Tuesday, June 14, 2011

Apple feels "harassed" by "copyist" Samsung's demands for early look at iPhone 5 and iPad 3; showdown on Friday

With all that's going on, this is already my third blog post within a few hours. After reporting on The New York Times Company's and OpinionLab's declaratory judgment actions against Lodsys and the settlement under which Apple pays royalties to Nokia, I still wanted to do a quick update on the dispute between Apple and Samsung. There's some interesting legal argument to report on.

The rhetoric is rather unusual considering that Samsung is one of Apple's key suppliers (probably its largest one). In one of its most recent filings, which became discoverable late on Monday by Pacific Time, Apple says that Samsung "attempts to harass" it and that Samsung's demands are not made in good faith. Apple also refers to Samsung as "the copyist" in this dispute.

For some background, here's a Bloomberg report on Samsung's recent request for Apple to provide it (or more precisely, its lawyers) with samples of its next-generation iPhone and iPad products. That would be the iPhone 5 and iPad 3, neither of which has been announced, though everyone knows that they will become available in the not too distant future.

It was obvious to all close observers of the dispute that Samsung's request was meant to echo and mirror Apple's previous request for "expedited discovery" and access to various Samsung products that had not yet been released in the U.S. market at the time, such as the Galaxy S II (which is, by the way, the kind of smartphone I use these days and really like a lot, but I'm neutral -- I also own an iPad 2 and have recommended it to several people).

While the court explained to Apple in a recent hearing that "what's good for the goose is ... good for the gander", this is not just about a reciprocal harassment. There's far more at stake: Apple made its original request for expedited recovery because it may soon want to file a motion for a preliminary injunction rather. In other words, Apple seeks to get legal leverage to take down some of Samsung's products in the very short term -- which would enable Apple to negotiate a settlement on its preferred terms. In one of its latest filings, Apple states the following about its intended course of action:

"Apple will decide whether to file a motion for a preliminary injunction motion against Samsung's new products after completing its review of the five products that Samsung will produce on June 17, 2011."

On that same day -- this coming Friday -- at 1:30 PM Pacific Time, Apple and Samsung will also meet with their judge at the U.S. District Court for the Northern District of California to discuss Samsung's request for expedited discovery. The filings that became available last night were basically made in preparation of that showdown, at which the judge will probably decide on Samsung's request for an early look (of its lawyers) at next-generation iPad and iPhone samples.

The legal argument is obviously more complex than the goose-and-gander proverb suggests. Let me just highlight a few of its aspects:

  • Apple argues that it is the "master" of its infringement claims while Samsung is merely "the copyist", and since no future iPhone and iPad products are at issue in Apple's complaint, there's no reason to show them. Apple doesn't say that Samsung's products infringe future Apple products -- just existing ones. But Samsung's lawyers argue that Apple's trade dress- and trademark-related claims (the case involves a variety of intellectual property rights listed in detail here), future design changes could indicate that Apple is not as consistent as it claims, and consequently Apple's related rights could be weaker -- possibly too weak to warrant the drastic measure that a preliminary injunction is. Apple dismisses those theories completely.

  • Apple claims that Samsung not only lacks a reasonable basis for its requests but is also asking for a kind of disclosure that goes way beyond what Apple requested (and the court granted). Its chief patent counsel, Richard J. Lutton, declares in a court filing that "Apple is widely recognized as one of the most secretive companies in the world" and that "Apple’s new product announcements are major events in the technology industry." I guess one doesn't have to be an "Apple fanboi" to consider those representations accurate. Neither the iPad 3 nor the iPhone 5 has been officially announced. By contrast, at the time when Apple requested a Galaxy S II sample from Samsung, I had already ordered mine from Amazon (and received it shortly thereafter). The following statement in Apple's filing is important and shows why Apple basically just asked Samsung to show products it had already shown, or provided samples of, to others:

    The Court further noted that Samsung's argument about the confidentiality of its new products was "undermined to some extent by evidence that Samsung has already released images and samples of its forthcoming products to the media and members of the public."

  • Samsung stresses that it doesn't want to look at those products for what would (though Samsung doesn't use that terminology) amount to court-legalized industry espionage. Samsung would only request access for its outside counsel. That is the firm of Quinn Emanuel, a very reputable litigation firm -- but it's also the firm that represents a variety of Android device makers against Apple and other patent holders. So even if Samsung's corporate decision makers didn't get a look, that law firm might make use of any confidential information on future Apple products to develop infringement theories that companies like Samsung, Motorola or HTC could bring against Apple at a later stage.

The above is a simplified representation of the parties' positions. Another way to sum up Apple's position is found in the conclusion of its filing in opposition to Samsung's Motion to Compel [the surrender of samples of the iPad 3 and iPhone 5]:

Samsung's Motion to Compel is an improper attempt to harass Apple by demanding production of extremely sensitive trade secrets that have no relevance to Apple's likelihood of success on its infringement claims or to a preliminary injunction motion. Apple made a compelling showing in its motion to expedite discovery that Apple needs samples of products that Samsung has already announced, distributed, and described, so that Apple can evaluate whether to file a preliminary injunction motion against those products, which look strikingly similar to the distinctive trade dress of Apple's current products. Samsung has made no such showing about Apple's future products. Therefore, Samsung's Motion to Compel should be denied.

I agree with Apple that Samsung's requests go way beyond what Apple asked for. I also have a feeling that the court is not going to grant Samsung's requests -- there doesn't seem to be sufficient cause. But at this stage let's not speculate too much. We will know the court's decision soon, probably by the end of the week, or early next week. I'll report in due course.

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