The Vringo (VRNG) vs. Google (GOOG) et al. case continues to meander through the U.S. legal system, causing shares of VRNG to languish in a tight trading range ($3.14-$3.20). Each side continues to submit a bevy of new motions, the court has failed to make any significant rulings of late (except Laches), and a settlement appears to be light years away. With all this uncertainty, investor fatigue has definitely set in, and many investors are considering exiting their long positions according to the sentiment on Stocktwits. While I share in the frustration of other VRNG longs, I believe the NTP vs. RIM (now BlackBerry (BBRY)) case offers some key insights into when VRNG may get the long awaited final judgment by Judge Jackson, which should be a strong positive catalyst for VRNG shares.
My belief stems from that fact that the two cases have a large number of striking similarities, and may therefore unfold in a relatively similar manner. Specifically, these two cases have some of the same actors (Donald Stout), same District (Virginia Eastern District), same type of lawsuit (patent infringement in the technology sector), nearly identical original base damage award (roughly $30M), and highly defiant defendants willing to go to extremes to avoid paying for their infringement. With this in mind, I have outlined the key events in the NTP vs. RIM case, and discuss their relevance to the current Vringo vs. Google et al. case.
November 2001 - Complaint filed in the United States Eastern District of Virginia Court.
November 2002 - Jury found RIM had willfully infringed and awarded NTP a base award of $33M plus a running royalty of 5.7% (increased to $53M by the Judge for deceptive legal tactics during the course of the trial).
Early 2003 - Re-examination of the patents by USPTO brought up substantial problems with patentability.
May 2003 - Judge Spencer increased award to $57.3M and the running royalty to 8.55%.
March 2005 - An initial settlement for $450M was announced by RIM, but NTP stated that no settlement had been agreed to. RIM took legal action in an attempt to enforce the settlement.
June 2005 - RIM sent NTP a set of technical manuals that predated NTP's patents, and stated they would be used as prior art during the re-examination process. Unfortunately for RIM, this was too late in the legal process to be of much use.
February 2006 - The Supreme Court denied hearing RIM's motion to enforce the prior settlement agreement.
March 2006 - The companies jointly announced that a settlement for $612M was finally reached, bringing the case to a close.
By using every legal process imaginable, RIM was able to delay paying NTP for over three years. Nevertheless, RIM's strategy of delay, delay, delay ended up costing the company somewhere in the neighborhood of $100-$150M in additional damages, making it worth the wait for NTP. In addition, I find it particularly interesting that the final judgment in the NTP vs. RIM case took around six months after the initial jury trial to finally be entered into the record. If the VRNG case continues to parallel the NTP vs. RIM case, investors could thus expect a final judgment to be entered around April/May of 2013. Vringo longs should also be interested in the fact that Judge Spencer significantly increased the running royalty awarded by the jury by 2.85%. Given that it's fairly common for judges to enhance the running royalty rate in general, I therefore believe it's reasonable to expect a similar outcome in the I/P Engine vs. Google et al. case. That would be another major catalyst for VRNG shares.
Despite the eerily similarities between these two cases, it's impossible to know if they will continue to parallel each other going forward. Nonetheless, there are definitely some interesting observations to be made in this comparison, and the NTP vs. RIM timeline strongly suggests that the final judgment in the Vringo case should come no later than May 2013. That is the primary catalyst most VRNG longs are truly interested in at this point, and the main reason for their frustration. With that said, I believe exiting the stock now and attempting to re-enter ahead of this catalyst is a fool's game. Vringo simply has too many other irons in the fire so to speak [ZTE (ZTCOF.PK) lawsuits, wireless energy charging technology, etc.], any of which could surprise the market causing the stock to break out of its trading range. As such, I believe this is an excellent time to accumulate shares of VRNG.
Disclosure: I am long VRNG.