Tuesday, December 6, 2011

Judge inclined to throw out large parts of Oracle's new damages claim in Google lawsuit

On July 22, Judge William Alsup ordered a thorough overhaul of a damages report written by an expert hired by Oracle for its patent and copyright infringement lawsuit against Google. He warned Oracle that its second damages calculation may very well be its last in this litigation to enable its expert to testify before the jury. Oracle created a damage report 2.0, and Google, which complained in a filing that Oracle just used a different methodology to arrive at pretty much the same amount of damages as before, once again asked the court to dismiss various parts of it because it would mislead the jury.

Today, Judge Alsup entered a "tentative order", meaning that he showed what the order would look like if he had to rule today and asked the parties to comment on it until December 20. Thereafter he will finalize the order.

The tentative order is described as "granting in part and denying in part Google's motion [...] to exclude portions of Dr. Cockburn's revised damages report". Three of Google's objections are tentatively overruled while five are tentatively supported by the court. However, in terms of the impact of the court's proposed rulings, this tentative order is much worse to Oracle than a 3-5 defeat. I expect Oracle to protest vehemently because some parts of the order appear exceedingly harsh to me.

The best part of the tentative order for Oracle is that the judge agrees a hypothetical license fee for an incompatible implementation of Java must be much higher than for a compatible one. The judge sums up Google's argument as saying that "Sun would never have licensed an incompatible version of Java to Google". Not only is it good for Oracle that the judge allows damage claims based on a hypothetical license for an incompatible version but Google's admission of Sun never having been willing to license an incompatible version contradicts some of Google's key arguments (such as its claim that a blog post by former Sun CEO Jonathan Schwartz was tantamount to an implied license) and strengthens Oracle's argument for injunctive relief. In late September, Oracle made it very clear that it intends to "strenuously pursue injunctive relief to resolve the key issue in this case: whether Google can use Oracle's intellectual property to create an incompatible clone of Java and thereby undermine Oracle's and many others' investments in 'write once, run anywhere.' ".

Damages are much less important than a possible injunction

When billion-dollar amounts are at stake, it's certainly counterintuitive to say that those damages don't matter. I wouldn't say that they don't matter at all -- it's too much money to be irrelevant. But relatively speaking, the strategic and ultimately economic value of an injunction to Oracle is hugely greater than any damages it will realistically be awarded if it wins this lawsuit.

Only an injunction gives Oracle the leverage it needs to force Google to bring Android into compliance with the Java standard.

If Google is found to have infringed Oracle's intellectual property rights willfully, damages will be tripled and in that case I wouldn't be surprised if there's still a billion-dollar figure on the table when all is said and done. But an injunction against Android is the most important thing for Oracle to achieve.

Key parts of Oracle's damages report 2.0 under pressure

It appears that Judge Alsup may throw out very important parts of Oracle's damages report 2.0. For example, he wants a very fine-grained apportionment of damages to the asserted patents (broken down to the level of a patent claim) and copyrights (making a distinction between the API copyrights and the 12 copied files). Some of it makes sense. For example, those 12 copied files are small -- if any high-value Oracle copyrights are infringed, it's the Java API specifications (which Google claims aren't copyrightable). But the judge also suggests, tentatively, that the jury assume that the entire value of a given patent is in one particular claim if a claim is found not to be infringed ("this tentative order holds that the jury will be instructed that if they find any asserted claim not infringed, they may assume that the noninfringed claim represented the full value of that patent").

One important item on which I tend to agree with Judge Alsup is that there are indications that the 2004 settlement between Sun and Microsoft reflects in no small part a different kind of issue than the Oracle-Google situation: a large part of it was an antitrust settlement.

At this stage it's unclear whether Judge Alsup will allow Oracle to come up with a damages report 3.0. But since the case still doesn't have a firm trial date yet, there would be plenty of time left for that.

Even if Dr. Cockburn wasn't allowed to amend his report, some parts of it could still be presented to the jury even if the tentative order became the final one.

Since the court appointed an independent damages expert (a rather unusual step), the testimony of the parties' experts may not bear too much weight with the jury anyway. A jury might place infinitely more trust in the representations of a court-appointed independent expert. That said, Oracle will certainly fight hard to defend or amend its damages report in order to present a position on damages that is much more aggressive than the position an independent expert is likely to take (though one never knows until he presents his findings).

Update on Google's petition for a writ of mandamus by the Court of Appeals for the Federal Circuit

Four weeks ago I reported on Google's request that the Court of Appeals for the Federal Circuit interfere with this litigation in order to throw out the Lindholm email.

I can't access the related briefs, but based on the information that I could find, Oracle filed its response to Google's petition on November 28, and Google immediately asked the court "not rule on the petition until it has considered Google's reply brief". Yesterday Google made another entry, presumably its reply brief.

It's quite possible that the CAFC will refuse to hear Google's petition at all. In that case we'll probably know soon.

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