Thursday, August 30, 2012

Apple and Samsung have to decide how to proceed with their 14 back-burner patents in California

While the United States District Court for the Northern District of California still has some very important post-trial decisions to make, especially on remedies, Apple and Samsung must plan ahead and think about their next claims against each other in that same federal district. Not only did they start a separate lawsuit (over eight patents from each party) earlier this year but they also have the right to reassert 14 patents that they temporarily withdrew in order to narrow the first case, at the court's request, for trial. Samsung would have preferred for all withdrawn rights to be dropped forever (with prejudice), but the court granted Apple's request to dismiss those claims only without prejudice.

A few months ago, Apple suggested a separate bench trial (a trial before Judge Koh, without a jury) to decide only on injunctive relief over those patents. At the time, Apple was not interested in pursuing further damages, and with the $1 billion verdict it just won, it really wouldn't be easy for Apple to collect a substantial amount of additional royalties on the same products. The per-unit damages amount is already fairly high. Apple proposed to focus entirely on injunctive relief with respect to any reasserted patents. For an injunction-only decision without a damages award, a jury is not needed.

In that context, Apple noted that those back-burner patents had already been almost fully litigated. Discovery and claim construction have already taken place. But this didn't persuade Judge Koh to schedule a near-term bench trial over these patents. Still, all of her orders dismissing claims (three in total) allowed reassertion, and even if Apple has to file a new lawsuit now in formal terms, the court can build on all of the effort that has already been made by the judge as well as the parties.

Given that there is only a limited amount of work left to do in order to adjudicate the withdrawn patents, I think there's a pretty good chance that these patents will go to trial, be it a bench trial or a jury trial, in 2013. By comparison, the new 16-patent Apple-Samsung lawsuit filed in 2012 currently has a trial date in March 2014, which Apple will probably try to get moved up at some point, arguing that Samsung's infringement must come to an end. If Apple now reasserts those back-burner patents from the first Samsung lawsuit, there's a risk that the court might consolidate those reasserted claims into the February 2012 lawsuit, resulting in a lawsuit that could involve up to 30 patents. In that event, these claims might not be adjudged next year, and here would also be much more pressure on Apple to drop claims (again) than if it could somehow request a decision on the withdrawn patents separately from the second California lawsuit.

I have no idea how quickly Apple is going to raise this issue. Judge Koh explained her denial of a preliminary injunction hearing on the patents that a jury just found infringe with the court's limited resources relative to the complexity of the dispute. If Apple reasserts some or all of the back-burner patents very soon, it can get them back into the court's queue but may annoy Judge Koh. At the latest, I believe we'll see a reassertion shortly after a ruling on Apple's motion for a permanent injunction and triple damages.

Samsung could also be proactive and reassert its own withdrawn claims anytime now without waiting for Apple. After all, Samsung really needs to win something against Apple at some point if it wants to get a settlement on palatable terms. But Samsung's strategy in this dispute has been to stall. Forging ahead with a reassertion would be out of character for Samsung in this case, but it may decide to change its strategy after the crushing defeat it suffered this month.

Some of Apple's back-burner patents are much more impactful (assuming that an injunction over them is granted) than the multi-touch gesture-related patents and design patents that went to trial. For the trial, Apple clearly focused on the maximum probability of winning, and it prevailed on almost all of its claims. With the back-burner patents, Apple would be unlikely to achieve a similar hit rate, but the enforcement of some of these patents, particularly the '607 multitouch hardware patent, would give Apple much more leverage over Samsung than an injunction over the patents that just went to trial. The trial victory lends Apple's enforcement efforts a lot of additional momentum, while Samsung has to defend itself from the difficult position of a convicted willful infringer.

These are the parties' withdrawn-but-reassertable patents:

The list above does not include Apple's trade dresses and trademarked icons; it's just a patent list. Also, one of Samsung's patents is not listed because it was thrown out by Judge Koh on summary judgment and can't be reasserted against Apple unless the facts change in Samsung's favor (hard to imagine) or the appeals court decides in Samsung's favor.

Furthermore, the parties also dropped various claims from patents from which some other claims (one per patent) still went to trial. They could reassert such claims if they think they might prevail on a different claim than one that may have failed at trial. This would be useful only to Samsung (unless certain parts of the verdict are overruled, in which case it might also be an interesting thing for Apple to do).

In the near term, Samsung is looking at workarounds and, according to a Korea Times article citing Samsung officials, "closely partnering with Microsoft [...] to cut its dependency on Google Android".

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