Add on to my latest post
I am borrowing this article posted on the VRNG forum by Mike 2005
Speaking of the WSJ article and the White House press release... here's an update from Barclays that sort of (at least IMHO) mirrors what I wrote last night about the targets of this action.
BARCLAYS: Patent Licensing Stocks Trade Lower on White House Press Release; Sell-Off Likely Overdone
Shares of patent licensing stocks are trading lower today as a result of a press release issued by the White House, which issued five executive actions and seven legislative recommendations around patent litigation (see “Fact Sheet: White House Task Force on High-Tech Patent Issues”). Overall, we believe that the White House is aiming to introduce more transparency into the patent licensing market and seeking to curb abusive practices by owners of low quality patents, which we think are positive for the industry and patent-related names under our coverage. While we continue to watch for further ramifications and/or the scope of potential legislation, we think that the recommendations/executive actions are relatively neutral to ACTG, IDCC and RPXC, and as such, view the sell-off in shares as likely overdone.
As it relates to ACTG specifically, we believe the stock is reacting to certain recommendations around transparency (requiring the ultimate parent company in control of the patent to be clear to the defendant) and the use of the ITC for patent-related litigation decisions. We point out that: 1) ACTG’s use of subsidiaries is merely to keep portfolios in separate entities (given the differences in partners/stakeholders, capitalization, accounting, etc. between entities) and Acacia always discloses that it is the parent company; 2) ACTG generally does not rely on the ITC (which the company has used only once and believes was done with a very high quality patent portfolio asserted against a foreign company); and 3) historical evidence suggests that legislation around patent reform has had minimal impact on larger, well-capitalized patent licensing companies. That said, we continue to look for greater visibility with respect to the timing and amount of ACTG’s future revenue prospects in order to point to geater upside from current levels. We maintain our Equal Weight rating.
The legislative measures that The White House is recommending include: 1) requiring patentees/applicants to disclose the “Real Party-in-Interest”; 2) permitting greater authority to district courts to award attorneys' fees as a sanction for abusive court filings; 3) expanding the USPTO’s transitional program for covered business method patents; 4) protecting “off-the-shelf” use for consumers and businesses; 5) modifying the ITC standard for obtaining an injunction (to bring in line with the decision in eBay Inc. v. MercExchange, which essentially ruled that NPEs are no longer entitled to injunctions); 6) using demand letter transparency (to make more accessible/searchable by the public); and 7) ensuring the ITC has the flexibility needed to hire qualified Administrative Law Judges.
