A week ago Friday the Apple - Burst claims construction (aka Markman) hearing took place.  From what I’ve read both sides did well and there was no clear victor- which in itself is a victory for Burst. The stocks movement this week reflects that.

Apple has filed a motion to dismiss (very unlikely IMO) which will be dealt with by Judge Patel soon.

Her ruling on the Markman hearing could come out any time in the next days to weeks. Look for lots of FUD on this in the press if it is favorable to BURST.

This may cause a drop in AAPL.  A favorable ruling for BURST will mean a very high probability of a pre-trial settlement since Apple would be foolish to risk a jury trial. Though a settlement will hurt AAPL in the short term - I would view it as neutral to positive for AAPL in the long term. (think RIMM vs NTP)

Disclaimer: I’m long BRST but MUCH more long AAPL

There was some chat a while ago about Apple or someone buying out Burst. Is this still a possiblity? Be nice to have their patents under the Apple roof. MS paid a pretty big settlement fee to them setting some sort of precedent to their validity

Yes, an Apple buyout of Burst has been discussed. From what I’ve read about Burst’s CEO, Richard Lang though, that would only happen for a very high price - one Apple may not be willing to pay. Lang really does not seem to be in it for the money - he wants his inventions to be acknowledged and has even talked about going back to developing and marketing new products once (if?) the patents are validated.

MSFT settled with Burst pre-trial for a relatively small sum- $60 million.  Burst’s agreement was apparently strategic - knowing that there were other fish to go after and that they could do this with the money from the MSFT settlement.

It may be in Apple’s interest to get the validity of Bursts patents settled once and for all. If they then are required to pay Burst for past infringement and a license (or buy Burst) then those patents will work in Apple’s favor. With money and validation from an Apple settlement Burst will go on to pursue other companies they see as infringers- some of which are Apple competitors.—Real Networks, Google and basically anyone who streams (bursts) digital audio or video over a network. There is also talk of Microsoft being a target again due to use of the technology outside of the terms of their current license.

I’ll say it again though - no matter what FUD is spread with an outcome favorable to Burst - any effect on Apple’s bottom line (or stock price) will be minimal and short lived. In the long term I believe it will be a win-win for Apple and Burst.

At least that’s my totally selfish, greedy, long AAPL, long BRST take on it.

As we all watch AAPL rally today I thought I’d throw out the latest on the BRST vs AAPL lawsuit- but first a BIG DISCLAIMER:

What follows is probably all wrong and is in no way an endorsement or recomendation to buy BRST - I have a position in BRST that is very speculative and will probably be worth nothing very soon.

As stated in prior posts the BRST vs AAPL Claims Construction (aka Markman) hearing took place on Feb 9th.  The ruling on this hearing by judge Patel will determine the parameters of a trial (should it occur) next year. It is really the whole ball of wax - since a decsion favorable to Burst will almost certainly mean no trial will occur and a Burst will be able to negotiate a handsome settlement with AAPL. Her decision was expected many weeks ago. It is the opinion of many (includiing me) that the fact that she has still not released her ruling is because AAPL and BRST are negotiating now. 

This Thursday - May 10 th it will be 90 days since the Markman hearing and this is considered the outside deadline for her ruling to be released. It is also - coincidently the date of both AAPL and BRSTs shareholder meetings.

What does all this mean?  Well the BRST speculators think it means that a ruling will be out in the next day or two. BRST trading volume is up today due to that speculation.

For any AAPL investor this should not be a concern. But for anyone swing trading or highly leveraged there is a danger here.  The BRST bulls say that any settlement should be at least $500 million - plus ongoing royalties!!!  Hard to beleive yes - but they make the case that the technology BRST developed in the early 90s and which was demonstrated to AAPL and MSFT at the time - is the foundation of not only streaming (bursting?) video but is also the foundation of the whole iPod - iTunes store. I’m not saying this is true but it is the case Burst is making and is what the ruling by Judge Patel will indirectly address.

So - If there is an anouncement of a big, unexpected BRST settlement in the next few days it will undoubtably cause a steep but short lived drop in AAPL.

If this all fizzles and the ruling is not favorable to Burst then my BRST profits will evaporate - but I don’t expect any upside for AAPL with this.

As my post in the options thread states - I went net short AAPL today (when it was at 103) for the first time in a long time. I did this because AAPL looks a bit overextended to me and I wanted to protect some profits.  Looks like I’ll take a beating on this decsion today

I’m still very bullish on AAPL over the next months to years - just managing risk right now. The above is only meant as a caution - as I’d hate to see any here get burned by an unexpected BRST settlement. It probably won’t happen and you can all then heckle me for my poor trading decsions -:lol:

mtdoc - thanks so much for the heads-up on this! I can’t see a $500M settlement, but I agree AAPL may take a bit of a hit if there is one. I see a couple of hundred million plus ongoing royalties as a worst-case, which will hardly touch the sides and certainly wouldn’t lead to much of a sell-off in AAPL. Depending on the nature of the settlement and licensing arrangements, it could actually give AAPL some kind of commercial advantage too, if there’s any degree of exclusivity involved (unlikely I know, but that would be something worth AAPL paying through the nose for, if the patents prove enforceable).

It would be huge news for BRST holders though Good luck!

[quote author=“Tommo_UK”]mtdoc - thanks so much for the heads-up on this! I can’t see a $500M settlement, but I agree AAPL may take a bit of a hit if there is one. I see a couple of hundred million plus ongoing royalties as a worst-case, which will hardly touch the sides and certainly wouldn’t lead to much of a sell-off in AAPL. Depending on the nature of the settlement and licensing arrangements, it could actually give AAPL some kind of commercial advantage too, if there’s any degree of exclusivity involved (unlikely I know, but that would be something worth AAPL paying through the nose for, if the patents prove enforceable).

It would be huge news for BRST holders though Good luck!

You’re probably right on the numbers. Rumour has it that 18 mo ago - before all the current legal proceedings started, AAPL offered Burst $240 million. So unless an offer of 200-300 million comes with a very good licensing agreement, it will be a big dissapointment to the BRST fans.  You’re right that a liscensing agreement and a Markman ruling that essentially validates the patents will be a plus for AAPL in the end.  There is speculation that this is what Apple wants before paying up. Apple’s new general counsel, Donald Rosenberg - oversaw IBMs accumulation of a large IP portfolio and presumably understands the value of intellectual property.

We’ll see. This unfortunately may all very well drag on for another year….

The Markman Ruling has been issued. I’m no lawyer but it appears the ruling is almost entirely in favor of Burst - that is the court accepted Burst’s interpretation of their patents - specifically meaning that they apply to the iPod, the iTunes store and perhaps even to quicktime.  This puts Apple in deep doo-doo since their case was based on the argument that Burst’s patents do not apply to these products.

It seems very unlikely now that this case will go to trial and Apple will likely need to provide a handsome settlement - whatever Burst was offering before this ruling - the price has now gone up.

I’m not sure what this will mean for the price of AAPL but hopefully it’s not too late for Apple to turn this into a strategic advantage.

For anyone interested a link to the ruling is HERE

Thanks for keeping us informed of this. I wonder how Apple will try and make this work for them now.. The spin machine will need to go into overdrive

I’m surprised this hasn’t hit the wires. I was thinking we might see AAPL down a little at the open of the PM, but there have been no significant moves down.

Yeah- I’m not sure yet what to make of this.
I see 2 possibilities:

1. The ramifications of this ruling are not as great as I think.

or

2. This whole case is so far under the AAPL investing/trading radar that no one really is aware or understands its implications and since it is likely that a deal is in the works any AAPL insiders are unable to make any trades without risking serious consequences.

From what I’ve learned about this case I suspect it is number 2.  Of course I am probably wrong

We will know more soon since both Apple and Bursts shareholder meetings are on Thursday. It may be months before any deal takes place - or Apple may have more legal manuevering to try.  They had submitted a motion for summary judgement before the Markman hearing but the Judge told them she would not consider this until after her ruling on the Claims Construction (Markman ruling). Given her ruling, Apple’s motion is dead in the water.

BRST hasn’t budged a single cent in the PM as far as I can tell, which is hardly what you’d expect if this really was a landmark ruling. Any thoughts?

It doesn’t trade premarket. It’s a pink sheet!

This thread over at IV seems to indicate this ruling means nothing as it is just an agreement over what the definitions in the case are.

An unbiased view to be sure

Time will tell.

An unbiased view to be sure

Time will tell.

My problem with IV in a nutshell, on an important issue such as this we need a broader perspective than than feel-good, echo chamber reassurances.  The stalwarts on the BRST board have the advantage, at least, that they been following this case with keen interest (what else do they have to do?!), and discounting their own pumping, I’ve found threads such as this one of interest, especially the speculation about Apple’s legal strategy.

Surely, a Markman hearing is simply to define legally the terms used in the patent / case. The fact that Burst ‘s definitions prevailed means that Apple’s pleadings were either incompetent, or Apple are actually happy for Burst’s definitions to prevail, either so that post-settlement the barriers to entering the market will be higher for competitors, or because Apple’s best defence works with Burst’s definitions.

Since Apple is using not so much live streaming, but rather downloads which happen to be able to start playback before fully downloaded, I suspect on a technical basis that Burst’s patents, if they apply to iPod and/or the store, must cover transmission of more or less any time based content by any means. In fact I’m not sure they wouldn’t apply to a postal subscription to a movie magazine that incuded a cover disk, since this involves time compressed transmission of video content ahead of actual playback, but playback can be commenced before all the cover disks forming the subscription have been received.

(Of course the defect is in the US patent system, which allows the patenting of the obvious, provided no-one else patented first)