GeoComply’s lawsuit against Xpoint for patent infringement has a new player in the cast and that is Out The Gate, an upstart online gambling company based out of New Jersey.
Alleged third-party presentation a point of controversy
According to a motion filed by GeoComply, Out The Gate put together an internal presentation in July 2022 which made several insinuations about Xpoint and its product.
GeoComply originally submitted the presentation in its entirety into record with its subpoena of Out the Gate. However, on Tuesday Judge William C Bryson ruled that the exhibit and its associated motion needs to be sealed.
“We’re thankful the court has ordered our confidential materials removed and sealed. We are very concerned that this preliminary work product has been used in such an inappropriate manner, and we will be conferring with our counsel about pursuing further legal redress,” said Joe Brennan Jr, president of OTG.
GeoComply offered this comment about the ruling to seal the motion:
“It is not surprising that Xpoint’s lawyers, who conveniently now also represent Out The Gate, are doing all they can to keep this document out of the case and the public’s view. We stand by our positions as conveyed to Judge Bryson, and expect the Court to further address this discrete issue soon.”
Brennan also issued a longer statement on behalf of Out the Gate where he confirmed Out the Gate is now a customer of Xpoint. In it, he stated the company never had access to Xpoint’s source code and compiled a similar internal presentation on GeoComply. He also expressed disappointment with GeoComply:
“I am very concerned that GeoComply would violate a potential customer’s confidentiality by exploiting and misrepresenting OTG’s analysis for its own purposes, especially given that our preliminary examination of their competitor’s platform was incomplete and has since been proven, to our satisfaction, to not be accurate. Xpoint has by contrast maintained our confidentiality and trust, even in the face of this legal assault by GeoComply.”
Out the Gate raised objections to scope of subpoena
With the knowledge that the report existed, GeoComply subpoenaed the company to provide both the source code Xpoint allegedly provided Out the Gate and any correspondence or work product associated with Xpoint. The company had previously requested expedited discovery in the case, but was denied by the Delaware district court.
Out the Gate filed an objection to the subpoena, stating:
“GeoComply seeks a wide breadth of discovery from OTG at a nascent stage of the litigation and before receiving any discovery from Xpoint, even though much of the requested documents and information are equally or more likely to be in Xpoint’s possession.”
OTG’s complaint argued a number of reasons why GeoComply’s request is an overstep, including the scope of the request being an undue burden on the company. Moreover, the document argues that this information should come from Xpoint and its discovery rather than a third party.
Judge will rule on matter and dismissal motion early next month
GeoComply filed a motion to compel OTG to provide the materials requested on Jan. 9. OTG has until Jan. 23 to file its opposition to that motion, then GeoComply will have until Jan. 30 to file its response. Judge Bryson should rule on the matter in early February.
GeoComply had the following to say about the matter:
“As we shared at the outset of this action, we are confident in the merits of our case, and that has not changed. GeoComply welcomes healthy competition and new ideas, allowing the market to distinguish leading solutions and technologies from others. However, respecting the valuable intellectual property that companies like ours spend considerable time, effort, and money developing is essential. We look forward to this matter working through the court process to validate our claims. We don’t have additional comments on this matter at this time.”
This was the response from Xpoint CEO Marvin Sanderson:
“We continue to believe this lawsuit is an unjustified attempt to stifle competition in the marketplace. We believe the case lacks merit and have asked the court to dismiss the complaint with prejudice. We will respond to the flaws in GeoComply’s latest motion in the court rather than in the media.”
Judge Bryson should also be ruling on a motion to dismiss from Xpoint filed in late November to dismiss the case. In its motion, Xpoint contends that the patent is invalid “because it claims an abstract idea: the basic concept of verifying a person’s location to determine whether the person is allowed to engage in a transaction.” The motion offered a second argument that the complaint failed to “plausibly allege infringement” and only offered “inconsistent allegations” of wrongdoing.
GeoComply filed its response to the motion and categorized Xpoint’s motion as oversimplifying the nature of GeoComply technology on its claim that the patent is not valid. The group also sought the option to amend the initial complaint and include more information about the patent and technology.