An update on Rockstar v. Google

January 27, 2014

This article was contributed by Adam Saunders

In October 2013, Rockstar, a non-practicing patent-holding entity (or "patent troll"), launched multiple lawsuits against Android OEMs and Google alleging multiple counts of patent infringement. Over the last month, sparks have been flying in the fight between Rockstar and Google. We looked at the patents back in November. Now Google has responded with a motion for declaratory judgment. Google seeks — among other things — a declaration that it does not infringe the patents Rockstar is asserting against it.

Request to change venues

Google's motion is particularly interesting because of those "other things". Rockstar brought its lawsuits in the US District Court for the Eastern District of Texas (or E.D. Tex.). However, in its motion, Google asked to move the lawsuit to a different jurisdiction: the US District Court for the Northern District of California (or N.D. Cal.).

Google is taking advantage of federal procedural rules that allow parties to many types of legal disputes to bring a motion for declaratory judgment before any US court if there is an "actual controversy within its jurisdiction". This means Google has to convince the N.D. Cal judges reviewing its motion that Rockstar has been active in asserting its patents in the area N.D. Cal has jurisdiction over: namely, northern California. Google points to Rockstar's business activities as justification for a change of venue:

7. This Court has personal jurisdiction over Rockstar. Among other things, Rockstar has continuous and systematic business contacts with California. As Rockstar executives have explained to the media, once Rockstar identifies commercially successful products, it approaches the companies behind those products in person and through other means to seek licenses to Rockstar’s patents. Rockstar conducts this business extensively throughout California, including through personnel located in the San Francisco Bay Area. Rockstar’s CEO has publicly stated that Facebook (based in Menlo Park) and LinkedIn (based in Mountain View) infringe Rockstar’s patents. (http://www.wired.com/wiredenterprise/2013/11/veschi/.) In fact, Rockstar’s CEO has stated that it would be difficult to imagine that any tech companies—legions of which call California home—do not infringe Rockstar’s patents. On information and belief, Rockstar’s licensing and enforcement efforts in California have generated substantial revenues.

Google also claims that Apple, a Rockstar shareholder, coordinates with Rockstar from Cupertino, which is in the district.

Google has moved for declaratory judgment in N.D. Cal likely because E.D. Tex. is notorious for being plaintiff-friendly in patent infringement cases. In 2006, 88% of plaintiffs bringing patent lawsuits in E.D. Tex. won. Of the 25 highest damage awards given from February 1, 2005 to December 31, 2013 for patent infringement, twelve were from E.D. Tex, including the highest award of over $1.6 billion.

Even if Google's desire for declaratory judgment that it did not infringe is dismissed by the N.D. Cal., its judges may rule that it is nonetheless appropriate to transfer the case to its jurisdiction. Should Google succeed in having the lawsuit transferred to the other jurisdiction, that alone would significantly increase its chances of success in this litigation and reduce its chances of having to pay a high damage award should it lose. Google's desire to transfer jurisdictions can be explained through this statistical calculation; a familiar approach to solving problems for the advertising and search engine giant.

Other complaints

The motion is also interesting for two other reasons. Google implies that Rockstar is acting as a proxy for its organizers and shareholders; most notably, Apple: "Rockstar's shareholders direct and participate in Rockstar's licensing and enforcement efforts against companies in California. [...]Apple [...] is a large shareholder in closely-held Rockstar, and maintains a seat on Rookstar's board of directors. Rockstar's CEO has publicly stated that Rockstar maintains regular contact with its shareholders." (Paragraph 8). Being a proxy is not a bad thing (legally) on its face, but this argument is a way for Google to claim that it's really fighting Apple, so the dispute should be settled on Apple's turf — in California.

Google also complains about the lawsuits against the Android OEMs, which it is not party to: "Rockstar intends the Android OEM Actions to harm Google's Android platform and disrupt Google's relationships with the Android OEM Defendants. This is an open secret [...]." (Paragraph 23) Google is, of course, affected by any OEMs who feel threatened by patent assertions on their use of Android. Most of the remainder of the motion is a wholesale denial of any infringement on Google's part of the asserted patents.

On December 31, Rockstar amended its complaint against Samsung to add Google as a defendant to the lawsuit in E.D. Tex. This is an interesting response to Google's motion; instead of addressing it directly, it fires the patents aimed at Samsung against Google as well, giving Google another set of patents it has to defend itself against. It's a procedural change to the lawsuit against Samsung solely meant to keep patent litigation against Google in the lucrative E.D. Tex. jurisdiction even if Google succeeds at getting the search patent infringement claims transferred to N.D. Cal.

While Google has not caved in on the jurisdictional issue with Rockstar's search patent infringement claims, it has decided to fight in E.D. Tex. while it awaits a decision from N.D. Cal. On January 10, Google formally responded in full to Rockstar's original complaint against it. In the 88-page response, "Google admits that venue is proper in the Eastern District of Texas for purposes of this particular action but not convenient or in the interests of justice" (Paragraph 10); that is, it is still hoping that N.D. Cal. will accept a transfer of the lawsuit.

After denying that it infringes, Google asserts a variety of different defenses, which would be generally claimed in this situation: that the patents are invalid for non-patentability, lack of novelty, obviousness, and because of written deficiencies in the patent text; that there are limitations on how much in damages Google would have to pay out; prosecution history estoppel; estoppel; and unclean hands. Prosecution history estoppel means that Google is alleging that Rockstar's search patents were the result of a revision and narrowing of rejected patent applications by the Patent and Trademark Office; if this is true, it means that Rockstar can only assert a narrow, and therefore weaker, interpretation of the patents against Google. The plain "estoppel" claim implies that Rockstar had behaved in such a way as to cause Google to believe it would not sue for infringement of the relevant patents.

The most interesting defense, though, is the last one: a claim of inequitable conduct on the part of the original inventors, the original patent attorneys, and anyone else who failed to make certain disclosures that they were required to to the United States Patent and Trademark Office (USPTO). Google alleges that the inventors were aware of prior art that made the search patents ineligible for patentability, and deliberately decided not to disclose them to the USPTO so they would be awarded the patents.

Google also alleges that the inventors and prosecuting attorneys lied about the workings of other relevant prior art, namely, the Open Text search engine. Google claims that, had the USPTO been properly informed about Open Text, the patents would not have issued. Since this was inequitable conduct, the patents cannot be enforced. For example, with regards to the '969 Patent:

76. But for the Applicants’ false statements to the PTO regarding Open Text functionality, the claims of the ‘969 Patent would not have issued. The Examiner had previously rejected all claims in light of the Open Text functionality described in the Sullivan reference. Directly after the Applicants’ false description of the Open Text functionality, the Examiner granted all claims. Moreover, the Examiner explicitly noted that he granted the claims in light of the Applicants’ distinction between “selling advertisements by the keyword”—as described in the alleged invention—and “selling of keywords wherein search results ordered based upon a sold keyword”—as the applicants claimed was practiced by the Open Text search engine. (Notice of Allowability at 2.) Had the Examiner known that the Open Text search engine in actuality “sold advertisements by the keyword,” he would not have withdrawn his rejection and granted the claims.

77. As a result of the actions described above, all claims of the ‘969 Patent are unenforceable due to inequitable conduct committed during the prosecution of the ‘969 Patent.

Much more to come

These activities are the latest in what will very likely be long, drawn-out litigation in the plaintiff-friendly Eastern District of Texas. Indeed, the detail of Google's January 10 response indicates that Rockstar has taken on a huge fight. However, should Rockstar be successful at trial or at getting a substantial and/or confidential settlement, it might send shocks through the IT industry, leading lawyers for other companies to be more amenable to paying Rockstar for patent licenses. Rockstar may be making some progress as Huawei appears to have already settled with the company, as there is a joint motion to dismiss Rockstar's lawsuit against Huawei. That kind of outcome seems unlikely for Google, at least, so stay tuned for lots more battles and skirmishes in this legal war.

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to post comments

An update on Rockstar v. Google

Posted Jan 30, 2014 9:36 UTC (Thu) by rvfh (guest, #31018) [Link] (3 responses)

IANAL, and not even American or aware of American laws apart from what I read here, but this article is extremely good and accessible! Thanks a lot.

An update on Rockstar v. Google

Posted Jan 30, 2014 16:05 UTC (Thu) by asaun (guest, #83917) [Link]

Thank you very much for your kind words!

An update on Rockstar v. Google

Posted Jan 31, 2014 8:27 UTC (Fri) by oldtomas (guest, #72579) [Link] (1 responses)

I second that: usually, my eyes glaze over two paragraphs into a legalese article. I force myself to keep on because I say to myself that it does concern me after all.

With this article, I even came out with the feeling of having understood something. Thanks for that.

An update on Rockstar v. Google

Posted Jan 31, 2014 13:24 UTC (Fri) by asaun (guest, #83917) [Link]

Thank you very much! I'm glad you got something out of this article!

An update on Rockstar v. Google

Posted Jan 30, 2014 15:48 UTC (Thu) by SLi (subscriber, #53131) [Link] (2 responses)

Normally you should not read too much into affirmative defenses asserted in an answer to a complaint. Many competent lawyers have a habit of asserting just about every conceivable affirmative defense; in my experience it would not have been totally out of the ordinary for Google to also assert the affirmative defense of license, i.e. claiming that they have a valid license to the patents, knowing well this to be untrue. Almost any major action tends to include asserted affirmative defenses which are resolved on summary judgment before the trial because they have not been prosecuted.

Also denying any claim in an answer generally does not mean that you believe it to be untrue or necessarily even harmful to you. It's just that if you admit something in an answer or do not raise some affirmative defense, generally you will not later be given the opportunity to change your mind no matter what comes up in discovery.

So basically an answer to a complaint, while a central document to a case, normally is more of a formality where you deny everything you can get away with at that point and assert every even remotely plausible counterclaim.

Having said that, I think Google's answer here is a bit atypical in that it elaborates on some of the counterclaims. My understanding is that that is not generally required at this point, and most lawyers want to keep their strategy hidden at this point, which generally is well served by asserting every possible affirmative defense.

An update on Rockstar v. Google

Posted Jan 30, 2014 16:05 UTC (Thu) by asaun (guest, #83917) [Link] (1 responses)

Article author here. Thank you for engaging so much with the article!

"Normally you should not read too much into affirmative defenses asserted in an answer to a complaint."

Definitely. Many of the listed defenses are listed simply because it's common practice to list as many defenses as you can, regardless of matters.

"Also denying any claim in an answer generally does not mean that you believe it to be untrue or necessarily even harmful to you. It's just that if you admit something in an answer or do not raise some affirmative defense, generally you will not later be given the opportunity to change your mind no matter what comes up in discovery."

Also true.

"So basically an answer to a complaint, while a central document to a case, normally is more of a formality where you deny everything you can get away with at that point and assert every even remotely plausible counterclaim.

Agreed. Google's inequitable conduct defense, on its face, seems quite strong if true, which helps explain why that defense was revealed in such depth early on in litigation.

An update on Rockstar v. Google

Posted Jan 30, 2014 16:06 UTC (Thu) by asaun (guest, #83917) [Link]

s/regardless of matters/regardless of the strength of the defense