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SteveKimLaw
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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: Two Motions Denied Today 48 comments
    Oct 17, 2012 8:50 PM | about stocks: VRNG

    I understand that near the end of the Court day today, Judge Jackson (1) DENIED Vringo's motion for reconsideration that sought to exclude Google's 250 pages of source code and (2) DENIED Google's emergency motion to strike Vringo's liability expert, Dr. Frieder's, supplemental opinions commenting on the 250 pages of source code.

    Both outcomes were anticipated, and are consistent with Judge Jackson's inclination in his prior rulings, to allow evidence into the trial for the jury to consider. The net result of this is that Google's liability expert, Dr. Ungar, will be able to use the 250 pages of source code as support for his expert opinions, and Dr. Frieder will be able to comment on why he feels the source code does not change the outcome.

    Nothing earth shattering here. This case remains a battle of the experts.

    Disclosure: I am long VRNG.

    Themes: GOOG Stocks: VRNG
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Comments (48)
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  • marpha
    , contributor
    Comments (565) | Send Message
     
    As someone else pointed out, Frieder is kind of studly looking and with seven women on the jury might have some charm in addition to credibility.

     

    Frieder: http://goo.gl/dNfKt

     

    Ungar: http://goo.gl/Ccbku

     

    Did anyone ever verify completely Ungar's credibility issues?
    17 Oct 2012, 11:04 PM Reply Like
  • surfnspy
    , contributor
    Comments (415) | Send Message
     
    Frieder looks like the Chuck Norris of Computer Science.
    18 Oct 2012, 01:28 AM Reply Like
  • wiesemc
    , contributor
    Comments (565) | Send Message
     
    Is that herpes simplex on Ungar's lower lip?
    18 Oct 2012, 02:33 PM Reply Like
  • surfnspy
    , contributor
    Comments (415) | Send Message
     
    As always, thank you Steve for your insight.

     

    Long
    18 Oct 2012, 01:24 AM Reply Like
  • Revanche
    , contributor
    Comments (69) | Send Message
     
    Steve, just a ballpark guess: how many days for jury deliberation?
    18 Oct 2012, 09:41 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » 2 to 3 days is a good ballpark guess, I'd say.
    18 Oct 2012, 11:54 AM Reply Like
  • Revanche
    , contributor
    Comments (69) | Send Message
     
    Thanks.
    18 Oct 2012, 01:07 PM Reply Like
  • Davedawgg77
    , contributor
    Comments (7) | Send Message
     
    Does anyone know why the stock has been tanking since Wednesday? I understand that volatility was to be expected but why so much volume moving out late yesterday and so far today? I only know what I read on here...does someone know something we don't?
    18 Oct 2012, 10:02 AM Reply Like
  • Revanche
    , contributor
    Comments (69) | Send Message
     
    My perspective: pre-trial selling of (minor) amounts by the leadership has gotten some longs to get nervous. Others are opining that there is a bear raid going on, but I haven't seen the facts to support that yet.
    18 Oct 2012, 10:07 AM Reply Like
  • ahkolle
    , contributor
    Comments (3) | Send Message
     
    options are expiring tomorrow, lots of market manipulation, monday will be calmer....actually, it looks better than even this morning
    18 Oct 2012, 02:15 PM Reply Like
  • marpha
    , contributor
    Comments (565) | Send Message
     
    Re: selling

     

    A chunk of folks seriously thought a settlement pre-trial was in the cards. Hence, selling now. Look at the volume leading up to the trial. A LOT of people bought in well into the high $4's on expectation that a settlement was imminent that would drive the stock to $8, $15, $30 whatever. As most serious commentators debated here for well over the past two weeks, that was fantasy.

     

    Judging from the comments, a lot of the late buyers were folks who were swinging wildly with no concept of risk management, literally betting the farm or at least their retirement accounts. Faced with the inevitable realization that settlement wasn't going to happen, price declines and then accelerates.as underwater and overextended weak hands fold.

     

    What you want to watch for is where people start buying again. It looks like $4.00.

     

    The fact remains that the trial outcome will remain a binary event until the jury returns a verdict. Between now and then, we will learn where the current fair value is based on the current status quo.

     

    If Vringo wins at least $250m, expect a pop to $8ish followed by a sell off to some level above $5. The bigger the award, the bigger the pop and the higher the lower end of the range.

     

    If Vringo loses, expect a return to $1.50ish.

     

    Right here, the odds are middling--risk $2.50 to make $4.00. Not very exciting.

     

    One thing is for absolutely certain--ain't no way VRNG is going to be $15 - $30 any time soon. I challenge any one to come up with an historical stock chart that shows that happening in one, two, three months, etc.. Simply does not happen.
    18 Oct 2012, 11:13 AM Reply Like
  • takesolace
    , contributor
    Comments (15) | Send Message
     
    in the event that VRNG wins, the multi-year chart on VHC is most intriguing. rapid spikes, falls during the legal process, and eventual stabilization at a share price equal to roughly 8-10x from where the journey began.
    18 Oct 2012, 11:45 AM Reply Like
  • Payperpeddler
    , contributor
    Comments (2) | Send Message
     
    Apple?
    18 Oct 2012, 02:14 PM Reply Like
  • Adam Gill
    , contributor
    Comments (135) | Send Message
     
    Or you can buy a Feb. call spread and get the next $5 in upside for a buck. That's a pretty good bet. And I use the word "bet" intentionally.
    19 Oct 2012, 12:39 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    My interpretation of the 'No Settlement so far' is simple and actually very bullish

     

    Imo there's a lot of confusion going on

     

    If I got it correctly,
    VRNG is asking for about 5B overall (all the 10 years, past damages + future royalties)

     

    3.5% royalties is absolutely reasonable (standard is 1-5%)
    5B is about 3.5x the pretrial estimate of 1.4B since royalties have jumped 3.5x too

     

    Don't forget that 4 years of future royalties are worth more than
    6 years of past damages due to much higher revenues per year

     

    A settlement would come in the 2-2.5B area and GOOG is not ready (yet) to pay that.

     

    GOOG has very probably tried to low bid and VRNG didn't accept.
    that's it.

     

    Imo Very High Chances (80-85%) VRNG will win at least that amount in court (2-2.5B) and that's why
    they didn't accept GOOG bid.

     

    Why is VRNG 'just' a 4s stock and even selling from high 5s?
    Simple. The stock has already run a lot YTD and is about 6x from 52 week low so some selling was physiological.

     

    The stock now needs something real to run more.
    A real settlement, a real buyout, a real win and it will run more or actually jump.

     

    It should come any day within the next 2-3 weeks.

     

    I am raising my VRNG target to $25 from $15
    18 Oct 2012, 11:20 AM Reply Like
  • wiesemc
    , contributor
    Comments (565) | Send Message
     
    Steve, I am not in disbelief but I'm impressed that you went from zero to 761 and counting followers in about a month. Impressive.
    18 Oct 2012, 02:34 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » They are not so much following me, as they are interest in keeping up with any current info on VRNG.
    18 Oct 2012, 04:20 PM Reply Like
  • holykatz
    , contributor
    Comments (18) | Send Message
     
    Well as a great compliment I can say i am just learning the ropes here and I signed up to follow you, and I can honestly say you are interesting enough to follow on future opinions.
    18 Oct 2012, 06:23 PM Reply Like
  • Gallowyn
    , contributor
    Comments (30) | Send Message
     
    A lot of investors I have been talking with have nothing but good comments to say about you and your articles. We definitely find you as a reliable source on this site.
    19 Oct 2012, 06:30 AM Reply Like
  • woohoo23
    , contributor
    Comments (3) | Send Message
     
    All,

     

    I found a yahoo message board from someone who claims to be inside the court room. He posts periodic updates - they seem to be fair. Sounds like great news so far.

     

    I recommend clicking on his username and sorting his comments by "newest" instead of following the message thread which is flooded with other peoples' comments.

     

    User: percyway
    http://yhoo.it/RKDIPO
    18 Oct 2012, 05:43 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    He seems reliable

     

    According to him,
    Dr. Frieder walked thru in laymans terms on how Goog is infringing on patents. He is a search guru himself. He has officially said on record that Goog infringed on patents.

     

    He demonstrated entire animated and color coded version of patents and showed exactly how Goog infringed.
    18 Oct 2012, 06:13 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » He sounds reliable to me, as in it sounds like he is actually there.
    18 Oct 2012, 06:52 PM Reply Like
  • holykatz
    , contributor
    Comments (18) | Send Message
     
    I wonder if Google has decided to go to court because, it is sure that it will win this case, and make an example out of Vringo that is described as a "patent troll" , or did Vringo ask for too much in the settlements talks that Google refused to pay and thought its better off with losing at court or try a game of "chicken".

     

    By the way was the amount Vringo is asking was never Disclosed?
    i am suddnly unsure of that...
    18 Oct 2012, 06:12 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » $493 million for past royalties, an amount TBD for future royalties, but possibly in the same neighborhood as the past, plus attorneys fees and interest.
    18 Oct 2012, 06:53 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    Steve, Could you explain why ''only'' 1B total if royalties have been upped to 3.5% ?
    18 Oct 2012, 07:22 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » For past royalties, although the requested % increased, the royalty base decreased when all worldwide revenues were taken out, and only US revenues were considered.
    18 Oct 2012, 07:47 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    yes but US revenues are about half the total.
    If royalties are upped 3.5x I still don't get how total royalties in $ are lowered.
    19 Oct 2012, 07:43 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Vringo has been very conservative in its damage claim. They have argued to the jury that after the infringement began, Google's ad revenues immediately increased by about 20%. So they are asking for 3.5% of the 20% increase.
    19 Oct 2012, 11:57 AM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    I see. Thank you.
    Since VRNG has been very conservative, is it possible that the jury awards Vringo more than what they are asking for ? or even much more ?

     

    If so, how often that happens?

     

    Thank you again in advance
    19 Oct 2012, 12:01 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » These types of damages have to be actually calculable. I suppose the jury could decide that a reasonable royalty is more or less thant the 3.5% that Vringo is asking, but I would be surprised if they award more than what Vringo is requesting. I would think any deviation by them would be downward.
    19 Oct 2012, 12:04 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    mmm that does sound pretty strange

     

    You are saying Vringo has been very conservative in its damage claim, yet any revision by the jury should be downward ?

     

    I don't see any logic
    19 Oct 2012, 12:12 PM Reply Like
  • Revanche
    , contributor
    Comments (69) | Send Message
     
    Kevin, it's safe to say that the jury would 'trust' Vringo to 'shoot for the moon'. Since Vringo has not made any motion to suggest the infringement was willing (and now are barred from doing so), the jury will not hear that Google went out of their way to deny the patent holders proper compensation. No one in that courtroom is suggesting Google was trying to be 'evil'.

     

    Therefore, the jury has no reason to decide to award higher. If anything, any doubts they may have that survive a judgement against Google will be shown bu providing an award less than the 3.5% Vringo seeks. Less is much more likely than more.
    19 Oct 2012, 12:19 PM Reply Like
  • Money George
    , contributor
    Comments (9) | Send Message
     
    Steve, how about those Tigers! I made one out of two predictions right so far with the second pending. Let's see if We are right with VRNG as well. Still looking to bat a thousand on the month. Good luck.
    18 Oct 2012, 09:21 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » They certainly made the Yankees look really old really fast, huh?
    18 Oct 2012, 09:22 PM Reply Like
  • couponphone
    , contributor
    Comments (4) | Send Message
     
    Steve, I was floored when under testimony Ken Lang and his partner said that the total amount of cash that they both have contributed to I/P Engine was under $500.00 combined; and that they paid $12.50 for stock they received. Can you comment on that, how will that effect the jury? Tony Trujillo...byw I'm long on Vringo.
    19 Oct 2012, 01:58 AM Reply Like
  • marpha
    , contributor
    Comments (565) | Send Message
     
    Lol. Lang testified exactly as I've been saying he would. Berger and the others put together the deal and then decided they needed the original inventors to make the case more win-able. This case is not about Lang getting his revenge or realizing his personal reward because Google stole his idea. It's about a bunch of really smart lawyers and slightly sleazy finance guys finding a diamond in the rough and super-charging it to take on one of the biggest companies in the world. And to do this they knew they needed to bribe a tech guy who had been put out to pasture to make their case better. If you look at the photos of the Vringo/I/P team with Lang, he is always standing off to the side looking uncomfortable.

     

    Now, of course, Google is trying to use this against Vringo. This is the Super Hero vs. Super Troll theme. Will the jury buy it? We won't have a better idea until Google presents their case. Right now, it sounds pretty good what Vringo is saying. But we can also certainly see how Google is going to build it's case.

     

    Fun stuff!
    19 Oct 2012, 02:21 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » I don't think it's just that. Lang and Kosak testified that Vringo has an "Inventors Circle" that they and others are part of. They are also brainstorming and working on other inventions for Vringo. I think Vringo will be looking at not just buying IP, but also developing its own IP. I think it would be a mistake to overlook Lang and Kosak as just "window dressing." These are extremely smart guys, who have been put back together in an environment where they can invent away, and I gather they are happy doing that.
    19 Oct 2012, 03:42 AM Reply Like
  • couponphone
    , contributor
    Comments (4) | Send Message
     
    My understanding is that the "investment circle" consists of Lang. Kodak, and Hudson Bay a hedge fund that put up all the money. Was there anyone else that I missed?
    19 Oct 2012, 03:39 PM Reply Like
  • couponphone
    , contributor
    Comments (4) | Send Message
     
    The lack of a settlement so far may have been that Google knew that their stock was going to get hammered yesterday and decided that they had some time during the trial to let the stock rebound before introducing their Vringo problem which the Judge can barely understand, forget about the Jury, or "Investors". investors would realize that Googles "CORE" mojo could disappear. The timing was all wrong to introduce a buyout or settlement with Vringo before the 3rd Qtr financials came out yesterday. Smart move really if that was the case. before settling or buying Vringo. Google stock value was erased by 20B or 30B in the last two days...it's staggering really.
    19 Oct 2012, 03:39 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Actually, I think it was termed an "Inventors Circle."
    19 Oct 2012, 07:15 PM Reply Like
  • couponphone
    , contributor
    Comments (4) | Send Message
     
    Yes it was termed an "Investors Circle" thank you.

     

    However Steve my question is the Investors Circle consisted of Lang, Kosak that put in a total of around $500.00 combined, and Hudson Bay a Hedge Fund that put in millions, are you aware of any other investors that were also part of the original Investors Circle that contributed any funds?
    21 Oct 2012, 06:20 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » There was NO reference to an Investors' circle. The testimony was about a group formed at Vringo called the "Inventors" Circle, which appears to be a group formed for creating and pursuing new inventions. In fact, according to Don Kosak, they recently filed a patent on an invention through the Inventors' Circle.
    21 Oct 2012, 02:56 PM Reply Like
  • marpha
    , contributor
    Comments (565) | Send Message
     
    @stevekim

     

    I didn't see the Inventor's Circle reference in the transcriptions. That's interesting. So, Vringo's long-term strategy basically mirrors Intellectual Ventures. That is smart. Personally, I detest Myhrvold and what IV is all about--it's complete innovation piracy and opportunism. However, like Mark Cuban, I am comfortable with a divided mind about being a Vringo investor. From an innovation standpoint, it's like investing in a cigarette/tobacco company that's marketing it's product on the playground. Sorry for the reference; but it's true.

     

    For the purposes of this trial, however, I'm not sure the jury is going to understand or even care about Vringo's master plan. When Google makes their case, I would expect them to pound on the Super Troll theme and to portray Lang/Kosak as window dressing. Which is, basically, true for the purposes of this case.
    19 Oct 2012, 11:30 AM Reply Like
  • mccartjt
    , contributor
    Comments (21) | Send Message
     
    Possession is 9/10ths of the law. If you own the I/P then that's it. Frankly that GOOG has admitted that they've infringed and had a revenue boost makes it moot that Vringo and Lang are patent trolls.

     

    Its also moot if you buy a Rembrandt for $300 at a yard sale and discover its value afterwards. If Google had any brains they 'd have bought the patent they are infringing on a long time ago and now have no need for this day in court.. You've gotta dot the i's and cross the t's to make sure business is done correctly..
    19 Oct 2012, 12:31 PM Reply Like
  • marpha
    , contributor
    Comments (565) | Send Message
     
    Hmm. Look up the definition of moot. Because these issues are moot is precisely why they are being presented to the jury for decision. It's good that you feel certain in your beliefs, but that's why the trial outcome is a coin toss! It's nine other people's decision and none of them own stock in either Vringo or Google!
    19 Oct 2012, 12:41 PM Reply Like
  • caddy311
    , contributor
    Comments (154) | Send Message
     
    guy updating from inside the court (maybe?) has a blog now - see here:

     

    http://bit.ly/T5kBA2
    19 Oct 2012, 12:47 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1794) | Send Message
     
    yes

     

    very nice of him
    19 Oct 2012, 12:51 PM Reply Like
  • trungnnguyen
    , contributor
    Comments (4) | Send Message
     
    I have read a lot of positive things about this case so far where VRNG is favorable, but yet, the stock continue to drop daily. Can some one explain this to me.
    19 Oct 2012, 03:34 PM Reply Like
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