MARA - June 2, 2015 Trial Day 2

MARATHON PATENT GROUP (MARA)

June 2, 2015

David Hoff Founder

[email protected]

Tire Pressure Trial Notes Day #2

IP HAWK

David Hoff [email protected]

@theiphawk http://theiphawk.blogspot.com

I am long MARA. I have not been paid to prepare or disseminate this report by Marathon or any company discussed. All information has been obtained from

public sources. All opinions are my own. Please consult a financial advisor before making any financial decisions.

Thoughts From the Hawk

Key Data

Price $4.50

TTM Revenue $22.71mm

Enterprise Value $87.1mm

Shares Outstanding 13.98mm

Shares Fully Diluted 19.56mm

Float 10.19mm

52 Week Range $4.25-9.73

3 Month Avg. Volume 93,928

Marathon Patent Group announced the acquisition of a new international patent portfolio on May 15, 2015. The patents are

related to tire pressure monitoring systems (TPMS). Of note the German portion of a TPMS patent was asserted in Germany,

which Bridgestone has already prevailed on the infringement portion and is able to post a bond to enforce an injunction. The

German victory does not guarantee success in the United States, but further shows that Marathon is able to source and acquire

valuable IP at various stages in its monetization campaign. The terms of the acquisition have not been fully disclosed

although I estimate any licensing revenues collected could be split 50/50.

A jury trial, Bridgestone v Schrader began on June 1, 2015. I attended day #2 and my notes are below. Please note that

patent litigation is very complicated and all of my notes are personal opinions or observations from attending the jury trial in

Delaware. I could very well be wrong in my understanding and recollection of what was said or demonstrated in court.

Day #2 Morning Session

I counted nine people in attendance including myself along with a trusted associate. I believe the rest were either lawyers,

shadow jurors, or company representatives. More attendees filtered in and out during the morning session. There were six

lawyers representing the plaintiffs and six lawyers representing the defendants. The jury is all female with eight jurors. Two

patents are being asserted with two claims in each patent.

- 895 patent claims 12 and 92

- 476 patent claims 1 and 136

The first plaintiff witness was a Bridgestone engineer with 31 years experience. He gave a background of the TPMS program

and how the program originated.

Next up was another engineer and a named inventor on the patents, David Coombs. He provided his background, which I

thought was very credible. The company he was employed by was contracted by Bridgestone to develop a TPMS device that

was very durable and conserve battery power in order for the device to work for a long time.


June 2, 2015

David Hoff Founder

[email protected]


IP HAWK





The system needed to use low power in order to conserve battery life when it wasnt being used or used in a lighter mode

and to use more battery / more power when it was transmitting the pressure information.

Next up was a Schrader employee (Tony Davenport) via video recording (he sounded miserable throughout). I believe he is

responsible for aftermarket products for Schraders TPMS line. He created a TPMS whitepaper to present to Schrader

executives for a business case. Budgeted $2.90 per unit for IP licenses. A note in the report was shown from the paper:

Corporate Risk is High IP Infringement.

Another Schrader employee via video recording was next. He is the Technical Development Team Manager. Generation 3

products and later involved microchips, memory, and a transmitter. He was questioned on the different Schrader TPMS

products and how they worked including the different modes: roll mode, power down mode, off mode, and stationary mode.

Day #2 Afternoon Session

The afternoon session started and ended with Bridgestones infringement expert. I noticed more attendees in the court room

and counted 18 people attending. He went through how Schrader accused products infringe claims 12 and 92 of the 885

patent. Patent 476 should be heard on Day #3. He went through the deep sleep mode with the advantages of power & battery

conservation, flexibility, software upgrades, easier to fix, and three modes of operation. He then testified that Generation 2

products or older do not infringe. They did not have microprocessors, which were programmable with different modes of

operation. He said they were state machines and the circuits were always on. Generation 1 TPMS were shipped in 1997

and in 2003 is when Schrader started shipping Generation 3.

He started with claim 12 of the 885 patent and how a tire tag as construed by the court teaches the steps of claim 1.

1. A system for measuring a parameter of a device at a first location comprising: a sensor for measuring the device parameter and generating a data signal representing the measured parameter; a microprocessor coupled to the sensor for activating the sensor on a first periodic basis to measure the device parameter; a memory in the microprocessor for storing the generated data signal representing the measured parameter; a transmitter coupled to the microprocessor; and

a receiver coupled to the microprocessor, the microprocessor periodically partially awakening to determine, on a second periodic basis, if a received transmission is a valid interrogation signal and, if so, fully awakening and responding to the valid interrogation signal, via the transmitter, by at least transmitting the last stored measured parameter. Bridgestone and Schrader only have a factual dispute with the bolded and underlined portion. The expert went through each step and testified that Schrader infringed each step of the claim. He used Schrader source code, block diagrams, compliance FCC testing from U of Michigan, Schrader testimony, and customer software designs. The expert showed exactly where Schrader infringed each step of the claim and ticked off boxes on an oversized board.


June 2, 2015

David Hoff Founder

[email protected]


IP HAWK





The expert then through the Doctrine of Equivalents and how each product was met through the DoE. Most of the focus on

the claim involved when the sensor awakened, how much power was used with the microprocessor (the different clockspeeds)

and which components of the sensors are used in various modes.

Claim 92 was very similar:

92. A tire tag comprising:

a sensor for measuring at least one tire parameter and generating a data signal representing the measured parameter;

a microprocessor for causing the tire tag to enter a deep sleep mode in which a minimum number of electrical

components are powered to conserve battery power;

the microprocessor, on a periodic basis, causing the tire tag to enter a lucid sleep mode in which certain of the

electrical components are activated to cause the sensor to measure and store the at least one tire parameter; and

the microprocessor periodically partially awakening and looking for a forward link transmission and, if

detected, causing the tire tag to determine whether the forward link transmission is a valid interrogation signal

and, if so, causing the tire tag to enter an interrogation mode where the microprocessor activates all necessary

electrical components to receive, process and respond to the valid interrogation signal.

In my opinion this case will be decided on which expert the jury believes is more credible.

Disclosure: I, David Hoff, own stock in MARA. I have no plans to buy or sell any stock

within the next 72 hours. I wrote this report myself, and it expresses my own opinions. I have no business

relationship with any company whose stock is mentioned in the article.

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June 2, 2015

David Hoff Founder

[email protected]


IP HAWK



MARA - June 2, 2015 Trial Day 2

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