Tuesday, January 17, 2012

In surprise move, Oracle asks court to stay its patent claims in favor of near-term copyright trial

Oracle just made the most surprising move in its Java lawsuit against Google. In reply to an order by Judge William Alsup, the federal judge presiding over this litigation, concerning the possibility of a new damages report, Oracle asked the court to sever and stay its patent claims for nine months -- and possibly even longer based on the status of the ongoing reexaminations at the end of that nine-month period. Thereby Oracle hopes to enable the court to take its copyright infringement claims to trial on "the first possible date in the winter or spring of 2012".

Oracle is willing to waive, for the copyright part of the case (but not for a future part relating to the patent infringement claims), its potential right to submit a new (third) damages report. However, Oracle insists on its right to present the Lindholm email, a key piece of evidence, to the jury. The judge had suggested that Oracle could accelerate things by waiving that right, but it won't. The question of the admissibility of the Lindholm email is currently before the Federal Circuit. Oracle believes a decision by the Court of Appeals for the Federal Circuit will come down "by March", judging by the speed at which other petitions for writ of mandamus have been adjudicated very recently. Oracle proposes that the United States District Court for the Northern District of California set a trial date at any rate since it can always postpone it in the event the Federal Circuit needs more time to decide on Google's petition.

If the court doesn't accept Oracle's preferred proposal, it encourages the judge to "dismiss the patent claims without prejudice and set a date certain for the trial of copyright liability and copyright damages for spring 2012, followed by a hearing on Oracle's request for a copyright injunction if Oracle prevails on liability". This is another clear sign that what was initially perceived as a patent infringement case with a secondary copyright component is now, in Oracle's eyes, increasingly a copyright case, at least for the short term.

Should the court neither stay nor dismiss (without prejudice) the patent claims, "Oracle requests that the Court set a winter or spring 2012 trial date on both the copyright and patent claims", and in that case, Oracle would waive its right to present a new damages report. Its expert would present to the jury only those parts that the court considered acceptable.

Oracle's priorities are clear: more than anything else, it wants an injunction. I have said all along that damages in this case could amount to billions of dollars, but the strategic value of an injunction far exceeds that of even the most aggressive damages award. Oracle wants that injunction as soon as possible, and it is willing to bet, in the near term, on the copyright part of its case.

Whether the patent claims get stayed (which the judge could do at any rate, just in light of the fact that the validity of most of Oracle's patents-in-suit has been called into question by the ongoing reexaminations) or dismissed without prejudice, they would go to trial long after the copyright infringement claims. In the event of a dismissal without prejudice, Oracle would have to start a whole new lawsuit to assert those claims again. It's possible that Oracle would select partly different patents in that case.

Oracle's proposal -- or set of prioritized proposals, to be precise -- is a bold move. For a long time, Oracle has opposed a stay of the patent claims, while Google consistently advocated it. Without a doubt, the enormous headway that Google's reexamination requests have made has created a situation in which Oracle believes its copyright infringement claims provide, at least in the near term, a better chance of winning an injunction.

But just like Google's reexamination requests have created doubts about Oracle's patent infringement claims, Google is also responsible for the fact that Oracle is so optimistic about its copyright case. In September, Judge Alsup threw out (for the largest part) a Google motion for summary judgment that was meant to do away with the copyright part of the case. While the judge made it clear that his denial of summary judgment wasn't automatically a finding that Oracle would prevail with its copyright claims, some of the reasons he provided clearly showed that Google would face a considerable hurdle if it wanted to convince a jury that Oracle's API-related files shouldn't be protected by copyright.

At a recent hearing, Judge Alsup expressed hopes that a copyright trial might be enough to resolve this dispute, whichever way it might go. The proposal Oracle submitted today would achieve just that, and it would do so with an even greater probability than the schedule envisioned by the judge.

It's hard to know what the judge will do. He has a tendency to surprise everyone, to a greater extent than Oracle, in fact. I think there's a real possibility that he may accept one of Oracle's first two proposals and stay or dismiss the patent infringement claims. If I were in his shoes, I would seize this opportunity to dismiss the patent infringement claims without prejudice.

Should the judge reject all of Oracle's proposals, the following sentence in Oracle's letter makes it clear that there would be a second petition to the Federal Circuit:

"Oracle believes the Court has taken an unduly strict and improperly narrow approach to the analysis of damages in this case, and reserves its right to appeal the Court’s Daubert and in limine orders."

Oracle is still ready to fight hard for its rights. But it's willing to make far-reaching concessions that streamline the case, in exchange for a very near-term copyright trial.

Oracle's response to the court also contains interesting passages on Google's Android business model. I will quote and discuss those passages in a subsequent blog post.

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