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Thursday, April 4, 2013

Vringo's Appeal: Why it matters

The purpose of this post is to rather quickly clear up some misconceptions of investors regarding the appeal filed by Vringo (VRNG). Vringo is appealing the laches and past damages portion of the judge's decision. They are not yet able to even appeal the running royalty rate etc. The easiest way to think about the case at this point would be as almost two seperate cases. One phase would be the laches, and the other the Running Royalty rate. This appeal was brought on by the judge's final rejection of Vringo's motion for a new trial yesterday, as soon as the judge rejected that all of the outstanding motions regarding the laches issue was therefore solved. This opened the door for Vringo's appeal.

This appeal is great for Vringo, as it has the potential to yield a huge amount of money, with little downside as the worst that could happen is that the appeals court keeps the current damages calculation in place, which would mean $30 million for Vringo. I would however speculate that it was more positioning. If Vringo were in negotiations with Google, they just raised the ante and now have a stronger hand going into the negotiations. If Google does not provide the types of numbers that Vringo wants, Vringo will just simply walk away and say that they will see Google in the court of appeals. 

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