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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: Down To Two Witnesses 51 comments
    Oct 26, 2012 11:36 PM | about stocks: VRNG

    Today's trial day ended with Google's damages expert, Dr. Ugone on the stand. I'm told that at the end of the day, the attorneys discussed their remaining witnesses with the Judge. It seems that on Monday, they will finish the Direct and Cross-Exam of Ugone, and then Google will rest its case. Vringo will then call Jaime Carbonell to testify, and he should be the last witness in the case.

    My guess is that Judge Jackson will call it a day at the end of Carbonell's testimony and give the attorneys overnight to prepare their closing arguments. Tuesday would then be closing arguments, followed by the Judge's reading of the jury instructions, and then the jury will go into deliberations.

    Some potential fireworks in the instructions will be what if anything Judge Jackson chooses to instruct the jury about (1) disregarding the Disney agreements, i.e., will he instruct them that the testimony is being stricken because Google failed to provide a witness to show comparability; and (2) whether Google failed to provide discovery that was requested during pretrial proceeings, since their attorney opened the door to that instruction by crossing Becker on the damage issues (and essentially criticizing him for not having more Google docs to rely upon in his calculations).

    Of course, all this is subject to change depending on the whim of Mother Nature. Barring a storm delay, however, it seems quite certain that the jury will begin deliberations on Tuesday of next week

    Disclosure: I am long VRNG.

    Themes: GOOG Stocks: VRNG
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Comments (51)
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  • Billu674
    , contributor
    Comments (47) | Send Message
     
    Hi Steve

     

    no updates for 10/24, 10/25 & 10/26?
    27 Oct 2012, 12:16 AM Reply Like
  • a1dynamo
    , contributor
    Comments (19) | Send Message
     
    looks like all will have an extra day of suspense
    court will be closed tomorrow due to storm so trial gets delayed
    this gives steve an opportunity to hopefully complete and submit more summaries for past thurs and friday's proceedings
    larry
    28 Oct 2012, 10:26 PM Reply Like
  • bazooooka
    , contributor
    Comments (2524) | Send Message
     
    Steve, what percentage of your portfolio do you have riding on this one? Are you using options as well? You have made quite a splash n your one month on SA. =)
    27 Oct 2012, 04:47 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » I have less than 10% of my portfolio at risk here, and yes, I am about equally spread between common/warrants, and $5 calls expiring in November and February. As far as splash, I think we are all in the same boat, looking for a context to try to analyze this crazy stock that is stuck in a lawsuit. I have tried to lend some context to the litigation so we can be more informed in evaluating and managing our risk, but ultimately, the investing decisions and risk tolerances still remain extremely individualized.
    27 Oct 2012, 04:57 AM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    This stock is one of the most volatile last two weeks, 10% swing in one day is normal and two 25% swing days last week.

     

    It is day trader's dream stock and will be so before verdict.

     

    My gut feeling: VRNG will win the verdict but the amount of award may not be very big. May be much less than most expected here.
    27 Oct 2012, 02:43 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Can you try to quantify (1) what you think is expected and (2) how much less you would guess at?
    27 Oct 2012, 03:05 PM Reply Like
  • a1dynamo
    , contributor
    Comments (19) | Send Message
     
    will lack of a claims for willfull infringement and injunction to stop Google from infringing on their patents be used against vringo and what is potential adverse effect on jury impression on strength of infringement points
    any thoughts on vringo's lack of a claim on these 2 points and whether it was deliberate or poor judgement
    since court announced it will be closed today due to weather, trial gets delayed
    29 Oct 2012, 11:04 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » I am quite sure the decision NOT to assert claims for willful infringement and injunctive relief were deliberate. I think that in conceiving the suit, Vringo wanted to keep it simple and strong, to put and keep their best foot forward.
    29 Oct 2012, 01:51 PM Reply Like
  • mitigate
    , contributor
    Comments (14) | Send Message
     
    The reason Vringo did not ask the court for injunctive relief is first off, they are not currently using the patents. Secondly, they want Google to keep on using their patent so they can continue to earn royalties going forward. Pretty cut and dry. Willful infringement is very hard to prove. Why waste time and resources on a claim that has very little chance of succeeding. Also, doing so could possibly alienate the jury. Their simple strategy of claiming past and future royalties is in my opinion the best approach.
    29 Oct 2012, 04:15 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » I agree.
    29 Oct 2012, 04:16 PM Reply Like
  • a1dynamo
    , contributor
    Comments (19) | Send Message
     
    all exchanges will be closed tomorrow ( tues ), as of 9pm, court is scheduled to be open at 10am tomorrow as per phone recording. no new postings on their web site
    29 Oct 2012, 10:02 PM Reply Like
  • a1dynamo
    , contributor
    Comments (19) | Send Message
     
    steve
    i read a few days ago that a tsunami was expected in hawaii due to the massive earthquake in canada. hope u r ok
    larry
    30 Oct 2012, 03:12 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Thanks, the Tsunami came and went, thankfully without any catastrophic results.
    30 Oct 2012, 05:32 PM Reply Like
  • RacerX1225
    , contributor
    Comments (125) | Send Message
     
    Im not quite sure why you would say that James because, personally, I feel like there is willful infringement, its just not being litigated. Google knew full well about these patents and ignored them. That in mind, intentional infringement, if its there, will not mitigate a settlement amount, just the opposite and we already have a judge who favors the lil guy and Google has been pretty well established as a bad guy i some ways. Why would you say that? Thanks.
    27 Oct 2012, 05:49 PM Reply Like
  • see punjabi
    , contributor
    Comments (354) | Send Message
     
    Thanks for the update Steve. I think settlement is out of context now and the case depends upon jury's verdict next week. I hope vrng prevails here. Will be looking forward for your updates next week.
    27 Oct 2012, 06:01 PM Reply Like
  • Tyammons
    , contributor
    Comments (27) | Send Message
     
    Agreed, we all know that it takes a special type of investor with a particular personality type to speculate on a stock like this, but you have to admit its still fun. I hope everyone stays diversified here. Chasing a one time retirement trade with your entire portfolio reminds me of when I was a child and my dad had me go mow the lawn for $5 allowance (BIG money back then). After I finished I walked back inside to he and his friends playing poker. I wanted to learn, he told me how to play, I went all in on my first hand and he took my $5 back saying "don't ever gamble all your hard earned money." I laughed thinking he would give it right back....... He has since passed away and needless to say I still don't have that $5. Good luck next week friends, and thanks to you Steve for your insights. It's always nice to meet Kindred spirits out there and I hope everyone with a vested interest in this trade is rewarded.
    27 Oct 2012, 10:49 PM Reply Like
  • Montana29
    , contributor
    Comments (2) | Send Message
     
    How worried are you that the facts presented in the case are simply too complex for the jury to understand The idea of GOOG (well established, ultra-successful company) having to pay a virtual start up company hundreds of millions of dollars for patents they bought for a tiny percentage of that amount could seem far fetched to jury members not being able to fully comprehend what they are hearing. I am long VRNG but worried about this risk.
    27 Oct 2012, 11:46 PM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    My calculation shows a less than $100 million award if VRNG wins. There is over 74% chance of winning up to this point.
    28 Oct 2012, 01:16 AM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    James REALLY!?! LESS THAN $100 mm, what calculations are you using? Past infringement alone is assessed by Dr. Becker at $469mm not including forward royalties. Please provide with us with the calculations you are basing your estimates with?
    28 Oct 2012, 11:11 AM Reply Like
  • RacerX1225
    , contributor
    Comments (125) | Send Message
     
    With all due respect James: And then you woke up :)
    29 Oct 2012, 04:54 PM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    Yes I am right.

     

    U.S. District Judge Raymond A. Jackson ruled that if Vringo and its subsidiary, I/P Engine, convince a jury that Google infringed on the patents, it cannot collect damages for the six years prior to the lawsuit’s filing last year. maximum damage: $500,000.
    31 Oct 2012, 02:21 PM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    Our team has done very detailed work on the amount of possible damage collection. Our figure is a surprise to many here, who are looking for 1 billion.
    31 Oct 2012, 02:22 PM Reply Like
  • darkangel
    , contributor
    Comments (38) | Send Message
     
    did you mean to say500'000'000 million not thousand
    31 Oct 2012, 02:44 PM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    James your an Idiot..plane and simple...thats based on past damages..not counting future Royalties. nice math using a reporters article to base your analysis.
    31 Oct 2012, 02:54 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » Where do you get the $500,000 from? I am thinking the past year is around $80 million, more or less, before future royalties.
    31 Oct 2012, 03:17 PM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    the author puts in the wrong amount of $500,000 not $500million unbelievable they cant be held accountable for their actions and mistakes!
    31 Oct 2012, 03:34 PM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    $500,000 is from VRNG. Company asking the minimum damage payment of at least $500,000, not from Judge.
    31 Oct 2012, 03:35 PM Reply Like
  • Droney
    , contributor
    Comments (100) | Send Message
     
    That has to be a typo. $500,000? Now way. Won't believe it till I see it. He had to have meant $500m.
    31 Oct 2012, 03:39 PM Reply Like
  • mitigate
    , contributor
    Comments (14) | Send Message
     
    This case is not about right and wrong. Vringo claims their patents were infringed. Google claims there is prior art so the patents in questions are not valid. What it boils down to is this: Whatever side has more credibility with the jury will prevail. Most civil cases settle prior to trial. However, when a trial does take place, the side that presents its case in the most credible manner to the jury wins. So far Vringo has done the best job of presenting their facts in a most believable manner. Barring any last minute suprise, Vringo should prevail. The only unkown is the damage award. Let's hope it is high enough to run the stock up at least to $10 or so. I am long and have limit orders already placed to sell at $6.50 up to $10.
    28 Oct 2012, 02:41 AM Reply Like
  • sab63090
    , contributor
    Comments (23) | Send Message
     
    iv's are so high that either a backspread or modified backspread might work nicely if VRNG wins monies above $5.50.....I'm using 1.5 to l.....(long 50% more than the short position)......ex. 15 long contracts vs 10 short....5's long 4's short.....this also works with a long position......long shs/100% covered write (4's), and long otm calls (5's)....
    28 Oct 2012, 10:40 AM Reply Like
  • sonicthoughts
    , contributor
    Comments (218) | Send Message
     
    Steve: Thanks again. I have a couple of things on my mind that you might help me process:
    1. Will verdict and award be announced at the same time or on different days?
    2. Will the stock halt when a verdict is imminent and will there be any advanced notice?
    3. When will we know / be able to determine scope of appeal?

     

    any insights?
    28 Oct 2012, 12:40 PM Reply Like
  • Noreika
    , contributor
    Comments (459) | Send Message
     
    I'm reading too much analysis here fellas.

     

    Holding.
    28 Oct 2012, 07:39 PM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    Royalty: VRNG increased it from 1% to 3.5%. I think that it is too much for this case.

     

    Normally the higher the revenue, the lower percent the royalty will be.

     

    1.5% - 2.0% is about right.

     

    Please remember, once VRNG wins, Google may face multiple-patent lawsuits later. If Google has to pay 3.5% royalty for each case it lost, Google will not be able to do its business.

     

    It is Google which created the world most successful i
    Internet search company, not Lyco.
    29 Oct 2012, 12:15 AM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » But the damages aren't based on Google's proprietary search algorithms, but on their AdSense marketing, which is based on separate algorithms, which Vringo claims falls within the Lang patents.
    29 Oct 2012, 01:52 PM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    James given what we have there's $13.4B gained by Google by using Langs patents. 20% of $67Billion
    As you say 1.5%-2% should be awarded which equals $200mm - $268mm
    Where do you get $100mm from your original comment? or is this some fictitious number you plucked out of thin air?

     

    "Google may face multiple-patent lawsuits later. If Google has to pay 3.5% royalty for each case it lost, Google will not be able to do its business."
    FYI they are facing a multiple lawsuits presently and they can afford to pay out on all of them with more the $50B in the bank
    Care to now explain your comment above, but please refrain as I've heard enough already......LMAO
    Makes one wonder even if your Personal Bio is accurate.
    29 Oct 2012, 06:08 PM Reply Like
  • RacerX1225
    , contributor
    Comments (125) | Send Message
     
    It doesnt make a difference what we think Vringo deserves, its up to the courts and the judge and he says 3.5%.
    30 Oct 2012, 08:49 PM Reply Like
  • darkangel
    , contributor
    Comments (38) | Send Message
     
    James In respect I feel you lost us all on Damages, I truly feel they will get around 2% royalties. We have to remember these patents are now owned by VRNG... It does not matter that Google has created the worlds best ever I-Internet, the issue here is they stole a key process to get there, and they have stomped on many heads to get there also. Google has sued many with total disregard for those companies and what they built and attained. So why should there all of a sudden be a tactic employed, to feel sorry for them here. Are we forgeting they have over 44 billion in cash sitting there and more each year pouring in.

     

    The Judge and Jury I figure will award a total toegther of around 550-1.3 billion and future royalties of 2%, ---I feel after this huge win - which I feel stands at 80% win in VRNG's favor-- will wake up everyone now -- all those the VRNG Hit list that are being sued by VRNG, they all waited on the side lines to see if the little pea in the pod would become something more. Google will now be forced to buck up or risk someone else buying VRNG thats on the hit list.and they in return will lose a competitive advantage of paying royalties to a competitor who may buy VRNG or they may say sorry you cannot use our Patent all together to Google.

     

    We have a major situation brewing now in VRNG's favor, a perfect storm, many on the hit list would rather make an offer and own the one that will eat their cake. They can then in turn own the patents and sue others instead, with use of VRNG's legal team. I feel also that because Chinese companies are thick with cash, that they in turn will make a huge and I mean huge offer for VRNG and its Patents. After this win, VRNG's team will not take offers on the cheap, they will scoff at any such numbers below 25 bucks a share at present time over the next few months. I am not saying that will be our share price, I am saying numbers to complete a buy out. The more lawsuits that are filed and companies on the hit list that settle out of fear will make the share price valuation grow more and more..I truly feel James A. is probably right, we may see a significant share price climb into the stratosphere soon. After the Judge and Jury's positive decision, this week, we all have to remember, we will se a substantial record breaking share accumalation happen, by new traders and now Big Institutional investors buying in, because now they know VRNG is a true winner and there will be a buyout coming from someone out there.

     

    Oh and did everyone forget all the shorts and the fake shares they own, it will be time to pay the piper for them also, and paybacks are a B^&*^*&^...We should hit 11-15 bucks plus easy after the verdict is announced, and short run to cover before they have to buy in at a record high new price and it will happen. Then we will move down to about 10 bucks trade in that 8-11 range for a bit and then with every new lawsuit announced we will move slowly higher, and if its a buyout, see you at 25-35 bucks people--
    29 Oct 2012, 02:05 AM Reply Like
  • Alex Picoult
    , contributor
    Comment (1) | Send Message
     
    Great article Steve. Here's my question for you: Google made a point of saying they will make an example of Vringo as a warning to all others, going all the way to the Supreme Court if necessary in appelate court . While Vringo does have an excellent litigation team, Google has much deeper pockets and could live out this case financially much longer than Vringo could survive. If this ends up being the case, why risk having to wait an unknown amount of time for Vringo to completely close this case and retain its awards from Google and make the investors money. If my income was more flexible i would be willing to possibly take a longer stake in Vringo's success, but just as many others I am not made out of money and waiting for Google to leave Vringo alone for good after the case wiukd have to high an oppertunity cost. Also, could you shed light on the subject of Vringo's officers unloading stock before and throughout the case, giving the impression to investors the firm has it's doubts and trepidations regarding the outcome of this case.
    29 Oct 2012, 02:59 AM Reply Like
  • holykatz
    , contributor
    Comments (18) | Send Message
     
    @alex
    Some of your questions had been addressed an talked about alot, the wide beleif is even if google appels it doesnt matter all that much cause a win would credit vringos future lawsuits so a price increase is expected even without them acctualy getting the cash yet, as for the deep pockets, vringo raised 45mil which is more then enogh for a long legal battle.
    As for the stock selling I see 2 points worth looking at, first the stocks sold are a very small fraction of the stocks they still hold, secondly these stocks were acctuly options coming to date that they decided to sell rather to hold for whatever reason ( sone profit taking most likly) either way I do not see any reason to think it is due to a foul move taking place in the sort of them jumping ship.

     

    Just my 2 cents in this
    30 Oct 2012, 03:34 AM Reply Like
  • a1dynamo
    , contributor
    Comments (19) | Send Message
     
    Too bad the markets are closed. i was expecting the stock to continue to trek up as the trial moved closer to jury deliberations and decision.
    Reading steve's updates & comments as well as other comments posted on the blog has truly been an educational and enjoyable experience. Steve is extremely bright and articulate and did a great job of bringing everyone up to speed on a level that all can comprehend.
    On another note, i believe the transcripts for past thurs and friday have yet to be filed via pacer but are expected to be filed by end of today.
    Is there agreement that the jury probably won't get their instructions and begin their deliberations any earlier than tomorrow ( weds ) afternoon.
    Today Google finishes with their last witness with cross examinations then if i recall correctly, closing arguments will begin.
    30 Oct 2012, 03:12 PM Reply Like
  • SteveKimLaw
    , contributor
    Comments (461) | Send Message
     
    Author’s reply » It sounds to me like Carbonell will testify tomorrow morning, followed by closing arguments tomorrow afternoon. The jury should get to start deliberations at the end of tomorrow or more likely, first thing Thursday. Given that they will have all day on Thursday and Friday to deliberate, I would not be surprised if a verdict comes in on Friday, although it could easily continue into next week.
    30 Oct 2012, 05:34 PM Reply Like
  • yvette.grier
    , contributor
    Comments (154) | Send Message
     
    I just saw this article on http://bit.ly/VDV3aZ. My question is this: It is obvious that Vringo did not know about this. Why did the judge wait till now to tell them? Why not tell them sooner?
    31 Oct 2012, 03:34 PM Reply Like
  • RacerX1225
    , contributor
    Comments (125) | Send Message
     
    I am wondering the same thing. This is not something that common sense would dictate happens now. My dad was a lawyer and always said "whats legal isnt always whats logical." and I am thinking that may apply here.
    31 Oct 2012, 04:08 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1759) | Send Message
     
    this judge ruling is absurd at best,
    especially with trial almost 100% done
    31 Oct 2012, 04:12 PM Reply Like
  • yvette.grier
    , contributor
    Comments (154) | Send Message
     
    KevinPorter,

     

    I agree. The question now becomes: How does this affect the award of damages past and future royalties? Can treble damages only be awarded to past damages and what are the terms for their assessment?

     

    Very Frustrating!
    31 Oct 2012, 04:23 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1759) | Send Message
     
    If true, it will obviously mean a significant cut in the past damage claim, since past royalties will only be collectable from September 15, 2011 forward. (basically only 1 year vs 6 previously)

     

    Claim for future royalties is still intact (4 years)

     

    So total potential award of $600 to $700 million, which is still pretty big, not including prejudgment interest and attorney's fees.
    31 Oct 2012, 04:35 PM Reply Like
  • yvette.grier
    , contributor
    Comments (154) | Send Message
     
    Thank you for the information. It is helpful. How would an award of 600-700 million affect the stock price?
    31 Oct 2012, 07:17 PM Reply Like
  • Kevin Porter
    , contributor
    Comments (1759) | Send Message
     
    700M = $10-12 share price imo
    31 Oct 2012, 07:35 PM Reply Like
  • yvette.grier
    , contributor
    Comments (154) | Send Message
     
    Anyone know why AH trading halted?
    31 Oct 2012, 07:18 PM Reply Like
  • yvette.grier
    , contributor
    Comments (154) | Send Message
     
    Vringo update:

     

    http://yhoo.it/PI3BkA
    31 Oct 2012, 07:28 PM Reply Like
  • jsIRA
    , contributor
    Comments (2502) | Send Message
     
    Another volatile day tomorrow. $2.00 is definitely low for VRNG. Market always over-reacts.

     

    Even $100 million award is quite a victory for VRNG. VHC was awarded $100 million from two patents against MSFT back in 2009. And it is $31 stock now.
    31 Oct 2012, 07:53 PM Reply Like
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