411 Theodore Fremd Ave. Suite 206S
Rye, NY 10580

(888) 743-7577 | info@qprc.com

© 2019 Quest Patent Research Corporation

  • Twitter
  • LinkedIn
  • QPRC

Dear Shareholders,

I hope this letter finds you safe, healthy and abiding by the recommendations of our brave healthcare professionals to help mitigate the spread of the COVID-19 virus. The world certainly feels dramatically different than it did at the time of our last update. However, amidst the upheaval, our team has remained focused on executing our strategy. Our accomplishments in 2019 have laid the foundation for a very busy remainder of 2020.

Our strategy is deeply rooted in our philosophy that patents remain a mispriced asset class which is uncorrelated to the broader market and represent a compelling opportunity for companies with expertise such as ours. With a proven ability to identify valuable assets and a stable of best in class counsel and experts to engage them with; we believe Quest is conditioned with regard to the fundamental opportunities ahead.

2019 Operational Highlights:

  • 14 matters resolved, generating more than $4 million dollars in revenue.

  • 9 of the 16 matters active as of December 31, 2019 were either dismissed or stayed pending final settlement agreement as of the end of Q1.

  • 7 active matters with 5 trials docketed for 2020 with additional programs staged for launch.

  • 68 patent assets added to the portfolio via the M-Red acquisition.

  • Uplist to the OTCQB Venture Market in an effort to provide additional transparency, value and liquidity to shareholders.

Our focus continues to be delivering long-term shareholder value. As one of the largest shareholders, I strongly believe value results from building a large, diversified asset base, and engaging those assets in strategically structured licensing programs. Long-term shareholder value is not dependent on any one portfolio, patent, case or defendant. We are building a quality portfolio of assets that can provide a consistent revenue stream, as opposed to singular litigation opportunities. We intend to accomplish that by seeking the best assets, partners, structures and strategies. A defendant in a patent infringement litigation has 27 patent defenses, fail in overcoming any one of them, and its game over. We believe the antidote to that type of systematic risk is diligence, diversification and dispassionate decision-making.

Strategic Growth Plan:

  • Evaluate every opportunity to expand and further diversify our portfolio;

  • Trust our analytically driven diligence process to identify targets for addition to a diversified portfolio of high quality assets;

  • Continue to explore strategic partnerships and management additions to augment our sourcing, acquisition and investor communication capabilities;

  • Engage best in class counsel and experts in a manner that shares risk and align interests while maximizing our economics – note that full contingency does not make sense for every firm or every case, especially complex technology which bring substantial out of pocket cost;

  • Scale our operations through the launch of multiple structured licensing programs across multiple portfolios, resulting in a broadly diversified portfolio of licensing investments and programs;

  • Maintain our commitment to a data driven, analytic, dispassionate and commercially minded approach to strategic licensing program management.

Management strives to communicate as much information as possible. However, aside from the publicly available information filed with the Court, significant aspects of the litigation process are strictly confidential. Furthermore, much of what is available and important can be difficult to identify and interpret. The result is that, what may appear to be a binary outcome driven business, is really a business driven by our ability to anticipate, assimilate and adapt to the ever shifting landscape of each litigation.

Ultimately, we work with counsel to ensure compliance, be as transparent as possible and not undermine our monetization strategy. We welcome shareholder feedback as we continue to seek to strike the appropriate balance.

I am confident that we are well positioned to leverage the unique opportunities before us and are excited for the year ahead.

Sincerely,

Jon Scahill

President & CEO


Statements made in this post include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as "may," "will," "plan," "should," "expect," "anticipate," "estimate," "continue," or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate, and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading "Risk Factors" in the Company's Annual Reports on Form 10-K, as may be supplemented or amended by the Company's Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

Updated: Feb 7

· 14 Matters Resolved in 2019

· 4 Matters Resolved or Stayed Pending Settlement YTD


· 16 Active Licensing Programs: 10 Claim Construction Hearings and 12 Trials Docketed in 2020


· Patent licensing revenues totaled $2 million in first three quarters of 2019; Full year results due March 30, 2020


Quest completed an active year of licensing programs, resolving 14 matters in 2019. With 16 active programs and a 2020 docket that currently includes 10 claim construction hearings and 12 trials, Quest is well positioned to maintain an active calendar across a solid portfolio of diverse intellectual property (IP) assets this year. A summary of the upcoming events is available here.


The company settled actions with the likes of Amazon, TiVo, Pier 1 Imports, and Netgear to name a few. the Company resolved two actions in 2019 with AsusTek Computer Inc, involving its wholly owned subsidiaries Photonic Imaging Solutions and Mariner IC, and resolved the case involving wholly owned subsidiary Semcon IP’s Power Management Portfolio on January 28, 2020.


By way of example, the Power Management/Bus Controller Portfolio, acquired by Quest from Intellectual Ventures in October 2015 and transferred to Semcon IP Inc., consists of four United States patents that cover basic technology for adjusting the processor voltage and clock to save power based on processor operating characteristics and one United States patent that relates to coordinating direct bus communications between subsystems in an assigned channel. Since acquiring the portfolio, Semcon has resolved matters against Texas Instruments, MediaTek, ZTE, Huawei, STMicroelectronics, Michael Kors, Kyocera and Amazon. Semcon currently has three pending matters involving the portfolio against TCT Mobile International, Louis Vuitton North America, Inc., and Shenzhen OnePlus Science & Technology. Trials have been docketed in all three matters for the late third and fourth quarters of 2020, though all dates are subject to change by the court.


In a recent interview, Quest’s CEO Jon Scahill stated that the Company “certainly saw significant activity in 2019, further demonstrating the value of our intellectual property portfolio. However, our goal as management is always to strive to do more, build more, and deliver more long-term value to our shareholders and partners. That means a continued focus on adding high quality assets to create more opportunities to do so.” With 4 matters already resolved or stayed pending settlement this year, and 16 active matters – and 12 trials docketed for 2020 – management appears to have Quest well positioned in that regard.

The Power Management/Bus Controller Portfolio, acquired from Intellectual Ventures in October 2015 and transferred to wholly owned subsidiary, Semcon IP Inc., consists of four United States patents that cover fundamental technology for adjusting the processor clock and voltage to save power based on the operating characteristics of the processor and one United States patent that relates to coordinating direct bus communications between subsystems in an assigned channel.


In May 2018, Semcon brought a patent infringement action in the United States District Court for the Eastern District of Texas against AsusTeK Computer Inc. for infringement of certain of the Power Management Portfolio, alleging that "Asus has infringed and is continuing to infringe the Patents-in-Suit by making, using, selling, offering to sell, and/or importing, and by actively inducing others to make, use, sell, offer to sell and/or importing, products that utilize SoCs and associated software that perform DCVS or DVFS for power management, including Qualcomm Snapdragon SoCs including at least the Snapdragon 800, 820 and 821 SoCs. Such Asus products include at least the Zenfone 3 Ultra, Zenfone 3 Deluxe, Zenfone AR, Zenpad 3 and Padfone X smartphones and tablets. Additionally, these Asus products include software that utilizes DCVS and/or DVFS for power management." A copy of the compaint is available here.


In July 2019, Asus moved for summary judgement of non-infringement, only to withdraw their motion in late August. A copy of the motion is available here and Semcon's response is available here. In September 2019, Asus moved for leave to serve amended initial disclosures and to produce discovery out of time. A copy of the motion is available here and Semcon's response is available here.


A Pretrial Conference was held on October 28, 2019, during which the court gave the parties instructions for jury selection, set trial for December 9th, heard oral arguments on the motion to leave, denied the motion and ordered the parties to return to mediation. The minutes from the pretrial conference are available here.


The Supplemental Mediators Report, filed with the court on November 18, 2019, states "a settlement has been reached as to all claims by and between Plaintiff Semcon IP, Inc. and Defendant AsusTek Computer Inc. This case is now settled." A copy of the mediator's report is available here.


Semcon has resolved cases against Capri Holdings Limited (f/k/a/ Michael Kors Holdings Limited), Kyocera Corporation and Amazon.com, Inc.


Semcon has cases pending against Louis Vuitton North America, Inc. (TXED-2-19-cv-00122 Lead Case) and TCT Mobile International Limited et al (TXED-2-18-cv-00194) consolidated and docketed for trial on September 14, 2020, subject to change; and Shenzhen OnePlus Science & Technology Co., Ltd. (TXED-2-18-cv-00196 )