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I am an active husband, father, lawyer (more than 24 years, how time flies), and investor. I believe in contrarian investing, i.e., going where the crowd isn't. I believe that successful investing, like successful living, requires equal parts listening and evaluating, followed by independent... More
  • Vringo Vs. Google: Vringo Seeks Reconsideration Of Order Denying Sanctions 11 comments
    Oct 10, 2012 10:32 PM | about stocks: VRNG

    Today Vringo filed a motion for reconsideration of the order entered yesterday that denied Vringo's 3rd Motion for Sanctions Against Google.

    The 3rd Motion for Sanctions was heard and denied by Magistrate Judge Lawrence Leonard. In truth, Judge Leonard probably should have granted the motion for sanctions, since Vringo's motion sought to disqualify evidence that Google produced after the Court's deadline for discovery. Discovery deadlines are pretty routinely enforced in Federal Courts. This should be more so the case when the parties are merely a week from trial, the stakes are high in the case, and the outcome affects publicly traded companies.

    Of note, Judge Leonard is a very new Judge. According to this article, his first day on the job was only a few days ago, on October 1, 2012. Although Judge Leonard has plenty of experience as a government lawyer, the truth of the matter is that it is a very different mindset being the Judge instead of an attorney.

    I wonder whether Judge Leonard's decision to give Google a second chance after the discovery cutoff was a result of any hesitance on his part to make a decisive ruling in a high profile, high stakes, case, being a literally brand new judge?

    I think this is a good motion for reconsideration by Vringo. The discovery cutoff is there for a reason, and there ought to be a REALLY good reason given when a party seeks to provide discovery after the discovery cutoff. I have not seen any such reason in this case to justify Google's late discovery exchange. Normally, parties have a right to appeal a Magistrate Judge's decision to a Federal Judge (Judge Jackson). Unfortunately, I wonder if Judge Jackson will be hesitant to overrule Magistrate Judge Leonard in this instance, for fear of cutting his legs out from under him since he is so new?

    I think in fairness, the motion should at least be re-heard before Judge Jackson. However, I doubt the Court will want to give Vringo as much due process as that, especially at Judge Leonard's expense.

    Disclosure: I am long VRNG.

    Stocks: VRNG
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Comments (11)
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  • gtgtbangbang
    , contributor
    Comments (102) | Send Message
     
    Saw something about a change in presiding trial judge compared to the recent settlement conferences ? Original judge recused (?) himself due to his involvement with the negotiations. I am looking for a the source info with name but your comments appreciated.
    10 Oct 2012, 11:19 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Hi, GT.

     

    Check the comments to my articles on the Motions for Sanctions, and the Reduction of Damages. Both comments have a fair amount of discussion of this issue.

     

    Thanks
    Steve.
    11 Oct 2012, 12:57 AM Reply Like
  • trexia
    , contributor
    Comments (165) | Send Message
     
    New numbers: $856 Milion or $9.27/share cash if settled or $12.5- $15 per share !!!
    .......

     

    (By Rich Bieglmeier) Vringo's (VRNG : 4.63, 0.21) stock price took a pretty good hit yesterday thanks to settlement court proceedings. At first, Google's (GOOG : 744.15, 0.4) team accidentally filed figures that might have included worldwide sales. GOOG resubmitted lower and more accurate numbers later.

     

    Vringo's attorneys argue that it is not their fault the whiz kids at Google can't add and that the original numbers should stand. It appears the judge prefers the "correct" numbers, and that's probably why VRNG gave up close to a dollar on Tuesday.

     

    Let's rewind a bit. In our original VRNG story, iStock dusted off the dusty 10-key calculator and wrote:

     

    "Let's do some math together. The clock for the suit started on September 15, 2005. Since then, Google has done nearly $160 billion in revenue. That's roughly $153 billion using Google's 96% of revenue 10Q figures. The suit only covers US revenue, chopping the number in half, which means somewhere around $75 billion of Google's sales are subject to back dated royalty payments, should the tech monster be on the wrong side of the decision.

     

    Vringo seeks a reasonable royalty payment in the lawsuit. What's a reasonable royalty fee? That's the billion dollar question. But for our purposes, we will use 0.5% to a max of 5%; although, we don't feel the company will hit the 5% jackpot. The calculator says a positive outcome could range between $375 million and $3.75 billion."

     

    Our figure could be too hot, too cold, or just right, but we believe it is in the ballpark. Based on Vringo requested settlement of $696 million, it appears the company was shooting for a 1% backdated royalty fee, putting the revenue subject to judgment a $69 billion.

     

    For those of you following along for the past two months, you'll know that Google believes $696 million is about $200 million too high. Using our 1% royalty guesstimate, we come up with $49.6 billion subjected to a possible settlement – remember, neither figure includes future royalties through 2016.

     

    It's time for the calculator, again. For the first six months of 2012, Google generated $21.6 billion in revenue, of which $20.7 billion came from advertising, and $10.57 billion from the United States. To gauge what future royalties might look like, we see that 95.8% of revenues come from the technology in question. Ninety-five point eight percent of $10.57 billion equals $10.41 billion.

     

    If revenues and percentage remain constant in the next 3.5 years, that's another $36.43 billion in revenue that could be subjected to royalty fees. Of course, Google is likely to continue growing. At a 1% royalty fee, that adds another potential $360 million to the roughly $496 million figure the settlement judge appears to favor.

     

    Add 'em up, and it totals $856 million, and in line with previous settlements. On August 13th, we noted, "Vringo's management team has success in previous litigation. David L. Cohen, Special Counsel, won a $715 million settlement, plus ongoing royalties, for patent infringement from Apple Inc. (AAPL : 640.75, 3.6) while at Nokia Corporation (NOK : 2.565, -0.12). While at NTP, Donald E. Stout, Director & Chair, was a part of a $612.5 million settlement with Blackberry."

     

    The number of VRNG shares outstanding seems to change from day-to-day, but the latest figure according to Motley Fool is 92.3 million shares. With iStock's $856 million figure, the stock is worth $9.27 in cash per share. However, if Vringo gets the winning hand, we feel it will trade at a premium - how much is hard to say.

     

    There is a lot of chatter on the web that Google would be better off buying Vringo and using the patents to go after others; sort of a game of patent lawsuit tag – fun stuff. In all likelihood management would want a premium above cash value, perhaps in the neighborhood of $12.50 to $15 per share.

     

    If the parties cannot reach an agreement, court is scheduled to start on October 16th. However, we continue to believe a pre-trail settlement is in the best interest for Google and Vringo. iStock puts it at better than 50% odds the disagreement will be settled prior to a verdict. http://bit.ly/T79OBJ
    10 Oct 2012, 11:21 PM Reply Like
  • fidcow
    , contributor
    Comments (40) | Send Message
     
    The link would have been sufficient. Cutting & pasting the entire article was not necessary.
    11 Oct 2012, 06:47 AM Reply Like
  • see punjabi
    , contributor
    Comments (357) | Send Message
     
    Hello Steve,
    Will Vringo's reconsideration request will be granted this time.
    11 Oct 2012, 02:42 AM Reply Like
  • joecrocker
    , contributor
    Comments (5) | Send Message
     
    Where do you find motions and other legal documents relevant to the VRNG case...I don't think the Vringoip website is updated real time
    11 Oct 2012, 03:41 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » You have to get a pacer account. Go to pacer.gov.
    11 Oct 2012, 05:15 PM Reply Like
  • joecrocker
    , contributor
    Comments (5) | Send Message
     
    Thanks! Appreciate the info
    11 Oct 2012, 06:33 PM Reply Like
  • falanke
    , contributor
    Comments (79) | Send Message
     
    Steve,

     

    Thx for the insights. At this point in time, what's your assessment of settlement? Are we still at the 85-95% probability for a settlement, or are both sides preparing to duke it out in the courts and the appeal process?

     

    Regards...
    12 Oct 2012, 07:54 PM Reply Like
  • grinwell
    , contributor
    Comments (4) | Send Message
     
    So #704 denied the reconsideration of sanctions, correct? Thanks again for your analysis!
    14 Oct 2012, 02:42 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Actually, it denied Google's motion for reconsideration of the order denying its MIL No. 2. Vringo's motion for reconsideration of its Motion for Sanctions is still out there, as far as I know.
    14 Oct 2012, 03:47 AM Reply Like
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