The Demise of The Market’s Most Controversial Industry Starts Now

Ethical Markets applauds this news  auguring the decline, at last , of patent trolls . Hazel Henderson , Editor

What do two tech giants and a growing number of state legislatures have in common?

Rude Awakening

May 20, 2014

The Demise of
The Market’s Most Controversial Industry Starts Now

  • Clear out the trolls!
  • A beat “business model”
  • Plus: My contrarian gold signal

Greg Guenthner coming to you from Baltimore, MD…

Greg Guenthner

Greg Guenthner

What do two tech giants and a growing number of state legislatures have in common?

Well, not much… other than a collective hatred for patent trolls.

You’ve probably heard of patent trolls before. They’re the companies that sit on important intellectual property. They have no intention of actually producing anything. Instead, they wait until another company starts using similar ideas. Then, they sue.

But this “business model” is about to go down in flames.

“Famous foes Google and Apple are now letting legal bygones be bygones and joining forces,” explains Rude researcher Noah Sugarman. “They’ve dropped patent lawsuits against each other, and are now going after their shared enemy. In a joint filing submitted to federal court in D.C. just last Friday, the two companies have agreed to drop all lawsuits against each other as part of a united front for patent reform.”

When you look at the numbers, this new alliance makes sense. Apple was absolutely hammered with patent infringement lawsuits last year. Google was also heavily targeted.


It shouldn’t be hard to figure out who filed these cases. The top 10 filers of new patent lawsuits are infamous “patent monetization entities”. These are the trolls, of course…

These companies don’t derive their revenues from a product or service, but rather, from vulnerabilities in the patent system. And it’s not just the cash-rich corporations that have been taking a hit.

“Patent trolls also demand licensing fees from small businesses for everyday actions like accessing Wi-Fi or using a scanner. No less than 6092 patent lawsuits were filed in 2013. And that’s a number that’s growing rapidly every year,” Noah explains. “It was easier to put up with these trolls when they were known for sticking it to cash-rich corporations. But when you go after the little guy, you tend to lose friends.”

Now a growing number of state legislatures have begun passing anti-patent troll laws in response. So far, 10 states have adopted bills banning “bad faith patent assertions” as a violation of consumer-protection laws. This is where you can find opportunity…

27 states have considered such bills, many of whom are already in the legislative process to pass them. But the real firepower lies in the federal government – and that’s where this battle is set to culminate.

Patent trolls may have bitten off more than they could chew. It doesn’t matter how profitable the industry might seem on the surface. Once legislative red tape begins unrolling, cash flows can dry up real quick.

Now, will these companies come to a screeching halt tomorrow?

“Not necessarily.” Noah says. “After all this is a large-scale war that’s only beginning to take shape. Apple and Google partnered just last week. But we’re going to be keeping a close eye on developments in this arena. A lot of other-wise intelligent investors could stand to lose a fortune if the IP litigation industry gets hit.”

In the meantime, we’re taking a look at one company in particular that you’ll want to bet against. Click here for the details…

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Rude Numbers

Targets, Predictions and Wild Guesses


6.9%

year-to-date gains for utility stocks over the S&P are getting smaller by the day. On May 20th, utilities were beating the market by 12.92%.

3.5 cents

dropped from the national price of gas over the past couple of weeks. The overabundant-supple driven fall was the first price drop in over 3 months.

$1,290

is where you’ll find gold futures this morning. The yellow metal failed to hold its Friday gains. It’s trading lower by about $3 today. Meanwhile…

$3.15

is the price of copper today. Copper has powered off its March lows and hasn’t looked back. A break above $3.20 would be huge for this base metal…

1,883

is where you’ll find S&P futures just before the bell. Stocks are looking to open slightly in the green to start today’s session…

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Rude Trends

When to Buy… When to Sell


Recently, I told you I didn’t see an edge just yet when it comes to the gold trade.

Of course, some folks took that idea and ran with it…

“Well Greg, your giving up sounds like a contrarian buy signal to me,” quips a reader. “I’ll let you know how it works out. I’ve done well betting against your advice before.”

Hey, go for it. Everyone needs a system. To help keep you on track, I’ll let you know if I start to feel bullish again (I assume you’re also open to using my opinions as part of your exit strategy).

OK. One more:

“Your analysis is funny. Some schmuck got a rope around the horse and won’t let it run and you blame the horse…”

Wait… I thought I was the schmuck.

[Ed. Note: Send your feedback here: [email protected] – and follow me on Twitter: @GregGuenthner]

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Ignore At Your Own Peril

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