Saturday, June 23, 2018

Judge Orrick upholds Samsung's anti-enforcement injunction against Huawei

The fact that Samsung und Huawei are the world's two leading Android device makers always lent some significance to their patent infringement dispute, but it wasn't really too interesting to watch until the motion process that culminated in Samsung's antisuit injunction, preventing Huawei from enforcing a couple of Chinese patent injunctions for the time being.

Huawei has since been trying to get rid of that decision, which prevents it from getting huge leverage in China in the shortest term. It asked Judge William H. Orrick of the United States District Court for the Northern District of California to revisit his decision, and it filed a Ninth Circuit appeal with the Federal Circuit. The latter then told Huawei: you can't keep two courts busy in parallel with the same matter, so please wait for your California-based judge, then we'll see.

A few days ago, Judge Orrick denied Huawei's motion for reconsideration (this post continues below the document):

18-06-19 Huawei v. Samsung - Denial of Motion to Alter Judgment by Florian Mueller on Scribd

While there's nothing unusual about a judge standing by his decision, this order is quite important in one respect: Huawei argued that Judge Orrick should have applied, in addition to the Gallo antisuit injunction factors, the Supreme Court's traditional Winter preliminary injunction factors. Judge Orrick still disagrees that Ninth Circuit law requires both, but--and that is a setback for Huawei--he explained in his order that "[the other Winter] factors would not alter [Judge Orrick's] conclusion." Judge Orrick elaborates on that part in his footnote 3:

"The analysis of these factors largely tracks that of the district court in Microsoft Corp. v. Motorola, Inc., [...](Microsoft I). Samsung faces irreparable harm in closing its manufacturing plant and ceasing the sale of infringing devices in China. See id. at 1102 ('Microsoft has provided this court with convincing evidence that it will lose market share, which will be difficult to regain, and suffer harm to its business reputation.'). The balance of equities tips in Samsung's favor because it would be placed in an untenable bargaining position, which would have lasting effects, whereas Huawei is only being enjoined for approximately six months. See id. at 1103 ('It would seem clear that a negotiation where one party (Microsoft) must either come to an agreement or cease its sales throughout the country of Germany fundamentally places that party at a disadvantage.'); id. ('By issuance of an anti-suit injunction, this court is in no way stating that Motorola will not at some later date receive injunctive relief, but only that it must wait until this court has had the opportunity to adjudicate that issue.'). And the public interest lies in this court adjudicating the propriety of injunctive relief for the parties' standard essential patents (SEPs). See id. ('The court finds that the public interest is served by issuing an anti-suit injunction and permitting Microsoft to continue its business operations without interruption until this court has had the opportunity to adjudicate the injunctive relief issue before it.'); see also Order at 15–17 (analyzing the Unte[r]weser factor of whether foreign litigation would frustrate a policy of this forum). The overlap between the Unte[r]weser factors and the Winter factors further bolsters the conclusion that the full Winter analysis is unnecessary when applying the Gallo test. See Gallo, 446 F.3d at 991 ('Gallo need only demonstrate that the factors specific to an anti-suit injunction weigh in favor of granting the injunction.')."

This ups the ante for Huawei before the Federal Circuit.

In other Huawei v. Samsung news, Samsung brought a motion for judgment on the pleadings about two weeks ago, seeking the dismissal of Huawei's FRAND rate-setting claim. Huawei has meanwhile opposed it, arguing that Samsung's consent isn't necessary since Samsung (just like Huawei) agreed to reciprocity in its FRAND declaration to ETSI (the relevant standard-setting organization), so Huawei is entitled to a license to Samsung's patents, but the terms of such a license must also involve a cross-license. I'll talk about that motion process in more detail later, but for now it's worth noting that, according to Huawei, "[the] parties have discussed the possibility of stipulating to the dismissal of Huawei's rate-setting claim without prejudice." Huawei promises to "promptly inform the Court" should such agreement still be reached. So maybe Judge Orrick won't even have to rule on that motion.

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Sunday, June 17, 2018

Judge stays two Huawei patent infringement claims against Samsung due to recent Supreme Court SAS decision

In its litigation with Samsung, Huawei has been a bit hapless so far. At least it's fair to say that the chronology of events hasn't really featured the Chinese tech giant:

  • By filing its case against Samsung in the Northern District of California technically on the calendar day (though it may have been more or less the same hour) prior to its Chinese patent infringement filings, Samsung's successful anti-enforcement injunction was brought in an earlier-filed (or at least simultaneously-filed) U.S. case.

  • Huawei then tried two things, again near-simultaneously, to overturn the antisuit injunction: a motion to alter the decision as well as an appeal to the Federal Circuit. The Federal Circuit didn't like this and had a simple message to Huawei: let Judge Orrick in San Francisco rule on your motion, and if you don't like the outcome, you can ask us for help, but not before.

  • And now the Supreme Court's recent decision in SAS v. Iancu, according to which the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO) must reexamine all challenged claims if a petitioner shows a reasonable likelihood of invalidatio for just one challenged claim, enabled Samsung to obtain a stay of two patent infringement claims brought by Huawei (this post continues below the document):

18-06-13 Order Granting Stay of Huawei Infringement Claims by Florian Mueller on Scribd

Samsung challenged multiple claims of two of Huawei's patents-in-suit. The USPTO decided to institute reexamination with respect to some of them, but it had to issue a supplemental order in the wake of SAS and look--nolens volens--at all challenged claims, though it encouraged Samsung to drop its challenge to the ones with respect to which the USPTO was originally unconvinced.

Huawei had actually focused, for the purposes of infringement litigation, on the claims the USPTO viewed more favorably, but the SAS decision changed everything.

As I wrote in my commentary on SAS, this isn't good for the efficiency of the PTAB inter-partes review (IPR) process, but the conservative Supreme Court majority was right that the way the law was worded didn't leave room for any other decision, short of legislating from the bench, which most justices declined to engage in.

Judge William H. Orrick of the United States District Court for the Northern District of California still didn't necessarily have to stay the related infringement claims. He had previously stayed a Samsung infringement claim at Huawei's request, but in that case, the USPTO instituted reexamination of the relevant patent claim because it held that Huawei had shown a reasonable likelihood of invalidation. Not so here.

Nevertheless, Samsung obtained its stay. All things (including the state of proceeding) considered, Judge Orrick felt that it made sense, and that the focus of this case was on FRAND licensing issues. Also, either party will have to narrow its case to five patent claims for the trial, and Huawei still has plenty of claims in play.

It's an interesting example of the procedural impact that the SAS ruling can have on patent infringement lawsuits.

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Saturday, June 9, 2018

USPTO holds key claims of core Twitter patent invalid: Indian inventor was first

Yesterday the United States Patent and Trademark Office had bad news for a particularly broad member of Twitter's key patent family, U.S. Patent No. 9,088,532 on a "device[-]independent message disribution platform." As I reported in March, the '532 patent is being reexamined based on a patent application by independent Indian inventor Yogesh Rathod as well as a couple of other prior art references. The reexamination requested related to claims 1-3, 8, 9, 13-15, 17, 20, and 21, all of which are being reexamined. In a (first) Office communication since opening the reexamination proceedings, the USPTO has held all of the reexamined claims invalid, challenging Twitter to persuade the examiner that its patent claims should be upheld. Here's the Office communication (this post continues below the document):

18-06-08 USPTO Rejection of Twitter Core Patent Claims by Florian Mueller on Scribd

All of the claims under reexamination have been found to have been anticipated by Yogesh Rathod's international patent application. In addition, all claims but one (claim 17) are deemed non-novel in light of U.S. Patent Application with publication no. US 2011/0289574 by three Northern Californian inventors (Mark Hull, Randall Farmer, and Ellen Perelman).

Note that rejection rates are very high at this stage of proceeding. Some examiners simply reject all challenged claims in their first action in order to challenge the patentee to make the strongest case possible in defense of the patent in question. Some patent claims are rejected multiple times before finally being confirmed by the USPTO.

That said, things are looking bleak for Twitter's patent claims. To salvage those claims, Twitter would have to

  • overcome the non-novelty holding with respect to two different patent applications (Yogesh Rathod's application and the application by Mark Hull et al.); and then

  • additionally overcome any obviousness argument (the first Office action already notes that, even if one disagreed on non-novelty, a person of ordinary skill in the art could combine either one of those references with a third patent application, publication number US 2007/0105536, by George Tingo.

As for the commercial implications, let me refer you to my March post.

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Tuesday, June 5, 2018

No quick win for Qualcomm over Apple in Germany: stipulated stay

Four months back, Qualcomm's lead counsel in the German Qualcomm v. Apple cases, Quinn Emanuel's Dr. Marcus Grosch, hoped to obtain a Germany-wide patent injunction against Apple this summer. The related case (one of various patent infringement claims Qualcomm has brought against Apple in Germany) went to trial this afternoon, and it's unlikely that anything, if ever, will happen in that particular matter before the summer of 2019.

The patent-in-suit, EP2954737 on a "power tracker for multiple transmit signals sent simultaneously," is under massive pressure because of Apple and Intel's opposition to its recent grant. Of the four prior art references cited, Alcatel Lucent's European patent application EP2442440A1 poses the greatest--though not the only--threat to Qualcomm's patent.

At today's trial it turned out that Qualcomm itself recognized that this patent, granted only about a year ago, is not the most defensible one. After reviewing Apple and Intel's petition for revocation, Qualcomm decided to narrow the claim scope by filing an application for a divisional patent that would (if granted, which is a huge IF) be limited to wireless devices. However, Presiding Judge Dr. Holger Kircher of the Mannheim Regional Court indicated in his initial summary of the court's preliminary position that he and his two colleagues were inclined to stay the case pending the EPO's decision on Apple and Intel's opposition--and the divisional patent that Qualcomm was seeking to obtain wouldn't have affected the court's validity assessment where we stand, given that a new filing, which may or may not result in a patent grant, just doesn't enjoy the strong presumption of validity that applies to actually-issued patents.

While the court was inclined to agree with Qualcomm's infringement theory and unconvinced of Apple's defenses (including its claim that Intel, its supplier, had prior use rights), validity was a lost cause for Qualcomm based on the current state of affairs. Therefore, Qualcomm's counsel didn't really see an alternative to a stipulated stay. He'd have preferred to limit the stay to the first decision by an EPO examiner on the new divisional patent application, but Judge Dr. Kircher reminded him of his procedural options: should there be other relevant developments, Qualcomm could bring a motion and the court would take another look at whether the stay might be lifted.

The parties finally stipulated to a stay. The opposition proceeding will likely result in a decision in mid-2019, given--as Samson & Partner's Dr. Wolfgang Lippich (a patent attorney on Apple's defense team) explained--the EPO's internal timelines for opposition proceedings involving patents that are being asserted in litigation.

On the infringement side, the court applied a broad claim construction, particularly with respect to the words "based on". Those words are followed by "a plurality of [components]," but despite Hoyng ROKH Monegier's Klaus Haft (lead counsel for Apple) explaining how the claim and certain paragraphs of the specification require multiple measurements to take place, the court remained convinced that this claim language dictated a rather broad interpretation (which, of course, has implications for validity as well, though validity will have to be resolved in a different forum, the European Patent Office).

By contrast, the court tends to interpret the statute governing prior use rights in Germany (§ 12 of the German Patent Act) rather narrowly. Reference was made today to an internal Intel presentation, but Judge Dr. Kircher's preliminary opinion was that Intel, while it had the relevant technical idea, had not actually implemented it to a sufficient extent by the priority date of Qualcomm's patent. He felt it was more like some people at Intel--and this must actually be about the mobile chipset division Intel acquired from Infineon--had said: "Wouldn't it be a nice idea to do this?" Unsurpisingly, Mr. Haft disagreed and pointed to the multi-year periods it takes from a firm technical decision to the actual availability of a chipset.

Apple had also raised antitrust defenses. However, Judge Dr. Kircher said that only the enforcement of an injunction would have antitrust implications, while Qualcomm could seek damages. Therefore, Qualcomm's allegedly anticompetitive behavior would not justify a stay of the entire case.

Since Apple convinced the court--and, by extension, even Qualcomm--that a stay was warranted, Apple's other defenses (such as its non-infringement theories, prior use, and antitrust defenses) are moot for the time being. Qualcomm now has to deliver a valid patent. Unless and until it does so (which will take time), this case here won't be resumed. Meanwhie, other Qualcomm v. Apple patent infringement assertions will go to trial. For the second half of the year, the Mannheim court has scheduled two Qualcomm v. Apple trials, and the Munich I Regional Court will hold three (there have already been first hearings in those cases).

Qualcomm's quest for leverage has been dealt a significant setback, but will continue without a doubt. But most likely today's stay wasn't the last one in that dispute.

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Friday, June 1, 2018

Apple, Samsung trying to put patent dispute behind them through mediation

After last week's Apple v. Samsung damages verdict (largely over design patents) in the Northern District of California, counsel for both parties told Judge Koh that they were both willing to put an end to their long-running dispute, which started with a complaint filed by Apple in April 2011 and quickly escalated into a global dispute with filings in ten countries.

Late on Thursday, Samsung filed an administrative motion asking Judge Koh to keep a joint notice regarding alternative dispute resolution out of the public eye (this post continues below the document):

18-05-31 Samsung Motion to File Under Seal ADR Notice by Florian Mueller on Scribd

All that one can learn from the public filing is that there is a "forthcoming mediation." It's unclear whether a judge or a private mediator will try to work out a settlement.

What's furthermore unclear (and no one may know at this stage) is whether the parties will try to resolve both California cases (the one that went to re-retrial in May, and a second one that turned into a roller coaster) or just the first one.

High-profile smartphone disputes between handset and platform makers (unlike litigation brought by non-practicing entities or increasingly-"trollified" former phone makers such as Nokia and Ericsson) haven't recently resulted in license agreements. Instead, parties just dropped pending cases but reserved all options for bringing new complaints anytime, with some license agreements--or covenants not to sue--of extremely limited scope possibly having been part of some of those confidential deals. I would expect the same if Apple and Samsung finally called a truce. Apple obviously isn't going to extend a design patent license to Samsung; the result might involve a license (or a convenant not to sue with the practical effect of a license) to a few software patents, though some have expired and others have been worked around. But by and large the question is just whether Apple will withdraw any pending claims. And, even if this works out now at long last, no one knows when hostilities might flare up again.

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Friday, May 25, 2018

Retrial jury awards Apple $533 million in design patent and $5 million in utility patent damages from Samsung

A cartoon showing Homer Simpson using an iPhone may indeed have had an impact on a high-profile smartphone patent dispute as the screen design patent it relates to apparently accounts for approximately half a billion dollars in design patent damages. After three days and a half of deliberation, the re-retrial jury in the first Apple v. Samsung case in the Northern District of California awarded Apple a total of approximately $538.6 million in damages from Samsung (related to some old phones--mostly the first two generations of the Galaxy S), $533.3 million of which relate to design patents and $5.3 million to utility (i.e., technical) patents. Here's the verdict form (this post continues below the document):

18-05-24 Apple v. Samsung Jury Verdict by Florian Mueller on Scribd

The amount is similar to what Apple won in previous trials. The August 2012 billion-dollar verdict included trade dress (later thrown out by the Federal Circuit) and a third utility patent (the '915 pinch-to-zoom API patent, which has been held invalid in the meantime, though theoretically it could still be revived). A retrial over some products was materially consistent with the original verdict. And so is, after years of appellate and post-appellate proceedings and despite the extremely important clarification of the law that Samsung had obtained from the Supreme Court, the latest verdict.

The jury had asked two questions, and both questions showed they were really struggling with determining the relevant article of manufacture (AoM). If the jury had determined that the design patents in question covered only certain components (casing and screen), the amount would have been in the tens--not hundreds--of millions of dollars, but given that Apple was seeking more than $1 billion, the jury would probably have been inclined (in that hypothetical scenario) to award substantially more than the amount Samsung described as reasonable (less than $30 million). At the same time, given that juries often come down somewhere in the middle, a billion-dollar award was a possibility, but far less probable than the combination of agreeing with Apple on the AoM but with Samsung on most or all of its deductions.

One juror explained to Law360's Dorothy Atkins how the jury arrived at the conclusion that the design patent damages award had to be based on the entire smartphone, not on components (this post continues below the two tweets):

Throughout the years, including this month, I've repeatedly expressed concern over software patents styled as screen design patents. The amount wasn't shocking because, again, it was consistent with previous verdicts, even though I, as a juror, would have arrived at a different AoM determination and, therefore, a lower amount. In my opinion, the law should be changed to allow apportionment because an AoM-based figure is quite often going to be the wrong one, especially in a case like this where there was a huge discrepancy between the economics of the two approaches to the AoM. But with the current statute, the question was just whether Apple would be undercompensated or hugely overcompensated, and the latter is what that jury verdict comes down to. But the shocking and somewhat unexpected part is the fact that a screen design patent was ultimately considered decisive is what I'm concerned about. That will encourage patent trolls to obtain and assert more screen design patents.

According to media reports, Apple reiterated how much value it attaches to design, and Samsung is now going to consider its options. Those options are post-trial motions and, possibly, another appeal.

While the focus in recent years was on the AoM question and proper interpretation of 35 U.S.C. § 289, I have already expressed on prior occasions that I'd have liked to see more of a focus on the question of whether screen layouts should be patentable.

I read on Twitter that Apple and Samsung may actually settle the case now, which would be good. Better late (more than seven years after the filing of the initial complaint) than never. Let's see what happens now. And regardless of what happens here, it's high time that more people woke up and understood the threat that screen layout design patents--which can cover subject matter that wouldn't pass the patentability criteria (including, but not limited to, patent-eligibility) for utility patents--pose. Apple v. Samsung is an extraordinary case in various ways. My concern is about a huge number of other cases in which such patents might be asserted.

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Saturday, May 19, 2018

Will Homer Simpson sway the Apple v. Samsung design patent damages retrial jury?

It would have been preferable to give the Apple v. Samsung design patent damages re-retrial jury in San Jose (Northern District of California) a chance to render a verdict before the weekend. In that case, jurors might have put an end to this disruption of their lives. But the way things worked out, they're now going to think about what position to take on Monday morning when official deliberations begin. In the meantime, they're not allowed to talk to anyone about the case or to take a look at any media reports (whether some jurors do so anyway is another question, but they're not supposed to).

As in the previous trials in this case, and as I mentioned a few days ago, Apple's lawyers portrayed Samsung as an intentional infringer, an unrepentant copyist, with Samsung being barred from presenting some evidence that could have shed a different kind of light on that question.

The holdings that (i) Samsung infringed those three design patents (a long time ago) and (ii) that those patents are valid are "law of the case" and the re-retrial jury must presume both to be the case. It is worth noting, however, that courts in other jurisdictions looked at international equivalents of those intellectual property rights (and at devices from the same generation of Android-based Samsung products) and reached rather different conclusions. But things are the way they are for the purposes of this U.S. case, so the focus is just on damages, and the single most important question in this regard is what "article of manufacture" a disgorgement of Samsung's profits should be based on: the entire device (which was considered a foregone conclusion in previous trials, but the Supreme Court and, previously, the United States Department of Justice disagreed with Judge Koh, the United States Court of Appeals for the Federal Circuit, and Judge Lucy H. Koh) or one or more components?

In that context, the most surprising tweet from the courtroom (thanks to Mike Swift, Joshua Sisco and Stephen Shankland for some excellent coverage!) indicated that Apple's lead counsel, Bill Lee, could live with a $370 million verdict:

Given that Apple's own damages demand is almost three times as high, the above observation suggests more than a crack in the shell. As I followed the trial on Twitter, I felt that Samsung's lawyers and experts drove some very important points home, though Apple also made some good points, considering that Apple's position is a very extreme one in this case. Is Apple now happy with getting a little bit less for those design patents than before? Or is it simply waving a white flag because it's afraid the jury might arrive at a much lower figure? W won't ever know.

If stakeholders could file amicus curiae briefs with this jury, Apple would really be in trouble and even the $370 million "compromise" proposal would be ambitious. Hardly anyone wanted to support Apple's "entire device" position in filings with the Supreme Court. Most of those who supported Apple said they just wanted to ensure that a disgorgement of infringer's profits under 35 U.S.C. § 289 would continue to be available in other cases (such as with respect to running shoes).

The world outside that San Jose courtroom overwhelmingly prefers a component-based damages determination. This InsideSources article on the problems that an excessive damages amount in the Apple v. Samsung case could cause tech and non-tech companies alike is a good example. But jurors won't have the benefit of such information on the wider ramifications of what they're required to decide.

The tech sector at large (with a few exceptions merely proving the rule) is also concerned about patents on screen designs. The D'305 patent covers a screen layout. That one is a software patent styled as a design patent because it wouldn't meet the patentability (including, but not limited to, patent-eligibility) standards for utility (i.e., technical) patents. While I can imagine Samsung saw the most immediate threat in this case in the original "it must be a complete device" standard for the determination of the relevant article of manufacture, it was very unfortunate that Samsung didn't additionally ask the Supreme Court to hold such subject matter ineligible for design patents. Now Samsung's lawyers say that a screen is the proper article of manufacture for a software user interface patent. That would mitigate the damage to Samsung, but it doesn't alleviate my concern, as an app developer, over patents like D'305 in the slightest.

Apple has some of the best lawyers in the world, and they dug up something that might have impressed the jury (this post continues below the YouTube video):

That video shows Homer Simpson with an iPhone, and what makes the iPhone particularly identifiable is the app menu matrix everyone knows. Actually, most non-iPhone devices have such a matrix as well. They still do, despite Apple's lawsuits against Samsung, Motorola, and HTC (the three leading Android device makers earlier this decade, i.e., when Apple's patent assertions against Google's ecosystem began). In other words, this is iconic and hard to protect at the same time. And the reason it's hard to protect is because it's just a very logical screen layout.

Should Apple get many hundreds of millions of dollars, or theoretically even a billion dollars, then Homer Simpson--or, in the real world, Homer's creator, Matt Groening--deserves a commission.

One of the questions that jurors will be asking themselves this weekend is likely whether (again, basing everything on the previous findings of infringement and validity, irrespectively of what courts in other countries concluded) Samsung should face the maximum penalty, a slap on the wrist, or something in between.

For more than one reason, there's no way I could ever have ended up on that jury. If--in a hypothetical alternative reality--I had to make a decision, I wouldn't agree with either party, but I'd sooner award Apple two or three times of what Samsung considers reasonable than half or a third of Apple's demand. The primary reason for this would be that such components are manufactured separately and can be bought as replacement parts--and there are hundreds of thousands of other potentially-patentable elements in a smartphone, not just three design patents.

That's why this is not a question of whether one respects Apple's designs, Apple's investment in design and innovation, or Apple's right to defend the uniqueness of its products. Over the course of almost eight years, this blog has repeatedly stated that Apple couldn't be different and think different if everyone else was allowed to "copy." Even the fact that Apple founder Steve Jobs once said that "good artists copy, great artists steal" and that Apple had "shamelessly" stolen other people's creations doesn't mean too much in this context.

The problem is just that, no matter whether a screen layout covered by a design patent appeared in a Simpsons episode, the kinds of products at issue in this Northern California case contain many technical components--hundreds of thousands of at least potentially patentable concepts--and so many visual designs (for instance, many other screen layouts than just the app matrix) that a damages award over a very few patents just shouldn't be excessive. Otherwise everything else in such a phone would be implicitly devalued, and that would neither be fair not would it be in the interest of consumers who expect an electronic device not only to look good but also to be fully functional.

When it's not about design patents, Apple itself is a proponent of the "smallest salable patent-practicing unit" (SSPPU) rule (damages or royalties should be determined based on the smallest component that is deemed to infringe or practice a patent) as opposed to complete products. I've supported Apple's related thinking in disputes with Google/Motorola, Ericsson, Qualcomm, and... Samsung. After all those years, I'm not going to be inconsistent. That's why I hope the jury will do precisely what Apple advocates when the shoe is on the other foot, and focus on the smallest salable patent-practicing unit(s).

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