I have written previously (here, here and here) about the patent infringement suit brought by Vringo (VRNG) against Google (NASDAQ:GOOG), which appears to be highly material to Vringo's valuation (currently about $260M) due to the possibility of receiving hundreds of millions of dollars from Google in royalties.
In November 2012, a jury found two of Vringo's I/P Engine subsidiary's patents to be valid and infringed by Google and its customer co-defendants and awarded Vringo $31M in past damages. Vringo then filed in mid-December a post-trial motion asking the Judge to award it an ongoing royalty to be paid by Google for continued infringement of the patents until they expire in April 2016. Vringo specifically asked the Judge to award it approximately 1.5% of Google's U.S. AdWords revenues (Vringo is technically requesting a 7% royalty rate applied against the 20.9% extra profit Google makes from infringing Vringo's patents, so I've merely multiplied those two percentages to get the 1.5% figure).
As I mentioned in my January 3 article, Google made a request that the Judge postpone any further briefing or consideration of Vringo's motion for the imposition of an ongoing royalty because, Google argued, the motion could be rendered moot if the Judge were to grant some of Google's post-trial motions, which include requests to overrule the jury and find Vringo's patents invalid and/or not infringed. Google also argued that a postponement would give the parties time to negotiate a reasonably royalty, which I called a flip-flop by Google, because they had consistently argued up until then that at most a lump sum payment was appropriate and disputed the legitimacy of having to pay Vringo any royalties.
Just for review, here are the relevant dates:
- December 18, 2012: Vringo files a motion for an award of post-judgment (i.e. ongoing) royalties. As a result of an agreement amongst the parties, opposition briefs to all post trial motions, including Vringo's motion for post-judgment royalties, are due January 25, 2013, and then all reply briefs in further support of the respective motions are due February 15, 2013. (As a side note, I've noticed some people are wondering why it's taking the Judge so long to decide these motions, when in reality it's not yet time for him to do so, since the briefing is not yet completed.)
- December 21, 2012 (Friday): Google filed a motion to postpone briefing and ruling on Vringo's motion for post-judgment royalties. Google argued in this motion that the Judge should rule on all the other post-trial motions first and only address Vringo's motion for post-judgment royalties if the jury's verdict of infringement and validity is upheld by the judge. Google and Vringo agreed to jointly request that the Judge expedite the briefing schedule for Google's motion to postpone consideration of Vringo's post-judgment royalties motion.
- December 24, 2012 (Monday and Christmas Eve): The Judge grants the parties' request to expedite briefing of Google's postponement motion. Vringo's brief in opposition to Google's motion to postpone is due December 31, 2012 (one week, which includes Christmas and ends on New Year's Eve; Happy Holidays!). Google's reply in further support of its motion to postpone is due January 3, 2013.
- December 31, 2012 (New Year's Eve): Vringo files its brief opposing Google's motion to postpone Vringo's motion for post-judgment royalties.
- January 3, 2013: Google files its reply brief in further support of its motion to postpone briefing and ruling on Vringo's motion for post-judgment royalties.
Delay is generally always bad for plaintiffs in lawsuits, and that's particularly true here where the motion Google wants to delay is one that would require Google to start paying Vringo royalties. In my January 3 article, I said:
I find [Google's request for postponement] abnormal, as judges frequently prefer to address all post-trial motions at once ... I expect the judge will deny Google's request to postpone the resolution of Vringo's post-trial motion for ongoing royalties
Now that almost three weeks have passed since Google's postponement motion was fully briefed, I believe my prediction is increasingly being proven correct that the Judge will indeed not grant Google's request. The Judge has proven himself capable of being immediately responsive to motions of the parties, including for example granting the parties request for an expedited briefing schedule on Monday, December 24, which was Christmas Eve, when the parties had just made the motion on Friday, December 21. That was a very quick response from the Court, on the eve of a Federal holiday nonetheless, and indicates to me he is not failing to pay attention to this case nor is he incapable of making fast decisions on motions regarding scheduling.
Thus, if the Judge wanted to grant Google's motion to postpone consideration of Vringo's motion for post-judgment royalties, I strongly believe he would have already done so by now. The fact that he hasn't, signals to me that he won't. Therefore, Google's response to Vringo's motion for post-judgment royalties remains due this Friday, January 25, and Vringo's reply brief in further support of its motion remains due February 15. At that point, the issue will be in the Judge's hands.
Of course, he could grant Google's postponement request at any time, he could decide later to have a hearing on the post-judgment royalty issue, he could decide to hold it in abeyance until the other motions are decided, he could deny Vringo's request altogether, etc. It's his court and he can do what he pleases when he pleases. The point of this article is to merely say that it is becoming increasingly clear to me that Google's attempt to delay consideration of Vringo's motion for post-judgment royalties has been unsuccessful and that this is good news for Vringo.
I have not come to a final conclusion on the merits of Vringo's motion for post-judgment royalties, or any of the other post-trial motions, as they have not yet been fully briefed. Once they are, I hope to have the time to do so. However, I do believe the judge's ignoring Google's postponement request is a good sign for VRNG. As I disclose herein, I am long VRNG as of the submission of this article to the Seeking Alpha editors (VRNG is at 3.22) and my personal opinion at the moment it has a fair value of about 3.55-3.70. I'm not a financial advisor, and that is not a suggestoin to any one to buy or sell VRNG. I merely state it because the Seeking Alpha editors have asked me to do so.
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.
Additional disclosure: This content was originally issued as a Ravicher Report on January 19, 2013. It is now being made available for free to the public for the first time here. VRNG is, in my opinion, highly volatile, as is the litigation process in which it is involved and, therefore, I may change my position in VRNG at any moment for any reason or no reason at all. Please see all my previous articles, including specifically those linked to herein, for additional disclosures.