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IP, Patent

Pathetic Patent Piece At PaidContent

Over at PaidContent.org, an article went up yesterday about The Facebook Fight attempting to explain to us mere mortals How Yahoo Could Win, Lose Or Draw.  The article is chock full of useful, and completely made up, information including “odds” on the various outcomes.

Granted, the author admits the posted odds are both speculative and “unofficial,” which leaves one wondering: In what way could odds on winning or losing a patent case be official?  While this may have been a clever attempt at making a boring story about patents into an interesting one, the fact that there are real statistics from which to draw illustrates the author’s ignorance and lack of interest in actually reporting facts. So where did the author go wrong?  For starters:

Yahoo Wins: A Court Decision or Forced Licensing Agreement (1 in 5 odds)

Except that we actually have real stats on patent-owner win rates in Northern District of California, and they’re not 1 in 5, they’re 1 in 3.  That’s right, overall, across the board, patent owners win about 33% of lawsuits filed in ND Cal. That’s no magic number.  Court filings are public information, and other researchers have used that information to compile these statistics.  You can read about these stats (and others) in this article from Issue 46 of IAM Magazine.

Yahoo Loses: Facebook KO’s the Patents or Wins a Counter Claim (3 in 10)

This doesn’t make any sense, and is logically inconsistent with the “Yahoo Wins” scenario. Yahoo only has three options: win, lose or compromise.  The author put “win” at 1 in 5, but “lose” at 3 in 10?  In any event, the only “Yahoo Loses” scenario Facebook really cares about is any one that avoids paying Yahoo money.  If patent-owner win rates in ND Cal are 1 in 3, then what do you think patent-defender win rates are? Just take a guess . . .

A Draw: Yahoo and Facebook enter a Cross-Licensing Agreement (even)

This prediction might make the least sense of all.  By all analyst accounts, Yahoo is in this for the cash. Not that it makes it true, but everyone with an opinion has said so.  A cross-license gets Yahoo very little in return due to the mediocrity of their own economic activity compared to Facebook.  Far more likely is the possibility that Yahoo will hold out for an extraordinary payment, or have its clock cleaned at trial.

But the author truly steps in it with this statement:

The case is taking place in a tech-savvy California court, not the troll paradise of East Texas where rural juries love sticking it to northern tech companies.

Frankly, this sentiment is downright insulting.  This goes beyond the more routine “plaintiff-friendly” tag most ill-informed reporters use to speculate about the Eastern quarter of the Lone Star state.  Here, the author basically paints Texans as rednecks with some sort of inherent bias against ‘northerners.’ And by calling California court’s “tech-savvy” and Texas courts “rural,” he might as well say what he really thinks: that Texans are stupid.   PaidContent should issue a retraction and apologize to the good people of Texas for these inflammatory and erroneous remarks.

What’s more, this myth about East Texas has been debunked (not once, not twice, but thrice).  First of all,  East Texas juries do not hesitate to invalidate patents where they believe it to be appropriate.  In fact, Texas juries in years past were highly volatile against patent owners.  Second of all, those “tech-savvy California” courts actually side with patent owners more often than in East Texas.  As the IAM article cited above explains, patent owners win at trial 71% of the time in Northern California, but only 66% of the time in East Texas.  In other words, while the judges in Northern California more frequently clear their dockets, denying patent owners a jury trial, the actual juries in Northern California end up siding with patent owners more frequently than those “rural” Texans!




One thought on “Pathetic Patent Piece At PaidContent

  1. I think your criticism of the “draw” situation overlooks something. Mediocre economic activity could actually benefit Yahoo in the instance of a negotiated cross license. If both sides are seen to have relatively equal patent portfolios, then both will pay to the other a relatively equal percentage of revenue, sales, etc. at issue. That percentage would result in a significant net gain for Yahoo. Moreover, I believe I have read that Yahoo actually probably has the stronger portfolio. If that’s the case, they ought to be able to obtain a higher percentage royalty in the settlement, assuming competent negotiators on both sides.

    Posted by John K. | March 15, 2012, 10:18 am

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