I’m a little late on this one, but late last week the U.S. Court of Appeals denied Blackboard’s rehearing petition. Their only recourse now would be to appeal to the United States Supreme Court and hope that the court miraculously decides to hear their case. As a result, Blackboard will have to return roughly $3.3 million to Desire2Learn, wiping out 100% of the company’s earnings for 2008.
This does not mean that the litigation is over. Blackboard is still suing D2L in Canada for infringement of the original patent, and the company has been granted continuation patents (basically revised versions of the original patents) that they could assert.
Page 20 of Blackboard’s Q2 10-Q ( http://bit.ly/33Nnwy ) states that “As a result of the Federal Circuit decision, for the three months ended June 30, 2009, the Company recorded expenses of approximately $3.5 million related to the reversal of the district court judgment…”
Either what you are reporting is old news, Desire2Learn wasn’t aware that they had already been repaid, Blackboard filed the 10-Q in error, or this is a separate significant chunk of money. Do you know which is the case?
It’s not exactly any of the above, but “old news” is closest. Blackboard wrote down the expense for accounting purposes after the initial loss in the Federal Circuit, but they didn’t actually pay Desire2Learn any money because the appeal was still pending. Now that they have lost on appeal, they have to cough up the cash.
The amount will probably be over $3.8M USD from my rough estimates which is higher than the expected writedown Blackboard took. This should result in additional expenses that will have to be recorded by BBBB.
What’s also interesting is that Blackboard’s top execs made record bonuses before this writedown, at the same time they took away any salary increases and the 401K plans for the regular staff. I think that is the bigger story.