NeoMedia CEO Iain McCready talks barcodes, IP and shareholders

NeoMedia is one of the major patent holders in the field of mobile barcodes, and it has been no stranger to controversy over the years. In response to requests from GoMo News readers, NeoMedia CEO Iain McCready answered some questions about licensing and shareholder concerns.

First of all, congratulations on the Buongiorno announcement earlier this week (see report)

The fit between the companies is very good. Buongiorno has very good reach – it’s a positive sign that a company of that size has signed a deal like this. It shows that the demand is their from their customers to make mobile barcodes part of their ongoing campaigns.

Many of our readers have been wondering what NeoMedia is doing to enforce its IP?

We take our patent portfolio very seriously. We’ve spent millions developing it, and spend further millions maintaining it around the world. Our American licensing partner, Neustar, is currently signing its tenth partner or so, so there has been a large amount of activity on the IP side as well as the platform side.

Patent infringement is a very treacherous area. If you point your finger at a large company and say “you’ve infringed our patent” you had better have a lot of years and money ready to get through that process. A lot of the big players have their own technology, so we are talking to a range of them about IP licenses – obviously those are all under non-disclosure agreements. People who don’t know a lot about IP or IP infringements can look at something that looks like a system that NeoMedia uses, and think there’s an infringement there. It’s an extremely complex process, and it has to be approached very carefully.

Are there many technological solutions that can be used to work around NeoMedia IP?

No, there aren’t. We’re unusual in that we hold 60 different patents. Most companies only have 1 or 2. We deliberately built a portfolio to protect from all sorts of different angles. A lot of people talk about the 048 patent that was re-examined 18 months ago… but that was just 1 of 60. Even if that had been overturned, we’d have got them with another patent. We continue to update our portfolio – this year alone we’ve made a number of new applications.

NeoMedia’s attitude towards licensing and IP has been very good for the mobile barcode industry at large. But there’s a lot of anger from NeoMedia shareholders who feel shortchanged. What would you say to them?

I completely understand their frustration. Some of these investors got involved 5 to 7 years ago, long before many of the mobile barcode players even did. This technology has taken a long time to even approach going mainstream. It hasn’t quite reached it yet, but it’s getting there, as you can see from the activity in the space.

I think the only way we can bring value to the shareholders is by doing big business and big deals, and earning good revenue. Two years ago, we didn’t have any partners or deals – we were stuck doing one-off trials. We’re still a small organisation with a small direct sales team; what we’re trying to do is sign big players like Neustar and Sony Ericsson who can bring real scale to the industry.

Do you have other big deals in the works?

There are a lot of deals being worked on internationally. The companies we sign with have a lot of connections. People like Nokia in Europe use our technology on a routine basis to place barcodes. We provide the technology that allows other companies to use barcodes, from placement and management through to content delivery. But NeoMedia is not a creative agency. We don’t do that – we’re a technology provider. So we’re not on the front line – you won’t hear see our name in most press releases. But these companies are using our IP and our platform to create on-going campaigns. We’re running campaigns all the time now.

A lot of shareholders are still upset and angry about the Yorkville Advisors move over Christmas (see report). When will they see a return on their investment?

That’s a very difficult question to answer. The truth is that if Yorkville hadn’t supported NeoMedia, I believe it would have gone out of business and those investments would be worth zero now. I know that doesn’t satisfy the long-term shareholders, and I’m sorry it doesn’t. But Yorkville has supported this company tremendously over the years, and invested at a time when other people weren’t willing to invest.

As for time scale, you have to remember that it takes a long time to do a big deal with a company the size of Buongiorno. We were talking to them for months and months and months. They had to do their diligence, and get the legal things in place to move it through their organisations. As a public company, we are simply not allowed to discuss deals until they have been finalised. So things that we are working very hard on now often won’t come to light for a very long time. Whereas a private company can release PR whenever it wants, often with very little behind it.

I know that won’t satisfy some of our more passionate shareholders – they want more facts. Unfortunately, as a public company, we simply can’t do that.