Saturday, September 1, 2012

After winning transfer to Delaware, HTC wants claims over six Apple patents stayed

HTC just brought another motion to stall Apple's patent enforcement. If you're one of the few people familiar with the complicated procedural history of U.S. patent litigation between Apple and HTC, you can click here to go directly to the summary of the latest motion. For the vast majority of people who have lost sight of this dispute, and in observance of tomorrow's 2.5-year anniversary of the Apple-HTC dispute, I am firstly going to explain the background.

More than a year before Apple filed the lawsuit in California that resulted in last month's billion-dollar verdict, it started its patent enforcement against Google's Android mobile operating system with an ITC complaint and a Delaware federal lawsuit (each over ten different patents). Here's Apple's March 2, 2010 press release. Tomorrow (Sunday), two and a half years will have passed since then.

The fact that Apple hasn't made much headway against HTC during those 30 months, other than winning an import ban based on one patent (over which there is now an enforcement dispute), is primarily attributable to the fact that the Delaware-based court ordered a sweeping stay in late 2011, putting on hold all of Apple's claims pending against HTC in that district at the time. As a result, none of Apple's claims against HTC besides four of the patents it asserted in its first ITC complaint have come to judgment yet.

It's common that a "companion" (or "mirror") lawsuit to an ITC complaint is stayed pending the final resolution, including all appeals, of an ITC investigation of such complaint. A defendant is legally entitled to this. Companion or mirror complaints are brought primarily for the purpose of being able to pursue damages, which the ITC cannot award, but there are also other incremental benefits to plaintiffs. For example, an injunction would also ban sales of products that are manufactured in the United States, or that are imported in a non-infringing form. Most of the ITC complaints relating to Android were accompanied by federal complaints in different districts (most of them in Delaware). The chief judge of the United States District Court for the District of Delaware went beyond the usual stay of companion lawsuits pending the related ITC investigations by additionally staying a number of Apple claims over non-ITC patents, arguing that there was some overlap in terms of products, technologies, and witnesses.

The only lawsuit between the two parties that was not stayed at the time is one over patents that Google gave to HTC for the purpose of suing Apple. But at the moment, even that one is on hold: Apple and HTC agreed to stay the proceedings pending resolution of an Apple motion to dismiss HTC's Google loan patents, an initiative that previously succeeded at the ITC. Apple originally wanted to bring some offensive counterclaims of its own in that action, but the court denied this request as untimely.

By the time the extraordinarily sweeping stay was ordered, Apple already had different priorities. Samsung is the biggest rival in the market, and the dispute with Motorola Mobility is key since that company now belongs to Google (when the Delaware stay was ordered, the acquisition was still under antitrust review). HTC looked like a convenient target in March 2010 to throw down the gauntlet to the Android camp. That message was indeed understood. Shortly after that lawsuit, then-CEOs Steve Jobs and Eric Schmidt met at a Palo Alto café, but couldn't agree because Jobs said that he didn't want Google's money: he wanted Google to stop using Apple's ideas in Android. I don't consider an Apple-Google settlement any more likely at this point than it was back then.

Not only have Apple's priorities changed since the original HTC lawsuit but the general public is also much more excited about the Apple-Samsung and Apple-Googlorola disputes. And for the time being, HTC is probably quite happy about the situation. It probably didn't expect Apple to be able to enforce only one patent in 30 months.

A few days ago, HTC chairperson Cher Wang indicated that the Taiwanese device maker has no intentions to settle, and that the jury verdict against Samsung "does not mean the failure of the entire Google Android ecosystem".

Now HTC would like to achieve that Apple doesn't make much more headway against it in the next 30 months than it did in the previous ones. That's why the first thing HTC routinely does when Apple brings new claims in the United States is to ask for a stay, or to look for some other reason why the claims shouldn't be adjudicated anytime soon.

Recently, Apple made two attempts to make it harder for HTC to stall: it brought different kinds of claims in two other districts. In March, Apple hit HTC with six patents in Florida that it simultaneously asserted against Motorola. Apple basically tried to drag HTC into a Miami litigation with Motorola, as an additional counterclaim-defendant. And Apple brought FRAND-related antitrust counterclaims against HTC (over patents it acquired from a company named ADC Technologies) -- counterclaims to an ITC investigation -- in the Eastern District of Virginia.

But HTC got the Florida claims as well as the Virginia FRAND counterclaims transferred to its favorite district: Delaware.

In the FRAND case originating from Virginia, a motion to stay proceedings is pending. The Virginia-based court decided on a transfer and left it to its Delaware counterpart to decide on a stay. And in the former Florida case over six Apple patents, HTC yesterday brought a motion to stay.

HTC's latest motion to stay

HTC wants the six-patent ex-Florida lawsuit stayed for the same duration as Apple's other infringement claims pending in Delaware, i.e., final resolution of the ITC investigation of Apple's second ITC complaint against HTC, including any appeals. That second ITC complaint went to trial last month and involves partly the same patents as the Samsung case in California. An initial determination by an administrative law judge will issue later this year, and a final ITC decision is scheduled for next spring. With an appeal and a potential post-appeal remand, this could still take years.

HTC's motion for a stay of the ex-Florida case asserts that Apple attempted an end-run around the Delaware court's sweeping stay by bringing claims in a different district. That was undoubtedly Apple's intention. But Apple's tactical choice doesn't entitle HTC to anything. HTC advances the following arguments for a stay:

  • "All or nearly all of the same accused HTC products are at issue" in the ex-Florida case and the stayed lawsuits. The memorandum in support of the motion says that of the 23 accused products in the ex-Florida case, "all but five have been identified as allegedly infringing products in Apple's discovery responses in the [stayed Delaware cases]". Four of the five new products were simply released in the United States after the related discovery responses in the older cases, and a fifth one "was never released in the United States".

  • "Eight of the twelve named inventors on the patents asserted against HTC in [the ex-Florida] action are also named inventors on the patents asserted in the [stayed Delaware cases]."

  • There's an overlap because five of the six Florida patents relate to "graphical user interface technologies", as do most of the Apple patents in the stayed Delaware actions.

  • One of the patents at issue in the stayed actions is Apple's original slide-to-unlock image patent (U.S. Patent No. 7,657,849), and the six ex-Florida claims involve a new slide-to-unlock patent (U.S. Patent No, 8,046,721) from the same patent family.

Apple is going to oppose this motion, and there may be a point at which even the Delaware-based court determines that it can't prevent Apple for too long from pursuing claims against HTC. Also, should Apple's motion to dismiss HTC's Google loan patents fail, HTC would be able to proceed in the same court with claims against Apple, while all of Apple's claims pending there would be stayed. But if the past is any indication, HTC will get the stay it's asking for.

The court may hold a combined hearing on this motion to stay and the one pending in the ex-Virginia FRAND case. But in the FRAND antitrust case, HTC's arguments for a stay are much weaker than in the ex-Florida infringement case. The whole idea of removing counterclaims from ITC proceedings is to put them before a federal court while, not after, the related ITC investigation is ongoing, ideally reaching a conclusion at a similar time.

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