Is Google Going Out On A Limb With Quest For Vringo Reexamination?

| About: FORM Holdings (FH)

Google (NASDAQ:GOOG) may be going out on a limb in its case against Vringo (VRNG). It seems they are quite simply looking to prove a point after they lost virtually all stages of the case against them.

Which point is Google looking to prove while paying a lot of attorney fees? Google is certainly not to be messed with, and that they are a big corporation with deep pockets able to pay the lawyers on the losing side a lot of hourly fees. Why? Potentially to discourage more lawsuits against them from those whom may have legitimate claims that a small inventor has their IP infringed upon.

We also believe the USPTO will fully enforce VRNG patents, and Google has deep pockets to pay more legal fees to make justice taken a little longer.

In the case of Google v. Vringo, Google infringed on the Lang patents filed before Google was even officially created. Since Google can not find any rational way to convince a Federal Judge on the matter to overturn a jury's long reasoned verdict, they are trying again to throw out 'hail marys':

'... Copies of the prior art must be provided, and the party making the request has to let the owner of the patent know that a request has been filed. If the USPTO finds that the request indeed raises a substantial new question of patentability, the USPTO orders a reexamination.'

We believe that the odds are against Google winning on this strategy, but at the same time they are trying to prove how tough they are to discourage more claims. How much has Google's law firm billed Google? This is playing out currently in regards to the 'reexamination'.

Most average investors are confused about what a reexamination is exactly. It is ".... whereby a third party or inventor can have a patent reexamined by a patent examiner to verify that the subject matter it claims is patentable." To have a patent reexamined, an interested party must submit prior art that raises a "substantial new question of patentability."

Microsoft (MSFT) tried fruitlessly against VirnetX (NYSEMKT:VHC) in VHC's win against Microsoft. This can guide us historically for what is going on in this re-exam process between Google and Vringo.

As a journalist covering the case of Microsoft vs. VirnetX put it at the time in layman's terms: "...But don't get too excited - "rejected" doesn't necessarily mean rejected, yet. The goofy way that the USPTO does business is they say they're rejecting it, but it all comes down to a final decision," said Sean O'Connor, a patent-law professor at the University of Washington. "The examiners can say, 'Ooh, that (patent) seems pretty questionable to us, so we'll do a non-final action.' (They're) saying, 'I'm not going to issue a patent unless you convince me otherwise.'"

The interesting research that we came up with here is one of the 'notable reexaminations is in fact directly tied to senior people involved with VRNG: NTP v. BlackBerry. One of the senior litigators (Donald Stout) involved in helping VRNG beat Google also was in charge of beating BlackBerry (formerly RIM) in his tenure at NTP : "The decision means RIM's options for an appeal in the four-year court battle with NTP have been exhausted, and puts the company's two million U.S. users closer to a wireless e-mail blackout."

In fact at that time, when BlackBerry (NASDAQ:BBRY) was the king of the hill in smartphones, there were potential violations of federal law regarding contact between PTO examiners and BlackBerry Counsel:

'FOIA requests which revealed attempts by RIM attorney David Stewart to obtain off-the-record interviews with PTO examiners, though such interviews are prohibited by federal regulations (e.g., 37 CFR 1.560(a), stating that "requests that reexamination requesters participate in interviews with examiners will not be granted" and 37 CFR 1.955 stating that "interviews prohibited in inter partes reexamination proceedings")

Basically, we believe Google knows that they have lost and it is over. On a side note, Google is attempting to influence lawmakers through a front group called the 'Coalition for Patent Fairness': "Damage awards should be based on common sense standards. In a world where a device can be made up of thousands of patented components, patent infringement damages should be proportionate to the value of the component in question rather than the entire product." However, Vringo still has won and will collect what it is due soon enough. There is no reason to logically be worried here.

Our other research revealed that 92% of all re-exam requests are approved. It is a routine event which should not likely at all affect the outcome of Google having lost in court or their fruitless appeals to delay paying what they owe.

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.