Vringo Vs. Google: Is A Stay Of The Trial In The Cards?

| About: FORM Holdings (FH)

Yesterday, in "Vringo vs. Google: Staying Focused Amid The Din," I tried to make some of the goings on in our favorite court case (Vringo (VRNG) vs. Google (NASDAQ:GOOG)) a bit more accessible to the 90% of us who are fortunate enough to make a living without having to be lawyers.

One commenter, Marpha, posed a very cogent question about Google's chances of staying the trial (which is two weeks away) pending the USPTO's patent reexamination:

"What do you think the possibility to be that Google will file a Motion to Stay to allow the PTO to reach a final determination?

This article suggests the Eastern District of Virginia grants stays for re-examination 60% of the time."


This is a great question, and it underscores the very dynamic that makes Vringo bettors so insecure. A big part of our bet hinges on litigation, and litigation is inherently unpredictable. Two judges can make different decisions based on the same set of facts, and paradoxically, both can be "right."

1. Will Google File A Motion To Stay?

I think the better way to ask this question is: Why wouldn't Google file a motion to stay? From Google's standpoint, the leverage they would obtain from a stay is considerable, and would offset the leverage Vringo now holds by reason of being on the expedited trial track (the so called "Rocket Docket"). From the standpoint of Google's lawyers, filing such a motion is a no-brainer, since lawyers tend to file as many plausible motions as their clients' budgets will allow. This is a function of attorneys' three-pronged need: (1) to be thorough; (2) to cover their bottoms; and (3) to generate more fees. In fact, I am surprised a motion to stay has not been filed yet, since with trial approaching, time is not on Google's side.

2. Should A Motion to Stay Be Granted?

Now on to the real issue of whether such a motion would be granted, especially in view of Marpha's observation that the cited article speaks of a 60% success rate for such motions in the Eastern District of Virginia ("EDVA") (where this case is set to be tried). A 60% success rate sounds quite intimidating, but let's unpack that a bit.

In truth, I don't believe the "percentages" are very relevant, because the decision to grant or deny a stay request is very fact specific (i.e., the facts vary from case to case), and the decision is within the Court's discretion. The EDVA, like other jurisdictions, uses a three part balancing test in deciding motions to stay pending reexamination: (1) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party, (2) whether a stay will simplify the issues in question and trial of the case, and (3) whether discovery is complete and whether a trial date has been set. No single factor is controlling, but each is analyzed and thrown into the mix in the Court's discretion.

In the case of ePlus v. Lawson Software, the EDVA denied the motion to stay pending reexamination based upon the following factors:

· Substantial discovery had already occurred;

· A trial date was already set to commence 6 months down the line;

· Plaintiff would be prejudiced because of the time it would have to wait to relitigate its claims, and the possibility it could lose its right to injunctive relief.

Compare this to the case of Juxtacomm v. Lanier, in which the EDVA granted the motion to stay pending reexamination, because:

· The request for reexamination had already been granted by the time the answer to the complaint was filed;

· The litigation was in its earliest stages;

· Any harm from the stay could be addressed through later award of money damages, if the plaintiff was successful.

Now which case sounds more like our case? In the Vringo case, discovery is completed, except possibly some remaining loose ends. Not only has trial been set in this case, it is scheduled to start in two weeks, whereas, the USPTO reexamination process has not even reached the stage where Vringo has even had to respond. In other words, the litigation is at an advanced and nearly complete stage, while the reexamination is at an early-mid stage.

The issue of prejudice cuts both ways. In Vringo's favor, the length of a delay would appear prejudicial in view of the fact that the litigation has virtually reached the courthouse steps. In Google's favor, there is no prejudice, because any delay could be compensated by a later award of money damages, if Vringo should prevail. I did not see any reference in Vringo's lawsuit to a request for injunctive relief against Google, so this would appear to show a lack of prejudice from a stay as well.

On balance, I don't think a stay is in the cards for Google. This case is just too far along, and Google has waited too long to file the motion. Had Google filed the motion months ago, its chances would obviously be much greater. Should it go forward with filing such a motion, I think the Court will find that it is too late to pull the rug out from under the Plaintiff. In the absence of a stay, trial starts as scheduled on October 16. This would be a huge positive for Vringo, since most of its leverage arises out of the upcoming trial date. I'm still looking for a settlement to occur prior to verdict, but even if the case does not settle, I am staying long.

Ain't litigation grand? Pass the popcorn, please.

Disclosure: I am long VRNG. 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.