Wednesday, March 21, 2012

Ten things Oracle v. Google tells us about the judge presiding over Yahoo v. Facebook -- UPDATE: 10 hours later, the case was reassigned to a different judge

[Update] Approximately ten hours after this post went live, Yahoo v. Facebook was reassigned to Judge Jeffrey White. I will leave this post online because it is, for the most part, a recap of Judge Alsup's handling of Oracle v. Google, a priority case for this blog. [/Update]

On Google+ I recently said that I don't consider Yahoo v. Facebook, however interesting it may be for the Internet community at large, to be sufficiently wireless-related for the FOSS Patents blog to cover. That said, I felt that this particular post would be of interest to at least parts of the FOSS Patents readership since it is all about an overlap between that case and Oracle v. Google, a case I have been (and still am) monitoring: Judge William Alsup is now also presiding over Yahoo v. Facebook, the highest-profile web patent lawsuit in the history of the industry.

Oracle v. Google will finally go to trial on April 16. Judge Alsup discouraged and subsequently (haven't mentioned this here yet) denied a Google motion for continuance (postponement). This is simultaneously a retrospective on how Judge Alsup handled Oracle v. Google and a sort of forecast of his management of his next high-profile Silicon Valley patent spat. Of course, there's no guarantee that his style will be the same as in Oracle v. Google. But in many respects it probably will be.

Before I discuss the ten take-away items, let me answer the question many would presumably like to raise upfront: for whom is Judge Alsup better news, Yahoo or Facebook? My opinion is this: The Northern District of California is generally not a bad location for defendants, compared to some other places, but Yahoo didn't have much of a venue choice because both parties and probably almost all of the witnesses are based in that region, so it would have been easy for Facebook to have the case transferred to San Francisco. If Yahoo ended up prevailing with only a couple of patent claims of average quality, there are many judges (in other districts) who would give it a much more leverage (in terms of damages and a possible injunction) than Judge Alsup likely would in such a scenario. However, he is in favor of reasonably strong intellectual property enforcement, so if Yahoo's case proved to be much stronger than the average patent infringement lawsuit, and especially if discovery resulted in evidence capable of buttressing the rather aggressive allegations of free-riding contained in the complaint, then Judge Alsup would let Yahoo win big-time.

Judge Alsup isn't the only member of the smartphone patent cast of characters to reappear in Yahoo v. Facebook. The first thing I noticed in Yahoo's complaint is that it's represented by Quinn Emanuel, an amazing litigation firm, and even by the same lead counsel (Charles Verhoeven) who also represents Samsung and HTC against Apple, and Motorola against Apple and Microsoft. It's not known yet who represents Facebook; the choice may not have been made yet. But Facebook won't be able to have an advantage in this regard. At the most, it can find a match for QE.

QE's involvement also makes it anything but unlikely that we'll see some Yahoo lawsuits against Facebook in Mannheim (where QE is counsel for Motorola and co-counsel for Samsung), depending on whether any of Yahoo's European patents appear powerful enough. Yahoo holds quite a number of European patents in the relevant fields, but not as many as in the United States. If it finds a couple of strong ones, it will most likely try to benefit from the fact that Mannheim is about three times as fast as the Northern District of California, and that infringement automatically results in injunctions under German law.

Getting back to Judge Alsup, here are my ten points:

1. He's a character

Based on the electronic filings I saw and reports from hearings I read, Judge Alsup became my favorite U.S. judge to watch. I have seen people describe him as "grouchy", but that's not the way I see him. I think he's a character and probably a very nice person. He's concerned about using the court's scarce resources wisely and seeks to minimize the burden on the jury. There were a couple of situation in which the pursuit of those cae management goals went too far for my taste, but all in all I think the decisions he took in Oracle v. Google didn't disadvantage either party.

With Judge Alsup's assignment, a lawsuit that is of great interest to many people in its own right is now going to become even more interesting to watch.

2. Primacy of courts over corporations

He said and wrote a number of things during the course of Oracle v. Google that I thought were brilliant and memorable. A strong contender for the number one spot is his remark to one of Oracle's (external) lawyers that "this [court] is not a wholly-owned subsidiary of Oracle Corporation". He wants the big players to realize that, to the greatest extent possible under the circumstances, we are all equal under the law. Also, Judge Alsup feels it's fairer to have large, deep-pocketed organizations pick up certain costs, or make certain efforts (that have cost implications) if it helps to prepare the case for an efficient jury trial.

Yahoo and Facebook will have to deal with this.

3. Yahoo will have to substantially narrow its claims

The judge can't prevent Yahoo from insisting on a trial involving each of its patents-in-suit, but unless Yahoo narrows its claims substantially during the course of the litigation, it's probably going to have to be very patient. It's very, very hard to imagine that Judge Alsup would allow a ten-patent trial. In Oracle's case, the judge at some proposed a narrowing from 132 down to only three (!) patent claims. Yahoo, too, will have to pick its best bets at some point.

4. Reexaminations will represent a major opportunity for Facebook

If Facebook identifies some really good prior art that renders some of Yahoo's patent claims non-novel or obvious, which is what Google achieved against Oracle, then Yahoo's case may take some serious hits. Judge Alsup will look at what preliminary results any reexaminations yield, and if there are signs of serious validity issues for Yahoo's patents (which appear pretty broad, which is often -- but not always -- an indicator of validity issues), he would most likely delay trial until there's greater clarity. In Oracle's case, delays were attributed to an unrelated circumstance (a gang murder trial), but I believe that reexaminations played a key role as well.

Judge Alsup would allow a jury to be informed of at least the USPTO's "final" rejections of patent claims (final but appealable), and in cases in which it's relevant, even some information from non-final decisions could be admitted as evidence. Preliminary results also give an indication to the judge whether this case is going to be narrowed by the passage of time. Facebook would be well-advised to spend a large amount of money on the quest for prior art and the reexamination effort at large. Google did a tremendous job against Oracle in this area.

5. High degree of transparency

Based on the cases I monitor, I can't think of any U.S. judge who would be more committed to transparency than Judge Alsup. He once stressed that litigation is "public proceeding", and he doesn't like the argument at public court hearings to be restricted by requirements to protect confidential business information. Transparency relates not only to what the general public can find out about the case but also to what the jury will get to see (provided that it's not misleading, of course).

So far, Yahoo was quite interested in transparency and publicity. It told the New York Times about a discussion with Facebook that preceded the lawsuit, and its formal complaint (of March 12, 2012) was given to journalists almost two days before it showed up in public court records. But at a later stage, transparency could also benefit Facebook (for example, if Yahoo's claims turned out to be totally overreaching or if Yahoo behaved unfairly in the eyes of the Internet community).

6. Excessive damages claims are a no-go

Anyone who watched even just a part of the damages debate in Oracle v. Google knows that Judge Alsup is an opponent of excessive damages claims. In particular, he will insist that Yahoo apportion its total damages to the particular patents-in-suit, so any patent infringement claims that fail will reduce the maximum damages amount.

As I said before, Judge Alsup will ensure that Yahoo's demands are commensurate with any patent infringement it can actually prove. He won't be misled by the fact that many of the patents-in-suit are directly linked to revenue sources: I'm sure he'll understand that those revenues can only be generated thanks to a lot of other intellectual property than whatever Yahoo claims is being infringed.

7. Significant hurdle for injunction

Judge Alsup once warned Google that evidence of willful infringement would have "profound implications for a permanent injunction". While this doesn't conversely mean that willfulness is an indispensable requirement for an injunction in Judge Alsup's eyes, I think Yahoo will need to prove something outrageous about Facebook's conduct (and not just the fact that it was first to patent concepts that Facebook later implemented independently) to get an injunction.

But if the facts that are on the table suggest that an injunction is the only appropriate response to an ongoing infringement, Judge Alsup won't hesitate to order one. One of his better-known rulings was an injunction against UC Berkeley (but not a patent injunction).

8. Sometimes he's generous (and patient with the parties)

I said further above that I don't think he's "grouchy", even if he sometimes appears to be. He tries to manage his cases well, but he can also be generous. For example, after Oracle's first damages report was thrown out, a second one still contained passages that Judge Alsup didn't want to let Oracle's expert present to the jury, but he gave Oracle a third chance to submit such a report. It would have been relatively easy for him to say that two attempts are all that Oracle gets, and to claim that his first order wasn't complied with, but he decided to allow yet another attempt.

Also, while he got Oracle to substantially narrow its claims, he does allow the "James Gosling patent" to be asserted at trial, even though the track record of the other reexaminations would suggest that it's going to be invalidated by the USPTO later this year.

9. Experienced in patent cases but not a "captive" of the patent system

At a hearing, Judge Alsup mentioned his 37 years in the legal profession (he was a lawyer before he became a judge). He's definitely very experienced, not only in general but also as far as patent cases are concerned. He's done many of them. But he doesn't spend 100% of his time on patent cases. For example, he was also assigned to the "MS-13" gang prosecution that involved four trials (he mentioned this fact in an order).

There are exceptions to this rule, but on average, judges who focus 100% on patent cases tend to be more patent holder-friendly. The U.S. Supreme Court once even expressed concerns about a patent-focused court being a "captive court" (a captive of the patent system). That's not an issue with Judge Alsup.

10. Better understanding of business than technical issues

I found Judge Alsup's work on the damages issue very impressive. Oracle and Google presented certain theories that I didn't subscribe to because I have a software industry background, but I felt that the judge might buy them because the parties' lawyers presented them very skillfully. Judge Alsup figured out all of the key issues relating to Google's revenue strategy.

Technology is not his strength, and he admitted it. Last year he explained that one of his clerks had analyzed the technical issues (Java, virtual machines etc.) for him and was going to leave the court in November 2011 and that's why he wanted the case to go to trial last fall. In recent weeks Judge Alsup ordered the parties to answer some basic technical questions that were quite surprising given the advanced stage of the litigation. Those questions also appeared to reflect quite a struggle with the basic concepts of programming languages and virtual machines.

On average, the technical issues in Yahoo v. Facebook are somewhat less esoteric than the ones in Oracle v. Google, but the judge will need a tutorial and even after that one he may still ask questions that will surprise those of us who have programming knowledge. But I am sure he will try very hard to understand the asserted patents, and the parties will have to help him understand.

[Update] Approximately ten hours after this post went live, Yahoo v. Facebook was reassigned to Judge Jeffrey White. I will leave this post online because it is, for the most part, a recap of Judge Alsup's handling of Oracle v. Google, a priority case for this blog. [/Update]

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