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Google's Argument Against Interest & Supplemental Damages: 10,000 Foot View 69 comments
Google's argument against pre-judgment interest & supplemental damages is in. What can we glean from it? I think it is safe to say there are no surpirses. As I surmised in an earlier post Google is seeking to make the jury's calculations precedent for everything that happens from here. I might add at the same time they will no doubt be motioning the judge to enter a judgment notwithstanding the verdict which would essentially overrule the jury and find that the defendants did not infringe. So we love the jury and their calculations until we can obliterate them is Google's mantra.
So on the pre-judgment interest Google argues (and cites Supreme Court and Eastern District of Virginia Court rulings to back it up) that it is inappropriate in view of the laches decision. I'm guessing they will win this motion. Google argues the appropriateness of T-Bill rate v. Prime rate of interest but I don't think the rate of interest is the key to this. People can argue this which is fine, I just think VRNG loses the pre-judgment interest battle.
So on to a bigger battle (much bigger), the supplemental damages battle. Google of course argues against supplemental damages and cites the verdict form to make its argument: "what sum of money, if any, if paid now in cash, would reasonably compensate I/P Engine for any of defendants['] past infringement?" Google argues that the amount the jury awarded for each defendant was it and it covers everything right up until the verdict. Ok, this is plausible but there is a problem with this logic in that the jury did not have a royalty base for this time frame so it can be argued, and has, that the jury could not consider it and therefore was not factored into their decision. Since Google essentially punted on handing the updated revenue information over, it allows Vringo to frame them once again in that pretrial, dirty tactics, light. If you are a pessimist you can argue that Judge Jackson won't add supplemental damages and will just stick with the argument that the jury gave all the money it intended to give up until the verdict. Since JJ is a bit unpredictable there is no way to know which way he'll go.
Now we have the Google magical apportionment theory to consider. They argue that since the award from Google was dramatically lower than the Plaintiff sought, when the math is considered, instead of the 20.9% apportionment number that Dr. Becker testified was appropriate, the apportionment should be 2.8%. Since it reinforces their own simplistic calculations, Google wouldn't dare compare this apportionment to the apportionment accorded the other defendant's which was...wait for it...wait for it...20.9%.
So even if Google is able to convince the judge there should be no pre-judgment interest (and I'm guessing they will) and no supplemental damages (it's possible) they won't convince Judge Jackson that he did not see what he saw in that courtroom over two weeks time. Google is previewing its argument that the apportionment that should be considered in establishing a forward-on royalty base is 2.8% and not 20.9%. They will not win this argument because the evidence and even the jury's calculations when considering all defendants does not support it. So here is a prediction. Expect to see a motion to correct the jury verdict calculations with respect to Google. That motion can come at any time, it may come in the next few days, it may come after a ruling from the Judge on the motion on the table, but it's coming. Unless of course we see a very near-term settlement which despite the ferocity of Google's defense (who would expect any less) is always possible. If we don't see some resolution shortly I also expect we will see a flurry of lawsuits aimed at Google's Search customers.
Disclosure: I am long VRNG.
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This post has 69 comments:
It basically said that yes we did have infringed but we should only pay 3.5% royalty from 2.9% of the revenue not 20.09%.
What is the ground for its argument? No ground at all.
I truly believe that VRNG will eventually wins it all:
Past damage $158 million not $30 million; supplemental damages and future royalty of 3.5% x 20.09% of future revenue from adWork.
don't know why you are talking about 20.09 and 2.9
and edva about 2.8 .........
everyone in total confusion mode
and past damages 158 +15 + interests = about 180-185M
2) EDVA,where are you getting the 2.8% number?
The situation is much simpler
Jury awarded 3.5% royalty.
All defendants numbers are 3.5% of 20.9% (BOTH Dr Becker estimate) but Goog which is exactly 1/10th.
It's clearly an elementary school miscalculation and only for GOOG (1 out of 5 defendants)
Goog motion asking all defendants numbers to be 3.5% of 2.09% is ridicolous at best.
2.09% doesn't make any sense and neither the fact that their number is the only one correct out of 5 (4 should be corrected lower out of 5 according to them)
They are trying to kid a federal judge.
and there's a good chance he ups future royalties too in his final judgement
you need both to succeed
JJ has to rule on future royalties too
sure
20th november was only the rendering of the verdict
final judgement is after post-verdict motions are ruled
Only a final judgment is subject to appeal and we are NOT there yet
probably a ruling on math error first
and then final judgement including future royalties ruling later
Do you think it will have a motion on that?
What additional motions the company may have?
Normal final judgment will be given with two months of verdict. Therefore it should be given by the end of this month.
GOOG argument is weaker than an Hail Mary.
Their 2.09% number doesn't make any sense and neither the fact that their past damages number is the only one correct out of 5 (4 should be corrected lower)
VRNG 20.9% number is the number provided by Dr Becker during the trial. it's clearly the correct number and only GOOG past damages needs to be correct, 1 out of 5.
99% win for VRNG
1) an appeal is not de novo
2) if you had a jury trial, it is very difficult to win an appeal, almost impossible
3) The appellate court can only reverse the trial court's decision if it finds a legal mistake in the trial court proceedings that was so important that it changed at least part of the outcome of the case.
The fact findings of the jury re infringement will stand here. Google can't change that.
Basically Google has already lost it all
There could easily be no appeal at all, otherwise google will risk the laches
That is, in jury's $30 million past damage award, Google is responsible for $15.8 million, which is 2.8% of increased revenue x 3.5% royalty rate not 20.9% of increased revenue x 3.5% royalty rate.
Therefore, Google said that means future damage should also be limited to 2.8% of increased revenue x 3.5% royalty rate.
Let us find out whether VRNG will file motion on this errors. This is the reason why VRNG stock price is so low now.
Up to now, VRNG has three set backs during the trial:
1. Limit the damage calculation to US revenue only;
2. Laches: limit the damage calculation only from the date when VRNG filed the lawsuit.
3. Jury's mis-calculation to limit Google's past damage to only 2.8% of increased revenue not 20.9%. Google itself acknowledged that the revenue increased 20.9% after applied Lang's patents.
Now if Judge sits with Google in his final judgment, stock will go under $3.00 for sure.
Google's part is $15.8 million not $158 million. For me, it is obvious a math error but how can jury make such error is beyond imagination.
if it's beyond imagination, he will fix it
that's why google % must be at least the same of every other defendant
Google kamikaze move is less likely than an Hail Mary and not smart at all at this point
now Google and customers face the potential of Willfull Infringement penalties of (3x) as they have been found to be infringers, for everyday, week, month, while leading up to such an appeal court date. They have nothing per say to appeal with. The PA was debunked, the source code argument was a farce, the judge has given them significant legal opportunities in allowed motions, they failed at a rationale SJ argument, they failed in the Markman Hearing, they got half the laches argument which is an appeal for Vringo, and the royalty rate was industry standard from a jury. they got nothing!
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I totally agree
There could easily be no appeal at all, otherwise Google will risk the laches amount (350M) and 3x damages.
If I were Google, I'd buy the patents or VRNG for 1-1.3B as soon as possible ($9-11.5 a share) through an hostile takeover if necessary. As soon as possible means before MSFT YHOO or any other.
They would get more than 500 patents for the same sum they'd have to pay anyway, including the 2 search patents, and that's for less than 0.5% of their market cap. Why shouldn't they do it ?
1. Future royalty payment: 3.5 x what (we all believe that it should 20.9% of increased revenue). If it is only 2.8%, that will be a bomb.
2. Past damage: $30 million or $158 million. If it is $158 million, stock will gain 1.5/share for this alone.
Interest is a small potato.
Don't know why they tried that unless they trying to make fun of the judge.
past damages is 30 or about 180, not 158 (it's 158 goog +15 other defendants +interests)
Could be 190M with the extra month VRNG already asked
Hostile takeovers through tender offers involve the acquiring company purchasing the shares of the target firm directly from shareholders or on the secondary markets.
Therefore, buying all or a majority of the company’s shares allows the acquiring company to possess ownership of the target company.
They could offer $1B (9 a share) and acquire the company by owning just 51% shares.
Thus paying only 510M vs 900M lost in in the trial
The reason: jury offered 2.8% to Google and they should be treated the same.
Now Judge must take a serious consideration on the past damage. This becomes a big issue he has to deal with.
He cannot simply let it go.
I am looking for VRNG's motion before Friday's deadline.
In the mean time, stock may dancing in $3.35 - $3.55.
I have xxk in at $3.41 and will buy extra 10k for day trade.
99.99% in VRNG favor imo
and getting more than 500 patents ! Why shouldn't they do it ?
Imagine a sudden takeover bid tomorrow at $9.
Do you think most people will hold or sell ?
They could end owning the majority of the company in very few days and the dispute is over
The most for GOOG is to settle as they did with other such lawsuits.
It may eventually settle for $500-$600 million.
I originally believe that the final settlement will be no more than $200 million and now I feel that it should be in 500-600 million range.
they pay much less and they acquire a lot of patents, including the 2 search engine ones
it will happen imo, any day
Google can buy VRNG shares at this price.
After Judge final judgment, they will sell for a profit and used the profit to pay for the damages.
Just a joke.
Settlement will be the final outcome for this case. I am just curious why people continue thinking the impossible.
All the acquisitions are to grow or expand its business or expand their patent portfolio. None from court.
But they do have few settlements after it lost in patent lawsuits.
By imposing it's will on GOOG, VRNG has demonstrated that it's patents are at the heart of their revenue generation. This is no ordinary lawsuit and no ordinary patent. This is critical to GOOG and, in my opinion, a major enough issue to solicit buyout or takeover if necessary. I'm certain that GOOG will not hesitate to acquire VRNG if it is more financially & strategically beneficial than settling. I don't profess to know what will happen. I merely wish to point out that calling this scenario "Impossible" does not reflect that facts at hand or the gravity of the situation for GOOG.
they will pay much less to acquire the whole company (or 51-60%)
and get all the patents
something is very wrong with the stock price right now
not necessarily by GOOG
1) up to 12/07 VRNG response to Google on jury miscalculation
2) any day after 12/07 JJ ruling on jury miscalculation
3) up to 12/19 post verdict motions
4) any day after 12/19 JJ final judgement
Don't forget that Jury verdict took only 3 days.
Very high chance we will get final judgement before Xmas
or before end of year.
and have patience
anyway it depends on the strike: math error fix is very important
and should be ruled before expiration
Past Damages Recap
158M (Google past damages fix)
15M (4 other defendants)
15M (Oct 1 - Nov 6 Supplemental damages motion)
+ interests
=
Almost 200M
Quite a change from the current 30M
The table of past damages presented during the trial is from Sept 15 2011 to Oct 01 2012 (only 12.5 months).
That's why VRNG already filed a motion seeking for supplemental damages from Oct 01 to Nov 06 (day of verdict).
173M / 12.5 months is 166M annualized
a much better annualized number than previously thought (prev estimate 153M)
Germany + UK 145M people market
ZTE Android -> Google
2) Motorola probably sued in future
extremely depressed stock price
really can't see how GOOG could not be interested in buying VRNG
that 2.8% number they are claiming is simply absurd, they are mad
their past damages is 1/10th of other defendants, so 2.09% instead of 20.9%
the 2.8% number is coming from fantasyland, really incredible,
they are kidding a federal judge
they are surely trying to create confusion intentionally
they say 20.9% is not supported by jury's findings
LOL
it's supported by 4 defendants out of 5
JJ should fix the math error which is 101% due
but also punish them with 5-7% future royalties
VRNG will fight with them to the end.
that would be fun
they could ask 5B after that
at that point GOOG would buy VRNG for any sum (x Billions) without risking an injunction ruling
Numbers are MUCH BETTER than my previous estimate
The table of past damages presented during the trial is from Sept 15 2011 to Oct 01 2012 (only 12.5 months).
That's why VRNG already filed a motion seeking for supplemental damages from Oct 01 to Nov 06 (day of verdict).
173M / 12.5 months is 166M annualized
a much better annualized number than previously thought (prev estimate 153M)
Actually final 2012 number should be about 175M since revenues are ramping vs 2011, especially mobile ads which is more than 3 times 2011
Future Royalties might be higher than 3.5% or JJ could up the 20.9% AdWords portion.
Using only 3.5% of 20.9% and a very conservative 11% y/y AdWords growth we have 740M of future damages.
Skyrocketing Google mobile ads (2016 estimate is almost 4 times 2012)
will probably fuel overall ads growth to 20% Y/Y and we have 880M of future damages.
Future Damages
740M very conservative
810M conservative
880M likely
950M possible
MUCH BETTER than my previous estimate
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$GOOG, $MSFT, $VRNG new blog post out @ edvapatent.wordpress.com
Apr 4, 2013
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$VRNG He can rule anytime after the 15th. Presumably he is taking a few days to consider everything and maybe even a week or two.
Feb 21, 2013
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