August 18, 2011 AM. It is raining here in Norwalk, CT. The DJIA is finally heading off today’s over 500 point drop after a major sell-off overseas triggered by fragile global economic conditions and fears of a double-dip recession in the U.S. What’s a communications and IT observer to do on such a gloomy day?

The answer is to find entertainment. And the best right now is to catch up on all of the opinions that continue to flow regarding the impact of the Google (News - Alert)-Motorola deal (including a re-read of my own), and review the latest news and speculation about the continuing patent litigation and other intellectual property jousts in the tech sector. 

This is blood sport at its finest. Every day our screens provide a front row seat as heavy weights —Oracle, Google, Apple, Samsung (News - Alert), HTC, and Microsoft are a few that come to mind —duke it out in court and in various regulatory venues around the world.  Plus, we can bet on the outcome and have a legion of touts (professional amateur) at our instant calling. This is more satisfying than playing Angry Birds or online Poker. The only thing you must risk is time. Yet in return, you get constant and compelling entertainment any time you tune in to get turned on. Best of all, it is a free app you do not have to download. In fact, you do not have to bother with going to an app store.

As I observed on June 10 (and as subsequently validated with the Nortel patent sale, the Google-Motorola (News - Alert) deal, Google’s purchase of 1,000 IBM patents and the continuing rolling thunder of lawsuits and attempts to stop the sale of supposedly infringing products in countries around the world), it is a shame that litigation has replaced organic innovation as the way to gain competitive advantage in tech markets, particularly ones regarding wireless.  We are heading toward a patent law economy. Woe is us. No less than Mark Cuban (who set off a fire storm with an August 7 blog diatribe about the need for patent reform), along with a host of politicians of both parties, thinks it is time to end the insanity.

First, a caveat: I am not a financial analyst, a financial advisor, or a stock broker. My opinions are strictly my own, and are not meant to be construed in any way as financial advice. What follows is for informational purposes only. What you decide to do with that information is your business.

With that out of the way, along with buying and selling the stock of the big boys, how are gamblers actually trying to play all of this IP stuff in regards to things relating to all things wireless/mobile?  There are two ways:

1.     Stay abreast of all the speculation of who’s the next household name target that has a substantial IP portfolio that is germane the things that smartphones do. Right now, Kodak is in the cross hairs, but keep an eye on the fortunes of RIM and even Nokia (News - Alert), potentially.

2.     Watch what people call “Patent Trolls,” companies whose prime business is making money off of licensing fees and litigation on IP portfolios they are hoarding.

In the latter category is Interdigital, the Long Island-based self-described developer of fundamental wireless technologies.  The company has been at this game a long time, and its stock tanked at the announcement of the Google-Motorola deal because many thought it would be Interdigital that Google would buy once they were left at the altar on the Nortel Patents. More intriguing, and flying low under the radar because of the intense interest in Interdigital, is Scotts Valley, Calif.-based Internet security company, VirnetX.

While not a total troll, they are worth tracking. To re-iterate “why VirnetX,” this is a company that:

• Last year won a $200 million settlement from Microsoft
• Is suing Aastra USA, Inc., Aastra Technologies Ltd., Apple Inc., Cisco Systems, Inc., NEC (News - Alert) Corporation, NEC Corporation of America, Siemens Enterprise Systems, Mitel and Avaya in the United States District Court for the Eastern District of Texas, Tyler Division. The complaint, as amended includes allegations of patent infringement regarding five patents owned by VirnetX, U.S. Patent Nos. 6,502,135, 6,839,759, 7,188,180, 7,418,504, 7,490,151. In its complaint, VirnetX seeks both damages and injunctive relief.
• The company has just been granted its ninth new security patent this year.
• On June 30, 2011, they announced that, at the request of the Alliance for Telecommunications Industry Solutions (ATIS) they have agreed to update their licensing declaration to ATIS under ATIS’ Intellectual Property Rights (IPR) policy. This is in response to VirnetX’s March 14, 2011, Statement of Patent Holder, identifying a group of its patents and patent applications that VirnetX believes are or may become essential to certain developing specifications in the 3GPP LTE, SAE project.

Figuratively holding the keys to 4G security is no trivial asset. And, while it may be sexy to focus on the IP associated with smartphones, it would be unwise to overlook the fundamental technologies that are critical pieces of the networks they attach to.  

While the stocks of both Interdigital and VirnetX have gyrated widely recently, depending in no small measure on which way the broader IP wars are going, if nothing else, make them part of your Google Alerts. These birds are angry. Remember it costs you absolutely nothing to be entertained. In addition, you too can follow all of the blogs, Tweets and articles and become a pundit yourself.

See you on the Internet.