SOURCE: Max Sound Corporation

Max Sound Corporation

December 12, 2016 15:03 ET

MAXD Update From CEO

SAN DIEGO, CA--(Marketwired - December 12, 2016) - Max Sound Corporation (MAXD) provides an ongoing summary of its business and legal actions.

Dear MAXD Shareholders,

Looking back on 2016, it was a year of progress. Some of the progress was slower than we would have liked, but overall as a Company we moved forward in significant ways. I'd like to take this opportunity to give you a brief description of where things stand currently and what we expect in 2017 and beyond.

The Legal Actions - As you are aware, in any legal proceedings, often much of the information surrounding the cases must remain confidential, but here is some information we're able to share with you on these lawsuits:

Many of you have been inquiring about how the cases against Google and Netflix are going. Let me begin by restating my excitement over one of our most important pieces of news this year: Max Sound is now the co-owner of the Optimized Data Transmission (ODT) patent portfolio! https://finance.yahoo.com/news/max-sound-corp-vedanti-systems-142500765.html This patent portfolio consists of patents in the following countries: The United States, Australia, Austria, Cyprus, Denmark, Spain, Finland, France, Ireland, Italy, Luxembourg, Monaco, Portugal, Sweden, Turkey, Belgium, Switzerland/ Liechtenstein, United Kingdom, Greece, Netherlands and Germany.

Becoming co-owners of this portfolio was a major milestone for the Company, as it carries numerous positive implications for the Company going forward. First, it solidifies our highly positive relationship with Vedanti and finally ends our legal standing issues. Second, we're able to drop our litigations and arbitrations against each other saving both companies potentially hundreds of thousands of dollars. Finally, as co-owners we're able to work together on existing business opportunities and jointly implement strategies for monetizing the ODT patents here in the United States and around the world.

We are also very pleased to have Mr. Kenneth Lustig on our Advisory Board and on the VLL Steering Committee. https://finance.yahoo.com/news/max-sounds-newest-advisory-board-143000938.html Mr. Lustig brings over two decades of experience and expertise from working within some of the world's largest companies (like Microsoft) helping to guide and monetize their IP interests. He has already been highly instrumental in the development of our new venture with Vedanti.

For those of you who don't know or remember why this is so important to us, let me refresh your memory on what the ODT patent portfolio is and what the various lawsuits are about.

In 2014, Max Sound identified patented technology called "Optimized Data Transmission System and Method" that would complement our audio technologies and began negotiations with the owner of that technology to acquire rights to the widely used technology. In mid-2014, MAXD signed a Licensing and Representation Agreement granting MAXD the right to sue Google and its affiliates for their worldwide infringement of the ODT Patents, as discussed in our press release dated December 11, 2014 http://finance.yahoo.com/news/max-sound-corporation-files-multi-032500895.html Then in the fall of 2014, MAXD initiated patent infringement lawsuits against Google and its affiliates in the United States and abroad.

Northern District of California Action

On November 24, 2015 the Northern District Court granted Google's Motion to Dismiss based only on the issue of standing. Our legal counsel is confident that the Court improperly applied the standard applicable to a party claiming standing as a "virtual assignee" rather than the standard applicable to a party claiming standing as an "exclusive licensee" such as MAXD. This error resulted in a ripple effect of additional errors committed by the District Court resulting in the erroneous conclusion that MAXD lacked standing to sue the Google Defendants for infringement of the `339 Patent. Therefore, MAXD had appealed the ruling and was working through the due process.

However, now that Max Sound is the co-owner of the ODT patents, this eliminates all issues with standing and should the appeal not rule in our favor, Vedanti will join us in refilling a new case in the Northern district. Should it go in our favor, Vedanti will simply join us if we win the appeal, which is going to be heard on January 9th 2017.

This is very exciting to us, as we believe that the US patent is the most IPR airtight and valuable asset we have in our global portfolio. According to the data reporting site statista.com, in 2015, 46 percent of the Google's revenue was generated in the United States. In the third quarter of 2016, Google's revenue amounted to 22.25 billion U.S. dollars, up from 21.32 billion U.S. dollars in the preceding quarter. Google's main revenue source is advertising through Google sites and its network that use the ODT technology.

German Court Action

On December 7, 2016 an offer was made to settle by Google and Netflix in the final hours of the day prior to the hearing in Germany, concerning the entire global patent portfolio. The VLL steering committee decided the offer required further consideration and significantly more detail around the terms and suspended the negotiations so not to jeopardize the value of the overall portfolio (specifically including the US).

On December 8, 2016 both parties presented arguments in the Nullity proceedings in Munich, Germany. The court will issue its written ruling early 2017. The VLL steering committee intends to continue negotiations with all parties concurrently. Further details will be provided in the very near future.

American Arbitration Association Proceeding

In August 2015, MAXD initiated an arbitration proceeding before the American Arbitration Association to confirm the rights it was granted by VSL pursuant under the Licensing Agreement and to prevent VSL, Nash and related parties from interfering with those rights. On August 25, 2015, an Emergency Arbitrator issued an Emergency Preliminary Injunction Arbitration Award in favor of MAXD prohibiting VSL from 1) disavowing the validity of the Contract (with MAXD); 2) altering any corporate or other entities formed, owned or controlled by VSL that has any connection with the Contract; or 3) licensing, selling, assigning or transferring, any of the technology, patents, or intellectual property, connected to the Contract in any manner, and 4) is required to cooperate with the pending ODT enforcement litigation and fulfill its contractual obligations.

MAXD filed a petition in California Superior Court seeking confirmation of the Emergency Arbitration Award. On Friday December 4, 2015 a California Superior Court ruled in MAXD's favor and confirmed the Emergency Arbitration Award against VSL. VSL attempted to overturn the decision by the California Superior Court by seeking a Writ of Appeal from the California Court of Appeals on December 10, 2015. The Court of Appeals denied VSL's appeal on December 16, 2015.

Since MAXD and Vedanti are now co-owners of the portfolio, we've withdrawn our claims against Vedanti and intend to soon terminate the AAA proceeding in its entirety.

The Legal Team

MAXD's attorneys in the United States agreed to handle the US lawsuits against Google on a contingency fee, reflecting their belief in the strength of MAXD's patent infringement claims. Together, we feel justice will be served, and MAXD and our Shareholders will prevail! Legal advisors of MAXD in the United States: Buether Joe & Carpenter, LLC www.bjciplaw.com

Additional Case Against Google

Our case number "2014-1-cv-274103" has made significant progress. Stay tuned for an update and possible resolution on this matter in late January 2017.

Pending MAX-D HD Audio Business

We've been working with Qualcomm at their San Diego Campus to create MAX-D Voice under our Hexagon Access Program License Agreement. This technology application can greatly improve the cellular voice quality on Qualcomm chips. Stay tuned for important developments on this and a potential mobile manufacturer product co-branding launch in early 2017.

Happy Holidays & Best Wishes from all of us at MAXD.

JOHN BLAISURE
CEO Max Sound Corporation
john@maxsound.com
www.maxd.audio

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Statements in this press release which are not purely historical, including statements regarding Max Sound's intentions, beliefs, expectations, representations, projections, plans or strategies regarding the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties including, but not limited to, the risks associated with the effect of changing economic conditions, trends in the products markets, variations in the company's cash flow or adequacy of capital resources, market acceptance risks, technical development risks, and other risk factors. The company cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Max Sound disclaims any obligation and does not undertake to update or revise any forward-looking statements in this press release. Expanded and historical information is made available to the public by Max Sound Corporation and its Affiliates on its website http://maxd.audio or at http://www.sec.gov.

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