Thursday, February 23, 2012

Apple keeps fighting for ITC import ban against Motorola Mobility

On January 13, 2012, an Administrative Law Judge (ALJ) at the ITC made an initial determination according to which Motorola Mobility shouldn't be found to infringe any of three patents asserted by Apple in investigation no. 337-TA-750. I said at the time that Apple would certainly petition for a review of this preliminary ruling by the six-member Commission at the top of the ITC.

Last week, the public redacted versions of various petitions and reply briefs of the parties with a view to a possible Commission review became available. Please excuse my delay in reporting on this. Things have been quite busy lately, especially on the famous FRAND front, and last week was a tough one for me due to a seasonal illness (meanwhile, I've recovered almost entirely).

I believe Apple has raised some good points that make a review of the ALJ's initial determination reasonably likely, and I believe it will most probably relate to at least two of the three patents-in-suit. Motorola has made strong points in its reply to Apple's petition, and in a contigent petition for review it has raised additional issues that could be outcome-determinative in its favor, but at this stage the question is not yet who will ultimately prevail on these issues. For now it's about whether there's a genuine dispute and whether there are signs that the ALJ may have erred to Apple's detriment. Having read the different briefs, I think there are valid reasons for a review.

Assuming the ITC decides to review the ALJ's findings, I guess Apple has a realistic chance of perhaps prevailing on one of those patents because the decision appears to be a relatively close one on each of them. If it prevailed on two, that would be a major surprise, and it's almost impossible to imagine that Apple would win on all three. But whatever the ITC will decide can be appealed to the Federal Circuit, and I guess that's what Apple will do.

Like I said, each of the decisions was relatively close, but the ALJ ultimately came down on Motorola's side 100% of the time. He was consistently very defendant-friendly, and that's why a review may very well result in some kind of adjustment.

One indication of how close a call those decisions were is that with respect to each asserted patent, Apple prevailed on two of the three counts that matter at the ITC (validity, infringement, domestic industry). Apple proved a domestic industry for the asserted claims of all three patents. Two of the patents were deemed infringed but not valid, while one was deemed valid but not infringed. All of the factors that were outcome-determinative against Apple appear to hinge entirely on claim construction.

The ITC as a whole is statistically very defendant-friendly, at least in connection with smartphone patent disputes. By my count, only about 1 out of 20 asserted patents ultimately results in a finding of a violation. Even in the most difficult court in Europe (the Chancery Division of the High Court of England and Wales), patent holders have a significantly better chance of winning (approximately 15% based on the most recent statistics I saw). Given how difficult the ITC makes it for patent holders to win, the popularity of German courts among the major players in the smartphone patent wars is easily understood (though the plaintiff-friendly line of some German judges is the diametrically opposed position and, in my opinion, against the public interest).

In the following three sections, I will elaborate on the situation concerning each of the three patents. In the final part, I'll also talk about a public interest statement that Google filed yesterday in this investigation.

U.S. Patent No. 7,812,828 on "ellipse fitting for multi-touch surfaces"

This patent is a multi-touch algorithm, applied-mathematics kind of patent. It's about figuring out the boundaries of a magnetic fingerprint.

The key disputed term in the wordings of the claims is "mathematically fit[ting] an ellipse to at least one of the [one or more] pixel groups". Apple proposed to interpret this as "comput(ing) numerical parameters that mathematically define an ellipse which approximates the shape of at least one of the pixel groups". Motorola proposed a much narrower construction ("for at least one of the pixel groups, applying a unitary transformation of the group covariance matrix of second moments of proximity data for all pixels in that pixel group to fit an ellipse"). One can have a reasonable argument over whether Apple's broader or Motorola's narrower construction is the more appropriate one, but the ALJ's own construction ("performing a mathematical process where by [sic] an ellipse is actually fitted to the data consisting of one or more pixel groups and from that ellipse various parameters can be calculated") is unsupported by the patent document and circular (it defines fitting an ellipse as a process in which "an ellipse is actually fitted"). Also, the use of the word "actually" is confusing, and another problem that needs to be fixed in my view.

I think the ITC is highly likely to overrule the initial determination on this claim construction question. Whether the construction ultimately adopted by the Commission will result in a finding of infringement (or possibly raise invalidity issues) is another question. I don't want to take a position on this one, at least not at this stage.

U.S. Patent No. 7,663,607 on a "multipoint touchscreen"

I previously said that this patent is a strategic one that could be very valuable to Apple (provided that its validity is confirmed and that it's interpreted broadly enough to be infringed by Android device makers). That assessment was shared by Ambercite, a research firm that evaluates patents based on citations.

The ALJ deemed it infringed, but also held it to be invalid. He thought that one prior art reference anticipated this patent, and a combination of two others rendered it obvious. There is reasonable doubt about whether the initial determination correctly applied the clear-and-convincing-evidence standard and other parts of patent law. The allegedly anticipatory reference may not be eligible as prior art at all, and the two prior art references over the combination of which the patent was deemed obvious were, according to Apple, before the examiner who nevertheless decided to grant the '607 patent (a fact that further raises the bar for any invalidity contentions based on prior art known to the examiner).

Apple also raises a legal issue concerning the extent to which secondary indicia of non-obviousness were properly taken into account.

I don't mean to claim that I have strong feelings about this patent being valid (or not). I do, however, believe that I have seen enough to be convinced that there's a genuine dispute over the validity of this patent, and this patent could be so valuable that I'm sure Apple will fight hard for the recognition of its validity (including an appeal to the Federal Circuit, which may be necessary). Apple must get the initial determination overruled both on the finding of an anticipation and the finding of obviousness, but for now I believe it may be able to achieve both and defeat additional invalidity contentions brought by MMI (or others in the future).

U.S. Patent No. 5,379,430 on an "object-oriented system locator system"

This old patent will apparently expire in August 2013. If Apple can't win an import ban very soon, I'm not sure it can still get much mileage out of this one after an appeal to the Federal Circuit. This may be a now-or-never situation.

The initial determination deemed this patent invalid because the ALJ didn't want to interpret the term "properties" more narrowly. He thought it should be given its ordinary meaning. As a result of this broad (non-)construction, even name- or file-size-search technology found in 1960s/1970s UNIX versions could be considered to locate properties and, therefore, to render this Apple patent non-novel.

Of the ALJ's three claim constructions that Apple contests in its petition for review, the decision to interpret "properties" rather broadly is the one I am most sympathetic to. While I don't mean to say that this patent is necessarily invalid, it appears to me that it applied rather old techniques to new objects, and that does call into question the validity of this patent.

Google's public interest statement

In October, Google filed a public interest statement with the ITC in the investigation of Apple's first comüplaint against HTC. Yesterday, Google also filed such a statement in this investigation of Apple's complaint against Motorola, once again arguing against an import ban that could result from a finding of a violation.

Google submits a seven-page statement as a self-described "non-party" and apparently fails to point out that it's in the process of acquiring Motorola Mobility. Given that the deal could close soon (and easily before an ITC decision on possible remedies), this omission is debatable, or even disingenuous.

Google's self-serving statement is extreme. Look at this sentence, for example:

"Should the Commission enter an exclusion order, it will reward Apple for asserting patented technologies that are, at best, minor components of the accused products."

If no violation is found, there won't be an exclusion order and those public interest considerations won't even be relevant. But assuming the ITC does find Motorola to infringe on a patent such as the '607 patent on a "multipoint touchscreen", it's preposterous to claim that such inventions are "at best, minor components of the accused products". Without Apple's innovative achievements, Android would today probably look like pre-iPhone-era versions of Symbian or the old BlackBerry operating system. There's no denying that Apple revolutionized this whole product category, and Android has at the very least been "inspired" by it.

Google furthermore appears to argue that Apple doesn't deserve intellectual property protection because it's so profitable that everyone should be free to steal from it:

"Apple needs no protection from the forces of the market; it is the largest seller of mobile devices, with a record $46.33 billion in recent quarterly revenue and $13.06 billion in quarterly net profit."

Google's "public interest" statement is a total non sequitur. The examples I gave above are representative of its overall quality. The ITC may be quite receptive to a lot of political arguments, but I'd be rather surprised if it based a decision to deny an import ban to any degree on one or more of the "public interest" considerations Google submitted yesterday.

At some point, the ITC will probably ask for input on possible remedies in cases involving standard-essential patents asserted by, for example, Motorola. Will Google then file public interest statements in support of FRAND access to standard-essential patents? Given that it's fully behind Motorola's conduct, there's no reason to assume that Google will advocate the true public interest in a context like that one.

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