Why Vringo Is A Sell: Read Judge Posner

| About: FORM Holdings (FH)


Vringo (VRNG) is suing Google (NASDAQ:GOOG) for patents in search engine technology. Billions are at stake. I have argued that a United States Supreme Court case, Mayo v. Prometheus, is closely comparable to Vringo v. Google.

In rebuttal to my article, a fellow Seeking Alpha Contributor claimed two things. One: that my case is not relevant to software patent law. And two: that a different software patent law case dealing with admissibility of prior art is more relevant.

I will not respond to claim two, because I feel it is a red herring. How could this different precedent, dealing with a peripheral issue of admissibility, possibly compare to the core principle my precedent raises? Irrelevant or relevant to the case, the admissibility precedent is tangential to my precedent. So you won't hear any more about it here.

Claim one:

From the outset, [Modernist] is incorrect to characterize the Mayo decision as relating to software patent law. It does not.

And here is Vringo's hero James Altucher cosigning:

"100%" is an unequivocal term. Hereby, Altucher is on record agreeing that I was incorrect to characterize the Mayo decision as relating to software patent law.

Mayo doesn't concern software patents?

This position is indefensible.

To summarize it all: Judge Richard Posner.

With some exceptions, U.S. patent law does not discriminate among types of inventions or particular industries.

Mayo deniers claim it is not relevant to software, because it comes from a medicine case. But this is a disagreement with nothing less than U.S. patent law, as explained in the quote above. By this discrepancy alone, Mayo deniers exhibit a contempt for reality. But this is just the beginning.

Not only does Mayo concern all patents, and thus software patents. Mayo concerns especially software patents (among others in the category of process patents). Here is the Supreme Court in Mayo introducing a quote from Richard Posner's co-authored book.

These statements reflect the fact that, even though rewarding with patents those who discover new laws of nature and the like might well encourage their discovery, those laws and principles, considered generally, are "the basic tools of scientific and technological work." Benson, supra, at 67, 93 S.Ct. 253. And so there is a danger that the grant of patents that tie up their use will inhibit future innovation premised upon them, a danger that becomes acute when a patented process amounts to no more than an instruction to "apply the natural law," or otherwise forecloses more future invention than the underlying discovery could reasonably justify. See generally1302*1302 Lemley, Risch, Sichelman, & Wagner, Life After Bilski, 63 Stan. L.Rev. 1315 (2011) (hereinafter Lemley) (arguing that § 101 reflects this kind of concern); see also C. Bohannan & H. Hovenkamp, Creation without Restraint: Promoting Liberty and Rivalry in Innovation 112 (2012) ("One problem with [process] patents is that the more abstractly their claims are stated, the more difficult it is to determine precisely what they cover. They risk being applied to a wide range of situations that were not anticipated by the patentee"); W. Landes & R. Posner, The Economic Structure of Intellectual Property Law 305-306 (2003) (The exclusion from patent law of basic truths reflects "both... the enormous potential for rent seeking that would be created if property rights could be obtained in them and ... the enormous transaction costs that would be imposed on would-be users [of those truths]").

Vringo's claimed intellectual property -- the filtering of search values -- is clearly a "basic tool of scientific and technical work". The concerns raised in Mayo about limiting innovation are clearly applicable to Vringo v. Google.

How can one say this Mayo case has no relevance to software? Why would it be featured on a leading software law website?

Who is this guy Posner whose name keeps coming up? Oh, he's just the judge who mocked and threw out Apple's (NASDAQ:AAPL) software lawsuit against Google.

Wow. So Mayo deniers are saying: the Supreme Court case that cites this guy's IP book has no relevance to a software lawsuit against Google.

If you're betting on Vringo you're betting against the book, and you're betting against the Supreme Court case which cited it.

Yes, Vringo's patents were obviously considered valid by the USPTO to be granted. But real validity is established in court. The Supreme Court supersedes everything else. That's why I would sell Vringo.

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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.