In case you haven't noticed, there has been no settlement or buyout announced in the Vringo (VRNG) vs. Google (GOOG) patent lawsuit. Consequently, this case continues to wend its way towards trial, which will commence next Tuesday, October 16, 2012, before Federal Judge Raymond A. Jackson in the Eastern District of Virginia.
Today, Judge Jackson made some very significant orders regarding Google's experts, and the evidence that the jury will hear in this case.
1. Vringo's MIL No. 1: Last week, Judge Jackson granted virtually all of Vringo's MIL No. 1, but reserved ruling on Vringo's request to exclude evidence of the purchase/pricing of Vringo's purchase of the patents in suit, and about Vringo's failure to practice the inventions claimed in the patents. Today, Judge Jackson restated his intention to reserve ruling on these issues, and will make this decision during the trial, as the evidence is offered.
2. Vringo's MIL No. 2: Judge Jackson previously reserved ruling on whether Google can offer evidence regarding non-comparable license agreements. Google seeks to provide the jury with evidence of patent license agreements it has reached with other patent holders, presumably to assist the jury in considering what would be a fair royalty (or royalty structure) for the Lang patents in this case.
Today, Judge Jackson decided that most of Google's evidence concerning non-comparable license agreements is not admissible in the trial, and cannot be presented to the jury. This significantly undercuts Google's ability to present an alternative damage calculation to the jury. This is a very significant victory for Vringo, with respect to the presentation on damages.
Judge Jackson will allow Google to present the jury with two license agreements (the Google-Carl Meyer Agreement and the Google-Disney Agreement) where the comparability of the underlying technology to this case is contested. Judge Jackson ruled that it will be up to the jury to decide whether those license agreements are sufficiently comparable to this case, and how much weight, if any, to give to it.
Vringo's Motion to Exclude Testimony/Opinions of Dr. Ugone: In this motion, Vringo seeks to strike and exclude testimony of Google's damages expert, Dr. Ugone. Vringo asserts that Dr. Ugone's opinion does not meet the Daubert standard for admission of expert testimony, because of his use of a so-called "proxy" or "yardstick" method of calculating damages. Today, Judge Jackson ruled that:
"[T]he Court has found no case law, nor has any been suggested to it, describing or supporting the use of any "yardstick" or "proxy" approach to measuring of damages. According, the Court GRANTS [Vringo's] Motion [to] Exclude Opinions and Testimony of Keith R. Ugone as to any testimony using a "yardstick" or "proxy" methodology or the use of the real estate valuations analogies in this context. Dr. Ugone is free to present expert opinion using established methods of calculating damages, including the hypothetical negotiation approach guided by the Georgia-Pacific factors, which he purports to use."
4. Vringo's Daubert Motion and MIL No. 4: Judge Jackson granted Vringo's MIL No. 4, which sought to exclude testimony by Google's liability expert, Dr. Lyle Ungars, "that is contrary to the Court claim construction order." This protects the earlier claim construction decisions that were rendered in Vringo's favor at the Markman hearings.
Judge Jackson will allow Dr. Ungars to testify to a late disclosed theory of patent invalidity that Vringo sought to exclude due to the timing of its disclosure. Vringo will presumably have to attack Dr. Ungars's testimony on cross-examination, by challenging the timing and circumstances of the disclosure, and his failure to list the opinion in his original expert's report.
It appears that Dr. Ungars's credibility has previously been sharply criticized in federal court. Some of you may have heard of Judge Richard Posner. Judge Posner is widely regarded as one of the most brilliant judges on the federal bench. During a patent case assigned to him, Judge Posner had occasion to hear and evaluate testimony by a Dr. Lyle Ungar. In a scathing critique, Judge Posner concluded of Dr. Ungar:
- "I found Ungar's testimony singularly lacking in credibility[.]"
- "Ungar's refusal to acknowledge that an email purporting to come from his email address was actually composed by him or with his knowledge was merely the low point of this witness's unsatisfactory testimony."
- "Ungar was a disloyal employee, whose disloyal act could not bind the university in its dealings with the sponsor whom Ungar was assisting in what amounted to a misappropriation of the university's intellectual property."
** NOTE: There is a slight difference in spelling between patent expert Dr. Lyle Ungars in this case, and patent expert Dr. Lyle Ungar referenced in Judge Posner's opinion. It appears that this is the same individual. If it is not, I will correct this reference.
If Dr. Lyle Ungars in this case is the same person as the Dr. Lyle Ungar who was sharply mauled by Judge Posner in a published federal decision, it would seem that Google is risking a fair amount of its credibility by calling an expert witness who may be subject to a scathing cross-examination.
Some may wonder whether Judge Posner's published opinion would be admissible on cross-examination. It may well be. FRE 608 allows cross-examination into specific instances of a witness's prior conduct "if they are probative of the character for truthfulness or untruthfulness" of the witness. Judge Posner's published decision finding that Dr. Ungar assisted "in what amounted to a misappropriation of the university's intellectual property" certainly sounds like a prior act that would be probative of his character for truthfulness or untruthfulness.
Allowance of such cross-examination would be within Judge Jackson's discretion. However, one wonders whether Google should even attempt to call Dr. Ungars to testify if this incident could be raised against him, particularly since the finding was made by a jurist of Judge Posner's stature. Would Google really want to call as its witness somebody who may be exposed before the jury as having assisted in misappropriation of intellectual property? Isn't this case also about misappropriation of intellectual property, i.e., patent infringement?
5. Google's MIL No. 1: Judge Jackson previously reserved ruling on Google's motion to exclude evidence of willful infringement. Today, Judge Jackson granted Google's motion to exclude evidence of willful infringement, finding that Vringo "failed to adequately plead willful infringement in its complaint." This is a significant ruling, because without a finding of willful infringement, it appears clear that Google will not be exposed to enhanced or treble damages should it lose this case.
At this point, I would like to explore whether this matters. What is the actual impact upon this case of Judge Jackson's order excluding evidence of willful infringement? This would be a good time to take a moment and read Vringo's complaint that it filed in this case against Google. You will notice that Vringo merely claims that the patents were infringed. Vringo does not claim that the infringement was willful infringement. Moreover, at the end of the complaint, Vringo does not ask for enhanced or treble damages, but merely asks for compensatory royalties for past and future infringement.
From this, the only reasonable conclusion is that Vringo never believed that Google's infringement ever amounted to willful infringement, and perhaps Vringo did not want to overreach by asking for a remedy it could not justify. This would explain why Vringo also chose not to include in the Complaint a request for an injunction. It appears that from the outset, Vringo elected to keep its claims simple, and follow the basic rule against overreaching: "Pigs get Fed, Hogs get slaughtered."
6. Google's Motion for Reconsideration of Its MIL No. 2: Judge Jackson previously denied Google's motion to exclude the entire market value of its accused products, and evidence of Google's size, wealth, and overall revenues. In denying Google's MIL No. 2, Judge Jackson left open the possibility that Vringo's royalty base could be based on the entire market value of Google's accused products. Quoting federal case law, Judge Jackson explained "[i]f it can be shown that the patented feature drives the demand for an entire multi-component product, a patentee may be awarded damages as a percentage of revenues or profits attributable to the entire product (emphasis supplied)." The Court also previously ruled that the jury may be told about Google's wealth and revenues.
Unhappy with this result, Google asked the Court to reconsider/change its decision. Today, Judge Jackson denied Google's motion for reconsideration, and affirmed his ruling on these issues. This is a significant win for Vringo.
7. Google's Motion to Dismiss Other Defendants: Google requested an order dismissing Defendants AOL, Gannett, IAC Search, and Target Corporation from this lawsuit. Judge Jackson denied this motion, holding that Google may be jointly liable for damages attributable to patent infringement by these defendants. Judge Jackson pointed out that Vringo's damages expert, Dr. Becker, "has provided specific damages calculations" against AOL, Gannett, and Target, and Google may have joint liability for these damages.
8. Google's Motion to Exclude Dr. Becker: Google sought to exclude testimony from Vringo's damages expert, Dr. Becker. Judge Jackson denied this motion. Dr. Becker will be allowed to testify for Vringo, against Google.
9. Google's Motion to Exclude Dr. Frieder: Google sought to exclude supplemental opinions rendered by Vringo's liability expert, Dr. Frieder. Judge Jackson denied this motion. Dr. Frieder will be allowed to testify against Google as to his supplemental opinions.
Recap of Motions
The most significant decisions today were Judge Jackson's decisions gutting the testimony of Google's damages expert, Dr. Ugone. Unlike Vringo's damages expert, Dr. Becker, who will be able to make a complete presentation of his opinions to the jury completely concerning Vringo's damage claim, the Court struck a significant portion of the testimony and evidence on damages by Google's damages expert, Dr. Ugone. While Dr. Ugone will be able to address the jury on damages, he will be limited in the opinions he will be able to share with the jury, since Judge Jackson has excluded much of his testimony as not being valid expert testimony.
In addition to having the testimony of its damages expert limited by the Court, the Court also struck a significant amount of Google's other damage evidence, finding that most of the license agreements offered by Google to be "non-comparable" and therefore not admissible in this case.
Google's second try (on reconsideration) to exclude evidence of its wealth and revenues, and the entire market value of its accused products, failed yet again, as Judge Jackson reiterated his ruling allowing this evidence to be offered at trial.
Google's effort to have the remaining defendants dismissed from the case was denied, which is significant because (1) it increases the amount that Vringo may be able to recover from Google; and (2) it may assist Vringo to demonstrate to the jury that Google's alleged infringement caused harm not only through Google's products, but also through other companies such as AOL, Gannett, and Target.
Google's motions to limit or exclude Vringo's experts, Dr. Becker and Dr. Frieder, were denied.
In Google's favor, the Court excluded evidence of willful infringement based upon the fact that Vringo hasn't claimed that willful infringement occurred in this case.
On balance, these pretrial orders seem once again to fall mainly in Vringo's favor. In a battle of the experts, it appears that all of Vringo's proposed expert testimony will be allowed in, whereas a significant portion of Google's expert testimony and damages evidence has been stricken. While the exclusion of willful infringement should temper runaway expectations in this case, bear in mind that the actual damages at issue in this case still involve very high numbers, which if awarded should exceed the sum that might have been brought in by a pretrial settlement.
Disclosure: I am long VRNG.