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USPTO Resurrects Vringo's ’420 Patent

|Includes:FORM Holdings Corp. (FH)

In a welcome bit of good news for Vringo investors, the USPTO has resurrected one of the Lang patents at issue in Vringo's (VRNG) major litigation with Google (NASDAQ:GOOG). Some quick thoughts:

1) Vringo brought its '420 patent back from the dead without reaching the PTO Board of Appeals by successfully arguing around the prior art references after the final rejection: http://www.scribd.com/doc/155771729/Vringo-Reexam-argument While this is unusual, it is also welcome, and investors should remember that patents surviving re-examination are generally much stronger for doing so. With the Google trial result currently on appeal to the Federal Circuit, Vringo's appellate counsel is now in a much more favorable position - as they can argue that the jury's findings on the '420 patent's validity is in line with the view of the USPTO after re-examination. Without today's ruling, Vringo would have had to deal with Google imploring the Federal Circuit to overturn the jury on validity, in light of the now-lifted final rejection.

2) Some of the issues brought up by Google in the running royalty motions that are now in front of Judge Jackson are now moot. Basically, any arguments that Google made relying on the USPTO final rejection are now inapt, and Vringo may very well bring this decision to the Judge's attention in a supplemental filing.

3) Vringo has more settlement leverage against Google, since one of Google's promising avenues (in the USPTO) is closed for now with respect to the '420 patent. This actually increases the stakes for the Federal Circuit appeal, but with more riding on that particular race, the settlement calculus will definitely shift for both parties. Of course, Google is unlikely to settle without hearing the Federal Circuit's decision, and they could initiate more re-examinations to the extent they have new prior art for the USPTO to consider. For the moment, it looks like the Federal Circuit appeal is for all the marbles;

4) Vringo also may have new targets for additional lawsuits. As noted above, re-examined patents are stronger - especially in front of juries. Should Vringo target other search companies, they will be moving forward with a stronger '420 patent as a result of the USPTO's decision today.

So today's news was good for Vringo. All eyes remain on the Norfolk, Virginia, and Washington D.C. with investors and the parties focusing on the running royalty decision in Judge Jackson's hands, and the all-important Federal Circuit briefing process that will unfold over the next few months. Lurking in the background is Google's workaround claim and the pending re-examination of the other Lang patent in the case as well. We will be watching closely on all fronts.

Stocks: FH