This article first appeared in The Edge Malaysia Weekly on April 17, 2023 - April 23, 2023
INVESTORS are showing interest in Salutica Bhd, an otherwise thinly traded counter, as its court case with Apple Malaysia Sdn Bhd nears. The Ipoh-based electronics component maker has seen a sharp rise in its share price over the last three weeks.
“Although the lawsuit by Salutica was filed in January last year, the trial date of the case has been set for mid-June. It will be an interesting one to watch,” a market observer tells The Edge.
Shares of Salutica, which is known for manufacturing wireless Bluetooth products, have quadrupled to close at RM1.09 per share last Friday from 25 sen on March 28. Its market capitalisation stood at RM461.62 million.
The sudden surge in its share price has raised eyebrows given that the company has been loss-making since the financial year ended June 30, 2019 (FY2019).
Last year, Salutica launched legal action against Apple Malaysia, claiming the latter used a wireless pairing process that is similar to the content of Salutica’s patent. Salutica alleges the pairing method used by Apple infringes upon its patent, which it applied for in 2012.
According to the patents, the technology allows pairing information of Salutica’s Bluetooth accessories — FOBO Tag and FOBO Tire — to be transferred to a new device and shared across multiple smart devices without the need to reinitiate the pairing process, which it refers to as “CrossPair Technology”.
Salutica says it was granted a patent for CrossPair Technology in December 2019. In addition to Malaysia, the company says it was also granted patents for the technology in the US, China, Japan, Singapore and South Korea, among others.
According to a court paper seen by The Edge, Salutica says: “In July 2021, Salutica discovered that Apple uses a system and method that incorporate the features as claimed by the MY’803 Patent, or at the very least, their equivalents with immaterial differences, without Salutica’s authority, permission and/or license (hereinafter the ‘Infringing Technology’).”
While there is no specific monetary value mentioned in the court case, Salutica is “seeking aggravated and/or exemplary damages”, an account of profits made by Apple and its related companies from all products that use the “infringing technology” either within or outside of Malaysia.
In response to the claim under the “defendant’s summary of case”, Apple Malaysia said the system and method by Salutica did not fall within the scope of the relevant patent claim.
It claimed that the “MY’803 Patent” was invalid on account that it is not patentable as it is neither novel and/or inventive, citing two US patents as arguments.
Apple Malaysia is also requesting that the “MY’803 Patent” be cancelled, revoked and removed from the Register of Patents in Malaysia.
The trial dates have been fixed for June 19 to 22 and June 26 to 28.
When contacted, a Salutica spokesman says that the lawsuit is between Salutica’s wholly-owned subsidiary, Salutica Allied Solutions Sdn Bhd, and Apple’s Malaysian subsidiary for a patent infringement claim on some of Apple’s products.
“The patent relates to pairing information of wireless accessories that can be stored and transmitted between smart devices. Salutica wants to ensure that its intellectual property rights are respected accordingly and proper compensation is made for the use of its IP rights,” he tells The Edge.
For the first half of its financial year ending June 30, 2023 (1HFY2023), Salutica saw its net loss widen to RM6.59 million from RM4.9 million a year earlier, on the back of a 48.6% decline in revenue to RM37.27 million from RM72.5 million during the period.
Amid the recent interest in the stock, Salutica chairman Leow Chan Khiang and several of its directors, including Chia Chee Hoong and Low Teng Lum, disposed of some of their shares as they took advantage of the spike in share price.
Chia offloaded 470,000 shares at between 70 sen and 85 sen from April 11 to 13, while Leow and Low sold 700,000 shares and 400,000 shares at an average price of 55.77 sen and 53.5 sen, respectively.
The company also saw the emergence of a new substantial shareholder, Cheong Siew Chyuan, who bought 4.43 million shares in Salutica on April 10 — increasing his direct stake to 16.22 million shares or 3.83%, at a time when the share price was trading at 68 sen apiece. Cheong also holds an indirect stake of 8.17 million shares or 1.9%.
Cheong continued to buy shares in Salutica a few days later, increasing his direct stake to 4.57% and indirect stake to 2.65% as at April 14. He is also a shareholder in Vitrox Corp Bhd, with 11.88 million shares or a 1.26% stake, which are valued at RM94.8 million based on the last closing price of RM7.98 apiece.
Salutica was listed on the ACE Market of Bursa Malaysia in May 2016 before migrating to the Main Market in March 2017.
The company is currently 50.65% controlled by Ocean Enlightenment Sdn Bhd, a family vehicle held by managing director Joshua Lim and his father James Lim Chong Shyh, the former CEO of Salutica.
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