None of the parties are saying much about the trial. The lead lawyer for Spangenberg’s patent holding company, Bright Response LLC, was Marc Fenster of the Los Angeles firm Russ, August & Kabat; he didn’t respond to The Prior Art’s requests for comment. Google’s outside lawyers at Quinn Emanuel deferred to the company, but a Google spokesperson declined to comment. The company did offer a short statement to sister publication AmLaw Litigation Daily (subscription required) immediately after trial. At that time deputy GC Tim Alger said: “This decision, as well as other recent Google patent litigation victories, validates our long-standing belief that the courts are burdened with a great number of frivolous patent lawsuits filed by speculators looking for an unjustified windfall.”
Still, a Spangenberg v. Google showdown in Marshall is too good for us to pass up at The Prior Art. All sides may be keeping mum, but the documents have a story to tell.
- A PATENT ON SORTING E-MAIL: USED TO SUE SEARCH ENGINES
The first counterintuitive thing about the Bright Response lawsuit is that it went forward at all. The asserted patent, No. 6,411,947, contains claims about sorting e-mail. The patent was created by a company called Brightware, which was hired by J.P. Morgan Chase in the 1990s to create a program for sorting incoming e-mails from the bank’s customers. Brightware no longer exists, and the patent came to be owned by Firepond, a Minnesota software company. Court documents from Bright Response v. Google show that Spangenberg picked up the ’947 as part of a batch of 13 patents he purchased from Firepond for $1 million.
The ’947 patent is as controversial as its owner. In 2004, the Electronic Frontier Foundation named it one of 10 patents that had committed “crimes against the public domain” by making obvious claims on already known technology. Gina Steele, a San Francisco solo practitioner who volunteered to help EFF bust the ’947 patent, said the technology described in the ’947 patent has been in use since at least 1996. (EFF was not involved in the Bright Response litigation.)
Nevertheless, in 2007, Spangenberg’s ostensibly Marshall-based holding company Bright Response (formerly Polaris IP) used the ’947 patent to sue Internet companies, alleging that their search engines infringe claims in the patent that refer to sorting “non-interactive electronic messages” but don’t explicitly say “e-mail.” (See independent claim 26.) Bright Response argued that users’ search queries are “non-interactive electronic messages.”
The suit was nothing less than a bold attempt to transform a patent Spangenberg picked up for a fraction of $1 million into a fortune of more than $100 million.
And it could only have succeeded in East Texas, where summary judgment is still a rarity. Magistrate Judge Charles Everingham, who oversaw the case, denied summary judgment motions from both sides and pushed the case to a jury trial. (Although Everingham is technically a magistrate judge working for Judge T. John Ward, he has been overseeing full patent trials from Ward’s overstuffed docket since taking office in 2007.)
Spangenberg’s lawyers made their demand, suggesting that Bright Response should be paid a royalty of .25% to .50% on Google’s AdWords—the system that throws ads up on users’ screen each time a search is performed. That damage demand equated to between $64.2 million and $128.4 million, since Google AdWords pulled in $25.78 billion during the period the plaintiffs alleged infringement, from July 2004 to March 2010.
For Yahoo, the suggested damage range was between $13.7 million and $27.4 million.
- BOTH SIDES CHANGE UP THEIR LAWYERS—AND SPANGENBERG’S TEAM MAKES A SURPRISING HIRE
Google originally hired Fenwick & West to defend the case, but dropped that firm in 2009 in favor of Quinn Emanuel. As AmLaw Litigation Daily (subscribers only) has noted, Quinn Emanuel has successfully defended Google in at least four East Texas patent cases now, including its one other patent trial. Yahoo was represented by Howrey LLP throughout the litigation.
On the plaintiffs’ side, the docket indicates that no fewer than 29 lawyers contributed to Bright Response’s case at some point. The two-person company made a particularly intriguing move right before trial, bringing on Irell & Manella, a Los Angeles law firm with major IP firepower that has won big in East Texas in the past.
Lawyers at large law firms like Irell have generally steered clear of helping Spangenberg, who has claimed that the patents he acquired from Firepond cover basic e-commerce functions. That has led to some patent lawsuits that claim property rights over a big swath of the Internet, which would create conflicts for any large firm.
But by the time Irell partner Hueston joined the case, Bright Response v. Google was down to two defendants. And according to Hueston, Irell was brought into the case in a very limited role. In response to an interview request, Hueston told The Prior Art that he was tied up with another case but sent an e-mail emphasizing his narrow role. “Shortly before trial, Irell was invited by lead counsel to handle the damages case,” Hueston said in the e-mail. “We were disappointed that the jury did not have the opportunity to consider damages.”
- CAN’T CALL ‘EM ‘TROLLS’ IN EAST TEXAS—BUT YOU CAN AT LEAST POINT OUT THAT THEY’RE NOT LOCALS
In July, only weeks before trial, Yahoo filed an emergency sealed motion to prevent Audrey Spangenberg—Erich Spagenberg’s wife, who has a litigation-based business of her own—from testifying. That motion was withdrawn when the two sides reached an interesting agreement [PDF]: The plaintiff would agree not to put Audrey Spangenberg on the stand, and the defendants would agree not to call the plaintiff a patent “troll.”
But while they didn’t say “troll,” defense lawyers still made sure that the 10-person East Texas jury at least knew that Bright Response’s claim to be a “local business,” with an office suite just blocks away from the federal courthouse in Marshall, was suspect.
A reporter from the Marshall News-Messenger captured a telling exchange between Jennifer Haltom Doan, Yahoo’s lead attorney, and Bradlee Sheafe, a former FBI agent and Firepond executive who is the manager of Bright Response:
Sheafe conceded that he lives in Monticello, Ill. He also said that Erich Spangenberg, the only other employee of the company, lives in Dallas.
“No one works there permanently?” Yahoo counsel Doan said, after asking if Sheafe even knew the physical address of the office. “No secretary or administrator is there?”
“That’s fair,” Sheafe responded.
“Mr. Sheafe, you never used the Marshall office for anything unrelated to your patent litigation, correct?” Doan inquired.
“I come here for trial,” Sheaf responded. “That’s correct.”
- GOOGLE’S E.D. TEXAS SCORECARD
The jury verdict for Google and Yahoo continues a remarkable string of patent successes for Google. An analysis by Corporate Counsel, conducted in February, after Google’s first patent trial, showed the company is a defendant in more than 25 patent lawsuits, more than half of them pending in the Eastern District of Texas. Google has faced more than 50 patent suits since 2007, and has been sued for patent infringement 14 times since the beginning of 2010. The company has won at least seven patent suits, and settled very few.
The outcome of Bright Response v. Google leaves the search giant with four patent victories in East Texas–a venue that the conventional wisdom would suggest is unfavorable to them. As the Litigation Daily has reported, in addition to the two trial victories, Google won summary judgment in March against PA Advisors, another Spangenberg entity, and against Performance Pricing, an arm of Acacia Research, a publicly traded patent enforcement company. Both summary judgment rulings came from Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit, who took over the cases at the district court level.
More links and documents for this story:
- Marshall News-Messenger reporter Robin Richardson had daily reportage of the Bright Response v. Google trial. See coverage from Aug. 3, Aug. 4, Aug. 5, Aug. 6, Aug. 7, and Aug. 10.
- This trial victory follows Google’s two patent wins on summary judgment in March. See Judge Rader’s opinions favoring Google over Acacia subsidiary Performance Pricing [PDF], and Spangenberg entity PA Advisors [PDF].