To anybody who happened to have a position in Vringo, Inc. (NASDAQ:VRNG) prior to Wednesday of last week, congratulations - your trade is now up somewhere around 25%, as VRNG essentially won the second part of its big-Kahuna court case it had been fighting. Score one for the art of defending a patent. Well, if you liked the outcome of the Vringo trial - and if you have a newfound appreciation for the intellectual property business model - then you're going to love a smaller but perhaps more potent company called Endeavor IP Inc. (OTCBB:ENIP).
The contrasts between ENIP and VRNG are plentiful. Endeavor IP is a $20 million organization, whereas Vringo sports a market cap of $330 million. VRNG owns hundreds of technology patents, while ENIP only owns three. Vringo owns patents that are geared around consumer technologies, while Endeavor IP Inc. owns patents that are more utilitarian in nature. Yet, there's one key similarity that makes Endeavor IP Inc. just as compelling as Vringo, Inc.... Endeavor has at least one patent (though probably at least one more) that's been proven to hold water. And for any intellectual property name, one patent is plenty to get the ball rolling. [For perspective, though Vringo has successfully spurred injunctions against a cell phone manufacturer for patent infringement, the meat of its value and buzz in its David-and-Goliath case against a handful of the web's titans was successfully fought on the grounds of just one search patent.]
So what, exactly, does Endeavor IP "do" that makes it money? Ever heard of smartmeters? Simply put, a smartmeter is how your utility company reads your meter remotely, rather than sending a guy out to your house to put eyes on your meter's dials. Usually it's done with cell phone technology. It's still not as common as physically reading a meter, but it's an idea that's quickly gaining ground, in that it saves time and money. Well, a couple of Endeavor's patents give it rights to royalty payments from utility companies using smartmeters.
And just for the record, this isn't a theoretical right. While ENIP is currently litigating or planning litigation against five different companies for patent infringement, four other companies have agreed to a royalty payment without even bothering to go through a trial. Given such a strong anti-IP pushback we've seen from infringers of late, the fact that several would-be defendants didn't even bother to make their case in a courtroom speaks highly of the patent in question, and bodes well for Endeavor IP Inc. with its other five pending cases (cases which could still be settled before trials begin).
No, ENIP isn't going to be the next VRNG, if for no other reason than its size. Then again, Endeavor IP doesn't have to be the next Vringo. It's less than a tenth the size of the bigger IP company, so victory in the courtroom - or before a court case becomes necessary - is shares among a much smaller user base. Moreover, with Endeavor's preference for buying quality patents rather than a large quantity of patents, that cost-effective focus should allow the company to grow its enforceable patent portfolio into something quote powerful.
Bottom line? With little left but a royalty calculation and what's probably going to be a failed appeal from the defendants, it's time for VRNG fans to start thinking about their next patent portfolio play. ENIP is definitely worth a look.
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