Contributor since: 2012
All good points, Rick.
I think a very important takeaway is that individual articles may only address one or more, but not necessarily all, factors that may impact valuation. Those of us who are thinking of putting our hard earned money into the stock market are certainly well advised to take heed of all relevant factors. Thanks for the reminder to us all.
Well said, Rick. However, if you look at my articles, I don't try to guess at values. I try to create some context for analyzing the who's and what's of litigation. That's really all I try to bite off. You did a pretty darned good job of discussing the dilution issue, much better than I would have done, so I'm glad you added those comments.
The settlements occurred during the second quarter. But for the merger, any revenues received would be reported on LTG's 2nd Q financials. Due to the merger, I believe these revenues will be reported as part of DSS' 2nd Q earnings. Also, recall that the Complaint alleged past damages as well, and while the press releases regarding the settlements were silent as to past damages, there is at least a reasonable chance that some figure was agreed as to past damages as well, which could also show up in the 2nd Q earnings report, or later, depending on the timing of payment or accrual.
Yes, I am still waiting on Judge Jackson along with the rest of us.
Hi, Justin. My thoughts haven't changed on Vringo. I think Judge Jackson will eventually get around to ruling on the running royalty motion, and there is little reason to think he will do anything other than to award Vringo at least 3% on the 20% royalty base shown at trial, although I think everybody agrees on this point the percentage could be shifted upward a point or more. I am still following Vringo, and I am still holding all my long positions. I don't think I've sold a single Vringo share, although I have had a few option positions that burned to the ground as the post-trial process lurched along.
Exactly. The offset of the diluted shares is that the post-merger DSS has a pretty potent patent portfolio that is already being monetized, and has greater potential out there in FB and LNKD. Plus, I think bringing the LTG legal and licensing team to DSS can only increase the value of DSS' ongoing litigation against
Hi, Rick.
I'm not sure I understand why you feel I should have discussed dilution issues in this article? I wrote to begin to address the status and potential stakes of the Bascom litigation to DSS, because I think that litigation is going to be significant to DSS' post-merger business plan. Impact of dilution on the post-merger share price may be an appropriate article for somebody else to write, but frankly, I think it's a bit of a dead horse since the merger has closed and the share price is where it is.
I agree with you that it's important to be familiar with "all the available details" when making an investing decision. For me, the important details are that the stock is trading at $1.97 after hours tonight, and that the company is controlling patents that have the potential for astronomical value. Two of the five defendants in the Bascom cases have capitulated with 4 and 5% royalty agreements, and I suspect they entered into those agreements based on an analysis of the value of the patents to them, and their likelihood of prevailing in the long term. I think that is quite instructive to us not only as to the strength of those patents, but more importantly, DSS' ability to monetize those patents into current income generating vehicles. From what I understand, the effect of those royalty agreements will begin to show up in the 2nd Q earnings reports, and then more so in the 3rd Q. By then, we should have a much better idea about what is going to happen with FB and LNKD, since the Markman hearings are currently scheduled for early October. I'm pretty sanguine about those timelines when I know that the Bascom patents have already begun to generate royalty income from the recent settlements.
I'm guessing you will have a chance in the morning! This looks like it will be a fun ride.
It does seem as though DSS shares are "on sale" at the moment. I am guessing there is some stock shakeout occurring with some institutional investor who may not have been in favor of the recent LTG merger. The crazy thing is that the LTG merger did not diminish value, but IMO, added significant value to DSS. DSS already has a pending enforcement lawsuit against, and I would think that litigation will only benefit from having LTG take the reins, as that is exactly what those guys do. I definitely view today's decline as creating a great entry point, or reducing average cost basis.
I am establishing a long position in DSS.
Yes, very clearly over the top. What was intended is that QE represents a party to fabrication. Google has consistently taken positions that have not been borne out in the litigation, whether by judge or jury. Specifically, their analysis was that their existing operations did not infringe on the Lang patents. They put a lot of eggs in that basket, and they were very sorely mistaken. So given their demonstrated ability to discern infringing behavior from non-infringing behavior, it's hard to put any particular stock in their current statement that their so-called workaround doesn't infringe.
The point is, I'm more interested in Dr. Frieder's infringement analysis than QE's.
Just resting my weary joints. Still following the story, although in reality, the only story that is really left at this point is determination of the future royalties. The rest of this stuff seems to me to be mainly water cooler conversation until real news hits.
QE may not be a party to a fabrication. But they represent one.
It should go without saying, but I would urge you not to take QE at their word. They are lawyers, paid to create and advocate legal positions. Thus, when they say they have created a workaround, my knee jerk reaction is that they have made some "changes" to the code that most likely either (1) don't alter the infringement analysis; or (2) sacrifice ad matching efficiency. Worse (for Google), their alleged workaround could do both, i.e., cause poorer results and still infringe. Remember, there is a reason that Google themselves in their own internal memos referred to their own system as "DumbAds" (sic) and Vringo's system as "SmartAds" (sic). Remember, not long ago, Google and QE were stamping their feet and insisting their system didn't infringe. Do you really think they have invented a better mousetrap? Just because QE says so?
"Faintest idea?" Well, let's see. Google lost the Markman hearings, the MSJ, its motions for judgment as a matter of law, and has renewed those motions post-trial, which are pending. If those pending motions are denied, don't you think the chances are quite high that Google will file an appeal? I do. Now let's say that Google files an appeal, which I think is highly likely. Once Google has appealed, I don't think there is any chance that Vringo decides not to cross-appeal the laches issue.
I suppose if total disaster strikes and Judge Jackson grants Google's post-trial motions, then Google would not file an appeal. I view that as very unlikely. But that, barring settlement (which I gave up on long ago), is the only scenario I see where Google does not file an appeal.
And no, I would venture to guess that even given the craziness of this case, it is safe to say that 18 years is not possible.
The comments I made are not specific to patent issues, but to appellate timelines in the Federal Circuit. So if you want to ask me do I think "x" patent fails for obviousness, my answer is "your guess is as good as mine." If you want to ask me whether a motion appears to raise a genuine issue of material fact, such that summary judgment is unlikely, or how long civil appeal time periods are, I feel like my feet touch ground there.
I am sorry if you feel as though providing information regarding realistic timelines is "creating fears and doubts," but frankly, i think we all deserve to have a realistic understanding of potential and likely timelines in this case, if they are pertinent to folks' investing strategy.
Are you of the opinion that an appeal would be resolved in just a couple of months? Would you want folks to bet on that? As far as fears and doubts, I think by far those are created by lack of understanding of the potential results and timelines. If folks know what to expect, they can strategize. Isn't that a good thing?
Hey, Tyler. Once the tolling motions are resolved, the parties have 30 days to file notices of appeal. I would not be surprised if there is a couple weeks of lag before notices of appeal are filed.
Hi, Doc.
As far as immediate impact on stock price, the current issue is really are what happens with the post-trial motions, as you know. I think it is pretty clear that both sides will file notice of appeal. The most important thing to be aware of is that the appeal process is not a quick process. Once Judge Jackson issues his final rulings in this case, the parties would file their notices of appeal, then over a period of several months, their opening briefs, answering briefs, and reply briefs would come due. From that point, it would be fair to estimate 10 to 12 months before the appellate court issues a decision. So the whole process could easily be 12 to 18 months. That's a little far down the line.
That having been said, I don't have a great basis to begin to guess at the potential appeal outcome until we see the briefs, but I do feel good about the way Judge Jackson handled all the issues that Google might appeal from.
Judges aren't as skittish about appeals as you might think. They are more concerned with getting it right, so they don't get reversed on appeal.
Kevin, you don't have to agree with my "strange forecasts." I think folks need and deserve to have a realistic viewpoint, and indeed there are several realistic viewpoints available on the board. Folks talk about a one day trial as if it would be a simple and uncomplicated matter, when in fact I think it is a bit of a complex equation. I look at it like a loose thread from a shirt. You have to be careful which threads you pull on, otherwise you may find that the thread is a lot longer than you think, and pretty soon a sleeve falls off.
Of course he would be admitting a mistake. The jury did not have the right numbers to work with because of the timing of his laches ruling. Judge Jackson made the decision on laches AFTER Vringo's damages expert had testified. If Judge Jackson had ruled earlier, then the expert witness could have given the jury the EXACT number of damages that are attributable for each defendant from the date of filing of the Complaint. Because of the timing of Judge Jackson's ruling, the jury had to extrapolate the numbers, and it seems clear they made a mistake.
There is no reliable answer to your very good question, John. This stuff does not happen every day. But, retrials happen with some frequency after appeals, or sometimes after motions for new trials. I don't believe they EVER call back the same jury. It would be a new jury, as I doubt that Google would ever agree to waive its right to a jury trial.
Hi, John. Happy Holidays, now that they are over. I think a lot of us are waiting for the briefing to be done on the post-trial motions so we can try to figure them out, although the only one I am really interested in is the running royalty motion. Vringo's other motions are indeed very tantalizing, but in the end, I just don't think there is a great chance that Judge Jackson will reverse his laches decision or grant a new one day trial on past damages. Though there is a lot of merit to them, those really tough motions for Vringo to win, because winning requires persuading a Federal Court Judge to make a very public concession that he made a big mistake. I don't see that happening, which is why I am not overly excited about Vringo's other post-trial motions (although again, I think they have a lot of merit). As for ZTE, I am trying to wrap my brain around those cases, to figure out the damage claims and timelines. From what I have gleaned so far, the UK and Germany are pretty favorable jurisdictions for Vringo.
This is hugely significant to the valuation issue. In many ways, the patent litigation in Europe has greater upside for Vringo, because of the availability of injunctive relief against ZTE there as opposed to here. Note that in the Google case, Vringo did not even bother to allege a claim asking for an injunction, whereas injunctive relief is very much in play in the pending ZTE litigation. That having been said, it is really difficult to factor the European litigation into Vringo's valuation, because there frankly isn't really any information out there (except from Jim Altucher's pretty optimistic point of view) that would assist in doing such a valuation. What I would like to know (and what I am trying to find out) is what is the magnitude in dollars of damages that Vringo is seeking from ZTE, and what are the timelines.
Actually, the fact that Judge Jackson granted Google's motion to postpone briefing is a non-event. Although the timing of the order in relation to the article is amusing, the fact of the matter is that Dan's article was actually pretty accurate from my point of view. The Judge's decision basically had the predictability of a coin toss, in that it could go either way. Dan's analysis was pretty rational, although the fact that the Judge went the other way really should not be any big surprise, because there was no wrong decision here. The decision was purely discretionary, and had no substantive impact whatsoever.
Still, the timing was priceless.
Thank you for reporting facts, which are appreciated.
I really don't have any inside track on what is going on with the timing of the motions. As I mentioned in the instablog post, I tend to think that Judge Jackson will deny Google's request to delay briefing, but as Adam Gill has pointed out in his recent article, there are good arguments on both sides, so it could certainly go either way.
Hi, Kevin. Actually, I have to clarify a couple of things. I have stated that the Judge cannot revise the verdict upward due to the additur rule. This remains true. I also stated that (1) Vringo could make a motion to correct the verdict based upon a clerical error if it could prove conclusively that there was a clerical error; and (2) Vringo could make a motion for a new trial on the issue of damages, but that there is risk in this strategy. Both remain true.
I don't recall ever having stated that Judge Jackson was going to reduce future royalties compared to past royalties. I believe my position has been consistent that the Court would be most likely to confirm the 3.5% running royalty going forward.
Finally, there is a subtle difference on the WI issue between what we are arguing. As I have stated in the past, Judge Jackson cannot award WI damages, which is essentially enhancing (e.g. trebling) the jury's award. However, in determining the amount of future royalties going forward, the Judge can look at the status of the parties at the time the royalty is being set, which includes the fact that Vringo has now been determined to be the owner of IP that is being infringed by Google. In view of this status, the future royalty can certainly take into account the fact that Google's future infringement would at this point be wilful.
That having been said, I don't view myself as a patent expert in any sense. I view myself as a lawyer who has some handle on the litigation process.
Sounds good to me, I hope you're right!