Monday, July 11, 2011

Judge is seriously contemplating a partial or complete stay of Oracle's lawsuit against Google

I just discovered the latest order by Judge Alsup, the federal judge presiding over Oracle's lawsuit against Google. It's a short order, but its content is staggering: he appears to be giving at least serious consideration to a partial or even complete stay of the case pending the ongoing reexamination of Oracle's patents by the US Patent & Trademark Office.

Such a stay could be ordered before the end of the month. Depending on its scope, even a partial stay could seriously weaken Oracle's case, and depending on the extent to which the case might be stayed, it's possible that even Oracle would at some point prefer a complete stay and employ alternative litigation strategies, such as ITC complaints against Android device makers refusing to pay the $15-$20 per-unit royalty Oracle purportedly demands.

The wording used by the judge even suggests that the question is not if there will be at least a partial stay, but just the scope that it will have. It could also be a complete one.

This is the text of today's order:

At least one day before the hearing, please file a five-page joint summary of the status of the PTO re-examination and update the parties' respective views on the extent to which this action should be stayed pending completion of the re-examination. Time will be short at the hearing due to the ongoing criminal trial.

By "the hearing" he means the upcoming hearing on Google's Daubert motion (related to damages). That hearing will take place on July 21 (Thursday of next week). So the requested update is due July 20 (Wednesday of next week).

It's likely that Oracle and Google will be able to agree on a common text describing the hard facts, but they'll for sure be fundamentally at odds over the question of a possible partial or complete stay. Google always advocated a stay (though it politely deferred to the judge in the most recent filing addressing this question, in May). Oracle wants the case to go to trial this year. The trial is tentatively scheduled to begin on October 31, 2011, with a jury verdict to be handed down three weeks later.

All seven patents-in-suit are being reexamined by the US Patent & Trademark Office. First Office actions -- initial positions taken by the examiner -- have been issued with respect to five of those seven patents. Such first Office actions are always just preliminary, and Oracle has already filed a response in one of those reexamination proceedings, fighting hard to keep the relevant patent alive despite a preliminary rejection of all of the asserted claims.

Based on the preliminary status of those reexaminations, Oracle has (though not definitively) lost three patents. All of the claims of those patents that Oracle wanted to assert have been rejected on a preliminary basis. A fourth patent has been seriously weakened based on the preliminary rejection of many (and especially some very important) claims. A fifth patent has also suffered but came out relatively strong. For the two remaining patents, no first Office actions have been issued yet. At least one of those first Office actions may be filed in the very near term.

The big question: the extent of a partial stay

While the judge asks the parties for input, he's certainly aware of the status of those reexaminations. Back in May it seemed that he was planning to evaluate a possible stay only at a later point in time: shortly before the scheduled trial. But now he doesn't even ask the parties whether there should be a stay. He just wants to hear their opinion on the extent to which the case should be stayed.

Last month, reexamination expert and patent litigator Scott Daniels wrote the following on his Reexamination Alert blog about this case:

The cumulative effect of these reexamination rejections of Oracle’s patent claims may lead Judge Alsup to believe that the reexaminations will have a major impact on the claims for the October trial. If so, Judge Alsup would be encouraged to stay Oracle's infringement litigation pending completion of the reexamination proceedings.

It seems that Scott Daniels was right. The judge has been concerned about the court's scarce resources all along. Today's order again points out the shortage of judicial resources, making reference to a lack of time at the July 21 hearing due to a major criminal trial going on in parallel.

It looks like the judge now believes that the current status of three or four of those reexaminations warrants a partial stay concerning those patents. Theoretically, the case could still continue with the remaining three or four patents, and with Oracle's copyright infringement allegations. In the meantime between now and the tentatively scheduled trial, the outcome of the two reexaminations concerning which the USPTO has yet to take an initial position could further widen the extent of the stay. But if those other two reexaminations go reasonably well for Oracle, it's possible that Oracle would feel pretty good about taking its three or four strongest patents to trial later this year.

Maybe the judge believes that a curtailed case is more likely to be settled before trial. However, I don't think Oracle will let Google off the hook anytime soon unless Google agrees to Oracle's proposed terms. I believe that in the event it's necessary, Oracle will probably take more time and modify its litigation strategy. It's not in Oracle's DNA to give up, and Oracle wants billions of dollars out of this case.

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