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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 (NASDAQ:GOOG), Apple (NASDAQ:AAPL), Nokia (NYSE:NOK), BlackBerry (NASDAQ: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:

"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."

Given that Nokia has continually lost market share to both Apple and Google in the mobile space, the company clearly believes that litigation is an important part of their overall strategy to monetize their telecommunications portfolio, and have in fact, teamed up with Vringo (NASDAQ:VRNG) to do just that. Astute observers will realize that the patent purchase agreement was signed approximately one month prior to their presentation at the telecommunications roundtable. In effect, Nokia used the roundtable to fire warning shots against the market leaders, i.e., "sign a licensing agreement or we'll see you in court." So I believe it is fair to say that the patent wars have only just begun.

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. (NYSEMKT: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 (NASDAQ:MSFT). Moreover, shares of MGT Capital Investments (NYSEMKT: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.

In a piece that was originally submitted to Seeking Alpha, but was unable to be published due to the company's tiny market cap at the time, I brought investors' attention to the World's Inc. (OTCQB:WDDD) patent lawsuit against Activision Blizzard (NASDAQ:ATVI). Since the piece appeared on our blog, the PPS of WDDD has followed its peers and shot up a whopping 109% in only 3 months. Moreover, the stock is now being covered by a number of other authors, who have come up with astronomical value propositions for the stock. Given that the World's piece is one of our highest viewed blog articles to date (12k + page views), I believe this further demonstrates the marked interest investors have in discovering unknown value propositions in the patent infringement space. With this in mind, I give an overview of two relatively unknown companies operating in the patent enforcement space in this article, and discuss their respective potentials to keep up the trend of doubling or even tripling in PPS based on their enforcement activities.

Internet Patents Corporation (NASDAQ:PTNT) is a California-based company focusing on either licensing or enforcing its portfolio of e-commerce and online insurance distribution patents. IPC was formerly known as InsWeb Corporation, but changed its name to Internet Patents Corporation after selling its insurance lead generation assets and marketing business to Bankrate, Inc. in December 2011 for $65M. As pointed out by Vince Martin in his excellent coverage of PTNT, IPS paid a $5 per share special dividend in March 2012, and then started down the road of becoming a patent licensing company.

PTNT's patent portfolio may not be as impressive as some of its peers, but it does hold six patents that are key within the fields of e-commerce applications and online insurance activities. To date, PTNT has filed a total of five lawsuits in the California Northern District Court against eBags, Inc,/TellApart, Inc., General Automobile Insurance Services, Inc., Active Network, Inc.(ACTV), Tree.com, and Quinstreet, Inc. The company's senior legal counsel is L. Eric Loewe, who joined PTNT in 1998, and has served in a number of capacities within the company.

What I like about Internet Patents Corporation is that company has approximately $32M in cash and cash equivalents and it is burning less than $500k per quarter. So company cash reserves should be adequate to see these lengthy suits through to their ultimate conclusion. As of right now, PTNT has at least $4M in cash above its current market cap of $28M, and is trading close to 17% below book value ($4.27 per share). Given that the company has no revenues to speak of and litigation costs to cover, this gap between book value and PPS is likely to close over the course of these cases. With that said, I would really become intrigued by this stock if it pulls back into the $3.20-3.30 range, which would give investors a considerable margin of safety against total catastrophe on the legal front (i.e., losing all or most of the cases).

What I don't like about PTNT, however, is the lack of a high profile legal team with multimillion dollar patent infringement verdicts under its belt. The legal teams of most NPEs are composed of some of the best in the business so to speak, giving me confidence that they can handle the meandering nature of a patent infringement case. I am also unimpressed by the "client" list that the company has chosen to file suit against thus far. The list lacks even a single billion-dollar market cap company, making it hard to imagine that a positive verdict will be much higher than a few million. Moreover, I haven't read over all of the initial complaints (in part because PTNT has failed to post them online for easy access), but so far there doesn't appear to be a complaint that strikes at the heart of any of these businesses. The complaints filed by NPEs such as VRNG and World's Inc., by contrast, center on the most profitable aspects of their infringers. Overall, PTNT does provide investors a nice margin of safety given their PPS relative to book value, but the lawsuits filed thus far are far from exciting in terms of creating value for shareholders. Nonetheless, that could all change if the company found a bigger fish to fry, and decided to retain a major law firm in their patent enforcement activities. My view on PTNT is that it's worth keeping on the radar, but there are better NPEs to invest in right now, especially for investors with a high tolerance for risk.

Marathon Patent Group (NASDAQ:MARA) is an intellectual property and monetization company that was formed out of the ashes of American Strategic Minerals in November 2012. MARA has changed its business model to focus on the acquisition and enforcement of intellectual property, and is currently unwinding its remaining real estate and mineral assets, according to a recent PR from the company. Since changing focus, MARA has jumped in with both feet into the patent licensing and enforcement space. Namely, the company has made a number of significant strategic moves, including the acquisition of CyberFone Systems and its patent portfolio, acquiring a key Multi-Casting patent from MOSAID Technologies, entering into a partnership with IP Navigation Group in order to license out or enforce its patent portfolio, and most impressively to date, acquiring Sampo IP, LLC and its patent portfolio that led to the filing of a major lawsuit against Sony Entertainment America et al. in the Eastern District of Texas. The company also hired a number of new Executives with decades of experience in the IP sector, which should aid MARA in executing its new business plan.

While there are a number of reasons to be excited about this tiny microcap IP company (market cap = $16M), the lawsuit against Sony et al. is likely going to be the major catalyst for this stock in the near future. As such, I will provide a brief overview of the suit and its potential value to shareholders.

Sampo IP vs. Sony et al.

On March 20th, Marathon's subsidiary Sampo IP, LLC filed suit in the United States District Court for the Eastern District of Texas against Sony Computer Entertainment America LLC, Siemens Energy, Inc., CB Apex Realtors, d/b/a Coldwell Banker Apex Realtors, Blue Cross and Blue Shield Association, Juniper Networks, Inc., Winn Dixie Stores, Inc., and Dell, Inc. The defendants are accused of infringing on U.S. Patent No. 6,161,149, U.S. Patent No. 6,772,229 and U.S. Patent No. 8,015,495, collectively known as "Centrifugal Communication and Collaboration Method". Sampo is represented by Andrew W. Spangler of Spangler & Fussell PC in Longview; James A. Fussell III of Spangler & Fussell PC in Alexandria, Va.; and Rolf O. Stadheim, George C. Summerfield and Steven R. Pedersen of Stadheim & Grear in Chicago, Ill. A copy of the original complaint can be found here.

Simplifying this legal jargon, this lawsuit is all about "HyperOffice", a software suite designed to allow businesses to roll email, contacts, document collaboration, management tasks, amongst many others applications, into a single package. Basically, HyperOffice makes running a medium to large business easier by removing conflicts among competing applications. MARA contends that all of these companies are infringing on the asserted patents given that the patents essentially outline how to set up an integrated communications system using computers and mobile phones.

MARA is represented in this case by Texas Super Lawyer Andrew W. Spangler, who has participated in hundreds of patent infringement cases, and has successfully argued a host of Markman hearings in the past. Some of his favorable Markman rulings include: Klausner Technologies, Inc. v. Vonage Holdings Corp., et al., (remote access to Caller I.D. linked to voice mail), I2 Technologies US, Inc., et al. v. SAP AG et al. (supply chain management solutions), and T-Netix, Inc. et al., v. Global Tel-Link Corp., (call-processing and billing technology in the telecommunications industry). Simply put, MARA has put together a top flight legal team, which has prevailed time and again in the Eastern District of Texas Court on patent infringement cases.

What I like most about MARA's case is that the company included a number of high profile and large cap defendants in the suit, some of which may be willing to settle for a few million as a "nuisance" fee. While that may sound like peanuts to some investors, one must keep in mind that MARA's market cap is only $16M at the time of writing this article. As a result, a combined settlement of $20-30M should dramatically push MARA's PPS higher. With a seasoned legal team that has a stellar record in this particular district, I think a settlement is likely if the Markman hearing turns out to be favorable for MARA.

Bottom line: MARA has been rapidly developing its IP business, but is still in the early stages of this particular suit. When the Markman hearing date is announced, however, I believe MARA will quickly double in PPS in a manner similar to World's Inc.-- making MARA an intriguing speculative play for aggressive investors. Backing up this assertion, the company is undoubtedly suing for an amount that dwarfs its current market cap, and is represented by top-notch attorneys in the patent infringement field. I will be watching this suit closely in the hopes that further details become available soon.

On the risk side of MARA, the suit could of course be dismissed, leaving the company with a legal bill for its troubles. Even so, I find that outcome to be unlikely given that Mr. Spangler probably wouldn't have taken the case in the first place if he felt the suit lacked merit. Finally, MARA is not a one-trick pony. The suit against Sony et al. is a potential blockbuster catalyst to be sure, but MARA will no doubt file other similar lawsuits in the coming months. MARA is therefore a stock to be watched closely by investors interested in the patent infringement space, especially given its strong potential to follow in the footsteps of other patent holding companies like VRNG, VHC, and WDDD.OB.

Source: 2 Undiscovered Patent Plays: Will History Repeat Itself In The Patent Infringement Space?