Silverbrook Statement Cites Poor Commercialization of Memjet Technlogy in Kaiser Lawsuit

The George Kaiser Family Foundation’s lawsuit against Kia Silverbrook - inventor, world’s most prolific patent holder, and Silverbrook Research founder – has reached Britain’s High Court. Mr. Silverbrook’s Witness Statement refutes allegations of fraud in the lawsuit filed against him by the Kaiser Foundation, a charitable foundation headed by billionaire U.S. businessman George Kaiser. The statement also shows that at one point, Silverbrook Research had offered its single-pass, page-width color ink-jet printing technology to both Hewlett-Packard and Dell, and that at another point, investors had discussed selling the Memjet Companies to a major electronics company that it was thought would be better able to commercialize and sell the technology.

In his statement, Mr. Silverbrook (right) denies all charges in the Kaiser lawsuit, and appears to state that low sales and poor commercialization of the technology by Memjet management, not any wrongdoing by himself or others, are behind any disappointing financial results, noting, “While the technology works, and is scalable to very high volumes and across many markets, the Memjet management have not met their own sales targets, recently missing these targets by more than 90 percent.” (He also disputes the Kaiser Foundation’s claim that it invested some $610 million in Memjet Companies, and that the actual amount invested was less than 60 percent of that, or $350 million.)

The Kaiser Foundation had recently filed suit in the Oklahoma courts in the United States against Kia Silverbrook, partner Janette Faye Lee, and their patent-holding company, Silverbrook Research Pty. Ltd., alleging fraud. The Foundation stated that it invested some $610 million since 2004 into Silverbrook Research, and alleges “omissions, false representations and false promises.” (While Kaiser filed suit in Oklahoma, Silverbrook states that Kaiser Foundation investments were made with the clause that any legal disputes will be settled in U.K. courts, thus Mr. Silverbrook’s statement was filed in the U.K.)

Silverbrook Background

Silverbrook Research doesn’t directly sell its color ink-jet printers or technology. Instead, in 2002, it created independent Memjet Companies; Silverbrook Research licenses and sells its printing technology to these companies for them to commercialize and sell it.

Memjet Companies have since licensed the technology to various OEMs, including Lenova, LG, Lomond and others. For instance, Memjet’s 60-ppm desktop office color ink printer is sold as the EvoJet in Europe and Russia, and Lenova China sells it as the Lenova RJ600N in China. Similarly, Memjet color ink-jet Waterfall Printhead Technology for stacking multiple Memjet print heads in a row is OEMed for use in  production, wide-format, and commercial printers, such as label printers.

Memjet Companies Valued at $1.5 to $3 Billion

Due to the perceived failure to successfully commercialize Memjet printing, Mr. Silverbrook, Ms. Lee, and Kaiser Foundation representatives met in July 2011 to discuss plans to sell the Memjet Companies, with the idea that a major electronics company would have better financial, technical and marketing resources to sell the technology, with Mr. Silverbrook noting that “Memjet is currently in a vicious spiral,” and recommending aggressive pricing, also noting, “Always remember that profit(s) come from ink sales from installed base, not printer sales.”

MDB Capital Group, a U.S.-based investment bank, stated that the Memjet companies would sell for $1-5 to $3 billion.

Mr. Silverbrook also refutes any claim that either himself, Silverbrook Research or partner Lee deceived George Kaiser (right) into making more investments than he should have, asserting that Mr. Kaiser’s investments were “personally directed by Mr Kaiser,” with almost half of the investments made directly by Mr Kaiser in his own name, and the rest by various trusts under his control.

For his part, Mr. Kaiser was ranked as the 34th richest man in America by Forbes. He’s also been involved in another high-risk investment, solar-panel company Solyndra, which went bankrupt last year.

Hewlett-Packard, Dell Make Bids for Memjet

In his statement, Mr. Silverbrook also relates some interesting Memjet development history. In 2006, he met with Vyomesh Joshi, who recently retired as leader of HP’s Imaging and Printing Group, and also with Michael Dell, founder and CEO of computer company Dell, Inc.  Silverbrook and others demonstrated  “Manta,” a prototype 60-ppm A4 printer and “Koi,” a prototype 6″x4″ color ink-jet photo printer, both based on Memjet technology. However, Silverbrook says HP wanted exclusive rights to the Memjet technology, which Memjet declined, while the efforts with Dell did not result in a sale.

Mr. Silverbrook, who previously headed Canon’s R&D center in Australia, and founded Silverbrook Research in 1994, says Canon spent at least $1 billion in attempts to develop high-speed ink-jet printing, while Philps made three unsuccessful attempts over a period of around six years, each costing over $200 million. He also states that HP “has spent several billion dollars in several attempts, and has come the closest to succeeding, although its solution is inferior to the Memjet technology.” Xerox, Sony, Fuji-Xerox, and Samsung have also tried – and failed, “It is a technology which is deceptively simple in concept, but enormously difficult to implement in practice.”

Ultimately, Mr. Silverbrook assets that Kaiser Foundation and other investors in the lawsuit are seeking to obtain Silverbrook Research’s Intellectual Property, which Silverbrook licenses to the Memjet Companies. He also asserts that the Kaiser Foundation is seeking to avoid paying some $22 million currently owned by Memjet to Silverbrook Research.

According to the Brisbane Tribune in Australia, where Silverbrook Research is headquartered, the lawsuit has resulted in the shutdown of Silverbrook’s research center, and some 200 scientists have been placed on leave because funding from U.S. investors has been cut off.

From the get-go, the Memjet story has been more than intriguing – from the rumour that its high-speed color ink-jet printing was a “hoax,” to inventor and Silverbrook Research founder Kia Silverbrook, who has filed some U.S. 4,394 patents and is the world’s top patent holder, to today’s contentious lawsuit. While this is a complicated lawsuit, one thing that stands out is that it should hardly surpise anyone in the printer industry that Memjet hasn’t been meeting its sales targets in the last several years - printer sales and shipments have been hit hard since the 2008 financial crisis, and no vendor has been unscathed. How this will turn out at this point though is anyone’s guess – stay tuned for more.

Until then, we saw  Memjet technology in action just last week and were mighty impressed in how quickly and quietly churned out A4 prints.

 

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