What Does The U.S. Supreme Court Say About Vringo?

| About: FORM Holdings (FH)

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Vringo (VRNG) is suing Google (NASDAQ:GOOG) for allegedly infringing on software patents. Some people think this will lead to a multi-billion-dollar settlement.

James Altucher is the hero of Vringo longs. His latest piece gets into the dirty details of the case:

[Google's prior art] Culliss says that a user clicks on a link, and then the link's "rank" gets altered accordingly. Then a second user comes along and the rank gets altered again. And so on. [Vringo's patent] Lang does this also. Lang also takes not only the clickthru data but COMBINES it with the CREDIBILITY of the user and the content. This is different. Google could say (and I expect them to say) that "CREDIBILITY" is an obvious addition so no patent was needed. But I ask this: define "Credibility" of a user. It's not so easy. Now program your definition up. Even harder. I bet my definition of credibility is different from yours. Is it someone who uses the search engine a lot? Is it someone who tends to click on things that other people tend to click on? I don't know. And then combining this with clickthru data is also interesting. How do you combine?

In other words, Vringo wins if credibility weighting is a patentable improvement on weight-agnostic Culliss click-through.

Let's unpack this a little bit. Altucher is asserting a couple of interesting things. One: the jump to credibility is non-obvious. Two: the jump is not easy, and open to a variety of difficult approaches; in other words the software code is complex. Then, let's connect it with some other information we have.



First, I want to quickly mention that Altucher's original comparison of Google and Vringo does not suggest much complexity.

look at Google economist Hal Varian describing their algorithm right here in this video. And compare with the patent claim filed in court by Vringo. You decide. But it looks like the exact same to me.

So Altucher himself says that Vringo's "highly complex" algorithm technology looks exactly the same as this pie chart.

He refers to this video to claim that Google is ripping off Vringo. So when it suits his argument, Altucher says these things are simple; but now he's saying they're complex. When one sees shifting assertions like this, it is a key indicator of circular reasoning, or begging the question. Which raises the question: what is Altucher saying?

Obviously, Altucher is not directly making these contradictory claims; they arise in different contexts. But it is just that, the shifting of contextual framework, which betrays an inconsistency.

Vringo patented an abstract idea, or goal, with many possible solution sets, all of which are probably difficult for the average programmer. Did Vringo patent the solution itself? No, because the solution was Google. A lot of players offered solutions; Google's was the best.

Google triumphed within the complexity. So how can Altucher's contention -- the contention of complexity -- work against Google instead of for Google?

The answer is that implementation has been reified within the idea. Vringo is claiming a package deal where describing a problem in exchange for a patent gives all of the problem's solutions thrown in as a bonus.

So I have doubts about complexity. What about Altucher's point regarding originality/non-obviousness?

Google expounds a well-documented narrative of being founded on academic networks of citation. If a leading scholar cites a journal article this would obviously carry more weight than some no-name. Ergo, the jump to clicker credibility/relevance (instead of click rate alone) is obvious. It is as obvious as weighting a Tweet from President Obama above a Tweet from Paris Hilton.

Patent law allows for some components to be obvious. Big-picture, combined perspective ultimately determines the outcome of the case.

The Real Issue: Abstract Ideas and Laws of Nature

Bitlaw has a summary of the only recent Supreme Court decision relating to software patent law. It was an unanimous decision.

The claims of this patent essentially required three separate steps: administering a drug to a patient, measuring a metabolite created by the body of the patient as a result of the drug, and informing whether more or less drug should be administered to the patient based on the measured levels of the metabolite. In this invention, the drug was known in the prior art, as was the fact that the drug produced the metabolite. Even the fact that the metabolite levels could be used to determine the efficacy of the dosage of the drug was previously known. What was not known was the precise correlations between the metabolite levels and the efficacy of the drug.

Vringo's patent is like this drug test. Search user scores are a test, measuring the rank of a link. These ranks, like the metabolite levels, are established through correlation. There are a variety of statistical approaches for establishing the precise correlations, and the fact that correlations exist between link quality and user identity was already known. These precise correlations, and various routes to implementation, like intricacies of the drug test, are not patentable.

Perhaps the drug test was a bit less obvious and complex compared to Lang's patent. But this Supreme Court case wasn't about obviousness or complexity. It was about abstract ideas and laws of nature. (No one doubts that abstract ideas and nature can both be confusing and complex.)

The Court then recited the well-settled rule that laws of nature, like natural phenomena and abstract ideas, are not patentable.

Vringo's IP claims both natural phenomena and abstract ideas. It is a natural phenomenon that some people have more relevance than others, and it is an abstract idea to say "let's give them some score".

How abstract is this idea of a score? As Altucher says: "I bet my definition of credibility is different from yours." It is more than abstract; it is subjective. It claims not just one way of doing things but all ways.

How concrete is Google's infringement on Vringo's patent for a law of nature? Please refer to the Pac Man diagram above; I think that's pretty abstract.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.