XpresSpa Group Inc (XSPA)

[Realizer]

http://m.seekingalpha.com/article/1379521

Another interesting patent play which has been receiving a large amount of press recently is Vringo . Vringo is almost notorious amongst the patent community for its recent courtroom victory against Google (GOOG). Vringo is different from DSS and SITO (the last stock featured in this article) in the idea that it does not have much of an underlying business (it has a few apps that are bringing in small amounts of revenue). However, in recent days Vringo has begun to fall in stock price due to a court filing in which Google has found a so called run around, in the idea of an ad system which does not infringe on Vringo's patents. If it is true, this would obviously be bad news for Vringo's shareholders as it would lower the amount of future royalties received from Google. Remember, with 30 million dollars in past damages, it seems as though Vringo will be relying on future royalties from Google in order to pay the bills. This is provided of course that Vringo is in no way successful with its appeal of the decision. Having a work-around to the point where Google would no longer infringe on Vringo's patents would lower the amount of future royalties received because Google would no longer be required to license the patent from Vringo from the day when Google updates its adwords system. Vringo will remain a volatile stock, largely following the tone of court filings. Should Vringo be successful in getting the laches ruling overturned, that could mean hundreds of millions of dollars more in past damages for Vringo (money that even if Google changed its ad system, they would still owe to Vringo). Vringo's lawyers have proven themselves to be quite capable, and have shown their ability to take out some of the titans in the internet industry.

Vringo, however, is not just suing Google. Vringo recently announced that it is in settlement talks with Microsoft (MSFT), related to a patent infringement lawsuit. This settlement would provide Vringo with much needed revenue, and would help to validate Vringo's claims in the minds of investors. The settlement talks were significant, so at the mention again of a settlement I would look for the stock to move up. However, should no settlement come to fruition, Vringo could be in for another long ride versus Microsoft, similar to the one experienced against Google. Vringo also holds a multitude of other patents, through which it is actively pursuing litigation against competitors. These competitors are not just in the United States, as Vringo has started enforcement activities in Europe as well.

Vringo is exciting due to the fact that it is also playing on another front against a large telecom company in ZTE. Vringo is suing ZTE, because of patents that Vringo acquired from Nokia (NOK). Vringo previously filed lawsuits versus ZTE in Germany and in the United Kingdom. Vringo recently expanded its European enforcement action against ZTE, through the filing of a lawsuit in France. What is very interesting about this lawsuit is that Vringo claims to have specific evidence of ZTE's infringement due to particular information uncovered during a seizure to obtain evidence (which is allowed under French law). Vringo is in my opinion the most interesting of the mentioned patent plays, simply because it has so many irons in the fire. With all of the various enforcement activities that Vringo has taken as of late, something is bound to break in Vringo's favor, the question is which will come first Google, Microsoft or ZTE?

However, Vringo is also lacking a true underlying business. Establishing an underlying business would help to cushion Vringo against any loss in court, and would provide some much needed revenue. While the scenario that Vringo is unsuccessful in its lawsuit against Google is unlikely, it cannot entirely be ruled out by the market. Vringo seems to be in a very nice position to strike, and will be for the future thanks to an agreement signed with Virginia Tech. This agreement should help to provide Vringo with the next generation of patents, specifically the companies are attempting to develop a technology that could "potentially enable first responders to quickly set up wireless networks in areas where telecommunications infrastructure has been destroyed or rendered inoperable." This technology could potentially represent a shift for Vringo, towards building an underlying business model. Obviously, this would be in the benefit of shareholders; as I mentioned above an underlying business would help to lower downside risk should the patent infringement lawsuits ultimately be unsuccessful. Vringo is an exciting patent play, and having already proved the validity of its patents in the recent infringement lawsuit versus Google, Vringo should remain on the radars of investors.