A firm that specializes in developing and owning patents has filed suit against Emeryville's Leapfrog, the educational toy company announced one day after its shares debuted on the New York Stock Exchange.
Leapfrog said the patent-infringement suit concerns its LeapPad interactive books, its flagship product and the best-selling toy in the country last year. News of the suit sent Leapfrog shares down $2.35, or 15 percent, to $13.50, or just 50 cents above their offering price.
The timing of the suit was curious. Leapfrog officials were served notice just two hours before the market closed Thursday, the company's legal counsel said in a wire service story. And Cherie Stewart, a company spokeswoman, said the complainant, Technology Innovations LLC of West Henrietta, N.Y., did not warn Leapfrog of any disputes or concerns before Leapfrog's much-publicized IPO. "I believe this was the first contact," she said. "It absolutely would have been in the S-1," the company's primary pre-IPO filing with the SEC, had the company known of any potential legal issues, she added.
Technology Innovations could not be reached for comment.
The patent was filed in 1994, five years before the LeapPad debuted, and granted in 1996 to Michael L. Weiner, who in 1999 sold it to Technology Innovations. It is summarized as, "An enhanced book (that) includes, in addition to printed material, enhancing material such as additional text, graphics and sounds, the nature of which is limited solely by the ability to store the additional information in digital format, stored in a memory device attached to the book, together with a connector for allowing the enhanced book to be connected to an external computing device for accessing and presenting the enhanced information to the reader."
The LeapPad holds a book and an accompanying digital cartridge. Children touch certain words and icons with a pen to hear sections read out loud, to activate games or to hear supplemental sounds from book characters. Leapfrog said in a statement that it did not know how much money, if any, it might lose as a result of the suit and was in the earliest stages of a legal investigation. But it added that, "based solely on our preliminary review of the patent, we believe we have valid arguments that our LeapPad platform does not infringe any claim of the patent." Leapfrog, which is controlled by Michael Milken, his brother, and Oracle CEO Larry Ellison, saw its shares rise 22 percent in initial trading Thursday. Milken pled guilty to six counts of securities fraud in 1990.
|
