Shares of Vringo (VRNG), a mobile-phone software maker that some have labeled a "patent troll," slumped 18% Tuesday, giving back some gains from Monday as the company flexes its legal muscle in patent battles with tech heavyweights.

The New York company, backed by billionaire Mark Cuban, was initially boosted Tuesday by an erroneous report that it had settled its infringement dispute with Google (GOOG) regarding patents it acquired from the now-defunct Lycos search engine. But when word got out that no settlement had in fact been reached, Vringo's stock plummeted.

The two companies are in court-ordered settlement talks. An analyst quoted by Barron's says the search engine giant may face damages from the Vringo case topping $1 billion and may have to acquire its smaller rival.

Gannett (GCI), Target (TGT) and IAC/InterActiveCorp.​ (IACI) have also been named as defendants by Vringo because they are customers of Google. The company last week reached a settlement with AOL (AOL) and Monday filed a patent infringement suit in Europe against the U.K. subsidiary of ZTE Corp. (ZTCOF), a Chinese company. 

In an interview, company spokesman Cliff Weinstein rejected the "patent troll" label, saying the company is not only interested in litigation and plans to develop its technology. Whatever its goals, the company has received plenty of attention. Its shares have skyrocketed more than 300% since the start of the year. The company, which has 27 employees, went public in 2010 at $4.60 and also has operations in Israel.

--Jonathan Berr in long Target.  Follow him on Twitter @jdberr.