Monday, July 25, 2011

Apple keeps pushing for February 2012 trial against Samsung in California

Apple recently suffered two setbacks for its efforts to speed up its federal lawsuit against Samsung (in the Northern District of California): Judge Lucy Koh denied Apple's motion to shorten time for a decision on an expedited trial (in other words, Apple wanted a tighter schedule for a decision on a greater scheduling issue) and adopted a schedule for the process on Apple's motion for a preliminary injunction with a target date that's almost identical to the one proposed by Samsung, scheduling the related hearing for October 13. But Apple's lawyers keep pushing on a third scheduling front: they still try to persuade the court to schedule a trial on the lawsuit (meaning the main proceeding, not the preliminary injunction) for February 2012.

While the two recent decisions against Apple's scheduling proposals indicate that Judge Koh refuses to be rushed, I think Apple has a chance -- even if it may be limited -- to succeed on this one. The judge also granted Apple's request for expedited discovery, which was an intermediate step toward Apple's motion for a preliminary injunction. More importantly, the two scheduling decisions that Apple just lost were about saving about a month of time in each case, but the motion for an expedited trial could make a difference of about a year (as compared to the median time to trial in that district). It's easier to argue that a year of continued infringement causes a great deal of irreparable harm than to convince a court that one month makes a huge difference in that regard.

Apple's lawyers put together an extremely well-written pleading in response to Samsung's opposition to an expedited trial (which was no less well-written, by the way). This process is a very interesting one to watch, and while it takes a lot of reading to keep track of it, it's fascinating to see so much persuasive power at work on both sides, and an interesting blend of hard punches and subtle sideswipes.

For example, here's a passage that shows the rhetoric with which Apple stresses the urgency of this matter:

"Because of that rapid pace [referring to product cycles in the relevant markets], justice delayed truly is justice denied. Without rapid adjudication of its claims, Apple's hard-earned intellectual property is devalued, Apple's iconic products may lose distinctiveness, Samsung's imitation products flourish, and the creativity that so infuses Apple's product design is misappropriated."

That's quite a strong story, isn't it? It's also true that Samsung is gaining market share based on the numbers I saw. But similar arguments didn't previously convince the judge of a need for the court to depart from its usual procedures.

The hearing on a possible expedited trial will take place on August 24, and we'll all know about the decision then or shortly thereafter.

Apple accuses Samsung of stalling

Apple reiterates that at a previous court hearing, a Samsung lawyer had compared the shelf life of mobile devices to that of cabbage. It makes sense for Apple to try to expose Samsung's different positions as inconsistent or self-contradictory. However, it's not like the short shelf life of those products makes injunctions (or ITC import bans) useless: even if the originally accused products are no longer for sale, the accusations typically have an "including but not limited to" kind of structure, and if successor products have the same infringement pattern as the ones originally accused in a previous complaint, the patent holder can shut those down quite easily (should the infringer even dare to sell them).

Apple uses a variety of terms to accuse Samsung of copying. In the opening paragraph of its new pleading, the related keyword is "copycat":

"Samsung plainly seeks to run out the clock with its current generation of infringing products and then move on to another round of copycat devices before any judgment can issue."

Again, if the same company infringes the same intellectual property rights product generation after product generation, it can't just do an end run around injunctions by always switching to the next generation before a lawsuit is concluded.

Apple also portrays Samsung's counterclaims as part of its stalling strategy:

"[...] Yet it was Samsung that artificially inflated the scope of this case by interposing 12 more utility patents from what was its countersuit in a transparent attempt to slow Apple's case down. And it did so in response to Apple's notice that it would file a motion for expedited trial the next day. Because these 12 disparate patents raise numerous legal, factual, and technical issues that are completely unrelated to Apple's claims — such as Samsung's breach of its duty to license patents that Samsung contends are essential to implement international standards, and related antitrust violations — they should be severed and set for trial on a separate track. Indeed, as demonstrated by its failure to move for expedited relief, even Samsung does not believe that its claims require quick resolution.

Setting aside Samsung's unrelated counterclaims, this case involves fairly straightforward claims concerning the distinctive look and user interface of Apple’s iPhone and iPad products and Apple's related intellectual property."

It's true that only Apple claims a lot of urgency and Samsung didn't request an expedited trial. It's also true that some (possibly even a majority) of Samsung's patents-in-suit raise FRAND licensing issues, which I discussed in my most recent post on this dispute, while there's no indication that Apple's asserted patents do. Maybe those differences would justify severing Samsung's counterclaims in order to have a fast track for Apple's claims and a normal-speed track for Samsung's counterclaims, but I don't agree with Apple that Samsung "artificially inflated" this litigation. If a company that owns many patents gets sued, it's normal that it brings counterclaims over many patents. Everyone does this in those smartphone patent lawsuits except for Google, which would like to but doesn't have the necessary arsenal (at least not yet). In terms of the number of asserted intellectual property rights, Apple asserts far more in that litigation than Samsung. Apple claims that many of the rights it asserts, like design patents and trade dresses, are "straightforward" claims, but even if one agreed with them, there still isn't a huge difference between the complexity of the parties' assertions.

I said on a couple of previous occasions that I believe Samsung filed its separate countersuit in California (about two weeks after Apple's original complaint) only to respond very quickly, and it would have needed more time to file counterclaims along with its answer to Apple's complaint. When Samsung later consolidated its countersuit into Apple's lawsuit, it justified the formal withdrawal of its originally separate countersuit with a suggestion made by the court and efficiency considerations:

"WHEREAS, during the June 17, 2011 hearing in the Apple Action, the Court suggested that an appropriate course of action would be for the Samsung entities to raise patent infringement claims in the Apple Action, which would render this separate action unnecessary since the Samsung entities could pursue their patent infringement claims in the Apple Action; and

"WHEREAS, it would be in the interest of judicial and administrative efficiency for Plaintiffs Samsung Electronics Co., Ltd. and Samsung Telecommunications America, LLC to dismiss without prejudice their complaint for patent infringement in this case and instead pursue those claims for patent infringement as Counterclaims in the Apple Action;"

If the judge (who was also presiding over that abandoned separate countersuit) indeed suggested that consolidation, she won't be impressed with Apple's claim that this is all just about inflating the lawsuit in order to slow things down.

Apple counters Samsung's claim of superior quality being the reason for its success

In a recent post on this dispute I mentioned Samsung's claim that the success of its products is all about the quality of their product (they mentioned "bigger and better screens and faster download times" and not attributable to any infringement of Apple's IPRs. In my view, as a Galaxy S II user, the first is definitely true but I also see strong indications for the second part.

Apple's reply to Samsung's related claims is strong, which is not surprising:

"Samsung's argument makes no sense. Samsung's sale of the accused products has indisputably enabled Samsung to take market share from Apple. There is a direct nexus between Samsung's sale of the accused products and the resulting changes in market share. Apple's evidence that Samsung has copied Apple's intellectual property is in no way rebutted by the screen size or download speeds of Samsung's products, which are features that have no relevance to Apple’s claims. If Samsung is selling infringing products, Apple is entitled to an injunction prohibiting such sales. Samsung cannot avoid an injunction on the ground that its products are allegedly 'better' in other irrelevant respects."

In this legal context, Apple doesn't argue about whether Samsung's claims of bigger and better screens and faster download times are true or not. Apple points out that they are irrelevant (whether right or not), and Apple is of course entitled to relief against infringement.

Apple: "Samsung's 'sue first, talk later' argument should be rejected"

In connection with Samsung's FRAND licensing commitments, Apple already claimed that Samsung filed an infringement suit prior to offering FRAND licensing terms. In the scheduling context, Samsung (but also the judge) doubted Apple's sense of urgency given that Apple waited for about a year after the beginning of the alleged infringement with filing a lawsuit. Apple now tries to turn this against Samsung:

"Samsung does not dispute that Apple immediately objected when Samsung released its first infringing products in July 2010, and that the parties then participated in multiple negotiation meetings. [...] Nor does Samsung dispute that
Apple realized that further negotiations were futile when Samsung released a new round of infringing products in February and March 2011.

Samsung nevertheless contends that Apple is barred from seeking an expedited trial because Apple chose to engage Samsung in negotiations, instead of suing Samsung immediately. Samsung's 'sue first, talk later' argument should be rejected. There is a strong public policy favoring the resolution of disputes through negotiation instead of litigation. Apple should not be penalized for seeking a negotiated resolution first, before suing its long-time supplier of key components. Moreover, the extensive pre-litigation negotiations provided Samsung with ample time to analyze Apple's claims and to prepare its response. Indeed, when Apple filed this action in April 2011, Samsung immediately retaliated by filing a countersuit in this District, as well as multiple lawsuits in several other countries."

I think the (alleged but probably accurate) fact that Samsung sued prior to making a FRAND offer is a strong point for Apple to make in its defense against Samsung's claims. I'm not so sure that Apple can convince the judge of its extreme sense of urgency. Apple wants a decision now from the court during a shorter time frame than the duration of its negotiations with Samsung.

Apple wants a rocket docket in Northern California

Apple rejects Samsung's suggestion that the duration of lawsuits in Northern California is a fact that Apple must have taken into consideration when filing its initial lawsuit against Samsung there:

"Samsung contends that Apple somehow forfeited an expedited trial because it sued Samsung in this District, where the average time to trial is about 23 months, rather than in a different district that has a shorter average time to trial. Samsung ignores that this District is by far the most logical place for this lawsuit, as it is the location of Apple's headquarters. This District is also in a central area between the headquarters of the three Samsung defendants (Korea, New Jersey, and Texas), and is closer to Korea than almost any other city in the continental U.S. Moreover, Defendant Samsung Electronics America has a branch office in San Jose, and its affiliate Samsung Information Systems America is based in San Jose and has sent representatives to attend the San Jose court hearings.

Samsung asserts that Apple should have filed in a district known for its speedy docket (such as the Eastern District of Virginia). Apple acted reasonably by filing this lawsuit in the forum with the strongest nexus. By filing here, Apple did not waive the right to request an expedited trial."

Apple's points look very compelling, but they raise what marketing professionals would call a "positioning" question for the district court in Northern California. Does that court want to be flexible about speeding up trials just so companies based in that area will be able to choose the "logical" venue for their patent infringement lawsuits? If the court agrees with Apple that its case is particularly urgent, it will get many more requests of this kind. If the court denies Apple's motion, it's possible that California companies are even more inclined to file patent infringement lawsuits in other districts.

Some of the points Apple has made in its various pleadings related to scheduling issues reiterate reasons for which Apple probably has a stronger infringement case against Samsung than the other way round, at least in my view at this stage of the process. Samsung probably hopes for tactical advantages, such as quick and favorable rulings in some of the many jurisdictions in which it sued Apple, but as far as the substance of the allegations is concerned, I see Apple on the winning on the track. However, I'm much less bullish on the prospect of an expedited trial. I guess the most likely outcome is that the court proceeds reasonably swiftly (as it did in Oracle v. Google, a case over which a different judge presides), but a February 2012 trial is probably going to be filed under "wishful thinking". In about a month we'll see.

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: