Nearmap Ltd (ASX: NEA) shares surged almost 15% on Wednesday after the company upgraded its FY21 guidance. However, its shares then went into a trading halt before market close in relation to potential legal proceedings.
Today, the Nearmap share price is plunging after the company acknowledged the legal proceedings filed on behalf of competing aerial imagery firm, Eagle View Technologies and its subsidiary Pictometry International Corp.
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Legal proceedings drive Nearmap share price lower
The Nearmap share price is currently trading 16.31% lower at $1.975 following the company's update on the legal proceedings. The announcement reveals that Eagle View Technologies and Pictometry International Corp have filed a complaint against Nearmap's subsidiary, Nearmap US, in the United States District Court.
The complaint alleges patent infringement in relation to Eagle View's roof estimation technology. Nearmap believes that the allegations do not affect its core proprietary technology and do not affect the survey of imagery or the delivery of premium content.
Nearmap CEO and Managing Director Dr Rob Newman commented on the matter, saying:
Nearmap has always taken the subject of intellectual property rights and patent protections seriously and believes the allegations are without merit. We will vigorously defend against the complaint. The business remains unaffected by the complaint.
Eagle View's patent infringement complaint
The complaint filed to the Utah courts highlights that:
Plaintiffs EagleView and Pictometry now bring this action to halt Nearmap's infringement of eight (8) patents, and obtain other relief as necessary.
The complaint states that "Nearmap has and continues to directly infringe and/or indirectly infringe, by way of inducement, the '152, '880, '518, '961, '737, '568, '960, and '149 Patents"
For example, the 152 patient, entitled "Concurrent Display Systems and Methods for Aerial Roof Estimation" was issued by the United States Patent and Trademark Office on 26 June 2012. The complaint alleges that:
Nearmap's product is remarkably similar to, and appears to have been copied from, EagleView's technology and roof reports, confirming that Nearmap monitors EagleView's website, products, roof reports, and patents.
Foolish takeaway
Following today's falls, the Nearmap share price is now trading 13% lower year to date. The company's shares have, however, gained almost 19% since this time last year. Nearmap has a market capitalisation of around $1 billion.
