Could Vringo Stock Jump 1,000%? Is Altucher Right?

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How, you might ask? It's simple and summed up in one word: Patents. Thank goodness for patents. Without patents the free market that we know of today would not exist. It's for this reason that Vringo (VRNG) bought Innovative Protect.

Here it is, if you want a little backstory as to how Vringo, with a market cap of $189 million, could take on Google (NASDAQ:GOOG), with a market cap of $218 billion. Recall the age of the dinosaurs when the Internet first came around. Search engines were popping up everywhere, and Internet companies were multiplying like rabbits.

Along with the tech boom, a guy named Ken Lang filed a patent on how search results and ad results are sorted, based on the number of click-thrus an ad receives. Sound familiar? Shortly after, Lycos bought the company that Ken Lang started, and he became its CTO.

Then everyone knows what happened at the beginning of 2000. Almost every search engine died, and Lycos crumbled. Fast forward to today and somehow Lycos has managed to stay alive after being bought by Spanish telecom giant Telefónica (NYSE:TEF) and then by a South Korean Telecommunications Company. With Lycos in shambles, Ken Lang bought back his patent for almost nothing and started another company I/P engine otherwise known as Innovative Protect.

Here we are now today. Vringo merged with Innovative Protect and the cat is out of the box. A trial date of October 16 possibly ensues the most threatening case that Google has ever encountered. The patent trial targets Google's core search algorithm and how it displays ads described here. Now look at Vringo's suit here against Google. Vringo's suit is quite lengthy, but I agree with James Altucher, and I don't see a difference between the two.

Here's something else you may or may not have known. Google generates 96-97% of its revenues from search ads. Forget about Chromebooks, Google+, or even Android. Google has yet to get away from search advertising and could be the death of it if they don't continue to screw over or buy off the little guys, like Ken Lang.

Vringo is seeking reasonable royalty fees from Google. Since its inception, Google has brought in $160 billion in revenue. Simple math tells us that they've roughly generated $153 billion from ads. The suit only covers US revenue so let's cut that number to a rough estimate of $65 billion. That's a lot of cheddar to make royalty payments should Google be on the wrong side. Some people are estimating Vringo is seeking a royalty fee anywhere from 0.5% - 5%. The estimation alone could easily sets Vringo's valuation anywhere from $6.00 to $68.00.

Google is just the start. Vringo is also suing the likes of (IACI), Gannett (NYSE:GCI), Target (NYSE:TGT), and AOL (NYSE:AOL), among others who use Google's technology. Just when you think Vringo doesn't have a chance, they've done it before. Vringo's management team with David L. Cohen succeeded against Apple in a patent litigation at Nokia (NYSE:NOK). Plus, Donald E. Stout, Director and Chair, was part of a $612 million settlement with Research in Motion (RIMM). Finally, there's another kicker. Vringo has employed the same lawyer that won its suit against Research in Motion.

As a company, Vringo continues to cultivate shareholder value. The company recently finalized the acquisition of Nokia's foundational wireless infrastructure IP portfolio. The purchase increases its IP portfolio by 15X and strengthens its IP assets with patents ranging from mobility, to search engines, and to digital advertising.

Just like Groundhog Day, you don't know if the Vringo groundhog will emerge to taste the glory of spring success or if it will shrink back to the cold of winter scrounging around for more financing. The outcome of the settlement on October 16 will either make or break Vringo's stock. Mark Tuesday October 16 down as another David and Goliath type battle. However, I don't think Google will let its Goliath head of advertising to be cut off and will likely settle with Vringo (David).

We're in the home stretch now. Billionaire Mark Cuban bought a 7.4% stake of the company after Altucher's article. Offering: check! AOL: check! Earnings: check! October 16... So place your bets, but know this - my money is on Vringo, and has been since Altucher's March 31 article.

Read "Why Google Might Be Going to $0" by James Altucher

Disclosure: I am long VRNG.