VRINGO ANNOUNCES RULING IN I/P ENGINE LITIGATION

News Release Details

VRINGO ANNOUNCES RULING IN I/P ENGINE LITIGATION

08/16/13

NEW YORK - August 16, 2013 - Vringo, Inc. (NASDAQ: VRNG), a company engaged in the innovation, development and monetization of intellectual property and mobile technologies, today announced the District Court has issued a ruling on its wholly-owned subsidiary I/P Engine, Inc.'s Motion for an Award of Post-Judgment Royalties in its litigation against AOL, Inc., Google, Inc., IAC Search & Media, Inc., Gannett Company, Inc., and Target Corporation (collectively, "Defendants").

The District Court's Memorandum Opinion and Order (the "Order") is available online at http://bit.ly/1bDBHNk, and the following summary is qualified in its entirety by the full text of the Order.

In the Order, the District Court found that I/P Engine is entitled to an award of a post-judgment royalty, and that additional discovery and briefing is necessary to determine the precise amount of the royalty.

The District Court noted that at trial, I/P Engine introduced expert testimony that starting in the Fourth Quarter of 2007, the infringing components of Google's SmartAds system added 20.9% to Google's U.S. AdWords revenue and additional evidence is in the record to support this position.  While Defendants continue to contest the use of this royalty base, the Court noted that it will not re-litigate this question, and held that it will apply the 20.9% royalty base to determine the proper ongoing royalty.

The District Court ordered Defendants to pay the ongoing royalty to I/P Engine on a quarterly basis by wire transfer or other certified means of receipt, and certify by penalty of perjury the U.S. revenue attributable to Defendants' use of AdWords in U.S. Dollars and the calculation of the royalty payment.

To resolve the ongoing royalty rate and duration for which the royalty rate shall be received, the Court set forth the following discovery and briefing schedule:

  • August 25, 2013 - The parties must produce any documents relevant for determining whether "New AdWords" is no more than a colorable variation of the adjudicated product. 

  • September 25, 2013 - Expert witness reports due. 

  • October 15, 2013 - Expert rebuttal reports due. 

  • October 30, 2013 - The parties shall serve and file briefs and any supporting evidence. 

  • November 10, 2013 - The parties may file responsive briefs. 

  • Evidentiary Hearing - The Court, if necessary, may schedule an evidentiary hearing in which the parties may present appropriate evidence and offer arguments in support. 

The District Court also held that the parties should be given the opportunity to set their own royalty rate before the Court imposes one.  To that end, the District Court ordered that within five days of completing the aforementioned discovery and briefing schedule, the parties meet and negotiate an appropriate ongoing royalty rate, using 20.9% of U.S. AdWords revenues as the appropriate royalty base.  If the parties are unable to come to an agreement, the District Court further ordered that the parties schedule a settlement conference with the United States Magistrate Judge assigned to the case no later than December 1, 2013.

Background

On November 6, 2012, a jury in U.S. District Court in Norfolk, Virginia ruled in favor of I/P Engine and against the defendants with respect to the defendants' infringement of the asserted claims of U.S. Patent Nos. 6,314,420 and 6,775,664.  After upholding the validity of the patents-in-suit, and determining that the asserted claims of the patents were infringed by the defendants, the jury found that reasonable royalty damages should be based on a "running royalty," and that the running royalty rate should be 3.5%.  The jury also awarded I/P Engine a total of approximately $30.5 million, excluding interest.  On November 20, 2012, the clerk entered the District Court's final judgment. 

On August 1, 2013, the District Court found that I/P Engine is entitled to supplemental damages from October 1, 2012 to November 20, 2012; prejudgment interest from September 15, 2011 to November 20, 2012; and post-judgment interest for Defendants' infringement.  The District Court held that it will determine the amounts for each of the foregoing.

I/P Engine and Defendants have appealed the case to the Court of Appeals for the Federal Circuit.  Defendants filed their opening brief on July 22, 2013.  I/P Engine's brief is due on September 3, 2013.

Google has submitted requests to the United States Patent and Trademark Office (the "USPTO") for ex parte reexamination of certain claims of the two asserted patents.  On July 24, 2013, the USPTO issued a notice that it will issue a certificate confirming that all of the claims in the '420 patent challenged by Google remain valid and unchanged.  The '664 patent remains subject to reexamination.

The court dockets for the cases are publicly available on the Public Access to Court Electronic Records website, http://www.pacer.gov, which is operated by the Administrative Office of the U.S. Courts.  The U.S. District Court proceedings are pending in the Eastern District of Virginia, Norfolk Division.  The case number is 2:11cv512RAJ.  Appellate proceedings are pending in the United States Court of Appeals for the Federal Circuit.  The docket numbers are 13-1307 and 13-1311.  Documents regarding the USPTO proceedings are publicly available on the Patent Application Information Retrieval website, http://portal.uspto.gov/pair/PublicPair.

About Vringo, Inc.

Vringo, Inc. is engaged in the innovation, development and monetization of intellectual property and mobile technologies.  Vringo's intellectual property portfolio consists of over 500 patents and patent applications covering telecom infrastructure, internet search, and mobile technologies.  The patents and patent applications have been developed internally, and acquired from third parties.  Vringo operates a global platform for the distribution of mobile social applications and services.  For more information, visit: www.vringoIP.com.

Forward-Looking Statements

This press release includes forward-looking statements, which may be identified by words such as "believes," "expects," "anticipates," "estimates," "projects," "intends," "should," "seeks," "future," "continue," or the negative of such terms, or other comparable terminology. Forward-looking statements are statements that are not historical facts.  Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained herein.  Factors that could cause actual results to differ materially include, but are not limited to: our inability to license and monetize our patents, including the outcome of the litigation against online search firms and other companies; our inability to monetize and recoup our investment with respect to patent assets that we acquire; our inability to develop and introduce new products and/or develop new intellectual property; new legislation, regulations or court rulings related to enforcing patents, that could harm our business and operating results; unexpected trends in the mobile phone and telecom infrastructure industries; our inability to raise additional capital to fund our combined operations and business plan; our inability to maintain the listing of our securities on NASDAQ; the potential lack of market acceptance of our products; potential competition from other providers and products;  our inability to retain key members of our management team; and other risks and uncertainties and other factors discussed from time to time in our filings with the Securities and Exchange Commission ("SEC"), including our annual report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 21, 2013.  Vringo expressly disclaims any obligation to publicly update any forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:

Investors and Media:
Cliff Weinstein
Executive Vice President
Vringo, Inc.
646-532-6777
cweinstein@vringoinc.com


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