DANA POINT, Calif.--(BUSINESS WIRE)--Mercury Cable & Energy, Inc. (“Mercury Cable”), the leading developer of High Voltage Composite Reinforced Conductors (“HVCRC”) for electrical transmission lines, is pleased to announce that based upon an extensive legal review by Mercury's patent counsel of the reexamination request filed by CTC Cable Corporation ("CTC") (OTCBB:CPTC.OB) and the initial office action issued by the U.S. Patent and Trademark Office ("USPTO"), it is our opinion that reexamination proceedings will result in the confirmation of the patentability of the claims of U.S. Pat. No. 7,705,242 (the ‘242 patent). Additionally, Mercury is pleased to report that the U.S. District Court has denied the motion of CTC to amend its complaint against Mercury citing "CTC’s dilatory motive and bad faith". The ruling of the District Court is more fully explained below.

The ‘242 patent which grants Mercury the right to manufacture its HVCRC product was filed on February 15, 2008, claiming priority from a provisional patent application filed February 15, 2007. Following, a substantive review of the patent application the USPTO concluded that the claims of the application were novel and not obvious. Therefore, on April 27, 2010, the USPTO issued the ‘242 patent. The ‘242 patent has an expiration date of March 22, 2031.

As part of its ongoing litigation campaign against Mercury, on June 21, 2010, CTC filed a reexamination request which requests that the USPTO to review the issued '242 patent in view of newly discovered prior art which was not before the Examiner during the original review of the patent documents.

As is common in an overwhelming percentage of reexamination requests, the USPTO granted the request to review the patent. In fact, as is common practice, nearly every request to review a patent is granted. Following the granting of the reexamination request, the USPTO will typically issue an Office Action which places the burden on the patentee to explain the differences between the prior art and the invention claimed in the patent. In response to the first office action, the patent owner has the absolute right to explain the invention to the Examiner and to set forth the differences between the invention claimed and the prior art. The patent owner is free to make amendments to the claims, if the patent owner deems certain amendments as being necessary. Further, the reexamination proceeding is a venue by which the patent owner can assert new claims and combinations of claims as necessary. Not only is the initial Office Action not dispositive, but statistically, the majority of reexamination proceedings conclude with the patent office upholding the patent and issuing a reexamination certificate confirming patentability.

Since Mercury's ultimate goal is to have rights to a valid, fully enforceable and defendable patent, we look forward to successful completion of the reexamination process in which we will explain to the USPTO the differences between the prior art and our patent claims. Because the inventions disclosed and claimed in the ‘242 patent are clearly novel and not obvious in light of the cited prior art, Mercury is confident that the USPTO will close the reexamination proceeding and issue a reexamination certificate certifying that the claims of the ‘242 patent are fully patentable. Once this process has been successfully concluded, there can be no further challenges to the validity of the `242 patent based upon these prior art references.

As part of our extensive legal analysis, Mercury's patent counsel has discovered at least 9 additional and compelling items of prior art that, while not impacting Mercury’s ‘242 patent, are directly attributable to CTC’s patent claims including their ‘162, ‘319 and ‘522 patents. Because of the compelling nature of the newly discovered prior art, Mercury is currently completing filings with the USPTO and Federal Court which, when filed, will challenge the validity of CTC’s ‘522, ‘162, ‘319 and other related patents based upon significant newly discovered prior art documents which discloses (prior to 2000) a carbon and glass strength member or “core” for use in a transmission cable.

Based upon our legal analysis, Mercury is highly confident the ‘242 patent will be confirmed through the reexamination proceedings with no meaningful changes to the scope of the claims. Mercury is further confident that following the review of the CTC patents, the majority if not all of CTC’s patent claims will be invalidated.

In the ongoing Federal Court litigation between Mercury and CTC, on June 21, 2010, CTC filed a motion for leave to file a second amended complaint. In denying CTC's motion, the Court held as follows:

"CTC proposes to add 13 new parties with nary a word about the factors the Court must consider when granting such motions. The timing of CTC’s proposed pleading, coupled with the sheer number of new defendants (all of whom CTC has been aware of since this lawsuit was first filed), evinces bad faith by CTC. Indeed, as Mercury argues, the new pleading seems to be a naked attempt to “destroy [Mercury’s] business relations” by “naming every possible party who has any association with Mercury.” The Court further found that "The facts available to the Court demonstrate CTC’s dilatory motive and bad faith in seeking amendment and joinder of new defendants".

As Mercury continues its defense of this lawsuit, we are confident that we can bring this matter to a successful conclusion in an expedited manner.

Mercury Cable & Energy is a privately‐held developer of High Voltage Composite Reinforced Conductors (HVCRC), Smart Conductors for the Smart Grid. The patented HVCRC Smart Conductor is superior to existing conductors in a number of key performance areas including:

• Up to double the current carrying capacity of ACSR
• Substantially reduces high‐temperature sag
• Requires fewer structures for new line construction
• Increases capacity of existing rights‐of‐way and structures through retrofitting
• Eliminates bi‐metallic corrosion
• Significantly reduces line losses compared to same‐diameter conventional and composite conductors at equal operating temperatures