Wednesday, August 29, 2012

Court schedules December 6 hearing on Apple's push for triple damages from Samsung

[Update] On Wednesday Judge Koh issued a clarifying order that there won't be a separate preliminary injunction hearing, which the original order did not say explicitly. [/Update]

Judge Koh has set the briefing and hearing schedule of the parties' post-trial motions in Apple v. Samsung. There are two categories of post-trial motions to decide on: motions seeking to overturn parts of the jury verdict (arguing that the judge should overrule the jury or order a new trial on a given set of issues), and motions relating to relief. The latter category has two subissues: damages enhancements and injunctions (permanent and preliminary ones).

The order notes that there is "substantial overlap between the analysis required for Apple's preliminary injunction motion and the parties' various other post-trial motions", so there will be some consolidation. Otherwise the parties could bring multiple partly-duplicative motions.

The court granted Samsung's request for an expedited schedule on the question of whether the preliminary injunction against the Galaxy Tab 10.1 should be dissolved because the jury did not find Apple's related design patent infringed. Apple opposed Samsung's request and argued that Samsung itself denied any irreparable harm from the ban (in public statements that contradict its court filings). But Samsung noted that there is no case law that says an injunction can stay in place without a sufficient likelihood of the underlying infringement claim's success on the merits just because there is supposedly no irreparable harm. Apple now has to respond to Samsung's motion for dissolution on September 7, Samsung can reply six days later, and Judge Koh will then decide, possibly without even holding a hearing on this question -- all of which looks good for Samsung. If there is going to be a hearing on this at all, it will take place on September 20. There might not be a hearing if Judge Koh determines that she doesn't have jurisdiction over this motion. That's because the preliminary injunction is on appeal and, currently, before the United States Court of Appeals for the Federal Circuit. It could be that Judge Koh only provides an indicative ruling but that Samsung will need help from the Federal Circuit to get rid of the Galaxy Tab 10.1 injunction.

September 20 is also the date on which there may be a hearing for Apple's upcoming preliminary injunction motion. Judge Koh's latest order does not set a briefing and hearing schedule for that one, but the fact that she has scheduled another potential hearing for September 20 shows that after seeing the scope of Apple's upcoming motion, a hearing on that day is still a possibility. Judge Koh previously indicated that a delay might occur if Apple asks for too much at once.

On this occasion I'd lke to reiterate that the Galaxy S III will also be affected by a preliminary injunction if it infringes any of the relevant patents in a way that is no more than colorably different from the exemplary infringing devices listed by Apple. Judge Koh's previous two preliminary injunctions against Samsung used a wording that undoubtedly includes other products than the ones named as examples of past infringement, even products that will be launched only after an injunction issues. You can find many quotes by financial analysts in the media who say such injunction will only affect older products. Those analysts presumably never read Judge Koh's other injunctions.

Some others have interpreted Judge Koh's order as indicating that December 6 is the earliest date for a decision on a sales ban. I don't know what the judge discussed with Apple's lawyers. The order itsel does not state that Apple is not allowed to move for a preliminary injunction. It acknowledges Apple's intent to do so without commenting on it explicitly. The scheduling decisions only relate to other matters, including a permanent injunction, and we won't know the schedule for a preliminary injunction until Judge Koh sets one, which apparently won't happen until Apple brings its motion. The scheduling order doesn't invite Apple to bring one, but acknowledges that it intends to and doesn't explicitly discourage it.

In addition to a preliminary injunction, Apple will also request a permanent injunction. A preliminary injunction is one that issues before the end of the proceedings. A permanent one can issue only at the end of the proceedings, requiring prior (or at least simultaneous) adjudication of the relevant post-trial motions. Since Apple wants to force Samsung to modify its products sooner rather than later, and ideally during the Christmas Selling Season (though Samsung might stuff the channel before any injunction takes effect), it wants both. If this was less time-sensitive, it would go for only a permanent injunction. This is also a timing issue with a view to an appeal. If Apple wins a preliminary injunction in, for example, October, and a permanent one in December, Samsung will appeal both and ask that both be stayed. But there's a possibility of the appeals court looking at this and allowing Apple to enforce the preliminary injunction while that one is being appealed. A preliminary injunction appeal would be decided within about six months, while a permanent injunction would have to be appealed as part of an appeal of the entire final ruling, and the appeals court would likely need more than a year given the complexity of this case.

A footnote says that "[t]he Court will entertain only one post-judgment motion for relief per side, not including Apple's motion for permanent injunction and willfulness enhancement", but even that footnote does not explicitly rule out a preliminary injunction motion. Instead, it provides other examples of post-judgment motions that must be consolidated into a single motion.

I still believe Apple wants a preliminary injunction, and we'll see whether it's going to formally file for one in the coming days. Let's focus on damages now.

Shortly after the verdict came down, Apple already indicated that it would seek triple damages for willful infringement. The jury found most of Samsung's identified infringements to have been willful. Under U.S. patent law, "the court may increase the damages up to three times the amount found or assessed". Theoretically, this could raise the amount of damages in Apple v. Samsung to approximately $3 billion.

In the near term, Samsung wanted to ensure that it wouldn't have to prematurely pay the $1.05 billion awarded by jury. It filed a motion for a stay of the August 24 judgment. Apple can oppose that motion by Friday, and Samsung can reply four days later. Judge Koh will not hold a hearing but decide based on the parties' filings. It looks like Samsung's motion is going to be granted. But the stay will only be in effect until the court has decided on the parties' post-trial motions. And at that point, the amount may increase.

Apple now has until September 21 to file its motion for a permanent injunction and "willfulness enhancements" (requests that certain parts of the overall damages figure be increased, with Apple most likely demanding a tripling wherever possible). Samsung's opposition brief will be due on October 19. Apple will reply on November 9, and the hearing will take place on December 6.

It's unlikely that Judge Koh will make a decision right at that December 6 hearing. She may very well indicate certain inclinations, but a formal ruling will take some time. It's more likely to come down later that month than to slip into next year.

I doubt that we'll see a $3 billion damages award. But the court cannot ignore the jury's finding of willful infringement and do nothing to show (not only to Samsung but to all other infringers) that willful misconduct can result in punitive damages. My guess is that there will be some adjustments of the $1 billion base figure (for example, the judge may very well overrule the jury on particular items, but I can't imagine that the verdict as a whole would be thrown out), and those adjustments are more likely to reduce the number in Samsung's favor, but subsequently we'll probably see willfulness enhancements of some kind -- not necessarily an outright tripling (Judge Koh can determine any factor between 1.0 and 3.0), and I expect any such enhancements to relate to only a subset of the overall damages figure, possibly a somewhat limited subset.

Whether or not the damages figure changes by a few hundred million (I think that's a realistic range for any adjustments and enhancements) is going to be less important to Samsung than the question of injunctive relief. If Samsung has to work around patents like tap-to-zoom and the programming interface patent without which it appears impossible to distinguish two-finger pinching gestures from single-finger tapping gestures), the user experience of its Android-based products will suffer some degradation (while not thermonuclear, the impact will be noticeable to users) and affect the competitiveness of Samsung's Android-based gadgets in the U.S. market.

[Update] On Wednesday Judge Koh issued a clarifying order that there won't be a separate preliminary injunction hearing, which the original order did not say explicitly. [/Update]

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