Vical Inc. (NASDAQ: VICL) surged higher out of the gate Thursday after scoring a U.S. patent for its pandemic and seasonal influenza vaccines, including those to shield against H1N1 (swine flu) and H5N1 (avian flu). Both treatments use Vical's patented Vaxfectin adjuvant, which helps to boost immunity.

While the H5N1 vaccine has completed early-stage human trials, the H1N1 vaccine has yet to be tested on human subjects. Positive results have been recorded from tests conducted on mice and rabbits, but VICL said earlier this year that it will require more funding to begin large-scale trials on humans.

A judge in Texas has ordered Microsoft (MSFT) to stop selling some versions of its Word software in the United States within two months. This follows a May decision that found Word infringes on a Canadian tech firm's patent.

The offending programs are Word 2003 and Word 2007, which seem to have borrowed technology on how to encode and display information. In addition, MSFT was ordered to pay $290 million to the Canadian firm i4i for damages and interest. The judge also issued an injunction that will take effect in 60 days, this move will not allow MSFT to sell Word products including the patented technology.

Reynolds American (NYSE: RAI - option chain) shares are rising today after a federal jury ruled that the company did not infringe upon Star Scientific Inc.'s (NASDAQ: STSI) patents regarding a method to reduce cancer-causing toxins in tobacco. The jury determined the two STSI patents at issue were not valid. STSI is expected to file an appeal. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on RAI.

RAI opened this morning at $37.03. So far today the stock has hit a low of $36.86 and a high of $37.97. As of 12:20, RAI is trading at $37.29 up.96 cents(2.6%). The chart for RAI looks neutral and S&P gives RAI a neutral 3 STARS (out of 5) hold ranking.

InterDigital (NASDAQ: IDCC - option chain) shares opened higher today after the company announced it has resolved its patent dispute with Samsung Electronics Co. Under the agreement, IDCC has granted Samsung a license that covers 3G wireless handsets through 2012. The license allows IDCC to collect royalties from Samsung. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on IDCC.

IDCC opened this morning at $28.10. So far today the stock has hit a low of $25.35 and a high of $28.98. As of 12:35, IDCC is trading at $28.98, up 0.29 (1.1%). The chart for IDCC looks neutral.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $15 range.

I've long thought the "business method patent" to be one of the biggest shams involved, and I am neither alone in this opinion or innocent of involvement in the scheme. Essentially, business method patents protect the manner of doing something; for instance, you might be able to patent your unique way of sorting envelopes. "I start by separating the colored envelopes from the white ones, and then sort by size," you might say. "Then I alphabetize each stack according to addressee first name."

As of yesterday, your patent would be denied. The Court of Appeals for the Federal Circuit handed down a ruling in the Ex Parte Bilski case that would severely limit software and business process patents, essentially requiring that these patents only be approved if the patent in question (1) is tied to a particular machine or apparatus, or (2) transforms a particular article into a different state or thing.

If this is upheld by the Supreme Court (which I tend to believe it would be), this will have far-reaching ramifications for technology companies like Amazon (NASDAQ: AMZN), which have protected a simple process (the One-Click ordering system) that is only an idea, not a machine. I've always found the concept that ideas could be patented to be noisome; taking the One-Click as an example, it is certainly not an idea that only one individual could ever conceive, and it's stifling to keep other competitors from using it. In my opinion, competition should exist based on the excellence of products and services and the development of brand identity, not on legal protectionism. Jeffrey Bezos may not agree ...

Qualcomm (NASDAQ: QCOM) lost a patent ruling against rival Broadcom (NASDAQ: BRCM). That was some time ago. It prevents Qualcomm from selling certain chips in the US. That hurts its profits and makes its handset partners very unhappy.

Things got worse for the wireless chip company. An appeals court turned down its request to temporarily start selling the chips again. According to The Wall Street Journal, "The U.S. Court of Appeals for the Federal Circuit, without providing details, ruled Tuesday that Qualcomm had not met its burden of proof to win a stay pending appeal of the injunction."

Qualcomm's bad patent habits have it in court cases against its largest customer, Nokia (NYSE: NOK), as well as Broadcom. That creates a nightmare for shareholders.

Although handset sales may be slowing a bit. Qualcomm has a wonderful business providing chips and software to the industry. That franchise took its stock from $15 less than five years ago to $53 in mid-2006. Disputes with customers and rivals have helped push that share price down to under $38.

With the new court ruling,Qualcom's share price is likely to stay down a lot longer.

Douglas A. McIntyre is an editor at 247wallst.com.

In what may end up being a net positive for eBay, albeit possibly an expensive one, a settlement has been reached in the litigation over patent infringement between eBay Inc. (NASDAQ: EBAY) and MercExchange. Financial figures of the settlement have not been disclosed, but a report from Computerworld indicates that eBay shall purchase the three patents which were the subject of the litigation, as well as a number of other related technologies and developments.

Mike Jacobson, eBay senior vice president and general counsel, was quoted by Computerworld as stating: "In addition to resolving the litigation, this settlement gives us access to additional intellectual property that will help improve and further secure our marketplaces." MercExchange founder and CEO Thomas Woolston, is quoted in the same report as stating: "It seemed like the right time to put it behind us."

In May of 2003, a jury in the case found eBay guilty of patent infringement and an injunction was sought and granted. However, in reviewing the US Court of Appeals decision, the Supreme Court unanimously derailed the long standing practice of issuing immediate injunctions in cases of intellectual property infringement, insisting that in the future, such injunctions must meet the requirements of a four-factor test.

Crocs Inc. (NASDAQ: CROX) shares are plummeting again this morning after news came out on Friday that the company's attempt to patent its uniquely-styled shoes in Europe may be unsuccessful. The European Union's Office for Harmonization in the International Market ruled in December that CROX's Beach model shoes "lack individual character" compared with other similar brands, according to a Forbes.com article published Friday evening. The ruling struck a blow, as CROX now faces more difficulty in pushing out its competitors in Europe. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CROX.

After hitting a one-year low of $21.675 in March, the stock hit a one-year high of $75.21 in October. This morning, CROX opened at $32.76. So far today the stock has hit a low of $27.64 and a high of $32.96. As of 10:50, CROX is trading at $28.41, down $4.34 (-13.2%). The chart for CROX looks bearish and steady.

For a bearish hedged play on this stock, I would consider a March bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in 11 weeks as long as CROX is below $45 at March expiration. Crocs would have to rise by more than 56% before we would start to lose money.

QUALCOMM Inc. (NASDAQ: QCOM) stock opened lower this morning after a federal judge in California ruled on Monday that the company must immediately halt selling third-generation (3G) WCDMA cellular chips, as they seem to infringe on patents held by rival Broadcom (NASDAQ: BRCM). According to analysts, QCOM may eventually have to pay royalties to BRCM due to the ruling, which would negatively affect its guidance, though the ruling allows QCOM time to implement a workaround solutions before any royalties can be imposed. Shortly after the open, QCOM announced the launch of new chips it says will comply with the ruling. If you think this stock won't be rising too far in the coming months, then now could be a good time to look at a bearish hedged play on QCOM, since options prices could be high at this time.

After hitting a one-year high of $47.72 in May, the stock hit a one-year low of $35.23 in August. This morning, QCOM opened at $38.23. So far today the stock has hit a low of $38.12 and a high of $39.80. As of 11:15, QCOM is trading at $38.92, down $0.42 (-1.1%). The chart for QCOM looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

One of the hottest names in tech, Apple, Inc. (NASDAQ: AAPL), and its wireless partner AT&T, Inc. (NYSE: T), have been sued by Klausner Technologies Inc. for patent violation. Although patent litigation is far and away the joke of the law business these days, this one involves the "Visual Voicemail" feature found on the iPhone, which lets customers visually see their voicemails and go directly to any of them (instead of the standard chronological order most wireless carriers offer).

Kluasner Technologies claims that two of its patents are being violated by Apple and AT&T, and that it is entitled to $360 million in total damages, including future royalties from both companies based on continued usage of the visual voicemail feature by iPhone customers.

From the actions by Klausner Technologies this week, it seems that the company is a patent litigation hound more than anything. The company also filed suits against eBay Inc. (NASDAQ: EBAY)'s Skype unit, Comcast Corp. (NYSE: CMCSA) and more for violation of Klausner's VoIP (Voice over Internet Protocol) patents. It wants an additional $300 million in those lawsuits. Klausner settled with more companies last year over its VoIP patents and this year it looks to be continuing the trend.

Intel Corp. (NASDAQ: INTC) stock is dropping today after the company agreed to pay a $250 million settlement to Transmeta Corp (NASDAQ: TMTA) in a patent dispute. The terms include one initial payment of $150M plus annual $20M disbursements. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on INTC.

Intel stock has climbed over the past six months, hitting a one-year high of $26.98 last week. This morning, INTC opened at $26.33. So far today the stock has hit a low of $25.62 and a high of $26.39. As of 11:50, INTC is trading at $25.72, down $1.08 (-4.0%). The chart for INTC looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.3% return in 3 months as long as INTC is below $30 at January expiration. Intel would have to rise by more than 16% before we would start to lose money. Learn more about this type of trade here.

Texas must hate successful internet giants. At least, that is what one must think after two sets of goofy, litigious lawsuits were brought against Google, Inc. (NASDAQ: GOOG), Yahoo!, Inc. (NASDAQ: YHOO) and Microsoft Corporation (NASDAQ: MSFT) in the last two months. On top of the Polaris lawsuit from a few months ago that accused the internet giants of violating its email filtering patent, Performance Pricing, Inc. (from Austin, Texas) now says that the three internet giants, along with AOL, LLC (part of Time Warner, Inc. (NYSE: TWX)) have violated patents related to -- get this -- a "transaction system."

Apparently some smaller firms have made it a point to make money not with innovation and marketing, but from trying to patent basic business practices and processes. This time around, these four companies have been charged with using Performance Pricing's technology "in methods and systems that they make, use, sell and offer to sell."

Is having a website that transacts business with customers a process that is patentable? I'm waiting for Performance Pricing to sue the other hundred million website operators who transact business with customers. Excuse me while I twiddle my thumbs here.

Is this "technology" even patentable? My guess is that the U.S. patent in question, 6,978,253, described as "Systems and Methods for Transacting Business Over a Global Communications Network such as the Internet" will be laughed out of court once it reaches that stage. Performance Pricing has requested a jury trial.

Vonage Holdings Corp. (NYSE: VG) has escaped the hangman's noose for now, settling a patent dispute with Sprint Nextel Corp. (NYSE: S) for $80 million that threatened to sink the company. Shares of the Internet phone service provider surged on the announcement.

Hold the applause for a second.

Remember, the Holmdel, NJ company recently was ordered to pay $58 million with Verizon Communications Inc. (NYSE: VZ) to settle another paent dispute. Though the company say it can "work around" the disputed patents, it has other serious problems.

The company is locked in a competitive struggle against much bigger competitors such as Verizon and Comcast Corp. (NASDAQ: CMCSA) that over time it will lose even as more telephone service migrates to the Internet. Yes, I know Vonage has a cadre of customers who are just crazy about it and even liked those annoying commercials that thankfully have disappeared but I don't see how the company will survive over the long term.

Monday August 13

• Sysco Corporation (NYSE: SYY) to report Q4 earnings; conference call at 9:45am.
• PDUFA date for Indevus Pharmaceuticals Inc's (NASDAQ: IDEV) Sanctura XR, an overactive bladder drug.

Tuesday August 14

• The Home Depot Inc (NYSE: HD) to report Q2 earnings; conference call at 9am. Home Depot is expected to post substantial Q2 revenue/EPS declines, but equally important will be the company's comments: with the housing sector expected to remain sluggish through at least late 2007, analysts will evaluate whether HD can overcome that headwind with a new focus on customer service, demographic trends that suggest increased home repair/remodeling, and 20-year high homeownership rates that suggest steady house goods demand.
• District Court California: Broadcom Corporation (NASDAQ: BRCM) to request an injunction related to Qualcom Incorporated's (Nasdaq: QCOM) infringement of 3 Broadcom cellular baseband patents.

Wednesday August 15

• Macy's Inc (NYSE: M) to report Q2 earnings; conference call at 10:30am.
• PDUFA date for GPC Biotech's (NASDAQ: GPCB) Satraplatin for treatment of hormone refractory prostate cancer.

Thursday August 16

• JC Penney Co Inc (NYSE: JCP) to report Q2 earnings; conference call at 9:30am.
• Hewlett Packard Company (NYSE: HPQ) to report Q3 earnings; conference call at 5pm. Analysts will evaluate HPQ's ability to maintain momentum in its innovative imaging/printing group, which is expected to help HPQ post solid Q3 revenue gains.

Friday August 17

• Quantum Corporation (NYSE: QTM) to hold annual shareholder meeting at 12pm.
• PDUFA Date for Endo Pharmaceuticals Holdings Inc's (NASDAQ: ENDP) and Vernalis PLC's (OTC: VNLSY) Frova, for menstrually-related migraine headaches.

Perhaps it's not exactly normal that one financial company comes out with two contrary predictions, but Apple Inc (NASDAQ: AAPL) is no normal company and neither is the speculation it generates. A little over a week ago, a patent application, filed by Apple back in November, was released detailing a multifunctional handheld device with a mode-sensitive circular touch pad. Whispers of the initial design for an iPhone Nano quickly began to get louder. Therefore, it wasn't exactly shocking when a note, written to clients by JP Morgan analyst Kevin Chang, was published Monday predicting a new iPhone that would be smaller, cheaper, and available sometime in the fourth quarter of this year. Chang said in his note, "We believe [the patent] is a strong sign that Apple could potentially convert every iPod nano in a nano phone." Chang concluded by predicting that release of a cheaper iPhone would generate sales of 30 to 40 million for 2008, a massive increase over Apple's own expectations of sales totaling 10 million for 2008 for the current model.

Predictably, Apple shares hit a new all-time high on Tuesday following Chang's speculation. Tuesday morning's record $134.50 eclipsed a 52-week high of $133.34 that had been the result of massive hype prior to the June 29th release of the iPhone, that had sent Apple share prices up 40% in a few months. Now, Apple has managed to yet again generate a media frenzy with the suggestive patent application. However, as fast as Chang created joyous an-iPhone-in-every-pocket images, a colleague tried to erase them. Fellow analyst Bill Shope, who has covered Apple for JP Morgan since 2003, responded to Chang's note with one of his own on Tuesday. While Shope did not disagree with the inevitable release of cheaper iPhone, Shope declared a near-term launch unlikely, stating that it would be "unusual and highly risky" and predicted that "Apple is likely to keep the iPhone and iPod as distinct business segments for as long as it makes economic sense."

So which analyst's view is gaining support? Both. There are plenty of people who feel that the end of this year is a reasonable time frame for the release of a new iPhone and still more who feel that a merging of the iPhone and iPod is imminent. Gene Munster, of Piper Jaffray, stated in a note to clients "We believe the iPhone reveals much of what the iPod will soon be." Yet, there are also those who, 13 days after the birth of the original iPhone, feel that it is too soon to begin looking for baby iPhone. And, as patent lawyer Jay Sandvos of Bromberg & Sunstein points out, not all patents indicate development: "It makes sense [for Apple] to seek patent protection for every possible aspect of such a device, whether or not Apple actually plans to use it - just to prevent competitors from doing something along these lines." It certainly wouldn't be the first time speculation regarding an Apple patent had been wrong. But who can keep from guessing at what's next? There's something about that little Apple that keeps us hungry for more.