Alsup to Oracle, Get Serious

     (CN) – A federal judge scoffed at Oracle’s expert’s multibillion-dollar damages estimate in its battle with Google over Java copyright claims. U.S. District Judge William Alsup warned Oracle that he would exclude the damage report from trial if its next one failed to offer more realistic – and competent – calculations.
     Oracle’s expert estimated that Google could owe Oracle $2 billion to $6 billion in royalties. Alsup has not minced words with either side in preliminary arguments.
     “The patent owner here simply served a report that overreached in multiple ways, each and every overreach compounding damages ever higher into the billions – evidently with the goal of seeing how much it could get away with, a ‘free bite,’ as it were,” Alsup wrote in granting most of Google’s motion to exclude the report.
     “Please be forewarned: the next bite will be for keeps. If the next and final report fails to measure up in any substantial and unseverable way, including ways this order did not have time to reach, then it may be excluded altogether without leave to try yet again.”
     Oracle, which owns the rights to some elements of Java, while others are open-source, claims Google infringed on at least 50 Java patents in the popular Android phone.
     Alsup criticized the reasoning and methods of Oracle’s expert, Boston University economics Professor Iain Cockburn. Cockburn said in a report filed in May that the fair market value of a Java license, “reached through hypothetical negotiations at the time infringement began,” would be at least $1.4 billion and could be “as much as $6.1 billion,” Alsup wrote.
     Cockburn added that “the most likely hypothetical license negotiation outcome” would have Google paying Oracle about $2.6 billion.
     But Alsup cited numerous errors in logic and method, including that Cockburn used the “entire market value rule,” suggesting that Android’s value is entirely dependent on its use of Java.
     “The fact that Java may be a critical component of Android does not justify application of the entire market value rule,” Alsup wrote. “Wheels are critical to an automobile, but no one would apportion all of the demand for a car to just the wheels. It seems highly unlikely that Android derives its entire value from a small set of infringing features, given its breadth. The next report must apportion the total value between the specific infringing features versus the rest of Android.”
     Cockburn’s analysis was also faulty because it was not tied to a specific patent claim, Alsup found. In fact, Oracle has yet to hash out which claims will be heard during the trial, which is set to begin in October.
     “He did not even identify a single patent claim. Instead, he used ‘Java’ and ‘Android’ as large-scale bargaining units,” Alsup wrote. “This approach was defective, because Oracle has provided no basis for equating the asserted claims with either all of Java or all of Android.”
     Alsup scoffed at Google’s hypothetical valuation of $100 million as well, calling its method “Soviet-style negotiation.”
     Google based its number on a licensing proposal floated by former Java owner Sun Microsystems, which Google rejected.
     “In other words, since Google rejected the offer, the rejected offer must serve as a ceiling for the hypothetical negotiation, or so Google argues,” Alsup wrote. “This would be a Soviet-style negotiation: ‘What’s mine is mine and what’s yours is negotiable.’ The test is not what the infringer actually bargained for but what reasonable parties would have negotiated.”
     Alsup ordered Oracle to file a “revised damages report limited to the claims actually to be tried.”

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