Friday, September 12, 2014

U.S. patent office upholds one half of Apple patent on missed telephone call management

There continues to be a discrepancy between Apple's ability to have its patents upheld on its home turf and the fate that its patents suffer in other jurisdictions, particularly in Europe. The last two posts showed this again: Judge Koh declined to hold even the slide-to-unlock patent invalid despite prior art that convinced ten (of ten) European judges to invalidate the European member of the same patent family. That decision may well represent a new low in patent quality standards in the Northern District of California, and it comes from a judge who's not biased in Apple's favor with respect to permanent injunctions and engaged in downright blasphemy by Silicon Valley standards when she recently wrote in the "no poaching" case that "[t]here is substantial and compelling evidence that Steve Jobs [you know, the one who wanted to wage thermonuclear patent war on Android] was a, if not the, central figure in the alleged conspiracy." In retrospect it's ridiculous that Steve Jobs reportedly even threatened another industry player (Palm) with patent assertions should they continue to poach Apple employees -- after Apple's patents turned out far weaker than Steve Jobs thought, I doubt that this threat would impress anyone today. Anyway, Judge Koh does seem to consider Apple's patents more sacrosanct than the memory of Steve Jobs no matter what record those claimed inventions have in the rest of the world or what evidence is presented.

A day earlier I had reported on a preliminary opinion by the European Patent Office that Apple's iconic "rubberbanding" (or "overscroll bounce") patent is invalid as granted. As a Europe-based Android user I now have hopes that the feature may be reactivated here at some point (for example, after the EPO decision in March 2015, or maybe after the related appeal). Last year the USPTO had upheld three of its claims, including the one asserted against Samsung in the first California case.

Now there's good news for Apple again on the validity side, and as always, in the United States. Last year the USPTO decided to reexamine U.S. Patent No. 8,014,760, an Apple patent on missed telephone call management, further to an anonymous reexamination request. A few months later, in September 2013, Apple dropped that patent from its second California case against Samsung well ahead of the spring 2014 trial. At the time I speculated that Apple might have wanted to avoid the negative effects of bad news from the reexamination front on the infringement case. In fact, that's what happened to a patent Apple elected not to withdraw: last month it became known that the USPTO has (on a non-final basis) rejected various claims, including the asserted claim, of the autocomplete patent.

Before Apple withdrew this patent from the second Samsung case in California, it was asserting its claims 10, 11, and 19. Late in August, the USPTO has now issued a reexamination certificate upholding claims 1-11 and canceling claims 12-22. Therefore, two of the three claims Apple had in the California case (claims 10 and 11), have actually survived and now enjoy an enhanced presumption of validity over the prior art presented to the USPTO.

The withdrawal in the first one was without prejudice, but in order to benefit from the enhanced presumption of validity, Apple would have to bring a new lawsuit. At this point there appears to be too much litigation fatigue to do this. The parties' priority is currently on various appeals, including a couple (resulting from the second California case) that have yet to be filed.

There's no European decision on Apple's autocomplete patent, but the pattern is always the same: Apple's patents do way better in the U.S. than elsewhere. In Judge Koh's case, it's not a bias in Apple's favor (for the reasons I outlined further above and many more), but with her approach the Northern District of California becomes a nature reserve for weak patents. The USPTO applies the rules it has in place. The patent reform movement has for a long time been arguing that it must be easier to shoot down weak patents. It's not clear yet where Apple stands on this question. On the one hand, it joined a lobbying group that opposes such reform. On the other hand, it announced an intent to work with Google on patent reform, and Google is on the good side in this context (as well as in some but not all others).

There's an interesting parallel between Apple's approach to the Samsung litigation -- withdrawing cases in all other jurisdictions but fighting on in the U.S. -- and its product and services strategy. I liked the stuff I saw at this week's Apple presentation, though there was nothing there that got me absolutely excited (to me the best news Apple delivered this year was the Swift programming language). I think the Apple Watch will do better than other smartwatches, just that it's hard to predict how much better. The iPhone price still seems very high to me. Apparently the U.S. and Japan are the only markets in which Apple can stil have a high market share despite those price points, while Android has a worldwide market share of 85%. Is Apple's focus increasingly on maximizing U.S. revenue while giving up entire continents -- almost the whole rest of the world -- to Android? Apple Pay is the most America-centric service Apple has ever launched (though it may at some point also find partners in the rest of the world, despite its very limited market share in places like Europe). I don't remember where I saw it, but somewhere on the Internet someone commented on a study that attributed U.S. economic growth mostly to Apple and other tech giants and said that "Americans get rich selling themselves gadgets made in China." That was obviously just a joke and doesn't consider that the real value is not in manufacturing. Still, if the trend continues in the rest of the world, Apple's success story will increasingly be one of Americans selling themselves their products -- and protecting that market with American patents upheld by American judges and patent examiners but not in the rest of the world.

Finally, a hat tip: I wish to thank an anonymous reader for drawing my attention (via my contact form) to the 8,014,760 reexamination certificate but reply here (since I can't contact him directly) to his assertion that I "don't post anything about the Apple patents that survive reexamination or the Samsung, Motorola, HTC, Xiaomi, Microsoft patents that are killed." That is absolutely not true. Whenever I became aware of a reexamination (or similar) kind of decision involving a patent-in-suit in the cases I watch, I reported on it, and that will continue to be the case. The problem is just that there are way too many patents for me to keep track of everything proactively. I now spend significantly less time on this kind of research than in the past because of my focus on app development, so I depend to a greater extent than before on official notices parties file with district courts about reexamination decisions (which didn't happen here because Apple had withdrawn the patent).

I really do appreciate heads-ups of this kind (even more so if allegations of bias are left out because they are unfounded) regardless of who loses a patent, provided that it's a major player (not just a troll) and that the patent was asserted in at least one "big company vs. big company" dispute I cover(ed) on this blog. Xiaomi patents aren't of interest to me because I haven't blogged about any patent case involving them, and HTC has settled with Apple and Nokia and took a license from Microsoft a long time ago, so HTC's patents are not of interest to me either at this point. But if any Samsung, Motorola or Microsoft patents-in-suit are invalidated or rejected, please do -- do -- do let me know. On October 1 I will publish a blog post on the outcome of the major cases I've watched so far, and it will show that none of those major players has established in court an entitlement to huge balancing payments in cross-license deals with other major players, suggesting that large players should return to (more or less) zero-zero cross-license deals between them. My overview of what happened to all those lawsuits will show that everyone's offensive cases have been a disaster, at least so far, with very few assertions having had merit at all and with workarounds having prevented significant commercial impact.

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Wednesday, September 10, 2014

Judge determines Samsung did not willfully infringe Apple's slide-to-unlock patent

About 24 hours after denying (except for a minor part) Apple's motion for judgment as a matter of law (JMOL) following the spring 2014 Apple v. Samsung trial in the Northern District of California, Judge Lucy Koh has also ruled on Samsung's JMOL motion. While I thought Samsung had pretty strong arguments for overturning at least one of the liability findings (particularly by holding patents invalid), Samsung's motion has fared only slightly better than Apple's. The number of patents deemed valid and infringed (three) has not changed. What has changed in Samsung's favor is that the jury's finding of subjective willfulness in the past infringement (this stopped years ago) of Apple's slide-to-unlock patent has been rendered useless to Apple because Judge Koh found there was no objective willfulness, given that Samsung could have reasonably believed in its invalidity defense. With respect to the other patents, even the jury didn't identify any willfulness on Samsung's part.

Normally, with both parties' JMOL motions adjudicated, they could now appeal the case to the Federal Circuit. But in a separate order that just came down, Judge Koh asked the parties to comment on the bearing of Apple's recently-filed motion for postjudgment royalties on the question of whether a final judgment can be (or has been) rendered. In other words, it could take several more months before an appeal can be filed. In that case Judge Koh would likely try to convince Apple that it's better to make the postjudgment royalties decision after an appeal.

Judge Koh, unlike judges in other countries, appears impossible to convince that an Apple patent is invalid. While she has previously invalidated Samsung patent claims (also before the recent trial), she's never ruled an Apple patent invalid, despite many opportunities and very good reasons to do so.

This is due in part to Judge Koh's personal belief that defendants should not challenge patents through reexamination but instead be held liable for infringement even of patents that should never have been granted. She didn't express that belief the way I just summarized it, but that's what it comes down to. She could do a lot more for patent quality if she wanted.

But that's not the only reason why Apple fares infinitely better on the validity side in the U.S. than abroad. In Europe, every single one of Apple's patents-in-suit used against Android has been found invalid so far, and Apple was not even able to salvage a patent in an amended (narrowed) form, unlike other litigants such as Samsung (which salvaged two patents), Microsoft, and Motorola. There's only one European Apple patent-in-suit on which a final decision hasn't come down yet, and that's the rubber-banding patent, but the European Patent Office stated a preliminary opinion in July according to which that one is also invalid for lack of novelty over the prior art.

While the slide-to-unlock patent, which Samsung worked around years ago, is next to irrelevant in a strategic sense, it's still astonishing that Judge Koh upheld this patent after ten European judges in three countries unanimously invalidated the European member of the same patent family -- even more so when considering that the two most important prior art references, the Neonode N1m phone and the Plaisant research study, were admitted as prior art in the California case as well (as the JMOL order makes clear again). I can't understand how a judge can look at the Neonode and not conclude that Apple's addition of a movable slide-to-unlock image, when slide-to-unlock per se already existed, was obvious and anything but an advance of technology. While Apple was out of luck with Judge Koh as far as injunctive relief is concerned, it couldn't have found a judge who loves weak patents more than she does.

In the post I just linked to, I said "there's a difference between a breakthrough invention and a particularly great execution". Patents are all about the first. Sometimes it takes breakthrough inventions to enable a particularly great execution. Slide-to-unlock is not like that. As far as I can see, the "next big things" Apple presented yesterday (between Judge Koh's two JMOL rulings) are also more about execution than breakthrough inventions. At least I didn't see any hardcore technology there that Apple was first to come up with. It's putting existing technologies like NFC to use in ways that are obvious from a patent point of view (which doesn't mean that there wasn't a lot of thought that went into it). It's a nice idea to have a watch notify you that you've been sitting for an hour and should stand up, but a technological breakthrough is something else.

The way patent litigation works in the U.S. clearly favors Apple. Still it has been unable after all those years to gain serious strategic leverage.

The California juries found none of Apple's patents invalid, but key facts were withheld from them. Then Judge Koh hides behind the decisions that jurors reached on such a fundamentally-flawed basis.

The order points, as usual, to the limited significance of non-final rejections of patents in USPTO reexaminations. There have been cases in which those "rejections" really didn't mean too much. There are statistics according to which some examiners of the USPTO's central reexamination decision routinely reject all claims at the beginning just to challenge the patentee. But in the case of the autocomplete patent, the non-final rejection is more meaningful than usually. In August 2013, an anonymous reexamination requested was granted, and there was no initial rejection. It took a year until the patent claims were rejected. Will Judge Koh ever invalidate an Apple patent? She's consistently missed out on every opportunity. But the Federal Circuit may still decide differently.

Here's the public version of the order:

14-09-09 Order on Samsung's Motion for Judgment as a Matter of Law by Florian Mueller

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Tuesday, September 9, 2014

Preliminary opinion of European Patent Office: Apple's rubber-banding patent invalid in Europe

Well over a year since the United States Patent and Trademark Office upheld a few claims of Apple's "rubberbanding" (or "overscroll bounceback") U.S. patent, the European version of that patent has come under massive pressure. The opposition division of the European Patent Office indicated in a document filed in July that independent claim 1 of EP2122678 does not meet the patentability requirement of novelty. Two pieces of prior art were considered "novelty destroying" (a term I've never seen in U.S. documents, where the common wording is that a prior art reference "anticipates" a claim inventioned, but it seems to be used over here):

Apple will now have to try to salvage the patent at least in an amended form. Overcoming two independent prior art references deemed to anticipate the claimed invention is not going to be easy. Even if Apple introduced amendments that are deemed novel, they may still fail to meet the non-obviousness requirement.

Fortunately for Apple, it now faces much less opposition from other parties. Originally, three companies were challenging the patent: Samsung, Motorola Mobility, and HTC. Samsung and HTC have meanwhile withdrawn their challenges as a result of an ex-U.S. ceasefire agreement (Samsung) and a worldwide settlement (HTC). Samsung was represented by Zimmermann & Partner's Dr. Joel Naegerl ("Nägerl" in German), whose track record in both shooting down and defending patents didn't previously get the publicity on this blog that it actually deserved (I mentioned it in my previous post today).

Motorola Mobility is the last opponent standing and intends to have lawyers from Quinn Emanuel appear at the mid-March opposition hearing in Munich (which I plan to attend and blog about). That fact was confirmed most recently in a letter by Apple's counsel, Withers & Rogers, transmitted on August 18, 2014. This surprised me. A few months ago, Apple and Motorola announced the withdrawal of all pending actions against each other. Usually this includes that patents are no longer challenged. But in this case, the proceedings at the EPO would have continued in any event (the EPO would have had to reevaluate the patent ex officio), and it's possible that Google disliked the idea of making it too easy for Apple to salvage the patent. Two years ago, Apple won a German injunction against Motorola Mobility over this patent. The judge who entered the injunction, Dr. Peter Guntz, later became a judge at the EPO.

During the Apple v. Samsung trial I explained why I have a lot of sympathy for the rubberbanding patent. The basic idea behind it was very unorthodox at the time. But I never found it impressive in technical terms (which I stated on this blog on multiple occasions). It's inventive in a psychological sense. But from a non-psychological, purely technical-innovation point of view I tend to agree with the EPO's preliminary opinion.

Interestingly, the EPO does believe that this patent meets the European technicity requirement for patent-eligible subject matter:

"The opposition division is of the opinion that the features of the independent claims relate to subject matter which is of a technical nature because they relate to the solution of a technical problem, that is how to inform a user of the device that the end of an electronic document has been reached, the solution being implemented with technical means like the [] user input (interaction with a touch screen display) and the subsequent translation of the electronic document on the touch screen display following the user input."

Having recently filed for a couple of patents on user interface technology myself (which are preferably implemented by means of a touchscreen and have technical depth as I'm sure people who see them, after publication, will agree), I consider this good news, and I'm sure so do countless practitioners in Europe who deal with user interface-related inventions. But subject-matter eligibility is only the first hurdle. The rubberbanding patent clearly has problems with respect to other patentability requirements.

For those interested in European case law on the patentability of computer-implemented inventions, aka "software patents", I'd like to recommend a German-language blog: Munich-based patent attorney Bastian Best's Softwarepatent-Blog. His two most recent posts describe a decision in which a technical board of appeal of the EPO deemed an invention involving the transfer of a personal activation code by means of a wire transfer patent-eligible and another decision in which a graphical programming tool was not deemed to solve a technical problem because it merely provided a visual representation of the structure of program code.

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Judge plans to take Microsoft-Samsung contract dispute over Android royalties to trial in early 2015

While there are ever clearer signs of Apple v. Samsung coming to an unspectacular end (including yesterday's order in California), the contract dispute between Microsoft and Samsung over Android patent royalties and the implications of Microsoft's acquisition of Nokia's wireless devices business has just begun. Microsoft filed its complaint in the Southern District of New York about a month ago. Meanwhile it has been served on Samsung (which always takes a little longer in international disputes), and Samsung has appointed counsel for this case. While Samsung is represented by Quinn Emanuel against Apple and the Rockstar consortium (whose two largest owners are Apple and Microsoft) and QE has so far defended Motorola extremely successfully against Microsoft (after almost four years of litigation, Motorola still hasn't seen a need to pay royalties on Android to Microsoft), Samsung has chosen O'Melveny & Myers for this case. Microsoft is represented by the Dechert firm and antitrust experts from Orrick.

Apple and Samsung's relationship can be characterized as "coopetition", but this is even more so the case with respect to Microsoft and Samsung, given that the latter builds all sorts of Windows devices. even though Android is now the much bigger opportunity for Samsung (Windows was not mentioned at all in Samsung's presentation of new key products at last week's IFA in Berlin), it's also in Samsung's strategic interest that Windows remain a viable alternative to Android in at least some market segments. But it's also in Microsoft's interest to maintain good relations with the leading mobile device maker in the world. That's why a mid-August report by the Korea Times on working-level settlement talks made sense to me. But later in August, Business Korea reported that Samsung as well as LG (another major Korea-headquartered Android device maker) feel they are paying Microsoft too much under their Android patent license deals. If even a fraction of the rumored amounts is what they pay, then I can understand this in light of litigation results, but they signed those deals before Motorola fended off one Microsoft patent assertion after the other. After almost four years of litigation against Motorola without a license deal, Microsoft has yet to prove that it owns valid patents that are infringed by Android and can't be worked around without major commercial implications (and some of the asserted patents have expired by now anyway). But that's an issue only in connection with new deals, not with existing contracts. Samsung and LG chose not to fight. They signed. What the court in the Southern District of New York has to clarify now is what bearing the Microsoft-Nokia deal has on that license agreement. Microsoft says Nokia's devices are covered post-acquisition; Samsung evidently disagrees.

If Samsung can bring infringement claims against the devices formerly made by Nokia, the deal will have to be renegotiated or at least Samsung could offset some of the royalties it forks over to Microsoft by collecting royalties on Microsoft's own phones. In Germany, Samsung has defended amended versions of two of its standard-essential wireless patents before the Federal Patent Court in the Apple dispute. If the amended versions are still standard-essential, they'll be extremely useful in any litigation that may arise between Samsung and Microsoft. No other litigant in the smartphone patent disputes between large players has been able to salvage more than one patent before the Federal Patent Court, which is a very significant success for Samsung's lead patent attorney in the German litigations, Zimmermann & Partner's Dr. Joel Naegerl ("Nägerl" in German), who was also key in having several Apple patents declared invalid. About twice as many Microsoft patents (as Samsung patents) came to judgment in that forum, and only one of them survived in an amended form, which I attribute to the fact that those patents were in no small part about how to structure program code. Motorola did better, relatively speaking, because it salvaged its only patent that came to judgment. Several Apple patents came to judgment, and none of them survived in any form whatsoever, which says something. It would have been very interesting to see some decisions on Nokia's patents, but HTC settled before any Federal Patent Court hearing was held.

The sooner the Microsoft v. Samsung contract matter is clarified, the better. That also appears to be the opinion of Judge Rakoff, who has set a case schedule that culminates in a mid-February final pretrial conference, suggesting that this case could go to trial in February or March 2015 barring an unexpected delay.

Here's the order:

14-09-05 Microsoft v. Samsung Case Management Plan by Florian Mueller

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Judge declines to overrule California jury in Apple's favor or grant retrial in 2nd Samsung case

Apple's patent infringement lawsuits against Android device makers continue to be anything but thermonuclear after a decision that came down late on Monday by local California time. A federal judge in the Northern District of California has just thrown out Apple's motion for judgment as a matter of law (JMOL) or a retrial in the second California case between Apple and Samsung, except for a negligible and inconsequential item that Samsung had not even argued at the spring trial and a finding that one day Apple will get supplemental damages for a limited period of time the jury couldn't consider and only concerning a couple of products (but no tripling for willfulness or anything like that). This practically complete denial is not an unexpected outcome given the rather high legal hurdle for JMOL motions, and Apple's top brass is presumably even less interested in this on the eve of the iPhone 6 launch (by the way, that's going to be the first iPhone I buy, not because I expect it to become my primary phone after all these years of using Android, but because I need to look at it as an app developer and appreciate the larger screen).

Apple's JMOL/retrial motion was an unmistakable sign of disappointment over the early-May jury verdict that resulted in only about 5% of the damages award Apple was seeking (the key indicator of disappointment is not the JMOL part per se, but the request for a retrial) and, at this point, its last chance for short-term leverage over Samsung after last month's withdrawal of all ex-U.S. lawsuits pending between the two and denial of a sales ban.

This is the public redacted version of the ruling (this post will continue below the document with further commentary as well as a report on the latest filing in Samsung's appeal of the final ruling in the first California Apple v. Samsung case):

14-09-08 Order on Apple's JMOL Motion in 2nd Samsung Case by Florian Mueller

Now that it's clear Apple won't get any improvement from the district court (it will obviously keep trying this at the Federal Circuit), the next milestone will be Judge Lucy Koh's ruling on Samsung's JMOL motion. Samsung faces the same high hurdle but is still more likely to achieve some sort of improvement than Apple was. For example, one of Apple's patent claims-in-suit has meanwhile been rejected by the United States Patent and Trademark Office, and another patent-in-suit is from the same patent family whose European member has unanimously been deemed invalid by ten judges. I believe there's a 60%-70% probability that at least one of Apple's liability wins (all three of which are questionable for different reasons) will be overruled by Judge Koh, and a 30%-40% chance of the verdict being upheld. The recent denial of Samsung's "Alice motion" was just a sideshow. The most important issues remain to be resolved.

After deciding on Samsung's JMOL motion, which could happen any day now, we'll see a cross-appeal to the Federal Circuit. Apple was in such a hurry that it immediately appealed the denial of a sales ban, but as I wrote on Thursday (when I reported on Apple's motion for postjudgment royalties of $6.46 per device that infringes the three patents underlying the liability findings), all the appeals relating to the second California Apple v. Samsung case are going to be consolidated. I have no more doubt about that given that the JMOL ruling on Apple's motion has already come down and that the ruling on Samsung's motion won't take very long. In the coming months, Judge Koh will have to rule on the aforementioned motion for monetary compensation as a substitute for an injunction. Apple's desire for this kind of remedy is understandable, but Judge Koh explained in her JMOL decision that she likes to resolve those kinds of issues after the appeal for reasons of judicial economy:

"Because the parties have indicated that an appeal is anticipated, proceeding without the Federal Circuit's guidance may cause unnecessary expenditures of time and resources should the Circuit reverse any part of the jury's verdict on liability. The Court thus finds it appropriate to delay the consideration of evidence of actual postverdict sales and calculation of supplemental damages until after the completion of the appeal in this case. The Court made this same determination in the first case."

Apple will presumably argue that it absolutely urgently needs an award of postjudgment royalties, but I doubt that Judge Koh will find this a good use of her time.

There is one part of Judge Koh's reasoning that reflects far more negatively on Apple's "thermonuclear war" against alleged "copycats" than the outcome of the JMOL process itself. What almost adds insult to injury is that Judge Koh exposes Apple's copycat claims by saying that "Apple's evidence was weak at best" with respect to its (past) practice of the asserted claims. After opening argument at the spring trial Judge Koh already denied an Apple motion for curative instructions relating to (among other things) its practice of the asserted claims (Apple wasn't allowed to present argument at the trial with respect to non-asserted claims of the same patents, which I thought was very strict). Then Apple wanted to place the emphasis on its alleged past practice of certain claims. Even for what Judge Koh describes as "three unasserted extra claims," the order says "Apple's claim is unavailing because this Court gave Apple the choice not once, but twice, to rebut by presenting evidence at trial that Apple practices the extra claims, but Apple declined the Court’s offer both times." And the order notes that "Apple's choice to assert the asserted claims as opposed to the unasserted claims was a strategic decision beneficial to Apple," for example, because there were pretty strong invalidity arguments against the unasserted claims.

Not only Samsung but also Google, whose software was at the heart of Apple's infringement contentions and "copycat" smear campaign, will be pleased with the JMOL order.

Samsung filed reply brief in support of its appeal of the final judgment in the first California Apple v. Samsung case -- hearing likely to take place in the fourth quarter

Since Apple's patents-in-suit have not proven strong enough to yield serious strategic leverage, all that's left to be sorted out between Apple and Samsung is a payment for past infringement. Apple withdrew its cross-appeal, so the only party still fighting for an improvement is Samsung. And Samsung's number one priority is to get the $929 million verdict in the first case (that's the number after a portion of the original verdict was replaced with a new amount by means of a retrial) reduced. That damages award was mostly about design patents and trade dress, not about technical patents. Samsung has support from 27 law professors and a tech industry group. Apple is defending that jury verdict all the way and has support from 54 design professionals and a group of mostly no-tech and low-tech companies, a fact that in and of itself buttresses Samsung's (and Samsung's supporters') argument that a disgorgement of unapportioned infringer's profits over a design patent is not appropriate for today's multifunctional high-tech products such as smartphones.

On Friday, Samsung filed its reply brief, then corrected it, and the final redacted version became available yesterday. There's nothing new in it. The next interesting step is going to be the appellate hearing, though I think there's a reasonable chance of a complete settlement in the meantime. While it's not new per se, I wanted to draw attention to something that Samsung's reply brief highlighted again. Samsung actually had evidence in the first California case (but was not allowed to present it to the jury, which is part of the reason why Samsung wants the ruling in the first case overturned) that it had designs with rounded corners and other iPhone-like elements in the works back in 2006, before the original iPhone was shown:

I acknowledge that I underestimated the significance of this evidence in 2012. In retrospect I think it was unfair that Apple had the right to smear Samsung, in court and in the media, for shameless copying when the truth is that Samsung had come up with such designs totally independently. When the Federal Circuit judges see this, they may feel that a new trial in the first case is warranted, or at least it may show to them that the ruling in the first case way overcompensates Apple for its design "innovations."

Finally, here's the full text of the public version of Samsung's reply brief:

14-09-05 Samsung Reply Brief in Appeal of Ruling in First Apple Case by Florian Mueller

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Thursday, September 4, 2014

Apple asks court to order Samsung to pay $6.46 per unit if it infringes 3 patents going forward

It's been a week since Judge Lucy Koh denied Apple's motion for a permanent U.S. sales ban against Samsung devices infringing the three patents on which Apple prevailed at the spring trial in their second California case, and Apple has meanwhile taken two steps in response to that decision. The U.S. is the only jurisdiction in which Apple still hopes to obtain at least a little bit of leverage over Samsung after dropping all ex-U.S. patent suits in an orderly retreat because Steve Jobs's vision of a thermonuclear war on Android didn't materialize.

First, it almost immediately appealed Judge Koh's decision to the Federal Circuit. Everyone knows about the fast-paced nature of the smartphone market, but Apple's decision to bring a separate appeal of the injunction denial instead of waiting for Judge Koh's final judgment is not going to please any judge -- neither Judge Koh nor the circuit judges. It would obviously be more efficient to hear an appeal involving all issues, liability and both kinds (monetary and injunctive) of remedies. Also, any reversal on the liability side would narrow the issues to be dealt with on the remedies side, and the liability-related outcome of the jury trial is far from rock-solid. For example, the United States Patent and Trademark Office (USPTO) has meanwhile rejected one of the asserted patent claims. But bringing an immediate, separate appeal of an injunction denial saved Apple time in the first Samsung case because a final judgment didn't come down until more than 14 months after Apple's injunction-denial appeal because a limited damages retrial was needed.

If Judge Koh hands down a final judgment in the second California case soon, all of the related appellate proceedings will almost certainly be merged. This time around, Apple wants a retrial. I understand its disappointment with this year's jury verdict, but I doubt that it's going to get one.

I'm also skeptical, as I previously explained on Twitter (1, 2, 3, 4, 5), concerning Apple's chances to get the denial reversed on appeal. While it helps Apple that Judge Koh sided with it on the public interest factor, the fundamental problem is that the related features don't really drive demand for these kinds of devices (even more so since Apple asserted rather narrow claims, some of which its own current products don't even practice). Any attempt to show a "causal nexus" between the infringements identified and irreparable harm to Apple will have to distort reality in order to arrive at the results Apple wants. It's much harder to lure courts than consumers into a reality distortion field. Basically, Judge Koh's denial of an injunction in the second California case was just consistent with the standard she applied in the first one. Apple's evidence was structurally the same, for the most part. They had one or two additional elements, but those didn't seem to remedy the shortcomings of the evidence in the first case.

Apple somewhat surprisingly dropped its recent cross-appeal of the final judgment in the first case, thereby accepting as the definitive outcome that the three software patents at issue in that case don't entitle it to the injunction it had been seeking for almost three years. While this could have different tactical reasons, it definitely doesn't exude confidence in the quality of Apple's evidence concerning irreparable harm in the first case -- but it seems that the evidence in the second case isn't structurally hands-down superior over the one in the first case.

Now on to the second response by Apple to the injunction denial. Late on Wednesday, Apple brought a motion for ongoing royalties, also called postjudgment royalties. This is the standard remedy at law that is available to patent holders if they can't prevent future infringement by means of an injunction.

Apple's motion for postjudgment royalties makes clear that the fight for an injunction is far from over ("Apple believes that it has been and continues to be irreparably harmed by Samsung's infringement and that only injunctive relief would suffice to remedy that harm — and Apple will urge that position before the Federal Circuit"). But if Apple (regardless of how likely it is or not) finally obtained an injunction, there would be no more need for the court to set postjudgment royalties. Therefore, Judge Koh may be quite inclined to postpone any decision on this motion until after the Federal Circuit appeal (which could also narrow the scope of any postjudgment royalties decision due to reversals of liability findings).

In December 2012, after Judge Koh first denied Apple an injunction in the first case (where it denied one again after an appeal), I already raised the issue of postjudgment royalties. Interestingly, Apple still hasn't brought such a motion in the first case. I guess that's because Samsung hasn't implemented the rubberbanding patent in years, the tap-to-zoom-and-navigate patent is way too narrow to be of any use (Samsung worked around it a long time ago and has no reason to infringe), and the '915 pinch-to-zoom API patent faces serious validity issues (plus, Samsung claims to have worked around that one, too). But what about the patents at issue now?

Apple wants "at least" $2.75 per product infringing the '647 "data tapping" ("quick links") patent, $2.30 for the '172 autocomplete patent, and $1.41 for the '721 slide-to-unlock patent. That would be a hypothetical total of "at least" $6.46 per unit. Let's look at it on a patent-by-patent basis.

The '172 autocomplete patent is the one the USPTO now considers invalid (the asserted claim is among the ones it recently rejected). The jury didn't hold it invalid, but juries rarely do. In any event, it can be worked around.

The '721 slide-to-unlock patent is weak in all respects. Maybe Judge Koh will be the first judge in the world of eleven judges to look at it (ten in Europe and now Judge Koh) to conclude that Apple deserves a patent on its slide-to-unlock image (even though slide-to-unlock per se had been invented before). But even Apple doesn't believe that Samsung's (relatively speaking) more recent products infringe that patent. Apple didn't even assert it against devices like the Note 2 (which is not exactly new; yesterday Samsung announced and demonstrated the Note 4 at the IFA trade show in Berlin).

The '647 "quick links" patent is the most interesting one of the three, at least in terms of the legal issues that a claim of continued infringement (in which case Samsung would likely disagree and the court would have to decide on whether Apple is indeed entitled to royalties) could raise. The way I see it, Samsung is in the clear if, together with Google, it copies certain Android code into the apps that use it. The Federal Circuit adopted Judge Posner's claim construction of this patent in Apple v. Motorola. In May, Apple and Google/Motorola dropped all of their pending cases against each other including the "Posner case", but it's hard to see how Apple would, even though it would be formally possible, persuade any court in the U.S. of a different claim construction. The Federal Circuit didn't explicitly comment on Judge Posner's workaround theory, but to me that one is an inevitable and logical conclusion from his claim construction, so it was implicitly endorsed by the appeals court.

If Apple had gotten its way at the spring trial in terms of the damages it claimed, it would now be demanding a far higher per-unit royalty for future infringement. Still, the amounts seem too high considering the huge number of patents in a smartphone or tablet.

Finally, here's Apple's motion:

14-09-03 Apple Motion for Ongoing Patent Royalties From Samsung by Florian Mueller

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Wednesday, August 27, 2014

Judge denies Apple bid for sales ban against Samsung in second California patent case

Judge Lucy Koh has just denied Apple's motion for a permanent injunction against Samsung over the three patents underlying the jury verdict at the end of the spring trial. This is a very significant setback for Apple, which less than six months ago had already failed, despite a partly-successful appeal, to obtain a sales ban against Samsung in the first California litigation between the two companies, an outcome that Apple accepted as final about a month ago when it withdrew its related cross-appeal.

The denial of an injunction following the recent trial in the second California case is based on Apple's failure to satisfy the eBay v. MercExchange factors for injunctive relief over patents. In a striking parallel to the other case, Judge Koh stressed that "Apple has not satisfied its burden of demonstrating irreparable harm and linking that harm to Samsungs exploitation of any of Apple's three infringed patents." Furthermore, "Apple has not shown that it suffered any of these alleged harms because Samsung infringed Apple's patents." In other words, Apple failed to demonstrate that Samsung's competition is substantially unlawful.

In order to prevail on this motion, Apple would have had to show that "the patented inventions drive consumer demand for the infringing products," which it couldn't (because, in my opinion, it's simply not the case). The court believes that monetary damages are sufficient compensation for the infringements identified in this case. Apple convinced Judge Koh that there was a strong public-interest case here because Apple's injunction motion was "narrowly tailored," Judge Koh still finds that, at the end of the day, the lack of irreparable harm remains outcome-determinative in Samsung's favor. Citing the Federal Circuit, the decision notes that without a clear causal nexus between infringement and irreparable harm, "a court cannot distinguish 'between irreparable harm caused by patent infringement and irreparable harm caused by otherwise lawful competition.'" In this context, it certainly didn't help Apple that, as the order notes, "Apple does not currently practice all of the patents at issue."

Three weeks ago, Apple and Samsung agreed to withdraw all litigation pending between them outside the United States. Apple's continued inability to convince U.S. courts that its patents entitle it to drastic remedies has probably increased the likelihood of a near-term settlement of the remaining litigation between them (though it could still continue for some time if the parties can't agree on a payment covering past infringement).

After today's decision, it's likely that Judge Koh will very soon (it might even happen today as well) rule on the parties' other post-trial motions. Samsung is pushing for a further adjustment in its favor, especially for the invalidation of certain asserted patent claims such as this one, while Apple would ideally like a retrial because the damages award was disappointing from its point of view: it wanted almost 20 times as much money as the jury awarded.

This decision is great news not only for Samsung but also for Google, the developer of the Android mobile operating system. In this second California case, Apple is essentially suing Samsung as a proxy for Google.

Here's the public redacted version of Judge Koh's order:

14-08-27 Order Denying Apple Motion for Permanent Injunction Against Samsung by Florian Mueller

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