Tag Archives: public IP companies (PIPCOs)

PIPCO stocks soar in a surprising first half for the second quarter

In what some patent holders are hoping will be a harbinger of things to come, publicly traded IP licensing companies are enjoying an unusually strong second quarter.

Year to date performance for some of the key players include Marathon (MARA), up 40.62% as of the close of the market on May 17. This is as the S&P 500 performance has dwindled to a mere .16% YTD.

MGT Capital Investments (MGT) is up an astounding 1,704.35%, in part because cybersecurity pioneer, John McAfee, is about to be named CEO.

“Until stock-featrecently, relentlessly negative information about patents and holders has been a challenge to patent licensing and sales activity,” one analyst observed.

“It may finally be hitting opcos and the courts that not only are there opportunities out there for amiable transactions that benefit all parties and avoid disputes, but an asymmetric market for patent transactions that depresses value is potentially very dangerous for everyone.”

Others performers were Inventergy (INTV), up 14.91%, Finjan (FNJN), ups 19.13% and WiLAN (WILN), which has risen an impressive 95.4% since January 1.

Not all PIPCOs have performed well. Stalwart RPX (RPXC) was down 17.82% and Spherix (SPEX) was down 24.56%.

Improving Conditions

The stock performance is a result of a diverse contributions, including $10 million in financing for Finjan, and $25 million settlement for Marathon from Apple.

Additionally, the courts have been ruling more favorably for patent enforcers, including increasing the likelihood of wilfulness. The Patent Trial and Appeal Board (PTAB) is showing some signs of acting more fairly, too.ipcu30-blurb2-21

Operating company patent acquisition activities have increased, too, in a sign that we may have hit a bottom and patent values will be creeping up if they have not already.

For a more complete list of PIPCOs and their recent performance, visit the IP CloseUp 30® here.

Image source: 3dprinting.com

Burford Capital, Digimarc and Imagination added to IP CloseUp 30

Three public companies that are active in patent licensing or highly dependent on patents for success have been added to the IP CloseUp 30 index of public intellectual property companies, or PIPCOs.

nav_3_7383531__burfordBurford Capital (BUR.L), is primarily a litigation funding organization that trades on the London Stock Exchange. It recently hired Justin Daniels, previously a IP litigation partner at Proskauer Rose, as a Managing Director to further develop and manage its IP offerings. Prior to Proskauer he was a litigator with Skadden, Sullivan & Cromwell and Cravath.

Digimarc Corporation, (DMRC) provides media identification and management solutions to commercial entities and governments. It has a number of key patents and was previously associated with Intellectual Ventures.Digimarc

Imagination Technologies Group (IGMNF) is involved in the development and licensing of silicon and software intellectual property solutions for system-on-chip devices for semiconductor, network operator and electronics original equipment manufacturer, and original design manufacturer companies.

Both Burford and Imagination are UK-based.

Real-Time PIPCO News

The IP CloseUp 30® is a real-time index of publicly traded IP monetization companies. By accessing it here, readers can add the url to their home screen or desk top for easy comparison of companies in the sector, and to get up-to-the-minute news.

imagination-logoTo be considered for inclusion in the index, invention rights (patents) must play a significant role in a company’s value or revenue stream, and its market capitalization must be above $5 million when included. A few companies on the list, including InterDigital, Rambus and Universal Display, are capitalized at over $1 billion. Companies are removed from time-to-time as lack of trading volume, market cap or share price warrant.

Image source: company websites

Public patent licensing company index declined 24.4% in 2015

While the S&P 500 stock market index was up 6.5% for the 4Q 2015, the PIPX (public IP licensing company index) was down 11%. 

2015 results were worse with the PIPX down 24.4% vs. the S&P 500, which declined 0.7%. The poor performance is attributed to the weakening of patents and patent values, and the increase in uncertainty, as a result of the American Invents Act (AIA) and several major court cases, including Alice v. CLS Bank.

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Marathon (MARA) and Acacia (ACTG) performed particularly poorly in 2015, down 81% and 74.7% respectively. Rambus (RMBS) was the only gainer in the group, up 4.5% for the year.

For the fourth quarter, ParkerVision (PRKR) and Unwired Planet (UPIP), up 21.1% and 17.8%, both outperformed the solid S&P 500 results of 6.5%.

The PIPX is a capitalization-weighted, price-return measure of the change in value of this segment of publicly traded companies. The performance of more highly valued companies, such as InterDigital (IDCC), Universal Display (OLED), has a more significant impact on the overall index.

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Many of those who follow public IP licensing companies (PIPCOs) do so in conjunction with the IP CloseUp 30®, a real-time index of individual company performance in this sector, which also provides up-to-the minute news updates.

The PIPX index, created by Dr. Kevin Klein, former Director of IP Licensing at Freescale Semiconductor, is designed to provide a measure of the market value, and hence a reading of the relative health of the publicly traded intellectual property licensing sector. The index consists of 13 companies with a primary focus of licensing and enforcement of patent intellectual property.

In addition to a focus on intellectual property, the companies must be publicly traded and have a market capitalization greater than $100M. Since being added to the index the market caps of many of the companies have shrunk below $100M. The index was initiated with a value of 100 on July 1, 2011.

For the full PIPX Intellectual Property Sector Index Q4 2015 update, go here.

Image source: PIPX Index

“Patent Investor” tracks licensing company shares & developments

A new weekly is the first to feature in-depth coverage of public intellectual property monetization companies (PIPCOs). 

I’ve been following The Patent Investor for a few weeks, wondering what news it could provide beyond what I already know and hear about the PIPCO space.

What I discovered is that TPI regularly contains news of developments and trends useful to those interested in or affected by patent licensing businesses – especially the publicly held kind. Editor/reporter Dan Lonkevich goes beyond news releases and news about PIPCOs reported in the business press, to provide the relevant facts that investors need to make informed decisions, and those on that defendants in NPE disputes may wish to be aware of.

He is also not afraid to report bad news or delve into SEC filings, nor is he reluctant to portray a company in a less than favorable light – essential for a credible investor newsletter.

Lonkevich previously worked as the senior editor for The DealFlow Report, a unit of The Street Inc. Prior to that he was a reporter for Bloomberg News in New York. While at Bloomberg, he covered the insurance TPI_Mastheadbusiness, mergers and acquisitions and oil and gas companies. Prior to that, he worked as an associate editor for The National Underwriter and was a reporter for Bestweek, a newsletter  covering the insurance business published by insurance rating company A.M. Best Co.

The Patent Investor, which began publication last year, looks at the publicly listed businesses involved that license and sell patents, and the performance of their shares. TPI differs from Intangible Investor, a column that I write for IAM magazine, which considers PIPCOs, as well as a broad range of indirect investors or IP stakeholders, including operating businesses.

The website describes the newsletter as “uniquely and solely devoted to covering the patent monetization business, unlike more mainstream business and legal publications. It is intended to be of interest to investors, inventors, entrepreneurs, attorneys and investment bankers who work with the growing number of patent monetization companies.”

At $899 for an annual group subscription ($299 for individual subscriptions) TPI, while good value, is not for everyone. However, the cover of each issue, with the first paragraph of key stories, is available for free. Those interested in a sample issue or subscription can receive one.

To see the cover of the latest issue or for a sample, go here.

TPI’s article archive can be found here.

Image source: thepatentinvestor.com

IP CloseUp 30 Index is Updated

Exclusion of two prominent patent holders will make the IP CloseUp® 30 index of publicly held IP companies (PIPCOs) more relevant.

ARM (ARM.L) and Qualcomm (QCOM), while strong, patent licensing companies with excellent IP portfolios, have been removed from the IPCU 30 because their large market cap, $14 billion  and $131 billion, respectively, dwarfs the others in the index and can cause a weighting issue. Most of the companies in the index are public patent licensing companies that are much smaller. Modest settlements and licenses, or even a good day in court, can move their shares dramatically.

In contrast, a recent trial loss by Qualcomm to ParkerVision (PRKR) for $173 million, the largest patent award of 2013, caused barely a ripple at the San Diego-based chip maker, which has $45 billion in assets on its balance sheet. (Ironically, PRKR shares were down significantly because of pumped-up expectations leading up to the decision.)

We also removed RWS Group (RWS.L), or Inovia, which is primarily a patent filing company, and barely trades, with an average ipcu30-blurb2-21of just 3,287 shares trading hands daily.

Measures of Performance

It is our hope that a wider range of IP-centric companies will eventually be included in the index, including those that do not out-license but nonetheless generate good returns on their patent portfolio and enhance overall performance. (Maintaining market share and profit margins ought to count somewhere other than on the bottom line.)

For now companies that will be included fall in the range of approximately $1 billion market value or lower. These are the IP businesses that — for better or worse —  will tend to be hyper sensitive to their patent licensing and enforcement activity, to the extent that it is understood by investors.

Removal of the three companies will make performance comparisons easier. Suggestions for additions or changes to the index are welcomed. We are planing a more quantitive look at some of the companies in the index in the 2Q.

Patent Properties, formerly GlobalOptions Group, Inc. (GLOI), can now be found under the symbol PPRO. It’s CEO, Jay Walker, previously founded Priceline.com.  

Vringo’s Potential $1b in Google-AOL Patent Case is not Yet a Win

While the court’s decision to enhance damages last week is a big positive, Google is unlikely to accept defeat without a fight.

Vringo, Inc.’s shares shot up 20% last Wednesday after a district court ruled that the result of the enhanced damages calculation on its AdWords infringement case involving AOL and Google could exceed $1 billion. The  stock was trading is less lofty heights by Friday when investors had time to take stock.

The court’s “Memorandum Opinion and Order” set the appropriate ongoing royalty rate for continued infringement of its patents is 6.5% of the 20.9% royalty base previously established. All told, the new rate and past awards, reports the Motley Fool, are collectively worth around $1 billion for Vringo.  

Mark Argento who follows Vringo (VRNG) for Lake Street Capital said, “We estimate this royalty rate could result in an incremental $1.2 billion in future royalties based on out estimates of Google’s AdWords business gogdollardomestically over the life of the patents. The $1.2 billion would be incremental to the damages the jury awarded and the Judge calculated for past and supplemental damages of approximately $47 million.”

Maulin Shah of Envision IP told me that he was surprised of the District Court awarded a 6.5% ongoing royalty, which pretty close to the 7% I/P Engine, Vringo’s IP subsidiary, had asked for based on a willful infringement argument.

“As for the royalty base,” he said, “I/P Engine has asked for the 20.9% figure, and I do not believe Google made any arguments during trial for a lower base. Google’s post-trial argument for a 2.8% royalty base was reverse engineered from the jury award.  While it appears high, without any substantive arguments from Google, it seems reasonable to me that the judge used I/P Engine’s figure.”

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While last Wednesday was a very good day in court for Vringo, investors would be wrong to believe that Google and AOL will be writing a check for $1b or more anytime soon, if at all. Vringo must continue to pursue its case against these infringers, while managing its other IP assets and investor expectations. The company had announced on New Year’s Day that it had singed a deal to divest itself of its ringtone operating business. 

The pull-back of VRNG’s shares to mid-day Monday to $4.11, or only about 4% above the price prior to the court’s decision, and well below their big move last week, may be an indication that investor expectations are becoming more realistic when it comes to the patent “home run” derby, despite the bold headlines.

A previous dispute involving VRNG and GOOG had been estimated as resulting in $700m in damages. The court capped the award at $31m. It’s being appealed, as is a decision reported in today’s IP Law 360 that one of the Vringo Inc. patents that Google Inc. was recently ordered to pay an ongoing royalty for infringing has been preliminarily rejected by the U.S. Patent and Trademark Office. Vringo said Friday, adding that it was confident the decision would be reversed.

It is still too early to tell whether or not the pull-back in VRNG shares is a sign that interest in public IP companies is maturing appropriately, and that PIPCOs as a group are starting to be regarded as ongoing businesses worthy of industry status. 

Image source: emerging growth.com; mentecritia.net 

ParkerVision v. Qualcomm: A Field Day for the Shorts?

ParkerVision v. Qualcomm is a unique patent dispute…

pitting two public IP licensing companies (PIPCOs) with decidedly different business models against each other. The case underscores an a weakness in the public IP licensing model. It can be addressed by providing better information about how the patent system works and managing shareholder expectations.

Qualcomm (QCOM), a certified tech giant that licenses chips used in practically every smart phone sold, and derives billions in profit from patent licensing. ParkerVision (PRKR) is a relative David vs.  giants,  with excellent rights but  more than $20 million in annual losses. It hast has never turned a profit.

Nose Dive

ParkerVision shares were down as much as 60% yesterday on almost 30 times its average daily volume because a Florida Central District Court in Orlando ruled that Qualcomm did not infringe willfully and that the damages award was “only” $173 million, about half of what was expected.

PRKR was up 75% on October 17, trading as high at $7.38 when the validity of its patents were upheld by the court last week.  PRKR had sought damages of $432 million and a wilfulness verdict, which  would have possibly tripled the award.

The market speculation regarding the damages that  PRKR could have won led to extreme volatility. Trading in PRKR shares was halted Wednesday afternoon pending the outcome of the court’s damages ruling. Ironically, a few other public licensing companies halted trading, too, in anticipation of the decision.

Costly Confusion

The audience that benefits most from confusion are the short sellers, who sometimes bid stocks up then bet they will dive, without concern for the RenderImagefundamentals, or, for that matter, the facts.  As long as the shorts are a step ahead of other investors’ timing they usually wind up winning.  Investment bankers also may benefit from higher market capitalization because it increases the prospect of underwriting secondary or debt offerings.

One significant patent holder told me that a  JP Morgan had pegged the potential damages award with a willfulness finding as high as $2 billion. Flame fanning of this nature merely preys on those already confused about patents and the patent system, and is a blow to PIPCO credibility and long-term acceptance and reliability.

While the damages award is the largest patent jury verdict so far in 2013, and ninth-largest of all U.S. jury awards according to data compiled by Bloomberg, it’s less than half the $432 million ParkerVision was seeking.

That the market saw this otherwise resounding and well-deserved win in court as a something  less than a significant success suggests a failure many to manage expectations.  It can only serve to undermine confidence in IP-centric stocks.

ParkerVision, founded in 1989 designs, develops, and markets proprietary radio frequency (RF) technologies and products for use in semiconductor circuits for wireless communication products in the United States.

The court ruled that Qualcomm infringed on four patents of ParkerVision’s related to radio-frequency receivers and the conversion of electromagnetic signals in wireless devices and improperly used them in Qualcomm’s semiconductor chips.

Back in February, after a positive Markman ruling against Qualcomm, ParkerVision’s stock price rose 73%, from $2.43 to $4.21. PRKR’s market cap was around $300 million for most of 2013 and was recently as high as about $700 million. IP investors will recall a spike in InterDigital’s (IDCC) shares after Google bought Motorola for $12.5 billion, temporarily increasing its value by over $1 billion.

Both PRKR and QCOM (and IDCC) are in the IP CloseUp® 30.

Illustration source: parkervision.com


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