Vringo Vs. Google: Google's Motions For Judgment As A Matter Of Law

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On Tuesday, October 30, Google (NASDAQ:GOOG) filed two Motions for Judgment as a Matter of Law, which essentially seek dismissal of Vringo's (VRNG) claims against them. A motion for judgment as a matter of law is a "during or post trial" equivalent of a motion for summary judgment. This article addresses the merits of Google's motions, in which Google seeks a summary termination of the litigation it its favor.

In its previous motion for summary judgment (which Judge Jackson denied), Google argued that there was no potential information that Vringo could present at trial that could justify a verdict for Vringo, and therefore, a trial would be a waste of time, and the Court should enter summary judgment for Google. The Court rather summarily denied this motion, without even the need for a hearing.

A motion for judgment as a matter of law is a similar motion, in which argues that based on the evidence that has actually been adduced at trial, no reasonable juror could find for Vringo, and as such, the case should not be given to the jury to decide. Such a motion might be granted, for instance, if Vringo failed to establish a prima facie case, meaning that it failed to present some evidence to support at least one element of its claims. Another reason that such a motion might be granted is if Google had presented irrefutable evidence to support an affirmative defense, for example, that I/P Engine did not own the Lang patents on the date the Complaint was filed.

None of those reasons applies here. Based on everything I have seen in the trial transcripts so far, I anticipate that Judge Jackson will deny both of Google's motions. It is important to understand that these types of motions are virtually always filed during a trial, and it is important for Google to file them in order to preserve certain arguments for later in the case, and for appeal. Thus, even if the motions are denied, Google's attorneys must file them in order to preserve these arguments for later.

Let's take a closer look at Google's two motions for judgment as a matter of law:

1. Motion Asserting No Proof of Infringement

Google's first motion asserts that there is no evidence upon which a jury could find the Defendants infringed on the Lang patents because:

1. The accused systems do not combine "content" and "collaborative;"

2. There is no proof of infringement through AdWords Before 2010;

3. There is no proof of infringement regarding AdSense for Search or Mobile Search;

4. There is no proof of infringement through use of QBB;

5. There is no proof that the accused systems "filter the combined information";

6. AdWords is not a search engine or search system;

7. The accused systems do not scan or search for ads;

8. The accused systems do not use "collaborative feedback" data;

9. The accused systems do not use "content based" filtering;

10. The accused systems do not filter for relevance to the query;

11. No reasonable jury could find that Google indirectly infringes upon the patent claims;

12. No reasonable jury could find that the Defendants infringe upon the patent claims under the doctrine of equivalents.

As a preface to this discussion, I once attended a deposition in which the opposing attorney answered virtually every question I asked with "I object to the question on the basis that it is vague, ambiguous, assumes facts not in evidence, is argumentative, burdensome, calls for hearsay, and is not reasonably calculated to lead to the discovery of admissible evidence." In other words, he did not know what objections to make, so he made every single one he could think of, every time I asked a question. Or more charitably, he knew that his objections did not apply, but didn't want to miss them, just in case.

Welcome to the shotgun approach to litigation. Google's motion on the issue of liability is precisely designed to object to everything under the sun, even if they know the arguments don't apply, because they don't want to miss them, just in case.

Google knows very well that Dr. Frieder addressed each of these issues in his testimony.

I will give you a few examples:

Google claims that there is no evidence that the accused systems combine "content" and "collaborative."

In describing Google's system, Dr. Frieder likened Google's system to a meat grinder, in which "you put in things, and you turn the crank, and it eventually produces something that's a combination thereof." He continued, "And when you turn the crank and combine the two of them, you get predictive click-through rate or you get Quality Score. Again, it doesn't matter how you call it. It is what it is. It is what it is. That's what you get. You combine content, you combine collaborative, you have a rating, you use that rating to filter and it was all done in response to a search."

I have read through the transcript, and this is just one of numerous examples where Dr. Frieder testified about the combining of content and collaborative. Judge Jackson needs just need one instance to deny this argument. It took me about two minutes to find it in the record.

Google claims that there is no proof of infringement through AdWords before 2010:

Dr. Frieder's testimony:

Q: So, Dr. Frieder, when did Google AdWords launch?

A: Sometime in 2004.

Q: It your opinion that the Google AdWords has infringed since its launch?

A: Yes.

Q: What's the basis for that opinion?

A: Okay. I have looked at all the current documents. I looked at the external documents to their customer, I looked at the internal documents to their own employees, I looked at e-mails, I looked at - I attended depositions, I read depositions, I saw depositions, I looked at source code, and the all, all, said the same thing, with the difference between them is the level of detail they described.

Google claims that there is no proof of infringement regarding AdSense and AdSense for Mobile:

A: Okay. So what this is, is part of the presentation. What it shows you is basically there's something called AdSense network and something called AFS, which is AdSense for Search and AFS for Mobile, which is basically for mobile environments.

Q: Do you believe AdSense for Search infringes --

A: Oh, absolutely.

Q: -- all of the asserted claims?

A: All of the asserted claims.

Q: Do you believe the mobile product infringes?

A. It does.

Q. All of the asserted claims?

A. All of the asserted claims.

* * *

Q. Is your analysis of infringement for AdSense for Search and Mobile essentially the same as it is for AdWords and Smart Ads Google products?

A. Yes, it is.

As you can see, Dr. Frieder did provide testimony on these issues, and this should be sufficient to overcome Google's motion.

I am very comfortable that the record thwarts Google's motion, but I will leave it to Vringo's attorneys to look up the rest of the record citations to the tedium of responding specifically to each of Google's complaints. From what I have seen of Judge Jackson thus far, I very much doubt that he will grant Google's motion.

2. Motion Asserting No Proof of Damages

Google also filed a motion for judgment as a matter of law, contending that Vringo has failed to supply the jury with evidence of damages, and therefore Google should be granted immediate judgment.

Google asserts:

1. I/P Engine wrongly relies upon a 2004 hypothetical negotiation date instead of a 2010 date;

2. I/P Engine produced no evidence to support a running royalty;

3. I/P Engine fails to apportion the patented and unpatented features of the accused systems;

4. I/P Engine artificially inflated the applicable royalty rate.

Like their motion alleging that there was no proof of infringement, this motion seems intended to "preserve" their arguments by putting them in writing, as opposed to being based on the actual evidence at trial.

Google's Claim Regarding the 2004 Hypothetical Negotiation Date.

This claim is based on Google's argument that there is no evidence of infringement until at least 2010, and therefore, the "hypothetical negotiation" model for setting a reasonable royalty should be based on a 2010 date, and not a 2004 date. The problem for Google is (and Google knows this), there is evidence that the infringement began in 2004. In the previous section, I pointed out the specific verbatim portion of Dr. Frieder's testimony where he testified that Google AdWords infringed since its launch in 2004. If the jury chooses to adopt/believe this testimony, that will be a sufficient basis for use of a 2004 hypothetical negotiation date.

Google's Claim That There Is No Evidence To Support A Running Royalty.

Google takes a very Google-centric approach to this analysis, by contending that it has an express preference for lump sum royalties instead of running royalties, and as such, a hypothetical negotiation with Google would never have resulted in a running royalty. In order to determine a reasonable royalty for past infringement, the jury needs to consider the relative circumstances of the two parties at the relevant time the negotiation would have occurred, in order to determine what would have been a fair royalty agreement if determined at that time. Thus, the jury has to make an objective analysis of what the parties would have agreed to, taking into account their relative circumstances at the time. The important issue here is that the jury's charge is to make an objective analysis instead of a subjective analysis.

Google is asking the Court to rule that the analysis must be subjective in nature, because they assert that they subjectively would not have entered into a running royalty agreement, because of their subjective preference for lump sum agreements. In a 2011 patent case involving Oracle USA, Inc., a California Federal Court observed that "[d]etermining a hypothetical license price requires an objective, not a subjective analysis[.]" Google's preference for lump sum agreements is a subjective factor, which at most may be relevant to the analysis, but is clearly not dispositive.

Google's Claim That I/P Engine Failed To Apportion Its Damages

It is important to remember that Vringo may only recover damages caused by the alleged infringement. Vringo is not entitled to collect a royalty on the entire enterprise, as some of the total revenues are clearly derived from aspects of Google's system that do not infringe upon the patents. Thus, Vringo has to fairly apportion the amount of revenues that are attributable to the alleged infringement.

It is also important to know that Vringo does not have to prove the amount of its damages to an absolute certainty, but must do so with "reasonable certainty." In practice, this means that Vringo's damage model has to have a rational basis in the evidence, and cannot be merely speculative (i.e., guesswork).

Vringo's damages expert, Dr. Becker, testified at great length about how he apportioned between Google's overall revenues and its increased revenues from the alleged infringement.

It is not practical to recite all of Dr. Becker's testimony regarding apportionment, but he did testify about apportionment in various areas of his testimony, both on direct and cross-examination. For example, Dr. Becker testified "I take the financial data we talked about, I apply the apportionment factors, I get the royalty base." Dr. Becker produced a specific exhibit (Exh. PDX-76) which shows the apportionment factors he used in his analysis. Moreover, Google actually cross-examined him on his apportionment factors for various revenue years.

In essence, Dr. Becker's apportionment testimony was that the introduction of the SmartAds system resulted in an increase of Google's advertising revenues, and that this increase represented the apportionment of the royalty base upon which the infringement damages are calculated. This position was clearly stated, and Google cross-examined Dr. Becker on it. There is no real question that I/P Engine did apportion its damages in this case.

Google's Claim that I/P Engine Artificially Inflated Its Royalty Rate

Google disagrees with the appropriateness of the comparable licenses that Dr. Becker relied upon in making his opinion of a 3.5% royalty rate. This is an argument for Google to make to the jury, not to Judge Jackson. A motion for judgment as a matter of law is a motion that is addressed to the sufficiency of the evidence. In other words, such a motion requires a court to find that there is insufficient evidence in the record to support a verdict. Google is not arguing that there is insufficient evidence in the record, they are arguing that they believe it to be unreliable. Vringo's obligation is to supply sufficient evidence so that a jury award would not be based on pure speculation. For purposes of getting this case to the jury, I believe that Judge Jackson's prior decisions to allow Dr. Becker's testimony into evidence, and to allow his testimony on direct and cross-examination regarding various comparables he considered (or could have considered) indicates that there is a sufficient basis for Dr. Becker's testimony concerning the royalty rate.

Based on the evidence that has been adduced in this case, there is a great likelihood that Judge Jackson will refuse to grant either motion. Remember, there is a procedural reason that Google needed to file these motions, or these arguments would be deemed waived later in the case. Furthermore, if the jury returns a verdict that is favorable to Vringo, you can expect that Google will reassert the same motions yet again, as allowed by FRCP 50(b). This is part of the procedural process not only in this case, but in virtually every jury trial.

It seems clear that Vringo has made a legally sufficient presentation to support all of its claims. "Legally sufficient" merely means that Vringo has presented "enough" evidence to allow the case to be presented to a jury. It does not mean that the jury will reach a verdict for Vringo, but simply that Vringo has made a prima facie case that the jury can consider. In view of the storm delay that occurred on Monday, and a short trial day on Tuesday, it appears that the earliest the jury will begin deliberations will be Wednesday afternoon, or Thursday morning. If this timeline holds true, we can expect to see a verdict as early as Friday or Monday, or perhaps as long as the middle or end of next week.

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.

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