Friday, January 23, 2015

Dear EPO Leadership: a judge subjected to an 'office ban' IS a suspended, temporarily-removed judge

It's time for a follow-up on what's going on at the European Patent Office. The day before yesterday, the EPO staff union, SUEPO, took to the streets of Munich again--this time around, approximately 1,000 EPO employees went to the Danish consulate (this post continues below the document):

15 01 22 SUEPO Flyer by Florian Mueller

The Danish consulate was chosen because a Danish public servant, Jesper Kongstad, is the chairman of the Administrative Council of the European Patent Organisation. I have heard from multiple sources that he's always aligned with controversial EPO president Benoît Battistelli.

The SUEPO flyer I published above contains some links, including one to this blog, and I recommend all of them. I wish to particularly highlight this article (PDF) by patent litigator Dr. Ingve Björn Stjerna that connects certain dots between the proceedings before the Court of Justice of the EU concerning the future Unified Patent Court and the questions that have been raised about judicial independence at the EPO. The related part (entitled "The most recent developments at the EPO") begins on page 3 of the document.

One of the links points to a TechRights article, and there are a couple of other recent TechRights article I find interesting (which does not mean a wholesale endorsement): this one on the rumor that the EPO's recently-hired Director of Internal Communications has "resigned" and this one on (so far unproven) allegations against a vice president of the EPO. The de facto suspension of a member of a board of appeal (i.e., an EPO-internal judge) that has drawn much criticism from judges and lawyers was, according to French financial daily Les Echos, due to whatever the suspended judge said about that vice president, Mr. Željko Topić.

You can find many interesting comments below this IPKat post on an EPO-internal memo with which a vice president, through one of his assistants, told the heads of examination units what he thought about a letter by retired UK judge and professor Sir Robin Jacob to the Administrative Council.

Here's my thinking: On the one hand, I can understand that the EPO leadership is increasingly nervous. I can also appreciate that they would prefer to handle matters like these internally and confidentially. But opacity has its limits, and the EPO is simply too important for people like Sir Robin (and so many others) to ignore what is going on there.

EPO vice president Minnoye is right that Sir Robin (and others, including me, except that I'm not aware of any EPO-internal communication about me) was "not aware of all facts" when he wrote his letter. But he had apparently received information from reliable sources according to which the suspended judge had not done anything that would explain why he had to be removed, why his computer had to be searched, and why he had to be denied access to the building. I'm sure Sir Robin would never have written the letter if there had been the slightest indication of, for example, the allegations having involved physical violence that others in the building had to be immediately protected from. Everything that the outside world has heard so far is about information and/or opinions the suspended judge shared.

That is enough for Sir Robin and others to conclude there was no basis for executive action. Whatever the issue may have been, it should have been properly investigated, and no matter how serious or not, this should have been adjudicated by a judicial body--not the president, not the Administrative Council--before taking such action.

The second point made by EPO VP Minnoye is that Sir Robin allegedly referred to a different type of executive action. Mr. Minnoye stresses this was an "office ban."

This is old news. It had already appeared in December that the EPO leadership distinguishes between

  • (temporary) office ban,

  • (temporary) suspension, and

  • (permanent) removal.

This sophistry is not going to get them anywhere. The critics of the decision presumably (and in my case, I know it's definitely the case) just refuse to make that distinction because it's meaningless to them.

Let's think about it. A judge who is not allowed to enter the building can't hold hearings, can't (easily) meet with his peers on the same board of appeals to discuss the case, can't access certain document databases, can't use office equipment there, can't get help from assistants. He's simply unable to do his job for all intents and purposes.

How is that not a suspension? How does an executive's ability to make this decision not compromise judicial independence?

I've been saying for some time that it would be a mistake to focus just on Mr. Battistelli. The problems here are structural. Mr. Minnoye may very well be right that in formal terms, Mr. Battistelli can impose an "office ban" on a judge, and that this is allowed by a section of the EPO's rules that is different from the one on a suspension, and that a suspension is not a removal because it's temporary (another distinction that amounts to hairsplitting). So maybe Mr. Battistelli acted in accordance with the rules, some of which he made or changed himself (and the Administrative Concil rubberstamped). It's not really important whether Mr. Battistelli will leave the EPO in a few months or in a few years. All that matters is that the structural deficiencies that allowed the current situation to arise be addressed for once and for all. The national governments of the EPO contracting states are responsible for this.

The root causes are key. Mr. Battistelli is not a root cause. There are reasons to believe that under this leadership the situation exacerbated, but he does not share political responsibility. Dozens of European countries that believe they have to "remind" China and Russia of human rights and democracy issues time and time again have allowed the situation to get out of hand because they failed to put proper checks and balances in place.

Mr. Minnoye and Sir Robin can be right at the same time. I tend to think they both are right at the same time. In Sir Robin's case I'm sure, in Mr. Minnoye's case I can see that the EPO's rules probably support his logic.

The bottom line is that reform is needed. The Administrative Council has been part of the problem, not part of the solution. Sir Robin and others were too polite to address someone other than the Administrative Council. They should have contacted politicial decision-makers and members of different parliaments. The Administrative Council appears to be the fox in charge of the henhouse, though it would be great if it could prove its critics wrong in the months and years ahead and bring about meaningful change, rather than endorse and rely on meaningless sophistry.

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Friday, January 16, 2015

Ericsson may demand 1.5% of Apple's sales from LTE-compatible iPhones and iPads for its patents

This is a follow-up to yesterday's post on the dispute between Apple and Ericsson over standard-essential patent royalties. I published Ericsson's complaint first because, though it was filed two days later, it appeared on a publicly-accessible court docket sooner. I also want to show you Apple's complaint now and say a few things about it (below the document):

15-01-12 Apple Complaint Against Ericsson by Florian Mueller

Apple's complaint was filed by Wilmer Hale, one of the firms representing Apple against Samsung. Wilmer Hale originally focused on Apple's defense against Samsung but also became involved with offensive matters, especially in the Federal Circuit (access to injunctive relief). Mark Selwyn has been a very key player on Apple's external legal team in the Samsung cases, in the U.S. as well as abroad (there was at least one Mannheim case in which he officially attended the trial). Joseph Mueller (not a relative of mine) is a co-author of a study according to which smartphone patent royalties may exceed $120 per device and undermine industry profitability. There's no reason to assume he's responsible for Apple's damages claim in the second California Samsung case (over five patents) that I criticized so harshly last year, or the design patent and trade dress damages in the first case.

It's the fate of lawyers and their firms that they stand on different sides of debates from time to time, and in this case it's not even inconsistent per se because Apple's position is that standard-essential patents have little value while non-SEPs should be deemed very valuable. While it's intellectually consistent, I disagree with the unbelievable discrepancy between Apple and WilmerHale's positions on SEP vs. non-SEP royalties. It's like they want non-SEPs on small features to be hundreds, if not thousands, of times more valuable than SEPs without which those devices wouldn't work at all. For example, in the first Samsung case Apple sought $2.5 billion (mostly over design patents) from Samsung while arguing that half a cent per Samsung SEP was a FRAND royalty. To WilmerHale's credit, the aforementioned study raises concerns over patent royalties that are not limited to SEPs.

Apple's complaint cites a former director of patents and licensing at Ericsson who publicly stated in 2010 that Ericsson expected to seek LTE royalties of 1.5% of the end product price. The filing also says the following:

"In its public statements, Ericsson has never retreated from the position that it is entitled to an approximate 25 percent share of a total LTE 'royalty stack' based on a percentage of the end prices of entire LTE devices--such as full smartphone or full tablet computers. And Ericsson has never accepted that LTE licensing should begin with a component-focused royalty base, to which a reasonable rate is applied."

Apple's complaint then picks seven LTE patents Ericsson asserted in other litigation and asks the court to hold those patents non-essential to LTE (in which case Apple wouldn't need to license them merely because it claims its products are LTE-compatible) or, should the court disagree on non-essentiality, to determine a FRAND rate for each of them. This patent-by-patent approach is unacceptable to Ericsson, which is why it asked the court in Texas to determine a portfolio rate.

The much more fundamental controversy here is not whether a FRAND determination should be made on a patent-by-patent basis but the question of the royalty base (see also the second sentence of the paragraph quoted above).

Ericsson basically takes the position that everything you run on an iPhone or iPad depends on wireless connectivity, so they should get a percentage of the device price. Apple's position has been for a long time that the price of a baseband chip is the proper royalty base against which some percentage should be applied, arguing that a "jalopy" and an expensive sports car also pay the same highway toll.

Obviously, access to injunctive relief has become much more difficult for SEP holders as a result of certain judicial decisions and regulatory interventions and settlements in recent years, at least in the U.S. and in Europe. But there were two key FRAND-related battles that the "net implementers" (my term for companies that are implementers of standards to a far greater extent than they seek to exploit SEPs of their own) haven't been able to win. The first one is about whether the exceptional cases in which injunctive relief is available should depend exclusively on the patent holder's behavior (since that's the party that made a FRAND pledge in the first place) or on both parties' conduct. The likes of Google (Motorola) succeeded in convincing judges and regulatory authorities that FRAND is a two-way street and an absolutely unwilling licensee may be enjoined from further infringement, as opposed to one that makes a good-faith, serious effort to obtain a license. There's no reason to believe that courts and regulators will change their stance on this one anytime soon. But the second question is the one Apple has now put front and center in its California case against Ericsson, and it's one on which the jury is still out though Apple does face a significant (or maybe even steep) challenge. The royalty base.

Even Judge Robart held in the Microsoft v. Motorola FRAND contract case that a royalty based on the price of a complete product as opposed to that of the smallest saleable unit (which Microsoft proposed in that case and which Apple is arguing now in the Ericsson case) may still be FRAND, as long as the percentage is low enough. However, in a different case (in Chicago), Judge Holderman agreed with a group of defendants against Innovatio's WiFi claims that the chipset price as the proper royalty base.

It won't be easy for Apple to get a bright-line rule that a FRAND commitment is violated merely by using a different royalty base. In procedural terms, I think Apple would have to take the Ericsson case all the way up to the Supreme Court--and while there are reasons to assume that Apple will drop this case as soon as it can reach a reasonable deal with Ericsson, the question is strategically important enough to Cupertino that it may pursue this as a matter of principle.

While I'm not aware of any ruling in which a U.S. or European court categorically ruled out injunctive relief over SEPs even against unwilling licensees, it looks like the law on the royalty base isn't settled yet, so this could be an increasingly interesting case over the next few years. The days are long gone when this was mostly a "FRAND Patents" blog, but I plan to look at this dispute from time to time.

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Thursday, January 15, 2015

Apple-Ericsson spat shows some big-dollar licensing issues remain to be resolved in smartphone industry

Apple and Ericsson teamed up with others (Microsoft, Sony, BlackBerry, EMC) in 2011 to buy up Nortel's wireless patent portfolio. As expected after a November motion, the Rockstar v. Android dispute has come to an end. Patent aggregator RPX Corporation, which is closer to Google than to Apple and Ericsson, bought Rockstar's patents in December.

But Apple and Ericsson now have licensing issues to sort out between the two of them. They had a five-year patent license in place, and it has now expired, according to an Ericsson press release. Traditionally, 'tis the season for patent suits resulting from failure to agree on renewals. Many patent license deals have terms defined by calendar years, and in recent years there have always been filings of this kind in early January.

Apple has won the race to the courthouse with a declaratory judgment action (asking the court to find that some Ericsson LTE patents are neither essential nor infringed) it filed on Monday in the Northern District of California. Two days later, Ericsson brought this very interesting FRAND-declaration complaint in the Eastern District of Texas (this post continues below the document):

15-01-14 Ericsson Complaint Against Apple by Florian Mueller

In the past, FRAND rate determinations were requested by implementers of standards (Microsoft/Motorola, Apple/Motorola, Huawei-ZTE/InterDigital). This is the first such case, at least the first high-profile case, in which the patent holder goes to a court and requests this kind of ruling.

It may be tactics, but Ericsson does exude confidence in the defensibility of its royalty demands by triggering the FRAND rate determination process instead of waiting for Apple to do it at some stage of a patent infringement proceeding.

What's much clearer is that we're going to see a venue fight, and Apple filed first, which means Ericsson is going to need some really strong arguments to avoid formal or factual consolidation of its FRAND declaration suit with the California case. The venue could make quite a difference here. Not only are the Northern California judges less patentee-friendly in my observation than their colleagues in East Texas but Silicon Valley juries are particularly likely to buy Apple's innovation story. I'm not based there but, frankly, I also look at Ericsson as one of those companies, like Nokia, that were way too bureaucratic, technocratic, and unimaginative to deliver a mobile computer and useful mobile Internet device to consumers over all those years, so the world really needed the iPhone revolution for the sake of progress.

Despite the fact that consumers the world over have far more reasons to thank Apple than to thank Ericsson, I want to be rational and Ericsson's innovation story is a pretty good one, too. It can legitimately claim that it still spends billions of dollars every year on research and development (it no longer builds mobile handsets, but is still big in infrastructure), and in its complaint it lists the following accomplishments, most of which go back such a long time that the related patents have expired:

  • "in 1878, Ericsson sold its first telephone;

  • in 1977, Ericsson introduced the world's first digital telephone exchange;

  • in 1981, Ericsson introduced its first mobile telephone system, NMT;

  • in 1991, Ericsson launched 2G phones on the world's first 2G network;

  • in 1994, Ericsson invented Bluetooth;

  • in 2001, Ericsson made the world's first 3G call for Vodafone in the UK; and

  • in 2009, Ericsson started the world's first 4G network and made the first 4G call."

Ericsson does deserve respect for all of that. Whether the license fees it wants Apple to pay are excessive may have to be determined in court. While a settlement between these companies is fairly likely to happen before a judicial decision, Ericsson, based on its behavior, may be the most demanding one of the major wireless patent holders and Apple has a lot at stake here financially just because of its huge revenues. So it really could be that pre-trial discovery and motion practice won't provide these parties with enough guidance, and one or more decisions may really be needed.

Paragraph 35 from Ericsson's complaint makes some general allegations about Apple's behavior and how it compares to that of its competitors:

"The parties' licensing negotiations have been unsuccessful because Apple refuses to pay a FRAND royalty corresponding to those paid by its competitors for Ericsson's Essential Patents. Apple fails to honor the fact that FRAND licensing is a two-way street, requiring not only that the licensor is fair and reasonable in providing licensing terms, but also that the licensee negotiates in good faith and accepts FRAND terms when they are offered."

Apple may be the most difficult company to sell a SEP license to, but it's a fact that Apple's competitors that have taken a license from Ericsson haven't always done so without a fight. Ericsson and Samsung settled only after failed renewal talks had resulted in litigation. Still, that deal helps Ericsson now. If any U.S. court (be it a judge or a jury; be it in California, Texas, Washington DC or elsewhere) determined that held that Apple should pay lower royalties (relative to volume) to Ericsson than Samsung, the protectionism question would inevitably come up. It would look like the United States allows Apple to get away with an unusual unwillingness to license SEPs.

Ericsson tends to enforce its patents pretty aggressively in different parts of the world. I've seen them demand rather high (though clearly sub-Motorola) royalties over WiFi patents in Germany, and India's antitrust regulator opened two investigations of Ericsson's demands in FRAND licensing negotiations. Also, a document I discovered about a year ago explains why Ericsson prefers to sue device makers rather than do license deals with chipset makers like Qualcomm.

Apple v. Ericsson is definitely a perfect match when it comes to FRAND licensing. Billions of dollars--probably many billions--are at stake. But it's just about money and not about a strategic conflict between direct competitors. By now it's clear that patent holders who thought to protect or gain market share through patent assertions have been unable to achieve such goals, let alone to wage "thermonuclear war," but there still are some financial issues left to be sorted out in the industry, such as Apple v. Ericsson, and some will have to be rediscussed from time to time as existing agreements expire.

Other industry players are interested in more or less zero-zero cross-license agreements, which is what I believe the Google-Verizon deal announced in December is about. Google has done various such deals, including with Cisco, Samsung, and LG. But that's the way Google and some other companies would like it to work. Ericsson is different. Patent licensing is increasingly important to its business.

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Monday, January 12, 2015

Supreme Court wants U.S. government to weigh in on Google's petition to hear Oracle's Android-Java copyright case

The Supreme Court of the United States had put Google's petition for writ of certiorari (request for Supreme Court review) in Oracle's Android-Java copyright case on its list of items to be discussed at the Friday (January 9) conference. The list of decisions, which was just released this morning, indicates that the top U.S. court has not made a decision yet. Instead, "[t]he Solicitor General is invited to file a brief in this case expressing the views of the United States."

In my two previous posts on this case, I explained why I don't consider Google's proposed distinction between allegedly non-copyrightable header and potentially-copyrightable non-header code to be workable, and noted that the software industry at large philosophically opposes Google's petition.

Only about 1 in 100 cert petitions succeeds. But Google apparently hopes that a well-orchestrated (rather than organic) amicus brief campaign (see 1, 2, 3, 4) will persuade the top U.S. court to hear the case.

The Supreme Court appears unconvinced for now that this case really needs to be heard (otherwise it could have decided based on the submissions it already has on file), but in light of Google's amicus brief campaign it apparently wants to double-check whether there really is a key issue at stake here for innovation. That's why the U.S. government is asked to chime in. Google is known to have excellent government relations, but I'm sure the Department of Justice is absolutely aware of the extent to which the software industry--which is so important to U.S. economic growth and employment--depends on legal certainty with respect to software IP protection. A decision to grant certiorari would create enormous uncertainty since Google wants to raise the general question of whether program code, no matter how creative, expressive, original or sizeable, can be devoid of copyright protection. It would be downright irresponsible for the U.S. government to support Google's cert petition because it would discourage investment in software development at least until the case is resolved and, if anything goes wrong, for a very long time. I'm sure the software industry at large, which is firmly on Oracle's side here, will convey that message to its government.

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Thursday, January 8, 2015

Competing device makers HTC and LG join Google, SAP in backing Samsung against Apple

Apple, Samsung and Google are three of the most significant members of an industry coalition that is fighting the good fight for balanced rules of procedure for Europe's future Unified Patent Court, particularly with respect to access to injunctive relief. But as the industry coalition stated repeatedly, including at the November 2014 hearing, some of its members are actually embroiled in patent litigation--in which they have sought or are seeking injunctions--with each other. That fact only adds to the credibility of that industry group because it shows that some of its members, such as Apple, are more interested in obtaining sales bans over patents than others, such as Google and Samsung, yet they all agree that the current proposal would make Europe a patent trolls' paradise and hurt all innovative operating companies. Nothing could better demonstrate just how bad those proposed rules are.

The most notable case in which members of the UPC industry coalition stand on opposing sides is Apple's appeal of Judge Lucy Koh's August 2014 denial of a permanent injunction against Samsung over the patents on which Apple had prevailed at the spring 2014 trial. Apple says that a feature-specific injunction should be granted here and claims to have better evidence in place this time around (Apple filed a reply brief this week that reinforces the points made in its opening brief) but Samsung argues that Apple still can't tie patented features to lost sales. Google sides with Samsung on this and has, together with other significant companies (LG, HTC, SAP, Red Hat, Rackspace), asked the Federal Circuit for permission to file an amicus curiae brief.

Apple formally opposes the proposed filing, noting that Google accepted to indemnify Samsung with respect to certain patents. However, no liability was established with respect to those patents, and as a result, they are not at issue in this injunction appeal. Apple also points to various business relationships between Google and some of the other amici curiae, even including some small-scale business partnerships compared to which there's actually a much closer cooperation between Apple and Samsung in certain (component-related) areas. Notably, HTC and LG compete with Samsung, and since HTC has a ten-year license agreement in place with Apple, it has no reason to be concerned about the particular patents at issue here.

I've seen LG enforce some of its patents (such as patents on the Blu-ray standard) rather aggressively.

There have also been some other filings. Industry group CCIA and the National Black Chamber of Commerce filed other briefs in support of Samsung, while Apple's pursuit of an injunction is backed by Ericsson and Nokia, two companies that used to build smartphones but exited that business and increasingly focus on patent licensing (and that are obviously not members of the aforementioned UPC industry coalition). While it's certainly good for Apple to have at least some support from third parties, the fact that no current smartphone maker was prepared to back Apple here shows that Cupertino is somewhat isolated in its industry when it comes to this issue. They all face too many patent assertions all the time and have to think about their interests as a defendant, even if they engage in some enforcement (Microsoft, for example). And there could be a future situation in which Apple itself will fight an injunction bid against its products and someone else will use Apple's own pro-injunction arguments against it.

I'm not an expert in the admissibility of amicus curiae briefs, so I can't predict whether Google itself will be formally allowed to appear as a "friend of the court" here, but there cannot be the slightest doubt about the other filers.

It's an interesting brief that this blog is first to make available to the general public (access is still restricted on the Federal Circuit docket; this post continues below the document):

14-12-24 Google HTC LG Rackspace RedHat SAP Amicus Brief by Florian Mueller

The amicus brief focuses on the bearing of a certain Federal Circuit decision from 2013, Douglas Dynamics, on the present case. In that case, which involved two snowplow manufacturers, then-Chief Judge Randall Rader stressed that if a workaround is available, an infringer should choose the path of legality. At the time I thought this was going to be very helpful to Apple (at that time, in connection with its first California case against Samsung, while the current appeal relates to the second case). But it turned out that it didn't help Apple too much. Smartphones and snowplows are different markets with different characteristics, and there's obviously a much smaller number of features in a snowplow than in a smartphone. While Apple won a remand of the denial of a permanent injunction in that first Samsung case, Judge Koh again (while taking into account the additional guidance from the Federal Circuit) denied an injunction. Last summer Apple dropped its related cross-appeal and, thereby, forever accepted that denial.

The above amicus brief has two parts. Section A explains that Apple still has to establish a causal nexus between the infringements identified (Samsung is appealing those findings, by the way) and the alleged irreparable harm, regardless of the scope of the injunction it is seeking. In other words, the standard isn't lowered just because a proposed injunction wording is very specific to particular features. That makes sense and may be part of the reason why Apple tries to reduce the credibility of that amicus brief, but I'm now going to focus on Section B, which addresses Apple's argument that Douglas Dynamics supports its injunction push now (though it didn't help in the previous case).

The "causal nexus" question never came up in Douglas Dynamics. That's the primary reason for which it didn't help Apple before and may not help now. According to the amicus brief (and I'm obviously not able to verify this), "Douglas's patents were directed to an entire snowplow blade assembly, not a specific feature of that assembly." The brief goes on to discuss another key difference from the Apple-Samsung dispute:

"Second, the core innovation of Douglas's patented snowplow design allows a user to easily remove the assembly, reducing stress on the vehicle's suspension. [...] Douglas promoted this 'easy on, easy off' feature in advertising for its own snowplow assemblies by incorporating the concept into its trademark – Minute Mount – to ensure that snowplow customers associate the patented feature with Douglas. [...] Here, there is no evidence that the patented features are core innovations of Apple’s products or that Apple has advertised them as such. Apple certainly has not incorporated those features into its product brand names."

As for the last part, the iPhone is certainly not sold or advertised as the "slide-to-unlock phone" or the "quick-links phone."

The brief also says that "Douglas never licensed the patents-in-suit and intentionally chose not to, thus insuring that the innovative design would (absent infringement) be exclusively associated with Douglas in the minds of its customers," and contrasts this no-outbound-licensing-ever approach with the fact that "Apple has licensed the patents-in-suit to several competitors, including IBM, Nokia, HTC and Microsoft." I would agree with the amici that "there is simply no evidence that anyone exclusively associates the patented features with Apple," with the exception that Apple's particular implementation of slide-to-unlock, with the slider bar, is certainly a signature feature, but Apple didn't even accuse the more recent products at issue in this case (and those are already a couple years old) of infringement of its slide-to-unlock patent. In the prior art context it has been stated over and over that the iPhone was not the first phone to come with a slide-to-unlock mechanism, which is why the related patent family is so weak. With respect to "quick links," that's a feature that consumers typically can't distinguish from other links, such as the ones found on a webpage like this. And autocomplete is also something that you find in all products from all sorts of vendors.

A key concern of the amici is that the way Apple would like Douglas Dynamics to be applied to cases like this one "would unfairly create a lower standard for proving causal nexus for companies with a reputation for innovation." Apple argues that Douglas Dynamics made the patent holder's reputation as an innovator a key factor. The amici concede that there is direct competition between Apple and Samsung, and that Apple has a reputation as an innovator, but say that evidence is "scant, at best," with respect to claims that Samsung has a less prestigious reputation, that Apple makes efforts to maintain exclusive control over its patented features, and that an injunction was necessary to demonstrate to consumers that Apple does protect its intellectual property rights.

Against this background, the amicus brief says:

"So the proposed 'Douglas Dynamics test,' as Apple has framed it, is this: if a patentee has a reputation for innovation and its patent is infringed by a competitor, then the patentee's reputation will necessarily be harmed by that infringement – no matter how trivial the patented feature – because consumers might believe the patentee did not enforce its intellectual property rights. No further proof of causal nexus is needed. The logical leap is astounding."

The appellate hearing will take place in a matter of months, and I'll listen to the official recording as soon as it becomes available (usually on the day of the hearing). I understand Apple's desire for a sales ban and I said before that, while Samsung doesn't need to infringe the related patents (and the liability findings are subject to an appeal, with the autocomplete patent also being under reexamination pressure), an injunction would make Apple look and feel better. However, it wouldn't make sense to lower the standard for access to injunctive relief if an injunction bid comes from a company with a reputation for innovation. In Apple's case, that reputation is based on a definition of innovation that is inconsistent with the one applied in patent law. In patent law, it's about who's first to come up with something, not who's first to convince millions of consumers to buy and use technologies that, for the most part, others created before Apple.

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Pressure mounts on EPO president and administrative council over suspension of patent judge

About a month ago, the Administrative Council of the European Patent Organisation, the international body running the European Patent Office, expressed "concern at an incident unique in the history of [the] EPO" without saying clearly whether this related to the controversial decision by EPO president Battistelli to "suspend" a member of a board of appeal (a judge in all but name) for disciplinary reasons or whatever the suspended judge might have done. I believe that this ambiguity was intended because the Administrative Council needs to keep all options open, as it may ultimately have to oust the president over this scandal. However, I learned later that EPO staff was told the Administrative Council took issue with the alleged misconduct of the suspended judge. The Administrative Council plays a key role in the "reign of terror" that tries to discourage EPO staff, including judges, from fighting for basic human rights and one of the most fundamental values of the civilized world: judicial independence.

If the Administrative Council of the EPO didn't believe that it can get away with things that other political bodies couldn't even dream of committing, the EPO would already have a new president (though, as I said more than once, the real issue here is a structural one) and it would also be unthinkable in other public organizations that a vice president faced with multiple criminal charges (also see this "special report" on criminal charges) could stay in office for this long. All of this shows that something is completely wrong with the Administrative Council itself. Instead of exercising oversight, that body is largely responsible for the banana republic that the EPO has become. Seriously, there is no way that, for example, someone could continue as a vice president of a national antitrust authority, national patent office, or a central bank--except in the Third World--under these circumstances. While everyone is innocent until proven guilty in court (and it's possible that Mr. Topic never committed any wrongdoing that can be proven), a certain amount of smoke is equivalent to fire in a political context. Except, of course, if the decision makers feel they are not going to be held accountable.

According to French financial daily Les Echos, the suspended EPO judge's alleged wrongdoing relates to whatever he may have said about Mr. Topic, viewed by the EPO president as a "defamation campaign." I don't know what exactly the suspended judge said, but this looks like someone merely exercising his freedom of speech. The IPKat blog published a letter from the Intellectual Property Judges' Association (IPJA) to the Administrative Council, and the letter had "near unanimous support" from the IPJA's membership, which means top-notch patent judges from 11 European countries, without any objection or reservation. That letter says about the suspended judge's alleged misconduct: "It is not, as far as we know, suggested that the Member has committed any criminal offence."

The judges call for political action:

"The present events seriously threaten the judicial independence of the Boards of Appeal and by doing that call in question the guarantee of an independent and impartial review of the European Office's decisions by a judicial body. Not tolerating that should be the common interest of all Member States of the European Patent Organisation."

Having watched various political scandals over the years, I consider it a rule of thumb that an affair that results in statements and actions even during the Holiday Season, and that continues with undiminished force after the Holiday Season, tends to result in someone's resignation or ousting. Smaller issues go away and are not carried over into the new year. But the really big issues do survive the Holiday Season.

Even on December 29, at a time when few people are at work, there was a very significant development. EPLAW, the European Patent Lawyers Association, wrote a letter to the members of the Administrative Council expressing concern over judicial independence at the EPO. My favorite part is the seventh paragraph:

EPLAW is of the opinion that [...] judicial independence is guaranteed only when the power to suspend or to remove a judge is with his peers, and not with an executive or administrative body. In this respect Article 11(4) EPC -- which provides the Administrative Council with the power to exercise disciplinary authority over the members of the [boards of appeal] -- falls short.

In the final paragraph, EPLAW therefore "urges the Council to use this opportunity to propose an amendment to Article 11 EPC and in any event to critically review the Guidelines for Investigation [the basis on which the suspension happened] so as to avoid any further concern with respect to the principle of judicial independence at the EPO."

Thanks to the IPKat blog I've become aware of an official response by the UK Government to a member of parliament (liberal democrat Dr. Julian Huppert, from Cambridge) who asked a question about what measures would be taken to ensure judicial independence at the EPO. The answer suggests that the UK government and possibly some other governments do see a need for some improvement:

Officials in the UK Intellectual Property Office are closely and actively involved in discussions relating to the Boards of Appeal of the European Patent Office (EPO), including the Enlarged Board. It is the UK Government position that the Boards of Appeal should be independent of the executive of the EPO, and be seen to be so. This view is shared by other EPO member states and we expect proposals to make this clearer to be considered by the Administrative Council, the Office's supervisory body, in March 2015.

Whether the proposed reforms will go far enough, and whether they will be implemented at all, remains to be seen. I felt last month that there was a crack in the shell, and the UK government's response reaffirms this belief. Let's hope for the best.

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Friday, January 2, 2015

Google denies that it wants to take all software copyright down with its Supreme Court petition

Happy New Year!

This is the follow-up I announced in my Wednesday blog post, "Deafening silence from software industry presents credibility problem for Google's Supreme Court petition."

Before I talk about a substantive issue concerning Google's petition, let me add something to what I wrote the day before yesterday about an orchestrated rather than organic amicus brief campaign. California-based inventor and IP lawyer John Nicholas Gross looked at the 77 "amici" who signed the EFF's computer scientists brief. On Twitter he commented on one after the other, and if you scroll down far enough on his Twitter page (to his November 9 tweets), you can find more detail on this. His analysis culminated in this overall result:

"Final scorecard: 35 of 77 EFF 'amici' [are] current/ex GOOGLE, received funding, work for orgs that get funding, or have biz deals w/ GOOGLE"

Almost two and a half years ago, there was a great deal of interest in business relationships between the parties to this dispute and commentators such as bloggers, including yours truly (who took the very same position on interface-related copyrightability in public more than 10 years ago and also about five years ago while working against Oracle). However, no one besides Mr. Gross has recently found it worthwhile to research the connections between those "friends of the court," about half of which are easily identifiable as Google friends. Instead, certain journalists (fortunately only a very few) have worked hard to describe those computer scientists as the authority on the issue. Well, even if you would like the the law to be what those guys say, it's not journalism but downright propaganda to overstate the importance of that filing without doing your homework. If you are real, serious journalists, why can't you do what Mr. Gross has done and simply run some Internet searches--Google searches, that is--to track down all those connections? So much for that.

On the substantive side, there's only one thing in Google's reply brief (published in my previous post) that I wish to discuss. Other than that, unless anything important comes to my mind or something interesting happens, I'll just wait for the Supreme Court's decision on the cert petition.

The one thing that is key here (other than Google's emphasis of the favors it received from its best friends in the form of signatures) is the question of what effect Google's proposal to hold 7,000 lines of highly-creative and highly creatively-structured declaring code uncopyrightable (as the district judge mistakenly did in an unprecedented outlier ruling) would have on software copyright as a whole. As an app developer who has written a lot of code himself and has recently hired four full-time developers, I'm obviously interested in a reasonable degree of IP protection for software. While I applaud Google for fighting in certain areas against the (sometimes institutionalized) excesses of the patent system, I view Google's attack on software copyright as an attack on every honest (i.e., non-thief) software developer in the world.

In its reply brief, Google still--after all those years--fails to make a workable line-drawing proposal. It just denies the undeniable: that an overreaching application of the §120(b) exclusion of systems and methods of operation from the scope of copyright would create enormous uncertainty about the copyrightability of any software, at least of all object code (since object code does not contain source code comments).

Google says in its reply brief "that the Java libraries of pre-written programs are generally eligible for copyright protection, but the method headers (also known as declarations) used to operate those programs are not." While this appears, at first sight, to be a line-drawing suggestion, it's utterly unhelpful once you think it through: the distinction between declaring code and other code makes no sense under software-related copyright law.

Google claims that the exclusion of systems and methods of operation applies to method headers in a very broad sense. According to Google's reply brief, it doesn't depend on any fact-specific determination. Ineligible. End of story. But Google's lawyers know that the Supreme Court would reject a petition for writ of certiorari that overtly advocates the unconstitutional abolition of software copyright as a whole. So they included the "don't worry" message I just quoted. But software developers would have to worry if the Supreme Court ever considered agreeing with Google.

Throughout this litigation, Google has always argued that whatever was presented wasn't copyrightable. Not just declaring code. Not just the nine-line rangeCheck function (which even the district court held copyrightable, quite tellingly). Even a bunch of decompiled programs that consist mostly of non-header code were held copyrightable, though Google said they were not. I have yet to see the first piece of software that Google agrees is copyrightable--except for the closed-source parts of Android, of course. Google does make it clear to Android device makers that it will enforce its copyright in those programs should anyone copy them without a license. But those are not at issue in this dispute.

I've really tried very hard to understand whether Google's proposal could be workable, and I just can't see how it would ever work. I can't see how anything good could come out of this Supreme Court petition for Google without causing massive damage to the software industry--including little guys like me--as a whole.

Let's think it through together. When lawmakers decided that software would be protected by copyright law just like literature, they made a policy judgment that is now binding on everyone, even on the Supreme Court. It has been clear ever since that not only program source code, which may contain expressive elements such as names and commentary that are not needed for functional purposes, but also object code stripped of those optional though expressive elements is protected by copyright law.

It makes for a much more focused analysis if we start from that premise: while §102(b) excludes systems and methods of operation from the scope of copyright, even object code that is by definition functional--it's the code you can actually run on your computer--does deserve and enjoy copyright protection provided that it's original.

That premise, in and of itself, makes it very clear that §102(b) is meant to protect only against overreaching interpretations of copyright law. Someone who writes a book about an accounting system doesn't own the accounting methods. Someone who publishes a game, or a book on game rules, can't monopolize a method of gameplay. Those questions were decided a long time ago and have nothing to do with the literal copying of 7,000 lines of highly-creative code. Of course, if copyright law allowed someone to monopolize an accounting method or a game category, then software copyright would be like broad and trivial software patents on steroids. Again, understood and agreed. But that's not the issue here.

Google could have designed an API with the same technical characteristics as the Java API without infringing copyright. It would just have had to come up with its own interface. As a result, programmers would have had to learn the new interface, but that would have been Google's problem (when it needed to get traction for Android among developers), not Oracle's.

Oracle never said that you couldn't have an API that allows you to rename files, to draw rectangles, or to terminate threads, without taking a license to Java. So this has nothing do with cases like Baker v. Selden (the one involving the accounting method).

Essentially, Google is saying that header code is inherently, and without a need to consider the facts, a system or method of operation, while other code may or may not be depending on the facts.

If you look at this through the lens of "no matter what §102(b) says, even object code stripped of variable names and source code comments must remain eligible for copyright protection because that's the way Congress and all courts wanted it to be," then there's really no basis on which one can consider header code to be, inherently, a system or method of operation without saying the same about all other code. That's the whole problem.

In order to illustrate this, I'm now going to walk you through a couple of code segments that the district court held copyrightable (against Google's non-copyrightability arguments) and discuss, from the §102(b) angle, the difference between headers and other code, just to show you that the distinction is nonsensical in a copyrightability context.

Let's start with the nine-line rangeCheck function (without the usual indents, just to make it easier to read here):

private static void rangeCheck(int arrayLen, int fromIndex, int toIndex) {
if (fromIndex > toIndex)
throw new IllegalArgumentException("fromIndex(" + fromIndex + ") > toIndex(" + toIndex+")");
if (fromIndex < 0)
throw new ArrayIndexOutOfBoundsException(fromIndex);
if (toIndex > arrayLen)
throw new ArrayIndexOutOfBoundsException(toIndex);
}

The header--and thus non-copyrightable part according to Google--would be everything that's in the first line before the opening brace. The rest would be eligible for copyright protection (though Google said this particular code segment wasn't worthy of copyright protection for other reasons than being a header; essentially, Google said it was way too small to be copyrightable).

I'm obviously not saying that the first line on its own would be copyrightable in isolation. But that's not because it's a header. I'd have an even bigger problem with any of the other lines if someone tried to copyright them on their own. Just like copyrightable music consists of non-copyrightable notes and this blog post as a whole is copyrightable while none of the 26 letters used in its are, you can always break down a copyrightable work to the level of uncopyrightable atoms.

So it typically (with the exception of some unusually creative single lines of code) takes a set of lines--in this case, nine lines--to identify a copyrightable work. But why would the header in this case have to be completely ignored in this analysis while the rest would at least have to be looked at?

It makes no sense if you look at what each line does. If the header is excluded under §102(b), so is the rest. If the rest is not excluded, then the header--and, as a result, a reasonably creative and large set of headers--isn't excluded either. It sounds simple because it is.

If any other code--non-header code--wanted to call the rangeCheck function, an exemplary line of code would be this:

rangeCheck(listLength, firstIndex, lastIndex);

That would be code making use of the header. It wouldn't be header code. If anything, that code, because it triggers the execution of the rangeCheck code, would be more of a system or method of operation than the rangeCheck header ever was.

The body of the rangeCheck function consists of two instructions that have a simple pattern: if a condition is met, an exception is thrown. Why would the "if" part that results in a comparison of actual numbers, or the "throw" part that triggers an exception (i.e., the program may stop executing, or at least there would have to be some exception handling that organizes an orderly retreat after an error came up), be less of a system or method of operation than the header? I just can't see that.

Sure, this was just rangeCheck. A very small function. Still, copyrightable in the opinion of the court(s) below. But we won't reach a conclusion more favorable to Google's position even if we compare header lines to non-header lines from larger programs. Let's look at one of the aforementioned decompiled files (that were also held copyrightable against Google's representation that they were not). The first one of those programs is AclEntryImpl. We won't discuss every line, just the categories of lines of non-header code.

The "package" command at the beginning is about defining namespaces. Since it's only one line, we don't have to waste time discussing whether or not this is header code. There's certainly a case for a "package" command being header code. But the "import" commands that follow have the effect of importing other namespaces for easier references. So, for example, if you have a namespace that is called mynamespace.tools.filemanagement and it comes with a compressedFileArchive class, then you can either reference that class by writing mynamespace.tools.filemanagement.compressedFileArchive each time you make use of it, or if you think you're going to use this one (and/or other classes from the same namespace) frequently, you may just import that namespace and then you can reference compressedFileArchive directly (unless another class by that name is also found in, or has been imported into, your namespace, in which case you need to specify which one you mean).

Then we get to what is undoubtedly a header line the way Google defines it:

public class AclEntryImpl implements AclEntry

The part inside the braces is code that gets executed when AclEntryImpl is called. And the first three lines of that inside part are:

private Principal user;
private vector permissionSet;
private boolean negative;

Those three lines declare (define, create) a variable of data type "Principal" named "user," a variable of data type "vector" named "permissionSet," and a variable of type "boolean" (it's binary; true or false) named "negative." So here you have declaring code of the kind that Google says is not copyrightable if it's in a header file, but Google says code that is not in a header-only file may be copyrightable. Remember, Google's reply brief says "that the Java libraries of pre-written programs are generally eligible for copyright protection, but the method headers (also known as declarations) used to operate those programs are not." Those "private" commands (they define a variable that is available only at the local level and can't be accessed from outside) are, however, part of the pre-written program code that gets executed when you instantiate the AclEntryImpl class (i.e., make use of the header in order to create an object based on the class definition).

If we believe that such declarations must be copyrightable, then we already disagree with Google. If we say, only for the sake of the argument, that this kind of code shouldn't be copyrightable, then we must disagree with Google shortly thereafter.

The very next line--"public AclEntryImpl(Principal principal)"--is the declaration for the constructor, i.e., for the code that creates an object based on a class definition. And the executable (non-declaring) constructor code consists only of these four lines:

user = null;
permissionSet = new Vector(10, 10);
negative = false;
user = principal;

Why would this constructor code not be excluded under §102(b) if the headers and even the "private" declarations are? Again, it makes no sense.

Those four lines assign a value to each of three variables. The "user" variable is initially assigned "null", a value that means "not available." Then, at the end of the constructor, it's assigned the content of the "principal" variable, which is the only parameter of the constructor (i.e, the only value passed on to the constructor when it is called). It makes no sense to have two assignments in the same block of code because the second one undoes the first one and no use is made of the assigned value in the meantime; the reason it's here at all is that a decompiler (a program that creates source code based on object code) was at work, and decompilers typically aren't smart enough to identify such inefficiencies. So technically, we have just three assignments of values to variables. Each variable is like a predefined storage place for information. Each such storage place gets some content, and then constructor is done. This is not declaring code, but wouldn't you agree that assignments look pretty much the same as declarations?

They do, and in fact, most programming languages allow developers to mix them: you can declare a variable and immediately assign an initial value to it. Or, if you have so-called constants, you must assign a value at the beginning and that value won't ever change while the program is being executed.

The absurdity of Google's proposition "that the Java libraries of pre-written programs are generally eligible for copyright protection, but the method headers (also known as declarations) used to operate those programs are not" is shown, not only but particularly clearly, by the fact that Google wants the very same thing--a declaration that comes with an immediate assignment--to be ineligible for copyright protection if it's in a header file but potentially copyrightable, depending on the specific facts, if it's found inside a block of non-header code. "Absurdity" is an understatement. No reasonable person could ever claim that copyrightability depends on where a particular line is found. Musical notes are equally copyrightable whether they're at the beginning or the end of a song or an entire opera. There's no rule that the prelude is copyright-ineligible. Similarly, headlines in books (Oracle's famous Harry Potter example) aren't treated differently from the body of the text. Prefaces and epilogues aren't treated differently from what's between them.

At this point it should already be clear that Google does not make a workable line-drawing proposal. It proposes a vague and arbitrary line that has no basis in the law and is completely detached from what Congress wanted when it decided that computer program code, even object code, must be copyrightable as long as it's original and expressive.

Let's continue a bit with the AclEntryImpl class definition anyway. The next header line there is "public AclEntryImpl()" and that's also a constructor, but one without any parameter. The code of this constructor is a subset of the previous constructor, the one with the "principal" parameter. This explains why the decompiler resulted in the aforementioned waste of assigning two different values to the "user" variable in the same code segment: the constructor with a parameter initially calls the one without a parameter and then just assigns the parameter value to the "user" variable. The recompiler tool that was used here simply processed each line without checking again later whether any particular line was rendered pointless by a subsequent line. But that's unrelated to the question of copyrightability. I'm just trying to make sense of something that makes no technical sense here, and that's due to the genesis of this file (decompilation).

After the two constructors, we find a boolean (true/false) function named setPrincipal. The "public boolean" line is a header; the code block within the braces is the code that gets executed when this method is invoked. The purpose of setPrincipal is to assign the value of the "principal" parameter to the "user" variable, but only if "user" hasn't been given a value before (otherwise it will return "false" to report that the attempt to assign the value has failed, a safeguard against overwriting the variable after the initial assignment and a typical write-only-once mechanism).

Why is "if(user != null)" and "return false" (to be clear, both "return" and "false" are predefined Java keywords, while the method name setPrincipal was freely chosen by the developer) any more expressive or any less functional than the declaring code? I can't see why that would be the case. I also can't see why a line that calls the setPrincipal function would be less of a system or method of operation than the line that defines the function.

Unless one tries to interpret the scope of copyright protection based on declaring code too broadly (like I wrote above, as a software patent on steroids), declaring code is an even weaker case for a §102(b) exception than non-declaring code.

This stuff isn't worth the Supreme Court's time. It's no more worthy of a Supreme Court review just because Google's friends signed some amicus briefs and got some of their friends and peers to sign. Certiorari should not become a campaigning contest.

The only way the Supreme Court could help Google here would be by creating a black hole that would absorb almost all software copyright protection, including all (no exception there) object code protection. Since the Supreme Court won't create a black hole, and since there's no basis for an interoperability exception to copyrightability in U.S. law, what good would a Supreme Court review do other than delay resolution of this case, which would come in handy for Google but not be in the public interest?

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