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Vringo Vs. Google: Jury Verdict

|Includes:FORM Holdings Corp. (FH), GOOG

Last week I predicted that the I/P Engine vs. AOL et al. -- aka Vringo (VRNG) vs. Google (NASDAQ:GOOG) -- trial would result in a jury verdict finding Vringo's patents infringed and not invalid and then award damages of $95M. Today the jury returned its verdict that the patents were infringed and not invalid and awarded approximately $31M in damages.

Both sides have many possible appeals they can make and the judge will decide how to handle future infringement by Google, either by issuing an injunction or awarding an ongoing royalty. The jury's $31M damages calculation was based on its assessment of a 3.5% royalty rate. Obviously, this rate is not applied against Google's total revenues, and indeed that would be inappropriate.

Thus, even if the judge awards an ongoing royalty of 3.5% against Google, and even if Google loses its appeals, and even if Google cannot develop a design around that avoids infringing Vringo's patents in the future, a rough approximation of the annual expectation to Vringo may be about the same $31M awarded by the jury today, as that was the amount they awarded for infringement since September 2011, roughly a year ago.

Vringo can appeal the Judge's decision last week limiting their damages to only one year instead of the up to six years it was seeking.

UPDATE Nov 7 @12:19PM: The Jury Verdict Form is now available.

Disclosure: I am short VRNG.

Stocks: FH, GOOG