Today, Florian Mueller of FOSSPatents writes1:
In connection with Oracle v. Google, some malicious individuals as well as
some gullible people (who parrot lies without fact-checking) later claimed that
my purely factual reporting on what a public Google filing said Oracle demanded2
(which Oracle later corrected anyway) was a prediction of the outcome. Strong words, indeed. Let's take a closer look, not only at the article he links to, but to a broader slice of his body of work. Let's see if it's "purely factual reporting", shall we?
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Here's more detail from an article he published on June 1st of 2012, linked to in his article today, after Google won at trial:
Out of the 700+ blog posts I've done so far (which as per today, June 1, 2012, have been read well over 5 million times (see the real-time counter, courtesy of Google, in the right-hand column) and been mentioned in articles that in my estimate have collectively been viewed many billions of times, only a couple dozen posts related to copyright, while almost all other posts were about patent disputes. ... The point isn't the amount, $2 billion or $6 billion. It's the emphasis over and over, as I'll show you, that it could be *any* kind of billions. In the end, after the trial, Google didn't have to pay so much as a penny.
I never claimed that the decision was going to be predictable....
In the meantime, there are also some things that those debating the issues can do to have a more reasonable, facts-focused discussion -- not only but especially on software copyright issues which are controversial enough all by themselves.
For example, while I stand by what I actually say, no one should have to accept responsibility for things he didn't even say. I could provide a long list of examples. I will give just one example because it's both simple and representative. In recent weeks I have been repeatedly accused of having "speculated", "claimed" or "predicted" that Oracle was going to receive billions of dollars -- or, more specifically, $6.1 billion -- in damages. There are lies, damn lies, and there are lies as nefarious as this one. Apart from the fact that I said on numerous occasions that damages were a secondary consideration in this case to the possibility of Oracle winning an injunction, all I did was that I read a publicly accessible filing by Google's lawyers and quoted from it. Here's Google's filing3, and here's my blog post on it4, entitled "Oracle expert says Google owes between 1.4 and 6.1 billion dollars". A few days later, Oracle contradicted5 this representation and said that the 6.1 billion figure was just the upper end of a hypothetical range while the actual demand was $2.6 billion at the time. Why did the $6.1 billion figure become known? Because Google itself wanted it to get out. Google's lawyers could have redacted the figure, or they could have referenced it without stating it in a public filing. But they opted to put this information out. My reporting on those filings was just factual. The filings said what they said. And I wasn't even first to pick this up: here you can see that Reuters picked up the information before me. No one can blame them either. If Google says that Oracle allegedly says it wants a certain amount, or an amount from a certain range, it's legitimate to report on it. For Reuters, for me, and for everyone else. Obviously, a damages claim by a party is not an outcome, or even a likely outcome -- but I trust that most of my readers don't need to be reminded of that again, and again, and again.
Did you notice how he claims that what he wrote has been repeated in the media and read maybe billions of times? If all he did was factual reporting, that wouldn't be such a problem, although I'll have more to say about that at the end. But is it the case that his reporting was purely factual? Let's see.
What Does the Record Show?
I wrote earlier today that I thought Oracle should have to pay at least some of Google's costs from the trial, if only because I didn't think Oracle should be allowed to cause so much unmerited damage and then just walk away. Let me show you what I mean by unmerited damage that shouldn't be ignored by reviewing some of what FOSSPatents wrote about the case.
By my reading, FOSSPatents at least implied repeatedly that Google was a willful infringer, going so far as to assert that the judge held that suspicion himself, along with presenting multiple gloomy analyses of what the bad outcome for Google as a result could be. Mueller, who announced he was hired by Oracle to advise it on FRAND patents and other issues, published article after article on this litigation both before and after the announcement, so let's look at just a few of them:
FOSSPatents, July 20, 2011,
"Google blinks in Oracle patent case, indicates willingness to pay"6:
Absolutely none of that happened. Google wrote what it wrote, that Oracle should reduce its claims, in harmony with the judge's opinion, and maybe then it would be possible to settle some issues. Some were settled that way, incidentally, but this was by no means an "admission" of guilt, as the ultimate outcome demonstrated so clearly.
Oracle and Google just filed their joint reply to the judge's request for input7 on "the extent to which" that lawsuit should be stayed.
As I expected, the common and agreed-upon part of their response is confined to undisputable facts: a summary of the five first Office actions that have been issued so far8 as a result of Google's requests that the USPTO reexamine all seven patents-in-suit. But (unsurprisingly) they disagree completely on what impact those preliminary rejections should have9. Oracle wants the trial to begin on October 31 as scheduled; Google wants a complete stay or, failing that, pressure on Oracle to narrow its assertions now.
Before I start my more detailed analysis of that update on the ongoing reexaminations, let me quote and comment on the two most interesting tidbits from the filing:
The biggest news is that Google, which has so far dismissed Oracle's assertions as if they had no merit whatsoever, has for the first time indicated in public (i.e., in a public court filing) its willingness to settle this case with Oracle. In a fundamental departure from the positions it previously articulated in its public filings and its public statements, Google clearly blinks. Here's the sentence I mean -- it makes references to Google's proposal to require Oracle to narrow the case for the sake of efficiency (unless it's stayed, which Google would prefer):
"Such a narrowed case will also eliminate the need for those efforts specifically directed at the claims rejected through reexamination, including motion practice, expert reports, and other trial preparation, as well as make it more likely that the parties could reach an informal resolution of the matter."
The last part about "informal resolution of the matter" can be interpreted in only one way: Google is prepared to settle with Oracle and make one or more payments in that event, but apparently the parties' positions are too far apart at this stage because Oracle is too confident of its ability to command a high royalty rate (presumably a high per-unit royalty).
In principle, it's constructive if a party indicates a willingness to settle. But there's a fundamental difference between negotiating in private and letting the court (as well as the public) know -- more than three months before the scheduled trial (!) -- that one isn't so sure of one's defenses anymore. This stands in clear contradiction to Google's past positions and declarations, and it looks increasingly like an admission all by itself. Discovery is almost complete, and it probably didn't go too well for Google.
Theoretically, an "informal resolution" could be a lot of things. But no one would seriously think that (after all of what's happened) Oracle would let Google off the hook for free. According to its own representation10, Oracle wants a $2.6 billion damages award (which might even be tripled due to willful infringement). Google even claims Oracle's demands constitute a range of up to $6.1 billion. When you start from that kind of amount, you can't settle for a small amount of money.
FOSSPatents, July 21, 201111, "Oracle wants to increase its $2.6 billion claims based on Android's effects
on Google's non-mobile business:
Google ended up owing nothing. Nothing. Nor was wilfulness ever demonstrated at trial. Nothing. $0. All the various possibilities mentioned turned out to be thin air. If wishes were fishes.
The latest filing in Oracle v. Google12-- not long before a court hearing that is taking place as I write these lines -- reveals that Oracle seeks to increase the damages claims it previously presented. Those claims amounted to
2.6 billion dollars according to Oracle13 and to a range between 1.4 and 6.1 billion dollars according to Google14, and whatever the base amount may be, it could yet be tripled if Google is found to have infringed Oracle's patents willfully15 (a scenario that "appears possible" to the judge).
The hypothetical royalties that represent the largest part of those claims are based on Google's mobile business, but it now turns out that Oracle additionally wants to be paid for the positive effect of Android on Google's non-mobile business.
FOSSPatents, July 22, 201116, "Oracle gets to depose Google CEO Larry Page for two hours on willful patent infringement, value of Android":
But Google did convince the judge and the jury that there was no willful infringement. So when he wrote, "It's pretty clear now that Google is going to have a hard time to convince the judge and the jury of there being no infringement (and especially no willful one)," was that just "factual reporting" with no predictive element? More importantly, did it prove accurate at all?
Late on Thursday by local time, magistrate judge issued an order according to which "Oracle may depose [Google co-founder and CEO] Mr. Page for a maximum of two hours, excluding breaks, solely on topics relevant to the willfulness of Defendant's alleged patent infringement, and the value of Android to Defendant". When I reported17 on Oracle's related request, I already said that Oracly had a "pretty good chance" because the judge is very interested in the question of willful infringement and has strong suspicions in that regard.
Willful infringement is hugely relevant because it leads to triple damages under U.S. patent law. Even prior to a potential tripling, Oracle's damages claims are staggering and still increasing: the previously claimed amount of
2.6 billion dollars18 (according to Oracle) -- or range between 1.4 and 6.1 billion according to Google's portrayal of what Oracle wants19 -- is not even the total bill. As I reported yesterday20, Oracle now wants to ask for additional money based on a network effects theory, claiming that Android has positive effects on Google's leadership in search even in connection with its non-mobile business. I am familiar from a business, policy and antitrust angle with network effects, and I think Oracle has a point in principle, though the question is exactly what the additional damages amount should be. At any rate, with so much money at stake, Magistrate Judge Donna Ryu apparently felt that it wasn't unduly burdensome to ask Mr. Page to take the witness stand….
It's pretty clear now that Google is going to have a hard time to convince the judge and the jury of there being no infringement (and especially no willful one). Google can hope that maybe the judge is willing to stay the case in whole or in part pending reexaminations. But they really are under pressure to settle now, and I believe Oracle is increasingly likely to develop new strategies and work according to new timelines should a stay be granted.
FOSSPatents, July 22, 201121, "Judge orders overhaul of Oracle's damages report", another article that day: You can't write that "Google has a serious problem" and not call it predictive or mere "factual reporting", particulary because it wasn't true.
The jury did see that email, and others that Oracle and its mouthpieces heralded far and wide in the media, and they meant nothing to the jury at all, in the end. Nor did the judge even consider an injunction. If there is no patent infringement, and the jury so held, you can't even ask for an injunction. So all that "analysis" about injunctions was totally based on an assumption that Google was caught and would have to suffer the consequences. But Google was found 100% innocent of any patent infringement.
Even though Google achieved a lot with its Daubert motion, it lost the strategic battle over the inclusion of Android-related advertising revenues. Perhaps even more importantly, Google faces the problem that the judge appears increasingly suspicious (if not already convinced) of Google having committed willful infringement because of a problematic attitude toward other companies' intellectual property rights.
Judge suspects of Google of having preferred "to roll the dice on possible litigation rather than to pay a fair price"
In connection with the theories Google presented, the judge refers to one (even in a headline) as "Google's Soviet-style negotiation", defined as "What's mine is mine and what's yours is negotiable". In that context, the judge suspects the following attitude:
"Google may have simply been brazen, preferring to roll the dice on possible litigation rather than to pay a fair price."
That kind of statement reflects extremely unfavorably on Google. It's exactly the kind of basis on which the judge might consider an injunction a highly appropriate remedy, and a tripling of the base damages amount, too.
One of the most interesting passages in today's order quotes from an October 2005 email by Google's Android boss Andy Rubin back in 2005:
"If Sun doesn't want to work with us, we have two options: 1) Abandon our work and adopt MSFT CLR VM and C# language - or - 2) Do Java anyway and defend our decision, perhaps making enemies along the way"
If a jury sees that statement (and if there is a trial, then the jury will see it for sure), Google has a very serious problem. And "very serious" may be an understatement. Moreover, a statement like that showing up in publicly accessible court documents now may cause significant concern among many of Google's Android partners (including, but not limited to, device makers).
FOSSPatents, July 26, 201122, "Google's new anti-patent stance has four credibility issues":
Now he seems to be asserting that the judge not only *might* be suspicious but that he definitely suspected Google of "reckless, willful infringement". Where did he get that? Maybe he misunderstood what the Notice he uploaded meant. Here's the Notice [PDF] he uploaded to Scribd, here on Groklaw, and it reads:
The same judge previously raised the question of Google's suspected willful infringement of Oracle's Java-related intellectual property rights. I
uploaded the related formal notice to Scribd23.
That's a circumstance that casts serious doubt on Google's implicit assertion that Android's intellectual property problems are just due to the shortcomings of the patent system (combined with Android's success). It seems more likely to me that those problems are a combination of various factors, and some of those are Google-specific. That doesn't mean that there aren't also very general problems with software patents -- it's just that a company suspected by a judge of totally reckless, willful infringement is not in the best position to advocate intellectual property reform.
In reading the Daubert briefing, it appears possible that early on Google recognized that it would infringe patents protecting at least part of Java, entered into negotiations with Sun to obtain a license for use in Android, then abandoned the negotiations as too expensive, and pushed home with Android without any license at all. How accurate is this scenario? Does Google acknowledge that Android infringes at least some of the claims if valid? If so, how should this affect the damages analysis? How should this affect the questions of willfulness and equitable relief? Counsel should be prepared to address these issues at the hearing. In other words, it was a list of questions he asked the parties to address at an upcoming hearing. It doesn't mean the judge assumed it was the case. In fact, when Mark Webbink wrote about this very same notice, he wrote:
Of course, Google has to answer this for themselves. However, I can tell you as an experienced licensing attorney that parties frequently have discussions over possible patent licenses while specifically avoiding any discussion over whether the patents are believed to be infringed. Google may well have been simply testing the waters to see if it was worth buying an "insurance policy" from Sun just to avoid later problems. Given that Google walked away from those negotiations, it is far more likely that they decided (a) Sun was asking too much and (b) the likelihood of infringement was relatively low. However, like everything else in this case, you shouldn't be reading the tea leaves too early. See the difference in approach? Here's the transcript [PDF] of the hearing, if you are curious. You will see Google's explanation, and you'll see the judge say that he's *not* saying there was willfulness. I don't know if Mueller uploaded that to Scribd or not. Perhaps he should, and maybe also update that article to highlight what the judge actually said, that he was explicitly not saying there had been willfulness.
In any case, it turned out to be untrue in the end. There was no willfulness found, because there was no infringement found, except for what was, as the judge himself said, a mistake that was immediately corrected when pointed out, which Google argues is de minimis anyhow.
FOSSPatents, April 18, 201224: As you can see, Mueller not only wrote about the litigation, he spoke with journalists personally to further spread his take on the litigation. And they printed it too, but was it true or fair? Did it come true? -- that's probably an even better question. And this was the same article where he announced that Oracle had hired him to consult with them, speaking of personal involvement, where he wrote: "We intend to work together for the long haul on mostly
competition-related topics including, for one example, FRAND licensing
terms." So, not just FRAND issues, evidently.
Oracle's opening statement presented ten documents indicating willful
infringement, from a five-year period in the middle of which Google
Certain Google-internal documents indicate in no uncertain terms an
awareness of a need for a license at different points in time during
the five-year period from Google's decision to use Java to the eve of
the filing of this lawsuit....
During those 20 months of litigation, I never saw documents or reports
from public hearings according to which Judge Alsup would have
described Google's references to Jonathan Schwartz' applauding blog
post and support-offering email as extremely powerful, but he said
some important things about certain evidence of willful infringement.
For example, in July 2011 the judge noted, in light of item #2, that
Google engaged in "Soviet-style negotiation" (defined as "What's mine
is mine and what's yours is negotiable") and "may have simply been
brazen, preferring to roll the dice on possible litigation rather than
to pay a fair price". When he became aware of the Lindholm email, he
told Oracle's counsel that it's "a pretty good document for [Oracle]"
that "ought to be, you know, big for [Oracle] at the trial". He warned
Google's counsel that a legendary San Francisco trial lawyer "needed a
document like [the Lindholm email], and the Magna Carta, and he won
every case", so in the judge's opinion, Google was "going to be on the
losing end of this document, and with Andy Rubin on the stand". He
then encouraged Google to "think about that"....
(There are other great reports from the third trial day, but I picked
the three above because of what they say about Page's evasiveness.)
As I told the L.A. Times, I believe the problem for Larry Page is that
he was personally very much involved with the decision to use Java
without a license. Now he's the CEO of the company and particularly
afraid of making a concession: in that case he would be blamed not
only for the outcome of the litigation but also for the original
decision. I don't mean to say that his denial of recollection was
dishonest (considering that he must have received huge numbers of
emails over the years), but it certainly does contrast with some
evidence of his personal involvement.
FOSSPatents on Twitter, April 19, 201225: As you see, Mueller not only wrote about the case on his blog, he also used Twitter to spread his views, and his view was, that day, that Google looked like a willful infringer from the evidence he saw at trial. Unfortunately, that analysis of the trial evidence was as misguided as his blog posts, given the outcome of the trial.
My take on the first three Oracle v. Google trial days http://t.co/OItQeGEh
Evidence of willful infringement spans 5 years, looks strong
FOSSPatents, April 20, 2012, 26
"The Lindholm testimony and the reality of Java licensing options": Except Google still doesn't have a license, it doesn't need one, and it's not going to pay for one, so his analysis was wrong. Also, the jurors did believe Mr. Lindholm. So his opinion that they were unlikely to be convinced was also wrong.
Yesterday was day 4 of the Oracle v. Google trial, and all observers were particularly interested in the testimony of Tim Lindholm, author of the Lindholm email. It appears that the testimony fell far short of meeting the expectations that this "smoking gun" piece of evidence had raised. Lindholm, who may have spent more time with lawyers recently than with fellow software developers, wanted to downplay the significance of the email and of his own involvement with Android.
Three facts appear particularly interesting to me. I'll comment on two of them quickly and then talk in more detail about the third item, licensing.
All of the reports I read indicate that Lindholm was extremely evasive. He tried to deny everything he possibly could deny, and to downplay the remainder. In particular, he didn't want the jury to think that he had too much to do with Android. However, Oracle presented a whole collection of Lindholm emails, spanning a period of more than five years and indicating that he was involved with Android, from a Java angle, at different points in time during that period. I guess he was primarily concerned about not saying anything stupid that would make things even worse than his most famous email, but whether he convinced the jury of anything is at least doubtful....
In short, Lindholm's denial of his most famous email having referred to any particular licensor comes down to this: Google needed (and still needs) to negotiate a license with Oracle or with Oracle.
FOSSPatents, April 22, 2012,27,
"Andy Rubin knew that a clean-room implementation of Java was 'unlikely' to
happen at Google": Oh really? Not clean? The judge and the jury disagreed. They needed a license? Nope. Now ask yourself: was this just reporting the facts, with no hint of a prediction of an outcome or do you notice some spit on this ball? He followed through and wrote about the copyrightability of APIs.
Having watched /Oracle v. Google/ closely from the outset of the litigation more
than 20 months ago, I can say that at least the trial serves to satisfy my
curiosity. None of the material that has shown up is entirely surprising, but
this trial adds many pieces to the puzzle. So far, this has been the case
especially in connection with the fact that Google knew at all stages of Android
development about the legal risks it was taking. For example, there isn't just
one Lindholm email but a whole collection that spans a period of more than five
years, a fact that neither his evasive testimony nor his victory signs in the
The "prior knowledge" of Java on the part of Google's Android development team
was clearly an issue, and Rubin knew that they were _unlikely_ to steer clear of
intellectual property infringement. One of Oracle's opening slides also pointed
to the fact that some key Googlers previously worked on Java while they were at Sun.
At the time, Rubin didn't say "APIs aren't copyrightable" or "this is fair use".
If there are no IP issues, it's still a "clean room". It only gets unclean if
there's an infringement of sorts.
The word "clean" isn't a question of whether something is 90%, 95%, 99% or maybe
99.99% clean. It's binary. It's clean or it's not. Android's implementation of
Java is not....
There's still going to be quite some talk about Google's management decisions
and internal processes. Former Google CEO Eric Schmidt and Andy Rubin are on the
list of Oracle's next ten trial witnesses. But this isn't just about how Google
knowingly and willingly used Java without the license it needed. A particularly
outcome-determinative issue is the copyrightability of the 37 APIs at issue in
this case, and the judge asked the parties a number of questions relevant to
that issue. The answers are due today at 3 PM local time. In my next blog post
on /Oracle v. Google/ I'm going to (finally) get to the important question of
API copyrightability. I will also review and comment on the parties' answers to
Judge Alsup's copyrightability-related questions.
FOSSPatents, April 22, 101228, "The pragmatic approach to the copyrightability of API packages:
"Such conduct" indeed. A little spin on the ball? Just the facts? The judge disagreed with his opinions, of course, ruling that the APIs at issue were not protectible by copyright, so it wasn't even a question of defenses like fair use. Maybe it'd be a good thing if Mueller did avoid predictions and opinions on legal issues, if his batting average is so low.
It's even possible that the judge concludes that neither patents nor copyright
can protect those APIs, but I think he believes in the rule of law and in
intellectual property and will be hesitant to deny all protection for an
important contribution to innovation....
I'll be frank: I think there are far more reasons to consider those Java APIs --
also at the level of selection, structure and organization -- deserving of
And I'll voice my opinion again on how
I view these case-specific issues in /Oracle v. Google/: I just can't see how it
would be good public policy to let Google get away with reckless infringement,
hijacking an entire platform and fragmenting it, and ultimately getting, as a
Twitter user told me yesterday
[https://twitter.com/#%21/remaerdyaD/status/193466379544969216], to have its
Java and drink it.
Even if the approach chosen was to adjudicate Google's defenses such as the
merger doctrine at the stage of evaluating copyrightability, one need look no
further than at what is happening in this present case to see, from a public
policy point of view, a need for protection against such conduct.
FOSSPatents, April 23, 2012,28
"Oracle Java patent rises like Phoenix from the ashes, can still be
asserted at trial": That didn't happen either. The judge refused to let Oracle go back on its earlier stipulation regarding the patent, that it would drop it in return for an early trial, which it got. "Oracle will be required to stand by its word and live with the dismissal with prejudice," the judge ruled. So, Mueller struck out again. No third patent.
It looks like we will see three, not two, Java patents at the /Oracle v. Google/
trial. The trial is currently in the copyright phase, and phase 2 will deal with
patents. Just in time, the patent office reconsidered its "final" rejection of a
patent. That patent is now set to come back with a vengeance since patents
surviving reexamination are particularly powerful.
[Update: Another one:
FOSSPatents, May 29, 2012,32 "The answer to API competition concerns is neither uncopyrightability nor fair use -- it's FRAND": Well, the judge didn't. But notice the prediction? This is, after all, the same person who declared on FOSSPatents, after creating a chart of two patents that Android allegedly infringed, and was then quoted by PCWorld as saying the following: "Florian Mueller, an expert on intellectual property, explains in a blog post, 'Those patents are apparently infringed by code that is at the core of Android.'
Mueller has created a table that walks through the two patents and compares the patented concepts against the HTC/Android implementation. Reviewing the information on the tables, Mueller exclaims, 'It's hard to see how any Android device could not infringe them, or how companies could work around them.'"]
There's a significant probability that Judge
Alsup and/or an appeals court will hold the SSO of these particular APIs
(as opposed to the SSO of all APIs out there) copyrightable.
I could go on and on, but isn't this enough? What does this body of work tell you? What *should* it tell you?
If you were Google, how would you feel?
If you were Google, how would you feel, being described the way Google was by FOSSPatents day in and day out, and then seeing him quoted in the media, who I guess didn't know any better but to assume he knew what he was talking about. Otherwise, why would Oracle and Microsoft hire him to consult, they might have thought.
Well, in the Emperor's New Clothes sense, let me just point out an obvious possibility, maybe for propaganda value?
Do imagine you are Google -- how would you feel, if you believed that you had not infringed and yet were described like some scofflaw in the press for about two years on an almost daily basis? In the end, Google was exonerated in court, but by then, Google had been painted as a "reckless, willful infringer" from one end of the Internet to the other. That kind of smear sticks, because there is so much of it, compared to one day of vindication.
That's just the tip of this iceberg, by the way. I haven't even listed all the articles. Mueller is nothing if not prolific.
Can Litigation Be Used to Trash Opponents?
The problem stems from this, in my view: that a party can say things in court filings without being sued for defamation. If others then repeat them, claiming all they are doing is reporting what the filings say, and yet implying they are true, it can do real damage to an innocent party.
You can go too far in court filings if the party spreads the claims too widely in the press, but it's hard to cross that line. And if others -- analysts or journalists -- do the job of spreading the news, what is your remedy?
Companies sometimes file complaints with outrageous claims, specifically hoping to embarrass the defendant into an early settlement. It's a known technique, sadly, and one that I despise. We saw it in the SCO saga, where SCO thought IBM would quickly settle. And in that saga, you saw Rob Enderle, Maureen O'Gara, Daniel Lyons, and Laura DiDio publishing articles or putting out statements presenting SCO's position as plausible and predicting that it could or would win or even in some cases that it *should* win. But did it?
Incidentally, you'll probably enjoy reading Ms. O'Gara sing29 Mr. Mueller's praises, back when the litigation was still in discovery, and he came up with the billion figure:
That reverberating scream you hear, the one that sounds like a wounded water buffalo beset by a pack of rabid hyenas, is Google after it saw how much Oracle expects in damages from its patent and copyright suit over Android’s alleged misuse of Java.... Did she misquote him, or did he make some predictions of Google's doom? Let's see.
The all-important royalty base that Boston University School of Management economics professor Iain Cockburn used has been censored but not the 50% royalty rate he applies against it.
There’s also the little matter of willful infringement and treble damages so 50% times three equals 150% and, yes, that can happen.
The letter confirms rumors that Google might have cut a deal with Sun before Oracle came on the scene but rejected the terms offered. The lawyers say that deal “would have included far more than the patents-in-suit.” The sum Sun wanted has been blacked out but it couldn’t have been more than Google’s staring at right now. It may come to rue the day it didn’t bite the bullet then.
We owe discovery of the letter to Florian Mueller who’s been tracking this suit as well as the 43 other suits currently lodged against Android like a hound dog after a fox.
It’s the first time in the 10-month-old case that the industry has gotten even a glimpse into Oracle’s demands and Florian figures that – worst case – the infringement damages alone would “exceed any money Google has made with Android so far” and could amount to “even more going forward.”
Besides if Google loses it may have to change the Dalvik virtual machine that’s at the bottom of the whole argument – Oracle doesn’t have to grant it a license – and that could impact all existing Dalvik-based applications. A defeat is also likely to impact Android’s “free” business model. Google might have to start charging significant per-copy licensing fees unless, as Florian hazards, it turns the thing into a loss leader....
Florian’s analysis of where he thinks Google’s case is weak and contradictory and where he thinks Oracle may not be a shoo-in is at http://fosspatents.blogspot.com/2011/06/oracle-wants-huge-cut-of-googles-mobile.html.
FOSSPatents, June 7, 2011,30 "Oracle wants a huge cut of Google's mobile advertising revenue plus compensation for fragmentation of Java": Rather breathless prose for a "purely factual" report, don't you think? But that's not all:
One of the best-kept secrets in the patent dispute between Oracle and Google is what Oracle demands in terms of compensation for past damages and on which terms (monetary and other conditions) Oracle might allow Google to continue to distribute its Dalvik virtual machine as a result of a settlement or, alternatively, if Oracle prevailed in court and obtained an injunction.
The details of those demands are still not known. It was always obvious that Oracle wanted a lot. They wouldn't sue for chicken feed, and if their demands were very limited, this would have been settled a while ago. But for the first time in this entire lawsuit (which began almost ten months ago), a publicly accessible document provides, despite some blackened passages, a pretty good indication as to how demanding Oracle is.
I have analyzed the situation and I can tell you up-front: the word "demanding" is an understatement. The position on damages for past infringement taken by an Oracle expert appears to be such that Oracle would want Google to pay damages for past infringement that would in the worst case far exceed any money Google has made with Android so far -- and would likely expect Google to pay even more going forward.
The two companies are not just miles but light years apart, and it could very well be that a defeat in court would require Google to make fundamental changes to its Dalvik virtual machine -- changes that would likely affect many if not all existing Dalvik-based (.DEX) applications. But even in purely financial terms, there's serious doubt as to whether Google would be able to meet Oracle's requirements while continuing to make Android available without charging a per-copy license fee.
This lawsuit has the potential to bring about a restructuring of Google's Android business in economic as well as technical terms. Interestingly, Google itself admits that it could have done a license deal with Sun (apparently before it was acquired by Oracle) but rejected its terms. That refusal could now prove one of the worst mistakes in Google's 13-year history as a company. In connection with Google's recent hiring of a third law firm to defend it against Oracle's claims, I explained that this litigation is indeed comparable to a make-or-break case. http://fosspatents.blogspot.com/2011/05/google-hires-third-law-firm-to-defend.html
The first important thing to understand here is that the Cockburn report itself is exclusively about damages for past infringement. Assuming that Google is found to infringe Oracle's intellectual property, the court (with the help of the jury) has to determine how much Google has to pay for that -- from whenever the infringement began until the date of the trial. But whatever Cockburn believes or whatever the court may ultimately decide in that scenario is still a separate issue from the terms on which Oracle may or may not grant Google a license going forward. In its complaint, Oracle asked for an injunction. If Oracle obtained that injunction, Google would have to cease all infringement unless the parties agree on a licensing deal for the future. That deal would not be set by the court: it would be negotiated. There could be a separate court case if Google claimed that Oracle had obligations to grant a license on terms meeting certain criteria, and I'll discuss that further below.
Or the judge either. He tossed out most of this report and had Dr. Cockburn try again. That report was also mostly tossed on a Google motion in limine, and then again. The court let Dr. Cockburn try once more, but he struck out again in all the significant areas, and then adjusted again, downward. Before the adjustment, the top limit to damages was set at $561 million, half from copyrights and the other half from patents. It ended up with both sides arguing details, but neither predicting anything close to a billion under even the worst case scenario for Google, more likely less than $100 million. No billions. No billion. In the end it was all a lot of effort for nothing, because there never was a damages phase of the trial, since there was nothing to discuss when Google won. There are more zigs and zags regarding the Cockburn reports, if you can stand it, in a long list here, where I took the time to actually try to chronicle it all. Here's one of Mark's article on some of Google's objections to the way Dr. Cockburn calculated damages, if you are curious to see all the flaws that Mueller missed.
The distinction between past damaages and a license deal for the future is really key. Let us firstly look at what Google's filing reveals about the Cockburn report's take on past damages and subsequently analyze what this suggests for Oracle's possible and likely expectations the terms and conditions of a possible license agreement.
Criteria for damage computation
Google accuses Cockburn of failure to properly "separate out and define the value of the patented technology to both Google and Oracle." He certainly did separate out and define, but not in a way that Google could agree with.
Getting back to Mueller, he wrote about the first Cockburn report with some gusto:
But it's also key to consider that Oracle doesn't ask for merely compensatory damages. In Oracle's original complaint, prayer for relief E demands a "[t]rebling of damages under 35 U.S.C. § 284 in view of the willful and deliberate nature of Google's infringement of the patents at issue in this litigation." I'm sure that Cockburn was not tasked with any analysis of that aspect. As an economist, he was certainly just asked to determine compensatory damages. But whatever the court establishes as compensatory damages could still be tripled if the infringement is deemed to have been willful. So when Cockburn considers a 50% royalty rate on a particular royalty base to be a reasonable rate, the worst-case scenario for Google is not 50%, but 150% (yes, it can be more than 100% -- there's no ceiling in statutory law at 100% or any other percentage, just some case law that argues in favor of certain de-facto ceilings).... Would you call that just the facts? Or does it look like more predictions of potential doom and gloom for Google, spread just as thickly as possible? Did any of it come true?
Another interesting detail in Google's letter is the claim that in its settlement with Microsoft, "Sun demanded and received $900 million to cover the risk of fragmentation to Java."
The amount itself is not new. The total settlement between Sun and Microsoft was even far greater, but I also recall announcements that suggested that $900 million was the Java-related part. Should Oracle really have attributed the entire $900 million amount to "fragmentation", that would be a bit narrow. The settlement probably included a far-reaching license to various intellectual property rights.
But the fact that Oracle brings up this kind of amount in its litigation with Google indicates to me that Oracle is, as I recently already figured, looking for a settlement with Google that would be similarly big as its recent damage award in the SAP case. We're talking about, potentially, billions....
Assuming this case goes to trial and Oracle obtains an injunction, I think Google will have to do two things (short of rewriting its entire virtual machine to steer clear of infringement of any Oracle intellectual property):
Pay a very significant per-copy royalty to Oracle -- possibly higher than all of Google's current Android-related revenues, in which case Google would have to change its Android business model and start to charge device makers per-unit license fees (assuming, of course, that Google wants to operate Android in an economically viable way and not just turn it into a "loss leader" in its portfolio).
- Formally recognize Oracle's control over Java and make at least some reasonably significant modifications to its code in order to reduce or eliminate the "fragmentation" issue Oracle complains about.
Google in the end was vindicated as to being a "willful infringer", there were no treble damages, and in fact no damages at all, and it ended up with the jury ruling that Google was 100% innocent of *any* patent infringement, so no injunction, no license royalties, no adjusted business model, no doom and gloom. Would you have even thought that was conceivable as an outcome, if all you read was FOSSPatents?
All those lists of possible or probable doom did not come true. But look at the repetitive implications that doom would befall Google, that it deserved it, that were put out there in public and repeated by journalists over and over as if they were credible, so much so that when Google won, many journalists were totally astonished. Smears can leave a mark on the victim, sometimes long after a victory in the courtroom.
I mean, where does Google go to get its good name back after a torrent of articles like that, repeating over and over how much money it might have to pay in damages, maybe tripled for willfulness, and how even the judge suspected it of wrongdoing, etc. and so forth? People tend to think if there's smoke, there must be some fire somewhere. So real damage was done.
Was it just factual reporting? Like I say, you be the judge. But when I read him frothing at the mouth about being misquoted or misunderstood or whatever his rant was about, all I could think was, what about Google? Imagine what it was put through, and for what?
I made the links footnotes for a reason. I wanted you to be able to check that the articles are accurately quoted if you are inclined, but because we have a lot of readers of Groklaw, I didn't want to add to his stats by just casual linking.