|Oracle Drops Final Claim in Patent '476 and Google Moves to Strike Portions of 3rd Oracle Damages Report|
Saturday, February 18 2012 @ 07:06 AM EST
Oracle has told the court it wishes to withdraw its last claim of the '476 patent, claim 14, no doubt having read Google's letter to the judge asking for permission to file a motion for summary judgment of invalidity of claim 14. This is the last claim of that patent still in the case. The USPTO in December issued a final rejection of 17 of the 21 claims of this '476 patent, anyway, including all seven of the patent's independent claims, and while Oracle has until February 20 to appeal, the handwriting is on the wall. Whatever it decides about an appeal, claim 14, and hence patent '476, is no longer in this litigation.The value of this case to Oracle keeps getting smaller and smaller.
Google pointed out that one can't patent "transitory electrical and electromagnetic signals propagating through some medium, such as wires, air, or a vacuum” and asserted that claim 14 fell into that category of unpatentable subject matter. So, it's buh-bye '476 patent.Google has filed a motion to strike portions of the third -- yes third -- attempt by Oracle's damages expert, Dr. Iain Cockburn, to come up with an acceptable report. This third effort is also flawed, Google maintains, and "riddled with fatal errors". Like guesswork. And inflated and unjustifiable numbers. "Yet again, he has violated the Court's express instructions and overstated Oracle's damages as a result."
Yet, in the end, even calculating that way, he comes up with a proposed number that is nothing near the multiple billions that made headlines when this case was first announced, the expert now valuing the patents at $57.1 million as the highest proposed figure. He values the copyrights at the highest end at between $52.4 million and $169 million, which is ridiculous anyway, but remember the headlines when Oracle first announced this litigation? That Google could lose up to $6.1 billion if it lost this case? That was never realistic.
I mean, Oracle bought Sun, everything Sun had, for what Oracle said was a transaction valued at "approximately $7.4 billion, or $5.6 billion net of Sun’s cash and debt". That's hardware, MySQL, Solaris, many things beyond just Java. So how could just six, now five, Java patents out of Sun's more than 500 Java patents alone, add up to $6 billion? Why did anyone ever think this was a realistic figure instead of just hype? The same thing happened with SCO, when it sued IBM for billions. Hardy har.
Sometimes, folks, people put such figures in complaints to try to embarrass or scare defendants into quickly settling to make the litigation, and the publicity, go away. When that doesn't happen, reality begins to bite, and that is what is happening to Oracle now.
Here are the filings:
02/17/2012 - 716 - Letter from Plaintiff Oracle America Re Google Precis Letter Re Claim 14 of the '476 Patent. (Jacobs, Michael) (Filed on 2/17/2012) (Entered: 02/17/2012)
02/17/2012 - 717 - Administrative Motion to File Under Seal filed by Google Inc.. (Van Nest, Robert) (Filed on 2/17/2012) (Entered: 02/17/2012)
02/17/2012 - 718 - MOTION to Strike Portions of Third Expert Report by Iain Cockburn and Expert Report by Steven Shugan; Memorandum of Points and Authorities in Support Thereof filed by Google Inc.. Responses due by 3/2/2012. Replies due by 3/9/2012. (Van Nest, Robert) (Filed on 2/17/2012) (Entered: 02/17/2012)
02/17/2012 - 719 - Declaration of DAVID ZIMMER in Support of 718 MOTION to Strike Portions of Third Expert Report by Iain Cockburn and Expert Report by Steven Shugan; Memorandum of Points and Authorities in Support Thereof filed by Google Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K)(Related document(s) 718 ) (Van Nest, Robert) (Filed on 2/17/2012) (Entered: 02/17/2012)
02/17/2012 - 720 - Proposed Order re 718 MOTION to Strike Portions of Third Expert Report by Iain Cockburn and Expert Report by Steven Shugan; Memorandum of Points and Authorities in Support Thereof by Google Inc.. (Van Nest, Robert) (Filed on 2/17/2012) (Entered: 02/17/2012)
Here's why Oracle says it is withdrawing the claim, to "streamline the case":As part of its continuing effort to streamline the case for trial and make best use of the Court’s and parties’ resources, Oracle has today by separate letter to Google withdrawn the assertion of Claim 14 of the ’476 patent, the only claim that is the subject of Google’s précis letter (and the only remaining asserted claim of the ’476 patent). Accordingly, Oracle requests that the Court deny Google’s request for leave as moot.I hate to make fun of Michael Jacobs, who sent the letter, because I like him a lot and I admire him too. But seriously, since when has Oracle been making a "continuing effort" to streamline the case? If that is their goal, I suggest talking to Oracle's damages expert. And drop the API nonsense Oracle tacked on to the litigation. It's actually worse than nonsense. It threatens the health, in my view, of the entire software industry, should Oracle be successful. A good name is worth a lot, you know, and once it's gone, it's mighty hard to get it back. Just a suggestion. It's not good for Oracle to look like SCO. And, because of the API claim, it does. Reread the transcript from the September 15th hearing if you wonder why I say this. A sample:THE COURT: Could a reasonable jury looking at everything and seeing this identity here and the other 8 files, could they say that even comparative works as a whole that there's been an infringement?MR. BABER (for Google): I don't believe so, Your Honor. And as a matter of law they could not because these eight files are eight out of a thousand files in Android. These are several hundred lines of code out of 11 million lines of code in Android.
THE COURT: But if there are others, why didn't you just change these two?
MR. BABER: We did. That's the point, Your Honor. As soon as Oracle said: "Hey, wait. There's these eight files in there. Did you know about that?" we looked at them, Your Honor. Frankly, it's not in record. We don't need them for summary judgment. It was a mistake. Somebody thought these were Apache Harmony files from the indepenent implementation of the API's, and they made their way in there. But as soon as they identified them, we took them out. We haven't replaced them. There's no sense in which they could be important to Android.
THE COURT: These don't even exist any more?
MR. BABER: They are gone. They are out. Not only are they out now, but the evidence will show and does show that these would never have even been shipped on any devices. They were test files. In order for a very, very small amount of copying to be actionable, and the courts have recognized for hundreds of years that not all identical things give rise to a copyright infringement claim. It has to be quantitatively and qualitatively important....
THE COURT: What damages are being sought for this infringement that doesn't exist any more? ... By the way, that would have been a nice thing for Mr. Jacobs to point out, that this was long gone. I didn't realize that it was long gone. What do they say in terms of how they have been damaged?
MR. BABER: Your Honor, they say they have been damaged. They say that this -- they highlight this literal copying. We have these eight files. We have some comments in two other files which we also took out right away. And then there's the nine lines of code that Mr. Swoopes just showed you with the so-called "range check function". That's still in there. It's nine lines out of 11 million. And it is a very simple code that simply does some sanity check on sorting things. That's what they are copying. And they use that, of course, in an inflammatory way to say, "This shows copying," when, in fact, Your Honor, it is so de minimis -- it's less than one-tenth of one percent.
THE COURT: Why wouldn't you be thrilled to have them waste their time at trial on this so that the patent issues fall to one side?
MR. BABER: Your Honor, we would be more than delighted.
Yet, the new expert damages report attributes a higher figure for this pitiful collection of alleged infringements of copyrights than for the patents.The Greatly Reduced Damages Claimed Are Still Too High, Google Says
Google once again claims that Oracle's expert, Dr. Cockburn, is inflating calculations. For example:
Dr. Cockburn's third report begins, as his second report did, with the negotiations Google and Sun conducted in early 2006 for a technology partnership to develop a mobile smartphone platform. As before, Dr. Cockburn uses as his monetary starting point Sun's initial February 2006 demand, which he calculates at $98.7 million, rather than Sun's final demand in April 2006 of $28 million."Think what that means. It means Sun valued the entire development deal at $28 million after negotiating with Google and coming down from its initial suggested price. This wasn't for patents, by the way, to remind you. It was for a joint development deal. Yet Dr. Cockburn chooses the initial demand figure instead of the one that reality caused Sun to end with as a figure. And that isn't the end of his inflationary calculations:He then performs the following adjustments:
In short, the expert, Google is saying, looked for any and all ways to inflate the numbers, and yet look at the final totals -- nothing like the billions that made headlines when this case was first announced. And considering that patent '476 is completely out of the litigation, even these figures are presumably going to have to be adjusted downward, even if the report is left in the case.Believe it or not, Cockburn, Google says, indicates he might ask for higher numbers when he goes before the jury, which is incredible, but worse, he claims that "the copyrighted APIs could constitute 100% of the value of the 2006 partnership". Are Oracle's lawyers reading what this expert is writing?
- He adjusts the starting point upward by $557.2 million to account for convoyed sales Sun projected to make as part of its partnership with Google, resulting in a subtotal of $655.9 million....
- Although Sun's initial demand contained a cap on Sun's ability to share in Google's revenue from the partnership, he removes that cap to adjust for Sun's loss of compatibility and control caused by Google's development of an independent platform. This adjustment adds a further $27.8 million, leaving the subtotal at $683.7 million. ...
- He then apportions the value of the patents and copyrights at issue in the suit as a percentage of the total. He uses two alternative apportionment methodologies -- the "group and value" and the "independent significance" approaches....
- Under the group and value approach, Dr. Cockburn first adjusts downward by $86.15 million to account for projected engineering expenses Sun would have incurred as part of a partnership with Google.... He assumes that this $86.15 million would have captured the value of (1) all copyrighted materials other than the APIs at issue, including source code and Java mobile class libraries; and (2) all Sun engineering know-how and trade secrets.... Next, he concludes that the JAVA trademark and Java brand was worth nothing to Google, and performs no further downward adjustment for that intellectual property. He similarly assigns no value to the fact that a partnership with Sun would have given Google access to relationships with OEMs and other Sun partners....
- This leaves him with a total of $597.5 million, which he contends accounts for the value of (1) Sun's Java mobile patent portfolio; and (2) the asserted copyrighted APIs.... Based on the qualitative analysis by Oracle engineers, and three studies regarding the distribution of value among patents generally, he concludes that the six patents-in-suit are worth somewhere between 10.2% and 32.7% of the total, or between $69.5 million and $223.7 million.... Based on Dr. Shugan's conjoint analysis, which suggests that consumers value the availability of applications (the Android feature allegedly enabled by the asserted patents), he sets the value of the copyrights at exactly half the value of the patents -- between 5.1% and 16.4% of the total, or between $34.8 million and $111.9 million.
- Under the independent significance approach, Dr. Cockburn evaluates the totality of the evidence as to the importance of certain performance features to Google and to consumers, and concludes that the patents are worth "at least" 25% of the total, or at least $170.9 million.... Again relying on Dr. Shugan, Dr. Cockburn values the copyrights at exactly half the value of the patents, or "at least" 12.5% of the total, or at least $85.5 million....
- Dr. Cockburn then performs further downward adjustments to his alternative patent calculations to exclude damages for extraterritorial infringement, past damages for Sun's and Oracle's failure to mark its products, and damages for non-accused devices. The results are final patent-damages figures of $17.7 million to $57.1 million under the group and value approach and at least $43.7 million under the independent significance approach.
- Accordingly, Dr. Cockburn's alternative total damages figures for both patent and copyright infringement are (1) between $52.4 million and $169 million under the group and value approach (assuming the Court requires all the deductions described above for extraterritorial infringement, marking, and non-accused devices); and (2) at least $129.2 million under the independent significance approach.
Remember the engineer who had a blog he quickly censored when Groklaw pointed out something he wrote about the case matched Google's position more than Oracle's? We learn a great deal more about the engineers Dr. Cockburn is relying on. They've been deposed, thanks to an order from the judge requiring Oracle to let them answer Google's questions. First, all five of them, it turns out, were used by Oracle to figure out what to sue over. That's who picked which patents to use in the litigation, I gather. Sun has 569 mobile Java-related patents, so these engineers were asked to analyze the patents and pick the ones to use against Google. They had 2 days to finish. Google's position is that they should have recused themselves, therefore, from later evaluating the value of the patents in this case:
The Oracle engineers themselves confirm that they had no technical basis for translating their qualitative judgment into quantitative valuations. Dr. Reinhold confirmed that the engineers did no quantitative assessment, and that such an assessment would require significant and repeated performance testing of each patent's functionality.Wow. So, according to Google, they just guessed. The copyright evaluation was also odd, Google writes:In addition to using two unreliable patent apportionment methodologies, Dr. Cockburn failed to make any attempt to value all of the copyrights that would have been part of the 2006 intellectual property package. Indeed, Dr. Cockburn had no idea what Java-related copyrights Sun owned at the time of the hypothetical negotiation, let alone what they were worth....Without knowing what copyrighted material was at issue, it was of course impossible for Dr. Cockburn to apportion all of that copyrighted material between the 37 APIs at issue and the rest of the material.... Yet there is no reason to think that there were not other copyrights being considered. Most obviously, the source code underlying Sun's implementation of the Java virtual machine is copyrighted, and at least would have been a basis of any new virtual machine jointly developed by Sun and Google.... Because he made no effort to consider the scope of the copyrights at issue in the 2006 negotiations, Dr. Cockburn's analysis does not account for these or other copyrights that Google would have obtained through the hypothetical negotiation.
Dr. Cockburn also made no systematic effort to measure the value of the millions of lines of code in the API libraries that would have been part of the 2006 bundle. Unlike in the patent context, Dr. Cockburn never had anyone from Oracle examine the code libraries to determine their value in relation to the API specifications. Instead, he simply assumed that, whatever other copyrights were on the table in the Sun-Google negotiations, their value would have been subsumed in the operating and research-and-development expenses Sun projected it would incur as part of its partnership with Google. Accordingly, Dr. Cockburn avoids any specific valuation of those copyrighted materials at all. But Dr. Cockburn has no logical basis for using Sun's projected future R&D costs (in developing new intellectual property in a mobile smartphone platform partnership with Google) as a proxy for the value of Sun's then-existing intellectual property (the copyrighted class libraries and source code). This analysis falls apart for at least two reasons. First, Dr. Cockburn confuses cost with value. Consider the patents-in-suit -- it would have cost Sun nothing in terms of R&D costs to license those patents to Google in 2006, because those inventions were already developed and patented. But Dr. Cockburn would contend that the patents have significant valueto Google. Second, Dr. Cockburn is again mixing apples and oranges, by comparing two entirely distinct classes of intellectual property -- Sun's existing copyrighted materials that were the subject of the licensing negotiation, on the one hand, and material that Sun might have developed during a partnership with Google, on the other.
Dr. Cockburn's conflation of projected cost with actual value, and his equal treatment of past copyrighted works and different, future copyrighted works are both efforts to cover up the fact that he has engaged in no rigorous evaluation of the individual values of the copyrights in the 2006 licensing bundle. Indeed, as already discussed, he cannot even identify the components of that bundle. His copyright apportionment analysis is unreliable and should be excluded.
Honestly, is this a joke? Is this really the best Oracle can do on a *third* try? Can you imagine, if this expert were allowed to say such things to a jury, what Google could do with his testimony? Imagine yourself on that jury. What would you be thinking right about now? That Oracle sued before it thought things through? That it has a very small case, if any? That it thought it could bully Google with scary headlines into a quick settlement and when that failed simply doesn't know what to do now to justify the litigation? And it's not like the court hasn't made it clear what the expert was to do, as Google points out:The court has repeatedly emphasized that Dr. Cockburn is required to calculate Oracle's purported damages on a claim-by-claim basis. Jan. 9, 2012 Order [Dkt. No. 685] at 9-10. Yet Dr. Cockburn has still failed to do so... Thus, as the Court ordered before, Dr. Cockburn should be "precluded from apportioning an asserted patent's value among its claims at trial." Jan. 9, 2012 Order [Dkt. No. 685] at 9.We'll see if the judge means what he said. But this isn't even the worst:More problematic, however, is that Dr. Cockburn fails to attribute any value to any of the unasserted claims of the patents-in-suit. In his deposition, Dr. Cockburn [redacted].... This raises the distinct possibility that a portion of the value of some of the patents-in-suit may be located in claims that Google has not infringed. As the Court noted in its January 9 Order: "An infringer of one claim is compelled by law to pay for a license, via the hypothetical negotiation, for the specific invention represented by that claim but it is not required to pay for a license for the other specific inventions not infringed. Therefore, the hypothetical negotiation must be focused only on negotiating a compulsory license for each claim infringed, not for the entire patent." ... Indeed the idea that the unasserted claims had no value is belied by Oracle's actions in this case. At one time, Oracle claimed that Google infringed 132 claims from 7 patents.... Oracle has now limited its patent case to 26 claims from 6 patents. But Oracle must have had a Rule 11 basis for asserting infringement of the now-abandoned claims by Google, so it cannot be heard to argue that those claims have no value to Google. Yet Dr. Cockburn has never tried to isolate the value of those claims -- or the claims that Oracle never asserted -- and deduct the value of the unasserted claims from the remaining value of the patents-in-suit. Yet again, he has violated the Court's express instructions and overstated Oracle's damages as a result.All I can conclude is that one should not sue Google for patent infringement unless you have your ducks in a neat little row in advance, because Google's lawyers notice every detail, know the law, and they will fight until their last breath. Robert A. Van Nest, of Keker & Van Nest, the firm that submitted this document, is impressive. I often heard tales of how effective he is, and now I believe it, and I can't wait to watch these lawyers on both sides in action at the trial.I have only covered part of this document. You can read the rest yourselves, and perhaps Mark will comment further when he is back. He's traveling again, which is why I'm telling you about the latest filings in the case. He will likely have more to add (or subtract) from my impressions. If anyone has the time to do an OCR for him, that'd be great, so he can post the document in full.
Finally, most of the exhibits listed above for entry #719 are actually sealed, including Exhibits A, B, D, F, G, H, I, J and K. The documents listed are just statements that this is the case. But you might find Exhibit E of real interest. It's a transcript from the Apple v. Motorola litigation, and the judge, Judge Richard Posner, tells Apple's lawyer he doesn't see how any kind of significant damages can result from a vertical swiping patent, even if it can prove infringement and validity.
I feel very much the same about Oracle's patents, and I have from the start wondered if any of them are valid, let alone worth millions in damages. So, to me, the risk has been very much on Oracle's side, that it might lose all its patents in this case. But then, I'm just a geeky paralegal, so we'll have to just wait and see how it all plays out. Anyone thinking of attending this trial? It's too soon to plan in detail, but if any of you can make arrangements to get to California to be our eyes and ears, that'd be great. Email me if you are thinking about it, please.