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EDVA
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I am part of a small investment group that combines significant business experience in product marketing and communications with legal analysis and interpretation. My partners and I combine for over 50 years of experience in these fields.
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  • VRNG: Deconstructing Ravicher & Other Thoughts 19 comments
    Dec 14, 2012 9:42 AM | about stocks: VRNG

    Just for fun lets take the latest SA offering from Dan Ravicher ["DR"] and examine it paragraph by paragraph. Remember, an "expert" parroting a position that has little basis in fact does not somehow make it more likely to materialize. Just as important if not more so, is that one should not "act" on such a position if it involves the stock market as doing so may be tantamount to fleeing your house given an earthquake warning in an area where little threat exists only to find out later that the "new" invention claiming seismic activity was suspect.

    In the third line down in the first paragraph the word "mere" implies "paltry" and therefore in that context suggests the jury felt the suit brought by Vringo must have been something less than significant. I argue vociferously that since Vringo won on all counts with respect to infringement, the jury's state of mind, particularly in light of the questions they asked of the court during deliberations, was probably quite punitive. The remainder of DR's first paragraph seems to mimic the argument of one of the litigants (guess who). The second paragraph begins with what seems to be a thinly veiled warning that Google intends to double down on the specious argument of damages with respect to the jury tabulations. This argument is not centered on facts presented during the trial but no matter, lets stay tuned to see if a federal judge is willing to rule for something that was not presented in his courtroom. The author suggests that people should worry about this.

    Further on, DR talks about the "successful" opening of a separate front in this case, meaning simply that the USPTO will review the Lang 420 Patent. It is interesting to speak of this as though one has gotten the last seat on the next Russian excursion to the international space station. Far from being terribly difficult, reexaminations with a reasonable presentation of something new referenced as prior art often get the nod. DR goes on to discuss how he has warned in the past that an appellate court may overturn the jury's finding of infringement and validity but does little to offer the reader an accurate picture on how long the odds are against an appellate court doing so (and they are very long indeed).

    So this is where critiquing all of DR's arguments becomes tedious, as on closer inspection they often appear slanted, illogical and inaccurate. As a result we are not going to proceed paragraph by paragraph and will simply confine ourselves to the major weaknesses. One weakness is to suggest that the PTO will permanently invalidate all of the 420 claims in the "near future" without providing anything but a passing reference to Vringo's response. Since the average wait for the USPTO to get to a final action is 25+ months, and since the PTO hasn't even decided yet to review the 664 Patent, DR appears to be taking liberties with the expression "near term."

    A quick note for you math geniuses out there: DR claims that Vringo will not see hundreds of millions of dollars but leaves open the possibility that Vringo will be paid up until the USPTO decides its final action. From my calculations this would appear to be around the first week of November 2014 (or perhaps longer depending upon whether the 664 Patent is reviewed). So that would be two years worth of royalty payments to Vringo. Since DR has made the case that a narrowing of the claims to avoid invalidity by Vringo could lead to a successful workaround by Google, one may infer that a workaround is unlikely to be successful until such a decision (if it ever is) is made by the USPTO.

    Lets marry this thought with another of DR's observations. He states that the court has neither ruled on the question of obviousness nor a future royalty rate. In fact the court has ruled on both (see docket numbers 799 here & 801 here) and did so on November 20, 2012. While perhaps not as artful and fulsome a description as some would like, line three on 801 has the important sentence "The Running Royalty Rate is 3.5%." If one assumes that the Judge used the apportionment rate of 20.9 % established by Dr. Becker (the only one presented at trial) multiplied by 96% of Google's U.S. revenues multiplied by 3.5%, we get a total of $316M (based upon flat revenue) up until the average time in which the USPTO normally rules. So if we square this interpretation of the logic of Professor Ravicher with the rest of his argument we get back to the only thing he can hang his hat on to arrive at a figure that is less than the several hundred million he says won't happen. And that is that the Judge must use math that was not presented at trial. I have said before that it remains a possibility that the Judge for some reason will decline to correct the past damages or even offer supplemental damages. For the record I expect that he will not decline to do so since he likely knows an appellate court will correct if he doesn't. But to think that the Judge might move from being someone who will not overturn or increase past damages to an active participant in fuzzy math is beyond the pale. Therefore, it is my opinion that DR has already lost his argument against an award of multiple hundreds of millions to Vringo.

    A few other observations: One, I think we will see a ruling on the interest and supplemental damages prior to the other rulings. This is the main reason that Vringo did not explicitly ask for a correction when they filed the response to Google on this same motion. If they had it would likely have delayed a decision by the court and perhaps even resulted in a hearing. Vringo knows that if the Judge does the correct math on the supplemental damages that whether JJ fixes the past damages or an appellate court does, it is probably going to happen. This ruling will also clarify how the future damages are to be calculated since the court will have done this calculation for the supplemental.

    Food for thought…there is no way for us to know whether a juror has come forward to speak about the past damages. We live in a digital age and one or two of them may just be curious enough to see how this all turns out. If so, they may well have seen that there is conflict about this verdict. If you spent a few weeks of your life on a case of some import and felt you may have gotten it wrong would you want to do something about it? I'm not saying this has happened but it seems strange that there has been no motion to get signed affidavits from the jurors. Keep in mind too that the Judge could have called one or more jurors back already. In any event big decisions are coming and my money is on the fact that what was presented at trial will prevail. In addition to his ruling on the supplemental the Judge is well within his rights to correct the past damages (see here). He may also clarify more fully what his Judgment of November 20 actually means. Why would he do all these things at once? Perhaps just to get on with it. This would leave the parties with the stark choice of settling or taking it up on appeal. I think there is an 80% likelihood we see the supplemental ruling in the next few business days and a 50% chance of the correction and clarification at the same time.

    Disclosure: I am long VRNG.

    Additional disclosure: These are my opinions only and should not be used in isolation to trade any security. Please do your own due diligence and/or consult with an investment advisor.

    Themes: GOOG Stocks: VRNG
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Comments (19)
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  • Kevin Porter
    , contributor
    Comments (1755) | Send Message
     
    well done

     

    I agree the ruling on past damages will be very soon.
    It could even be today if he wants.

     

    We have really waited enough already.
    14 Dec 2012, 10:17 AM Reply Like
  • EDVA
    , contributor
    Comments (114) | Send Message
     
    Author’s reply » Amen to that Kevin!
    14 Dec 2012, 10:43 AM Reply Like
  • RHD
    , contributor
    Comments (447) | Send Message
     
    Thank you for your effort and clear analytical thinking, as always. The timeframe in the final sentence seems aggressive to me; do you have some basis for such?
    14 Dec 2012, 10:46 AM Reply Like
  • EDVA
    , contributor
    Comments (114) | Send Message
     
    Author’s reply » Only that the original motion was filed well over a month ago and both sides have responded to each other. It is impossible to know what the court will do but I am guessing that Vringo is using the same calculus which, in short, is that the Judge will rule on supplemental before the 19th and should he not correct the past damages in light of the math that he must employ to arrive at the supplemental, there will still be time to motion explicitly for a past damages correction.
    14 Dec 2012, 10:53 AM Reply Like
  • Kevin Porter
    , contributor
    Comments (1755) | Send Message
     
    BTW

     

    the correct date for post-verdict motions is up to Dec 18, not 19

     

    28 days after the 11/20 verdict
    14 Dec 2012, 12:59 PM Reply Like
  • Spcomelately
    , contributor
    Comment (1) | Send Message
     
    Thank you Edvacourt!
    14 Dec 2012, 02:25 PM Reply Like
  • n2qmt
    , contributor
    Comment (1) | Send Message
     
    Good job, EDVA. It would seem to me that if the jury was contacted by the court, that would have to be disclosed in the court records, no? Also, I find it unlikely that anyone from the jury has "come forward", unsolicited, to offer an interpretation of the verdict. Those points aside, thanks for another good piece. Cheers!
    14 Dec 2012, 02:25 PM Reply Like
  • EDVA
    , contributor
    Comments (114) | Send Message
     
    Author’s reply » Thank you and thanks for the question. If it is the Judge who decides to bring a juror in to question them he would likely tell the sides he was doing so of his own volition (sua sponte) and I'm not sure we would see anything on a public docket as this would likely be done in chambers with both sides present. I agree that someone coming forward is unlikely though it certainly would not be unprecedented.
    14 Dec 2012, 07:15 PM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    Nicely done EDVA. I would also mention that JJ may enter Judgment just before Christmas, like he did on Thanksgiving. He has taking the appropriate amount of time and treading carefully as we can see to avoid mistakes leading to an appeal. STeve K feels an appeal is in the cards ....your thoughts and the timing of one if it does come to fruition?
    14 Dec 2012, 08:27 PM Reply Like
  • EDVA
    , contributor
    Comments (114) | Send Message
     
    Author’s reply » Thanks Asia. Unless there is a settlement an appeal from Google is not a question of if but when. Hard to say when as they may try to settle after what I expect will be unfavorable post trial rulings for them.
    14 Dec 2012, 09:08 PM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    That damn "S" word....lol We've been hoping for that settlement post Markman, pre-trial, during, and post. I'm starting to thinks it's Vringo's decision not to settle and go for the whole kit and kabootle.
    14 Dec 2012, 09:17 PM Reply Like
  • EDVA
    , contributor
    Comments (114) | Send Message
     
    Author’s reply » You could very well be right.
    14 Dec 2012, 09:33 PM Reply Like
  • coolerheadsprevail
    , contributor
    Comments (92) | Send Message
     
    Hi EDVA,

     

    Looking forward a bit, is your group planning on sending anyone over to Europe to perform 1st hand due diligence on the ZTE suits similar to how you personally observed the GOOG trial?

     

    Thank you!
    16 Dec 2012, 07:46 AM Reply Like
  • Rburroug
    , contributor
    Comments (7) | Send Message
     
    EDVA---If Google appeals, is there anything stopping Vringo from immediately filing to sue all googles customers that are infringing ? Or does Vringo have to wait for appeal to do so ?
    16 Dec 2012, 07:53 AM Reply Like
  • Rburroug
    , contributor
    Comments (7) | Send Message
     
    What I meant to say is if Google appeals, and the appeal is granted, does Vringo have to wait for the RESULTS of the appeal ( which of course could take awhile) before they sue Googles customers that are infringing ?
    17 Dec 2012, 08:14 AM Reply Like
  • EDVA
    , contributor
    Comments (114) | Send Message
     
    Author’s reply » No, in fact but for the agreement to wait until all of the post trial motions are entered from both sides (before trying to enforce the court's judgment) that VRNG agreed to they could sue those customers right now.
    17 Dec 2012, 03:00 PM Reply Like
  • Oshn33
    , contributor
    Comments (42) | Send Message
     
    I doubt anything will happen before JJ decision on the motion for interest & supplemental damages...but VRNG could put a lot of pressure on Google to settle once the JJ rules (if favorable to VRNG) by beginning to file against Google's customers.
    17 Dec 2012, 03:31 PM Reply Like
  • asia24
    , contributor
    Comments (140) | Send Message
     
    One of the possible reasons Vringo hasn't sued Google's customers is what EDVA and I hope for is a possible settlement. That fact that Vringo attorneys Dickstein Shapiro have granted all these extensions to QE attorneys is that there may be something in the works pending what if from JJ. I know it may be a conspiracy theory but who knows, I may be grasping at something but at this point im fed up with this whole case and PPS.
    18 Dec 2012, 06:48 PM Reply Like
  • stockguy58
    , contributor
    Comments (5) | Send Message
     
    EDVA, What are your thoughts on Google's motion today? Will you posting another instablog here or article on Yahoo? Seems like final rulings are being pushed to late January or early February, with a GOOG appeal dragging on for sometime after that?
    19 Dec 2012, 12:54 AM Reply Like
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