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CafePress announced a favorable settlement with Tiki Shark Art Inc.

The positive development has strengthened my bullish conviction in CafePress.

Although I did not specifically discuss the case in my previous article, the settlement makes it more likely that my prediction of a buyout comes to fruition.

This morning, CafePress (NASDAQ:PRSS) announced that it entered into an agreement to settle all claims brought against it by artist Brad Parker, which were filed through his company, Tiki Shark Art Inc. The suit was originally filed on October 31, 2013 in The United States District Court for the District of Hawaii. The settlement was exceptionally positive for CafePress, as it will not be required to make financial or other payments to Tiki Shark Art.

Further, the settlement states that Tiki Shark Art will be prohibited from suing CafePress in any future claims against infringement unless it proves that user-uploaded content infringes upon its intellectual property rights and CafePress did not remove the images after a written request. General Counsel for CafePress was upbeat about the announcement:

"We are satisfied with today's settlement, which highlights CafePress' insulation from liability for copyright infringement by safe harbor defenses under the Digital Millennium Copyright Act."

Source: Press Release

In my previous article, "CafePress: A Revitalized Strategy Can Easily Return It To The Black," I pegged PRSS as being a possible takeover candidate, as it has substantial assets, limited liabilities, and over 20 million unique monthly users. This settlement mitigates litigation risk and further cements the possibility of PRSS being taken over. Even if a buyout does not materialize, PRSS's new strategy of shifting to licensing through partnerships could easily return it to profitability. At the current trading level, PRSS presents an asymmetric risk/reward opportunity.

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