Devonshire Capital Funds - GoPro

Devonshire Capital Funds: Fund I
An analysis of GoPro
January 2015
For Public Release

-For Public Release-
Disclaimer
For Public Release 2
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Fears over Apple entering GoPro’s market, backed up by IP
filings, sent GoPro shares tumbling 12.17% on Tuesday
 US 8934045 B2 (2015): Digital camera system having remote control
 Original applicant: Eastman Kodak
 Inventors: Kazuhiro Joza, Marc Krolczyk, Keith Stoll Karn
 A digital camera system contains an image capture module, which consists
of an image capture system and a wireless communication system, and a
remote control module, which includes a battery, status display elements,
user controls, a wireless communication system, and a power
management system
Basic info
Description
Exemplary claims
 (1) A digital camera system, comprising:
 An image capture module including:
 A first image capture system including:
 A first image sensor for capturing a digital image; and
 A first optical system for forming an image of a first
portion of a scene onto the first image sensor; and
 A first wireless communication system; and
 a remote control module including:
 A remote control status display including one or more remote
control status display elements for displaying status information
pertaining to the image capture module;
 A battery-operated power supply;
 One or more remote control user controls;
 A second wireless communication system for communicating
with the first wireless communication system using a wireless
interface; and
 A power management system providing a normal-power state
where the remote control status display and the second wireless
communication system are active and a low-power state where
the remote control status display and the second wireless
system are inactive
 Wherein when none of the remote control user controls have been
activated for a predefined first time interval the power management
system sets the remote control module to operate in the low-power state;
 And wherein when a user activates one of the remote control user
controls while the remote control module is in the low-power state:
 The power management system sets the remote control module
to operate in the normal-power state:
 The remote control module sends a status inquiry to the image
capture module using the second wireless communication
system, and in response the image capture module sends status
information back to the remote control module using the first
wireless communication system; and
 The status information is displayed using the remote control
status display elements of the remote control status dusplay
Other bibliometric data
 Patent application that resulted in this patent was re-assigned from Eastman Kodak to Apple on February 11, 2013
 Cites over 56 patents, including previous work by Ricoh, Canon, Kodak, Minolta and other leading electronics and camera companies on camera remote
controls, image sensors, low-power capture modes, etc.; out of the 56 foundational camera and electronics patents that Apple cites, only one
is also cited by GoPro’s portfolio of 50 granted patents

One patent erased $880 million dollars from GoPro’s market cap
in six-and-a-half hours
$48.00
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GoPro Share Price (01/13/2015, by tick)
15.47%
How many other patents exist that can do the same?

GoPro has soared upwards from an initial share price of $24 during its June IPO,
propelled by impressive revenue growth and a wave of investor enthusiasm
1
Executive Summary

ForecastEstimated
Go-Pro offers an example of a traditional consumer
electronics growth revenue curve
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
0
200
400
600
800
1000
1200
1400
1600
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
R&D stage Consumer electronics co. Media co.?
Nick Woodman
founds GoPro as
Woodman Labs after
he is unable to find
suitable camera gear
for a surf trip
Digital HERO 5 is
released, the first
with a 170-degree
view angle, ultra-wide
lens (December 2008)
GoPro releases its
first HD camera, the
HD HERO, shooting in
1080p at up to 60fps
GoPro introduces its
first digital camera,
the Digital HERO, with
10-seconds of
recording capability
GoPro releases the
HERO3, with Wi-Fi
connectivity and the
ability to shoot in 4k
resolution
GoPro sells 17.8M
shares in its IPO,
valuing it at $2.95B
(June 2014)
Company releases its
first product, a
camera system using
35mm film, in
September 2004
Units
soldRevenue
$

Within four years, GoPro has found a way to successfully
turn a profit and to grow its earnings
Income Statement;
For the Fiscal Period Ending
Dec-31-2010 Dec-31-2011 Dec-31-2013 Dec-31-2013
LTM Restated
Sep-30-2014
Revenue $64.5 $234.2 $526.0 $985.7 $1,121.7
Total Revenue 64.5 234.2 526.0 985.7 1,121.7
Cost of Goods Sold 31.7 111.7 298.5 624.0 646.8
Gross Profit 32.7 122.6 227.5 361.8 474.9
SG&A Expense 19.5 74.8 137.8 189.0 259.5
Selling and Marketing 13.2 64.4 116.9 157.8 not available
General and Administrative 6.3 10.8 20.9 31.6 not available
R&D Expense 1.4 8.6 36.1 73.7 131.2
Other Operating Expense, Total 20.9 83.5 173.9 262.8 390.7
Operating Income 11.9 39.1 53.6 99.0 84.2
Net Income $11.6 $24.6 $32.3 $60.6 $49.6
GPRO is 94th percentile in
the NASDAQ in 1-year
revenue growth, and 98th
percentile in 3-year
revenue growth
GoPro has managed to
keep its gross margin over
35%, and as high as 50
Faced with stronger
competition from HTC,
Polaroid, and Sony, GPRO
has raised R&D exp. from
2% of revenue to 12%
Balance Sheet;
As of
Dec-31-2010 Dec-31-2011 Dec-31-2013 Dec-31-2013 Sep-30-2014
Cash And Equivalents $ - $29.1 $36.5 $101.4 $237.7
Short Term Investments - - 1.2 2.0 1.6
Total Cash & ST Investments - 29.1 37.3 103.5 239.3
Total Assets - 104.4 246.7 439.7 589.1
Total Liabilities $ - $37.4 $249.3 $367.8 $238.4
Net Debt not available $(28.7) $91.7 $10.2 $(239.3)
Quick Ratio not available 1.5x 0.9x 0.8x 1.5x
Inventory Turnover not available not available 7.6x 7.2x 5.8x
GoPro’s large cash holdings
have been bolstered by its
recent secondary offering
1.5x quick ratio
underscores GoPro’s strong
cash position; it could pay
off all liabilities with its cash
and short-term investments
GoPro may take advantage
of its low long-term debt to
make acquisitions in the
near-term

GoPro has soared upwards from an initial share price of $24 during its June IPO, propelled by
impressive revenue growth and a wave of investor enthusiasm
1
Executive Summary
GoPro’s publicity engine has hyped the stock ever since its IPO, but some
investors and activists remain concerned
2

GoPro’s valuation in December was abnormally high, especially
when looking at companies with comparable PE/PB ratios
P/E (LTM Norm.): 214x P/E (NTM): 74.69x P/BV: 80x
Revenue $6,500
1-Yr Rev.
Growth
11.3%
Net
Income
($43)
Revenue $985.7
1-Yr Rev.
Growth
87.4%
Net
Income
$60.6
Revenue $14,474
1-Yr Rev.
Growth
45.8%
Net
Income
($964)
Revenue $3,022
1-Yr Rev.
Growth
24.2%
Net
Income
$90
Revenue $2,300
1-Yr Rev.
Growth
27.1%
Net
Income
$162
Revenue $8,155
1-Yr Rev.
Growth
8.7%
Net
Income
($169)
Revenue $17,857
1-Yr Rev.
Growth
6.9%
Net
Income
$162
Multiples based on avg. for quarter ending 12/8/2014
Revenue $2,972
1-Yr Rev.
Growth
8.8%
Net
Income
$804
Revenue $5,591
1-Yr Rev.
Growth
(0.5%)
Net
Income
$558
Revenue $6,170
1-Yr Rev.
Growth
5%
Net
Income
$913
Revenue, net income from 2013 ($M)
 Owns, operates, or leases 298 leading
entertainment and other venues
globally; 150M+ ticket sales per year
 Leading international cable company,
with 14x GoPro’s revenue and
impressive revenue growth
 Key rating institution with over $839M
in levered FCF in 2013 and $2.1B in
cash
 4th-largest cable provider in US, with
27.6M subscribers and $961M in
operating income
 Largest provider of wireless
infrastructure in US; signed large tower
leasing agreement with AT&T in 2013
 Leading American consumer and
products brand with $5.6B in revenue
and consistent 40+% gross margins
 Major South Korean conglomerate with
holdings across an impressive span of
industries
 Ascendant athletic wear company with
major long-term supply deals and a
significant addressable market
 British multination clothing, footwear,
and home products retailer with sold
net income and $6B in revenue

In December, GoPro’s market cap ($9.2B*) placed it alongside
the world’s largest consumer goods, media, and tech companies
Revenue ($M) Net income ($M) Rev. growth, 1-yr.Company & Mkt. Cap* Description
$74,488 ($3,100) (2.45%)
 Europe’s second-largest car manufacturer by
volume; global deliveries of 2.82 million
 Rapidly expanding in Chinese market
$19,800 ($1,790) 0.09%
 French telecommunications equipment company
 Industry Group Leader for Technology Hardware
in Dow Jones Sustainability Indices review
 One of Top 100 Global Innovators for 4th
year in a row
$23,100 $620 (5.19%)
 Office supply chain with 2,000 stores worldwide
and over 90,000 employees
$8,500 $449 (3.57%)
 American multinational media company
 Holds Down Jones & Co., the NY Post, Harper
Collins, and other publishing and newspaper
assets
Earned off of its broad content
and media holdings
$7,500 $449 18.8%
 Manufactures and sells automation equipment and
systems and medical equipment
 One of Top 100 Global Innovators in 2013,
per Thomson Reuters
Leading technology
innovator
$55,070 $167 5.48%
 Multinational manufacturer of consumer, home,
and automotive electronics
 Ranked in top 50 Most Innovative
Companies in 2014 by BCG
One of world’s top
electronics brands
*all market caps as of 12/5/2014
$10.14B
$9.55B
$9.87B
$9.18B
$9.2B
$10.34B

Analysts have hyped GoPro’s stock since its IPO, but skeptics
have raised doubts
What GoPro’s media hype engine says… …what critics say about GoPro’s situation
GoPro has continued to see stellar revenue growth;
GoPros should be among the key gifts this holiday
season, as it has top billing at Amazon and Best Buy
 GoPro will need to ship 15M to 20M devices annually to grow
into valuation; long-term projections of annual GoPro sales are
closer to 10M to 12M
 Unlike Apple’s iPod, GoPro cameras appeal to a much smaller
addressable market, which is already showing signs of saturation
GoPro’s intended shift towards a media / content
company means it should be valued as such; it has
one of the top 10 YouTube brand channels
 GoPro has yet to generate any significant revenue from its
YouTube channel or media efforts, yet it has the same market
cap as News Corp
 GoPro doesn’t necessarily own content shot on its devices
GoPro’s cameras feature industry-leading technology
that its competitors can’t match, which will allow it to
sustain margins
 GoPro’s cameras are not significantly better than those of its
competitors, nor are its chipsets differentiated or particularly unique
 In fact, GoPro faces increasingly intense competition from
Sony, HTC, and Polaroid, among others
GoPro offers 4% net profit margins and $110M in
positive levered free cash flow generated each year;
momentum / enthusiasm of retail investors keeps
bumping it higher
 Picking and choosing out of a basket of metrics is dangerous; any
look at the fundamentals should focus on its sky-high price-to-
book, forward P/E, and price-to-sales ratios; mob mentality is
not a long-term viable valuation method
GoPro plans to release its own line of consumer drones
in late 2015, expanding its product offering into what
may be the next hot consumer product
 Leading drone manufacturers have already begun selling
drones with cameras sourced in-house
 GoPro is four years behind industry leaders, and may be shooting
itself in the foot since many drone manufacturers market their
drones for use with GoPro cameras
Google may look to acquire GoPro in 2015
 The majority of proposed synergies benefit GoPro above all; GoPro’s
specialization is not near-term relevant to Google Glass
 Google paid $9.5B for Motorola and received 4,500 patents
and was able to bolster Android; $9B for a camera company with
limited IP appears high

1
Executive Summary
The crest of this wave of Wall Street hype is evident in frothy media coverage of GoPro and
surprising, if not outright worrying, valuations metrics
2
But as the valuations have grown, so have questions about GoPro’s future success3

Not everyone believes the hype surrounding GoPro, and
some have made their opinions known
Copperfield Research
Citron Research
Kerrisdale Capital
 “GoPro is a tech hardware company. Yet it has spun a story, which is a very convenient
fiction, for Wall Street to parrot: that it can become a ‘media company’. Why? Because
users are uploading some of their videos to YouTube?”
 “The clearest comparison to GoPro is Beats Headphones…Apple bought Beats for 2x revenue…At
the time of the acquisition, much of the media opined that 2x sales was high for a product
in a commoditized industry.”
 “We have never seen analysts on consumer electronics gear company resort to social media
‘eyeballs’ metrics to justify valuations…In Wall Street’s compulsion to fabricate a story where
a story does not exist, you see its fingerprints on GoPro media.
 “We believe $GPRO has used accounting gimmickry to overstate EBITDA by at least
10%. Very aggressive”
 “$GPRO is not what it seems. Great product, great chart…but accounting has yet to be fleshed out
well.”
 Media strategy is unlikely to bear fruit; although GoPro has millions of YouTube subscribers
and hundreds of millions of views of its videos, the idea of the company obtaining significant
amounts of revenue from YouTube or a cable TV station is “ludicrous”
 Some investors have compared GoPro’s camera to Apple’s iPod, but unlike the iPod it does not
have an ecosystem and is not “materially superior” to its competition
Accounting
issues
Wall Street
market-making
Weak
fundamentals

Is GoPro the next Flip Cam?
History
Previous hype surrounding Flip
 Flip Video cameras were a popular
product line sold from 2006 to 2011 by
Pure Digital Technologies
 Hailed as “the future of journalism video”, Flip Cams were one
of the “most significant electronics products of [2008]”,
according to New York Times tech writer David Pogue
 Over seven million were sold between 2006 and 2011; at times it
represented over 35% of the camcorder market
 In 2011, however, Cisco, which had acquired Flip for $590M,
shuttered the business, seeking to exit the low-margin,
increasingly competitive consumer camera market while
retaining Flip’s valuable intellectual property portfolio
Introduction
 Flip is “looking at a younger audience, 14-25 or 28, who’ll just slip
it into their pocket…This particular product is a subsector
we’re creating”
Ray Sangster, Flip Video’s European president
 “e-tailers moved very quickly…they’re the guys with the fingers
on the pulse.”
Ray Sangster, Flip Video’s European president
 “Pure Digital reveals YouTube-friendly Flip Video Ultra”
Engadget
 The Flip Ultra is part of the “modern reporter’s toolkit”
Rory Cellan-Jones, BBC tech correspondent
 “A Reporter’s Toolbag: Reduced to Two – Flip Camera and
iPhone…The Flip video camera’s simple, one-red-button
design makes it perfect for capturing quick video pieces”
Nieman Reports
The Flip Ultra was released on September
12, 2007, quickly becoming the best-selling
camcorder on Amazon; within a year it had
captured 13% of the camcorder market
The Flip Mino HD, Pure Digital’s first HD
camera, was released on November 11, 2008
Cisco Systems acquired Pure Digital on May
21, 2009 for $590M in stock
On April 12, 2011, Cisco announced it was shuttering Flip,
laying off 550 employees and “writing off” its $590M purchase;
the unit was “considered a drag on margins” and was “facing
increased competition from traditional camcorder players”
Cameras are still a rapidly commoditizing, replaceable piece of consumer
electronics
340
400400
150
50
219421
20042002 2003 2005 201020092006 20082007 2011
Flip Sales ($M)¹
¹Estimated on analyst consensus

1
Executive Summary
2
While many of the previous points are concerning, we are asking a more
fundamental question: how much technology does GoPro actually own?
4

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000
2.0
0.6
0.4
0.2
0.0
0.8
1.8
1.6
1.4
1.0
2.6
2.4
4.0
4.6
4.8
3.2
3.8
2.2
4.2
1.2
4.4
3.6
3.4
3.0
2.8
Canon
Toshiba
JVC
Panasonic
FUJIFILM
Nikon
GoPro
Olympus
Polaroid²
Sony
HTC
Garmin
Most analysts, whether long or short, value GoPro as a technology
company…but how much technology does GoPro own?
For Public Release 16¹ Within last 20 years; US/Europe/JP INPADOC families
² Conservative estimates based on point of last certainty
R&Dspending,latestannual,$B
Revenue, FY2013, $M
Direct Competitors in Action Cam Market
Leading Digital Camera Manufacturers
Size scales with patent portfolio¹
Examining camera-specific patent portfolios of leading manufacturers
Among leading camera makers, GoPro has the lowest R&D spend and the
2nd –smallest patent portfolio
Garmin has a small
camera IP portfolio, but it
also has 350 other patent
families covering its core
products

GoPro CEO Nick Woodman and S-1 filings have hinted at
this problem before, as recently as August 2014
For Public Release 17¹ Source: Bloomberg phone call, August 2014
“We relied on the engineering departments of our contract manufacturers for
innovation – at their pace of innovation. [But now] we’ve got a ton of brilliant products in
the pipeline, and we’ve developed a ton of brilliant intellectual property”
Nick Woodman, GoPro Founder and CEO¹
Risk factors
Many of our existing and potential competitors enjoy substantial competitive advantages, such
as…
 larger intellectual property portfolios
…
Our intellectual property rights and proprietary rights may not adequately protect our
products.
…
Our business may suffer if it is alleged or determined that our technology or another
aspect of our business infringes the intellectual property rights of others.
…
If we are unable to maintain or acquire rights to include intellectual property owned
by others in the content distributed by us, our marketing, sales or future business
strategy could be affected or we could be subject to lawsuits relating to our use of
this content.
GoPro S-1

1
Executive Summary
2
While many of these attacks are concerning, none of them are the attack we are presenting
today; GoPro’s core problem is far more significant…it hardly owns any technology
4
GoPro appears to have gone to market with a technology product before it owned
any technology
5

In January 2014, GoPro was granted its 5th patent family, but
had already sold over 8.1 million cameras – this matters
35 U.S. Code § 283
The several courts having jurisdiction of cases under this title may grant injunctions in
accordance with the principles of equity to prevent the violation of any right secured by patent, on
such terms as the court deems reasonable.
35 U.S. Code § 284
Upon finding for the claimant the court shall award the claimant damages adequate to
compensate for the infringement, but in no event less than a reasonable royalty for the use
made of the invention by the infringer, together with interest and costs as fixed by the court.
When the damages are not found by a jury, the court shall assess them. In either event the
court may increase the damages up to three times the amount found or assessed.
35 U.S. Code § 286
Except as otherwise provided by law, no recovery shall be had for any infringement committed
more than six years prior to the filing of the complaint or counterclaim for infringement in
the action.
35 U.S. Code § 281 A patentee shall have remedy by civil action for infringement of his patent.
If you infringe and sell products in the past, you can be
held liable in the future:

Potential for “lookback”
134
197
132
78
0
50
100
150
200
250
2005 2011 201220062004 2008 20092007 2010 2013 2014
10
54
14
10
0
5
10
15
20
25
30
35
40
1.0
0.0
0.4
0.6
0.2
0.8
1.2
1.4
2014
24
2013
15
2012
6
2
2011
5
3
2
2010200920082007200620052004
10
54
14
10
0
5
10
15
20
25
30
35
40
3
2
0
1
4
5
2004 2005 2006 2012
2
6
2014
5
2011
2
3
200920082007 2010
15
24
2013
Design Patents
Utility Patents
Revenue
Design Patents
Utility Patents
Units Sold
Recapping GoPro’s revenue and unit sales timeline
underscores that its products predate its granted patents
¹ US/Europe/JP grants
² Units sold est. 2004-2010, proj. 2014
³ Revenue est. 2007-2008, proj. 2014
GoPro Patenting¹ vs. Sales²
GoPro Patenting¹ vs. Revenue³
GoPro Revenue³ / Utility Patent¹ ($M)
Revenue / Utility Patent
GrantedPatents
UnitsSold(M)
GrantedPatents
Revenue($M)
Revenue/utilitypatent
GoPro had sold almost two
million cameras before it had
a single US granted patent

Each successive iteration of GoPro has introduced new features reliant on new
technology – but does GoPro own the technology its cameras utilize?
21
Digital HERO Digital HERO 3 Digital HERO 5 HD HERO HD HERO 960 HD HERO2 HERO3 HERO3+ HERO4
Digital Video with audio HD 4K
Key
feature
Storage
medium
Internal / external flash memory
170º lens
External SDHC flash
120 fps Wi-Fi
Power
source
AAA batteries
1,100 mAh Li-ion battery + optional Battery BacPac (not compatible with HD
HERO 960)
Resol-
ution
512x384 1080p 960p 1080p 4k
Frame-
rate
30fps
Internal flash
memory
60fps 120fps 240fps
Water-
proofto
30’ 100’ 197’ 131’
For Public Release

Covers existing GoPro case shape
Majority of the IP that GoPro owns appears to cover the
design of its products, not its core technology…
Design Patents
Battery
Camera
Housings
Expansion
Modules
Lens Covers /
Windows /
Adapters
USD682778S1 Ornamental design for a GoPro lithium ion battery
USD646313S1 Describes housing for GoPro’s Hero cases
USD657808S1 Design for a camera housing
USD674429S1 Design for camera housing with three lens windows
USD702276S1 Design for square camera housing with latch
USD702747S1 Design for housing with square lens cover
USD699277S1 Design for housing for Dual Hero system
USD674428S1 Design for housing for Dual Hero system
USD699276S1 Design for a square camera housing
USD702277S1 Design for a square camera housing
USD710922S1 Design for a square camera housing with LCD viewing pane in back
USD710921S1 Design for a camera housing with square lens cover
USD698791S1 Ornamental design for a BacPac expansion module
USD691608S1 Ornamental design for a GoPro Battery BacPac
USD698790S1 Ornamental design for a BacPac expansion module
USD691609S1 Ornamental design for a GoPro Battery BacPac, with fewer ports
USD692472S1 Design for a lens adapter
USD699275S1 Design for a lens adapter
USD702755S1 Design for a cylindrical lens cover
USD702754S1 Design for lens cover with cover for button as well
USD657811S1 Design for spherical lens window on GoPro’s waterproof cases
USD644679S1 Covers the specific design of the lens window of GoPro’s waterproof cases
USD689537S1 Design for a flat lens camera assembly; resembles “Dive Housing”
USD688726S1 Design for a suction cup mount
USD698851S1 Design for a suction cup mount
USD677748S1 Design of a mounting system for a “sports board”
Important to note that, surprisingly, many of GoPro’s competitors have
used very different design language in their offerings
Mounts
These cover form,
not function
Some prior art surrounding suction
mount iterations
Covers design, not function of
mounting system
Important to note that most GoPro
competitors have waterproof bodies,
not cases
Are lens covers a core GoPro
accessory?
Interchangeable lenses seem to be
mostly pushed by external brands
Utilize GoPro’s proprietary port to
protect copycats
Protects Blackout Housing in multiple
iterations
Could protect stereoscopic camera
housing designs
Doesn’t appear to map to current
product
Covers basic battery design

…while GoPro’s utility patents predominantly focus on
various housings, mounts, and harnesses
Utility Patents
US8606073B2 Method for managing multiple video streams of a broadcast
US8837928B1 Housing with laterally-mounted latch mechanisms
US8325270B2 Camera housing with integrated expansion module and cable from module to camera
US8644629B2 Decompression of images captured by Bayer-style camera
US8718390B1 Two operating modes of accessing and decoding image plane data
US8538143B2 Compressing RGB images from single-sensor imager by separating into planes
US8345969B2 Method of compressing color imagery of video from Bayer sensor
US8879861B2 A method of accessing / decoding image planes to re-construct an image
US8014597B1
Separating image into independent color channels and encoding / compressing them,
storing them, and re-combining into full-color display
US8830367B1 Image sensor, frame controller, and processor system to reduce rolling shutter
US8879858B1 Storing compressed image data in multiple band states
US8687086B1 A method of compressing image data before sending to a digital signal processor
US8014656B2 Two-piece mount for attaching camera to sports board
US8870475B1 Detachable buckle component for mounting on a sports board
US8857775B1 System with a spring clamp for mounting a camera to various equipment
US8150248B1 Two-piece mount for attaching camera to sports board
EP2341389B1 Strap that allows for two secured positions of camera
US8079501B2 Harness for attaching camera to a human user
Some of these patents refer to technology for which prior patenting and
prior art records are extensive
Broadcasting
Camera
Housings
Compression /
Image
Manipulation
Mounts /
Harnesses
Given prior
patenting and
potential prior art,
these may not
survive IPR
Post-Alice decision,
these patents
deserve further
examination
Much extant IP in this area
May be susceptible to prior art
Not applicable to existing business
model; prior use?
Certain of these appear to be
susceptible to prior art / practice;
while this family has received
consistent attention from GoPro,
questions about its strength remain
Potential for high throughput apps
Deserving of prior art search; narrow?
Use of frame buffer predates this
Important concerns over decades of
prior art in this field; relatively narrow
claim construction
Superseded by new mounts
How limited is applicability / use?
How limited is applicability / use?
Language may have workarounds

The heart of GoPro’s IP is the process of mounting cameras onto
surfboards
‘Over the years, [Preston ‘Pete’ Peterson] got interested in photography. In a direct line from Tom Blake
to Doc Ball, Pete produced several prototype camera housings for his own use and experimentation.
His most notable experiment was “an underwater housing that George Downing mounted
on his board and on his back like a butt pack,” wrote Craig Lockwood, based on what Pete’s son
John told him. “Shot at Makaha in the mid-1950s, these may be the first-ever shots of a
board taking off underwater.”’¹
Footage likely shot at Sunset Beach on Oahu, no later than 1962; TV
show Adventures in Paradise aired on ABC from 1959 to 1962²
¹ Source: Legendary Surfers, Malcolm Gault-William
² Retrieved from YouTube

1
Executive Summary
2
4
In fact, GoPro made a name for itself as a tech company well before it had one, single
granted patent
5
Does GoPro have necessary technology it needs to drive its ambitious future
growth strategies?
6

GoPro’s corporate strategy, outlined in its reports and calls,
references many technology areas with significant IP activity
Manufacture and sell consumer drones
Become a media company
Pursue image stabilization
Improve waterproof cases/bodies
Add GPS location to camera
GoPro patenting Industry patenting
0
0
5
3
0
~1,400
~2,600
~15,900
~300
~860
Forward-looking GoPro strategies

-For Public Release-GrantedPatents¹
Enthusiasm over GoPro’s strategy to enter drones should
be tempered by competitors’ patenting levels
207207
173
115
8681
65576251424948
2924
13211314111
0
50
100
150
200
250
2007 2009 20102003 20082006 2011 20122005200419961994 1995 2000 2001 200219981997 1999 2013 2014
Patenting on UAVs
¹ US/JP/EP grants, ’94 to ‘14
UAV / UAS Patenting
Early work led by
American defense
corporations
Foundational work
re. hobbyist drones is
from early 1990s
Small clusters of
inventorship have started to
appear, although citation
network is still fledgling
Parrot SA, which
jumpstarted
consumer drone
market, has a strong
portfolio
Honeywell has a
particularly strong
portfolio around the
use of cameras with
drones
Assignee network

GoPro’s competitors own the software, hardware, and
methods of content management and distribution
GrantedPatents¹
1,186
1,1191,097
1,220
1,346
1,148
942919897
755
684628
548532566603563
397356346
21
0
200
400
600
800
1,000
1,200
1,400
19971996 2000 2004 20061999 200520031998 200220011994 1995 2007 2011 201320092008 201420122010
Patenting on broadcast communications
Key GoPro competitor Sony
rests at the center of the
broadcast communication
citation network, with well
over 1,100 patents
Nielsen Co also boasts a
strong portfolio,
unsurprisingly
Google’s portfolio includes
estimating demographic
compositions, data collection
on users and dynamic data
delivery
HTC, another GoPro HERO
competitor, has a strong
portfolio on handling and
managing multimedia
broadcasts
GoPro does not appear on
this citation network, which
only features portfolios of
over eight patents
Digimarc also shows well in
this space, with key
watermarking technology,
image processing, and
second screen IP
Broadcast Communications Patenting
Assignee network

Attempts by GoPro to include image stabilization in its products may be
hemmed in by its competitors’ (especially Sony’s) patenting
GrantedPatents¹
252
272
255
223235
214
168153151
88
121
103101
444536
82
48
33
172
0
50
100
150
200
250
300
20132007 2011 20122009 20102008 20141994 1999 2000 2005 2006200420022001 20031998199719961995
Patenting on image stabilization
Image Stabilization Patenting
Nikon and Canon represent
the center of image
stabilization patenting, with
consistent transfer of
knowledge between the two
Small group of Irish /
European optics and
photography companies
Sony Corp has a strong,
relatively distinct, portfolio;
this is no surprise given the
success of its image-
stabilized action cameras
Even smaller competitors,
such as Minolta and Casio,
have strong portfolios
surrounding image
stabilization
Assignee network

Kodak, Sony, and Ricoh have been patenting around
waterproof cameras since the mid- to late-90s
GrantedPatents¹
86
79
72
6161
53
47
3939
25
33
4041
2932
40
2421
15
22
1
0
20
40
60
80
100
1998 20021997199619951994 1999 2001 201420132012201120102009200820032000 20062005 20072004
Patenting on waterproof cameras
Waterproof Camera Patenting
Very isolated citation
network; little work between
secondary players
Key cluster includes Kodak,
Ricoh, Sony, Olympus, Fuji,
and Minolta with research
occurring predominantly
from 1994 to 2004US Navy and US Army have
each contributed to the field,
focusing on underwater
cameras for submarine
detection
Assignee network

GoPro has located a niche in the GPS / camera space, but
its application is narrow
GrantedPatents¹
4749
36
26
32
17
20
9
14
7
10
557754221
0
10
20
30
40
50
2000 2001 2002 2003 2004 2005 2006 2007 20081999199819971996 201220112010 2013 2014200919951994
Patenting on GPS in cameras
GPS and Camera Patenting
Nokia (5) and Sony Ericsson
(13) both have portfolios
surrounding this technology
GoPro / Woodman Labs
claims an integrated
expansion module that may
include a GPS unit (it is not
internal to the camera)
Apple and Samsung both
have patents in this
technology space, with Apple
focusing more heavily on the
camera side
Digimarc uses GPS to
digitally watermark images
and videos with location
data
Fujifilm describes image
capturing devices with maps
and an apparatus for
identifying images
Assignee network

1
Executive Summary
2
4
In fact, GoPro made a name for itself as a tech company well before it had one, single
granted patent
5
Despite its recent attempts to improve its IP, GoPro still does not have the intellectual property
it needs to control its future
6
If GoPro has infringed others’ technology, it may be liable for hundreds of millions
of dollars in damages looking backward and hundreds of millions of dollars in
royalties looking forward
7

Past companies have demonstrated how costly technology can be to
acquire retroactively
 Marvell Technology was found in December 2012 to have intentionally infringed two Carnegie Mellon
University patents and was ordered to pay $1.17 billion dollars in damages
 Marvell has chosen instead to continue to appeal; in the meantime, as of April 2014, the verdict has
reached $1.54 billion dollars
($1,540M)
 DuPont was ordered to pay Monsanto $1 billion dollars after losing a patent verdict in August 2012
 This was followed by a new licensing deal in March 2013 that threw out the earlier verdict but
required DuPont to make at least $1.75 billion dollars in royalty payments over the next several
years
($1,750M)
 In late 2002, RIM was found guilty of infringing NTP’s patents on wireless email and ordered to pay
$53 million dollars
 Instead, RIM continued to appeal until March 2006 when, hit with a stern warning from the presiding
judge, it agreed to pay NTP $612.5 million dollars
($612M)
 Intel faced the music several times in the early 2000s, paying Intergraph Corp $300 million dollars
in April 2002 for infringing Intergraph’s patents with its Pentium chips, an additional $150 million
dollars for infringing with its Itanium chips, and following those up with a March 2004 settlement of
$225 million dollars to close all outstanding patent litigation between the two companies
($675M)
 EchoStar Corporation settled its patent litigation with TiVo in May 2011, signing a license deal and
agreeing to pay TiVo $500 million dollars ($500M)
 SAP was found in 2009 to infringe a business method patent held by Versata Software and was
ordered to pay $139 million dollars; after a new trial, this amount grew to $391 million dollars ($391M)
 After a 2010 verdict, Microsoft agreed to pay VirnetX Holding Corp $200 million dollars to license
its patents on secure network communications ($200M)
 W.L. Gore & Associates was ordered by the Federal Circuit in January 2015 to pay C.R. Bard Inc.
$1.06 billion dollars after it willfully infringed Bard’s blood vessel graft patent ($1,059M)

Canary in the coal mine? Some companies think GoPro is
infringing their IP
Z-Dimensional, LLC
VStream Technologies,
LLC
AccusedproductsPatentsinsuitCaseinformation
 Hero
 Hero2
 Hero 3
 Hero3+ Black Edition
 Dual / 3D Hero System
 Jaws flex clamp  Digital video cameras
US5,742,737 – “Method For
Recording Voice Messages On
Flash Memory In A Hand Held
Recorder”
Venue: CA Southern District
Filed: 12/5/2012
Latest Docket Entry: 1/27/2014
Status: Open in Scheduling
US7,729,530 – “Method and
Apparatus for 3-D Data Input to
a Personal Computer with a
Multimedia Oriented Operating
System
Venue: TX Eastern District
Filed: 4/15/2014
Status: Closed in Initial Pleadings
US8,602,662 – “Camera and
Accessories Clamping Mount”
Venue: Colorado District Court
Filed: 1/21/2014
Latest Docket Entry:
11/19/2014
Status: Closed in Claim
Construction (Settled)
US6,690,731; US8,179,971;
US6,850,647; US7,627,183;
US7,489,824 – Five patents
relating to compression /
decompression of video data
Venue: CA Southern District
Filed: 12/5/2012
Status: Open in Scheduling
 As a direct result of its relationship with Dinkum, GoPro became intimately aware of the ActionPod Products, including
product components and the manufacturing process, and Dinkum’s desire to grow its business through sales of these products
 In October 2013, GoPro release the Jaws Flex Clamp, a clamping monopod mount as an accessory to its camera line that is
substantially similar to the ActionPod Products
 Upon information and belief, GoPro developed the Jaws Flex Clamp at the same time it was promoting the ActionPod Products
 Upon information and belief, GoPro intentionally kept secret from Dinkum its development of the Jaws Flex Clamp
 By copying the ActionPod Products to create the Jaws Flex Clamp, GoPro misappropriated the skill and labor of
Dinkum

Many of GoPro’s key features appear to be referenced by earlier
patents assigned to competitors
US5481303A – Nikon
US6002240A– Dell
US7327122B2– Mathews Associates
US7123935B2– Canon
US5475539A – Casio
US5438363A– Nikon
US6624842B2– Diversified Patent
US6864911B1– HP
US6285471B1– Siemens
US6987527B2 – Philip Kossin
US7714925B2 – Samsung
US6462508B1– Kinpo Electronics
US6574433B1–
Frank Stuempfl
US7924323B2– Walker Digital
These are just a few of the patents that engineering analyses
commissioned by Devonshire Capital Funds suggest GoPro may infringe

Many companies with strong track records of defending IP
appear to hold patents related to GoPro products

Thank you
Matt Stack, Fund Manager
Devonshire Capital Fund
info@devonshirecapitalfunds.com

Full Legal Disclaimer
As of the publication date of this report, Devonshire Capital LLC ("Devonshire") has a short position in the stock of the company covered herein (GoPro, Inc.) and
stands to realize gains in the event that the price of the stock declines. Following publication of the report, Devonshire may transact in the securities of the
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be accurate and reliable. However, such information is presented “as is”, without warranty of any kind – whether express or implied. Devonshire makes no
representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results obtained from its use. All
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This document is for informational purposes only and it is not intended as an official confirmation of any transaction. All market prices, data and other information
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discussed in this document at any time. As of the original publication date of this document, investors should assume that Devonshire is short shares of GoPro,
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