xG Technology Shows How to Value Patents

By Jon C. Ogg Published May 29, 12:55PM EDT

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xG Technology Inc. (NASDAQ: XGTI) saw a major surge in its value and share price on Thursday due to patent news. The news looks like a win, but how do you value a patent of this sort when the company has so many other patents as well?

xG Tech announced Thursday morning that it has been awarded a new patent for interference mitigation techniques. This is the company’s second new patent grant announced this week alone, and the prior patent win was a cognitive radio patent award enabling enhanced interference mitigation for devices in shared spectrum.

This new patent is named “OFDM Symbol Diversity Combiner for Burst Interference Mitigation.” It is said to cover a method of diversity combining that operates on individual OFDM symbols, allowing efficient mitigation of burst interference typical to many devices operating on unlicensed bands. In short, it is a diversity combiner that operates as a maximal ratio combiner or selection combiner, depending on operation conditions.

Specifically, this is another effort targeting broadband communications patents. With this patent award, xG Technology’s intellectual property portfolio now stands at 60 U.S. patent matters (51 issued) and 145 international patent matters (65 issued).

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xG Technology shares were up 36% at $2.32 in early afternoon trading. The 52-week range is $1.12 to $9.00. Even after this gain by mid-day, xG’s market cap is still just under $44 million. Keep in mind that the company’s entire revenue stream in 2013 was a mere $406,000, and its net loss attributable to its shareholders was $27.4 million.

So, how much is one patent really worth? The company said:

Interference is a major impediment to reliable and efficient wireless transmissions, and can negatively impact performance and coverage in high-capacity mobile systems. While interference has been an issue in unlicensed spectrum bands for years, mobile carriers are now also experiencing unprecedented levels of interference in their licensed spectrum-based mobile networks, due to skyrocketing demand for mobile data. This latest xG innovation describes advanced techniques for detecting and reducing unwanted transmissions that lead to harmful interference, thus improving system performance.

About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.