Some Thoughts on the Vringo – Google Patent Battle

Vringo is one small-cap “stock-of-the-moment” that is garnering a lot of hype on Stocktwits, Seeking Alpha, or anywhere anyone publishes an article about it.   James Altucher put $VRNG onto the mainstream radar several months ago with his post “Why Google Might Be Going to Zero.”    I can’t tell you what will happen with the VRNG – $GOOG suit, but I am very confident that GOOG is not, in fact, going to go to zero.

Anyway, there have been a number of developments since Altucher’s Techcrunch post, and I would urge anyone involved in the stock to 1) read all of the docket filings on Justia, and 2) talk to a patent lawyer instead of seeking out conforming opinions based in fantasy that make you feel better.  Confirmation bias will kill your portfolio:  wouldn’t you rather hear the other side of the argument instead of the side you already believe?   The latest dockets which have impact (which hit Justia late Tuesday night, August 21st) are # 201, and Google’s response in docket # 217.

I received a smart email from reader @arper regarding his interpretation of this specific back and forth between VRNG and GOOG, and he gave me permission to share some details here (edited slightly for clarity).  This is ONE MAN’s opinion – if you don’t like it, I don’t care – but I found it more valuable than all of the echo-chamber cheerleading reverberating on the Stocktwits stream :

“The gist of the case is Google trying to prove invalidation due to them using patents/ideas prior to VRNG’s patents (Prior Art or  Anticipatory Art). They repeatedly asked VRNG for exact clarification of where Google was infringing and for how long? VRNG only would say “we found out where you infringed but we’re not gonna tell you specifically.

GOOG says: “How long?”

VRNG answers: “Uh, well AT LEAST back as far as Dec 3, 1998

Google says: “That’s not good enough, how can we do our prior art search w/o an exact date?

They finally had to get the judge to COMPEL VRNG to set the date in stone. This had NOTHING to do with the Markman hearing, which is solely about establishing the exact definition of terms in the infringement suit (and comes from a ruling involving Markman that said the  wording of the patents is up to a judge to decide and not a jury, thus, a hearing before the judge.  The current kerfuffle is because Google, AFTER the Markman hearing, brought up 3 new cases of “prior art” that they had not previously disclosed to VRNG. VRNG calls foul play.

But Google says “Hey, there’s ZERO in our discussions that said we couldn’t continue our investigations, tough shit. Furthermore, how the hell could we do “prior art” research until we had the exact date? You didn’t give us the exact date until we compelled you to after the Markman hearing!

VRNG says: “But we based our infringement case on your telling us about the 6-12 previous prior art cases you told us about and you TOLD us you weren’t going to bring up any more back in March!!

GOOG says: “Sorry dudes, you misunderstood. We said we had nuthin’ further AT THAT TIME because you wouldn’t give us the date nor was the language clear until the Markman hearing. Now that that is clear and the court finally compelled you to give us what we needed to do our complete search, we did our search, and came up with stuff that predates your patent.”

VRNG says: “But if we’d known, we might’ve looked harder for info our idea went back further!

Google says: “You got it backwards guys. Your idea’s date of conception and implementation IS what it is. It is NOT dependent on what our prior art search turns up..

Google set a trap and VRNG got snared. How the judge will read it as dirty pool or fair game is totally unknown. I have no clue (as you would support) HOW the judge is going to rule this, or if it is a gamechanger, but VRNG’s angry response indicates Google struck a nerve. I think the flurry of filings you are seeing this week indicates Google is pressing its advantage HARD! Is it desperation or is it piranha? I don’t think I’ll bet the farm either way……”

Now here’s the thing:  I happen to be long VRNG at the moment.   That position may change at any time.  I am not going to discuss valuation in this post, but I think that lots of commenters on VRNG tend to ignore the fully diluted sharecount.

Anyway, the patent issue is very much not clear cut (that really shouldn’t come as a surprise!).   Those who are telling you that VRNG has a slam dunk case here are lying to you.  Those who are telling you that GOOG will easily win a summary judgement and get all the claims thrown out are lying to you.   Those who are not attorneys who specialize in patent law or are not spending hours talking to such attorneys about this case are probably almost completely useless.  I say that because I have talked to multiple attorneys and patent lawyers about this case and even they acknowledge it’s not easy to handicap.

My layman’s evaluation of the scenario is that GOOG will not want a jury trial:  I think that juries in general probably don’t like “patent trolls,” but I also think that a jury would have a tough time understanding any defense that GOOG would offer at trial.   However, I have still been unable to gain any sort of confidence as to what the results of these motions regarding prior art will be, what the significance of the content of the prior art is,  and thus the likelihood that GOOG could get summary judgement.   Maybe I’ll do another post in the future talking about potential settlement numbers should GOOG’s latest salvos fail,  and what they would mean for VRNG in terms of value per share.

Nothing is easy in the markets – there is no free money.  Beware of anyone who tells you otherwise.

 

related:

Vringo Justia Dockets

Altucher: “Why Google Might Be Going to Zero

Groklaw: “Another Patent Attack on Google With More Wild $$$ Predictions

Vringo IP Site

KD: “Confirmation Bias Is A Portfolio Killer

 

-KD

 

 

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