Vringo Vs. Google: Vringo's Motion For Interest And Supplemental Damages

| About: FORM Holdings (FH)

You have to hand it to Dickstein Shapiro. These lawyers don't rest on their laurels. As we all know, the jury returned its verdict in Vringo (VRNG) vs. Google (NASDAQ:GOOG) on Tuesday afternoon, November 6. In its verdict, the jury found Google and its co-Defendants liable for infringing 14 separate patent claims, and awarded Vringo (1) about $30 million in past infringement damages, together with (2) a recommended 3.5% running royalty.

No sooner had the LED darkened on the jury's 8 digit calculator, when Dickstein Shapiro came knocking on Quinn Emmanuel's door ("QE"). At 6:46 p.m. on the very same day as the verdict, Dickstein Shapiro sent QE an email demanding an "updated supplemental response to Interrogatory No. 15, providing Defendants' revenues from October 1, 2012 through today." QE has not supplied the requested information to Dickstein Shapiro.

On Friday, November 9, 2012, Dickstein Shapiro filed a motion asking Judge Jackson to award it $634,084 in prejudgment interest on the jury verdict (compounded quarterly), for an order awarding it post-judgment interest on the verdict (compounded annually), and to order the Defendants to account to Vringo for their revenues from October 1, 2012 to the present, so Vringo can be awarded supplemental infringement damages that the jury did not have a chance to consider.

From Vringo's motion, it appears that prior to the trial, the Defendants produced their revenue information through September 30, 2012, and consequently, Dr. Becker's damage opinions were only through that date. The verdict therefore does not cover any periods after that date. Therefore, Vringo is seeking a supplemental award of damages based on the Defendants' revenues from and after October 1, 2012, through the date that judgment is ultimately entered, at which time the running royalty would presumably commence.

Using a conservative approximate infringement damage number of $25 million per quarter, it is reasonable to anticipate that the Defendants will owe Vringo more than $8 million per month in additional supplemental damages for infringement periods after October 1, 2012, which were not covered by the jury verdict.

This is a very significant motion for the following reasons:

  • The outcome of this motion will likely be very instructive as to the issue of running royalty rate. Vringo has proposed to Judge Jackson that it should be awarded supplemental damages based on Dr. Becker's 3.5% of 20% theory, which again, should amount to more than $8 million per month until the judgment is entered. If Judge Jackson grants Vringo's request, it would be a very strong indication that the future running royalty rate will be at least 3.5%.
  • Vringo is showing Google that not only did they beat them wholly and decisively on the merits, but they are not going away. Dickstein Shapiro was knocking on QE's door to demand the supplemental revenue information within only a few hours after the verdict was announced. I don't know about you, but I was ready for some needed rest after the verdict was announced. It comforts me to know that Dicktstein Shapiro doesn't rest. I doubt Google feels the same way.

Bear in mind, this is not "The Correction Motion" that many Vringo investors are speculating about. This is a very narrowly tailored motion that seeks an award of continued damages. There is very little doubt that the motion will be granted, as Vringo is likely entitled to prejudgment interest, post-judgment interest, and supplemental damages until the judgment is entered. The most important issue to watch for is what royalty rate Judge Jackson approves for the calculation of supplemental damages, since that could be a harbinger of things to come relating to running royalty rate.

Disclosure: I am long VRNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.