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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's Rebuttal Key Arguments  22 comments
    Dec 8, 2012 3:00 AM | about stocks: VRNG, GOOG

    Vringo's Rebuttal

    After some speculation that Vringo (VRNG) might not file a rebuttal to Google's (GOOG) opposition, the rebuttal is finally in. Here is a link for those of you that have not read it (http://www.scribd.com/doc/115975929/Re-Buttle)

    In the rebuttal, Vringo discusses why it should receive past damages and supplemental damages. Since I am currently in Finals Mode, below I will provide what I believe to be some of the key arguments. Although I do not have time to discuss them in detail feel free to comment with any questions you may have.

    MAIN ARGUEMENTS:

    "[T]he patentee is entitled to damages for the entire period of infringement and should therefore be awarded supplemental damages for any periods of infringement not covered by the jury verdict."

    Defendants are silent on the issue of post-judgment interest, and thus have conceded that I/P Engine's request is proper.

    Defendants cite no case law to support their contention that I/P Engine's motion is premature. (Opp. at 2). This is because they cannot.

    Defendants claim that there is a "[rule that unreasonable delay negates entitlement to prejudgment interest." (Opp. at 5). The opposite is in fact true: an award of prejudgment interest is the rule, and the denial of prejudgment interest due to delay "[i]s the exception , not the rule."

    (SAME ARGUMENT I MADE IN A PREVIOUS ARTICLE)

    seekingalpha.com/instablog/5578741-lawtr...

    Prejudgment interest "serves to make the patent owner whole, since his damages consist not only of the value of the royalty payments but also of the foregone use of the money between the time of infringement and the date of the judgment."Id.

    Any alleged evidentiary prejudice is unrelated to this economic concern. Economic prejudice is not at issue in this case.

    There is no justification for applying two different remedies for the same alleged delay.

    Defendants do not and cannot allege that I/P Engine delayed at any time after the filing date of this lawsuit. Because there was no delay or associated prejudice during this time period,

    The sole ground for Defendants' argument is that the verdict form states "what sum of money, if any, if paid now in cash would reasonably compensate I/P Engine for any of defendants past infringement?"(Opp. at 9 (emphasis in original)). According to Defendants, the terms "paid now" and "any past infringement" means that the jury awarded damages for "all" pre-verdict infringement. (Id.) This argument is absurd. It is also wrong as a matter of fact and law. (SAME ARGUMENT I MADE IN A PREVIOUS ARTICLE THAT IT IS STILL PENDING) (HOWEVER I ALSO MENTIONED IT IN A COMMENT TO ONE OF MY ARTICLES)

    It seems clear to me that the questions are very different. The first two focus on a running royalty and damages in general. On the other hand, the third question clearly mentions "past infringement" and amount in cash to be paid now. (Pending 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 (22)
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  • Lawtrader, can you please confirm if this closing note is basically stating the jury should have awarded 35% instead of 3.5%? If so why is it so understated in the rebuttal when it is such a significant $$ award? Thanks
    .........................
    5

     

    It is apparent that the jury made a simple decimal point transposition error in arriving at itsdamages amounts. This confusion was caused by the Court’s limitation of the damages period toSeptember 15, 2011 (“the laches damages period”). The Court announced this ruling after alldamages evidence had been submitted, and further altered its ruling in the middle of closingarguments. The jury awarded 35% of the damages I/P Engine sought for AOL, IAC, Gannett,and Target. (Becker Dec., ¶ 12). However, for Google, the jury awarded 3.5% of the damagesI/P Engine sought for the original damages period—one tenth the amount awarded for the otherdefendants. The evidence of the underlying revenues for each of these defendants was the same.Thus, the portion of the amount I/P Engine sought for the original damages period should havebeen the same for each of the defendants. The most plausible explanation is a simple decimalpoint transposition with respect to Google’s damages.
    8 Dec 2012, 09:16 AM Reply Like
  • Author’s reply » Yes they definitely mention it at the end of their rebuttal. The reason why it is understated is because judges do not like to deal with these types of errors. Also, at no point did they want to seem like they want as much as they could get out. At all times they are trying to get what seems reasonable. However, they do mention it. I am not sure that they believe there was an error. There seems to be some confusion about the laches period or at least the laches caused confusion on the jury. Also, the way they argued as well is to show how Google is just greedy and asked the judge for a 2.8% rather than 20.9%. It is just a smart move to show how Google is the evil party here. But they mention it and I am sure the judge noticed it. They also do not want to state the obvious with too much emphasis that it would make the judge wonder do they believe I am dumb.
    8 Dec 2012, 11:33 AM Reply Like
  • Judge or appeal late court will have to deal with as verdict is unfair to other defendants as no basis in the record for such A disparity of damages favoring google over all the other defendants.
    Ris.
    8 Dec 2012, 11:39 PM Reply Like
  • I do wonder why none of the other company's charged the 35% wouldn't also wonder and ask, "Why are we being charged 35% while Google is only being charged 3.5%?" Microsoft should question the court about this, why not, it's just a reasonable question and why wouldn't Microsoft want to make Goog pay it's fair share? This isn't over people, I expect one of these other defendants to broach this question. Why shouldn't they ask it, what do they have to lose?
    10 Dec 2012, 05:40 AM Reply Like
  • thanks Lawtrader, i didn't see anything in the rebuttal that VRNG asked for the Judge to fixed the Jury calculation, did I miss that anywhere in the rebuttal or is that a separate motion that VRNG will have to file? any info you can provide? thanks
    8 Dec 2012, 09:40 AM Reply Like
  • Author’s reply » Well if you read the rebuttal you get the idea that VRNG is asking for more for past damages as well as asking supplemental damages. However, the way they are doing this is the exact way that I have been saying the judge will probably do so. VRNG asks for supplemental damages for everything the jury has not awarded. I am still confused as to why GOOG is only paying 15 million for any past damage paid in cash now. I am not sure that it is a mistake. There seems to be something about the laches that caused that to be the number. But VRNG does say there is an error and they argue two things. One that the jury calculation did not cover all of the damages, which is true and of course it did not include future damages. Also, they says at the very end that there seems to be a clear error. In the footnote they argue that all the defendants were based on 35% and GOOG was the only one with 3.5%. They basically say that there must have been "a simple point transposition with respect to Google's damages" We still need clarity from the judge to really know what is going on. But VRNG will definitely get all that it deserves for past damages (which it is not clear yet) plus (3.5% on 20.9% add revenue until 2016)

     

    ( "It is apparent that the jury made a simple decimal point transposition error in arriving at its damages amounts. This confusion was caused by the Court’s limitation of the damages period to September 15, 2011 (“the laches damages period”). The Court announced this ruling after all damages evidence had been submitted, and further altered its ruling in the middle of closing arguments. The jury awarded 35% of the damages I/P Engine sought for AOL, IAC, Gannett,and Target. (Becker Dec., ¶ 12). However, for Google, the jury awarded 3.5% of the damages I/P Engine sought for the original damages period—one tenth the amount awarded for the othe rdefendants. The evidence of the underlying revenues for each of these defendants was the same.Thus, the portion of the amount I/P Engine sought for the original damages period should have been the same for each of the defendants. The most plausible explanation is a simple decimal point transposition with respect to Google’s damages" )
    8 Dec 2012, 11:20 AM Reply Like
  • I believe that this is the first time Vringo has raised the issue of the miscalculation directly - IMHO they have been very careful about this as it could potentially (although unlikely) jeopardize the entire verdict (competence of jury, retrial, etc.) They set the bait for Google - and Google took it. That was the point of the interest motion. Google raised the calculation error and now Vringo can jump on it. If Vringo raised it, then Google could have raised a motion. very clever .... they want the judge to set the precedent for use in a future motion or appeal.
    8 Dec 2012, 08:49 PM Reply Like
  • Author’s reply » Absolutely. Vringo got a very favorable ruling that many people can't seem to see yet. 3.5% on going royalty rate could amount up to 600mi in future damages. VRNG does not want to jeopardize that.
    8 Dec 2012, 09:49 PM Reply Like
  • Lawtrader--Between you and Steve Kim, the strength of Vringo's case is increasingly evident. Let us hope that the investing public comes to see it that way. Selling pressure has exceeded buying pressure since the positive jury ruling. Surely this reflects serious concern with the Judge's final assignment of the royalty rate. How did you get to the $600 Million in future damages? Thanks rdmill
    9 Dec 2012, 08:27 AM Reply Like
  • Author’s reply » Well applying the 3.5% on going royalty to the 20.9% add revenue gives you about 120mi a year. If you time that times 4 it gives you 500mi. However, Google's revenue could increase since it has been increasing steadily. Hope that helps :)
    9 Dec 2012, 12:39 PM Reply Like
  • thank you lawtrader, its nice to have someone with actual "law experience" to provide input
    10 Dec 2012, 12:48 AM Reply Like
  • Looking ahead to what will certainly be a series of appeals by GOOG, assuming that you have been following this trial from the beginning even during the pre-trial phase, would you be able to identify the most likely basis of appeals that you believe GOOG would appeal on?

     

    For example, I can think of the following 3, but I am certain that GOOG will file many more:

     

    (1) That JJ improperly denied certain of GOOG's motions for summary judgment.

     

    (2) That JJ improperly included/excluded certain pieces of evidence.

     

    (3) That JJ gave improper instructions to the jury, which led to the difference of opinion as to what the jury truly intended to award.

     

    For these respective likely basis of appeals, what are your assessments as an attorney who has been following this trial as to the strengths and merits of each one?

     

    Much thanks for whatever insight you may be able to provide.
    10 Dec 2012, 12:52 AM Reply Like
  • I read something on another board that I would appreciate your opinion on: It was stated that if JJ alters the jury's verdict in ANY way for ANY reason, that it would be sufficient grounds to automatically grant an appeal by GOOG (either party, actually). Meaning that even if VRNG files a motion for JJ to revisit the jury's calcs of past damages or if VRNG or JJ initiate the process of obtaining juror affidavits -- whatever or however the reason or method -- that if the end result involves JJ modifying the jury's verdict in any way, that this action alone clears the way for GOOG to be granted an appeal. Is this correct?
    10 Dec 2012, 12:53 AM Reply Like
  • Author’s reply » In regards to your first 3 questions. It is not that simple. Google can file anything they like but it does not mean it will get granted. The bigger issue right now is that there is a jury verdict. Overturning a jury verdict is very very unlikely. The fact that the jury has found the patents to be valid and infringed is huge. It will stand. Google knows it. From the beginning Google knew it was guilty. All GOOG has done is try to pay VRNG as little as possible. In regards to your follow up question, it all depends how the judge does it. If the judge decides to correct it because he knows its a simple math error then it is not a big deal. However, if there is a bigger issue it might lead bigger problems for VRNG and could lead to a re-trial. However, judges almost never make changes for that reason. What the judge might do is just give more in damages himself which he can. He has the power to give more in past damages as well as future damages. I do not think the past damages will be changed unless it was a simple math error. However, future damages will amount to 3.5% on going royalty rate to the 20.9% add revenue which may amount up to 600mi
    10 Dec 2012, 02:00 AM Reply Like
  • So when you say that a judge "has the power to give more in past damages" are you saying that JJ could theoretically make the following decision unilaterally:

     

    Instead of opening up pandora's box by messing around with the jury verdict of $30M and increasing it to $158M, JJ could say, "OK, the jury verdict of $30M in past damages stands but I will be awarding additional past damages of $128M" as a less prickly way to get to the same end result?

     

    If so, then this begs the follow-up question: Would a judge's decision to utilize his authority to award additional damages be grounds for an appeal?

     

    Thanks again...
    11 Dec 2012, 01:21 AM Reply Like
  • Author’s reply » Yes the judge can deliberately increase past damages if he believes what the jury has awarded is not reasonable. However, it is unlikely for that to happen. Usually if the judge feels past damages are low, he just awards more in future damages/supplemental damages. So, the judge could make it 4% or 5% instead of 3.5% or he could award more by just giving a bigger sum to pay in cash now.
    11 Dec 2012, 01:57 AM Reply Like
  • Thank you for your post Lawtrader. Does anyone know what the estimated time frame on JJ's say is?
    10 Dec 2012, 11:58 AM Reply Like
  • Author’s reply » JJ can rule any time after the 19th of this month and before the first end of the first week of January.
    10 Dec 2012, 12:02 PM Reply Like
  • First off, thanks for being so responsive to everyone's questions. I know we all appreciate it.

     

    I have begun to hear rumblings about a legal doctrine called "manifest injustice". I am not familiar with this term, but it is being described as a judicial principle similar to "clerical errors" whereby a judge not only can modify jury verdicts on his/her own initiative but is actually obligated to do so. The conclusions being drawn from this doctrine are that the difference between $58M and $158M in past damages is material enough that JJ would be required as a matter of law to modify the past damages award in order to prevent this "manifest injustice".

     

    As a non-attorney, it sounds plausible, but I know enough to know what I don't know -- and the byzantine quirks of the letter of the law and judicial protocol are near the top of my "don't know" list.

     

    Any insight you can offer would be much appreciated...
    11 Dec 2012, 04:08 AM Reply Like
  • Author’s reply » Yes that is true. But that is only if the judge clearly believes that it was a math error. The key thing is whether it was a reasonable award. The other thing to keep in mind is that the jury might have wanted to charge the rest of the defendants more for a very good reason. That is that the only one that has the running royalty rate is GOOGLE. Meaning GOOGLE would be the only one paying the on going royalty rate in future damages. The other defendants just pay a cash amount once. The jury did ask the question to the judge before the jury verdict of whether if someone pays cash now they could still be charged with an on going royalty. The judge said yes. Just a thought.
    11 Dec 2012, 09:51 AM Reply Like
  • Hi lawtrader - Can or might JJ rule on post-verdict motions prior to 12/19? Wondering if perhaps smaller independent motion rulings might entice the parties to settle before final judgment.
    11 Dec 2012, 12:05 PM Reply Like
  • Author’s reply » He might. However, he could wait until Final Judgment.
    11 Dec 2012, 04:13 PM Reply Like
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