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Vringo Shares Will Likely Add to Friday’s Huge Gain- Here’s Why (VRNG)

At the end of the trading day Friday, shares of Vringo Inc. (NASDAQ: VRNG) spiked higher. By the time the market closed, the stock was up more than 10 percent. Soon after the close, it was learned that the District Court of Eastern Virginia ruled in favor of Vringo in its petition to collect post-judgment interest, supplemental damages, and pre-judgment interest.

The trial started in 2011 when Vringo subsidiary, I/P Engine filed suit against AOL (NYSE: AOL), Google (NASDAQ: GOOG), Target (NYSE: TGT) and others for infringement on several patents. In November of last year, a jury found that two of IP Engine’s patents were infringed and awarded damages of more than $30 million along with a 3.5 percent royalty rate.

But the ruling didn’t include interest. Vringo argued that it was entitled to interest between the period of the judgment through the period when the damages are paid–called post-judgment interest. It also argued for pre-judgment interest–interest paid during the length of the trial. Finally, supplemental damages cover cover further infringement damages during the course of the trial that were known when the proceedings began.

A judge ruled on August 1 that Vringo was entitled to all three and asked the company to submit actual amounts for the damages. Defendants’ council will then respond to the claim.

The bottom line is that interest will be calculated based on the U.S. treasury’s prime rate, the damages won’t likely be a large issue for companies like Google but for a small company like Vringo, it’s likely to be a substantial payment.

This is why investors are excited and why the stock will likely rise. The risk to investors is expectations. Once the final amount is announced, watch for a sell off in the stock as investor expectations of this type are often missed.

However, don’t expect an announcement any time soon. Until then the stock is likely to continue higher in the short term.

Read the full court decision here.

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Disclosure: At the time of this writing, the author had no position in the company mentioned.

 

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