Shares of Vringo Inc. (VRNG) gained 59% this week as the patent monetization company aggressively stepped up its legal fight against ZTE Corp. in the U.S. District Court in Manhattan.
Vringo shares gained 16 cents, or 28.7%, to 70 cents today, which is up 59% above the 44 cents open on Monday.
The rally comes after New York-based Vringo accused ZTE of orchestrating a stock manipulation scheme with the help of Chinese regulators to cause a decline in Vringo’s stock and thereby weaken its position in their multi-jurisdictional infringement war.
Shares of Vringo had lost more than 85% of their value before Vringo made the allegations in a motion to compel the testimony of ZTE general counsel Guo Xiaoming in a deposition in New York.
ZTE had fought to prevent Guo from being deposed in New York, saying he wasn’t as knowledgable about its litigation with Vringo as others who had already testified or been deposed.
The case involves a breach of a non-disclosure agreement between the two companies by ZTE.
Vringo has alleged that ZTE twice intentionally violated the NDA in an effort to persuade Chinese antitrust authorities to open an investigation of Vringo in order to pressure the company to reduce its demands for a license to standard essential patents for 2G, 3G and 4G wireless applications on fair reasonable and non-discriminatory terms.
Judge Lewis Kaplan has already ruled that ZTE breached the NDA and in a hearing indicated that Vringo was likely to win significant damages.
Judge Kaplan last week granted Vringo’s motion to compel Guo Xiaoming’s deposition and to produce documents and ordered that the deposition take place in New York.
In addition, Judge Kaplan said in his order that it “preliminarily appears that ZTE’s opposition to this motion was entirely frivolous and, in any case, interposed for purposes of delay and harassment. Accordingly, Messrs. [Robert] Perry and [Paul] Strauss and ZTE shall show cause, on or before August 7 , 2015, why they should not be sanctioned….and why they should not be required to pay movant’s reasonable expenses incurred in making this motion, including attorneys’ fees.”
In the latest development, Vringo is now asking Judge Kaplan to compel complete document production from ZTE after finding evidence that ZTE withheld documents and may have destroyed some as well.
“ZTE’s counsel was apparently unaware that ZTE had a team more than 115 employees working on the Vringo litigation and asserting ‘countermeasures’ against Vringo,” Vringo said in a July 30 motion to compel complete document production. “Yet, nearly all these employees were omitted from witness interviews and document collection in a case where the central issue is improper distribution and use of NDA material.”
After last week representing that its document production was substantially complete, Vringo said “ZTE now has admitted that it never collected (or even looked for) documents from the vast majority of ZTE employees that received Vringo’s NDA material. More troubling yet, ZTE apparently did not send litigation holds to prevent spoliation of documents that might show what these employees did with the NDA material they received.”
Vringo asked Judge Kaplan to order that ZTE produce documents by a date certain and to provide a certification of its discovery and document preservation efforts to the court and that the court appoint an independent expert at ZTE’s expense to determine the extent of spoliation.
"You've got to be persistent when you have a defendant like ZTE that is pulling every trick in the book," said Kevin Rivette, the managing partner of 3LP Advisors, an IP investment advisory firm. "You have to try every lever. You have to go after every single thing."
Vringo shares "have suffered but depending on how it all works out it could be worth it," Rivette said.
"The court is not happy with ZTE. There's a lot of games that have been played and the courts don't like that."
In a motion to enforce court orders, Vringo highlighted some of the games ZTE has been playing, saying "The ZTE employees deposed to date in this litigation have demonstrated collective amnesia over the events that have taken place over the past two years."
Vringo's motion said one ZTE employee, who was tasked with managing countermeasures against ZTE, "used the phrase 'don't know' 131 times, 'don't remember' 211 times, and 'don't recall' 50 times during his deposition."
Vringo "is doing it right," Rivette said.
If Vringo gets significant damages from ZTE in this case it should be able to refill its coffers to continue to pursue its multi-jurisdictional infringement campaign, he said.
Officials of Vringo couldn't be reached for comment.
ZTE officials couldn’t be reached for comment. Perry and Straus, partners with King & Spalding, which represents ZTE in the case, also couldn’t be reached.
—To reach the reporter responsible for this story please contact Dan Lonkevich at 707 318-7899 or firstname.lastname@example.org