Vringo – Google Patent Maneuvering Nears Fever Pitch

Today, $VRNG sold off, prompting a press release from The Company as follows:

“This afternoon, Vringo’s wholly-owned subsidiary, I/P Engine, Inc. received notice of an initial Office Action at the U.S. Patent Office (“USPTO”) with respect to Google, Inc.’s Ex Parte request for Reexamination of U.S. Patent No. 6,314,420 (the “420 Patent”).

I/P Engine acquired the 420 Patent from Lycos, Inc., and it is one of the two patents-in-suit in I/P Engine vs. AOL, Google et al.

Since the inception of the lawsuit, I/P Engine expected Google to seek reexamination because it is a standard and typical tactic used by defendants in patent litigation cases.

Today’s action is an initial step in a process that ordinarily takes several years. It is not the USPTO’s final action. At this point, the USPTO has only heard from Google. I/P Engine looks forward to sharing its input with the USPTO by November 25, 2012. I/P Engine believes that it will be successful in obtaining re-confirmation of the 420 Patent.

I/P Engine does not believe this will result in any delay of the trial, which remains scheduled to commence on October 16, 2012.”

Message boards lit up with chatter about how the key “420 patent was being re-examined.”  I stumbled across this Yahoo Message Board post (?!?!!?) directing me to the actual US Patent Office (USPTO) documents on the matter.

1) go to http://portal.uspto.gov/external/portal/pair and type in the CAPTCHA

2) enter “90/009991″ as the application number

3) Click the tab that says “image file wrapper” and then click the doc titled “Reexam – Non-Final Action”

Read that 12 page document.  The USPTO examiner has looked at Google’s ($GOOG – no positions) request for re-examination and rejected 6 of the claims of the 420 patent.   This rejection is NOT final, and Vringo ($VRNG – position: long up the whazoo) will have an opportunity to present their side to the USPTO.  Of course, as VRNG noted in their press release today, they “look forward to sharing their input with the USPTO by November 25, 2012.”  Now, intelligent observers will notice that VRNG and GOOG are scheduled to begin their trial well before November 25th, so, in the words of the non-lawyers (ie: me): WTF?

Now, I would encourage all interested parties to go and read the USPTO’s non-final action on this re-examination as per the steps I just outlined above, but I have some screenshots for you – links don’t work as the site times out after a few minutes rendering all links dead.

1) Here is the cover page

2) Here is the intro

So, I read this, and I thought: Uh oh, this is bad.  What is VRNG going to do if their key patent claims have been rejected?   Yes, I understand that the ruling is not final – VRNG will appeal – but they won’t do so until after the trial!  Guess what – as I’ve already noted in my prior posts on the subject - this case is confusing to smart people- never mind the average layman jury.  When a jury hears Google tell them that the US Patent Office has rejected (on a non-final basis) the key claims of the Lang 420 Patent, the Jury will have a hard time understanding how VRNG should win this case.

I spoke with the company tonight, and they had already filed a motion (docket 315 on Justia) to try to prevent GOOG from even introducing the non-final results of the USPTO re-examination at the trial.  At the time VRNG filed this motion, they didn’t know the preliminary, non-final, one-side-of-the-story (GOOG’s side) results of the re-examination which we now know.

The relevant portion of Docket 315 begins with (boldface mine):

“A. Pending Reexamination Evidence Should be Precluded as it Has No or Little Probative Value to any Issue in this Case, But Would be Highly Prejudicial to Plaintiff’s Claims of Infringement and Validity

A U.S. patent is presumed to be valid. 28 U.S.C. § 282. Google recently petitioned the U.S. Patent and Trademark Office to reexamine U.S. Patent No. 6,314,420 (“the ‘420 patent”).

That request is pending. Defendants have identified a U.S. Patent & Trademark Office (“USPTO”) communication regarding Google’s Request for Reexamination of the ‘420 patent document as Defendants’ Exhibit (DEX) 76 in their Trial Exhibit List, served September 19, Until and unless the USPTO issues a final decision cancelling that patent, the patentee is entitled to rely upon the presumption of validity. Well established case law holds that evidence regarding pending patent reexamination proceedings, including the grant of reexamination and subsequent office actions, is inadmissible for any purpose because it has little probative value, and is highly prejudicial.”

Interested parties should, of course, read the entire filing.  In plain English, what that says is “You should not allow GOOG to tell the Jury that the USPTO has rejected (on a non-final basis) the claims in the 420 Patent because the re-examination process is not complete and we have not told the USPTO our side of the story.   If GOOG were to be allowed to tell the Jury this development, the Jury would be biased.”

Now, this was kinda my point exactly:  if the Jury, who will already be confused beyond belief, hears that the USPTO “rejected” these 6 core claims – even if it was on a non-final basis pending further examination after VRNG presented its case – I think it would tip the scales heavily in Google’s favor.

The Company replied (in a conversation with me this evening) that 1) they think that the patent will eventually be confirmed (ie, this rejection will be overturned) and 2) once the Jury hears all the evidence from both sides – as opposed to the USPTO who only heard GOOG’s argument, that the Jury will likely side with VRNG.

It’s certainly good to know that VRNG had, prior to this re-examiner’s result, already moved to prevent the result from being used by Google in court – of course they did: they’re good at this lawyer stuff, it’s what they DO!  As I’ve noted multiple times, I think that if the re-examiner’s action is allowed to be used by Google,  that just as VRNG noted in their motion, it certainly WOULD prejudice the Jury against VRNG and be a serious negative for $VRNG.  I am not a lawyer, but I think I’m smarter than the average Juror, and I am putting myself in their shoes.  Just one man’s opinion.

What concerns me is that if this “evidence” is allowed, even if we agree with VRNG’s point that:

“Until and unless the USPTO issues a final decision cancelling that patent, the patentee is entitled to rely upon the presumption of validity”

we end up back in what I wrote in prior posts about the “letter of the law” and the “spirit of the law.”  The letter of the law is almost certainly, as VRNG noted in that sentence just above, that their patent is presumed to be valid until the USPTO completes the re-examination process, which could take YEARS.    However, when you’re talking about a confused jury listening to an endless stream of technical jargon about “search engine informons and wire strings,” the prejudice of the layman’s mind is not something to ignore.

As VRNG’s own motion notes in their argument that GOOG shouldn’t even be able to mention this:

“…Yet telling the jury that the patent has been called into question by the Patent Office may significantly influence the jury’s application of the presumption of validity and significantly prejudice [I/P Engine].” Amphenol T & M Antennas, Inc. v. Centurion Intern., Inc., 2002 WL 32373639,”

Vringo proceeds to elaborate on prior case law about prejudice involved with introducing this evidence:

““[T]he risk of jury confusion if evidence of the non-final PTO proceedings were introduced [is] high.” Callaway Golf Co. v. Acushnet Co., 576 F.3d 1331, 1343 (Fed. Cir. 2009); see also Pharmastem Therapeutics, Inc. v. Viacell, Inc., No. 02-148, 2003 WL 22244704, at *3 (D. Del. Sept. 30, 2003) (noting that “there is a strong likelihood that the jury would be confused as to the reexaminations’ relevance and thereby give the evidence of reexamination undue weight”).

Presenting the jury with evidence of the pending reexaminations would no doubt present a danger of “undue tendency to suggest decision on an improper basis.” Fed. R. Evid. 403, official commentary.

Further, “because it is standard practice for the PTO to broadly interpret claims during . . .reexamination,” the jury would likely afford undue weight to a seemingly “expert” opinion on issues such as validity and infringement – an opinion based on a completely different interpretation of the prior art and application of a much lower standard of proof. E.I. duPont, 706 F. Supp. at 1141. “The prejudicial potential of this evidence far outweighs any probative value it may have.” Amphenol, 2002 WL 32373639, at *2.2 Accordingly, Defendants should be precluded from making any reference to the pending reexamination proceeding of the ‘420 patent, including DEX # 76.”

Read that above excerpt, and you’ll know exactly why today’s news freaked me out – I agree completely, and I think that if the Jury hears this news, it will be a serious negative for VRNG.

Hopefully for VRNG longs, their Motion In Limine (to exclude this evidence) that I’m quoting from above will be granted, and Google won’t be allowed to reference the non-final USPTO re-examination results that I mentioned above.

-KD

disclosure: long VRNG

related:

Justia Docket 315: Memorandum In Support of Motion 314 In Limine to Exclude Inadmissible Evidence

Memorandum in Support of Defendants’ Motion For Summary Judgment

Latest Chapter in VRNG-GOOG “he said, she said”

Some Thoughts on the Vringo-Google Patent Battle

Vringo Justia Dockets

Altucher: “Why Google Might Be Going to Zero

Groklaw: “Another Patent Attack on Google With More Wild $$$ Predictions

Vringo IP Site

KD: “Confirmation Bias Is A Portfolio Killer

postscript – from @MichaelHR on Stocktwits, comes this flowchart, edited in MS Paint by me to show where in the process we are:

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