When traders think of an IP (intellectual property) company, they tend to conjure up names like InterDigital, Inc. (NASDAQ:IDCC), VirnetX Holding Corporation (NYSEMKT:VHC), or of course, the well-known Vringo, Inc. (NASDAQ:VRNG). And, investors see these patent-enforcement names as such for good reason.... between VRNG, IDCC, and VHC, the three organizations own well over 20,000 technology patents, and their efforts to enforce them have been well-documented, and well publicized. Thing is, as the patent-protection industry matures, companies like Vringo, InterDigital, or VirnetX Holding may well find that it's the quality of the patent portfolio rather than the quantity of patents that makes an IP owner a potent investment. Enter Endeavor IP Inc. (OTCBB:ENIP).
Most traders won't have heard of Endeavor IP. That may be because its market cap is a mere $30.5 million, and it hasn't actually posted any quarterly revenue yet. Oh yeah... something else about ENIP - its patent portfolio only consists of three patents, only two of which have actually been issued. The third one is only "allowed" at this point (though Endeavor IP Inc. does believe it will be issued by the USPTO in the foreseeable future).
Three patents? How in the world can ENIP expect to stand shoulder to shoulder with the likes of Vringo, InterDigital, or VirnetX Holding in the IP arena with only three patents? Answer(s): (1) Endeavor IP Inc. can and likely will add to its patent portfolio in the future, and (2) it only takes one really good and highly enforceable patent to make a small fortune in the patent protection game, and Endeavor IP Inc. has such a patent in its arsenal.
That patent is U.S. Patent No. 7,379,981 (aka the '981 patent), entitled "Wireless Communication Enabled Meter and Network." The patent covers, just as it describes, a means with which a smart meter (like a water meter or electricity consumption meter) remotely communicates with a utility company and/or that home's owner's home-management system.
For those not familiar with them, smart meters are the proverbial "next big thing." Now that mobile broadband and cellular networks are established and wireless networking is commonplace, the ability to more effectively manage the monitoring and consumption of basic services like water or power is within grasp. Your utility providers no longer need to send a meter-reader out to your house. That job can be done over the airwaves from miles away with the push of a button. That same technology can record your daily patterns of electricity usage, and adjust the availability of electricity to suit your needs, this creating the so-called "smart grid" that eliminates the creation of electricity that isn't actually needed at the time it's created. The smart meters that facilitate the idea are a multi-billion dollar opportunity few people actually see, even though many of us are using these meters right now (perhaps without even knowing it).
What's that got to do with Endeavor IP? Well, there's not a lot of ambiguity with the answer to the question. ENIP owns a patent called "Wireless Communication Enabled Meter and Network." It has a right to collect a royalty on many smart meters being made today.
The litmus test of the power of a patent, of course, isn't on paper. It's proven in the courtroom, and ideally, proven before a court case becomes necessary. This is where things get really fun for Endeavor IP Inc. shareholders.
While ENIP is preparing four patent-infringement cases at this time based on the '981 patent, know that it's already secured four royalty/licensing deals stemming from that patent, without needing to go to court. Aside from the immediate revenue those four agreements will offer, the fact that the companies using said technology didn't even argue the point bodes well for a successful outcome with the company's approaching litigation effort.
Luck? No, it's skill and tenacity. Rather than buy patents by the hundreds (if not thousands) and hope that some of them have merit in the eyes of a jury - the approach often taken by Vringo, InterDigital, or VirnetX Holding - Endeavor IP realizes it and its shareholders are better served by limiting its efforts to working with patents that are cost-effective and decidedly enforceable.
It's a young company, and relatively unknown.... and that may be the most exciting aspect of all for new investors. The metaphorical cat isn't out of the bag, so shares can be purchased at a good value before the rest of the market puts two and two together, and before the company finds and acquires any more brilliant but overlooked IP. It's likely to only be a matter of time before the patent portfolio grows, however, and given ENIP's penchant for quality over quantity, that portfolio expansion could be a real mover and shaker for the stock.
For more on the company, visit the Endeavor IP website here, or review the SmallCap Network research report here.
No comments:
Post a Comment