Google Must Defend Itself in Vringo Lawsuit (GOOG, VRNG, NOK)

At issue are patents related to search technology, and the judge’s refusal to toss Vringo’s suit is very likely to result in a settlement between the two combatants. Vringo acquired the patents, originally granted to early search company Lycos, when it acquired intellectual property firm Innovate/Protect earlier this year. Vringo also purchased a portfolio of patents from Nokia Corp. (NYSE: NOK) in August.

Vringo stands to gain significant damages if the company prevails. By some estimates damages could reach into the hundreds of millions and a 3x penalty for deliberate infringement could push Google’s total payout to well past $1 billion. A settlement between the two companies would seem to be in order, and that’s probably what most investors are hoping for as well.

Vringo’s shares are skyrocketing today, up 29% at $3.99 in a 52-week range of $0.68 to $5.45. Volume is above 16 million shares in the mid-afternoon, more than 4x the company’s average daily volume.

Google’s shares are up about 0.6% at $761.30 in a 52-week range of $480.77 to $765.99.

Paul Ausick