Tuesday, August 19, 2014

Vringo CAFC and the Future


As many know Vringo (VRNG) had their case reversed on appeal at the Federal Circuit.  Shares spiked down 70% in a flash, leaving un-hedged investors in a very bad position.  The company has very few options in regards to the search portfolio.  We should see an En Banc petition for a rehearing in front of the full Federal Circuit and a writ to the Supreme Court.  My opinion it is highly unlikely for either to get granted, especially with the case being a non-precedential opinion.  I suggest to consult an expert patent attorney, which I highly recommend the team at Markman Advisors for litigation specifics, especially ahead of binary decisions.  Enough has already been published on the specifics of the reversal and I have nothing of importance to add on that front.

Even with the loss the team at Vringo executed very well in their first attempt at patent monetization.  The team was able to merge a patent asset into a listed entity, execute very well through the Markman, SJ, at trial, and the USPTO.  They were able to provide investors with a very liquid vehicle and later an options market with the ability to hedge the risks.  While getting reversed on appeal was ultimately very disappointing, management put investors in the best position possible, where many thought they would fall on their face well before ever getting to the CAFC (including me).  As an investor that is all I can really ask for.  I don't believe management could have done anything better to change the result.  The company has a fairly large following and investors should have understood all of the risks involved as an immense amount of research and commentary was published.

I expect the future to revolve around the Infrastructure portfolio that was acquired from Nokia in 2012, which the team has already seen very solid preliminary results.  They have done very well with their efforts against ZTE globally and have filed/settled cases with ADT/Tyco with non-core patent assets.  About 4.5% of the initial outlay has already been recovered.  I will be publishing more information in the near future.  My opinion is VRNG management / David Cohen are on the bleeding edge of global monetization by a NPE.

The company also acquired a patent of importance from Microsoft and a handful of others from Alcatel.  I expect to see future actions filed along with a strong likelihood of additional acquisitions.  My belief is an IP company should focus on a diversified portfolio of patent assets and a strong pipeline of incoming assets in order to mitigate risk for investors and to provide a steady revenue stream to offset cash burn from litigating the bigger cases.

The Future

This has been well in the works for nearly a year, but I will be moving the IPHawk blog into a paid subscription service.  There will be a plethora of coverage and analysis on IP investments.  The space is way bigger than one man can cover so I will be partnering with two very trusted names that many have likely seen before.  They have put out expertly researched publications that continue to be guidebooks for IP investments.  The goal is not to predict binary legal outcomes, but to provide investors with data, opinions, and analysis to supplement their own research in order for individuals to make more informed decisions.  Patent monetization tends to be a multi-year process with many developments and events along the way that are largely under-reported.  We intend to provide that coverage.  If anyone has interest please email me at iphawk@outlook.com .


  1. you wrote: "The company has a fairly large following and investors should have understood all of the risks involved as an immense amount of research and commentary was published."

    correction: "an immense amount of idiotic research and relentlessly pumping and unrealistic commentary was published."

    - and no, I'm not talking about the work you do/did!

    1. I tried countering all of the pumping and terrible commentary, but it was just too much to keep up with. I actually wish more negative commentary was published across a number of names I follow or invest in. The sad reality is there is too much risk writing a negative article as you will either be harassed by the investors or the company will go after you.

      I thought the risk/reward was good with a jury verdict, final judgment, and 4 reexamination certs. It blew up in my face in an epic fashion, but I knew and have published repeatedly that anything goes in patent litigation. Avoid holding full, one directional positioning ahead of binary events.

    2. i feel like somewhat of an idiot for having had such a sizable position in an area where I didn't have the relevant expertise... i am somewhat placated by the fact that even "experts" didn't see this coming and thing it was an abomination, and yet somewhat confused that even though many/most "experts" commenting on this CAFC opinion seem to think it's a ridiculous load of crap, there doesn't seem to be any "remedy" for the screwup.