Vringo (VRNG) brought numerous actions around the world against ZTE shortly after they acquired the Infrastructure portfolio from Nokia in 2012. One of those jurisdictions is Brazil, which Vringo was issued a preliminary injunction of certain infrastructure products (base stations). The company put out an update on September 3rd, 2014 listing all outstanding cases.
A filing was made available yesterday on the Brazilian court system:
The website is in Portuguese, but through Google Chrome I was able to have the website translated in order to navigate. You first need to enter the captcha.
In the middle of the page you will be able to see the following and need to click on the blue link "See the full decision".
It brings up the following with a rough translation.
1 Given the evidence of noncompliance with the injunction emanating from the manifestation of the Hi fls. 2355, as noted by the author in item 5, the petition of pages. 2371/2374, reconsider the decision of pages. 2364, item 2.I, to defer action pled in the items 8.i, 8.ii and 8.iii the petition of pages. 2358/2363. If consigning-rogatory for inspection and seal equipment, as suggested by the author, certain that, during the investigation, must accompany the bailiff Dr. Marcelo Mazzola, well appointed expert judgment to carry out the technical analysis required by this author and can hire able to act on technical expertise that is required auziliares. The fees shall be requested 48h competing applicant to support them. Deposited the fees, proceed to the survey. Confirmed the breach of the injunction, decide on the increase of the fine. 2 Fls. 2369 - is to disregard and join in the correct process, because Vringo, here, is the author, and not the defendant, as stated in the petitionary. 3 Indefiro order of suspension made by ZTE, in view of the disagreement expressed by the author in items 7-9 of the petition of pages. 2371/2374.
My Summary (rough guess of the translation):
ZTE was not in compliance with the court ordered injunction and was continuing to import equipment into Brazil. Vringo was able to find containers that product was being held in. Vringo requested the court to seal the containers, which was granted with a court ordered bailiff (Dr. Mazzola) to carry out the analysis (sealing). The court confirmed the breach of the injunction and will decide on an increase to the fines (damage awards?)
Injunctions on ZTE are far more powerful in negotiations than damages as they have an immediate effect on ZTE's business. ZTE has a number of contracts worldwide with various telecommunication companies to provide infrastructure equipment to build the networks. Without being able to import the equipment into countries, ZTE will not be able to meet the terms of the contracts they have entered into. This provides added leverage to any negotiations that might be ongoing or possibly restart those discussions, with the end result being a worldwide license to the Vringo Infrastructure patents.
In my opinion, this is a very positive development for Vringo's licensing campaign, which I have recently discussed in a seekingalpha.com article.
Disclosure: I am long VRNG. I have not been compensated to publish this blog entry by any company discussed. All information is based on publicly available information and all opinions/conclusions are my own. This blog entry is only for informational purposes. Please contact a registered financial agent before making any financial decisions.
Please contact me with any questions, corrections, or more information.