• Home
  • News
  • Regulation
  • US court denies GeoComply request for access to Xpoint source code in patent infringement case
A Delaware court has rejected a motion filed by GeoComply that requested expedited access to market competitor Xpoint’s source code in order to solidify a patent infringement case filed last week.

On 27 September, geolocation specialist GeoComply filed its original complaint in the District Delaware Court, alleging that Xpoint’s software infringes on its existing US Patent No. 9,413,805.

The firm subsequently filed a Motion for Expedited Discovery with the court that said: “GeoComply has an abundance of factual and legal bases for the PI [Preliminary Injunction] Motion and indeed is ready and able to file its PI Motion. 

“However, unless GeoComply is able to point to the precise lines in the source code that infringe its ’805 Patent, Xpoint will not have a detailed understanding of GeoComply’s infringement allegations.”

A preliminary injunction motion is intended to offer a quick solution to prevent patent infringement within a matter of weeks, compared to filing a full patent case which can sometimes take years to resolve.

GeoComply added: “With every passing day, literally, GeoComply continues to suffer alarming irreparable harm: just yesterday, one day after GeoComply filed its initial complaint, Xpoint announced a new multi-million-dollar round of investment funding that will support the company’s continued growth in the USA.”

Indeed, on 28 September Xpoint announced new investment from Acies Investments, The Raine Group and SuRo Capital Sports, which join existing investors Bettor Capital and Courtside Ventures, both of which also increased their investments in the firm as part of the new funding round.

GeoComply: “With every passing day, literally, GeoComply continues to suffer alarming irreparable harm: just yesterday, one day after GeoComply filed its initial complaint, Xpoint announced a new multi-million-dollar round of investment funding.”

Following the investment round, managing partner of Bettor Capital David VanEgmond will join Xpoint’s board of directors. He said: “We’re thrilled to double down on our support of Xpoint as the company accelerates their product roll-out.”

GeoComply argued further in its filing that its request for a short and targeted review of Xpoint’s service source code is reasonable at this juncture “because the request is narrow and poses little, if any, prejudice to Xpoint. 

“In fact, the request will likely benefit the parties and the court by enabling GeoComply to efficiently and precisely articulate its infringement allegations,” it added.

The firm insisted that the request “is not a mere fishing expedition, but rather an efficient use of the parties’ and the court’s resources to define the issues in GeoComply’s PI Motion more precisely,” adding that “courts routinely grant expedited discovery on similar grounds.”

The request was nevertheless dismissed by the Chief United States District Judge for Delaware Colm F. Connolly on 30 September.

According to the request filing by GeoComply, gaining access to Xpoint’s source code remains an inevitability during the course of the case – it said its request to expedite access was merely intended to prevent further harm to the business in the meantime while speeding up the proceedings of the case.

In a statement made by defendant Xpoint, the business said the allegations made by GeoComply were “meritless,” adding that it would not make any further statements on the matter until legal action has concluded.

Problems at Lottery.com show no sign of slowing down, as the business is now at risk of being delisted from the Nasdaq after failing to submit its latest financial reports on time.

In addition, Lottery.com is now facing a class action lawsuit led by angry investors who are seeking compensation for what they say were false and misleading statements made by the business.

The US Securities and Exchange Commission (SEC) said Lottery.com is yet to submit the final reviews of its financial statements for the period ended 30 June, as it has been unable to file its quarterly report via form 10-Q for the period.

Last week (17 August), Nasdaq informed Lottery.com that as a result of the missed filings, the business is not in compliance with the stock exchange’s listing rules, which require timely filing of all periodic financial reports with the SEC.

In addition, Nasdaq informed Lottery.com that it had decided to exercise its right to deviate from the normal procedure which allows a company 60 calendar days to submit a plan to regain compliance and to shorten the deadline for Lottery.com to 31 August.

Lottery.com can regain compliance with Nasdaq’s listing rules at any time prior to 31 August by filing form 10-Q. Alternatively, if Lottery.com submits a compliance plan, Nasdaq may grant an extension of 180 calendar days from the form 10-Q due date, until 13 February 2023.

According to the SEC, Lottery.com can provide “no assurances as to timing” but plans to file form 10-Q “as soon as practicably possible” to regain compliance.

Meanwhile, a class action lawsuit against Lottery.com has been filed in the US District Court for the Southern District of New York on behalf of all all investors who purchased Lottery.com securities between 15 November 2021 and 29 July 2022 for violations of the Securities Exchange Act of 1934.

They claim that Lottery.com allegedly made false and misleading statements to the market and failed to maintain appropriate accounting controls.

Moreover, the business allegedly failed to maintain appropriate controls over financial reporting, including revenue recognition and the reporting of cash, and was not in compliance with laws related to the sale of lottery tickets.

Lottery.com investors say that the business’ public statements were false and materially misleading throughout the class period. When the market learned the truth about Lottery.com, it was too late and investors suffered damages, they claim.

Lottery.com has found itself in a downward spiral since the beginning of July when it was revealed the firm had overstated its available cash balance by $30m.

According to the lawsuit, Lottery.com made a series of adverse disclosures before finally, on 29 July, informing the market that it did not have “sufficient financial resources to fund its operations or pay certain existing obligations”.

In reaction to this news, shares of Lottery.com lost 64% of their value in a single trading day, falling $0.52 per share, from a closing price of $0.81 per share on 28 July to a close of $0.29 per share on 29 July.