John H. Ford
Deep value, special situations

Internet Patents Corporation: Large Upside Potential, Limited Risk

Internet Patents Corporation (PTNT) recently announced it initiated 3 lawsuits against the following companies for patent infringement: eBags, TellApart, General Automobile Insurance Services, and Active Network (NYSE:ACTV). IPC is trading well below net cash, and presents one of the best asymmetrical trades I've seen in a long time: good upside potential, limited downside.

If IPC prevails, investors could realize a 2X to 10X return. If IPC were to lose all these lawsuits, investors who got in at the recent $3.50 level would probably come close to breaking even. After an in-depth analysis of IPC and its patent portfolio, I have quadrupled my original position.

Company background

In 1996, when the Internet was in its infancy, IPC,...

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