Patent firm IPCom settles with T-Mobile, will be more active in U.S. with ex-Hitachi patents

IPCom is a patent licensing firm based in the Munich area that acquired a portfolio of cellular standard-essential patents (SEPs) from Bosch, a company that exited the mobile devices business about a decade ago. IPCom has been embroiled in litigation with Nokia and HTC for more than five years, and is also asserting patents against the resale of Nokia and HTC devices by certain carriers and retailers. IPCom also alleged that carriers use certain patents covering network infrastructure components and the provision of services implementing cellular standards. The center of gravity of the IPCom disputes is in Germany, though there is also significant activity in other jurisdictions such as the UK (1, 2) and the U.S., where a declaratory judgment action brought by HTC even reached the Federal Circuit. In 2009 the European Commission was looking at (though not conducting a full-blown investigation of) a complaint by Nokia, in response to which IPCom made a public promise to honor Bosch's FRAND pledge, which the EU's antitrust enforcers welcomed.

Today IPCom announced a global settlement further to which Deutsche Telekom (T-Mobile) is paying for the use of IPCom's patents and all litigation between the two parties is withdrawn. The terms of the agreement were not disclosed, but it's easy to figure that royalty payments are involved and also supported by IPCom director Bernhard Frohwitter's statement that "this agreement will also send a signal to those companies that use these patents without paying license fees for them". IPCom has other licensees including BlackBerry (Research In Motion). Some companies, such as Samsung, licensed the former Bosch patents from their original assignee.

Earlier this year it appeared that Nokia and IPCom were close to a settlement, but they hit an impasse mentioned in a May 2013 UK ruling.

Rumor has it that IPCom is also suing Apple. I have not yet been able to obtain information on this from the Mannheim court, but if and when a public hearing takes place, any litigation becomes discoverable.

IPCom's international litigations are coordinated by Dr. Roman Sedlmaier of the Frohwitter patent law firm. This is a complex cross-jurisdictional effort, involving at some point over 100 cases (including numerous invalidation actions brought by Nokia and HTC in various countries).

The most interesting part of IPCom's press release today is the following quote from IPCom director Christoph Schoeller:

"We are now proceeding with the licensing of a further portfolio of mobile telecoms patents, which we acquired from Hitachi. The Hitachi patents are particularly important in the US market, but also in Europe."

This means IPCom is going to be more active in licensing and, if negotiations fail, litigation in the U.S. than before, where it appears that it was actually HTC's choice to trigger litigation there. The press release reveals the following about the Hitachi deal:

"The Hitachi patents consist of 135 patents in 17 patent families, and cover important aspects of the UMTS standards. The technology is also present in the 3G standards CDMA 2000 and HSUPA. Among the Hitachi patents, two standard-essential patents are particularly important : EP 0957 594 describes the synchronisation of handset and network in the UMTS standard. DE 69735 459 describes a process that controls the transmission strength for a CDMA message transfer system."

The U.S. equivalent of the European patent is U.S. Patent No. 6,507,576 on a "code division multiple access mobile communication system". There are at least two U.S. patents belonging to the same family as the German patent: U.S. Patent No. 6,307,844 and U.S. Patent No. 6,483,816 on a "CDMA communication system and its transmission power control method".

IPCom's overall patent portfolio "currently consists of about 1,200 patents in roughly 160 patent families", including patents declared essential to "global telecoms standards such as 2,5G (GSM/GPRS), 3G (UMTS) and LTE".

This blog primarily reports on litigations between large operating companies. I didn't even blog about several IPCom-related hearings and trials I attended over the last two years. But every once in a while I do talk about NPE activities (particularly if FRAND-pledged SEPs are involved), and today's IPCom announcement caught my interest because of an increased focus on the U.S. market following the Hitachi deal.

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Anonymous reexamination requests filed against two more patents Apple is suing Samsung over

Scott Daniels and Cindy Chen report on the WHDA US PTO Litigation Alert blog that anonymous ex parte reexamination requests have just been filed with the USPTO against two Apple patents:

• U.S. Patent No. 8,074,172 on a "method, system, and graphical user interface for providing word recommendations"

• U.S. Patent No. 8,014,760 on "missed telephone call management for a portable multifunction device"

These two patents are among the eight patents Apple asserted in its second California complaint against Samsung, filed in February 2012 and scheduled to go to trial in 2014. The '172 patent was also asserted in the related preliminary injunction motion against the Galaxy Nexus smartphone. In her June 2012 ruling on that motion, Judge Lucy Koh found that "Apple has shown that it is likely to succeed on the merits at trial in its claims that the Samsung Galaxy Nexus infringes claims 18, 19, and 27 of the '172 [autocorrect] Patent".

Apart from Google, whose Android operating system faces a variety of patent assertions, the most likely company to be behind these new requests is Samsung. It's unlikely that these requests will help Samsung at the relevant California trial (unless that one is postponed). Samsung is unlikely to be able to point to anything more than a first Office action at trial time. First Office actions don't impress judges and juries are usually not told about them because they mean too little. Any definitive invalidation of these patents, should it ultimately happen, is years off.

Just last week it became known that the USPTO is going to issue a reexamination certificate confirming four of the 20 claims of the "rubber-banding" (or "overscroll bounce") patent, including the one a California jury found Samsung to infringe. Should Samsung have brought that reexamination request, then it clearly backfired, resulting in further strengthening -- not invalidation -- of the claim that matters to Samsung. Another patent that was at issue in last year's trial, the '915 pinch-to-zoom API patent, is also undergoing reexamination (a first Office action tentatively rejected all claims). A couple of patents from Apple's ITC complaint against Samsung (a final ruling, due on August 1, is likely going to result in a U.S. import ban) are also under reexamination pressure. The "Steve Jobs" touchscreen heuristics '949 patent has been tentatively rejected (also just a first Office action), and so have the key claims of the translucent images RE'922 patent. Two weeks ago the WHDA US PTO Litigation Alert blog also discovered two reexamination requests against iPhone design patents. One of them was found infringed at last year's California trial. The other one is at issue in the aforementioned ITC investigation.

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German VP8 infringement cases show Google's inability to cut through the codec patent thicket

I don't think any responsible standardization body will be able anytime soon to declare VP8 a "royalty-free" codec. Everyone in the industry knows -- though a few deny against better knowledge -- that there's a whole patent thicket surrounding video compression techniques, and that all codecs implement more or less the same fundamental concepts. Only a fool could believe Google when it originally claimed that there were no issues concerning third-party rights. Google's license deal with 11 MPEG LA contributors comes with terms that Google certainly wouldn't have accepted if it had not been seriously concerned about the risk of litigation brough by those right holders. And with Nokia refusing to make its patents available for VP8 on royalty-free or even FRAND terms (Nokia reserves the right to seek injunctions, or to charge as much as it wants, no matter how much above a FRAND rate it might be), there's at least one company that is actually suing over VP8.

Nokia brought its latest patent assertion against VP8 as part of an ITC complaint and its first two infringement actions over VP8 in Mannheim, Germany, and this post is mostly about the trial held on Friday over the second one of these cases. Also, since my last post on VP8 I've had the opportunity to read the full text of the order to reopen the proceedings in the first case. As I wrote two weeks ago, that order wouldn't have come down without at least a finding of a likely infringement. It relates to the possibility of staying the case pending a parallel nullity proceeding, and German courts don't reach the question of a stay if they can outright dismiss a case for lack of infringement. The order says one can conclude that devices implementing VP8 infringe EP1206881 if the asserted claim (claim 46) is interpreted "broadly", in which case there is room for invalidity contentions (which, as the order doesn't say explicitly because it's clear to patent litigators, wouldn't be relevant to a narrower claim construction). Therefore, the court now wants to take a closer look at a particular invalidity theory. While the court could still reach a different conclusion on infringement, it would have dismissed the case immediately (to conserve court and party resources) if Google and HTC had convinced the court that Nokia's claim construction is overbroad. Absent a relatively unlikely change of mind by the court, the likely outcomes are a stay or an injunction. A stay would mean that an injunction will issue if the asserted patent claim survives the nullity proceedings in its granted form, or in a form that still warrants an infringement finding. This means that Google won't have legal certainty concerning the German part of EP'881 (courts in other European countries will not be bound by the related German decisions) for years to come.

Yesterday's patent-in-suit, EP1186177 on a "method and associated device for filtering digital video images" is less likely to be deemed infringed when the Mannheim court announces a decision on August 2, but Nokia can and presumably will appeal a dismissal, and despite the inclination indicated by the court at yesterday's trial, EP'177 is indicative of VP8's patent issues because it's within striking distance of VP8: the whole case hinges on only one claim element. All other claim limitations are considered satisfied by HTC's VP8-implementing devices. That fact reduces to absurdity all those claims that VP8 is so very original that no third party patented anything that might read on it.

While video compression techniques involve advanced mathematical operations, it's actually quite easy to explain the only claim limitation that may (and, apart from the possibiltiy of an appeal, probably will) help Google and HTC avoid an infringement finding:

Video codecs -- and this is true of H.264 as it is of VP8 -- divide an image into macroblocks (rectangular areas). Each macroblock is processed separately. End users just see the overall image and shouldn't notice the edges of macroblocks, which are only an internal thing. But they would notice those borders if certain mathematical operations resulted in artefacts (unwanted elements that appear in an image but don't exist in reality) that a codec failed to filter out. The patent relates to this filtering process. The codec looks at the overall image and identifies actual vertical and horizontal lines that were filmed (for example, a corner of a building). Only artefacts at the edges of the macroblocks are filtered out; real-world lines are preserved.

For each macroblock there are different compression methods. The patent mentions "intra coding", "copy coding", "motion-compensated prediction coding", and "not-coded coding". Google and HTC can't dispute that VP8 uses all of these. But their non-infringement argument, which the court views favorably, is that VP8 does not "determin[e] at least one parameter of the filtering operation based on the types of the first and second prediction encoding methods". They say VP8 analyzes the pixels of two neighboring macroblocks, but it does not make a determination by directly checking on which encoding methods were used for the two blocks in question. Nokia, however, says that the pixels result from processing of a macroblock using a certain encoding method, and that there are correlations between the encoding methods used and at least one parameter (they particularly stressed the number of pixel rows/columns subjected to filtering).

At German patent trials claim construction and infringement analysis usually aren't separated as systematically as in U.S. lawsuits, in which the court firstly provides interpretations of disputed terms (which are later put before a jury if a jury trial is requested, which is the case in most U.S. patent infringement cases). In a U.S. proceeding over the same patent (I couldn't find a granted U.S. equivalent of this particular one, but let's assume so for the sake of the argument), the term "determining at least one parameter [...] based on the types of the first and second prediction encoding methods" would have resulted in a claim construction dispute, with Google and HTC trying to defeat Nokia's infringement theory by inserting into the court's construction of the term a word like "directly", while Nokia would probably have argued that the plain and ordinary meaning is fine and has scope for its infringement theory, possibly also proposing an alternative like "depending on" (for "based on"), which is even broader. Additionally or alternatively, the defendant and the intervenor would have tried to have "the first and second prediction encoding methods" interpreted as "the types of the first and second prediction encoding methods".

At yesterday's German trial the question was not how to rephrase the term, but the analysis that had to be performed was the same. Both parties advanced reasonable arguments. Google's counsel pointed to items (a) and (d) in paragraph 24 of the patent specification. Item (a) is "the type of block on either side of the boundary", while (d) relates to "differences in pixel values", which are only influenced by the encoding method types. Google plausibly argues that the description of the patent therefore distinguishes between these two (and two other) criteria. So far, so good. It makes a lot of sense, but it doesn't prove beyond reasonable doubt that the disputed claim term relates to only item (a) and not item (d). Nokia pointed to other parts of the description which, such as paragraph 37, show that the patent discusses an analysis of pixel values.

In order to back up its "royalty-free" claims, Google needs legal certainty, but there are just too many patents in this field covering the same or at least very similar techniques as those used by VP8. There's clearly a lack of certainty if the outcome of a single infringement case depends on whether "based on" can or cannot be reasonably understood to have the meaning of "depending on". And as I wrote further above, the first finding of a likely infringement has already been made in connection with another Nokia patent.

Nokia and Google may also have some patent issues to sort out over Google Maps according to a TechCrunch article. At this stage I just wanted to mention this nonjudgmentally.

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European Commission looking into competition-chilling effects of Android licensing practices

Yesterday the Financial Times, the most influential newspaper in EU circles, reported on a leaked document showing that the European Commission's competition enforcement division has sent out a reasonably detailedquestionnaire to "device makers and mobile operators", and the 82 questions indicate that a recently-lodged complaint by industry players including Nokia, Microsoft and Oracle over Google's Android business model and licensing practices has led to preliminary investigations. At this stage it's not a given that there will be a full-blown, formal inquiry. And even when formal investigations start, they don't always result in antitrust charges. It's too early for a guilty verdict, but I am convinced that the European Commission is right to take this issue seriously.

After the filing of the complaint became known, certain Google-aligned critics of the initiative primarily made the following two points:

• The complainants are Google rivals.

• Android is open source.

The first point is completely irrelevant: in this context, only merits matter, and motives don't. Obviously companies that depend on Google in commercial terms are not going to bring a complaint against it, but Google's own partners could ultimately benefit from whatever comes out of this process. The second point -- open source -- is a distortion, but to the extent it holds truth, this is just one of various considerations in a competition context and not a definitive answer. In this post Id like to quickly share a few thoughts about this.

The accurate characterization of the licensing situation for Android's software code is not "open source", but "mixed source". There are some key closed-source components, and Google requires device makers to distribute them if they want to use the Google logo and, especially, the little green robot logo, and it will give them those apps (such as the Google Play app store client) only if they accept Google's terms. And it's not just about the code: for commercial reasons most device makers also license the Android trademark. The Android license most device maker take is a mixed-IP license, and the software part of the license it's a mixed-source offering.

The Skyhook-Google litigation brought to light hundreds of pages of Google-internal dccuments that show how tightly the search engine company controls its mobile operating system and ecosystem especially through its arbitrary approach to "compatibility", which one internal email says Google using as a "club to make [device makers] do what [Google] want[s]".

There's a fundamental difference between Free and Open Source Software (FOSS) philosophy and competition theory. FOSS is all about the theoretical freedom of end users to inspect and modify code, and to use and redistribute not only the original version but also the modified one, while competition theory is about the commercial realities in a given market. You can be "free" from a FOSS point of view to modify and use a codebase, but you can still be constrained i practical, commercial terms due to customer expectations. You can have freedom, but will people buy what you build?

Such constraints are not a binary question like being free or in jail in a Monopoly game. Different players will be constrained to different degrees if they serve different markets and/or pursue different business models. The fact that Amazon uses large parts of Android without a license from Google doesn't mean that the same would work for Samsung or HTC; and companies focusing on the Chinese market are in a different position than those who generate most of their sales in the U.S. and Europe (even in China there's profound concern over Google's heavy-handedness with respect to Android). If something works for some companies under special circumstances, it doesn't necessarily work for most of the market. But the functioning of the overall market is what competition enforcers care about.

Competition is all about choice. Customers get the greatest benefit if different business models co-exist and compete. I have been defending open source interests for some time, but I wouldn't want to live in a world in which open source is the only type of business model that works because certain kinds of innovation aren't financially viable on open source terms.

It's a fallacy to take a short-term perspective and not worry about an antitrust complaint alleging that the market leader provides its platform on a "sub-cost" basis. Sure, today we'll all save money if someone gives something away for free. But if there are strings attached, we may all ultimately pay a greater price. We'll be locked in, and some innovation that would enhance our lives won't happen further down the road. Antitrust law is there to prevent this from happening.

The European Commission has previously recognized that "open source" must not be beyond the reach of competition enforcement. Its in-depth investigation of Oracle's acquisition of MySQL (as part of Sun Microsystems) delayed the closing of that transaction by about five months. I was a vcocal opponent of the deal. In a guest post I wrote for the Brussels-based BlogActiv.eu platform I reached the following conclusion:

Given the increasing importance of "free" and "freemium" business models, there can be no doubt that the related case-law will continue to be developed over the coming years and decades. The rule of law must be adjusted to these new realities, not surrender in their face.

Values persist; methods evolve.

Google's Android strategy is such a new reality involving a "free" business model.

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Apple says Samsung has continued importing infringing devices during entire ITC investigation

Today the public redacted version of Apple's response to the ITC's review questions, including its comments on the public interest, entered the U.S. trade agency's electronic document system (this post continues below the document):

13-06-11 Apple Submission on Public Interest

The ITC usually orders an import ban if infringements of valid patents are found and the domestic industry requirement is satisfied. As the Office of Unfair Import Investigations (OUII, commonly referred to as the "ITC staff") stressed in its rebuttal of Google's public interest arguments against an exclusion order, the legal standard is not whether a ban would "advance" the public interest but whether there are public interest reasons for which this remedy would be denied. In other words, a ban is the norm, and scenarios in which a ban is against the public interest are rare exceptions. Apple argues that the requested exclusion order and cease-and-desist order (the latter one for products already imported when the order takes effect "would not conflict with public health, safety and welfare", "would not adversely affect the production of like or directly competitive articles in the U.S.", "would not adversely affect competitive conditions int he U.S. economy" and "would not adversely affect U.S. consumers", while the requested remedies "would benefit the public interest by encouraging domestic innovation through protection of intellectual property rights".

Apple backs Judge Pender's recommended bond (of 88% of Samsung's smartphone sales) and doesn't want the ITC to be too lenient and allow further infringement: "Samsung has had more than fair notices that its products infringe Apple's asserted patents. [Since the preliminary ruling issued in October 2012] Samsung has [...] already had more than seven months to transition to non-infringing designs and technology for its articles subject to an exclusion order." Apple also points to Samsung's claim to have workarounds in place and says "[e]ach Big Four carrier can switch to Apple smartphones, among several other supplier options, to replace excluded Samsung smartphones".

Apple's filing alleges lawless conduct on Samsung's part:

"By the time the Commission issues its Final Determination, this Investigation will be nearly two years old. During this entire length of this Investigation, Samsung has continued importing electronic digital media devices that infringe Apple's Patents-at-Issue, and Samsung is still importing such infringing devices. During the entire length of this Investigation, Apple has been significantly harmed by these unabated unfair acts. Further delay in providing Apple relief would effectively subsidize Samsung’s continued infringement of Apple's intellectual property, thus creating perverse incentives for infringers, such as Samsung, and disincentives for companies that have committed to innovation through domestic investment in research and development, such as Apple. The Commission should therefore decline to tailor remedial orders to delay implementation and should instead provide for such orders to go into effect as soon as possible."

These accusations mirror the ones in California, where Apple just said that Samsung keeps launching products with features the court there found likely to infringe Apple's patents.

One of the issues on which the parties disagree -- and on which the ITC staff clearly sides with Apple -- is whether an exclusion order would also relate to product categories that come with infringing features but weren't specifically at issue in this investigation. Here's Apple's position:

"1. Samsung's request that a limited exclusion order apply only to certain product categories is contrary to Commission precedent

Samsung has argued that a limited exclusion order should apply only to particular product categories accused by Apple, rather than to all infringing electronic digital media devices. [...] But this argument is contrary to Commission precedent and its standard practice of crafting exclusion orders to encompass all infringing products within the scope of the investigation, rather than only particular products or product categories. [...] ('[T]he scope of an ITC investigation is defined by the notice of investigation. Thus, any exclusion order may cover all products within that scope, i.e., 'the articles concerned.'' [...]

Here, in the Notice of Investigation, the Commission defined the scope of this investigation to include 'electronic digital media devices.' [...] Therefore, consistent with the Commission's precedent and its standard practice, a limited exclusion order should cover all of Samsung’s infringing electronic digital media devices. Doing otherwise would arbitrarily cabin Apple's relief by permitting Samsung to continue infringing Apple's Patents-at-Issue, so long as it avoids doing so for a select few product categories. Moreover, affording Apple full relief against Samsung’s infringing products is particularly important because, as noted above, Samsung has continued to infringe Apple's asserted intellectual property rights to this day, and evidence shows that Samsung introduces '50 or more models' of mobile devices in the United States per year, such that it has ample opportunities to import new models that infringe Apple's patents. [...] On such facts, there is quite simply no basis in Commission law or practice to deny Apple the full scope of relief from Samsung's infringement."

For a point of reference, here's the related passage from the ITC staff's latest filing:

"Samsung does not appear to contest that a limited exclusion order is warranted if a violation is found, but has instead requested that any exclusion order 'be directed solely at those product categories for which Apple has shown a violation.' (RPostBr. at 274). The Judge rejected this argument. (RD at 2). OUII agrees with the Judge – such a restriction would not be consistent with Commission precedent. See, e.g., Certain Erasable Programmable Read-Only Memories, Inv. No. 337-TA-276 (Enforcement), Commission Opinion at 10-11 (Public Version Aug. 1, 1991) ('The Commission has always issued its orders in terms of 'infringing' products, and has always intended them, as in this case, to prohibit to [sic] future importation or sale of products which were not specifically judged infringing in the violation proceeding, but do in fact infringe. . . . It is an unusual case where the Commission makes specific determinations of infringement for all products which could be covered its exclusion order.') (footnote omitted)."

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Huge win for Apple at the patent office: key claims of rubber-banding patent confirmed

Apple has just informed Judge Lucy Koh of the United States District Court for the Northern District of California of a major breakthrough: the United States Patent and Trademark Office (USPTO) has notified Apple of its intent to issue a reexamination certificate confirming four claims of U.S. Patent No. 7,469,381, the famous rubber-banding (or, as I like to call it, "overscroll bounce") patent, including claim 19, which is the claim Apple successfully asserted at last year's trial against Samsung. Here's the key part of the header of the USPTO's notice (click on the image to enlarge):

In May 2012, an anonymous request for an ex parte reexamination of the '381 patent became discoverable. In October 2012, a first Office action tentatively rejected all claims of this patent, and about two and a half months ago a "final Office action" upheld only three of them but rejected all others, including claim 19. Samsung was always quick to file notices of these early decisions with the court. But Apple had consistently cautioned against overrating first and "final" (but not final-final) Office actions tentatively rejecting certain claims. It also pointed out that these processes can take years: even if the relevant claims of the rubber-banding patent ultimately had been invalidated, it would have taken until mid-2017 or later. But along the way there can be many reversals of fortune, and Apple now has the upper hand with respect to this patent -- and it may at some point have the upper hand with respect to other key patents it's asserting against Samsung in California and at the ITC.

Apple's notice to the court points out that this will already be the second reexamination certificate confirming claim 19 of this patent. A previous one issued on April 26, 2011, presumably in response to a reexamination request filed by Nokia (raising different invalidity contentions). As a result of this new reexamination certificate, claim 19 will enjoy an enhanced presumption of validity against the invalidity theories the patent office evaluated. Instead of invalidation in mid-2017 or later, this patent has now been confirmed in mid-2013.

Judge Koh had also denied the part of a Samsung motion for judgment as a matter of law (JMOL) in which Samsung asked the court to declare this patent invalid even though the jury did not. In a preliminary injunction ruling in late 2011 she had already found this patent claim likely to be valid (an injunction over it was denied, but only for equitable reasons).

In late April Judge Koh ordered a limited damages retrial and scheduled it for November. She denied without prejudice a Samsung motion to stay the infringement case, but said Samsung could try again later depending on what the further proceedings at the patent office may bring. The '381 patent is one of two patents being asserted in the California case and under reexamination. The other one that is being reexamined is the pinch-to-zoom API '915 patent. In late 2012 a first Office action tentatively rejected all claims of that patent, too, but rejection rates in first Office actions are extremely high. The process concerning the '915 patent is further behind. The USPTO has yet to issue a "final" Office action, and the situation surrounding the rubber-banding patent shows that "final" isn't truly final in this context. Last week I also reported on a reexamination request targeting two Apple design patents, including one that the California jury found infringed. It's unlikely that anything persuading Judge Koh to stay the case before the November damages retrial will happen with respect to the design patent. At the most there will be a first Office action, which means little. So if Samsung hopes to avoid the November retrial, its best bet now is the '915 patent, but time is not on its side. With the forthcoming reexamination certificate for the '381 patent, the likelihood of the November retrial actually taking place has increased considerably.

Apple would presumably have liked to salvage even more claims than the four claims the patent office is now going to confirm, but claim 19 is the one that matters in the dispute with Samsung, and it's now stronger than ever.

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ITC staff rejects Google's public interest arguments, recommends import ban against Samsung

With a view to the ITC's final ruling on Apple's complaint against Samsung, currently scheduled for August 1, 2013, 17 submissions on the public interest were made this week. An Administrative Law Judge had found Samsung to infringe four Apple patents (three utility patents, one design patent). His findings are now being reviewed by the Commission, the six-member decision-making body at the top of the U.S. trade agency. I published all 17 submissions on Scribd; I had to update that post twice as additional letters poured in. Some of the submissions discourage an exclusion order (import ban) against Android-based Samsung devices, while many just warn against the impact of an order that, due to insufficient clarity, might lead in seizures of non-infringing Samsung products by U.S. customs officers.

This investigation had been remanded to the Administrative Law Judge, so this was already the second window of opportunity for stakeholders to chime in. Google had already filed a public interest statement in support of Samsung (which was strikingly inconsistent with the positions Google's wholly-owned and micromanaged Motorola Mobility subsidiary filed at around the same time in connection with the investigation of Samsung's complaint against Apple). Yesterday the Office of Unfair Import Investigations (OUII, commonly referred to as the "ITC staff", which participates in certain investigations as a third party whose recommendations are not binding on the actual decision-makers) filed its answers to the Commission's review questions and its position on the public interest (both in the same document; this post continues below the document).

13-06-11 ITC Staff Brief in Apple-Samsung Case

The ITC staff couldn't disagree more with Google's arguments against an import ban. I'm now going to quote the ITC staff's comments on Google's submission and add my own comments below each quoted sentence:

"With respect to non-party Google's arguments, OUII first notes that the question is not whether an exclusion order would 'advance' the public interest (see Google Comments at 1); rather, the statute states that the Commission 'shall' issue an exclusion order 'unless' the public interest dictates otherwise. 19 U.S.C. § 1337(d)(1)."

The basic assumption is that the general public has an interest in intellectual property enforcement. That's also the starting point for any analysis of public interest arguments (such as in connection with one of the four eBay factors) by the Federal Circuit. This doesn't mean to say that the interest in IP enforcement always prevails, but there's a reasonable hurdle to overcom, and by suggesting that an order has to "advance" the public interest, Google subtly tried to lower the hurdle and shift the burden of proof. The ITC staff apparently doesn't like this distortion of the statute.

The ITC staff politely calls Google a "non-party". This case is in no small part about Android's infringements. Google would have had no less of a reason to join this investigation as an intervenor than in the investigation of Nokia's complaint against HTC, but for whatever reason it chose not to do so. Maybe its policy has changed over time, which would be fair. Anyway, Google is not a neutral third party in cases like this. It may not be a formal party to the dispute, but in practical, commercial terms it is a co-defendant -- in fact, a fully-intended additional target of some of Apple's assertions in this case.

"Moreover, Google's contention that the patents are not 'inventive' and are easily designed around, even if true, actually shows the lack of impact on the public interest – once Samsung designs around the patents, then its products will no longer be subject to exclusion."

This is the most important point the ITC staff makes. Three days ago I said the most fundamental shortcoming of an amicus curiae brief filed by Google, HTC, Rackspace, Red Hat and SAP with the Federal Circuit in support of Samsung against Apple's pursuit of a previously-denied injunction was its failure to address the possibility of workarounds/designarounds, and I pointed to the position Chief Judge Rader expressed in a recent ruling:

"If indeed [the defendant in that case] had a non-infringing alternative which it could easily deliver to the market, then the balance of hardships would suggest that [it] should halt infringement and pursue a lawful course of market conduct."

In the ITC investigation, Samsung insisted, against Apple's objections, on presenting to the judge certain workaround/designaround products in order to obtain clearance, which it received as far as the preliminary ruling is concerned. That's why there's also no reason to delay entry into force of an exclusion order. The key to the kingdom of legality is already in Samsung's hands.

What the ITC staff has now said about Google's argument is consistent with Chief Judge Rader's approach.

Note that the ITC staff also considers Google's claimt hat Apple's asserted patents are not "inventive" to be irrelevant. It's like saying, "If these patents are trivial, try to prove them invalid, and if you can't, then just work around them".

"Finally, Google's arguments concerning the lack of competition in the marketplace (see Google Comments at 3-4) are contradicted by both the publicly-available information cited above and the Commission's findings in other recent investigations involving similar products.

Various of the submissions by other parties that I published this week stress Samsung's huge Android market share. But there are stil plenty of other Android device makers out there, and even if any infringing Android-based Samsung devices were banned (which wouldn't happen in practical terms because Samsung can avoid infringing the patents-in-suit), there would be other platforms than Android.

"Thus, OUII does not believe that the public interest precludes issuance of its proposed remedies in this investigation."

I'd be surprised if this week's 17 public interest submissions will change the ITC staff's position on the appropriate remedies.

The sentence I just quoted is not the only one in the staff's filing that talks about remedies: there's a detailed discussion, and the conclusion is that a limited exclusion order (limited in the sense that only Samsung will be affected) is the way to go if the final ruling includes an infringement finding. I'm sure there will be at least some infringement finding(s). The question is just how many of the four patents the judge found infringed will ultimately be deemed valid and infringed; furthermore Apple has to satisfy the domestic industry requirement for each of them, but that should not be a problem.

The ITC staff's submission addresses the Commission's infringement-related questions in detail. The "Steve Jobs" touchscreen heuristics '949 patent and the translucent images RE'922 patent are software patents that cover parts of Android that aren't sold separately. The ITC staff argues that Apple and other patent holders cannot claim that such software components (as opposed to stand-alone software modules) are a "material or apparatus" for the purpose of a contributory infringement analysis. This means that Android as a whole, or at least a certain Android app as a whole, is in the staff's opinion the correct basis for determining whether there is substantial noninfringing use. Since it's easy to demonstrate substantial noninfringing use of a more widely-defined "material or apparatus", the ITC staff believes there's no contributory infringement, but given that Samsung's documentation discusses the relevant features, Apple has satisfied the requirement for proving that Samsung induces infringement (which would be just fine for Apple). There are some issues concerning the infringement analysis that the ITC staff raises. If the Commission agreed with the staff, Apple's victory would be considerably narrower than the preliminary ruling. But there would be an import ban if the ITC staff got its way, and during the Presidential Review period Samsung would have to post a hefty bond (for example, Judge Pender recommended that Samsung post 88% of its smartphone sales as a bond, and while the ITC staff thinks this percentage is too high, it proposes 58%, which is still substantial).

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