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EXP is a graduate from The University of Wall Street and serves as the CEO / Chief Stock Strategist at EXPstocktrader.com research firm. With over 30 years of trading the market, EXP is an experienced investor using a fundamental and technical approach as a market analyst, chartist, visual... More
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  • Vringo Officially Files A Lawsuit Against China Telecom ZTE 0 comments
    Oct 8, 2012 10:47 AM | about stocks: GOOG, NOK, FH

    This morning, Vringo (VRNG) has officially filed a lawsuit against China's second largest telecom company relating to its Nokia (NYSE:NOK) patents that they recently acquired in August , 2012. ZTE describes itself as "a leading global provider of telecommunications equipment and network solutions," with recently reported annual revenue of US $13.7 billion, according to filings with the Hong Kong Stock Exchange. According to ZTE's public filings, the company generates its revenue primarily from the sale of telecommunications equipment and handsets.

    "The filing of this action in the United Kingdom is an initial step in Vringo's global licensing and enforcement program in the telecommunications sector. ZTE has elected not to take a license to patents in Vringo's portfolio relevant to certain international standards, despite manufacturing and selling devices and equipment for a number of years that are said by ZTE to be compliant with those standards," said David L. Cohen, Head of Licensing, Litigation, and Intellectual Property at Vringo. "We believe that ZTE is aware that it requires licenses to all patents that are essential to relevant standards. Further, we believe that ZTE is familiar with systems for declaring patents to standards-setting organizations and the relevant intellectual property rights policies for those organizations, having itself declared hundreds of patents to international standards."

    VRNG stock is currently up about 16% and the biggest percentage leader on the news and could be a real strong catalyst since the company now has two very serious patent litigation lawsuits pending at this time. The prior lawsuit is pending with Google (NASDAQ:GOOG) and as stated in a prior article, settlement talks have been ordered by the judge. This will occur this week.

    Recap Of The Nokia Patent Acquisition:
    On August 9, 2012, the company reached an agreement with Nokia to purchase patents and patent applications covering a variety of cellular infrastructure technologies. Per the terms of the purchase agreement, Vringo paid $22 million up-front for the patent portfolio and will also pay Nokia a percentage of future licensing proceeds associated with the portfolio. Vringo will retain 100% of the
    revenue generated from licensing these patents up until it recovers the
    initial $22 million. Thereafter, the company will pay Nokia a royalty of 35%
    on licensing proceeds generated.

    This patent portfolio transaction highlights a very interesting relationship
    between Vringo and Nokia. In 2011 the two companies partnered to launch
    Facetones on certain Nokia devices. Nokia also sponsored Vringo's first
    Reality TV app that same year. In 2012, they began developing a customized
    Facetones product for Nokia's Asha phone family. Perhaps the most
    significant connection between the two companies is David L. Cohen, who
    currently serves as Head of Litigation & Licensing for Vringo. Prior to joining
    the company, Mr. Cohen was Senior Litigation Counsel for Nokia, a role he
    held for nearly five years. At Nokia, Mr. Cohen had many responsibilities
    including overseeing the high profile patent dispute with Apple. That
    multi-jurisdictional litigation began in October 2009 when Nokia sued Apple
    for patent infringement. In June 2011 the companies settled the dispute with
    Apple agreeing to pay Nokia a one-time payment as well as ongoing
    royalties relating to future sales of Apple's iPhones. The details of the
    settlement agreement were never made public, but the deal was widely
    considered to be a major win for Nokia and Mr. Cohen's legal team.

    More About ZTE In China:
    ZTE Corporation is a leading global provider of telecommunications equipment and network solutions. Through its network of operators across 140 countries, the company delivers innovative products and business solutions. It connects global customers via voice, data, multimedia and WLAN. Founded in 1985, ZTE is listed on both the Hong Kong and Shenzhen Stock Exchanges and is China's largest listed telecoms equipment company.

    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.

    Stocks: GOOG, NOK, FH
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