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Daniel B. Ravicher
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Daniel B. Ravicher is a registered patent attorney who frequently consults with investment banks, hedge funds, and individual investors on legal issues that may materially affect the value of publicly traded companies. In addition to private consulting, Mr. Ravicher also regularly publishes... More
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  • Vringo Settles Microsoft Patent Infringement Case 8 comments
    May 30, 2013 8:11 AM | about stocks: FH, MSFT, GOOG

    Vringo (VRNG) announced this morning that it has settled its patent infringement case with Microsoft (NASDAQ:MSFT). Terms of the deal are published in the 8K:

    Microsoft agreed to pay I/P Engine $1 million within fifteen (15) business days, plus five percent (5%) of any amounts Google (NASDAQ:GOOG) pays for use of the patents I/P Engine acquired from Lycos. The parties also agreed to a limitation on Microsoft's total liability, which would not impact the Company unless the amounts received from Google substantially exceed the judgment previously awarded.

    So, it's $1M today plus 5% of whatever Google has to pay, but no more than 5% of something that "substantially exceeds" the judgment against Google. So, forgetting about the cap for a moment, if Vringo is awarded $700M from Google, which some predict is possible, that means Microsoft would pay a total of $36M ($1M today and 5% of the $700M). The market cap of Vringo is up about that much as of the moment I'm writing this.

    Microsoft has also given Vringo six patents as part of the arrangement. Vringo likely intends to monetize those patents with future litigation and/or licensing. Untested unasserted unlicensed patents are typically worth between 50k and 500k, so those 6 patents may currently be worth another 3M, which is coincidentally about how much Vringo paid for the Lycos patents that it has now monetized for many multiples more. Perhaps that's a sign of things to come.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: FH, MSFT, GOOG
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Comments (8)
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  • bigcg98
    , contributor
    Comments (35) | Send Message
    Things in the stock market often sell for more than they are worth. Come on. You have shorted before, right?
    30 May 2013, 08:21 AM Reply Like
  • BiotechHSV
    , contributor
    Comments (28) | Send Message
    Those must be some really, really good patents.
    30 May 2013, 02:03 PM Reply Like
  • Daniel B. Ravicher
    , contributor
    Comments (321) | Send Message
    Author’s reply » Patents are like trees. They have some value as is, but if you really want to realize their value, you have to monetize them, such as by cutting them down, making lumber, building a house and charging rent. It's that effort that frequently determines how much revenue can be realized from a patent. Give the same patent to two different people, say Vringo on the one hand and me on the other, and it will have dramatically different value.
    30 May 2013, 02:35 PM Reply Like
  • Mesa_eric
    , contributor
    Comments (44) | Send Message
    Anything on the RoyRate going forward? I wonder if MSFT is going to wait for Judge J. to rule before MSFT give a RoyRate. Your thoughts?
    30 May 2013, 02:24 PM Reply Like
  • Daniel B. Ravicher
    , contributor
    Comments (321) | Send Message
    Author’s reply » Since there's no public version of the license agreement for us to review, we don't have clarity on its terms beyond the general descriptions contained in the press release. But, those descriptions seem to indicate that MSFT's payments to VRNG will be based on whatever GOOG's payments to VRNG are, and not MSFT's revenues.
    30 May 2013, 02:33 PM Reply Like
  • Mesa_eric
    , contributor
    Comments (44) | Send Message
    Might be moot if MSFT buys out VRNG as they would owe VRNG nothing other than the buyout price if MSFT is setting up Google to lose big and helping VRNG with this agreement, The judge has to see it as MSFT and settle why can't you google. If MSFT is going to buyout VRNG there must be a deal in place to say what ever you win against Google: if it's between $X and $Y then we will pay you $Z a share and if it's between $Y and $W then $Z + $V. I see MSFT buying out VRNG to let them do the dirty work. What does it matter to them if they gave them 6 patents go start the lawsuit and MSFT gets them back in the long run. BTW I am Long VRNG and those are my opinions.
    30 May 2013, 04:07 PM Reply Like
  • imispgh
    , contributor
    Comments (250) | Send Message
    No doom and gloom scenario?


    Interesting how verbose you are when you make a shorting position compared to a long one? Or is this article "neutral"?
    30 May 2013, 02:27 PM Reply Like
  • Daniel B. Ravicher
    , contributor
    Comments (321) | Send Message
    Author’s reply » If you look at my past Instablogs on Vrigno, many of them were positive. And my most popular regular article ever was a very positive piece for Vringo that caused the stock to go up nearly 30% in a day. So, please feel free to criticize me, but at least do so with facts and not emotional unsupported rants.
    30 May 2013, 02:30 PM Reply Like
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