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.
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.
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. "