Follow by Email

Tuesday, October 16, 2012

$VRNG New Steve Kim Article with LOTS of Updates.

"Disclosure: I am long VRNG. (More...)

As I write this, it is almost 4:00 a.m. on Tuesday in Norfolk, Virginia. Despite the wee hour, there is unmistakable bustle in two "war-rooms" across town, where opposing armies of lawyers are going over last minute notes and jury lists, while a cadre of brainiacs for each side cleans and reloads their vinyl pocket protectors.

At 10:00 a.m. today, the federal courtroom of Judge Raymond A. Jackson in the Eastern District of Virginia will explode in a boom of activity as Vringo (VRNG) and Google (GOOG) square off to commence jury selection in their much anticipated patent infringement trial.

As Judge Jackson's court ordered peace talks have come to no avail, one is reminded of the words of another famous Virginian of yesteryear:

"Gentlemen may cry, 'Peace, Peace,' - but there is no peace. The war is actually begun!"
All fun aside, here are some last thoughts before "The Trial" commences later this morning.

1. Trial Schedule

The parties are on a time limited trial, meaning that the Court will be keeping track of time, and each side will be given a total of about 25 hours for presentation of evidence, including direct and cross-examinations. This works out to approximately 8-10 trial days, depending upon the length of Judge Jackson's trial day. Expect the trial to last about two weeks, not including jury deliberations.

2. Who Needs Treble Damages?

Last week, Judge Jackson granted Google's motion to exclude evidence of willful infringement, due to Vringo's decision not to pursue such a claim, which if successful could have led to an award of enhanced, or even treble, damages.

Yesterday's Final Pretrial Conference Order provided some insight into the reason for Vringo's apparent nonchalant approach to a treble damage claim -- Vringo's claim for reasonable royalties has been set not at 1% as many had speculated, but at a gargantuan 3.5%. Evidently, treble damages become less relevant when one's compensatory damage claim is almost quadrupled from the pretrial estimates.

3. What Are Adwords Anyway? Don't Ask Google's Expert

In an effort to simplify the trial, the parties have agreed to certain undisputed facts. In this connection, Judge Jackson went out of his way in the Final Pretrial Order to point out that Vringo:

"has offered to stipulate to the operation of the Adwords system as described in Defendants' [Google's] own expert report of Dr. Ungar; Defendants, however, have refused."

Judge Jackson specifically noted that "[a] stipulation regarding the operation of the Adwords system will fundamentally narrow the issues at trial, and would shorten the trial."

This will not score points with Judge Jackson, as parties are expected to reach reasonable agreements on undisputed points, and it is unusual for a party to refuse a stipulation based on their own expert's report. Look for Vringo to stand up during the trial and restate its offer before the jury to save time by "graciously" adopting the Adwords definition proposed by Google's own expert. If Google refuses before the jury, it will look like Google is deliberately wasting time, or disagrees with its own expert's statement.

4. Emergency Motions? Call 911.

There is no ruling yet on Vringo's motion for reconsideration of discovery sanctions to exclude 250 pages of allegedly late produced source code, which was filed last week. Likewise, there is no ruling on Google's motion filed over the weekend for an emergency hearing to strike supplemental opinions by Vringo's liability expert, Dr. Frieder. Google contends that although Dr. Frieder was permitted to file a supplemental report, the Court did not permit him to provide supplemental opinions taking into consideration the 250 pages of disputed source code.

As the parties await the Court's decisions on their last-minute emergency motions, one cannot help but be reminded of the sign that is posted (just out of public view) on the wall of every clerk's office in just about every court around the nation: "Failure to plan on your part does not constitute an emergency on my part."

All kidding aside, the Court will likely rule on both motions relatively soon. The probable outcome? Both motions should be denied, with Google getting to keep its 250 pages of source code, and Vringo's expert getting to opine on them.

Bear in mind that the Court's refusal to strike the 250 pages of source code as a discovery sanction against Google is not the same thing as agreeing that those pages will ever see the inside of the courtroom. In order to present those pages to the jury, Google will have to overcome a Rule 403 objection by Vringo that their probative value is substantially outweighed by the danger of undue delay, confusion of the issues, or that the jury will be misled.

Here's some sample source code so you can see what I mean:

#define MAX_NSITES 500
static char* sites[MAX_NSITES];
static int nsites;
static TSMutex sites_mutex;
static TSTextLogObject log;
static void
handle_dns (TSHttpTxn txnp, TSCont contp)
TSMBuffer bufp;
TSMLoc hdr_loc;
TSMLoc url_loc;
const char *host;
int i;
int host_length;

Now help yourself to a cup of coffee, there's 249 ¾ more pages of this kind of source code yet to come. Seriously, though, this type of evidence has very little probative value in and of itself for a jury, except to the extent it provides a springboard for experts to explain to the jury what on earth any of this means. Google is likely hoping to introduce the source code for the very purpose of provoking jury confusion in this highly technical case. Vringo's mission is to point to Google's marketing materials to show how similarly Google describes its processes in relation to the Lang patents.

5. A Short Look Back At How We Got Here

This is a good time to review some of the information that got us here in the first place. Sometime today, take a few minutes to re-read these background articles to remind us why we are here:

6. Trial Updates

Finally, be sure and check in regularly with my Seeking Alpha Instablog for periodic trial updates. I have posted my initial Instablog trial update covering jury selection, opening statements, and "Who's Who" among the anticipated witnesses. I will be monitoring the trial developments as best as I can, and making trial information available as I learn it. If you "follow" me, you will receive automatic notifications when the Instablog is updated (don't worry, you can just as easily "unfollow" me later).

With trial commencing, you will be best served to expect that there will be a lot of information and misinformation flying around, and it will not be easy to distinguish one from the other. Pay attention to news coming from reputable news sources, for example, Reuters. Double and triple check news coming from blogs and sources you've never heard of.

Trial starts in a few hours. Try to relax, and enjoy the fact that the sleep you'll get tonight will be more restful than any that two armies of lawyers will enjoy for the next couple of weeks. Good luck to us all."

No comments:

Post a Comment