Tag Archives: Vringo
3q-2016-fig-2-screenshot

Record 20.4% move in 3Q for Public IP company stock index (PIPX)

Public IP licensing companies (PIPCOs) are very much alive and some company shares are doing surprisingly well, despite increased obstacles to patent licensing.  

PIPX reported a 20.4% gain for the 3Q vs. just 3.3% for the S&P 500.

It was the PIPX’s best performance since the index began tracking IP licensing companies in 2011. The PIPX is a capitalization-weighted, price-return measure of the change in value of this segment of publicly traded companies.

3q-2016-fig-2-screenshot

“InterDigital and Tessera, comparative giants in market value, were responsible for 20% of the index move,” said Dr. Kevin Klein, Vice President and GM of Products and Licensing at VORAGO Technologies, who compiles the data. “Acacia was the biggest individual gainer, up 48.2%; WiLAN was the biggest loser, down 39.4%. ”

High Volatility

It is difficult to attribute any one specific factor to the record quarter. However, PIPX has been volatile, and somewhat counter-cyclical since its inception. The index could be seen as a hedge against S&P 500 performance. Additionally, patent licensing and sales have started to come back, and patent damages awards are being paid, although at reduced amounts.

The Patent Trial and Appeal Board has been instituting fewer Inter Partes Reviews (down to about one-third of petitions filed), but is still seen by many as a somewhat arbitrary impediment to patent licensing and enforcement.

The value of $1 invested in the S&P 500 in Q3 2011 would now be worth $1.62 while the value of the same $1 invested in the PIPX would be $0.68.

PIPX Performance by Quarter 

3q-2016-fig-3-screenshot

Added to the index is FORM Holdings (NASADQ: FH), a diversified holding company that specializes in identifying, investing in and developing companies with superior growth potential. Removed were Vringo, which was absorbed by FORM Holdings, and Unwired Planet, which was delisted on June 18.

For the full 3Q report, go here.

Image source: PIPX Public IP Index

Fig5

Leading IP stocks for 1Q include VRNG, RMBS, TSRA, VHC & RPXC

Despite a soft first quarter 2015 for the 13 IP licensing company stocks that comprise the PIPX IP Stock Index, versus the S&P 500, individual winners and losers that bucked the trend.

Vringo (VRNG), down 80.9% over the past 12 months, was up 18.2% in the quarter one, the most in the group. Also advancing were Rambus (RMBS) was up 13.4%, Tessera (TSRA) 12.6%, Virnetx (VHC)10.9% and RPX (RPXC) 4.4%.

Unwired Planet (UPIP), Acacia (ACTG) and Marathon (MARA) were down, 43.0%, 36.8% and 31.0% respectively for the quarter. For MARA it came after a stellar 2014 where it gained some 170%, so some profit-taking is not unexpected. InterDigital (IDC) also cooled off after a torrid 4Q 2014.

*****

PIPX under-performance relative to the S&P 500 was more muted in the first quarter. This appeared to be less a result of improving performance among PIPX sector companies as a group, than improved performance among a handful of larger Index leaders (Tessera and InderDigital), whose weighting impacted overall results (see final graph).  

Fig2
Vringo’s stock was beaten down significantly in the 2014 as the result of adverse decisions in court, so its gain is less impressive in relative terms. Its improved stock performance is either being considered by some investors as a positive harbinger, or the shares are enjoying a favorable bounce due more to traders than long-term investors.

The role of depressed patent values as a result of the American Invents Act, IPRs and proposed proposed additional anti-patent litigation legislation in poor PIPCO performance is difficult to determine. The likelihood is that investors are beginning to regard some companies as better capitalized and and more sufficiently equipped for the long hall, whatever the scenario.

Those larger players that appear to be in possession of sufficient numbers of good patents and licensing opportunities, appear to be the best position to perform over time.

*****

Fig3The PIPX Index, compiled exclusively for IP CloseUp by Dr. Kevin Klein, Director of IP Licensing at Freescale Semiconductor, is designed to provide a measure of the market value and health of the intellectual property licensing business. The index consists of 13 public companies all whose market capitalization exceeds $100M, whose primary focus of licensing and enforcement of patent intellectual property. The companies included in the index are listed in Table 1. Several of the companies’ market capitalization has fallen below $100M since being added to the index.

“The PIPX index starting from July 2011 through March 31, 2015,” says Dr. Klein. “Somewhat surprisingly, given the amount of interest and attention provided to IP licensing in recent years, the index trends down from July 2011 to about the middle of 2012 and from there has been relatively flat. This performance stands in contrast to that of the broader economy and of publicly traded companies in general.”

The 2015 1Q PIPX update can be found here.

Fig5

Image source: PIPX IP Sector Index, Q1 2015 Update

virnetxmicrosoft2

VirnextX Settles with Miscrosoft Over Skype; Vringo is Delisted

VirnetX announced that it has settled a patent infringement suit with Microsoft for $23 million sending its shares up 20%.

VirnetX (NYSE: VHC), whose stock had been pummeled in 2014 as the result of adverse court decisions, is currently down 70% YTD.

VirnetX Holding Corp. and Microsoft Corp. (NASDAQ: MSFT) have reached an agreement to settle a lawsuit over alleged patent violations related to Skype, which Microsoft acquired in 2011 for $8.5 billion.

As reported in the Wall Street Journal: “VirnetX, a communications-technology company that in 2010 won a $200 million settlement from Microsoft over patent violations, sued the software company in April 2013 charging Skype had broken the terms of their licensing agreement regarding six patents. Microsoft bought Skype, a phone-and-video-calling Internet company, in 2011.”

VirnetX had initially won in 2013 a $368 million verdict against Apple, which was later overturned.VRNG

*****

Also just announced, Vringo (NASDAQ: VRNG) in an 8-K filing with the SEC said that it had received a notice of delisting because it no longer met the exchange requirements. The filing also said that its Chief Operating Officer had resigned. The company has 180 calendar days, or until June 16, 2015, to regain compliance.

*****

Hipcricket (Other OTC: HIPP) and Paid, Inc. (Other OTC: PAYD) are being removed from the IP CloseUp 30. They are trading at $.03 and $.05 per share respectively.

Image sources:seattlepi.com; aimhighprofits.com

imgres

Vringo Stock Dive: Bad Day in Court or Flawed Business Model?

Google’s successful CAFC appeal has vacated Vringo’s already reduced $30M award. Could it have quit while it was ahead?

Vringo stock traded as high as $5.45 in 2013 and as low as $.67 a few days ago. It lost 80% of its value in a matter of hours when its big win was overturned by the Court of Appeals. Since then it has regained about 20% of its value. While the company’s dreams of a $1B+ payout appear to have been dashed, its future for some recent shareholders may not.

IP CloseUp readers will recall that back in February, when VRNG’s shares were touching $5, I reminded them that a big win was not certain (here).

Fresh off of a patent victory on Google’s AdWords in 2012 Vringo (NASDAQ: VRNG)  was looking toward a record payout and a share price of $10 or higher. But something happened on the way to the party. On August 15 Vringo received news that it had lost an appeal filed by Google that sent the stock into a tailspin.

Business Model or Model Business?

The sudden, dramatic decline in VRNG shares begs a few questions: (1) Did Vringo over-emphasize the importance of the single victory? (2) Is its business model dependent on a big win and there is little else for investors to? (3) Does it simply not care about spikes in its share price?

Loosing cases is a fact of NPE life. In the post American Invents Act (AIA) environment, NPEs must achieve a pipeline of quality patents, licenses and disputes to endure. A “portfolio” of risk, imgresif you will. While NPEs may lose more today than in the past — and win less big —  the economics of patent enforcement are still viable for those with quality, capital and patience. Public ownership adds pressure to patent licensing companies, and may appeal more to short sellers than value investors. Shorts lose less than investors do.

Vringo won $30M  from a jury verdict in 2012, less than the $493M verdict it had sought. The judge overseeing the case ordered Google to pay a running royalty amounting to 1.36 percent of US AdWords sales. Those additional payments could have been more than $200 million annually. Instead, Google appealed.

Was Vringo right to push the litigation envelope or should it (could it?) have taken the money and run?

“Vringo once had a small ‘video ringtone’ business,” writes Joe Mullin in Ars Technica, “but today its value is in its patents. It purchased foundational patents from Lycos, an early search engine, and put them in a holding company it calls I/P Engine.”

Mullin continues: “The result will resonate beyond Vringo’s case. By dismantling two patents from a once-famed search engine on this basis, the majority has sent a message that more Federal Circuit judges are willing to invalidate patents following the results of this year’s most important Supreme Court patent case, Alice v. CLS Bank. That opinion, which was cited in a concurring opinion, said that obvious ideas—especially ones that don’t amount to more than an idea surrounded with computer jargon—shouldn’t get patents.”

The Supreme Court has embarked upon a slippery slope, providing even less clarity about what computer coded inventions are indeed novel and non-obvious.

Request for En Banc Review

Vringo plans to file a petition for an en banc review of the adverse federal appeals court ruling it received last week for its infringement suit against Google, AOL, IAC Search and Media, Gannett Company and Target. Those are not often heard. If the appeal is granted expect the stock to jump. If the appeal is heard, Google may think it prudent to settle, maybe not, given Alice v. CLS Bank.

Vringo (NASDAQ:VRNG) Director Noel Joseph Spiegel acquired 30,000 shares of Vringo stock on the open market in a transaction dated Friday, August 15th. The shares were purchased at an average cost of $0.89 per share, for a total transaction of $26,700.00. Following the completion of the transaction, the director now directly owns 50,000 markcuban_E_20120413183830shares of the company’s stock, valued at approximately $44,500. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this link.

Shares of Vringo opened at 1.40 on Wednesday. Vringo has a 1-year low of $0.67 and a 1-year high of $5.45.  According to WKRB News and Analysis, “Vringo also was the target of unusually large options trading activity on Monday. Traders bought 7,610 call options on the stock. This represents an increase of approximately 419% compared to the typical volume of 1,465 call options.”

“Vringo also sued Microsoft over its Bing search engine in January 2013,” reports Ars Technica. “Microsoft quickly settled the suit, giving Vringo six additional patents, and agreed to pay Vringo $1 million plus five percent of whatever was won from Google. That final payment now looks like it will be five percent of nothing.”

In 2012 Dallas Mavericks owner Mark Cuban bought a 7.4% stake in Vringo.

 

Image source: wsj.com

ACTG Chart

Tap “IP CloseUp 30” to get a Continuously Updated Snap-Shot of Public Patent Companies

IP CloseUp 30 is a handy tool for those who want to track the most active IP stocks in an instant.

IP CloseUp is pleased to announce the IP CloseUp® 30 a free, all-in-one information update of the leading patent stocks. A click or a tap is all investors, innovators, lawyers and or businesses to track the ups and downs of the rapidly expanding universe of IP-sensitive stocks.

In addition to Acacia, WiLAN and Virnetx, smaller players like Marathon Patent Group, Augme Technologies and MGT also are represented. The list will be updated periodically and companies are likely to be added or dropped.

Criteria for inclusion in the IPCU 30 index includes:

– A company must have IP rights, typically patents, as part of its core value proposition.

– The company must be publicly held for at least one month and reporting.

– Companies may hold significant IP rights but do not have to be out-licensing or direct monetization businesses.

– Listed companies have to file required regulatory disclosures and are encouraged to provide discretionary ones. (Transparency counts.)

*MOSAID is listed because it had a purchase value of $594 USD when it was taken private by Sterling Partners in late 2011 and is likely to go public or be sold to a public entity at some time in the future.

Expanded List

Our goal is to expand the list beyond 30 companies and to include more IP-rich companies whose model does not necessarily include monetization or enforcement-driven patent licensing. Not all the companies on the current list are non-practicing (patent owning) entities (NPEs),

ACTG Basicor so-called patent assertion entities (PAEs) that have been established to solely to enforce. Examples of these companies include Document Securities Systems and Single Touch, which are small, potentially under-priced operating companies with significant patents.

Companies listed in the IP CloseUp® 30 tend to be more directly affected by developments regarding their IP rights. For example, if Samsung settles a dispute with Apple for $1 billion, it is barely a blip on either company’s radar. It’s may not even be worthy of an 8K filing. If an IPCU 30 company secures a license for say $10 million, it is not only material, it is likely to move the corresponding revenue needle and stock price.

The five menu-tabbed views based on Yahoo! Finance data found in the IP CloseUp® 30:

Basic: This includes  pricing and trading information, as well as market capitalization or market value. It also provides access to a chart and recent information, including key statistics. Scroll down for the most recent company news.

Performance: 52-week range

Real-Time: % change

Fundamentals: Includes average daily volume, earning per share (EPS), price earning ration (P/E), if applicable, yield and EBITDA.

Detailed: This offers probably the most convenient summary, including bid and ask, market cap, P/E and EPS, as well as optional monthly, weekly or daily share price and trading volume.

Custom permits you to create your own screen, including or excluding information you may require.

*     *     *

Copy and paste the IP CloseUp® 30 link into your browser or create an icon for your desk top and watch the these companies evolve. Suggestions about new companies to add will be considered.

Image sources: Yahoo! Finace; Brody Berman Associates

*     *     *

IP CloseUp 30, by capitalization:

IPCU 30

0822-nasdaq_full_600

Public IP Cos (PIPCOs) – An Expanding Universe

IP-centric businesses whose shares trade on the public markets come in many shapes and sizes — some are better suited for return than others.

Many of the most interesting IP-rich businesses, from an investor perspective, are publicly traded, thinly capitalized companies with experienced management. The best have a realistic view of their IP assets, usually patents, and the timing and cost of their disputes and value of potential licenses.

The emergence of public IP-rich companies (PIPCOs) whose shares trade on the global exchanges is presenting new opportunities for patent holders and investors alike. They are the subject of the next (March) Intangible Investor, “PIPCOs – A Business Model Whose Time Has Come,” due out in IAM next week.

Pure-play licensing businesses, non-practicing patent licensing companies with a single method of generating return, are being challenged by business models that provide more options and potentially greater return. Through self-generation, acquisition or merger with complimentary operating units, publicly held licensing companies are emerging as businesses that are more readily understood by investors, able to access the capital markets, and acceptable to the courts.

Global Interest

At last count, there are no fewer than 25 companies that trade on US, UK and Canadian stock exchanges that include among their primary goals direct patent monetization. As recently at 18 months ago they would all be considered NPEs. pipcoeditToday, only a few are licensing-only pure-plays. The mix now includes enforcement businesses that support inventors and SMEs; licensing businesses that conduct proprietary R&D and obtain patents through filings; and those sometimes called profiteers that acquire rights from others, including operating companies that stand to profit.

More public IP businesses today are a combination of models that include smaller, under-capitalized operating companies that are selling products or attempting to commercialize them. While the patent monetization business makes good sense, it is not for every holder or investor.

With the exception of Qualcomm, Acacia, InterDigital and VirnetX, all with billion dollar plus valuations, public IP companies tend to be companies whose value is under about $500m. Mosaid, Tessera, Rambus and WiLAN comprise the next tier, between $500m and $1b. The remaining 17 companies are what Wall Street calls micro-caps.

They include Vringo and Document Securities Systems, DSS, an anti-fraud and brand protection business with patents and trade secrets which has announced a merger with patent monetization firm, Lexington Technology Group. LTG (which BBA advises) is headed by IP veterans Jeff Ronaldi , who has run successful technology and monetization businesses, and Peter Hardigan, formerly director of investment management at IP Navigation Group and a Principal heading IP transactions at Charles River Associates. Warren Hurwitz, co-founder with Rob Kramer of Allied Security Trust, a successful IP private equity fund which has sold a $46 million portfolio to RPX, recently joined LTG as a director. The merger is set to close late 1Q.

Defensive-minded patent-rich companies, like Microsoft, IBM and Samsung, arguably are also PIPCOs, although their lofty market cap and abundant revenue streams make their shares less dependent on the outcome of IP disputes. The lack of broad ownership of smaller PIPCOs means that they are frequently misunderstood and their shares are sensitive to news, good and bad.

For stoic investors looking to take advantage of still inefficient market for generating a return on infringed patents, PIPCOs may be an option whose time has come.

Illustration source: csmonitor.com; Brody Berman Associates

Market data as of 2/1/13.


%d bloggers like this: