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Vringo Settles Microsoft Patent Infringement Case

|Includes: GOOG, MSFT, XpresSpa Group (XSPA)

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.