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In this article, I would like to touch on two tech companies worth reviewing as we evolve into more technological advancements involving wireless as well as secure Internet communications. They are Microsoft (NASDAQ:MSFT) and VirnetX (NYSEMKT:VHC).

Microsoft as an investment:

Microsoft's R&D budget reached a record high of about $10 billion per year by investing in projects like:

Skype - readying video-calling feature for its 60 million Outlook users

Kinect innovations as a gaming peripheral for Xbox 360

OmniTouch project with Carnegie-Mellon University

LightSpace - turning surface computing into spatial computing

IllumiShare with the use of existing systems like Skype

Let's just review Skype, which is gaining popularity:

Going back to 2011, you may recall that Microsoft acquired Skype, a widely used Internet communications company, for $8.5 billion in cash from the investor group led by Silver Lake. Skype has been acclaimed as being a remarkable service that is loved and used by millions of people all over the world.

Skype has claimed to have over 663 million reported registered users, of which 170 million were active, and 8.8 million Skype users were actual paying customers. Skype is available for most platforms, including Apple's Mac and iOS, Google's Android, and of course, Windows.

The acquisition will subsequently increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise customers. The combination is expected to extend Skype's world-class brand and the reach of its networked platform, while enhancing Microsoft's existing portfolio of real-time communications products and services. Integrating the Skype technology with its 60 million Outlook users should also catapult sales into the next several quarters. And, let's not forget the shift in its Messenger service. Microsoft's Live Messenger service is expected to transition its 100 million users into a Skype feature as well.

Microsoft appears to have several revenue models in place to monetize Skype's global expansion, generating significant new business and revenue opportunities.

Okay, let's step back and think about this for a minute in the big scheme of the things. Apple (NASDAQ:AAPL) has FaceTime, but what does Samsung (OTC:SSNLF) and the other Android players have as a competing product?

Maybe this is where the monumental significance of the Skype acquisition will eventually come into play. With its gaining popularity, it might make sense that Skype would increase the accessibility of real-time video and voice communications globally. This could benefit both consumers and enterprise users alike. It could generate significantly new business and revenue opportunities. So much so, that the combination could extend Skype's world-class brand and reach of its platform to synergistically enhance Microsoft's already existing portfolio of real-time communication products and services.

VirnetX as an investment:

This company is engaged in 4G LTE (Long Term Evolution) and secure Internet software. As an "essential" patent holder, VirnetX holds over 47 U.S. and international patents and over 100 pending applications. It is attempting to monetize its Internet and wireless patent portfolio. I believe VirnetX is in a very strong position to monetize its essential patents to significantly collect ongoing running royalty stream from companies like Mitel (NASDAQ:MITL), Siemens (SI), Microsoft, Apple and others.

Moving forward, I genuinely envision ongoing revenue streams to come from licensing from OEMs and global technology service providers. Also, lawsuits and/or settlements involving past and future infringement cases. It may also procure agreements for current products, and possibly advanced technological products sometime down the road. Its plan appears to include signing initial license fees, then collecting on reasonable ongoing royalty agreements as well. I think to some extent, a large part that maybe investors are missing is the 4G Long Term Evolution products. This will be a huge opportunity for longer-term investors in the next three to five years. Think about it, 4G is the fourth generation of mobile phone mobile communication technology standards. Companies will be fighting to get a front row seat at this table. Everyone in this space will want the best mandated and compliant technology. So yes, there will be more jockeying for patents amongst the large tech firms, and of course in the process, lines will get crossed as they do from time to time.

Just recently, Microsoft and VirnetX have collided once again. A new complaint references Microsoft's Skype products as infringing the VirnetX patents outside of the scope of their prior lawsuit with Microsoft. Last week in the United States District Court for the Eastern District of Texas, Tyler Division, VirnetX Holding Corporation, a leading Internet security software and technology company, announced that it has filed a complaint against Microsoft Corporation involving Lync-Skype integration.

Some Past Legal History:

This is not the first go around in court between these two admired companies. Previously, as you may recall, Microsoft lost the case for over $105mm. Soon thereafter, Microsoft was sued for additional products like Windows 7 for infringement of the same patents. Patent litigation can be time consuming and a distraction to a firm's overall business strategy, so instead of continuing to battle in court, Microsoft agreed to pay VirnetX $200mm in 2010. The USPTO had concluded in its reexaminations that the VirnetX patents were determined to be valid and enforceable.

In this particular lawsuit filed last week, VirnetX seeks both damages and injunctive relief. The filed complaint includes allegations of "willful patent infringement" regarding six patents owned by VirnetX, U.S. Patent Nos. 6,502,135, 7,188,180, 7,418,504, 7,490,151, 7,921,211, and 7,987,274. Remember now that Skype was purchased after the limited license was signed between Microsoft and VirnetX in 2010, so investors must understand that this new infringement falls outside of the scope of the prior license agreements.

Okay, so what does this mean for Microsoft and VirnetX investors?

Overall, this is pretty significant news for VirnetX shareholders where Microsoft's Skype is involved. I believe that given these new patent damages against Microsoft, as well as anticipating positive news in the Apple trial (that may come at any time), we may see VirnetX stock rebound back up around the $25 level very soon.

Kendall Larsen, VirnetX's CEO and President is quoted as saying that "Although Microsoft previously signed a patent license with VirnetX, we believe they are infringing our patents in ways that are outside the scope of the original license. We look forward to quickly resolving this matter."

Microsoft replied to the newest claims by saying; "Every successful technology company sees patent suits from time to time," a Microsoft spokesperson said in an email. "We're confident in our handling of intellectual property and look forward to addressing these claims."

Also, earlier this year, a jury in February upheld a $368 million award for VirnetX in a patent suit against Apple. Final future royalty terms have not been reached yet. It's fair to say that investors are anxiously waiting to hear from Judge Davis in April. Without a doubt, Honorable Judge Davis has his plate full in Texas. You should also know that he has been the presiding judge on all of the VirnetX patent infringement suits, including the first Microsoft case.

Investors should note that VirnetX is here to stay as a key patent holder for 4G LTE and ensuring a secure Internet. It has won all patent cases except for the recent Cisco Systems (NASDAQ:CSCO) case even after the USPTO confirmed that its claims were valid and patentable. Feeling confident, VirnetX has concluded by asking the court for another trial due to what it called allegations of Cisco's inappropriate conduct and arguments during the jury trial that concluded on March 14, 2013.

In Summary:

You may want to pay particular attention to VirnetX, because the judge's final ruling on its licensing royalty portion of the Apple case could come at almost any time. We could hear something this week. Also, as far as Microsoft goes, this new suit is just another bump in the road.

Microsoft's fundamentals appear to be improving and the stock has performed well so far this year. Microsoft as an investment may be turning a corner this year. Currently, it's up from $26.50 to about $32.90 since January 2013. Maybe in the coming weeks or months, we will see Microsoft explain in more detailed filings and news how it expects to significantly monetize its $8.5 billion Skype acquisition.

In all possibilities, which may not be too unrealistic, Microsoft could team up with the leading Android companies to battle its rival Google (NASDAQ:GOOG). One might think that this would certainly lead to meaningful licensing deals. It's not too farfetched to think that Skype could be Samsung's answer to compete with Apple's FaceTime feature. Will there be a deal like this down the road? It's certainly possible, so we will have to keep our ears to the ground as always.

As far as VirnetX is concerned, we know that it is a key contender in 4G LTE technology. VirnetX appears to be holding patents on the most valuable patent portfolios in the tech world today. Tech companies using 4G technology will have to meet compliance requirements. That's where VirnetX comes in. It is like a toll road or bridge. It owns the "key" 4G LTE licenses, securing wireless communications. Therefore, if you want to ride on its toll road (so to speak), you will have to pay the toll charge; called a licensing fee, like Siemens signed in January 2013.

Also, as far as its patent portfolio goes, VirnetX could very well win this new Microsoft case hands down. Remember, although there are no guarantees, if history continues to repeat itself, we just might see Microsoft settle out of court again with VirnetX. I suspect that Microsoft will see that it has ventured outside of its prior licensing agreements and will want to resolve the matter within the next few months.

Near term, I suspect that Microsoft has been dusted off and institutions have taken a liking to its winning Bing search engine, Skype integration plans, and other business strategies mentioned above. I also expect to see a spike in VirnetX stock too if more positive news develops short term. I suspect that we may see more licensing deals as well this year.

Please stay tuned. Expect more details to follow.

Source: Microsoft's Skype Integration And VirnetX's Technology

Additional disclosure: I may also go long MSFT within the next 72 hours.