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I have written previously (here and here) about the patent infringement suit brought by Vringo (NASDAQ:VRNG) against Google (NASDAQ:GOOG), which appears to be highly material to Vringo's valuation. After the jury found Vringo's patents valid and infringed, and awarded Vringo $31M in damages, both sides proceeded to file several post-trial motions. Those motions are not yet fully briefed, and so I haven't drawn any conclusions on their respective merits.

However, Google has asked the judge to postpone ruling on one of the motions filed by Vringo requesting the implementation of an ongoing royalty Google must pay Vringo for continued infringement of the patents. Not only do I find such a request abnormal, as judges frequently prefer to address all post-trial motions at once, rather than in series, Google made a specific argument in its December 21 request for postponement that caught me completely off guard. Specifically, Google said,

... allowing the Court to first rule on the other pending post-trial motions would give the parties an opportunity to negotiate post-judgment royalties themselves.

My jaw literally hit the floor when I saw that in Google's papers, as I believed they were not at all willing to consider paying any ongoing royalties to Vringo whatsoever. Throughout the litigation, Google has consistently argued that even if Vringo's patents are valid and infringed, Vringo is not entitled to royalties, but instead is only entitled to a single lump-sum one-time payment for a total license to the patents.

To be sure, in its post-trial motion for Judgment as a Matter of Law on Damages filed December 18, Google argued,

In this case, none of the evidence relied on by I/P Engine or Dr. Becker to justify a running royalty was admissible or reliable. ...

By contrast, Defendants introduced evidence that the hypothetical negotiation would have resulted in a lump-sum.

It's absolutely shocking to me to see Google so severely undercut that argument just three days later in its request to postpone Vringo's post-trial motion for ongoing royalties by saying,

[T]ime would also provide the parties with an opportunity to negotiate an agreeable post-judgment reasonable royalty, an approach strongly endorsed by the Federal Circuit. See Telecordia Tech, Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1378 (Fed. Cir. 2010) ("If the district court determines that a permanent injunction is not warranted, the district court may, and is encouraged, to allow the parties to negotiate a license . . . . The district court may step in to assess a reasonably royalty should the parties fail to come to an agreement.").

This statement by Google not only contradicts their previous position that Vringo is not entitled to any royalties whatsoever, but it also concedes that a reasonable royalty for ongoing infringement is something the Court of Appeals has "strongly endorsed" judges assessing if the parties can't negotiate such terms themselves.

I don't see how Google can continue to argue Vringo is not entitled to an ongoing royalty if it is now saying it wants time to negotiate an ongoing royalty with Vringo privately and, if the parties are unable to reach a deal, the judge should step in and assess an ongoing royalty himself. To do so, as it appears Google intends to do, in my opinion seriously erodes Google's credibility on the issue and virtually admits Vringo is indeed entitled to an ongoing royalty and not just a lump-sum payment. This is a substantial concession on Google's part and I do not see the strategic sense in effectively giving up on the argument that Vringo is only entitled to a lump sum.

On New Year's Eve, Vringo filed its opposition to Google's postponement request, saying in pertinent part,

Defendants' claim that a delay is necessary for the parties to negotiate post-judgment royalties themselves is disingenuous. Defendants have not contacted I/P Engine at all since the jury's verdict to convene any such negotiations. While I/P Engine remains available - no matter the briefing schedule - to negotiate a resolution to this litigation in good faith, there is no justification to delay this Court's determination of what is inevitable (the awarding of post-judgment royalties based on an in-hand verdict). Such a delay would likely achieve the opposite, allowing Defendants to postpone any meaningful discussions given that there are no imminent rulings or deadlines looming over them.

Vringo's argument is extremely persuasive to me. If it is true that Google has not attempted to initiate any negotiations with Vringo regarding a license with ongoing royalties instead of a lump sum payment, then Google's argument that it needs time to do so as an excuse to delay the court's consideration of imposing such ongoing royalties to Vringo seems extremely disingenuous to me. I expect the judge will deny Google's request to postpone the resolution of Vringo's post-trial motion for ongoing royalties and while I won't draw a final conclusion until I see all the briefing, I think Google's argument that Vringo is not entitled to ongoing royalties is very unlikely to prevail.

Source: Google Flip Flops, Concedes Vringo Entitled To Ongoing Royalties

Additional disclosure: This content was originally issued as a Ravicher Report on January 3, 2013. It is now being made available for free to the public for the first time here. I was previously short VRNG, as disclosed in my Nov 1, Nov 7, Dec 5, Dec 12 and Dec 13 articles. My articles of Oct 11, Oct 17, Oct 22 and Oct 26 correctly disclosed I had no position in VRNG. In light of the issues addressed in this article and the fact that VRNG recently fell below $3, I closed my short position and initiated a long position. VRNG is, in my opinion, highly volatile, as is the litigation process in which it is involved. Therefore, I may change my position in VRNG at any moment for any reason. I have never directly held shares in GOOG, although I am sure I have and do effectively own such shares through mutual funds and ETF's. Neither I nor any entity that I direct (i.e. I am a member of the Board of Directors) has any business relationship with VRNG, GOOG or any other party involved in this matter. I am Legal Director of the Software Freedom Law Center, a non profit that has in the past received support from GOOG, but I have been on an unpaid leave of absence from SFLC since August 2011. A client I have represented in litigation in the past, the Software Freedom Conservancy, may have received or be receiving support from GOOG, but no such support has ever been used to compensate me for my services to the client, as I provide all my services to that client either pro bono or on contingency. I have in the past been invited by GOOG to give two public speeches on issues relating to patent law. Those two speeches are available through YouTube by searching my name. I was not compensated by GOOG or any other party for those speeches, nor were any of my travel expenses even reimbursed. I have a couple friends who work at GOOG. Some of them are patent attorneys, but I've never talked to them or any of my other friends at GOOG about VRNG. I use GOOG products, such as Gmail, Google Search, Android and Chrome.