$VRNG $GOOG BREAKING: Update from Steve Kim On Google's Confusion Strategy October 17th

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Google  developed  several  themes  in  its  opening,  but  it  did  so  in  a  way  that  was  fairly  disjointed,  confusing,  and  hard  to  understand.    I  have  said  before  the  key  in  this  case  is  to  make  the  highly  technical  subject  matter  here  accessible  to  ordinary  people,  who  are  not  computer  scientists.      I  think  Google’s  attorney  got  a  bit  lost  in  the  trees,  but  he  did  point  out  some  important  trees.  

He  said  that  Google’s  system  is  different  from  the  Lang  patents  do.    That  it  is  not  base  

on  the  Lang  patents,  but  on  a  complex  but  different  system  for  returning  information  to  the  user.    His  explanation  was  difficult  to  understand.    But  this  may  be  a  good  thing  for  them.      Perhaps  Google’s  strategy  is  to  make  the  information  hard  to  understand,  on  the  theory  that  if  the  jury  can’t  understand  exactly  how  Google’s  system  works,  how  can  they  conclude  that  Google  infringed?    While  I  doubt  that  this  was  their  actual  strategy,  perhaps  it  will  be  the  effect.  

He  also  said  that  there  was  prior  art  before  the  Lang  patents  that  spoke  to  the  issue  of  combining  content  based  and  collaborative  filtering.    Based  on  the  prior  art,  he  feels  that  the  Lang  patents  are  not  valid.  

On  damages,  he  spoke  to  the  value  of  the  patents  in  relation  to  (1)  what  Plaintiff  paid  to  purchase  the  patents  in  2011  ($3.2  million),  (2)  what  Google  paid  to  Disney  for  license  and  purchase  of  advertising  patents  ($5  million),  and  (3)  what  Google  paid  to  Carl  Meyer  for  license  and  purchase  of  search  advertising  patents  ($3.55  million).    He  pointed  out  that  while  Plaintiff  only  just  bought  the  patents  for  $3.2  million,  they  are  now  claiming  the  patents  entitled  them  to  about  $  1billion  in  past  and  future  royalties.   

 

.....

 

Evidence  will  show  that  before  Google  launched  its  Smart  system,  it  had  actually  

cited  the  420  patent  in  one  of  its  own  patent  applications.  Now  damages.  

You  will  hear  from  Dr.  Stephen  Becker  on  the  issue  of  royalties.    The  question  is  not  

how  much  sales  Google  has,  but  what  is  a  fair  percentage  to  apply  to  those  sales.    

.....When  Google  introduced  the  Smart  system,  its  sales  increased  by  20%.    We  are  

asking  for  3  ½  percent  of  the  20  percent  increase.  

 

.....

 

Inventors:    Lang  and  Kosak  

• The  Patent  examiner  looked  at  the  Cullis  patent  before  issuing  the  420  patent.  

• PTO  wrote  the  prior  arts  “do  not  fairly  teach  or  suggest  the  teaching  of  information  filtering  through  a  combination  of  data  from  a  first  user,  their  content  data,  and  feedback  by  other  users.”  

• Remember,  the  patents  are  “presumed  valid”  unless  you  conclude  it  is  “highly  

probable”  that  it  doesn’t  meet  the  patent  requirements.  

• Shows  that  the  patent  claims  are  written  in  English,  not  source  code.    Nobody  

writes  a  patent  in  source  code.  

......

 

Dr.  Frieder’s  damage  calculations  are  very  conservative.    Some  of  the  documents  suggest  that  the  revenue  increase  from  SmartAds  was  as  high  as  40%.    But  we  are  using  20%.      

[Plays  a  2006  audio  clip  of  a  Google  employee,  Steven  Glassman]:    “for  which  SmartASS  gives  us  is  roughly  a  20  percent    higher  clicker  rate  for  the  ads  we  show,  which  means  that  we  can  show  the  same  number  of  ads  and  get  20  percent  more  clicks  and  make  20  percent  more  money.  .  .  .    And  SmartASS  basically  lets  us,  you  know,  be  good  and  rich  for  that.  

Dr.  Becker  has  calculated  a  3  ½  %  royalty  on  20%  increased  revenues  at  $493  million  total  for  all  the  defendants.    But  this  is  simply  a  reflection  of  the  royalty  on  the  percentage  associate  with  the  increase  in  revenue  from  the  use  of  the  SmartAds  system.      

 

Google's arguments:

 

Noninfringement:    We  (Google)  have  to  show  invalidity  by  clear  and  convincing  evidence.    While  the  PTO  issued  the  Lang  patents,  it  did  not  have  the  benefit  of  Google’s  witnesses  and  argument.    It  was  a  one-­‐sided  process.      

We  will  show  you  prior  art.    Here  is  a  timeline  showing  Yahoo  in  1994,  Alta  Vista  in  

1995,  Google  in  1997,  doing  search  engine  systems.    We  will  show  you  that  in  1997  

Fabs  system  published  an  article  called  “Content  based,  Collaborative  Recommendation,”  which  says  in  its  subtitle  “by  combining  both  collaborative  and  content  based  filtering  systems,  Fab  may  eliminate  many  of  the  weaknesses  found  in  each  approach.”  

 

Dr.  Ungar  will  tell  you  that  everything  Plaintiff  is  accusing  of  infringement,  is  

disclosed  in  the  prior  art.    

Here  is  the  Bowman  patent  from  amazon.com.    Here  is  the  Cullis  patent.    The  way  I/P  Engine  is  stretching  its  claims,  is  disclosed  in  Cullis.  

Damages  

Here  is  a  license  and  patent  sale  agreement  between  Google  and  Disney  that  

concerns  advertising  technology,  for  $5  million.  

Here  is  a  license  and  patent  sale  agreement  between  Google  and  Carl  Meyer,  that  

also  concerned  search  advertising,  for  $3.55  million  in  2008.  

I/P  Engine  purchased  these  patents  in  2011  for  $3.2  million.    They  just  asked  you  to  give  them  almost  $500  million.    Including  running  royalties,  they  are  really  asking  for  nearly  a  billion  dollars.  

Remember,  Lycos  owned  these  patents  for  over  10  years.    They  never  implemented  them,  they  never  told  Google  “you’re  infringing,  you  need  a  license.”    Now  Plaintiff  is  telling  you  Lycos  would  have  sat  down  and  negotiated,  saying  Google  owes  them  a  billion  dollars.    That’s  not  reasonable. "