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Oracle is not Happy; Asks Judge to Reconsider Order Reducing Claims
Monday, May 09 2011 @ 03:21 PM EDT

The parties have each responded to the judge's order reducing the number of Oracle's claims in Oracle v. Google from 132 to 3. And each has provided requested input to the judge on his tentative order on claim construction. If you recall, the judge asked for their input.

Here is Oracle's response to the order reducing the claims. After a respectful introduction acknowledging the Hon. William Alsup's "experience with complex trials", Oracle says it thinks he needs to modify the order:

The Court’s proposal to limit Oracle to only three asserted claims, however, will prejudice Oracle in the upcoming trial. That prejudice will be seen in both Oracle’s damages and liability case. Moreover, the Court’s requirement that Oracle surrender untried claims will deny Oracle due process and its right to a jury trial. The Court’s proposal, moreover, will place additional pressure on motions for summary judgment. Oracle recommends that the Court decide the number of claims to be tried closer to trial.
When a lawyer tells a judge that his client will be "prejudiced" by an order, it's kind of fighting words. Not in a bad way, but that word has weight. It is a word that lets the judge know that the party believes an error has been made that is fundamental to a fair trial. Of course Google has a shorter response:
Google agrees with the Court’s three-step process in its entirety.
If Google had just written, "Yay!" it couldn't be more clear that Google is delighted with the order.

I think that Oracle has made some valid points, however, and I think the judge may well agree, and while he may not go all the way to Oracle's suggested numbers, I think he may modify his order somewhat. And Google makes some strong points regarding the reexamination of Oracle's patents. It seems Google has made some progress already at the USPTO.

Meanwhile, we can use this document to learn how Morrison & Foerster's Michael A. Jacobs, who signed it, deals with a situation where a judge has issued an order that the lawyer now hopes to persuade the judge to modify. Jacobs is a master at this sort of thing, so law students everywhere can learn a great deal from this skillful filing. The rest of us can just enjoy the display. I confess, I absolutely love watching this guy work.

Do you remember when IBM got hit with a discovery order [PDF] they thought was unfair in SCO v. IBM back in 2005? David Marriott of Cravath was able to get the judge to modify the order. So we have seen a talented lawyer do this once before. And it can work. Judges don't always see all the issues as clearly as the lawyers do, at the beginning of a trial especially. How could they? The lawyers have been thinking deeply about all the detailed aspects of the case for a while in a more focused way than the judge has yet done or ever will.

Judges are aware of that, by the way. That's why this judge asked the parties for their reactions to his tentative order on claims construction. He's open to hearing from them if they think he's missed something. And when the magistrate judge in the IBM case modified her order, she said frankly that there were things she had not considered when making her original order.

So Jacobs here offers the judge his counter proposal, mentioning details he thinks the judge didn't think about, and notice that his tone is reasonable, respectful, but rather clear as to why he believes the order went too far, the unfair results he anticipates if the order is not modified, how he would suggest it be modified, and finally what Oracle will have to do if there is no modification:

We understand the Court’s desire to limit each side to a manageable number of claims and prior art references. Oracle believes, however, that the number should be larger – three claims per patent. Just as important, the ultimate decision on the number of claims should be made closer to trial – after summary judgment and after the Court has heard from the parties on the distinctions among the remaining claims for trial, consistent with Katz. This added procedure would not add significant cost or time and would reduce the risk of error in depriving Oracle of its valuable rights.

The limitations should also be imposed after Google refines its invalidity defenses. Although the order imposes limits on Google’s triable prior art references, it imposes no limits on Google’s other invalidity defenses. This could result in considerable unfairness: Google can maintain a highly elastic defense strategy and present multiple invalidity defenses against Oracle’s excessively narrowed claim set target. Limits on Oracle’s triable claims should be accompanied by limits on Google’s triable defenses in toto, not merely those based on prior art.

We raise this issue now to prevent surprising the Court regarding the scope of these motions. These will be technical motions with technical evidence in the form of expert declarations and deposition testimony. They will be as brief as the content allows. But they will require time to resolve. We think it better for both the Court and the parties to balance summary judgment and trial, and not to impose such severe limits on trial presentation that summary judgment is artificially inflated.

If I were the judge, I wouldn't be moved by the part about Google's defenses. But did you see the threat of summary judgments up to the judge's eyeballs? That should do it. Kidding, sort of, but it's a way of saying to the judge that if his unfair order, as Oracle views it, stands, there have to be consequences, because Oracle's lawyers can't just let their client be prejudiced. They will have to do something to get Oracle a more fair playing field. And it strengthens Oracle's suggestion that the final number be decided by the judge closer to trial, after summary judgment.

We watched this judge in the Apple v. Psystar case, and he can't be bullied. He isn't a fan of large corporate law firm fancy dancing either. But that is exactly why Jacobs is the very best lawyer to approach him with this request. We never saw Jacobs in the SCO v. Novell litigation, where he represented Novell, do anything tricky or underhanded, did we? He never stretched the truth. He always showed respect not just to the judge's face but to the very concept of the rule of law, where lawyers fight hard on the issues but with dignity, honesty and a sense fair play. Jacobs is always pleasant in tone and manner. Despite all the tricks that others might have come up with, he steadfastly stayed true to his own values. And still he won, did he not?

If you think about it, those are very similar to the values I associate with the FOSS community, where programmers and projects compete on skill and merit, not with backstabbing or FUD or dirty anticompetitive tricks.

This is, after all, a case between two companies who each care about and benefit from Linux. The community does expect it to be possible to get into a dispute inside the family, so to speak, and still handle it fairly. If someone has made a mistake, they can correct it, make the other whole, and then get back to cooperating again. It's a community, and this litigation is like a pimple on its nose. Everyone, I think, would like it to be resolved in a way that distinguishes it from the mean, bare-knuckle viciousness of the proprietary software style. At least I continue to hope for that. As Jacobs has already demonstrated, you can do that and still prevail. Here are all the filings:

05/06/2011 - 132 - RESPONSE to re 128 Order Oracle's response to Court's Tentative Claim Construction Order and Request for Critique by Oracle America, Inc.. (Peters, Marc) (Filed on 5/6/2011) (Entered: 05/06/2011)

05/06/2011 - 133 - RESPONSE to re 131 Order Re Schedule for Narrowing Issues for Trial by Oracle America, Inc.. (Jacobs, Michael) (Filed on 5/6/2011) (Entered: 05/06/2011)

05/06/2011 - 134 - Statement in Response to the Court's Order Re Schedule For Narrowing Issues For Trial by Google Inc.. (Sabnis, Cheryl) (Filed on 5/6/2011) (Entered: 05/06/2011)

05/06/2011 - 135 - Statement on the Court's Tentative Claim Construction Order by Google Inc.. (Sabnis, Cheryl) (Filed on 5/6/2011) (Entered: 05/06/2011)

There are some details about the inter partes reexamination of Oracle's patents that Google initiated that I didn't know before and you might find interesting:
Responding (briefly) to the Court’s questions:

Only two patents are in inter partes reexamination, the '205 and '720 patents. The PTO disagreed with Google about six of the eight grounds Google asserted against the '205 patent and limited the scope of that reexamination accordingly. The PTO agreed with Google with respect to arguments made against the '720 patent and has issued rejections based on those arguments, to which Oracle will be responding shortly. The extent to which – several years from now – the final results in the reexamination could moot the need for a trial here on those patents depends, of course, on the outcome in reexamination. The remaining patents are subject to ex parte reexamination. According to current PTO statistics, the average number of months between an ex parte reexamination request and the issuance of a reexamination certificate is 31.8 months.

I don't know about you, but I read that to be saying that Google has made some progress with the PTO already. This issue may well tip things toward Google in significant ways, because no judge wants to have the financial burden and effort of a trial, only to discover that the patents aren't valid in the first place. On the other side, it's quite common to request reexaminations when being sued, and not all are successful, so he will have to balance that out. Judges didn't just fall off a turnip truck. Oracle is stressing the length of any delay, but Google is stressing how unfair or pointless it would be to award damages on patents that it believes will not survive the invalidity challenge. And this isn't coming up deep into the litigation but at the start.

Here's what Google tells the judge:

II. If Trial Were Postponed, To What Extent Would The Results Of The Inter Partes Reexaminations Possibly Moot Need For Trial

Postponing the trial until after the completion of the inter partes reexaminations would most likely moot the need for a trial. It is very unlikely that the presently asserted patent claims will survive the reexamination process. And, even in the unlikely event that claims were to survive the reexamination process in their current form, their scope would likely be diminished based on the argumentation and evidentiary support entered into the administrative record to gain their allowance, which are key considerations in interpreting claim scope. As a result of claim cancellation or amendment, Oracle will not be entitled to past damages, and ongoing damages will be limited by the limited remaining terms of most of the patents-in-suit. This may impact the value of the case to Oracle, which in turn may moot the need for a trial.

The probability of any asserted claims surviving unchanged is quite low, based on the most recent reexamination statics. Oracle has suggested that “some decisions will favor Oracle [and] some will favor Google.” However, the most recent U.S. Patent and Trademark Office (“PTO”) statistics show that claims are cancelled or amended in 88% of inter partes reexaminations and in 76% of ex parte reexaminations. Cancelled claims cannot be infringed and amended claims are subject to absolute and equitable intervening rights. 35 U.S.C. §§ 307(b), 252; Seattle Box Co., Inc. v. Indust. Crating & Packing, Inc., 731 F.2d 818, 830 (Fed. Cir. 1984). Based on these statistics, the outcome of the reexaminations is not simply an even coin-toss, as implied by Oracle, but is likely a narrowed claim scope. Unless Oracle includes only its narrowest claims in its final set of three asserted claims, it is highly probable that the claims selected will be cancelled or amended during the reexamination process. The claims subject to inter partes reexamination are even less likely to emerge unchanged. The statistics discussed above are available at the U.S. Patent and Trademark Office’s website under Reexamination Information, which is available at Reexamination_Information.jsp.

The Court is in the process of construing five of the many claim terms at issue in this case. The claim construction process relies heavily on the administrative record supporting the claims of the patents-in-suit. Yet, this record has been reopened and is subject to significant further development. Indeed, one week ago, Oracle asked for an extension of time to respond to a first office action in the reexamination of the ‘720 patent. Request for Extension of Time Under 37 C.F.R. § 1.956, In re Inter Parte Reexamination of Nedim Fresko, Control No. 95/001,560 (Apr. 29, 2011) (available at portal/pair). Such an extension requires a showing of good cause, and Oracle argued that it would need time to prepare and submit evidence, possibly including testimonial evidence from the inventor, along with its arguments in support of the patentability of its claims. Id. at 3. This continuing development of the administrative record is highly material to the issues in this case, and will likely alter the bases for the parties’ arguments, including Oracle’s infringement theories in the present case, which would again moot the need for a trial.

Some additional statistics may be helpful to the Court on this point. Currently, the PTO is issuing first rejections on the merits of claims in about three months for inter partes reexaminations and in about six months for ex parte reexaminations. Because these patents are in litigation, Oracle will have limited ability to extend the time to respond to these office actions. As a result, it is highly likely that the administrative record for all of the patents-in-suit will be in flux by this summer, and certainly before trial. In addition, the PTO is currently issuing notices of intent to issue a reexamination certificate in just over 20 months for ex parte reexaminations and about 34 months for inter partes reexaminations. Such a notice is the effective end of substantive prosecution and is the earliest date that the parties can know with some certainty what claim scope, if any, will survive the reexamination proceeding.

As discussed above, cancelled claims cannot be infringed and past damages are eliminated for amended claims. 35 U.S.C. §§ 307(b), 252; Seattle Box Co., Inc. v. Indust. Crating & Packing, Inc., 731 F.2d 818, 830 (Fed. Cir. 1984). Ongoing damages may also be eliminated for products existing prior to the claim amendments under a theory of equitable intervening rights. Seattle Box, 731 F.2d at 830. All but one patent asserted by Oracle have limited lives, expiring within 6-7 years of today for the most part. As a result, the pending reexaminations may have a significant impact on the value of the case to Oracle and may well moot all claims of infringement against the accused instrumentalities, or dramatically impact the chance for settlement.

III. When Will the Ex Parte Reexaminations be Completed

The Court specifically inquired into the duration of the pending ex parte reexaminations. The average pendency of ex parte reexaminations is just over 30 months, which is about 6 months shorter than the average pendency of inter partes reexaminations. (This timeframe reflects additional administrative work after the notice of intent to issue a reexamination certificate discussed above.) Thus, by the time the two inter partes reexaminations complete, all of the ex parte reexaminations should have also completed. The overall pendency time for each ex parte reexamination may be longer if additional reexaminations are filed for those patents, e.g., by other entities.

You see how both sides presented their issues persuasively? Does that give you an idea of how hard it is to be a judge? It does me. Both sides make valid points, and yet he has to structure things so that a jury can understand everything and deal with it all. That's why Google's points about reexamination are so compelling. The judge has stated he wants the case reduced to a more manageable size. Why not let the USPTO prune the case, then? From Google's point of view, it makes perfect sense. But if you are Oracle, delay is the very last thing you want, as it gives Android more time to spread and take over the mobile world. Whether the judge is willing to wait as long as a reexam would require is unknown to me. We'll have to wait and see. But let's face it. You saw how long litigation can drag on in the SCO litigations, and judges there were willing to let the IBM case go first, knowing that it would require at least as long as a patent reexamination.

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