Thursday, June 30, 2011

ITC gives Kodak a small chance to prevail over Apple and RIM -- uphill battle until August 30, 2011

A week ago I reported on the ITC's postponement of its decision on Kodak's complaint against Apple and BlackBerry maker RIM over an image preview patent.

The ITC could have taken a final decision today, either affirming the initial determination made by the Administrative Law Judge -- the ALJ found the relevant patent claim invalid and not infringed -- or reversing it entirely by finding Apple and RIM liable for infringement of a valid patent claim. Instead, the ITC decided to reverse only certain elements of the initial determination and to remand the case to the ALJ for a new analysis. Here's the ITC's decision.

The new target date for the decision is now August 30, 2011.

This is going to be an uphill battle for Kodak because the Commission still leaves it to the ALJ to decide whether the relevant patent claim is valid. If the ALJ once again concludes that it's invalid, Kodak loses. Only the infringement of a valid patent is legally relevant. If the ITC had definitively reaffirmed the judge's determination of invalidity, that would have resulted in a definitive and immediate decision against Kodak's complaint.

The area in which the Commission clearly overturned the ALJ's determination is claim construction. I recently explained the role of claim construction in connection with the ITC's investigation of Microsoft's complaint against Motorola. In the Kodak case, a few key terms must now be interpreted differently by the judge in the further proceeding than before. For two of the modified terms, today's decision doesn't take a position on whether the different constructions must result in a different determination concerning infringement. For two other terms, the Commission does state that its modified construction suggests infringement, but an infringement analysis always depends on all key elements of a patent claim, so even if some elements are now deemed infringed, there are still others concerning which the judge may arrive at the same conclusion as before.

In other words, the ALJ can still rule against Kodak, and it's reasonably probable that he will. Kodak gains more time and gets the opportunity to present new arguments. Given that Kodak is not too likely to prevail, a possible outcome now is a settlement that would cost Apple and RIM a fraction -- possibly a tiny fraction -- of the billion-dollar amount Kodak and some observers previously considered realistic. This way, Kodak would at least get some cash to finance its restructuring while Apple and RIM could eliminate the remaining risk of losing. Also, let's not forget that there are federal lawsuits going on, and Apple and RIM would presumably also like to get rid of those -- but on their terms now rather than Kodak's.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents.

Share with other professionals via LinkedIn: