VirnetX Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wireless technology licensor VirnetX (ASE: VHC) are soaring today, jumping as much as 18.7% on fairly heavy volume.

So what:Yesterday, VirnetX crashed as the U.S. Patent Office opened a review of an important patent at the behest of Apple (NAS: AAPL) and Cisco Systems (NAS: CSCO) . Today, share prices are back where they were on Monday morning as management came out to reassure everyone that the review was totally expected and might even be good for VirnetX.

Now what: "We welcome these reexamination proceedings as we believe the outcome will only further validate our patent," says CEO Kendall Larsen. The patent in question -- No. 6,502,135, if you're curious -- has been battle-tested before and could very well survive another reexamination. VirnetX is a development-stage company that depends on legal success for its very livelihood, and it hopes to become another InterDigital (NAS: IDCC) when it grows up. I'm a skeptic of this lottery-like business model, but lotteries are won every day. I just can't win because I won't play.

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At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Motley Fool owns shares of Apple. The Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems, InterDigital, and Apple, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.

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