A lot of people I know have been minting coing long VHC. I used to own the stock at around $14, but sold it because I am a fucking moron. Nevertheless, there is a very interesting story to be told in the name. Long term contributor and friend of mine, Chuck Bennett, alongside the ever elusive “Devil”, have been heavy buyers of the stock and options for months. This is what I can tell you, relating to the story and why they feel it is going to $70.
VirnetX is a patent troll company, armed with some of the best attorneys money can buy. They are claiming ownership of the Secure Domain Names/Registry, in other words: every time you make a purchase via iTunes, VHC expects to get a cut. Their patents were recently validated by a Federal Judge, who ruled against Microsoft, awarding VHC $200 million. They have open lawsuits with a number of companies, including AAPL, pursuing the framework of royalty whoring established by QCOM many years ago.
One of their open cases against CSCO, AAPL, NEC and Aastra pertain to the core products of each company (think iTunes) and amount to $160 billion in sales, ANNUALLY. In layman’s terms, every time someone accesses iTunes via their iPhone or iPad, it violates VHC’s patents. Pretty sick, huh?
Regarding valuation: The company has $60 mill in cash, no debt, with a small burn. Bulls who know the story say the settlements to come may amount to over $8 billion. The bears who are being flamed in the stock point to other patent trolls, like CEVA and TSRA, who shot higher early, only to come crashing down later. Whether this is the next QCOM is anyone’s guess. It’s too hard to predict how a judge might rule. Nevertheless, the stock has been working and is clearly being recognized by investors as a story to watch.
Related: Inventors declaration.
vhc
Pardon the brevity of this post. There are people who know the story much better than I do and are welcomed to leave bullet points in the comments section.
Also Related: fuck, fuck, fuck! (note left by yours truly in The PPT many moons ago. There are 26 pages of notes in there.)
They already signed an agreement with Aastra. Just looks like a matter of time the others will be forced to do so: http://finance.yahoo.com/news/virnetx-aastra-sign-patent-license-154900127.html
Thanks Fly, but sounds as another cancer-wonder-drug-biotech sort of play. One needs to know the law or befriend the judge.
Per one of the yahoo MB guys who knows his shit;
**VirnetX Technology: VHC’s technology will be used in two different ways going forward. First, it is already being used in products and applications, as was demonstrated in the MSFT suit, and is being highlighted again in the current suits with products such as Avaya Flare, Cisco AnyConnect VPN, and Apple’s FaceTime. Second, VHC’s patents will be needed for compliance with R10 specifications. These two uses for the IP are completely separate, which should tell us why the portfolio has such a significant upside value, and how complex licensing discussions might be.
**Essential Patent Declarations: The essential IPR declarations that were made by VHC were finalized in April 2011. This closed a 14-month window that started with an initial declaration in December 2009 to ATIS / ETSI wherein VHC disclosed they may hold essential IPR to the standard. As we all know, the R10 standards were frozen in March 2011, and VirnetX agreed to ETSI’s FRAND request, and this ensured that their patents would be listed on ETSI’s IPR database. It is well-known that ETSI has a disclaimer that says they do not validate essential IPR, and they will not get involved in licensing discussions. I have no doubt that VirnetX made significant efforts to ensure their IPR was truly essential before finalizing their IPR declarations. In other words, it was necessary to do a thorough analysis (i.e. patent claim mapping to the standard). If VirnetX just submitted their IPR without any work on this, as a NPE, non-ETSI / 3GPP member, they would be exposed. I believe VirnetX has positioned itself well to make sure member companies understand it holds essential IPR and will need to secure licenses to comply with R10.
**4G LTE-Advanced: Postyle and flyers are on top of when the backhaul and products are happening for true 4G LTE-Advanced. But R10 is not like a light switch that you just flip on and all of a sudden each section of the standard is implemented at once. As stated above, R10 is already frozen functionally, and companies can already start implementing them. For the sections related to VHC, much of it depends on when the networks are in place. At some point in time, there will be devices that will need technology to work on both 3G and 4G LTE-A networks. The key to understand why VHC will be needed is understanding how the networks change. At some point, all-IP networks will be here, which means the game changes on how information / data is sent. This is especially true with IMS (IP Multimedia System), which will allow for voice, video, and other forms of data to be moved across the network that will transform communication significantly.
**IMS Security Issues: VHC claims their patents underlie HOW the signalling protocols are secured as outlined in the 3GPP specifications. On one hand, it will truly amazing to have networks that allow for voice, video, and other data to be handled efficiently, but on the flip side, this all-IP, open network that makes this data flow possible means there are security issues that will be problematic unless certain features of the standard are implemented. Here’s a good article I have linked before that may be worth reading to help others understand why security becomes an issue for IMS: http://www.gtisc.gatech.edu/pdf/imswp.pdf
**Lawsuits and Reexams: While I believe the current lawsuits are important, they are not the end game. If VirnetX was merely a patent troll, they would hire 2 more firms like McKool Smith and go after 20 more companies. But they have not. Instead, they have focused on 7 companies, many who are big players in the industry. Current litigation is just a stepping stone for VirnetX to be able to license their IP porftolio going forward. As I mentioned, companies will need to license if they want to use it in their products for applications such as FaceTime, but also, when the all-IP network is in place, they will need VirnetX technology to build devices that comply with the standard. VirnetX must win on all fronts: Litigation and reexams. Obviously the legal war is messy. But in the end, I do think the defendants are facing a real challenge here and IMHO, VirnetX has a great shot at coming out on top. I am not going to try and connect all the dots from the legal docs coming out. VirnetX has a solid legal team (IP litigation, patent reexams, corporate counsel) and I will trust them do their jobs. In the end, what matters to me are the big milestones – Markman, Trial, ITC ruling, etc..
And one more valuable post:
VirnetX Holding Corporation is an Internet security software and technology company with patented technology for 4G LTE security. The Company’s software and technology solutions, including its secure domain name registry and GABRIEL Connection Technology™, are designed to facilitate secure communications and to create a secure environment for real-time communication applications such as instant messaging, VoIP, smart phones, eReaders and video conferencing.
VirnetX’s patent portfolio includes a broad spectrum of methods for implementing secure communications. The reason VirnetX finds themselves in litigation is many companies have already adopted their patented methods as a ‘best practice’ for IP security within their own products/services. In fact, the standards bodies for 3GPP have incorporated VirnetX patented methods into their security specification. You can learn about 3GPP here –
http://www.3gpp.org/About-3GPP
Last year, VirnetX declared their patents essential to the 3GPP Release 10 (or prior) technical series 33 specifications –
http://phx.corporate-ir.net/preview/phoenix.zhtml?c=67430&p=irol-newsArticle&ID=1539317&highlight=
VirnetX is a licensing company who will either license their patents or license their branded out-of-the-box solution called GABRIEL, mentioned earlier. VirnetX also owns patents that cover Secure Domain Registrar services. This initiative is still being formalized but the license description and approach can be found here –
http://virnetx.com/?page_id=42
After you read and digest that, I recommend you go to their grass roots White Paper on their technology –
http://virnetx.com/?page_id=37
Once you have completed all of that, you will have done more homework than 90% of the folks who own the stock.
Excellent read, cheers.
This is ironic.
I just watched a short video from the owner of a website called FARK.com
It is a small news/gatherer site, with a twist, and a loyal subscriber base.
The thing is, he was sued by the patent trolls recently. In that suit, was also named most of the big boys, (Google, Yahoo, MSN, etc)
Since he was the small fish of the group, he figured he would get the help of those other plaintiff’s legal departments.
NOT!
They ALL settled with cash payments immediatley.
He stuck it out, spent a ton of dough, and actually won.
The key with patent trolls is, it is up to the entity being sued, to prove that it isn’t infringing on their patent(s)
This is big busine$$.
Patent Troll Companies! More of those big patent portfolio/law firms should go public!
Very interesting and illuminating report. Can’t help but wonder how all these intrigues fit into the grand vision held by Comrade President Obama for business in this country.
Funny how everyone screams about the need for “tort reform” when it comes to medical malpractice. But patent troll litigation is A-OK if you can make a fast buck off it.
So inventors shouldn’t be allowed to go after companies who steal their ideas?
Absolutley, inventors should be able to sue companies that steal their ideas. But patent trolls aren’t inventors. They don’t represent the inventor. They buy patents on the cheap and then set out to fleece as many corporations as they can simply to enrich themselves — not to defend the rights of inventors.
http://www.theatlanticwire.com/technology/2012/03/how-chicago-not-silicon-valley-controlling-patent-debate/50316/
VHC is different; the original inventors whose names are on the patents are suing for infringement. I don’t consider them trolls. Companies who buy a portfolio of patents for the sole purpose of suing over infringement are definitely trolls.
Thanks for the clarification. I’ll give VHC another look.
the French are douche baguettes. monday we gap lower! I ride a white stallion, clad in a burlap poncho, buying puts while volatility is low….
Playing the lawyer/patent game is one dangerous bitch via stocks of companies that have sure fire patents. I still have deep cuts in my ass from playing that game via IDCC.
A dangerous game, indeed. However, VHC keeps winning its litigation. IDCC on the other hand…. Well, we’re still waiting to hear from the itc? The company says they are just as clueless as the rest of us as to why there is a historic delay regarding their case. They also said they have no idea when it will end.
What is the historic delay at the ITC? I’ve been following this stock for over a year and this is the first I’ve heard of a delay. It hasn’t been mentioned on Yahoo or Investor Village to my knowledge.
Apparently nobody here does any real DD, including the original Blogger. IDCC is not VHC. IDCC is not waiting on the ITC, but rather a CAFC decision that is in regards to an appealed ITC decision from the past. Orals on that case were heard in January 2011.
Furthermore, IDCC has a newer, separate ITC complaint being investigated right now involving Nokia, LG, Huawei, and ZTE. This investigation is not related to VHC’s complaint against Apple also being heard by the ITC. And that complaint is separate from VHC’s suit in Eastern Texas district court against Apple, Cisco, and Aastra… although Aastra just settled. I’m sure you people can google or search on Wiki for these things, can’t you?
It’s shameful how little research the average idiot does.
Is that hey moron directed at me or at mad_scientist? Obviously I’m having trouble figuring out what people are trying to say tonite. I missed that scientist was talking about IDCC, my DD is quite fine thank you.
You don’t do DD. And neither does stevensbaker. You both just fetch and talk about public documents that everyone has access to and neither of you have a clue how to analyze them or make logical conclusions based on them. Flyers and Floyd do all the DD and you posers just regurgitate most of what they say, but you do it in a manner where it is obvious you don’t understand the source material.
If you don’t understand the tech then you shouldn’t talk about it.
“If you don’t understand the tech then you shouldn’t talk about it.”
Well you can just kiss my hairy ass, with that self-righteous attitude. Should we wait for you to pass down your edicts from the mountain tops carved in stone? Who are you hiding behind the hey_moron name? I’ve been told I’m too brutal on the Y board (which you obviously read, and I’ll assume post on) bashers, but at least when I venture out I’m not afraid to still let people know who I am, so to speak.
I’ve read hours and hours of patents, ETSI standards, and legal filings so to claim I do no DD is just assinine. I was at the Markman on Jan. 5th, rode there with flyers and sat next to floyd. Did I miss you? I’ll be the first to say I’m no computer engineer (I never looked good in the propeller beanie, so they wouldn’t let me in the club), but to tell me I shouldn’t even talk about what this company does? GFY
I could read hours and hours on cardiology but that wouldn’t qualify me to do heart surgery or to discuss it for that matter.
As for the marksman, I was there with flyers. We drank iced tea together.
No it wouldn’t qualify you to do heart surgery and you are free to discuss whatever you would like in this country. I’m not trying to create cell phone technology or sell my cell phone inventions, but I can discuss anything I damn well wish without giving a rat’s ass about what you think or say. And strangely enough I will continue to do so to my hearts content.
And as for the MarKMan (no S, I think you shouldn’t discuss anything legal) did you have that iced tea at dinner that night or lunch the next day because I was there for both? Or was that iced tea served in the courthouse? Or did you just show your hand as GUTBoy?
Yes, oral arguments were made in January 2011. And here we are over a year later with no feedback. They said on the conference call, they don’t know why there is a delay and have no idea when it will end. They literally said something to the effect of “all we can do is call them up every day and ask them if there’s an update” – iow the company has no better idea than anyone.
Listening to conference calls is part of my dd.
Who is stevensbaker?
In addition, my point was to stress that the situations of these two companies are different. So the meaning of your lecture is lost on me.
He is calling me out not you. Glad I’m not the only one that can’t even understand what he is trying to say as he tells me I shouldn’t talk about the tech, looks like he shouldn’t be talking period.
Why are you fuckers getting pissy with one another? It’s absurd to criticize people regarding this stock. You really need a lot of time to figure all of this shit out. It’s not exactly an easy story to understand.
I got called a moron and told I shouldn’t discuss the stock by some jackass liar SOB, so I defended myself. My apologies for littering your blog’s comment section with my defense.
Our attacker seems to have a very low opinion of your cognitive abilities as well as mine, but I doubt he is man enough to apologize to you. He might know what he is talking about tech-wise but he is too busy attacking people to show whether that is true or not.
He seems to think that blogs and their comment sections should only be filled with people that are as smart as him and he doesn’t figure on talking to many people, if you ask me.
He can go fuck himself.
Well it sounds like you destroyed him. He thought he was Mr. important until he found out with whom you had lunch and dinner.
I’m certainly no expert on this technology.
Fuck off. Don’t get all high and mighty because you are emotionally attached to this stock.
Stocks come and go.
No go fuck yourself.
Futes getting pummeled. Europe sits on the brink once again.
how repetitive
Dirk Digler is right on.
This is not a troll. These guys actually invented this and are looking to get their “fair share”. I cant believe 30% of the stock is short. Look out, hedge funds who are short could be going tits up because of this one.
regards,
chuck
The other interesting thing, is how simple the patents can be.
“Put item “A” into item “B”
You got it! Patent #US893725-109875-092735-10
How is this even possible?
Oh, that’s right, it is a government bureaucracy.
Oil is going down faster then $10 Crack Whore!
Fuck that Oil! $ERY …..9.33
The metaphors on tonight’s blog are fucking tedious.
As tedious as a three legged spider trying to knit a cable pattern crash helmet cozy?
Almost but, not quite as much as an empty mind which I lost and miss greatly.
I’d be willing to bet that the last 5 years has had that effect on most of us.
These fucks are clever with their legalise. I know the founders of a web based company who screwed up and filed for their business license before they registered a domain name. Some fucking asshole lawyer who monitors such proceedings grabbed all the pertinent domains and shook them down for big money.
I heard a new one, even being from the deep south. I’m hanging out with a bunch of hunters and one of them says he killed a transvestite deer. I shot beer out of my nose and nearly collapsed in laughter. You figure it out.
Hats off to you Sir Fly! Thank you for answering my question regarding VHC in the previous post. You are a true gentleman and a scholar.
Looking at analyst ratings and projected earnings estimates of 2013 (assuming we are still around) really raised my eyebrows. 400%+ and now I know why. Why is almost always fun.
I’m thinking the only caveat would be if there is some competing or alternative technology waiting in the wings that would blow them out of the water.
Release 10 (LTE-Advanced) of ETSI’s standards (basically the first REAL 4G) has been frozen and no new standards can be added. So security is mandated by Release 10 and VHC’s patents are declared by the company as essential for security. Release 10 is the big shift to all IP, secure communication. I believe Release 11 will be tweaks to that system, not an overhaul like 10. I’m not an engineer, but to allow Release 10 versions of phones, etc. to communicate with later versions there has to be some utilization of the older technology (you can’t teach old phones new tricks), therefore VHC’s IP will have to stay integrated.
On another note, Monday could be interesting with the Greeks electing Nazis and the French throwing out Sarcozy cup for 0bama’s twin politically speaking.
Long live Fascism and Socialism!!
Also, from what I have been reading about the ESB, that entity pretty much has Europe in a full nelson from which countries have little avenue of escape.
Good food for conspiracy theories here………
The EU is planning a new treaty called the European Stability Mechanism, or ESM: a treaty of debt. . . . The authorized capital stock shall be 700 billion euros. Question: why 700 billion? [Probable answer: it simply mimicked the $700 billion the U.S. Congress bought into in 2008.] . . . .
[Article 9]: “. . . ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them . . . within seven days of receipt of such demand.” . . . If the ESM needs money, we have seven days to pay. . . . But what does “irrevocably and unconditionally” mean? What if we have a new parliament, one that does not want to transfer money to the ESM? . . . .
[Article 10]: “The Board of Governors may decide to change the authorized capital and amend Article 8 . . . accordingly.” Question: . . . 700 billion is just the beginning? The ESM can stock up the fund as much as it wants to, any time it wants to? And we would then be required under Article 9 to irrevocably and unconditionally pay up?
[Article 27, lines 2-3]: “The ESM, its property, funding, and assets . . . shall enjoy immunity from every form of judicial process . . . .” Question: So the ESM program can sue us, but we can’t challenge it in court?
[Article 27, line 4]: “The property, funding and assets of the ESM shall . . . be immune from search, requisition, confiscation, expropriation, or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.” Question: . . . [T]his means that neither our governments, nor our legislatures, nor any of our democratic laws have any effect on the ESM organization? That’s a pretty powerful treaty!
[Article 30]: “Governors, alternate Governors, Directors, alternate Directors, the Managing Director and staff members shall be immune from legal process with respect to acts performed by them . . . and shall enjoy inviolability in respect of their official papers and documents.” Question: So anyone involved in the ESM is off the hook? They can’t be held accountable for anything? . . . The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity. There are no independent reviewers and no existing laws apply? Governments cannot take action against it? Europe’s national budgets in the hands of one single unelected intergovernmental organization? Is that the future of Europe? Is that the new EU – a Europe devoid of sovereign democracies?
VRNG ???
For the disrespect showed by some of you VHC longs, I will never help get out the word on VHC again.