Shares of Vringo (NASDAQ: VRNG) moved nearly 3% higher yesterday -- on its heaviest volume in nearly two months -- after striking a settlement deal with Microsoft (MSFT -1.84%).
Vringo's subsidiary is receiving $1 million in settling pending patent litigation, entering into a licensing agreement with the world's largest software company for future royalties.
Vringo has been one of the market's more volatile companies since acquiring old search patents from Lycos. It didn't seem like much more than an eight-figure purchase of intellectual property last year, but Vringo quickly got its legal eagles to use the old Lycos patents to go after Google (GOOGL 0.35%), AOL (NYSE: AOL), and Microsoft.
Vringo was hoping to collect on damages dating as far back as 2005, but the stock lost more than a third of its value in a single day -- Halloween, fittingly enough -- when the case's district court judge ruled to only go as far back as mid-September of 2011 in assessing potential damages.
A week later, Vringo emerged victorious against AOL and Google. Unfortunately, the $30 million that was awarded was well short of the $696 million that Vringo and its investors were originally gunning for.
The silver lining in the deal was that the collective $30 million was for past damages. A running royalty rate of 3.5% would apply going forward.
This was the kind of mixed verdict that could've made Vringo a compelling acquisition target. Google, AOL, or Microsoft could've easily snapped up Vringo, hoping to bludgeon its tech rivals. Intellectual capital is the currency of choice in the tech space these days.
It wouldn't be an expensive purchase. Vringo shares have shed nearly half of their value since peaking this past October ahead of the district court ruling. However, Microsoft settling after Google and AOL received small judgments against them doesn't make it seem as if anyone will be snapping up Vringo for now. The sums are chump change for the titans of tech.
The story doesn't end here. Investors know the value of patents can change if trends and circumstances change. Vringo investors will merely have to be patient, but that's not a quality often found in tech investors.
