Wednesday, July 27, 2011

Google doesn't want techies to testify on value of Java to Android

[UPDATED after judge's order to continue search for experts, on modified basis, until August 3, 2011]

Damages claims are a highly controversial issue between Oracle and Google, and once again they couldn't agree. This time they disagreed on possible candidates for the role of a court-appointed expert. That comes as little surprise to me.

In a pretty swift reaction, the judge has modified his order: Oracle and Google now have until August 3 to propose candidates they can agree on or propose separate candidates (under seal) for the court to consider. And the judge continues:

"If no candidates are submitted by that date, then the Court will independently search for candidates, and the parties will still be required to pay the costs of the expert(s) chosen from that pool pursuant to [Federal Rule of Evidence] 706(b). Such a search likely would portend delay of the trial date, because any expert will need time to be brought up to speed on the facts of the case after being appointed."

A delay of the trial date would certainly not be in Oracle's interest. Therefore, Oracle will certainly make an effort to present the court with choices.

While the disagreement on candidates was almost expected, here's one thing that probably will surprise many observers of this process: for the question of the contribution Oracle's Java-related intellectual property rights make to Android's success, Google wants the court to pick a marketing expert rather than a technical expert -- and Oracle disagrees. That's a generic preference because they don't know whom the court might choose, so this has nothing to do with any candidates known to them. Here's what Google wrote:

"Third, if the Court decides to appoint a technical or industry expert regarding the basis of demand for Android, Google believes that an industry expert would be more helpful to the Court and the jury than a technical expert. An industry expert would have first-hand knowledge of the market for handsets, operating systems, and applications, how those products are marketed to consumers, and the reason why consumers make their practical purchasing decisions. As Google reads the Court’s Order and understands the legal standard, those are the critical questions with respect to evaluating the basis of demand. A technical expert, by contrast, might be limited to offering objective data regarding how any patented features in the Android software improved the performance of that software, but may not have a basis for evaluating the extent to which any of those performance improvements actually mattered to consumers, relative to the other features of the software."

A joint letter by the two parties to the court also shows that one of eight candidates they analyzed together fell through because Google objected to a computer scientist:

"Google objects to one additional potential expert proposed by Oracle, Candidate H, on the ground that he is a technical (computer science) rather than a marketing expert."

This is Oracle's take:

"Oracle is not submitting a declaration, but notes that it disagrees with Google's position as to the advisability of a marketing expert as compared to a technical expert on the issue of whether the claims to be tried to the jury constitute the basis for demand for Android."

Usually one would expect these preferences to be just the other way round:

  • Google always likes to present itself as a company with a markedly "geeky" culture. Its CEO Larry Page just started his second term by promoting a number of executives with a technical background at the expense of other professional groups. And Google used to take great pride in not spending much (if any) money on marketing.

  • By contrast, Oracle's leadership is -- except for its CEO Larry Ellison -- more like a group of marketeers and investment bankers: business-oriented as opposed to "geeky".

Having both a technical background and conducted marketing campaigns, I believe I have an explanation for these counterintuitive preferences. Google obviously wants to downplay the role Oracle's Java IPRs play, claiming that anything those patents (and copyrights) cover is just a small part of Android as a whole. Oracle wants the opposite. Programmers are, on average, more inclined to attach substantial value to certain functionalities, and in this case we're talking about rights that allegedly cover essential aspects of Android's app platform. A programmer's perspective is likely to be that Android would be fundamentally less valuable without the technologies to which Oracle claims exclusive rights. For a programmer, Android without access to all those Dalvik-based apps is a rather unattractive platform. We're talking about 200,000+ apps and counting, and a programmer would probably also figure that the amount of code those apps collectivly represent already dwarfs that of Android itself -- a gap that is only going to widen in the future.

In discussions between programmers and marketing people on how many features to build into a product, programmers are often "feature-crazy" while marketing professionals often think that a lot of functionality can be removed without losing too much of the sales opportunity, or that advertising, branding, in-store promotions and pricing strategies can offset any technical shortcomings. Therefore, Google is probably more comfortable with the conclusions at which a marketing expert would arrive.

Google failed to downgrade the role of an independent expert

Regardless of whether the court chooses a marketing or a technical expert, Google attempted to generally downgrade the expert's role and reduce the potential impact of whatever court-apppointed expert as compared to the court's tentative plan.

A July 5 court order stated that "[d]ue to the large damages at issue, the Court tentatively plans to use the selected expert to testify before the jury at trial under FRE 706 and not [merely] as a confidential advisor to the judge." Google's lawyers view this very differently and tried to persuade the court of an alternative approach:

"Fourth, Google believes it would be more appropriate if the Court would limit the role of any Court-appointed expert to confidentially advising the Court, rather than testifying before the jury. Both Oracle and Google have retained damages experts and plan to have those experts testify, including about the basis of demand for the Android software. If the jury also hears testimony from a third, neutral expert, that will further complicate the jury's decision on damages, which decision will already be a complex task. Moreover, if the jury is aware that the Court's expert was appointed by the Court and is not a representative of the parties, that expert will have a powerful stamp of Court approval and objectivity that will lend a disproportionate weight to that expert's opinions and testimony. In addition, only three months remain until trial, and it is still unclear which patent claims Oracle plans to rely on at trial. The expert will need a significant amount of time to gather materials from the parties and get up to speed on the facts of the case. Once the expert does get up to speed, there would be a greater need for both Oracle and Google to take comprehensive discovery of that expert if the expert will testify. Accordingly, it would be logistically simpler and impose less pressure on the parties, the Court, and the expert if the Court gave the expert the more streamlined role of a confidential advisor, rather than the more complex role of a testifying witness."

Oracle didn't formally contradict that view. I guess Oracle's lawyers figured that the judge was going to stick to his original plan, and this isn't worth a fight, so they effectively deferred to him.

There are various possible reasons for which Google wanted to limit the impact of a future court-appointed expert. Google's lawyers appear to be generally uneasy with the conclusions at which an independent expert could arrive. They may also believe that their own damages expert will be more convincing than Oracle's expert, so they'd rather have bet on that particular showdown without a third expert (whose credibility would, by virtue of his independence, eclipse that of the two experts hired by the parties).

When I saw Google's proposal, I wrote in an earlier version of this blog post that "in the interest of justice, I believe the court-appointed independent expert should appear as a witness before the jury, as envisioned by the judge". And that's also the position taken by the judge, who didn't adopt Google's suggestion:

"Regarding the declaration filed by Google Inc., the suggestion that the role of any Rule 706 expert be limited 'to confidentially advising the Court, rather than testifying before the jury' will not be taken [...]. As stated in the July 5 order, the search is for an expert 'to testify before the jury at trial under FRE 706 and not [to serve] as a confidential advisor to the judge' [...]. Far from complicating the jury's decision on damages, as Google argues, the testimony of a Rule 706 expert would assist the jury by providing a neutral explanation and viewpoint. [...]. This assistance will be particularly useful because both sides have taken such extreme and unreasonable positions regarding damages in this action."

That last sentence is consistent with the judge's previous criticism of the parties. At a hearing he said that they were "both asking for the moon".

Procedural context

Let's do a quick recap of the situation in this lawsuit so everyone has the context:

On Friday, Judge William Alsup largely agreed with Google and ordered a thorough overhaul of Oracle's damages report, but at the same time expressed strong suspicions of Google having willfully infringed Oracle's intellectual property rights. Also, Google couldn't get its advertising revenues excluded from consideration in connection with damages. For the most part, such damages claims will relate to Google's Android-related mobile advertising revenues, but Magistrate Judge Donna Ryu, who helps Judge Alsup out in connection with discovery disputes, also issued an order on Friday and allowed Oracle some reasonable discovery of Google's non-mobile revenues in view of network effects (meaning that Android serves to further cement Google's dominant position in the search market).

A joint letter of the agree-to-disagree kind

At 11 PM local (San Francisco) time on Tuesday, Oracle and Google filed their joint response to a July 5 order by Judge Alsup. That order gave the parties three weeks to "agree on two qualified candidates [for the role of an independent expert according to Federal Rule of Evidence 706] in this district and jointly call them to make sure they would be available and have no conflicts". The court was then going to "tentatively pick one of the two". In addition, the court ordered "both sides [to] recommend two qualified economists or other experts to testify under FRE 706 concerning whether or not the claims tried to the jury, if infringed, constitute the basis for demand for Android".

An unreliable blog tried to spin that order as underscoring how controversial Oracle's original damages report was. While that report was without a doubt controversial (as you can see in my post on the overhaul order, I already expressed doubts about some the theories in early June), a court invoking FRE 706 cannot be reasonably understood to dismiss the theories of one particular party. In fact, the judge also considered Google's zero damages theory "ridiculous" at a recent hearing. The reason FRE 706 (you can find its text here) came into play is simply that there's a whole lot of money at stake in this case, which justifies the cost and effort of having a court-appointed expert.

Even though the court appoints such an independent expert (or in this case, possibly two of them, with one focusing on damages and the other on the relevance of Oracle's patented technologies to consumer demand for Android), the parties were given a chance to reach a consensus on candidates. They agreed to disagree (as they did on various other issues):

"First, both parties sifted through a large number of experts that they thought might be good candidates. Each party independently found that many experts had to be excluded for reasons of conflicts, as a result of which both parties expanded their searches outside the Northern District of California. Second, the parties exchanged names of several experts who survived this process, after which they jointly reached out to those experts to assess availability and conflicts.

Having now concluded the vetting process, the parties regret to inform the Court that they do not yet have agreed experts who fulfill the Court's criteria."

Next step: the court will make its own choice if necessary

The parties told the court that they can keep trying, but that appeared to be merely a way to show respect for the original order. Between the lines they indicated pretty clearly (in my interpretation) that even more time won't necessarily put them closer to a solution:

"The parties are willing to continue working together in an effort to satisfy the Court's request for recommendations, but would need more time to do so. In light of the results to date and the Court's July 22, 2011 Order on the Daubert motion, however, the parties would appreciate further direction from the Court as to whether it wishes the parties to attempt further efforts to agree on candidates who meet the Court's criteria."

This left the court with three choices:

  1. Give the parties more time.

  2. Having given the parties a chance to agree on proposals, simply appoint an expert without asking them. FRE 706 says that "[t]he court may appoint any expert witnesses agreed upon by the parties, and may appoint expert witnesses of its own selection." (emphasis mine) The latter will be the only viable option left if they can't agree. But even if the judge may have to choose the experts, he would at least like the parties to make proposals for him to select from instead of having to conduct his own search for experts.

  3. Abandon the idea of having a court-appointed expert.

I guess the judge knew beforehand that Oracle and Google weren't too likely to agree but he gave them a chance, and he gives them another one until August 3. If this doesn't work out, Judge Alsup will feel better about picking an expert of his choosing (provided that he or she meets the applicable criteria), but at least he wants the parties to submit proposals, even if they don't agree on those.

Conflicts of interest rendered various candidates ineligible

The letter doesn't name the candidates Oracle and Google considered but instead refers to them by letters (A-H). If you're curious about what kinds of reasons might have made some of the proposed persons ineligible, here's a summary.

Besides logistical issues (availability and location), some candidates "have actual or apparent conflicts that one party or the other believes would prevent them from being an apporpriate court-appointed expert". Here are some examples:

  • Candidate B: "recently adverse to Oracle, and employment issue with consulting firm retained by Oracle in this case"

  • Candidate C: "previously approached Oracle in connection with this litigation"

  • Candidate D: "investor in Google, has written on Android, and has stated positions on software patents generally" (since this is apparently an expert distrusted by Oracle, his general "positions on software patents" are presumably critical, which is increasingly en vogue)

  • Candidate E: "contacts with Google and past payment by Google"

  • Candidate F: "contacts with Sun Microsystems"

  • Candidate G: "represented Google in two previous cases"

And as I mentioned further above, there was a Candidate H whom Google didn't want to accept because he's a computer science (not marketing) professional.

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