Monday, September 24, 2012

Assessment of prospects of Apple's and Samsung's requests for overruling the jury

Late on Friday, Apple and Samsung filed various post-trial motions in their first California litigation, especially their Rule 50 motions (i.e., motions asking the court to overrule the August 24 jury verdict on certain issues or at least grant a new trial on some issues). I have already commented on Apple's motion for willfulness enhancements and supplemental damages and on Samsung's reverse-engineering of the damages part of the verdict.

This post is a somewhat ambitious undertaking because I want to take a look not only at Apple's and Samsung's chances in the post-verdict process (before Judge Koh and, looking past the district court, the Federal Circuit) but also draw some comparisons to other smartphone patent cases that have already been appealed to the Fed. Circuit (or, in the particular case of Oracle v. Google, will be appealed shortly). I won't go into as much detail on those other cases as on Apple v. Samsung, but the public debate over these issues needs more rationality.

It doesn't make sense that some of the same people who claimed Oracle was just going to waste its money on an appeal of Judge Alsup's ruling now look at the California jury verdict as something that is almost certain to be overturned. Both Oracle and Samsung are going to continue to defend their interests vigorously. Both know that they face significant hurdles because it's always preferable to win as much as possible and as early as possible. Both may win something on appeal or lose on appeal. But if one looks at the parameters of those appeals, the likelihood of a fundamental reversal is actually higher in Oracle v. Google because the appeals court only has to disagree with Judge Alsup on one central question on which he's probably not going to be afforded much deference (or next to none if the appeals court considers this a legal question of first impression), while Samsung is more likely to have to content itself with some gradual improvement as far as liability is concerned (the damages figure could change substantially, in either direction, but that's only a secondary consideration in the fight between Apple and Samsung).

It's not just that more consistency is needed when comparing Oracle v. Google and Apple v. Samsung (by coincidence, Morrison & Foerster's Michael Jacobs is playing a key role on behalf of either plaintiff, and both lawsuits were filed and tried in the same federal district). There are actually a number of other important appeals involving Android that nobody even mentions in the public debate but I'm still following them and every one of them has the potential to considerably exacerbate Android's patent worries:

Any one of the lawsuits listed above would get a similar level of attention if there had been a billion-dollar jury verdict.

Prior to the August 24 verdict, the drop-out rate of U.S. patent infringement claims against Android was very high. The ITC has proven to be difficult terrain for everyone (also for the counterclaims of Android companies and in disputes without any Android connection), Judge Alsup has strong views on weak copyright in connection with APIs, and Judge Posner is an outspoken critic of the patent system. That's why there are some ongoing or impending appeals that could improve the situation in favor of Apple, Microsoft and Oracle, while there's no question that after the August 24 verdict, Samsung stands more to gain in the further process related to that verdict than Apple, which would probably be prepared any day of the week to sign a deal under which the verdict becomes the final ruling on liability and damages (and would then pursue, on that basis, some enhancements and, as the top priority, injunctive relief).

It's also worth noting that a number of German court rulings on smartphone patents have been appealed already. I will report on those cases when there are hearings (there will be at least two hearings at the Munich Higher Regional Court before the end of the year) and decisions. Also, the Mannheim Regional Court stayed three Apple lawsuits against Samsung for the duration of parallel nullity or revocation proceedings. In those three Mannheim cases, the court identified infringements (otherwise it wouldn't have stayed), so if the asserted intellectual property rights (two utility models and one patent) survive those challenges to their validity, they can come back with a vengeance at some point.

After this broad and even cross-jurisdictional overview, let's get back to the post-trial proceedings and inevitable appeal in this particular Apple v. Samsung lawsuit in San Jose and make references to other cases only where analogies are useful in a specific context. I just wanted to make sure that a consistent standard be applied to all of these issues. It doesn't make sense to consider all of the claims that were dismissed or stayed prior to August to have been resolved definitively while ignoring the enormous amount of deference that, right or wrong, the California jury is now going to get.


Anything can always happen on appeal. These large organizations appeal each and every decision they disagree with. But it is nevertheless possible to form an opinion from the outside on the probability of a major reversal in a given case:

  • The very first question is the standard of review, i.e., how much deference the appeals court will afford the lower court (or, in the very next step, how much deference Judge Koh will afford the jury). This is a much more complex question than some people think. Generally speaking, the questions that have to be answered in a complex litigation are usually a mix of factual and legal issues, factual findings get more deference than legal conclusions, and juries get more deference than judges.

    With a view to some of the non-Samsung cases I listed, I'd like to mention that the ITC is a special case because its judges also do some of the work that juries do in district courts; furthermore, the ITC gets a huge amount of deference on its interpretation of its governing statute (Section 337). But ITC decisions frequently hinge on claim construction, which is considered a legal question. Claim constructions are overruled quite often.

  • Once a particular standard of review has been determined, it has to be applied to the particular argument.

  • In assessing the chances under those circumstances, it's helpful to look at a court's (or a particular judge's) track record. The Federal Circuit has a reputation of being rather patent-holder-friendly, both traditionally and recently. And before Apple v. Samsung gets there, Judge Koh has to make her Rule 50 ("overrule-the-jury") decisions, but in the build-up to the trial, Judge Koh was clearly reluctant, especially compared to Judge Posner, to make summary judgment decisions instead of deferring to the jury.

  • Decisions consist of building blocks, and if an appellant manages to destroy a cornerstone of a building, large parts of the building may collapse, while the impact of breaking a window is minimal. I wouldn't rule out at all that Samsung can tear down the damages part of the verdict (as I'll explain further below), but on the liability side there's no obvious reason why it could get rid of all infringement findings in one fell swoop.

    A chain is as strong as its weakest link, so if a defendant can get one indispensable part of a liability finding reversed, the finding as a whole goes away, while a plaintiff may have to get more than one finding reversed on appeal to get a different outcome.

I admit that this was a long introduction before I actually get to Apple v. Samsung. But some of this just had to be clarified once, and I'm sure I will reference some of the above on multiple future occasions. High-profile appeals are going to happenin the near term (certainly Oracle and Samsung), and in 2013, especially in the second half of 2013, there will be more and more attention to what's going on at the Federal Circuit.

Mudslinging against the jury

I agree with Judge Posner that patent cases should not be put before juries in the first place I understand Samsung's frustration with the verdict. I can furthermore imagine that some of what jury foreman Velvin Hogan and at least one other member of the jury told the press doesn't sit well with Samsung and its lawyers. (I'm underwhelmed by Mr. Hogan's software patents, by the way.) Samsung has every right to defend itself vigorously, and it must attack the jury. But I really wonder why Samsung's Rule 50 motion makes a reference to a personal bankruptcy case involving jury foreman Velvin R. Hogan and Carol K. Hogan (presumably his wife, at least at the time) on page 2. The related passages are redacted, but the table of authorities is unredacted and contains this entry (click on the image to enlarge):

That one appears to be a personal story, and it's almost 19 years old. That was after Steve Jobs had left Apple and before he returned. This can't possibly have any factual bearing on Apple v. Samsung. More decency, please.

I've also seen some really outrageous name-calling against the jury on Twitter and on certain blogs, not by Samsung but by people who appear to be sympathetic to its cause.

Let me show you the header of a June 30 filing by Samsung in this very litigation (I added the red arrow; click on the image to enlarge or read the text below the image):

CASE NO. 11-cv-01846-LHK



And this is what the last paragraph of that filing says:


SEC [Samsung Electronics Co., Ltd.], SEA [Samsung Electronics America, Inc.] and STA [Samsung Telecommunications America, LLC] hereby demand a jury trial on all issues.

In other words, Samsung wanted the very lottery that a jury trial is. It obviously wanted a fair trial and has every right to complain about unfair treatment. But in doing so, it should also be fair.

Neither Judge Koh nor the appeals court are going to say that they're impressed with Samsung's efforts to discredit the jury. And all of that may be legally irrelevant. But it could nevertheless have a psychological effect, and that's why Samsung is presumably doing it.

Claim construction

I already said further above that claim constructions are relatively easy to get overturned. But Judge Koh didn't actually provide a lot of constructions, and especially no particularly controversial ones. U Unlike in some of the appeals of ITC decisions I listed further above, I don't expect claim construction questions to play a key role on appeal. And it certainly won't in the Rule 50 context.

Constraints on trial time, witnesses and exhibits

One of the reasons for which Samsung demands a new trial is that "the Court's constraints on trial time, witnesses and exhibits [...] were unprecedented for a patent case of this complexity and magnitude, and prevented Samsung from presenting a full and fair case in response to Apple's many claims". Samsung had consistently objected to those limits, and it ran out of time at the trial.

I have a lot of sympathy for this argument. In fact, the Rule 50 motion itself suffers from severe constraints: Samsung's arguments appear conclusory because Samsung just has enough space to make a claim and to point to some other documents in the case, which is just about enough to preserve the record for an appeal but not enough to make a coherent and persuasive case on some fo the more complex issues. I'm generally more on the interests-of-justice than case management side, and if major economic interests are at stake, I think the courts should also make a fair amount of resources available to resolve such disputes. But it won't be easy for Samsung to persuade the appeals court that Judge Koh misinterpreted her court's patent local rules or abused her discretion to the extent that a whole new trial is needed. What I consider more realistic than a new trial being granted just for this reason is that if there is a new trial on some of the issues for other reasons, there could also be some more generous limits (relative to the scope of the issues to be addressed at a retrial).

In its appeal of the non-FRAND parts of Judge Posner's ruling, I'm sure Apple will raise a constraints issue: Judge Posner gave the parties only one chance to submit a damages report. In that case, I think it would have been fair to allow them a do-over based on Judge Posner's guidance. That guidance would have been excellent if only they had been allowed to make up for the shortcomings identified. I think the Federal Circuit is more likely to be concerned about the implications it has for patent holders if they get to do only one damages report than to conclude that Judge Koh erred or abused her discretion in imposing the tough constraints she ordered.

The old equal-treatment argument

Samsung keeps arguing that it was "treated unequally", which is what it implied a lot in recent months. It served Samsung well in a couple of contexts, while it didn't work in some others, but all in all I can see why Samsung thinks this is still a smart strategy, especially in a case involving a domestic and a foreign company. However, I believe that Samsung's demand for "evenhanded treatment of the parties" is going to be less successful at this stage of the game. Judge Koh won't conclude that she treated anyone unfairly, and the appeals court will look at this analytically, not politically.

Patent validity

I have previously said that the jury's conclusion that all 12 patents-in-suit (seven Apple and five Samsung patents) are valid as granted is at odds with statistics. Four weeks ago I described this as the biggest issue with the verdict, and it still is. Both Apple and Samsung continue to argue that each other's patents-in-suit are invalid. But Judge Koh and, subsequently, the Federal Circuit can't vacate the verdict because its validity part is statistically implausible. Instead, they will have to look at each of the 12 patent claims separately and determine whether it was invalid in a way that no reasonable jury could have disagreed with. That standard of review is high. Apple and Samsung are less likely to prevail on their invalidity defenses in the infringement case than to persuade the patent office to reject some of the claims at issue. At the USPTO, the standard to meet for this is just preponderance of the evidence. It's a potential problem here that those USPTO reexaminations take very long, and if there's an enforceable infringement ruling in the meantime, then there may be a window during which a patent that shouldn't have been granted in the first place gets enforced. There are some interdependencies. Once there are any preliminary indications by the USPTO that an asserted patent claim may be invalid, then it will also be easier to win a stay of any parts of the ruling relating to patents of doubtful validity, while a final ruling by a federal court would affect the USPTO process.

Utility patent infringement

The jury verdict is a bit lop-sided in finding that Samsung infringed all three Apple utility patents while clearing Apple of infringement of all five Samsung utility patents. I thought Samsung was going to prevail on at least one of its offensive claims. But the outcome is not completely implausible since there's evidence of Samsung having copied Apple and not the other way round.

On a patent-by-patent basis, it's not going to be easy to get any of the jury's infringement findings overruled because there's no single case in which the jury found what no reasonable jury could have found in my opinion.

Design patent infringement

Apple prevailed on its smartphone design patents but lost on the tablet-related one. Before the jury verdict came down, Judge Koh (in a preliminary injunction ruling last year) and many observers (including me) thought that Apple had a stronger case with its tablet design patent, while the smartphone design patent case looked like a closer call. But now there is a jury verdict and the question is whether no reasonable jury could have found this way. I would argue that the combination of these two outcomes related to design patents doesn't make sense, but Apple's smartphone design patent case is strong enough that a jury can find that way, and the tablet design patent case is so strong that Apple may very well get the jury overruled either by Judge Koh or on appeal.

In its Rule 50 motion, Apple points to the Federal Circuit's position on infringement:

"On appeal, Samsung argued that 'Apple failed to demonstrate likely success in proving that the Galaxy Tab 10.1 infringes the D'889 patent.' (Kim Decl. Ex. A at 61.) The Federal Circuit considered this argument so insubstantial that it did not specifically address it in concluding that Apple 'was likely to succeed on the merits.' Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1329 (Fed. Cir. 2012); see also id.[ ]at 1323 (opinion focuses on issues that 'present close questions' and does not address findings 'not subject to serious challenge')."

Apple's motion doesn't even point to Circuit Judge O'Malley's dissenting opinion, which speaks out very clearly on infringement.

The argument I just quoted is valid in principle, but there is a caveat. Preliminary injunction decisions get more deference than final rulings. In the Federal Circuit opinion, the passage "not subject to serious challenge" is actually followed by "particularly in light of the exacting standard of review that applies to this appeal". While the Federal Circuit's (non-)treatment of Samsung's non-infringement contention makes it fairly or even very likely that this appeals court would also conclude that no reasonable jury could not have deemed the D'889 patent infringed, that outcome is not a foregone conclusion. Due to the different standards of review, even a very clear case under the exacting standard of a preliminary injunction review could (in a minority of cases, but still) fall short of being something that no reasonable jury could ever have decided the other way.

From a damages point of view, the smartphone design patent part of the case is the real moneymaker for Apple here, but this is about stopping infringement more so than about money, and from an IP enforcement point of view, the D'889 patent is presumbly no less important to Apple than those iPhone design patents.

Trade dress infringement

It looks (also based on the jury's approach to damages) like the jury decided the trade dress part like it was just an enhancement of design patents. The jury may not have paid close attention to all the legal differences between design patents and trade dresses. Samsung's Rule 50 motion claims that there are constitutional issues involved. I have not yet formed an opinion on that argument.


Samsung wants to get rid of the willful infringement findings the jury made, while Apple also wants to prevail on willfulness with respect to the few items on which it didn't. Samsung's argument is that if willfulness was established at all, it was only the case for the '381 "rubber-banding" patent since Samsung was put on notice of its alleged infringement of that one in 2010, but the other patents-in-suit were not on a list of patents Apple provided two years ago. Judge Koh didn't appear to be too impressed with that argument before. I believe this is more of an argument for the appeal than for the next few months.


In my previous post I said that the jury's damages award relating to the Galaxy Prevail smartphone appears to be, quite clearly in fact, contrary to law.

Since the day the verdict came down I've been saying that some adjustments are very likely, while it will be hard to get the damages award thrown out entirely. But there's one argument that Samsung makes and which the Korea Times quotes:

"Because the jury verdict form didn't allow identification of damages on a claim-by-claim basis (per Apple's request), if even one patent infringement or trade dress issue is overturned on a judgment as a matter of law (JMOL), then the Court needs to vacate the entire damages amount."

It's an interesting point, but Samsung's own disaggregation of the jury's damages will be held against it in this context. Also, that quote refers to "the entire damages amount", but at the most there would be a need to reevaluate damages for a particular product or set of products.

I actually think Apple was full well aware of this risk, but decided to focus on getting a favorable verdict first and on defending it later. Before the trial, Apple was definitely concerned about the risk of a hung jury or of the jury ruling against many claims simply because of an unwillingness to deal with all the complexities.

If any parts of the damages verdict have to be revisited, Apple also asks for another $150 million, which could offset in whole or in part any adjustments in Samsung's favor. Furthermore, Apple is seeking willfulness enhancements, supplemental damages and prejudgment interest totaling more than $700 million. If the court makes adjustments, the overall amount may not change as much as Samsung would like it to. And in the event of a new damages trial, Apple could lose the billion-dollar verdict it has in its hands today but a new jury could even award it two billion dollars or more.

Patent exhaustion

Patent exhaustion is a matter of license agreements, the place where a sale of a component is made, and technical questions concerning which components of the accused product fully implement a patented invention. With respect to Apple products incorporating Intel chips, the jury found in Apple's favor. Qualcomm-based products were not at issue here.

If Samsung wants to change this finding, it will probably have to show that its license agreement with Intel doesn't result in exhaustion. Contract interpretation is something judges do all the time. Concerning the country in which the sale was made, it appears that Judge Koh sided with Apple when deciding on her jury instructions, and on the technical side, the jury will get a huge amount of deference (whether or not it really figured the technical issues out).

FRAND issues

Apple's FRAND defenses are alive and will be heard on December 6 despite the fact that the jury did not find in favor of certain FRAND-related counterclaims.

Apple would nevertheless like to prevail on those counterclaims. That's not going to be easy, but FRAND issues involve (and sometimes completely come down to) questions of equity, which are the judges' prerogative. I think both Judge Koh and the appeals court will be more willing to overrule the jury on a FRAND issue than on, for example, a patent validity or infringement question.


There are numerous issues in this case, and while the jury does not deserve some of the name-calling that has occurred and may occur in the future, it certainly made some mistakes and a numnber of adjustments of different kinds will likely happen between now and the final ruling. But as far as liability findings are concerned, Samsung's best shot is to prove some of the patents invalid, which would be easier to accomplish at the patent office than it is to get a jury verdict overruled.

After Judge Koh is done with this case, both parties will appeal to the Federal Circuit all those parts that weren't resolved in the respective party's favor. There are already some other interesting smartphone patent cases pending at the Federal Circuit, and at the end of all those appeals, there will have been some improvements in favor of defendants but also some in favor of plaintiffs. The appeals process can cut both ways, and I'm sure it will.

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