Wednesday, May 18, 2011

Oracle and Google file joint memorandum in reply to tentative case plan: agree to start trial on October 31 but disagree on stay and number of claims

A week ago I blogged about Judge Alsup's proposed case plan for Oracle v. Google, envisioning a three-week patent trial in October and prior summary judgment on the copyright infringement claims (after a motion to be filed in August). The parties had until noon (California time) today to file their replies, and they did so in a joint memorandum that states where they are in agreement and where they have agreed to disagree.

The memorandum firstly states the agreed points, then the disputed issues. I'm now going to structure it differently, looking firstly at the scheduling of the trial, then the narrowing of asserted claims -- let me say upfront that it's increasingly clear that the number of asserted claims will be substantially higher (by a factor) than three --, and finally the game plan for summary judgment on the copyright infringement claims.

Start of three-week trial: October 31, 2011 -- but stay pending reexamination still preferred by Google

In paragraph 6 of their joint memorandum, the parties agree on the following timing:

"The trial remains set to begin on October 31. The trial, addressing all issues, will last for three weeks."

The judge's proposal sounded like he wanted the trial to take place in October, while the parties now propose to let it begin on the last day of that month, which means that 93.3% of the trial (based on the assumption of 15 days) would actually take place in November. We will see whether this still works for the judge. It may very well be acceptable to the judge since he was just concerned about delays beyond November, but we'll see.

It's important to note that Google would still prefer for the case to be stayed pending reexamination of Oracle's patents-in-suit by the USPTO. Basically the parties reiterated in today's joint memorandum the positions about which I blogged before, but Google doesn't insist on a stay. Instead, Google says the following in paragraph 8b of the joint memorandum:

"To the extent that Oracle intends to assert a large number of claims at trial, resulting in a complicated and extremely burdensome trial, Google defers to the Court's discretion to grant a stay pending reexamination."

This way, Google tries to build pressure on Oracle to narrow its claims if it wants a swift resolution of the case, but Google knows that a stay would very much be in the discretion of the judge, which is why Google defers to him.

The judge's tentative case plan also pointed out that Oracle would have to take the risk of possibly getting a decision based on claims that might be narrowed or invalidated later as a result of reexamination. In that case, Oracle won't be able to turn back time and have another trial based on claims that with the benefit of 20/20 hindsight would have been a better choice. Oracle accepts this and Google restates it in different words. Oracle writes in paragraph 8a that it "will bear the risk of subsequent adverse events in reexamination pursuant to applicable law", while Google writes in paragraph 8b that in the event of no stay, "Oracle will take the risk that claims selected for trial will be cancelled or modified during re-examination." Oracle's wording appears broad and general, and Google's appears much more specific, but in my opinion the scenarios mentioned by Google fall within the "adverse events" Oracle says it can live with.

Narrowing of asserted claims -- still no agreement on final number after Oracle rejected Google's compromise proposal of 10 to 14 claims

On May 6, 2011, I expressed my strong belief that Oracle had very convincing arguments against the judge's bargaining position of narrowing Oracle's asserted claims down to only three, which would have required Oracle to drop more than half of its seven asserted patents.

I see that view validated by the following passage in paragraph 7b of today's memorandum:

"Google proposed a compromise of 10 to 14 claims to be asserted by Oracle (upon which the parties could not reach agreement)"

If Google really believed that the judge could require Oracle to go down to only three asserted patent claims, it wouldn't have proposed a compromise of 10 to 14 claims.

All those who previously reported that Oracle would have to throw out 129 (or 98%) of its 132 originally asserted claims jumped to a conclusion based on a tentative schedule with which the judge probably just meant to build a bargaining position. Also, the most important metric here is how many different patents Oracle gets to assert. It wouldn't be hard for Oracle to pick a few claims per patent, and even one claim per patent wouldn't be the end of the world. But having to drop entire patents would hurt Oracle a lot, and if the number of asserted claims was lower than the number of patents, then Oracle would inevitably have to drop patents. At this stage, even though there's still disagreement between the parties, it's likely that Oracle will be able to assert all of its originally asserted patents, and the question is only how many claims per patent will still be asserted at the time of trial.

Like in its reply to the judge's proposal of three asserted claims, Oracle still makes its counterproposal of up to 21 claims. Oracle's position has changed only slightly in the sense that Oracle originally asked for 21 claims as well as a postponement of the decision on the number of asserted claims. The postponement would have given Oracle the opportunity to petition at a later time for asserting even more claims than 21, arguing that there are so many distinct ones. Now Oracle is fine with either setting a hard limit of 21 claims or, "[i]n the alternative", discussing this "in papers submitted in connection with the final pre-trial conference." In the final sentence of paragraph 7a, "Oracle opposes any other approach to narrowing its asserted claim on the grounds set forth in its response to the Court's May 4, 2011 Order." This shows that Oracle believes it has a strong legal basis, which is furthermore demonstrated by the fact that Oracle rejected the 10-to-14-claims compromise proposal (although it was between more than three and almost five times the number of claims the judge proposed in his tentative schedule).

Oracle and Google appear to have reached an agreement on the number of invalidity defenses brought by Google. Per patent claim asserted by Oracle, Google will bring "no more than four grounds of invalidity." Compared to the judge's tentative schedule there's some important progress for Oracle here: the judge's proposal would have limited only the number of prior art claims to be used by Google but would not have explicitly limited the number of non-prior-art invalidity arguments (such as obviousness or patent-ineligible subject matter). The wording in today's joint memorandum refers to invalidity and thereby also sets a limit for non-prior-art invalidity arguments.

The parties have also reached agreement on an interim step toward the final narrowing of asserted claims and invalidity defenses: Oracle will define a shortlist of 50 asserted patent claims (out of the 132 originally asserted ones) by June 1, 2011, and two weeks later Google will create a shortlist of six grounds of invalidity per patent claim asserted by Oracle. If you're interested in the details of how the number of grounds of invalidity will be counted for purposes of that shortlist, this is what the joint memorandum stipulates:

"A reference or set of references setting forth an
anticipation or obviousness theory shall be counted by 'chart' pursuant to Patent [Local Rule] 3-3(c) (i.e., anticipation by a reference shall be counted as one ground for purposes of this paragraph; references setting forth an obviousness combination shall be counted as another ground). Other grounds shall be counted by stated legal theory, e.g., 'enablement,' 'lack of written description,' 'improper broadening.'"

Anything the parties agree upon is still subject to approval by the judge. It's not known to what extent the parties previously discussed these matters with the judge, but it's possible that they clarified beforehand that he would accept certain proposals. We will know soon how he reacts.

Summary judgment on copyright infringement claims

The judge wanted to ensure that the parties won't file too many summary judgment motions (requests for the judge to take decisions during the process ahead of the jury trial) during the remainder of the process. Therefore, the judge would have liked to limit summary judgment motions to only the issue of copyright infringement. Oracle and Google now propose a specific schedule for the copyright part, but paragraph 5 of the joint memorandum provide for the possibility that "[o]ther summary judgment motions will be entertained only upon obtaining leave pursuant to the Court's previous order to that effect." If the judge accepts that paragraph 5, there could be various motions for leave, but the judge could also decline them.

Concerning those copyright infringement assertions, Google will file a summary judgment motion to have those dismissed (which Google would have liked to do before, but at the time it was premature in the judge's opinion, who therefore declined and let discovery carry on).

While Google would under the agreement (if the judge accepts it) definitely have the right to ask for summary judgment as a way to dismiss the copyright issue, Oracle would only have the right to "seek the Court's leave to file a summary judgment motion on copyright issues as well." Should Oracle do so, it would push for summary judgment that there is a copyright infringement. Otherwise, if Google's summary judgment motion failed, Oracle still wouldn't have won that part of the lawsuit.

Whether only Google or both Google and Oracle file for summary judgment on the copyright issue, the schedule is that Google (and possibly also Oracle) would file an opening brief on August 1,2011; Oracle would respond with an opposition brief on August 19, 2011 (and Google would on that day respond with an opposition brief to a possible Oracle motion); and one or two reply briefs would be filed on August 29, 2011. Thereafter the judge would decide on the motion(s).


It's now very likely that this case will go to trial in the fourth quarter, but it still isn't certain. An agreement between the parties on some of the items is helpful but the judge decides. Also, the number of asserted claims is still controversial. I believe the time has come to forget about the possibility of only three claims to be asserted, but there's still a possibility of a stay (pending reexamination) being granted if Oracle cannot reach an agreement on this with the judge.

The judge has previously reacted rather quickly to motions. My guess is he'll probably take a decision tomorrow ([Update] there was no same-day decision on Wednesday [/Update]), or on Friday at the latest.

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