The stock of Mosaid Technologies surged as much as 44 per cent Friday morning after the market reacted to the news that it had gained some ground in its landmark patent case against South Korean electronics giant Samsung.
In morning trade on the Toronto Stock Exchange, the stock surged as much as 44 per cent from where it closed Thursday after being halted pending the announcement, to $14.50 from $10.05. By 11 a.m. Friday, the stock had eased back to $13.26, still up by $3.21, or 32 per cent.
On Thursday, the judge overseeing the case in a New Jersey court, Ronald Hedges, granted Mosaid a number of sanctions against Samsung.
Mosaid is pursuing a combined patent infringement case against Samsung and Germany's Infineon Technologies that analysts have said could be pivotal to its future.
Mosaid had requested sanctions against Samsung on the grounds that it has failed to provide certain documents during the discovery phase of the case and destroyed e-mail evidence related to the case.
A full trial is scheduled to begin in December.
Justice Hedges granted a number of the sanctions requested by Mosaid, but refused to grant a default judgment against Samsung for certain infringement claims.
"We believe this ruling largely vindicates Mosaid's efforts to secure proper discovery in this case," Jim Skippen, senior VP and general counsel for the company, said in a statement Thursday afternoon.
"Part of Samsung's strategy seems to have been to unfairly delay and bias the case outcome by either withholding or destroying critical documents. The court obviously agreed with Mosaid in granting these significant sanctions since in Judge Hedges Order he writes, when referring to Samsung's destruction of e-mails: 'The prejudice resulting from complete and total e- mail spoliation seems particularly obvious... the fact that no technical e-mails were preserved... demonstrates, at the least, extremely reckless behaviour'."
In a research report on Thursday, BMO Nesbitt Burns' analyst Brian Piccioni said the ruling is definitely a mark in Mosaid's favour.
"We believe the judge's language, to put it mildly, indicates he is frustrated with Samsung's behavior thus far," Mr. Piccioni wrote in a research note. "This has negative ramifications for Samsung in the event Mosaid is successful and damages are awarded."
Mr. Piccioni rates Mosaid's stock as "outperform".
In a research note Friday morning, Harris Partners analyst Greg Reid maintained his "buy" rating on the stock with a 12-month target price of $20.
"We believe yesterday's announced favorable court ruling, in the Mosaid vs. Samsung lawsuit, supports our belief that the stock market is significantly undervaluing Mosaid's intellectual property portfolio," Mr. Reid wrote in his note, adding that, "we believe this mini victory could be increased ammunition for a settlement".
The suits pertain to dynamic random access memory, or DRAM, the most common type of random memory used in computers and embedded in other electronic devices. The company has been involved in developing such memory chips for most of its 30-year history.
Mosaid claims that there is not a single DRAM technology on the market that did not originate with its own designs. From Mosaid's perspective, any company that manufactures electronics with mainstream and Rambus DRAM chips is infringing on its patents. The company also claims its patents are being infringed more and more by semiconductor makers that produce embedded DRAM products.
Mosaid has made great strides in signing licensing deals. Its list boasts the world's three largest electronics manufacturers: Sony, Matsushita (Panasonic) and Royal Philips Electronics. Mosaid signed up Philips in April, making the Dutch firm its first European licensee.
Despite these successes, Mosaid has yet to license any of the top four manufacturers of DRAM that collectively account for 75 per cent of the market. Samsung and Infineon are two of those four. The others are Micron Technologies and Hynix Semiconductor.
