Friday, August 3, 2018

Huawei, Qualcomm, and patent holders' three preferred ways to gain anticompetitive leverage

Over the last year and half, it turned out that Huawei's patent enforcement campaign against Samsung and Qualcomm's antitrust issues as well as the parallel patent infringement cases raise bigger and more interesting issues than any other smartphone patent disputes going on as we speak.

Qualcomm is just being Qualcomm: it's always leveraged its wireless standard-essential patents more aggressively than the rest of the industry (maybe even more than the rest combined). But now it has competition watchdogs from around the globe going after it; it's embroiled in cross-jurisdictional litigation with Apple (large parts of which are effectively an Intel-Qualcomm dispute in the first place, with Apple purportedly having decided to use Intel's instead of Qualcomm's baseband chips in new iPhones); and someone else (analysts believe Huawei) stopped paying royalties, too.

Huawei, however, has been undergoing a steady transformation for a while. The first time it took center stage as a patent enforcer was in 2012 when it went after fellow Chinese device maker ZTE--in Germany, where Huawei obtained an injunction it never elected to enforce and took the question of injunctions over standard-essential patents (SEPs) all the way up to the Court of Justice of the EU. But for about two years it's now been trying to coerce Samsung into a license agreement on terms that the Korean electronics giant considers utterly unreasonable according to court filings.

Both Huawei and Qualcomm have anticompetitive intentions. Huawei and Samsung are the two leading Android device makers, so any transfer of supra-FRAND royalties from one to the other would distort competition in the device market centered around Google's mobile operating system. Qualcomm is clinging to its business model where patents are leveraged to drive chip sales and chip sales are leveraged to the benefit of the patent licensing business. As I noted above, when Qualcomm enforces patents against Apple, it quite often looks almost like Apple is in the crosshairs as a proxy for Intel.

As I'm keeping an eye on Huawei and Qualcomm's patent-leveraging strategies, I'd like to highlight the three ways in which some aggressive patent holders are seeking undue, anticompetitive leverage in our times (in no particular order):

1. Chinese patent injunctions

In the original "anti-Android" smartphone patent wars, China didn't play a role yet. Even Apple and Samsung weren't suing each other there (just in about ten other countries before the dispute lost steam and, ultimately, settled out).

By now, China is a patent litigation hotbed. In October (2017) it became known that Qualcomm brought patent infringement claims against Apple in China, where the iPhone is manufactured and where Apple enjoys strong sales). In its home court, Huawei won a couple of patent injunctions against Samsung, but due to a U.S. antisuit (anti-enforcement in this case) injunction, it doesn't get to enforce them. Huawei is trying to overcome that roadblock through a Ninth Circuit appeal filed with the Federal Circuit, but the latter declined to shorten the time for Samsung's brief, which will be due on the 27th of this month.

2. United States International Trade Commission (ITC)

If Huawei had known in 2016 (when it started suing Samsung) that Presidents Clinton and Obama weren't going to get the next best thing to a joint third term, it might have given an ITC complaint against Samsung a try. It didn't, but Qualcomm has already brought two such complaints against Apple. In one of them, it may prevail on one patent, but its strategy of targeting iPhones incorporating Intel baseband chips raises serious antitrust and public-interest issues.

This Qualcomm scheme, like Huawei's Chinese scheme, may be thwarted by an antisuit (anti-enforcement, to be precise) injunction in the Northern District of California. An antisuit injunction motion was brought on behalf of consumers in an antitrust class action against Qualcomm. Judge Lucy Koh will hear the motion on the 30th of this month. She denied the parties' motion for a rescheduling, and in the same order indicated that she won't necessarily rule on the motion at the end of the hearing but may take it under advisement.

3. German patent injunctions

Germany is still a top three patent infringement jurisdiction and the undisputed #1 in Europe.

Whatever the reason may be, Huawei is not--or not yet--known to be going after Samsung in Germany, but Qualcomm is actively seeking to gain leverage in Mannheim and Munich. There are currently six-week school vacations in the relevant states, Baden-Wurttemberg and Bavaria, but in the middle of September, just days before the late-September start of the 2018 Oktoberfest, Qualcomm and Apple will square off in Mannheim (September 18) and Munich (two days later). And there'll be more to come, including but not limited to another Mannheim trial in early October.

Not only, but particularly in Germany, the current hiatus is the quiet before a scheduled set of storms.

Share with other professionals via LinkedIn:


Sunday, July 22, 2018

Qualcomm's own experts concede Intel's baseband chipsets are good for innovation and pricing

At this stage, the Northern District of California is a standard-essential patent (SEP) litigation hotbed. The previous post was about Huawei's shrinking case against Samsung, but there are some extremely interesting developments in a consumer class lawsuit against Qualcomm, related to FTC v. Qualcomm. Late last month, the consumer plaintiffs brought a motion to bar Qualcomm from enforcing a potential U.S. import ban against certain (in practical terms, Intel-powered) iPhones. Qualcomm filed its opposition brief on July 12 (this post continues below the document):

18-07-12 Qualcomm's Opposition to Consumers' PI Motion by Florian Mueller on Scribd

Qualcomm's legal arguments against the motion involve timing (the same consumer plaintiffs had filed a public interest statement with the ITC a long time ago, thus they knew about the ITC case, but waited until recently to thwart Qualcomm's pursuit of an exclusion order, i.e., U.S. import ban), standing (whether those consumers are harmed or not), the preliminary injunction factors, whether an ITC case involving non-SEPs has a bearing on an antitrust case involving SEPs, the ability of a district court (under the All Writs Act) to prevent an ITC plaintiff from enforcing an exclusion order, and the Noerr-Pennington doctrine, according to which litigation does not constitute an antitrust violation in its own right. In similar contexts in recent years, U.S. courts have consistently not deemed the enforcement of injunctions to be covered by Noerr-Pennington. The difference between SEPs and non-SEPs is also at issue (but hasn't been addressed yet by a court of law) in Qualcomm's German cases against Apple, but the heart of the issue is not a FRAND licensing commitment and the related rights of third-party beneficiaries: it's all about forcing competitors like Intel out of a market.

Qualcomm's timing-related arguments appear potentially more interesting to me than the other points it makes, but Qualcomm does contradict itself in that context. Qualcomm says:

"Here, any possible injury to Plaintiffs depends upon an attenuated chain of events transpiring. The exclusion order must issue, the presidential review period must pass, the investigation must result in actual exclusion of the accused iPhones, and the exclusion order must leave Apple with no reasonable opportunity to 'design around' the patents at issue. Such an attenuated 'chain of inferences' cannot confer standing."

Apart from the fact that everything on that list is precisely what Qualcomm is pursuing (it naturally wants to prevail, it would seek to dissuade the Trump Administration from a veto, and it seeks leverage from patents that it hopes cannot be designed around, at least not without incurring a prohibitive cost), Qualcomm itself blames those consumers in the timing context for not having brought their motion for a preliminary antisuit injunction a year ago--but consumers argue that there was a possibility at the time of Qualcomm's case not making any headway, and only now that the ITC staff has lately recommended (at the ITC hearing) to hold Apple in violation of one Qualcomm patent, there was a clear and present danger of anticompetitive effects and, therefore, consumers believe their motion was warranted.

From an industry point of view, the consumers' reply brief contains some very interesting quotes from the aforementioned ITC hearing, showing that even Qualcomm's own expert witnesses had no way of denying that Intel's efforts to compete with Qualcomm in the mobile baseband chipset market are good for innovation and choice (this post continues below the document):

18-07-19 Consumers' Reply in Support of PI Motion by Florian Mueller on Scribd

The most interesting passages of the reply brief are about the question of whether the fact that Intel is at least trying hard to compete with Qualcomm in the mobile baseband chipset market benefits consumers. At the recent ITC hearing, ITC staff lawyer Lisa Murray said:

"If Intel is taken out of the 5G race, this would slow the pace of U.S. innovation."

That assessment, which is actually just common sense, will serve as a silver bullet in the further proceedings.

But even Qualcomm's own expert witnesses in the ITC proceedings felt forced to concede that Intel's competing baseband chipsets make an important difference:

  • One Qualcomm expert conceded that the Intel-based iPhone "is the only top-tier phone that currently uses a competing company's chip."

  • A Qualcomm expert also agreed that the "two premium chipset providers based right here in the U.S. are Qualcomm and Intel" and that "every top-echelon smartphone that could potentially serve as a consumer substitute for iPhones blocked from the U.S. uses Qualcomm’s modem chip, with the exception of some Samsung phones that use chips built in-house."

  • And here comes the most impressive passage from the expert witness testimony:

    "Q. In fact, you agree that having Intel as a competitor in that market is good for competition; correct? A. I do agree. Q. Having Intel as a competitor in that premium chipset market is good for quality of chipsets; correct? A. Generally competition is good, yeah. Q. And competition from Intel in particular is good; correct? A. Yes. Q. It's good for pricing; correct? A. Yes. Q. It's good for innovation; correct? A. Yes. Q. Good for innovation as we move into 5G; right? A. Yes. Q. Which is an absolutely critical market for the country as a whole; correct? A. Certainly for Qualcomm, yeah. We believe it is, yeah. Q. And it's good to have Qualcomm in that market; right? A. Yeah, that's right. Q. And it's good to have Intel there too? A. Yes. Q. It's good for the public? A. I agree. Q. Good for the public interest? A. I agree."

    "Good for the public interest" to have not only Qualcomm but also Intel in that market--quite an important concession.

  • One last quote:

    "Two companies competing in this premium baseband chipset market in the U.S. is better than one monopolist for the public interest; correct? A. Well, as a general proposition, yes."

Unlike Samsung, Intel supplies other companies with its baseband chipsets and would like to sell to as many customers as possible, with Apple being its key reference customer. The consumers' reply brief notes that "only the AT&T Samsung Galaxy S6 devices contain an Exynos System-on-a-Chip" (Exynos is Samsung's mobile chipset brand), while "[t]he Verizon and Sprint Samsung devices contain Qualcomm chips."

In light of all of that, it's not hard to see why Qualcomm would like to force Intel out of the market as soon as possible. But what follows from the above admissions by Qualcomm's own expert witnesses is that this would be bad for innovation and harm consumers in two respects (less innovation and higher prices).

Share with other professionals via LinkedIn:


"Huawei, I shrunk the case": scope of December patent trial against Samsung whittled down

This week in Huawei v. Samsung delivered two more setbacks for the Chinese Android device maker and increasingly aggressive patent enforcer (I don't want to call them a "patent bully" just yet, though it may be an appropriate label at a later stage).

First, the trial that Judge William H. Orrick will preside over in the Northern District of California in December is going to be far narrower, and potentially less impactful, than Huawei had hoped. As I had noted toward the end of this recent post, Huawei previously informed of the court of its willingness to withdraw its request for a declaratory judgment on worldwide FRAND licensing terms to its standard-essential patents, subject to an agreement with Samsung on the specifics. That agreement has indeed materialized, suggesting that Huawei saw a high risk of Judge Orrick throwing out the claim (whose dismissal Samsung was already formally seeking) at any rate. Instead of having to make a decision, Judge Orrick merely had to grant the parties' stipulation of a dismissal that is formally without prejudice, allowing Huawei to try again, but only in a different case and not for at least nine months (this post continues below the document):

18-07-18 Stipulated Dismissal of Huawei-Samsung FRAND Claim by Florian Mueller on Scribd

Just last month, Huawei's offensive case already got narrowed as Judge Orrick, in a matter involving the Supreme Court's recent SAS ruling, stayed two patent infringement claims. So all that's left for the December trial is a bunch of patent infringement claims and the question of a potential breach of a FRAND licensing commitment. Huawei portrays Samsung as an unwilling licensee, and Samsung argues that Huawei's demands are unreasonable and that there hasn't been enough progress of the give-and-take kind.

The second thing that didn't go too well for Huawei this week was its attempt to expedite its Ninth Circuit appeal before the Federal Circuit of the antisuit (more specifically, anti-injunction-enforcement) injunction Samsung obtained three months ago. Huawei was using two procedural attack vectors in parallel, seeking a reconsideration of Judge Orrick's decision in district court while pursuing the aforementioned appeal in Washington, D.C.--but the Federal Circuit told Huawei it should firstly await resolution of its motion in San Francisco. After Judge Orrick's decision to uphold the injunction, Huawei informed the Federal Circuit, which then resumed the proceedings, and Huawei, before even filing an opening brief that isn't publicly accessible yet, brought an emergency motion to expedite the appeal.

Samsung opposed this emergency motion, arguing that Huawei's procedural tactics had caused delay and pointing to the prejudicial effects of having to respond to a Huawei opening brief on a tight schedule, three months after the notice of appeal (meaning Huawei had plenty of time to prepare its argument) and while working hard on some motion practice in the district court case the appeal originated from. The Federal Circuit told Huawei to be patient and suggested that it could file its reply brief as soon as possible--ahead of the court's deadline--after Samsung has had the chance to react to the opening brief. The appeals court will then hold a hearing as soon as possible, but just like Judge Orrick, it doesn't accomodate all of Huawei's procedural preferences.

Share with other professionals via LinkedIn:


Wednesday, July 4, 2018

Shareholder class actions against Qualcomm over frustrated Broadcom merger may turn on secrecy of CFIUS proceedings

Before we get to the actual topic of this post, a quick follow-up to the previous one: the Deseret News reports that President Trump has interviewed Senator Mike Lee, so the possibility of a FRAND-friendly Supreme Court Justice is real (though other candidates have been interviewed as well).

Last week, an interesting class action complaint was brought against Qualcomm in the Northern District of California by a group of consumers, with the class being defined broadly enough to include any U.S. smartphone buyer. I've run a couple of online searches and found that there's a whole bunch of other class lawsuits pending against Qualcomm, and they're all about Broadcom's acquisition of Qualcomm, which couldn't materialize after a presidential veto.

Many complaints were filed by small firms, but I've also found some complaints that were filed by firms with a strong track recordin securities litigation. Here's a particularly well-crafted complaint by the Pomerantz firm, which a United States District Judge called "some of the best lawyers in the United States, if not in the world" and which recently achieved the largest securities class action settlement in a decade as Petrobras coughed up $3 billion (this post continues below the document):

18 06 26 Jadhav Complaint by Florian Mueller on Scribd

I've also uploaded another complaint filed in the Southern District of California and a March complaint filed with the Delaware Chancery Court to Scribd. The Delaware complaint argued that Qualcomm's directors made an end-run around Delaware corporate law by seeking a presidential veto against a vote on the composition of Qualcomm's board.

Qualcomm's directors and officers now have to defend themselves against accusations that they "defrauded" the market by not disclosing their company's secret request that the Committee on Foreign Investment in the United States (CFIUS) preclude Broadcom from acquiring Qualcomm (and, on the way to that destination, getting deal-friendly board members voted in). Failure to disclose material information of this kind can constitute securities fraud and give rise to insider-trading claims.

One doesn't have to be an expert in securities law to understand that Qualcomm's request for a presidential veto was very significant. However, the fact that something very significant wasn't disclosed isn't necessarily sufficient. As a patent litigation watcher I obviously find it inconsistent that a company would publish an infographic to announce and promote a patent infringement complaint, but would remain silent about its volunary request that the CFIUS initiate an investigation into Broadcom's unsolicited takeover bid. But that's just a personal opinion.

Qualcomm hasn't filed its answer to the complaints yet. It has merely sought an extension, especially since a number of parallel actions need to be consolidated.

The most interesting legal question will be whether Qualcomm's leadership--which was undoubtedly pursuing an agenda of entrenchment--had a stronger obligation to protect the confidentiality of its CFIUS request (in the interest of the United States) than to inform actual or prospective shareholders.

The website of the Department of the Treasury says the following:

"Confidentiality

In reviewing a transaction, CFIUS considers national security matters and commercially sensitive information provided by the parties. By law, information filed with CFIUS is subject to strong confidentiality requirements that prohibit disclosure to the public. Accordingly, CFIUS does not disclose whether parties to any transaction have filed notices with CFIUS, nor does CFIUS disclose the results of any review. When a transaction is referred to the President, however, the decision of the President is announced publicly."

None of that says that Qualcomm couldn't have told shareholders of the mere fact that it made a request for a CFIUS review (aiming to obtain, as Qualcomm did, a presidential veto). However, courts may still prioritize the national security interests of the United States over the obligation of publicly-traded companies to disclose certain material information.

In the further process, the parties will have to find apposite cases. Also, the United States' federal government might support Qualcomm on this one in case the Trump Administration feels that companies secretly raising national security concerns should not have to fear shareholder lawsuits.

Share with other professionals via LinkedIn:


Saturday, June 30, 2018

Tech industry should lobby President Trump to nominate Senator Mike Lee to succeed Justice Kennedy on the Supreme Court

While Justice Anthony Kennedy has decided to retire from the Supreme Court after 30 years, his concurrence in eBay v. MercExchange, which stressed the unreasonableness of injunctive relief over a minor feature of a multifunctional product, will be a lasting legacy for which the tech sector (apart from patent trolls and companies that used to make or are still making devices, but largely or entirely relying on patent licensing revenue) will be forever grateful.

With this voice of reason in connection with patent enforcement leaving the Supreme Court, and with someone like Assistant Attorney General Makan Delrahim mislabeling as "the United States' policy" an unFRANDly agenda hostile to innovators focused on making actual products, the product-making, truly innovative majority of America's technology industry should make an effort to ensure that Justice Kennedy's successor will have a very balanced approach to patent enforcement. Where the rumored candidates stand on patent policy is usually unknown: you'd only have a clue if they had previously served on the United States Court of Appeals for the Federal Circuit, or maybe if they had demonstrated a certain approach to patent cases at the trial stage (Judge Rodney Gilstrap--obviously not a candidate--is undoubtedly unbalanced). But that's rarely the case. For an example, no one really knew where Justice Gorsuch would stand, but he's a judge whom I would always trust that he'll go to extreme lengths to interpret the law correctly and reasonably (and to explain his reasoning in an intelligible way).

At this stage, there is a high-potential candidate we should rally behind: Senator Mike Lee (R-Utah).

He's on the President's shortlist of about two dozen potential nominees. Senator Ted Cruz (R-Tex.), himself often considered a potential Supreme Court nominee and probably one of the smartest jurists ever to hold elective office, vouches for his colleague's judicial conservatism. As does Mark Levin. Or the Hoover Institution's Adam White. And Senator Lee would gladly accept.

There are, however, two obstacles, apart from the fact that there are many other impressive people on the list of potential nominees. They aren't insurmountable, but they are significant. One is that Senator Mike Lee is not a sitting judge, unlike other recent nominees. The other issue is that he called on then-candidate Trump to withdraw before the general election when the "p***y-grabbing" recording came up. I must admit that even I, as a longstanding Trump supporter (even on this blog I voiced support for him in early 2016), was very concerned at the time that the recording would cost him too many female votes. Fortunately, he won anyway, and more and more people believe that he may go down in history as one of the most impactful presidents ever. But in that situation so close to the election, Senator Lee was skeptical, for understandable reasons.

I'm reasonably optimistic that President Trump will let bygones be bygones, and that he's not too much bound to this conventional thinking that only a sitting judge should be nominated. He's the first president never to have held political office or to have been a general.

Silicon Valley, and Microsoft and Amazon up north, and many other tech innovators across the United States, should support Senator Lee. The Supreme Court will continue to hear many patent cases in the coming years and beyond. Sooner or later, a FRAND case will reach the Supreme Court, given all that is going on with the controversy surrounding Qualcomm's business practices (most recently, an extremely interesting motion for an anti-enforcement injunction brought by consumers) or the patent dispute between the world's two leading Android device makers (Samsung v. Huawei), and numerous other issues and disputes. If Apple and then-Google's Motorola hadn't settled, even Judge Posner's historic FRAND decision could have gone all the way up to the top U.S. court.

There also is some potential for legal questions involving the United States International Trade Commission (USITC) and its sole remedy (equivalent to injunctive relief) reaching the Supreme Court in the not too distant future.

A hypothetical Justice Mike Lee would understand how to strike a reasonable balance between the interests of right holders and those of innovators who don't intend to infringe but simply implement industry standards or independently create products. He's knowledgeable on antitrust as well, and patent and antitrust matters overlap ever more often.

I've previously mentioned Senator Lee's advocacy of reasonableness in patent enforcement:

Please support him if you can.

Share with other professionals via LinkedIn:


Thursday, June 28, 2018

Consumers bring motion to bar Qualcomm from enforcing a potential U.S. import ban against certain iPhones

Qualcomm's efforts to obtain a U.S. import ban against iPhones without a Qualcomm chip--simply put, against iPhones using an Intel chip--are facing a new challenge: a group of consumers (whose class action against Qualcomm was merged with the FTC v. Qualcomm antitrust case in the Northern District of California last year) just brought a motion for an anti-enforcement injunction that would bar Qualcomm from the enforcement of a potential future ITC exclusion order (this post continues below the document):

18-06-28 Consumers' Motion for Anti-Enforcement Injunction Against Qualcomm by Florian Mueller on Scribd

Yesterday, Judge Lucy H. Koh had the pleasure to terminate the long-running Apple v. Samsung dispute by granting an order of dismissal based on a settlement. Some of the time she'd otherwise have spent on the adjudication of post-trial motions can now be dedicated to this extremely interesting and important motion for a preliminary anti-enforcement injunction.

There's a precedent in the Northern District of California. By that I don't even mean my favorite antisuit injunction process in recent months (Samsung's anti-enforcement injunction against a couple of Chinese standard-essential patent (SEP) injunctions obtained by Huawei. I mean something much older, and I blogged about it at the time and hailed it as a "landmark decision": about five years ago, Judge Ronald Whyte (whom Judge Koh succeeded when he became a senior judge), enjoined two WiFi (IEEE 802.11) SEP holders named LSI and Agere from enforcing a potential ITC exclusion order against RealTek Semiconductor.

In that 2013 case, it was "only" about patent holders seeking maximum leverage for the purpose of dictating supra-FRAND royalties (which Judge Whyte didn't allow them to do). In the present Qualcomm case, the situation is a whole lot worse for two reasons:

  • Qualcomm's conduct has already been held to be anticompetitive. So far, Judge Koh also appears to have been rather skeptical of the legality of some of Qualcomm's business practices.

  • Qualcomm isn't merely seeking leverage to impose high royalties. That's part of the plan, obviously, but what makes Qualcomm's two ITC complaints against Apple particularly problematic is that Qualcomm wants an import ban against iPhones that come with a baseband chip from Intel--the only company that presently poses a significant competitive threat to Qualcomm's cellular baseband chips.

    Qualcomm's position is that it doesn't want all iPhones banned since this would raise issues in the ITC's public interest analysis (impact of an import ban on the economy at large, and on society). But Qualcomm's anti-Intel focus hasn't solved the public-interest problem at all: it has merely traded one set of issues for another. It's hard to tell which one is worse. The court may very well find that the focus on Intel--i.e., the use of patents in order to defend a monopoly--is an unusually clear antitrust violation. Monopolies aren't necessarily illegal; but some monopolization tactics are.

The consumers' motion argues that Qualcomm must be enjoined from enforcing a potential ITC exclusion order because of the additional harm to consumers that it would result in (beyond what Qualcomm has already been doing anyway). The motion makes a number of good points, and I'll quote one such passage here:

"Other modem chip suppliers are unlikely to enter the market in Intel's place if Qualcomm can selectively target devices using a non-Qualcomm modem chip for exclusion. Both the potential modem chip vendor and its customers make significant (joint) investments when deciding to work together on a modem chip project, and thus both face substantial risks. For example, “Intel has invested billions of dollars to develop next generation advanced modems and technologies to improve the performance and functionality of modern smartphones and cellular communications [...]"

And here's an interesting footnote (no. 15):

"Given the delicate and high-stakes business decisions in play, the Court should not feel obligated to wait and see if the ITC actually issues the order Qualcomm has requested. The market is already very difficult to penetrate due to Qualcomm’s anti-competitive practices, and the mere uncertainty faced by Intel and Apple because of Qualcomm's ITC action itself compromises the possibility of free and open competition."

Federal judges--including, but not limited to, Judge Whyte--are well aware of how certain patent holders turn to the ITC in an attempt to make an end-run around the eBay v. MercExchange standard for patent injunctions. Normally, the federal courts don't pay much attention to what's going on at the ITC. Also, there was an InterDigital case in Delaware where the district court declined to fast-track a FRAND determination just because the defendants sought to pre-empt an ITC order. But RealTek was a case where a federal court determined it just had to thwart an anticompetitive plan by certain plaintiffs that involved the ITC.

There are two ITC investigations of Qualcomm complaints against Apple. In the first one, where only three of the six originally asserted patents are still in play, a hearing was held a couple of weeks ago. The ITC staff, which does not formally make decisions but whose input bears considerable weight with the ITC's Administrative Law Judges (and with the Commission itself), believes Apple's iPhones infringe one of the asserted patents. So there is a clear and reasonably present danger of a U.S. import ban. It's hard to predict what position the Commission (the final decision-makers at the ITC) will take on the competition-related public-interest concerns here.

Meanwhile, Qualcomm will oppose the motion, and most likely there will also be some amicus curiae briefs (just like last year--in that case, because of a Qualcomm motion to dismiss the FTC's case). For now, it's intriguing enough that consumers, in their role as class plaintiffs, have taken this initiative. But these consumers deserve broadbased support from industry!

Share with other professionals via LinkedIn:


Wednesday, June 27, 2018

After more than 7 years of suing, Apple and Samsung finally call a truce

Apple v. Samsung, the longest-running patent dispute that this blog has consistently covered from Day One to Settlement Day, has come to an end--one day and one month after one of multiple jury verdicts. Within about eight minutes (!) of Apple and Samsung notifying the court of a settlement and seeking dismissal, Judge Koh signed the proposed order (this post continues below the document):

18-06-27 Order of Dismissal of Apple v. Samsung by Florian Mueller on Scribd

I'm torn between saying "Good riddance!" or, quite the opposite and in Spanish, "Fue bonito mientras durĂ³." ("It was nice while it was ongoing.") This dispute raised some important issues and contributed to the evolution of patent case law, but the part related to design patents was going in circles. Apparently the parties thought so as well, at this point. At long last.

This megadispute gave rise to some of the highest-quality legal work (on both sides) one could have had the privilege to read. Apple's original complaint told a coherent and compelling story of the alleged infringement of a multiplicity and wide variety of intellectual property rights. No one should write a multi-IPR complaint without at least reading that complaint once, for the purpose of inspiration.

But Samsung's lawyers delivered a first-rate answer to that complaint, and the mantra of that pleading was one of the best passages I ever read in a court filing:

"The Samsung Defendants admit that they have not ceased competing with Apple notwithstanding Apple's efforts to avoid such competition."

The complaint and the answer to the complaint laid out the fundamental question underlying the dispute: Was Samsung competing lawfully--or had it gone too far? Or, conversely, was Apple taking action against theft or simply trying to eradicate competition the thermonuclear way?

There was and there is no general answer, except that the impact obviously ended up being far from nuclear. One has to look at one patent (or other intellectual property right) at a time, and jurisdiction by jurisdiction.

Samsung managed to fend off many accusations, in multiple jurisdictions. It countersued, mostly over standard-essential patents (SEPs), and in that context I criticized it far more harshly than in connection with the alleged or adjudicated infringement of design or software patents. Fortunately, Samsung is now a proponent of reasonableness in SEP licensing and enforcement. Case in point, it signed an open letter to U.S. Assistant Attorney General Delrahim earlier this year--alongside a few industry bodies and dozens of companies, including... Apple!

Apple has clearly proven that it's prepared to enforce its intellectual property rights. Vigorously. Persistently. Patiently. And Samsung has shown that it's a formidable defendant.

Let's not underestimate the effect this will have had on other parties. Who knows whom else Apple might have had to sue over design patents if it had not demonstrated in its dispute with Samsung how it responds to (alleged) design patent infringement? Who knows who else might have picked a fight with Samsung if Samsung hadn't mounted such a strong and tireless defense as in the Apple case?

Normally, those companies strike license deals, and when they wind up in court, they typically settle reasonably early. Somehow, it took them a lot longer in this case. And now either one of them has a dispute going that looks like it could become the next long-running one: Apple with Qualcomm, and Samsung with Huawei.

Share with other professionals via LinkedIn: