Acacia Research Corp (ACTG) 2014 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Acacia Research third-quarter earnings release conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. (Operator Instructions) I would now like to turn the conference over to Mr. Matthew Vella. Please go ahead, sir.

Thank you for being with us today. Today's call may involve what the SEC considers to be forward-looking statements. Please refer to our 8-K, which was filed with the SEC today, for our forward-looking statement disclaimer. In today's call, the terms we, us, and our refer to Acacia Research Corporation and its wholly and majority-owned operating subsidiaries. All patent rights acquisitions, developments, licensing, and enforcement activities are conducted solely by certain of Acacia Research Corporation's wholly and majority-owned operating subsidiaries.

With me today is Clayton Haynes, our Chief Financial Officer, and Jaime Siegel, our Executive Vice President of Licensing. Today, Clayton will start our call by taking you through the numbers for this past quarter. Clayton?

Thank you, Matt, and thank you to those joining us for today's conference call. As detailed in our earnings release today, on a consolidated basis, Q3 2014 revenues totaled $37.2 million as compared to $15.5 million in the comparable prior-year quarter. Q3 2014 revenues were comprised primarily of 20 new license agreements executed in the quarter as compared to 24 new license agreements executed in the comparable prior-year quarter. As we have discussed on previous conference calls, license fee revenues continue to be uneven from period to period.

For the third quarter of 2014, we have reported a GAAP net loss of $12.4 million, or $.26 per share, versus a GAAP net loss of $15.7 million, or $.33 per share, for the comparable prior-year quarter. Please note that the comparable 2013 prior-year quarter's GAAP net loss included the favorable impact of $19.6 million of NOL-related tax benefits recorded in the period. For Q3 2014, we have provided a full valuation allowance for NOL-related tax assets and, hence, no comparable favorable benefit was recorded in Q3 2014.

On a non-GAAP or pro forma basis, we have reported net income of $5.1 million, or $0.10 per share, as compared to a non-GAAP net loss of $13.2 million, or $0.28 per share, for the comparable prior-year quarter. As discussed on previous conference calls, non-GAAP or pro forma net income or loss excludes the impact of certain non-cash charges and the impact of certain non-cash tax benefits. Please refer to our disclosures regarding the presentation of non-GAAP financial measures in today's earnings release and 8-K filed with the SEC.

On a combined basis, inventor royalties and contingent legal fees expense increased 152%, relatively consistent with the 140% increase in revenues in Q3 2014 as compared to the prior-quarter. As such, quarterly average margins were also relatively consistent at 67% for Q3 2014 and 68% for the comparable prior-year quarter.

Litigation and licensing expenses decreased slightly in Q3 2014 due to minor fluctuations in litigation and licensing support-related legal expenses quarter to quarter. These expenses will continue to fluctuate period to period based on activities occurring in those periods. MG&A expenses, excluding non-cash stock compensation charges, decreased 13% in Q3 2014 due primarily to a $1.2 million decrease in executive and other employee severance-related charges and an overall reduction in personnel costs due to staff reductions in previous quarters.

Non-cash stock compensation charges decreased $5.4 million during Q3 2014 due to a $1.8 million decrease in non-recurring executive severance related non-cash stock compensation expense and overall decreased in grant date fair value for the shares expense during the quarter, and a decrease in the number of shares vesting each quarter due to a decrease in employee headcount and a decrease in the number of shares vesting for current employees.

We ended Q3 2014 with $227 million of cash and investments as compared to $221 million as of the end of the second quarter of 2014. The decrease in cash and investments included the quarterly cash dividends paid to shareholders on August 31 totaling $6.3 million. Patent-related upfront advances and scheduled milestone payments in Q3 2014 totaled $2.4 million.

Looking forward for fiscal 2014, we continue to expect fixed [MG&A], excluding non-cash stock compensation charges and including the impact of variable performance-based compensation, for the first nine months of the year to be in the range of $28 million to $30 million. We expect patent-related litigation and licensing expenses to be in the range of $37 million to $39 million. Excluding any additional 2014 patent portfolio acquisitions and any future amortization accelerations, scheduled fiscal-year 2014 non-cash patent amortization expense is expected to be approximately $56.2 million.

For additional details regarding the summary information provided in these prepared remarks today, please refer to today's earnings press release and 8-K filed with the SEC.

Thank you all for joining us today, I will now turn the call back over to Matt Vella to provide you with an update on our business operations and other information.

Thanks, Clayton. The team at Acacia had another strong quarter executing on its mission. That is teaming with the originators of valuable technologies, patent owners, to provide them a path to compensation when their proprietary creations are being used without their permission. To date, we have returned over $640 million to these patent owners, our customers.

Over the last year, we changed our approach to our business and, commensurately, our operating level to hone in on fewer patent portfolios that have a higher potential return for the patent holders and for us. These portfolios have highly defensible claims and sit in high-revenue markets. We call them marquee portfolios. We are starting to see the fruits of this change and approach.

Over the last year, as we have cemented these changes and executed on our strategy, our view of the future of the market and how our Company will fit into it remains unchanged. Specifically, one, we see a growing need for our service which has kept our marquee portfolio opportunity pipeline strong; and two, we also have a trial calendar populated with marquee portfolios, which is making our revenue pipeline more robust than ever.

Looking at the results over the last two quarters, we are guardedly happy about our progress. While we are still not quite ready to proclaim that we are the revenue trough, our performance over the last couple of quarters are a testament to two tenets of our strategy.

First, our focus on marquee portfolios is the best path to scaling revenue. Our marquees are proven to have the high return on investment we expected. Second, we are seeing the continued association of revenues and trial dates. While we aspire to a monetization process that is not so closely tied to trial dates, one with less friction in which reliance on costly legal machinations to resolve licensing disputes is reduced, for now, trial dates have been acting as a catalyst for payment by the licensees. Accordingly, we remain confident that the revenue trough is only temporary because of our strong marquee intake over the last couple of years and because of the trial date calendar we have built up based on that intake.

Again, though not perfect predictors of revenue events, our trial dates are historically correlated to revenue events. In all of 2013, we only had three sets dates, which is part of the reason for our revenue shortfall that year. In 2014, we had roughly 10 scheduled trial dates. And for the first half of 2015, there are over 20 scheduled trial dates, most of which relate to marquee portfolios. While it was the paucity of marquee portfolios and trial dates that put us in this revenue trough, it is the strengthened portfolio depth and subsequent trial dates that we believe are pulling us out of the trough.

Though we did not bring in a marquee portfolio in the third quarter, our marquee portfolio opportunity pipeline remains strong. We have 11 marquees, and we are still optimistic that we will reach our goal of having 12 to 15 marquees by the end of the year. We are optimistic because we have never seen the strength of pipeline from marquee portfolios that we see today. Judging from this pipeline, Acacia's model and expertise are making us the premier outsource licensing partner for those looking to be compensated for their inventions. This is something we will talk about in greater detail during an upcoming analyst day we are hosting on November 5, as discussed at the end of my remarks today.

I will now briefly touch on legislative and judicial initiatives aimed at the patent industry. In short, these initiatives target patent holders whose business model is to take advantage of the high cost of patent litigation to license weak patents to successful businesses at price points lower than the cost of litigation.

While there hasn't been much activity on this front since our last call, our stance remains the same with respect to these legislative and judicial initiatives. We generally support them because they do effectively deal with such targeted patent holders. We also note that because these same initiatives are additionally hampering the licensing efforts of many capital-constrained and inexperienced patent holders with strong patents, the initiatives are driving new customers to Acacia's outsourced patent licensing service.

In conclusion for today, as I mentioned, we are guardedly happy. All of the ingredients of future success are in place. The high quality of our patents and strong pipeline for intake, our upcoming trial dates, and the marquee patents that will go to trial on those dates, the increased need of our customers, the patent holders, for the services we provide thanks in part to patent reform, and above all else, the quality and technical skill of our professional staff. We have never been better positioned for high-caliber, long-term performance. And we remain as optimistic as ever about Acacia's future.

We look forward to reporting back to you again in a few months. In the meantime, we once again encourage you to visit our litigation calendar page on our website for access to descriptions of our marquee portfolio's technology, trial posture, addressable markets, and, in some cases, royalty rates. And, as mentioned earlier in my call, we are holding an analyst day on Wednesday, November 5 at the Palace Hotel in New York to provide you with still more detail about our business. We hope you can join us at this event in person or through the associated webcast.

We can now take any questions you may have. Thank you.

(Operator Instructions) Mark Argento, Lake Street Capital Markets.

Maybe break down the 20 dates in the first half of 2015 for us a little bit in terms of Markman's versus actual trials? Is it mostly actually trials, or does that include Markman's as well?

No, they are all trials. And the breakdown is on the website. I can tell you there are a number of Adaptix, but they are all trials.

Got you. All right, I will check the website, too. And when you guys when you -- surveying the landscape, obviously there's been some pretty high-profile cases that have been overturned, larger-dollar jury awards that have been overturned by the appeals court. Could you talk a little bit -- and most of those have been in the software -- in and around the software. Could you talk a little bit about your exposure to software and what you think about how your portfolios are positioned right now and your overall risk relative to what's been going on in the market?

Well, you're right. Most of those have related to software cases. And our exposure to -- I'm going to use business method, Mark, instead, which is I think what they really been attacking, if you will. Our exposure there is minimal because we've anticipated, I guess, if you will, this change, and we just have not been focusing our resources on helping folks with those patents in the last couple of years.

To the extent there is some big damages awards on non-business method patents that have been reversed, again, the idea of marquee portfolios is to have a lot of patents and to not necessarily rely on any one patent in a portfolio to earn all the income.

I will say that amidst all of the disappointing results for patent plaintiffs that a lot of folks have been focusing on, there have been some equally encouraging results in the patent licensing business at large. Tessera has done a great job monetizing its portfolio. Certainly there are a lot of practicing entities out there that can point to success stories monetizing their portfolio. So I wouldn't say that the news has all been bad.

In fact, I would say the news has been mixed. I would say that the news has been worse for smaller entities relying on smaller portfolios. It's been better for entities with larger portfolios, and we definitely see ourselves in the latter category.

Great. That's helpful. And when you talk about the strong pipeline that you see right now, obviously on the IP intake side, is it -- what is drawing -- what is driving the pipeline? Is it a specific vertical? Is it the fact that you have been -- you have run at kind of a multi-vertical strategy for a few years now like, say, energy, which you have been focused on for over a year, starting to bear fruit. What's the key driver to building that pipeline and ultimately converting it?

Today, it is still what I'm going to call technology, meaning smart phones, telecommunications, computing. But we are seeing promising signs, and we hope to make announcements they reflect the promising signs on the other two verticals we have. But as of today, to be perfectly candid, that's where we have had the reputation. That's where we have a very good, in-depth understanding of portfolios that we have seen time and time again over the last seven years. And that's what we're seeing a lot of the opportunity.

Great. Congrats on the strong quarter, guys. Thanks.

Bryan Prohm, Cowen and Company.

A quick question on the quarter. The revenue is real solid. Profitability may be a little bit lower than expected even with the one-timer in there related to the expense accrual for the negative rulings in NetApp and the other case.

What is driving this? Can we expect any improvement over the near term as revenue builds, as more marquee portfolios are monetized in the coming quarters?

Yes, I think -- well, there's a couple of things going on right now. One is obviously the revenue is not where we think it can be right now. So that's where we see the profitability increasing. We see that profitability increasing without a commensurate increase in the expense line. So that's the first thing and the most important thing.

I think the second thing that's going on is there are a lot of trial dates coming up. And the trial portion of litigation is expensive. And when you have as many trial dates as we do -- and when I say 20 for the first half of the year, that's probably a little light. You can go to the website and count them up yourself for anyone out there on the call. It's a lot of trial dates. And so you're going to see some expense mount up as a leading indicator of what we think is going to be future revenue. So I think between those two things, the fact that the -- we expect the revenue to go up and the fact that expenses around litigation tend to go up as you hit trial dates, that is a large part of what you're seeing on that profitability line.

Okay, understood. So next, I will build on Mark's questions a bit. On the outlook, 20-plus in the first half of next year, but you alluded to 10 this year. I know there are a few left here in the fourth quarter. And as much as I do look at the website for that information, I see that there are some trials in -- on Adaptix in Japan here to the end of the year. And then I know that there were still some things pending in the med tech portfolio world in Germany. Can you update us on those and whether or not they are still something we should be modeling for 4Q? Thanks.

It's always difficult to respond to questions and inadvertently provide guidance, which of course we're not doing. Having said that, I can give you some facts, and you guys can use them in any way you want in your models. One is the trials on med tech in Germany primarily relating to what I'm calling the Boston Scientific patents around stent grafts and primarily against GORE are proceeding. They are progressing, and we expect those to be wrapped up in this coming quarter.

Secondly, there are a number of cases in Adaptix for Japan. Those are occurring. I don't think they're going to be wrapped up this quarter. I think there is a higher likelihood of the US cases wrapping up on Adaptix before the Japanese cases. So those are my responses with respect to those two fact points.

Okay. And let me just build on that Adaptix in the US piece, because I know that there are -- there was a Markman order, I believe it was in September, maybe it was in August, but I read it and it seemed like the claims construction was quite favorable. And then inasmuch as there seems to be a high correlation between in your prepared remarks these Markman orders and some resolution. Maybe that's a good way to read that into what we might expect between now and the balance of the year. Is that fair?

Well, the Markman --

(Multiple Speakers), right? There are multiple Adaptix litigations in multiple jurisdictions.

Right. And you will notice that we have executed some Adaptix licenses with one company that was not a defendant and one company -- well, we haven't just been executing Adaptix licenses with companies that are on the trial dock, so to speak, in Q1.

Having said that, look, a Markman is a potential catalyst. The trial date is a much stronger potential catalyst. The trial date is a much stronger potential catalyst if the Markman wins well. That's the way this business works, and that was an assumption I would use in building out your models.

All right, very good. Last question for me, then. No top-tier portfolio in the quarter. Is the Renaissance partnership effectively filling that role in the quarter? And when will we -- I believe we actually are starting to get some litigation there. Is that something that you expect could be monetized in 4Q, or is that more of a 2015 event for the model? Thanks.

We did just file some suits on Renaissance. We expect to file some more quite soon. Renaissance is really something that pushes out beyond the first half of 2015. Probably even beyond 2015. It's going to be populating trial dates, I would imagine, in the 2016 time frame.

The activity, with respect to new marquees -- I think some cycles in our Company were definitely diverted by Renaissance in a good way. And it's one of those things where bird in hand as opposed to two in the bush might be what's at play there. The arrangement is there, the patents of enemy monetized and we have obviously focused efforts on them. And people will see the results of those efforts in the coming months as we show our hand more and more, so to speak.

But we certainly have been extremely busy with other portfolios. Sometimes portfolios can be quite complex, and it can take a bit of time to make sure that we are paying the right price and we've done the right amount of diligence on them. And I would say we've run into that phenomenon a couple of times this quarter, and that's what's really going on.

Understood. Hey, one last quick one. Are there any other older portfolios that might be impacted adversely by the Alice ruling where you are accruing expenses in the current quarter? (Multiple speakers) thanks.

I don't think we've had portfolios impacted by the Alice ruling except for Digitek.

Right.

We have not -- we did not accrue -- in other words, the accrual you just saw was not on the Alice matter. So as mentioned before, Alice exposure, we think it's quite minimal. If you're asking --

Okay, they are not correlated, then. Never mind (multiple speakers).

They are not. No. They're not correlated.

All right. Congratulations on the solid revenue, and I will pass it on. Thanks guys. Take care.

Darrin Peller, Barclays.

This James Berkley stopping in for Darren. How are you doing?

Good.

I guess my first question just on the pipeline of trial dates, given the correlation with the revenue there, could you just speak to the sustainability of that real quick? Obviously you said you've got 20-plus coming up in the first half, and that compares to the 3 in 2013 and the 10 or so in 2014. So if you could just speak to that first, I would appreciate it.

As I said, we might have in fact a bit more than 20 -- quite a bit more for the first half of 2015. But you're going to see a general upward trend. And of course, as part of the general upward trend, you're going to see some spikes as you see a general upward trend. So I'm not saying that you're going to be seeing 25 in Q2 and 30 in Q3 and 40 in Q4. But you should see, and we think you will see if you look online for example, 12 -- one-year, 12-month increments. You should see a general rising trend. So that's really all I can say at this point.

It's very difficult to get these things timed exactly right. Sometimes you get the dates sooner than you think. A lot of times they slip. But all in all, you should see a very nice, solid trial date calendar going forward with some spikes amidst that general increase in trial date density.

Okay. Thanks. And then just on [interparty] reviews, if you could just talk to how you see the tactic trending in terms of usage and your focus on higher-quality patents, how that's playing out relative to those trends.

Yes. The -- first off, let's just be frank with each other. The IPRs do make assertion costlier and riskier. And that's just reality. Now, the nice thing is that that increase in cost and risk is offset in two ways. One, because the process of monetization in general is getting costlier and riskier, the patent owners are turning to us more frequently with higher-quality assets. And so the increase in quality that we are experiencing on the intake more than offsets the extra cost in risk we're taking on the licensing side.

The second thing is that when patents survive IPRs, they are going to command a far higher royalty rate than patents that are never subjected to IPRs. And so we think we're going to have plenty of patents that will survive IPRs, and we're looking forward to putting those into play. We think that effect is going to offset the increase in cost and risk.

The final thing I'll say is that the industry is reacting. And by the industry, I don't just mean companies like ours, but I mean the law firms out there. As we're all collectively reacting to this new phenomenon, what you're seeing is effectively the cost structure is adapting. Because remember, when you win an IPR, there is less work to do for the litigation firm. So you're going to see the costs come more into line. People are going to get smarter about where they spend their dollars on these IPRs.

The final thing I'll say is that in the three months preceding September 22, only 58% of the cases have seen an institution of the IPRs. So we're getting a lot of cases; we are now even getting going on the IPRs. And in a situation like that, the deleterious effect on the company that brings those IPR applications, that still remains in place.

So, again, I think you definitely saw some folks getting caught a little by surprise with the IPRs initially. But I think as we get into a steady-state understanding and reaction to IPRs, we see it as -- and the impact on us as being somewhere between neutral and probably positive.

Okay, great. Thanks. That's really helpful. And then just lastly, if you don't mind, if you could just walk us through the income tax line, just how to think about that going forward when modeling out your tax rate (multiple speakers).

Sure, sure. So as we indicated in the press release today, with respect to the Q3 2014 and really for all of 2014, we are recording a full valuation allowance related to any net operating loss of tax assets generated during the period. So at the end of the day, what we're looking at, at least for the foreseeable future, is a tax line that primarily would just reflect the foreign taxes paid to the extent we are executing license agreements with licensees in foreign jurisdictions where withholding taxes would be a factor.

And so we are not anticipating showing the tax benefit line. And to the extent that we do have NOLs that we are able to utilize them to offset any tax expense, that tax line really would just be related to foreign taxes.

All right. Thank you very much. I'll turn it over.

Mike Latimore, Northland Capital Markets.

Just on that last comment about IPR, you gave a statistic there of 58%. Can you mention what that relates to one more time?

Actually, sure, and I'm going to turn the call over to Jaime Siegel.

Sure. Hi, this is Jaime. That statistic is based on data released by the Patent and Trademark Office with regard to 58% of the IPRs that are requested to be instituted actually getting instituted. So 42% of the IPRs that are requested are rejected.

Right out of the gate.

Right out of the gate.

All right. Thank you. And then obviously Adaptix is in a number of trials and negotiations. If I recall, Adaptix related to revenue generally has a higher gross margin associated with it. Isn't that right?

Well, yes. The way Adaptix came into this Company was not in a normal manner in the sense that we -- it was an M&A transaction. I can't really get into much more detail because I guess I might be inadvertently telling you what a more normal manner of revenue is. But let's put it this way: the returns on Adaptix, the way the revenue looks, the margin is going to be different.

And then you have this -- I guess it was a one-time cost in the third quarter here. Are there any events that might cause a one-time cost in the fourth quarter?

By one-time cost, we mean the Shalamo and the Summit Data.

My view on that, there is a very small handful of cases that could come into play. I don't see it happening, but there is a small number potentially. One thing I should say is that on those two cases, they are especially unusual, and I'll say for two reasons.

One, as mentioned earlier, we are looking at cases -- the standard changed on us at some point recently. And so when the standard changes and you're doing an inventory that's a couple of years old, then you inevitably are going to see some stress testing of your previous judgments that were based on an old standard. We're going to see less and less of that because we are dealing with older inventory.

The second thing I'll say is that even within that subset of assets where the assumptions change on us midway through in an unexpected fashion so to speak, this is still a minority. Because we are really talking about two cases where the awards were made based on license defenses that are not very typical in our portfolio. So, again, we do see these two cases as relatively -- as outliers.

Got it. Okay. And for the three deal that amounted to over 10% of revenue, I don't know if you can provide any detail around that such as who they are with or whether there were marquee portfolios involved there. Can you provide any color on those three?

No, I can't. Regulations are regulations. But we do, in our report, try and give you as much information as we can if you read the Q closely. That's all the data I can give you.

Got it. Okay. Thank you.

Richard Kramer, Arete Research.

Couple of quick ones. First of all, when you are heading into a trial with a company like Apple in February 15, you touched on the cost. And given the lengths of Apple-Samsung that we have watched over the last four or so years, can you give us a sense of your expectations or your theories of how long these trial processes could take? I'm just conscious that expectations will be that first half series of trials turn very quickly into revenue. And how are you thinking about that especially with respect to the cost?

I can't give you a complete, unvarnished answer because it's part of our trial and licensing strategy with respect to, in this example, Apple. But generally speaking, we have not been in disputes that have been as long-running or, frankly, as costly as the Apple against Samsung dispute. It's a different animal altogether. Having said that, I don't rule out the possibility that you can have a trial come and go and even win, and you might have someone (technical difficulty) deal. That's certainly a possibility.

But historically, what we know is looking back at our Company and what's been happening with our matters, we have tended to see revenue. Now, if we're talking about any one matter, I suppose you could certainly see it go up on an appeal, and maybe that doesn't cash out. But we do have 20 of these dates, and we do think all of those are going to resolve -- are going to be resolved settlements in and around the trial time.

I guess next question is with respect to the recently announced Blackberry settlement, how should we think about a company that might not be making smart phones in a year's time or few years' time? And how does that affect at all the upcoming litigations you have with Blackberry? I think I counted four or five upcoming trials with them on your listing.

Well, you can't -- I think, frankly, you look at Blackberry the way your question implies one would look at Blackberry. It's a company that has had plummeting sales, a company whose dedication to the space is being questioned. And there's no point in spending a lot of resources necessarily on a company like that except to the extent that you have to protect the royalty rate. And sometimes what you need to do is protect the royalty rates so that you are not -- you've got a rate you can go with, and it's a rate that won't be attacked by the companies.

Having said that, it is a company that is struggling, and we are mindful of that.

Okay. And I guess the last one is relating to the portfolio like Cellular Communications where, looking at it, you've got a whole heap of trial dates in 2016. But you mentioned that the first patents start expiring in 2018. And how do you mitigate the risk that potential licensees just try to delay the process and then start to say that, well, there's just not enough time left in the portfolio for you to really monetize?

Well Cellular Communications, that's the Nokia Siemens portfolio. The dates go out beyond 2018. So -- and there is more of those patents coming. So in that particular case, we're not so worried about people delaying and the patents expiring.

Number two, I would say that there are cases, a minority of them, where you've got patents that are expiring. But the reality is that as people sell units, the damages go up. And you count the units and you apply royalty, and that's your damages case. It is what it is, so to speak. And so whether the patent is expired or not, since we're not looking for any injunction in a lot of these cases, especially in the US, we're looking just for the damages, they will sell what they sell, we will collect what we can collect, and that's the end of it.

In Europe, it's a different case because obviously the injunction is an available remedy. But we are careful not to assert patents in Europe. We definitely look at the expiry date and then part of the factors we look at before we decide to assert in Europe.

Okay. Thanks. That's really helpful.

David Hoss, private investor.

Hi, Matt. Great quarter. I just had two quick questions. The Renaissance portfolio with the Hitachi patents, we saw litigation filed in California late last week and early this week. Was there any matching litigation -- foreign litigation filed?

Not as of now.

Okay. My second question is Pantech filed bankruptcy. I know that they were scheduled early in the Adaptix case schedule. Is there plans to move them and slide someone else in?

I'm looking at my list. I don't even see Pantech on it, meaning maybe the date is still hanging around -- the trial date, but I don't think anyone is planning on actually having that trial. So it definitely is going to free up some cycles. Whether or not the court will let us slot someone else in, I'm not sure. But as you know, probably better than just about anyone out there, we've got plenty to keep us busy in Q1.

Right. Okay. Thank you. My last question relates to the American Vehicular Sciences portfolio.

Okay.

We should see some of the interparty reviews, final decisions in the next maybe three months or so. Any patents that get through, should we see the cases -- the case stays lifted almost immediately and they would still be added to the trial schedule?

Well, you should. Will they? Depends. That's a great question. We ask ourselves that question. But the reality is, look, if it comes through unscathed or if it comes through intact, then, yes, at some point, it's going to have to get lifted. When? Who knows. But we are hoping it would be soon after.

Yes. Well, there's a lot of patents being challenged. There's a lot of patents in the case. There's 10 of them being challenged. You make out with 5 or more, you're doing okay. So that's just my point of view on that.

Yes, absolutely. We will see what comes out, but -- and you know, the profiles are going to vary, but let's see. You're right.

Okay. Thanks for taking the questions. Great quarter.

Thank you. Ladies and gentlemen, this will conclude the question-and-answer session. I will now turn the call back over to Mr. Vella.

Thanks, everyone, for your support and for your attention to this call today. Again, we will be at Park Hotel in New York City -- I'm sorry, the Palace Hotel in New York City on November 5. We look forward to seeing you guys there. Bye for now.

Thank you. Ladies and gentlemen, if you wish to ask -- access the replay for today's call, you may do so by dialing 888-203-1112 or 719-457-0820 with confirmation code 1571982. This concludes our conference for today. Thank you all for your participation, and have a nice day. All parties may now disconnect.