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With Google Lawsuit Looming, Facebook and LinkedIn Face Similar Threats


Successful patent suits waged against big tech firms and social media historically generate significant revenue streams for small cap "victims."

MINYANVILLE ORIGINAL Hedge fund manager James Altucher has made something of a name for himself after siding with a patent troll named Vringo (VRNG) (NYSEAMEX:VRNG) that is suing Google (GOOG) (NASDAQ:GOOG) for infringing on patented search technology originally acquired from Lycos. Year to date, the small company has rallied over 350% on anticipation of a large settlement from Google. The progression of the trial in favor of Altucher's stock pick Vringo has brought investor interest back to an often overlooked area for investment: high-stakes patent litigation.

Last week, for example, shares of Document Security Systems (DSS) (NYSE:DSS) rallied after it announced a patent infringement lawsuit against Facebook (FB) (NASDAQ: FB) and other social networks, including LinkedIn (LNKD) (NYSE:LNKD), Broadvision (BVSN) (NASDAQ:BVSN) and Jive Software (JIVE) (NASDAQ:JIVE).

Officially ushered in by Apple's (AAPL) (NASDAQ:AAPL) history-making lawsuit against Samsung (SSNLF) (PINK:SSNLF) for over $1 billion, 'tis the season for high-stakes litigation. Billion-dollar allegations against Google, Apple, Facebook, and LinkedIn pose serious threats to the young and high-growth social media sector.

Bascom Research, a wholly-owned subsidiary of Lexington Technology Group, announced last week's lawsuit against Facebook and LinkedIn shortly after it had signed a definitive merger agreement with Document Security Systems, the public company maintaining the ticker symbol "DSS" throughout the process. On its conference call with investors on Thursday afternoon, Document Security Systems clarified that it expects to complete the merger by the first quarter of 2013 and likely before any settlement payments would be received. The single, public entity would own the rights to the entire intellectual property portfolio under the combined umbrella of Lexington Technology Group, Bascom Research, and Document Security Systems.

CEO William Rosellini commented about the lawsuit, "Our pioneering technology was patented as early as 2001-long before the advent of Facebook, LinkedIn, and other social and business networks-and covers key aspects of online collaboration and relationship linking." Document Security Systems alleges that certain connections between document objects and other functions of social networks like Facebook and LinkedIn violate Bascom Research's patents.
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