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Matias Castro
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UCLA graduate- BA Political Science- Philosophy Minor- Law School student - Intermediate Investor I am a current law student and investor. I have been investing for about 5 years. I began investing in Apple, but over the years began investing in small bios and companies that were under $5 that... More
  • Vringo V. Google Analysis On Defendant's Opposition Argument  8 comments
    Nov 30, 2012 1:10 PM | about stocks: VRNG, GOOG

    Google's Opposition Argument Analysis

    On 11/29/2012 Defendant's filed an opposition to Plaintiff's motion for an award of pre-judgment interest, post-judgment interest and supplemental damages. Below I will discuss and assess some of the main points from the argument. In doing so, I have divided the sections just like they appear on Defendant's file.

    II Argument (NYSE:A)

    "A running royalty is not appropriate in this case". The judge is the one who decided to place the question of the running royalty for the jury. That being said, this is like a slap in the judge's face saying you are wrong.

    Furthermore, in this section the defendant argues that the court's resources would be better used if they decided first on the invalidity and infringement rather than the damages. This argument is commonly used and nothing to worry about. Also, if there was a mistake by the jury then it is clearly something that needs to be solved immediately and for that reason the judge will not focus on this.

    B (1)

    "Prejudgment interest should not be awarded in EVERY case where infringement is found" The key words here are "in every case". This means that it might not be appropriate in all cases, but it might be appropriate in some cases. Bottom line the judge is the one to decide.

    "Prejudgment interest, although ordinarily awarded, MAY be denied altogether when a patent owner unduly delays in bringing its lawsuit". Again the key words here are "may be denied", which leaves it up to the judge's discretion.

    C (1)

    Here, Google's argument is not really strong. They are saying that VRNG should not get supplemental damages. However, VRNG is asking for supplemental damages because they believe the jury has made an error in their past damages award. Even Google mentioned that there seems to be an error. Of course Google will argue the error was done in favor of VRNG rather than themselves. But once again the judge is the one that will decide if there was an error at all and what to do with it.

    C (2)

    Here, Google once again talks about the possible error by the jury. Instead of basing the 3.5% on 20.9% of revenue, they argue that the jury applied the 3.5% to only 2.8%. Defendant also says that if there are any supplemental damages to be awarded to Vringo then they should be based on the 2.8% that the jury applied the 3.5% running royalty to. This argument will likely fail. The judge is the one that will see through all this legal bargain and pick out whether there was an error in the jury's math or not. Regardless of what happens he will decided if the award was reasonable or not. If he believes it was reasonable then he will only award what the jury has awarded. But if he believes there was a mistake or that it does not seem reasonable to ask so little of Google in proportion to the rest of the defendants, then he could easily award more in damages (past and/or future)

    In sum, Google's arguments leave it up to the judge's discretion. The judge will do what he believes is fair and reasonable. That being said, there is nothing to worry about. The rules of the game have not changed. Vringo has won the case by jury trial and that is very hard to overturn.

    Disclosure: I am long VRNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Disclosure: I am long VRNG.

    Additional disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: VRNG, GOOG
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Comments (8)
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  • sonicthoughts
    , contributor
    Comments (211) | Send Message
     
    Looks like Google fell into a bear trap here. By C (2) opening up the discussion of jury error, they allow VRNG to petition the court to examine this issue without having to file a motion of their own. It is also pushing the judge to make a ruling on jury error. IMHO GOOG is taking a big gamble that the error was in their favor and not VRNG. They have far more downside than upside here...
    30 Nov 2012, 02:20 PM Reply Like
  • Matias Castro
    , contributor
    Comments (48) | Send Message
     
    Author’s reply » Yes it can be double-edged sword. But Google needs to take into account shareholders' interest and fight til the end. The judge is the authority and he will do what is just. I personally think Vringo has the upper hand at this point. Pretty much everything except for laches has gone in their favor.
    30 Nov 2012, 04:17 PM Reply Like
  • DavidTru
    , contributor
    Comments (63) | Send Message
     
    I agree that this does open a can o worms for Goog with giving the judge the opportunity to alter the past damages award in Vrng favor.

     

    But I think Q.E. (Goog) knew what they were doing. It either works for them, or it works against them but gives them the opening for an appeal if the judge ups the jury award. Goog seems hellbent on minimizing damages down to almost nothing and/or dragging this out for as long as possible. This is just another step down that road. There's been speculation that Vrng could now sue every other AdSense (for search) customer out there. Goog dragging this out probably helps to minimize that and/or make it a less sure process. I mean wouldn't the other AdSense customers pretty much just have to pull out their checkbooks if Goog and some customers have already been forced to pay a boatload? But if Goog pays next to nothing and/or won't be paying anytime soon... then the "other AdSense" checkbooks can stay in the desk drawers for now.
    30 Nov 2012, 03:34 PM Reply Like
  • Matias Castro
    , contributor
    Comments (48) | Send Message
     
    Author’s reply » Yes that is definitely what they are trying to do. They want to pay the least possible. Also, they need to protect their shareholders so they will drag this as much as possible. The longer they drag this out the more expensive it is for Vringo too and Vringo has limited resources so we will see how it plays out. However there are institutions that have already put money in the stock to take this case to the end. But I do not think they can sue others like Microsoft, Yahoo, Facebook, or other Google customers until they win this particular case. They need money to make more money. Bottom line this will take a while, but the important thing is that Vringo won the case which is huge and can lead to many other lawsuits.
    30 Nov 2012, 04:17 PM Reply Like
  • maillady
    , contributor
    Comments (3) | Send Message
     
    Could you clarify for me a question I have in re to jury findings. Was it not recommended by jury that payment for damages are to be paid immediately , as part of their verdict. How will this apply if this isn't finalized soon? or will it? Thank You in advance for your thoughts.
    30 Nov 2012, 10:12 PM Reply Like
  • Matias Castro
    , contributor
    Comments (48) | Send Message
     
    Author’s reply » Yes the jury has said that it needs to be paid immediately. This will only happen once the judge gives the final verdict. The judge is the one that awards damages. Jury just sort of guides the judge on what they think is reasonable but the judge has the final say. He can give more or less accordingly. But once the judge gives the final verdict Google and the rest of defendants will have to pay immediately for past damages.
    1 Dec 2012, 12:37 AM Reply Like
  • coolerheadsprevail
    , contributor
    Comments (92) | Send Message
     
    Although there are still many issues that will likely be raised in post-trial motions for JJ to clarify/rule on, it seems fair to say that the most significant ones revolve around the past damages, future royalty rate, and royalty base.

     

    This clarity is necessary by and large due to the jury's puzzling verdict form. It seems fair to say that if the jury wrote down $158M for GOOG and applied the same rate consistently across GOOG and their clients, that there would be little discussion about this and the complexion of many post-trial motions would be vastly different than what they will likely be now.

     

    Again, I am not saying that $158M is what the jury actually intended -- only the jury knows what they intended to do, and all any of us can do is theorize.

     

    But that is precisely the heart of my question for you: Would you know whether there is still a gag order in effect for jurors? I had thought that once they were released from service that they were free to speak?

     

    If the gag order is still in effect, then that answers my ultimate question. If the gag order has indeed been lifted, then I am perplexed as to why no jury member has spoken up about it, considering how much ridicule they have received over this perception that they cannot perform middle school math.

     

    Human nature would seem to tell us that at least one of them would speak out to either (1) Defend their calculation and explain why the verdict form is indeed correct as written, or (2) Explain what the mistake was and clarify the jury's intent.

     

    Thanks.
    2 Dec 2012, 03:34 AM Reply Like
  • Matias Castro
    , contributor
    Comments (48) | Send Message
     
    Author’s reply » Yes the gag order is still in effect. The gag order has to be lifted by the judge. The judge could even have a gag order that remains even after the final verdict (very rare instances) (also depend on the district) But my understanding is that the gag order is still in effect. Judge will probably lift it after the final verdict. Lots of interests in this case so we can just hope that the judge gives a little more clarity. For now just need to be glad that Google has been found guilty and the patents are valid.
    2 Dec 2012, 06:13 PM Reply Like
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