Wednesday, August 29, 2012

The biggest issue with the Apple-Samsung jury verdict: are all those patents really valid as granted?

Since the Apple v. Samsung jury verdict came down on Friday, it's been criticized very harshly by a number of people. In particular, a lot people including me were puzzled that they managed to fill out well over 700 boxes in only three days. And when I read about some of the interviews the foreman and other members of the jury gave, I thought that Apple would have preferred them to remain silent because some of what what they said about their methodology, such as ignoring the judge's instructions and most of the prior art contentions, does not reflect favorably on the process.

But we must separate the question of what has happened from the one of what will happen next. None of those interviews changes the fact that juries enjoy a whole lot of discretion in terms of how they arrive at their decisions. There are some rules they must respect, but not as many rules as some people may think.

I've already said that in connection with damages, we may still see some adjustments in either party's favor. What we are very unlikely to see is that this verdict gets thrown out as a whole. The legal standard for overruling the jury is not that a verdict reached in three days has less weight than one reached after three weeks. It's not that a jury chaired by a markedly pro-intellectual-property software patent holder is presumed to have been biased (though there's no question that Apple hit the lottery jackpot with this foreman). The standard is very high. It's that Judge Koh or the appeals court can only overrule the jury with respect to those parts of the verdict that no reasonable jury could have found.

"No reasonable jury could have found this" is like saying: this jury did something blatantly unreasonable. And again, this relates to what the jury found, not to what instructions it chose to ignore or how quickly it rendered a verdict. If a reasonable jury that read the instructions and took a reasonable amount of time (whether or not three days can be considered reasonable doesn't matter) could have arrived at the same findings, then this verdict will stand forever.

To be clear: I'm describing, not defending, the system. I live in a country in which these cases are put only before professional judges. For a proposal to do away with jury verdicts on patent infringement issues in the U.S., let me refer you to Judge Posner.

Samsung's first bite at the apple is to ask Judge Koh to overrule the jury. Apple will certainly do the same with respect to the findings that didn't work out in its favor (especially the tablet design patent). So far, Judge Koh did not appear to be particularly willing to substitute her opinion for a jury verdict. Samsung brought a dozen summary judgment requests before the trial, all of which were denied. Apple focused on three and prevailed on one of them. There are differences between summary judgment decisions and post-trial Rule 50 decisions. The standard for summary judgment is that one party has a winning legal theory over which there is no genuine factual dispute, i.e., no need to even put the issue before a jury because even if the facts are seen in the light most favorable to the non-moving party, there can be only one decision. For judgment as a matter of law, the standard is, as I explained, that no reasonable jury could find otherwise based on the evidence on the table. One important difference is that a summary judgment ruling is made before, and a Rule 50 decision is made after, all of the testimony given at trial. But even with more evidence on the table, a judge who has previously shown a preference for deferring to the jury may still have that tendency now. I don't think Judge Koh will run roughshod over the jury verdict. But again, adjustments are quite possible.

The one regard in which the jury verdict represents almost a statistical anomaly is that none of the 12 patents -- 4 Apple design patents, 3 Apple software patents, 3 Samsung software patents, 2 Samsung wireless standard-essential patents -- was deemed invalid. This is irreconcilable with overall patent litigation statistics and my observations in these smartphone patent disputes. The jury apparently thought that it should not declare a patent invalid after the patent office, a government agency, had granted it. The "clear and convincing evidence" standard for invalidation is high -- far too high in my opinion -- but it's not insurmountably high. With a dozen patents-in-suit, even though the parties focused on only one claim per patent, there must be some validity issues somewhere.

Even this statistical approach is not a basis for tossing the jury verdict. The question is not whether it's statistically realistic that all 12 patents are valid. The question that must be asked is specific to each patent: could a reasonable jury have found that the "clear and convincing evidence" standard was not met? If yes, the jury verdict stands. This is quite a hurdle for modifying the verdict...

I wouldn't be surprised if Judge Koh declared one or more patents invalid. If she doesn't do it, so might the appeals court. But even if it doesn't happen there, Samsung accurately noted in its post-verdict reaction that at least some of these patents are being reexamined by the patent office, and I think we are definitely going to see some invalidations there. But if you hear of any "rejections", it's not clear whether they relate to the claims that were put before the jury, and even if so, most of those patent office decisions are just preliminary. Should a patent claim get invalidated on a final basis, then Apple will not be able to enforce an injunction over that patent claim.

With all the noise out there about the verdict, I advocate realism. It's not realistic to think that a jury verdict on 700+ issues gets thrown out in its entirety. Nor is it realistic that neither Judge Koh nor the appeals court will decide on at least some modifications. And it's particularly not realistic that all 12 patent-claims-in-suit will survive reexamination.

When there are any new developments, let's analyze their impact as the process unfolds. Most likely, there won't be dramatic changes. But it won't be all bad news for Samsung 100% of the time.

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