Should EDIG change it's name, sell out or just be happy to be like these others?
posted on
Apr 29, 2013 09:10AM
Here's an article from another board by "windowlite". The most interesting part of the article to me is the valuations and stock appreciation possible with these companies and their patent litigation strategies. I'm not recommending any of the stocks and even thought of xing them out. But you can do that if you want. I am posting because of the similarities of our EDIG with those others mentioned. You can click on the links to even more similarities. I was intrigued by Nokia's strategies. Should or could EDIG get a power player to join us in our quest for justice and compensation? Who would it be? Food for thought as we begin the week. GLTAL
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MARA.OB over the next 72 hours. (More...)
Contentious patent litigation amongst technology companies is certainly not a new phenomenon. In fact, a roundtable discussion was held in Geneva last October to discuss the rampant litigation occurring within the telecommunications sector, with the stated aim of coming to a broad agreement on what the term "reasonable" meant in (F)RAND agreements, as well as potentially taking injunctive relief off the table. This roundtable featured representatives from all the major players in the sector such as Google (GOOG), Apple (AAPL), Nokia (NOK), BlackBerry (BBRY), amongst a slew of others. Not surprisingly, companies that have struggled in the sector of late, yet hold key patents, took the position that litigation is a normal part of the business. Nokia, for example, submitted the following as part of their roundtable discussion:
http://seekingalpha.com/article/1379211-2-undiscovered-patent-plays-will-history-repeat-itself-in-the-patent-infringement-space?source=yahoo"Patent litigation as such is not a sign of market failure - rather it represents the only available remedy ultimately for IP holders to enforce their right to exclusivity or to compensation from unwilling licensees. As open standards are publicly available, developers of the technology cannot withhold their contributions from non-paying customers, like a box-maker could simply stop shipments. Litigation is an integral part of the IP system, and the use of courts to resolve disputes between competitors is simply a sign of a vibrant and functioning market."
With all of this money flying back and forth in the tech patent wars, it is not surprising that a handful of non-practicing entities (NPE) have sprung up and begun to file lawsuits against the tech giants. When these companies go public, like VirnetX Holding Corp. (VHC) and Vringo , they often present tremendous value propositions for investors. Specifically, these companies are typically suing for amounts that are several orders of magnitude higher than their initial market caps upon going public, or upon changing their business models (e.g., MGT Capital Investments, Inc.). To date, shares of VRNG are up 88% since the company's reverse merger, and VHC is up a stunning 5,597% since its settlement with Microsoft (MSFT). Moreover, shares of MGT Capital Investments (MGT) are up approximately 45% since changing its business model to focus on enforcing its patent portfolio in the Casino gaming space. What is most impressive is that MGT, VHC, and VRNG are all currently well off of their all-time highs at the time of writing this article, showing just how lucrative these companies can be for aggressive investors.