Vringo vs. Obama
Longs in Vringo Inc., $VRNG, are celebrating today after a judge increased their payout in a patent infringement suit against $GOOG. The stock of the patent portfolio company has skyrocketed 31% and some investors are calling for the $5 stock to hit double digits.
Jan. 29 at 10:30 AM
Jan. 29 at 10:08 AM
But cashtaggers may want to exercise caution given Google’s connections. Shortly after the verdict came out Monday, none-other than President Barack Obama highlighted the dangers of so-called patent trolls that buy intellectual property, sometimes from failing companies, and then seek to make money off of the patents through lawsuits.
“Let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation,” Obama said in his State of The Union address.
Major technology players, such as Google, have long complained that stringent patent protections can stifle spontaneous innovation, when two or more people have the same idea at the same time. Those complaints are getting someone’s attention.
Of course, patent reform impacts future profits for VRNG, not current payouts. And, providing the judgement holds, those are substantial.
On Monday, the district court judge increased the amount of royalties Google must pay Vringo for patent infringement related to its AdWords system to 6.5% from 4.6%. That payout is not on all the AdWords revenue, only a portion deemed to arise from the patented intellectual property. Arstechnica does some good dirty math based on Google’s U.S. sites revenues that put Vringo’s royalties somewhere between $200 million to $250 million annually.
In the filing, the judge accused Google of failing to fix the product to avoid further infringement and launching another version that was basically the same as the first.
“Defendants have taken no remedial action. In fact, they have redesigned a system that clearly replicates the infringing elements of old AdWords,” wrote United States District Court Judge Raymond A. Jackson.
Google plans to appeal the ruling.
~ via Catherine Holahan (@cholahan)
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