I've been an investor in PTSC since 1998 or so. I know the whole public story of PTSC, including it's association with TPL; and then some. I'm also a sizable stockholder who is willing to openly discuss the warts of the company along with it's beauty marks. I tell you the above so that you understand and believe that at the heart of my postings and motivations is only one goal; a higher PTSC stock price and a more desirable PTSC stock for new investors to want to own.

I was at the HTC trial every day except for the first day of jury selection, and Fish's Video deposition testimony. Nothing I write in this post is confidential information, in-fact, everything can be verified (or corrected) by anyone who reads the official court transcript. Speaking of the Transcript, no doubt there will be many companies/law firms who will be doing just that, and there were a couple of individuals of the 40+ in the gallery who were there every day taking their own unofficial transcript on laptops.

This post can go on and on, but I want to tell you why I believe the continued presence of TPL and Alliasence doing our negotiating, and being intimately and directly associated with MMP licensing activities negatively impacts the credibility and integrity of the licensing program, requires more time to conclude deals, results in more combativeness and dismissiveness by targeted infringers, creates a lower Royalty rate or license fee, and incurs higher relative licensing overhead costs.

The MMP licensing program has brought in "about 120" licenses, and something close to $350M. That's an impressive bottom line; when looked at in a vacuum. But unfortunately, that kind of money has done little for PTSC with the stock at 15 cents, or for TPL with them finding themselves in Bankruptcy (though this is also due to unrelated factors to the MMP licensing analysis as well, imo). Why ?? Because the costs to administer the licensing program is so top heavy, and license fees have been so low (in absolute dollar terms), that by the time the approx remaining 70-75% in profits from the license fees are split and passed along to the Partners of the JV, and then the administrative/overhead costs of the individual receiving entity's own operations are covered, those partnership profits drop all the way down to 10 - 25%; or in PTSC's case, even translate to operating losses on PTSC's financials. From my estimations, the Licensing Program operating fees and off the top license recovery percentage that was previously paid to TPL, and is now paid to Alliasence, essentially puts Alliasence in for what adds up to practically 1/4 of our total license fee recovery amounts; in addition to the 50% of license revenues that TPL is due. Although we are unable to see the Alliasence agreement with PDS, that relationship certainly does not appear to me to be the result of an arms length competitive negotiation. After all, Alliasence is an "enterprise" of the TPL Group, and the change from one to the other quietly came about in a revised ComAg when PTSC dropped the suit against TPL for Fraud, etc. The move from TPL to Alliasence was seamless, and the change occurred not too long in advance of TPL's subsequent filing for bankruptcy protection. If you think of TPL and Alliasence as one in the same, you can see that PTSC's obligations for cash outlays for the licensing activity feeds a TPL "enterprise", and yet, PTSC's share of license fees when distributed back out to them really ends up becoming more like a junior cut in the scheme of the entire MMP fee recovery effort. For lack of another descriptive phrase, the TPL group is allowed to double dip because they also provide Licensing services, so you can see how even with low licensing fees, the principals/employees of a private companywho don't have 400,000,000 separate share interests to create value for, can personally do very well for themselves; even during periods where partner money is paid to pursue licenses, but none or only few are signed.

When a prospective licensee is contacted early on by TPL, it's done in a letter of introduction. That "letter" also indicates what TPL advises that company's potential infringement exposure is; and then asks for discussions to license the MMP to them. Once correspondence are exchanged or discussions are entered into, TPL presents their tiered licensing structure. In HTC's case, TPL took a team and traveled overseas 6 times (costing approx "$50K" per trip) to speak with their technologists and executives; it's likely this same procedure was done for the other potentially significant (and not so significant ?) infringers as well. Depending on what "category" that company is in, and how early or down the line that company would be a signer in it's designated category, they would be charged the appropriate Royalty rate; with the "early movers" garnering some greater level of discount than do later signers in the category.

PTSC investors who were at annual SHMs back in 2006 and 2007 when the Leckrones and the MMP licensing program were first being introduced and explained to us, will recall that the major emphasis of the discussion of why TPL provided such sophistication and expertise to the MMP program, was because TPL did extremely extensive reverse engineering and product breakdown, and had experts and expensive equipment which could indicate or detect if infringement was occurring technologically when it couldn't be viewed physically. It was said that the Leckrone's own personal history of running previous licensing programs gave them credibility in the industry, that they came from the viewpoint of wanting to foster and encourage co-operative licensing with our prospective "partners", and have Infringers make licensing "decisions in the Boardroom and not the Courtroom". The Leckrone's position to us and the industry was that our Licensing program was so exhaustively prepared and documented, that they did so much checking and crosschecking, that when they educated infringers on what technology the MMP covered, and presented their case to infringers, that their evidence of infringement was extensive, reliable, and almost incontrovertible. TPL then determines the Infringers potential infringement liability exposure; if not by internal documents voluntarily offered up by the infringer, then by research based on whatever industry intelligence or public information is available to calculate or approximate the total dollar valuation of the products sold which TPL has identified as infringing.

The point of recapping the above, is that this is how TPL (and now PDS, utilizing the research and licensing effort activity of TPL and Alliasence) presents itself to the world of potential licensees. We're the owners of a multi-patent portfolio comprising at least one highly significant microprocessor design technology which has been so widely copied and incorporated into almost every high speed and embedded microprocessor, that it's design benefits touch just about every kind of electronic use worldwide; from industrial applications to consumer gadgets. This is why Infringers need to talk to us, this is why they need to negotiate with us, this is why we need to come to a cooperative understanding, because if they don't, this offered license amount and this "case of infringement" we have carefully and arduously documented and prepared against you, will be heard in front of a Jury; and then things will only get more difficult and more expensive for you.

When anyone negotiates across the table from their counterpart, and each looks at the other squarely in the eye ... the credibility of that person, their representations, facts, and their convictions and intentions become one of the main elements of what the other side's response and behavior will be. When someone wants something from you, especially when you here-to-for had no expectation of needing to give them anything, you ask yourself ... Should I believe this person ? Are these folks dealing with me in good faith ? Can they back up their claims ? How much room for negotiation is there ? What is their reputation in the community ? How have they dealt with others in my similar situation ? and on and on and on.

It is in all of the above criteria, that after reflecting on the HTC trial, and our 8 year journey with TPL, it seems clear to me that the continued direct association of MMP licensing activity by TPL and Alliasence, has, and will continue to, damage or weaken future potential MMP licensing efforts; be they cooperative or in a courtroom setting. I am not suggesting we break up the MMP ownership inside PDS, but I am suggesting that we RErevise the responsibilities and fee structure of Alliasence (or TPL) in the ComAg, and introduce a new and credible neutral party to manage/oversee the overall licensing Program (inc Alliasence) and conduct the actual negotiations.

The following are three examples used in the HTC trial of those "Potential Exposure" introduction letters, and what we actually sold licenses for.

1. In the "potential exposure" letter to HTC, TPL wrote to HTC that HTC was at risk of potential infringement exposure to the level of $280,000,000. I can't find it in my notes, but I recall that during negotiations, HTC ultimately offered to license for $2 or $4 Million. Both our and their expert agreed that HTC had approximately $8 Billion in identified infringing products sold (and anticipated to be sold through 2015). Our expert guestimated that out of the $8 Billion sold, HTC profited approx $2 Billion. Our expert testified we had $9,500,000 in damages, their expert testified we only had $500K in damages. The Jury awarded us $980,000.

2. In the "potential exposure" introduction letter to RIMM, TPL wrote that RIMM was at risk of potential infringement exposure to the amount of $712,000,000. RIMM signed an MMP license for $1,500,000.

3. In the "potential exposure" introduction letter to Apple, TPL wrote that Apple was at risk of potential infringement exposure to the level of $3,300,000,000. I heard testimony that at some point after notifying Apple, TPL's "opening offer" to Apple for an MMP license was $40,000,000. For purposes of the trial, Apple's official licensing fee amount for the MMP was $960,000.

4. As an FYI, although I do not know the amount of claimed "potential exposure" in their letter, Disney licensed the MMP for only $20,000.

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HTC lawyers hammered on the tiny amount of the Apple license. TPL argued that there was a value to the prestige of licensing Apple because they are hard to license and because they are the most cutting edge technology company out there. We said this was an important consideration for us because we could tout the Apple license to other prospective licensees as an indication of acceptance of the MMP and our program. TPL also argued that they were in financial distress, that they were almost "broke" at that time, and so they did it due to financial circumstances as well. However, it was shown on a projector that the Apple license contained a non disclosure clause, and that TPL was not permitted to discuss the Apple license with anyone; so the question became, how legitimate and valuable was the claim of prestige when you're contractually restricted from telling anyone ?? Mac Leckrone's retort was that he had other agreements with Apple that allowed him to discuss the Apple license to others in private discussions.

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HTC's lawyers were not allowed to mention TPL's BK, but Gloria took the stand and was asked about her Declaration under oath that "TPL's financial representations could not be trusted". Gloria's deposition is a public document, Gloria had no choice but to confirm her declaration statement. She was later given the opportunity by Mr Hoge to qualify her Declaration by saying that that statement was made in relation to our lawsuit against TPL over our differences in the Apple License.

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HTC's attorney's asked Moore about his conflicts with TPL, and about how he was "cheated" out of approx $30 Million by his partner and lawyer at TPL. An objection was sustained on opposing Counsel's characterization, he promptly withdrew the question then released Moore as a witness.

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My point to recounting some of those aspects of the trial, and those that would likely be illuminated again at every trial we're a party to, is that reputation and character mean a great deal, and garner you either considerable good will or guarded suspicion; especially in an industry where you want co-operative compliance and cannot afford in time or money or professional resources, to litigate every 1, 2, 3, or 4 million dollar license. Reputation and Character also carry a great deal of weight in front of a Jury too. Unfortunately, I think that it is here in our damages award of 1/10th of what we were demanding, where we see that the weight of those two elements manifested themselves in the Jury's award.

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IMO .. We have genuine issues with how to overcome our history of grand infringment exposure representations, but a record of voluntarily accepting relatively low licensing fees and Royalty rates. Not only do I think removing TPL and Alliasence from MMP licensing decisionmaking will bring renewed credibility and co-operation to the Licensing program, and result in more and swifter Licensing closures, but I also think it will provide PDS with a strategic and legitimate argument to raise our Royalty rates, especially in court, where "reasonableness" of the rates will certainly be argued and pivotal in large damages cases.

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I am aware that even with Allisence now taking the lead in MMP licensing, that we will continue to sign licenses. But to me, it's a question of are these license signings resulting in the raising of the market value in my PTSC stock ? It's a question of degrees.... Under the status quo, PTSC stock might rise 10 cents, it may rise to 30 cents, it may rise to $1; but what COULD it rise to, and WHEN that might happen, if we had a Licensing program that was free of so much of the baggage and anchorage of our licensing partner's financial problems, business practices and negative business history, and if we had competitive cost saving opportunities in which to conduct our licensing activities, and fresh personalities providing better efficiency and reduced delays in concluding licenses which took years and only amounted to few hundred thousand dollars.

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The entire backdrop and future of MMP licensing is occuring under the very real pressures in which we have limited remaining patent protection and patent prosecution timeframes. We know we have at least 400 identified companies where Infringment is known and licenses hopefully should be expected, but we all know there are likely thousands of small infringers who will never be contacted.

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TIME and low Royalty fees are not a luxury the MMP, and especially publically traded PTSC has, even in signing up the just the 400 companies we've been told about.

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There is much more to write, but I hope this post was sufficient to get across my general opinions on the matter.

Go PTSC Onwards and Upwards!

Cheers~