Replies to post #42625 on XpresSpa Group Inc (XSPA)

[BARHENDER]

"The wording "would not impact the company" means the cap is set at a level so as not to become an issue unless VRNG somehow collects a lot more than $30 million. In that case, VRNG is impacted because it will not collect 5% from MSFT for anything above the agreed upon level."

I read this about 20 times.

Vringo gets X amount which is a set/capped amount.

Unless, Vringo gets substantially more that 30 million from Google;

then, since Vringo is impacted, it will NOT collect X amount.

postyle, is this what you are conveying?

[coolerheadsprevail]

@postyle,

Although I do not subscribe to ipitydafoo's specific theory, I do concur that there is a possibility that your interpretation may not necesssarily be correct either.

BUT, the caveat to any such discussion is that there are simply too many unknown variables out there to enable any outside observors such as us to be able to conclude w/absolute certainty whether any of our theories are correct. As it stands, what you outlined could fit within the boundaries of the scant info that is known -- but so could others. So... ...in that light, here is what I had always interpreted the MSFT settlement to possibly entail:

First, let's take a look at the actual language used:

"...plus five percent (5%) of any amounts Google pays for use of the patents I/P Engine acquired from Lycos. The parties also agreed to a limitation on Microsoft's total liability, which would not impact the Company unless the amounts received from Google substantially exceed the judgment previously awarded."

Second, look at the underlined portions.

"Pays for use of the patents". IMO, this is using present/future tense, not past tense. Describing this component of MSFT/GOOG's liability as based upon "payment for use of patents" to me clearly describes a license. And a license is future use. Payment for past use is NOT a license nor is it described as payment for use of a patent -- it is described as damages (for past infringement).

"Total liability". IMO, total liability is precisely that. A sum of two parts: Component 1 is a liability associated with prior use (i.e. analagous to the past damages component of the VRNG-GOOG case), and Component 2 is a liability associated with future use (i.e. analagous to the future ongoing RR component of the VRNG-GOOG case).

"Received" and "Judgment previously awarded". IMO, this is strictly referring to Component 1, the past damages, and has ZERO bearing on Component 2, the future ongoing RR.

Now, follow me here (down into the rabbit hole!)...

Based upon the above specific language/terms used in the MSFT settlement agreement (well, at least what was made public via the PR and 8-K), it seems that the following interpretation may also be consistent and just as possible as the interpretation you laid out, and it is this:

(1)
There is no cap on the 5%. 5% is 5%. Period. BUT, this 5% is strictly related only to any future ongoing RR that GOOG pays as part of any post-judgment period of time for which the Court determines a RR should apply. This is Component 2 of what comprises MSFT's "total liability". In the PR and 8-K, the 5% is discussed solely within the context of what will be paid in the future for use of the patent (i.e. future licensing royalties). No mention of the cap is made in the PR or 8-K within the context of any future licensing payments.

(2)
The cap only applies to Component 1 -- which IS a component of "MSFT's total liabilities" -- and is designed primarily to protect MSFT in the event that laches is overturned, so that this $30M (i.e. the "judgment previously awarded") does not balloon to $500M. IMO, this language was inserted to make crystal clear that even though any potential laches reversal would result in a FUTURE payment of ~$500M to VRNG, that this additional $500M is NOT related to any "present/future payments for use of the patents" (i.e. unrelated to Component 2) -- and therefore, not subject to 5%.

In fact, considering that 5% of $30M equates to only $1.5M, it can be argued (all speculative of course) that the $1M MSFT paid upfront along with the patents were a surrogate for what 5% of past damages (i.e. Component 1) would have been. And, no, I am not interested in side-bar'ing this conversation into the merits of why MSFT's 6 patents should be "worth" more than $500k. postyle actually did an excellent job of addressing the valuation aspects of these patents already.


Bottom line: I'm not saying I'm right, but simply saying that based upon the scant breadcrumbs provided in the PR and 8-K, this interpretation -- along with yours -- is not inconsistent with the squishy variables that are known in the public space right now.

Now, that being said, I would imagine that liability caps are not new to either IP litigation or to litigation in general. Would you be able to provide any other examples of liability caps that have been included in other IP settlements? If so, perhaps seeing the language used in other similar cases and seeing how they ultimately played out may be an avenue which can enable us to obtain insight as to what the MSFT language really is intended to mean?

OK, enough laboring for me on Labor Day...