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Alleged IP theft batters Sarine, but our holding stays for now

Jeffrey Tan Published on Fri, Sep 22, 2017 / 10:23 PM GMT+8

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(Sept 25): Oscar Wilde once wrote that imitation is the sincerest form of flattery that mediocrity can pay to greatness. The theft of intellectual property, however, is the sort of flattery that can kill a potentially great company.

Israel-based gemmological tool maker Sarine Technologies, which was added to our Singapore Market Portfolio back in April 11, has claimed in India’s courts that Diyora & Bhanderi Corp and “a number of its related entities” (collectively called D&B) had copied Sarine’s patented Galaxy inclusion mapping products. It has alleged that D&B is using “pirated and manipulated versions” of its pro prietary and copyrighted Advisor software programme to adapt the resultant imagery for use in rough diamond planning.

Sarine says this alleged theft of its IP is having an adverse impact on its top and bottom lines. For 1HFY2017 ended June 30, it reported a 5.3% y-o-y decrease in revenue to US$34.4 million ($46.2 million) and a 36.9% y-o-y fall in earnings to US$5.7 million. “The y-o-y results were primarily impacted by lower sales, mainly owing to the illicit competition in India and higher operating expenses,” Sarine says in the notes accompanying its financial statements. It adds that revenue was also lower than anticipated owing to the sale of fewer Meteor and Solaris inclusion mapping systems, which are used for smaller stones.