Following a 16-month-long patent violation case between semiconductor specialist Netlist (OTCMKTS:NLST) and technology giant Samsung (OTCMKTS:SSNLF), the court handed the former enterprise a critical victory. The jury issued a unanimous verdict confirming that Samsung infringed all five Netlist patents involved in the case. As a result, NLST stock went parabolic, gaining 40% earlier Monday morning.
According to Netlist’s press release, the jury’s findings represented a comprehensive victory for the semiconductor firm, which focuses on solid-state drives (SSDs) and other memory solutions for enterprise-level clients. Specifically, the court noted the following elements:
- Samsung infringed all patents associated with the lawsuit.
- None of Netlist’s underlying patents were invalid.
- Samsung willfully infringed said patents.
- Samsung owed Netlist money damages for the infringement.
“We are pleased with the outcome of this case. The jury verdict left no doubt that Samsung not only willfully infringed Netlist patents, but currently uses Netlist technology without a license on strategic products which collectively represent the future of Samsung’s memory business,” said in part Netlist CEO C.K. Hong.
NLST Stock a ‘Hero’ Trade for IP Rights
Naturally, the favorable legal outcome symbolized redemption for NLST stock. Trading on an over-the-counter exchange throughout much of its existence, it ran through the charts as a literal penny stock. However, Netlist also represents a “hero” trade of sorts for intellectual property (IP) rights.
On a broader level, the Commission on the Theft of American Intellectual Property reported in 2017 that the “annual cost to the U.S. economy of counterfeit goods, pirated software and theft of trade secrets” ranged between $225 billion and $600 billion.
However, as the Independent Women’s Forum notes, “[t]his figure does not include the full cost of patent infringement and economic espionage through hacking — estimated to be $400 billion per year. In total, the U.S. has suffered over $1.2 trillion in economic damage.”
Included in the discussion of IP rights are smaller businesses. Lacking the financial wherewithal to chase down fraudsters or patent violators, many unfairly suffer huge losses. Therefore, NLST stock inherently aligns with this vexing narrative, especially considering Samsung’s massive footprint.
Notably, Hong also remarked that “[t]he brazen free-ride and efficient infringement of intellectual property belonging to small innovators by industry giants remain a serious issue for our innovation ecosystem. We hope this case serves as a reminder of this problem to policymakers as well as a wakeup call to those in the memory industry that are using our IP without permission.”
Why It Matters
Although TipRanks data does not show any analyst coverage for NLST stock, bullish chatter on various platforms popped up. Objectively, investment resource Gurufocus shows that Netlist’s cash-to-debt ratio stands at 3.51, ranked higher than 60% of public companies listed in the semiconductor space. Also, the company’s three-year revenue growth rate (on a per-share basis) lands at an impressive 58.3%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
