Wednesday, 14 January 2015

Granting of Apple Patent makes GoPro share price drop

There has been some dispute on how the news that a company is sued for patent infringement influences the share price (in particular in the context where the plaintiff is a so-called troll, see here).

Today's news is that not a legal action but merely the publication of a decision to grant a US patent relating to an action camera system to Apple Inc. made the share price of the "action camera" producer (and market leader) Go Pro dramatically drop. Indeed, the share value of GoPro dropped by roughly 13% on Tuesday.

Looking at the 1 month chart (right), the development appears less dramatic and well within the order of magnitude of typical fluctuations.

A further interesting point is that the patent specification specifically mentions drawbacks of GoPro products (this not being a surprise given that GoPro is the market leader). This is interpreted by the jounalists in such a way that Apple has specifically targeted GoPro. An interesting case on how and why the mentioning of drawbacks or problems of competitor's products in a patent specification may harm a company's reputation and be unfair competition (and what the company can do against this) was reported here.

The secretive business attitude of Apple promotes speculations on potential new business fields in an extreme way and the mere publication of patent application has already been the basis for business news created by journalists reading the tea leaves and subsequent hysterical reactions earlier. However, the huge impact on a specific stock price of a third party is a new and scary development for me. After all, patent documents are not meant to be business news.


Philip Kerr said...

I would have thought that the granting of a patent is quintessential business news. I do not know whether Apple's Patent in fact adversely impacts on the existing market leader but even if it did not it demarcates an area where other players in the field cannot enter the Apple 'paddock' surely a matter of business importance both for Apple and its competitors.

Philip Kerr
Senior Patent Counsel

Roufousse T. Fairfly said...

Nice theory, but...

The file wrapper has been public before issue, since there was an A1 application publication.

The issue notification (the US equivalent of an EPO form 2006A) is dated 23.12.2014, and must have been visible in PAIR on that day, or soon after.

The notice of allowance (equivalent to a communication under Rule 71(3) EPC) is dated 15.09.2014.

So some investors would have waited until the announcement by the ticker of the legal entry in force of the patent to speculate on the title, just to play into the hands of those who were less clueless and were able to solve the CAPTCHA?

The savvy investor armed with that knowledge could have played the stock short. It's not even insider trading, the information is public. But isn't two weeks (let alone 4 months) an eternity when it come to the stock market?

You needn't even squint your eyes on the PAIR welcome page, several private operators are allowed to roam the USPTO database and download documents. Google is foremost among them, I shudder at the quantity of tactical and strategic information that they derive.

(Rant: Why is Bubustelli so proud of his "alliance" with Google for automatic translation. I don't know what he paid in the deal, but I firmly believe he could have got a lot more in return. I dreamed of a service for identifying an Art. 54(2) date for internet disclosure, which is something you can implement when you have thousands of spiders visiting every corner of the web. The EPO could have set up something by itself long ago. It was already clear in the late 90's that this was going to be an issue).