VirnetX In The Crosshairs: Troll Gets (Potentially) Trolled With New Tactic

Note:  Edits at the end, based on new info.

This article over at Seeking Alpha (which sometimes requires a log in and other times not, which tells me they need to make up their mind already) was sent to me by a hipster tipster.  It contains a whole lot of information about stocks and prices and the market and shorting stock and honestly?  I don’t comprehend a whole lot of it.  I was 10 when I read The Westing Game and, being the overachiever that I was, checked out a stack of books from the library (<— ha ha, remember those?) about the stock market but completely failed to finish any of them because math.  I can’t wrap my brain around it any more than I can wrap it around the fact that George Lucas sold out off to Disney.


Definitely hipster, not my tipster.

But thankfully you don’t have to understand the ins and outs of Wall Street to know that New Bay is using IPR and the USPTO to go after VirnetX.


Here’s how it’s working:

VirnetX sued Apple for infringement (that’s one of many links about the suit, Google is your friend for history on that).  New Bay Capital is a brand new baby company born of another brand new baby company named Eastern Shore Capital, neither of whom has an expressed interest in the patents in suit between Apple and VirnetX.  According to the rules of IPR, it would appear that they don’t have to have an interest (quote from the USPTO site):

A person who is not the patent owner and has not previously filed a civil action challenging the validity of a claim of the patent may petition for an inter partes review of the patent.

An inter partes review must raise a substantial new question regarding the patentability of the patents in questions relating to obviousness or prior art references.  In this case, there is no certainty that the review will be granted much less actually result in any real change to the scope of the patents.  But it doesn’t matter and here’s why:  from the chart in the Seeking Alpha article, just the filing of the IPR (both by Apple and by New Bay) have brought VirnetX’s stock price down by 20%.  I don’t even understand this stuff, and serious thanks to Tom Shaughnessy for doing the actual math, but that’s not an insignificant amount.

While New Bay filed the IPR, they also went and played golf with the head honchos at VirnetX because I have it on good authority that trolls like to play golf, and told them they’d drop the whole thing in exchange for 10% of winnings from the Apple suit.


Just to recap:

  • New Bay files IPR.
  • Runs VirnetX’s stock price down, and probably buys a lot of it knowing they’re going to hit it rich in the Apple suit and the stock will thereby rise again.  This would allow them to sell at a higher price than they bought which, if I’m given to understand anything at all about this world, that is the way you want things to go if you play the stock market.
  • Just to ensure that they get something if the IPR fails and/or the stock price doesn’t go up because evidently stock prices are super fickle, they agreed to back off altogether in exchange for 10% of the final judgment in the Apple case.

All we need now is someone to tie these New Bay cats with someone at Apple or Cisco or anyone else who’s been trolled by VirnetX.

If the black hats can play the shell  game, why can’t the white hats?

UPDATE:  From Tom at Seeking Alpha, we have this update which tells us that New Bay did indeed request to pull their IPR.  From his analysis, it sounds like they’re a smidge afraid of discovery in EDTX.  Such a pesky, troll-friendly venue after all these years.  I contend that the damage was done…again, I have not much clue or interest in the stock market but can we get a read on who bought VHC stock while it was down and what they’ve done with it since?  It feels like a loss in the troll-fighting scheme of things, but from a financial standpoint for New Bay folks, they might be in the market for a new car or two with their winnings, is what I’m saying.



{Kramer image found here.  Internet meme of cute little toddler at a screen door can be found virtually everywhere on the internet.}


2 thoughts on “VirnetX In The Crosshairs: Troll Gets (Potentially) Trolled With New Tactic

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