Securus Expects Some Patents To Be Invalidated - No Impact On Quality Or Scale Advantage of Securus' Industry Leading Patent Portfolio

DALLAS, June 2, 2015 /PRNewswire/ -- Securus Technologies, a leading provider of civil and criminal justice technology solutions for public safety, investigation, corrections and monitoring, announced today that it seeks to set the record straight and discuss the relatively new process that the Patent Trial and Appeal Board (PTAB) uses in its validation/invalidation process.

Securus Technologies enjoys a significant advantage in patents approved and pending metrics over second place GTL – see the following metrics:

Since the passage of the Leahy-Smith America Invents Act (AIA) in September of 2011, the PTAB has changed the way it validates/invalidates patents and makes it much easier for petitioners to file to invalidate patents – a "clear change in rules."  This was done in an effort to reduce the total number of patents approved by the United States Patent and Trademark Office (USPTO) and also to reduce the number of patent infringement cases.  It is important to recognize that the USPTO and the PTAB are part of the same federal government organization – and what was a perfectly legal/approved patent three (3) years ago may be invalidated today, based on changes in the law and standards for the evaluation of patents.  It doesn't seem logical that the USPTO typically spends 2 to 4 years analyzing a patent application before they approve it – then the PTAB (a part of the USPTO) invalidates the patent 50% of the time on average when they take a second look.  But that is the new process that the USPTO and the PTAB have established.

"GTL has seized upon these recent changes in how a patent is evaluated, and the newly instituted use of the PTAB for review purposes, to file at least 18 petitions seeking invalidation of Securus patents – patents that were previously reviewed, approved and issued by the USPTO. Given recent changes in the law, and a more lenient standard of review, we now expect that some of our previously approved and issued patents could be invalidated by a different arm of the same governmental organization that issued them," said Richard A. ("Rick") Smith, Chief Executive Officer of Securus Technologies.  "Not because they are 'bad patents' – but rather because the criteria for their evaluation  have changed.  However, we will aggressively defend each and every one.  Ultimately – the number of patent invalidations that GTL seeks is irrelevant to me – it just doesn't matter because they cannot invalidate our entire existing patent portfolio AND the extensive number of pending patents that we have will keep them busy for years at a very high cost to them." 

This tactic of using the PTAB to review eighteen or more of the existing Securus patents in an effort to have them invalidated will take years, and could cost GTL many millions of dollars in legal fees and expenses; in all likelihood, this process will cost GTL from $18 million to $27 million for those filed to date.  We are encouraging GTL to have all 115 of the current active Securus patents and the 91 pending patents when approved evaluated by PTAB – at a total cost to them of an estimated $206 million to $309 million.  It's a legal and economic strategy that could certainly be called into question – not only in terms of method, but also in terms of result. By contrast, Securus has taken a much more surgical approach to this change of law and patent review process. Although we anticipate filing additional petitions seeking to invalidate GTL patents in the future, at present, we have limited the PTAB petitions filed to just 3 of GTL's patents.

"I can justify a GTL payment to Securus of $115 million, with a 10 to 25 year payment plan – based upon existing, pending, and future patents - for a license granting GTL access to all existing and future patents into perpetuity.  On a net present value basis, that is $61 million – which is at the low end of what other licensees have paid on a percentage basis, so that is an okay deal for GTL," said Smith. 

Although GTL has recently trumpeted its efforts to invalidate Securus' "crown jewel" US Patent # 7,899,167, that relates to centralized call processing.  "I am not sure why GTL calls this our crown jewel – perhaps it's because they have high hopes of getting the PTAB to rule in their favor this year on this one – but I certainly would not call it our crown jewel," said Smith.  "It represents less than 1% of our patent portfolio – certainly not our crown jewel by any measure and just another valuable patent that we own." Although it would be our preference to retain every one of our patents, each patent represents less than 1% of our current patent portfolio, which would make the loss of any patent insignificant in the larger scheme of things.

"Patents are important to Securus and being a patent leader in our sector is important – but they represent only one measure of our technology leadership.  Having the largest VoIP Platform in the world, having the largest product set – over 700 products, having our own domestic call center with my own associates versus outsourcing this, having my own field technicians and not outsourcing that strategic area, having more IT professionals building more things than anyone else, having customers for a very long time – with good references – all of these are more important to me than patents, in the big picture," said Smith.  "Ultimately, keeping all of society safer, with a high level of business integrity are the best measures of who we are and who others aren't."

ABOUT SECURUS TECHNOLOGIES
Headquartered in Dallas, Texas, and serving more than 2,600 public safety, law enforcement and corrections agencies and over 1,000,000 inmates across North America, Securus Technologies is committed to serve and connect by providing emergency response, incident management, public information, investigation, biometric analysis, communication, information management, inmate self-service, and monitoring products and services in order to make our world a safer place to live.  Securus Technologies focuses on connecting what matters^®.  To learn more about our full suite of civil and criminal justice technology solutions, please visit SecurusTechnologies.com.

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SOURCE Securus Technologies, Inc.

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