Microsoft battle
Microsoft Corporation (NASDAQ:MSFT) is, of course, one of the big boys in tech, so it’s no surprise that it has lots of attorneys on staff to defend patent rights and claims in various courtrooms around the world. Redmond has had its share of legal scraps involving patents, as well as trademarks, including a notorious case against a Canadian teenager who wanted to call his web-design business web site MikeRoweSoft.com. The company, like others, has been aggressive in fighting off these various attacks. Now, however, it seems that Redmond will be facing a new attack that involves its newly acquired videoconference platform, Skype.
Skype has been around for a few years, so the timing of this suit seems strategic, but Web Conference Encryption, which is affiliated with Copytele, has filed a patent infringement suit against Microsoft Corporation (NASDAQ:MSFT), claiming that the Skype video-conferencing service uses a couple of patents from the 1990s that are used for e-mail attachments and telecommunication security on a video conference. WCE is seeking, through Copytele, some royalties and licensing fees for the patents, which are claimed to be used by any smartphones that uses Skype or any similar conferencing software.
In defense of the suit against Microsoft Corporation (NASDAQ:MSFT), we can only presume that Copytele is being accused of being a “patent troll” – Copytele CEO Robert Berman said, “Copytele’s contention is that they have just as much right to assert their patents as any big company, and that the “Troll” controversy is an illusion created by large companies to further influence the patent laws to their advantage.”
As this lawsuit was only filed in federal court on the last day of April, naturally Microsoft is not commenting on the suit at this point.
What can investors do at the moment?
Obviously, courtroom battles aren’t the only thing that should affect a shareholder’s investment decision, but it’s worth pointing out a few basic metrics about this trio. From a valuation standpoint, Microsoft Corporation (NASDAQ:MSFT) investors appear to have the best play, as shares trade at a forward earnings ratio below 11.0x, though looks can be deceiving. Shares of the tech giant also sport a PEG ratio—which measures how Mr. Market is valuing expected EPS growth—near 2.0, above Google Inc (NASDAQ:GOOG) (1.6), but below Facebook Inc (NASDAQ:FB) (93.9).
With an expected EPS growth clip of nearly 30% a year over the next half-decade, growth investors would obviously much rather have Facebook Inc (NASDAQ:FB)—as if its sky-high valuation didn’t suggest elevated growth already—as Google Inc (NASDAQ:GOOG)(15.5%) and Microsoft Corporation (NASDAQ:MSFT) (8.5%) have forecast trajectories much more in line with peer averages.
An evenly mixed basket of this trio may be the best way to go, and other, more specific strategies may be best considered as well. On the whole, though, it’s crucial for investors to watch how tech giants are behaving in the courtroom, as it could play a meaningful effect on their futures.
Disclosure: none
