received the money. Patents attorneys are expensive. But not that expensive. The first application was submitted by a very small and relatively obscure firm in Cornwall (turnover in 2007 of £380,000) before the much larger, more expensive, and better-known London-based Mathys & Squire (gross billings in year to March 2008 of £15m) stepped in for the second and third applications. (Apart from a year or so between mid-2022 and mid-2023, Mathys & Squire have remained Semafone/Sycurio’s patent attorneys ever since).
In late June 2010, Octopus Titan VCT invested £1.56m in Sycurio. This investment was presumably based on Cooper-Davis’ and Jackson’s stellar track record—their sale of Careline Services for approximately £10m had completed just days before—and on the promise of Semafone/Sycurio’s technology. As a reputable VCT, Octopus Titan should have conducted considerable due diligence on the submitted patent applications and the background to the invention. That due diligence, if conducted, would have left an extensive paper trail in Semafone/Sycurio. If so, will this form part of Semafone’s disclosures to PCIP’s US lawyers?
This company, variously called Elync Ltd, then Semafone Ltd and then Elync Ltd again, submitted the three patent applications between May 2008 and May 2009 that ultimately led to the granting of the patents in the UK and US that Sycurio alleges PCIP infringed. Elync assigned the rights to these applications to Semafone Ltd (now Sycurio) between mid-July and mid-November 2009.
Elync was set up in 2003 by Richard Cooper-Davis and David Jackson, co-founders of Semafone/Sycurio and two of the named inventors on the allegedly infringed US and UK patents . They were its only directors. Cooper-Davis owned 60% and Jackson 40%. Half of Jackson’s stake was owned by an offshore company in a tax haven, according to records at Companies House. The ownership structure mirrored that of Foxbay Ltd, another company Cooper-Davis and Jackson had set up, through which, as from early 2003, they ultimately controlled Careline Services (see previous posts about Careline Services).
In Elync’s accounts, Cooper-Davis and Jackson described Elync’s principal activities as the “provision of web-based services to the education sector and consulting services for web-based products”.
From incorporation in mid-2003 to the end of December 2006, Elync incurred about £87,000 of expenses, and had virtually no third-party sales. In 2006 it recouped most of these accumulated expenses by charging Foxbay £85,000 for consultancy services.
In the calendar years 2007 and 2008 the consultancy services charged to Foxbay increased dramatically: to £105,730 in 2007 and £335,000 in 2008, a period which must have coincided with Elync’s development of the patent applications. (No consultancy services were charged to Foxbay in 2009). Nearly all the money received by Elync from Foxbay was spent. When Cooper-Davis and Jackson put Elync into voluntary liquidation in November 2010 it had, according to records at Companies House, just £17,275 in the bank and no other assets.
Foxbay derived its income from an annual management charge levied on Careline Services and from its share of dividends paid by Careline Services’ immediate holding company. Cooper-Davies and Jackson took minimal directors’ payment from Foxbay, instead paying large dividends to themselves. This would almost certainly have been because it would have been more tax efficient for them personally, and it also would have avoided employer’s national insurance that Foxbay would otherwise have had to have paid on any qualifying directors’ remuneration. For tax reasons, it is therefore highly unlikely that Elync would have paid out any of the money it received from Foxbay to Cooper-Davis and Jackson as directors’ pay.
(More to follow)
Victor,
Fascinating that Penn worked at the Post Office on PCI compliance across “all payment channels” and that Careline Services had Post Office Financial Services as a customer. They presumably came across each other!
2. Please describe with specificity and detail about each aspects of the Asserted Patents and the UK Patent that you believe were novel as of May 9 2008.
And to produce the following:
1. Documents reflecting or relating to your assignment of the transfer of ownership in the Asserted Patents and the UK Patent
2. Documents relating to the conception, development and reduction to practice, or testing of any subject matter described or claimed in in the Asserted Patents or the UK Patent, including but not limited to design notes, technical aspects, drawings or schematics.
3. Communications, documentations, descriptions, statements, disclosures, or drawings covering the subject matter claimed in the Asserted Patents or UK Patent that were made or prepared before 30th September 2008.
4. Documents reflecting any work performed by you to develop Sycurio.Voice (previously Semafone Cardprotect. Voice+).
The depositions should be very interesting. Nobody could accuse the US lawyers of not doing a thorough job.
16th July 2009: a new company called Semafone Ltd was incorporated.
16th July 2009: Semafone Ltd issued founder shares to Cooper-Davis and Jackson. (Three employees of Careline Services, who had a small equity stake in the holding company through which Cooper-Davis and Jackson controlled Careline Services, were also issued shares In Semafone. Two are mentioned in this article https://wearetechwomen.com/inspirational-woman-megan-neale-co-founder-limitless/).
10th September 2009: the patent applications of 9th May 2008 and 30th September 2008 were terminated.
21st October 2009: Timothy Critchley, one of the name inventors on the disputed US patents but the only named inventor not to be deposed by PCIP’s US lawyers, was appointed a director of Semafone and became its CEO.
28th October 2009: Jackson appointed a director of Semafone.
17th November 2009: By this date Elync Ltd (previously Semafone Ltd, previously Elync Ltd) had transferred rights in the patent applications to Semafone Ltd (the one incorporated on 16th July 2009). (Source: https://patentscope.wipo.int/search/docs2/pct/WO2009136163/pdf/mSqm53U3abTC7Bk8tTrxtmJUZuH6CWQHUaaYTC0Qrrw). The precise date of the transfer was not revealed but must have been after 16th July 2009.
11th January 2010: Cooper-Davis appointed a director of Semafone.
21st June 2010: Careline Services sold to HTMT Europe Ltd, a subsidiary of the Hinduja Global Solutions, for approximately £10m (source: accounts of HTMT Europe Ltd for the year to 31st Mar h 2011). (See this [inaccurate] PR guff from Arrowpoint, who acted for Cooper-Davis and Jackson, about the sale: https://www.arrowpointadvisory.com/our-transactions/careline-services-has-been-acquired-by-hinduja-global-solutions/)
21st June 2010: Cooper-Davis and Jackson resigned as directors of Careline Services
21st June 2010: Cooper-Davis and Jackson put the companies through which they controlled Careline Services into voluntary (ie, solvent) liquidation.
5th November 2010: Cooper-Davis and Jackson put Elync Ltd into voluntary (ie, solvent) liquidation.
In addition to their knowledge of the involvement of Ultra Communications and Cardline Services in design and development of the call processor that would become Sycurio.Voice, PCIP’s lawyers want to depose Davis-Cooper and Jackson (and one of the other named inventors) about these topics:
1. Please describe with specificity and detail the circumstances of your assignment of ownership in the Asserted Patents [ie, the disputed US Patents) and UK Patent No. GB2,473,376 (“the UK Patent”) (including any patent applications leading thereto ) to Sycurio/Semafone, including but not limited to when the assignment was made, why the assignment was made, specifically to who the assignment was made and the amount of compensation you received for such assignment
(More to follow)
Victor
That is great. A clear link between Ultra Communications and Careline Services: the latter was a client of the former, at least in 2008.
Just to recap. We know from the accounts of Ultra Communications for the year to 30th June 2010 that : “…our development team has turned its attention towards developing a full PCI standard solution which we expect will be the most secure system available to handle the taking of debit and credit card payments over the phone. We expect to be able to offer the facility to existing clients in the first quarter of 2011”.
Careline Services, a contact-centre business, was co-founded in 1997 by Richard Cooper-Davis and David Jackson, the co-founders of Semafone and two of the named inventors in the disputed US patents. They owned a majority of the Careline Services from January 2003, and ran it from 1997 until they sold it in June 2010. A profile of Jackson states that while at Careline Services “he identified the need for enhanced security in the processing of sensitive data which led to the formation of Semafone.” https://people.equilar.com/bio/david-jackson-semafone/30008712
By putting together chronologically the pieces that are in the public domain it is apparent why PCIP’s US lawyers want to depose Cooper-Davis and Jackson under oath (and compel them to produce documents) about who the inventors of the disputed US and UK patents were. And in particular about details of their knowledge “of the involvement of Ultra Communications [and Careline Services] with the design and development of the call processor that would become Sycurio.Voice (previously SemafoneCardprotcet Voice +)” See https://workswith.worldpay.com/en/apps/14327/cardprotect-from-semafone
Chronology:
4th January 2008: Press release from Ultra Communications, cited by PCIP in US court papers as a prior art reference that “it believes anticipates and/or renders obvious the Asserted Claims [in the US patents]”.
9th May 2008: Elync Ltd, a company controlled by Cooper-Davis & Jackson, by request under the Patent Cooperation Treaty (a means of protecting patent international rights) applied for a patent for “A secure communication system and means of operating the same”. The request runs to 25 pages.
16th July 2008: Elync Ltd changed its name to Semafone Ltd.
30th September 2008: Semafone Ltd by request under the Patent Cooperation Treaty applied for a patent for “A secure communication system and means of operating the same”. The request runs to 49 pages and claims priority to Elync’s application on 9th May 2008.
9th May 2009: Semafone Ltd by request under the Patent Cooperation Treaty applied for a patent for “Signal detection and blocking or voice processing equipment”. This application claims priority to the two previous applications and is the application that enters the national phases of the patent applications in the US and UK.
27th June 2009: Semafone Ltd changed its name
Victor,
Unfortunately, I have not been able to find the press release from January 2008.
Regarding the expert report from the Eckoh case, definitely an example of the Penn not being mightier than the sword.
According to the US court document, among the topics the three inventors will face questions on are:
1. Details of their knowledge of and involvement in the licence agreement with Ultra Communications.
2. Why Sycurio agreed to the terms in the licence agreement with Ultra Communications.
3. Details of their knowledge “of the involvement of Ultra Communications with the with the design and development of the call processor that would become Sycurio.Voice (previously SemafoneCradprotcet Voice +)” See https://workswith.worldpay.com/en/apps/14327/cardprotect-from-semafone
It is worth noting that PCIP says in the 15th June document that Sycurio "despite repeated requests has failed to produce dscovery relating to this issue."
There is also an interesting reference in the 15th June document (page 6) to a press release dated 4th January 2008? Victor, have you managed to find this?
More to follow over the weekend on Careline & the complicated corporate dealings of Jackson & Cooper-Davis in the early days of Semafone Mark 1 amd Mark 2, on which they will also face questions from PCIP’s US legal hounds.
Victor,
I had been looking into the part of Annex A dated 15th June. This sets out in some detail why PCIP thinks that Sycurio’s US patents are invalid. One claimed ground of invalidity is that the core technology in the patents was invented by people other than the named inventors (Andrew Tew, David Jackson, Richard Cooper-Davis and Timothy Critchley, all former employees of Sycurio).
PCIP claims on “information and belief” that the core technology in the US patents was developed by individuals--associated with Ultra Communications and Careline, both British companies--who are not named on the patent. And, apparently, a US patent may be declared invalid if more or less than the true inventors are named.
According to documents at Companies House, Sycurio signed a licence agreement with Ultra Communications, which was a provider of network telephony services, for Sycurio’s UK patent in 2013.
In Ultra Communications accounts for the year to 30th June 2010, the directors stated: “…our development team has turned its attention towards developing a full PCI standard solution which we expect will be the most secure system available to handle the taking of debit and credit card payments over the phone. We expect to be able to offer the facility to existing clients in the first quarter of 2011.”
And in the following year’s accounts (to 30 June 2011): “Since the first quarter of 2011 we have been able to offer existing clients a full PCI standard solution. It appears that we are one of two suppliers in the UK offering a completely secure payment system to handle the taking of debit and credit card systems over the phone. Recent market research has shown that Ultra clients pay 70% less for PCI compliance versus non-Ultra clients”.
The UK Patent Office published Sycurio’s patent application in March 2011; the patent was granted in May 2012. The disclosures in Ultra Communications’ accounts about its own PCI solution begs the questions of why Ultra needed to license Sycurio’s technology in 2013. Perhaps Sycurio used threats of patent infringement proceedings. Or perhaps the legal threats were from Ultra Communications (ie, you have partly patented our technology: grant us a licence or we sue). If the latter is true, then the terms of the licence agreement with Ultra Communications could be very revealing.
PCIP’s US lawyers now have the US Court’s permission to depose in the UK for up to three hours three of the named inventors on the US patents (Tew, Jackson & Cooper-Davis). And to compel them to disclose relevant documents.
(More to follow)
And the Group chewed up £3.5m in cash, primarily because of bank interest costs of £2.2m and net loan repayments of £1.0m.
Total interest bill of £11.7m for 2022 when £9.0m charged by Livingbridge on its loans, but not paid, is taken into account. The £9.0m interest income that Livingbridge will have recorded somewhere is fantasy income: Livingbridge is very unlikely to see all that income turn into cash (or to get its loans repaid in full). If Livingbridge is interested, I would offer to buy their loans to the Sycurio group of companies of nearly £100m for £1,000, which I reckon is a generous offer.
And to think that tbe group owes £31m to its bankers, too!! More than Sycurio is worth, in my view, especially when all the litigation is finished.
Victor,
Yes, thanks very much for that addition. The passage you mention spells it out very clearly. This translates as Sycurio needing to change its previously held position in the US case about the meaning of a “call processor” otherwise its case about infringement rested on sand.
And for the marvellous extract about the insertion of “directly” from a US case cited by Sycurio’s lawyers!!
Victor,
Yes, I have.
To have received that answer would have required someone clear-headed and expert in the relevant field. Neither of those attributes was present in the witness for Sycurio, in my view.
Victor
One of the latest US filings (doc 80) is interesting.
Although PCIP lawyers can’t file it openly, because of confidentiality, a claim construction order from a retired US judge in an arbitration case (involving Sycurio & Eckoh and one of the disputed US patents) looks to be helpful to PCIP. The ruling was recently disclosed to PCIP by Sycurio as part of the discovery process in the US proceedings.
According to PCIP’s US lawyers, the retired judge’s claim construction order is supportive of PCIP’s proposed definition of a “call processor” in Sycurio’s US patents. PCIP’s lawyers request the North Carolina court to “consider” the retired judge’s claim construction order (ie, adopt it).
The background is that PCIP and Sycurio agreed a joint definition of a “call processor” for the US proceedings in March this year that included the phrase “having a first telephone interface, a second telephone interface, and a data interface that are separate from a public telephone network”. A week after “testimony and argument in the UK court case”, Sycurio’s US lawyers told the US court that it had changed its mind and wanted to delete the phrase “that are separate from a public telephone network” from the jointly agreed definition. (PCIP objected to the deletion; and the definition of a “call processor” will be one of the things to be decided at the forthcoming US claim construction hearing.)
According to PCIP, the arbitration judge’s order supports PCIP’s position that the call processor must have integrated first and second telephone interfaces and that an external public service telephone network (PSTN) cannot serve as the first telephone interface of the call processor.
This issue was also relevant for the UK case in which PCIP’s expert argued in relation to alleged infringement of Sycurio’s UK patent: “For [PCIP’s Agent Assist] to be considered to include these telephone interfaces, the overall AWS [Amazon Web Services] infrastructure ……..would need to be considered part of Agent Assist…..I don’t think it is reasonable to interpret Agent Assist in such a broad way. Indeed for this definition to be valid, large parts of the Internet and PSTN would also need to be considered as being part of Agent Assist, even though they are just part of their ordinary functionality”.
And later in his report:” In order to identify a first telephone interface in Agent Assist….it would either need to be the caller’s telephone itself (thus putting every telephone in the world within the scope of Claim 9 [of the UK patent]), or in the PSTN (putting every telephone call in the world within scope).
Quite.