A couple of days ago, the detailed version of the initial determination made by Administrative Law Judge E. James Gildea on Samsung's ITC complaint against Apple entered the public record. It spans 611 pages, not even counting the recommendations on remedies and bonding, and the attachments. Prior to the release of this document, only sparse information was available for the reasons underlying Judge Gildea's mid-September initial determination that the accused Apple products don't violate Samsung's asserted patents and that Samsung also failed to satisfy the domestic industry requirement for the patents-in-suit. There was no information on such questions as whether he considered Samsung's patents valid (it turns out that he held one of them to be invalid), on his evaluation of Apple's FRAND defense (which he rejected categorically), and on the positions of the Office of Unfair Import Investigations ("ITC staff"), which turns out to have been on Samsung's side on a couple of issues that could still make a difference in the further process. Now I'm able to shed some more light on where that investigation stands.
The process has meanwhile continued. Samsung and the ITC staff filed petitions for review. Apple filed only a conditional petition for review: it would rather have the Commission adopt the initial determination as the final ruling but does want to raise certain issues only if there is a review. Public redacted versions of the petitions are not available yet.
Samsung's patents-in-suit include two declared-essential 3G (UMTS) patents and two non-standard-essential ones. Judge Gildea takes an extremely FRAND-skeptical position and brushes aside Judge Posner's reasoning by pointing to differences between ITC investigations and federal lawsuits. Also, while he takes note of Apple's argument that Samsung's 2.4% royalty demand exceeds the price of the baseband chip implementing 3G, he simply finds that Apple has failed to prove that Samsung's demand is a FRAND violation. If Judge Gildea had wanted to provide ammunition to those advocating a change of the statute governing the ITC ("Section 337"), he couldn't have done a better job: if the positions on FRAND that he voices in his initial determination were adopted by the Commission, the six-member decision-making body at the top of the ITC, Congress could not help but conclude that legislative intervention is needed because the ITC will readily order import bans based on standard-essential patents absent such intervention. But he's only one ALJ, and it remains to be seen what the Commission does in the next step.
Judge Gildea is just as skeptical of patent exhaustion in this case (regardless of whether the accused products use Qualcomm or Intel baseband chips) as he is of Apple's FRAND defenses, and I disagree with him on at least parts of the exhaustion analysis. He's actually the first judge on this planet to say that Samsung's patent rights are not exhausted with respect to Qualcomm chips. On Intel, Apple got mixed results, but on Qualcomm, it had a perfect track record so far. And maybe it will still have one after the Commission review of this initial determination.
Samsung satisfied the economic prong of the domestic industry requirement (it has enough commercial activity going in the United States to quality for protection of its intellectual property by the ITC), but it failed to meet the technical prong with respect to each of the four patents-in-suit.
A general observation I'd like to share is that, at least according to the ALJ, Samsung had some shifting positions. For example, an alleged change in Samsung's infringement theory for the '980 patent was described as "troublesome and lack[ing] substance and credibility", and in connection with another patent a Samsung approach to the infringement analysis was called "protean". And a Samsung expert changed his opinion on a key issue concerning the '114 patent after he had to admit that there was no infringement based on his original position. A lack of consistency is generally an indication of a weak case unless there's a good reason for it, and the initial determination doesn't indicate any.
In the following I'll summarize the ALJ's findings and the ITC staff's position on a patent-by-patent basis.
U.S. Patent No. 7,706,348 on an "apparatus and method for encoding/decoding transport format combination indicator in CDMA mobile communication system" (an allegedly UMTS-essential patent)
This patent is probably Samsung's best shot at the review stage. Judge Gildea ruled it valid but not infringed. The staff deemed one of the asserted claims (claim 82) obvious, but not the others, and unlike the ALJ, it does consider three of the asserted claims (82-84) infringed. The technical findings regarding domestic industry overlap with the infringement analysis.
U.S. Patent No. 7,486,644 on a "method and apparatus for transmitting and receiving data with high reliability in a mobile communication system supporting packet data transmission" (allegedly UMTS-essential)
The ALJ and the ITC staff consider this patent valid but agree with Apple that it is not infringed. Samsung asserted it against all Apple devices with HSUPA capabilities. Apple, Samsung and the ITC staff all agreed that the outcome of the infringement analysis must also be the outcome of the technical prong of the domestic industry analysis. This would be an opportunity for Samsung to kill two birds (infringement, domestic industry) with one stone, but it faces a steep challenge with respect to that stone.
U.S. Patent No. 6,771,980 on a "method for dialing in a smart phone"
The patent was deemed valid (also by the ITC staff) but not infringed, and the domestic industry requirement was not held satisfied. The staff also believes that there is no infringement, though for partly different reasons than Apple. Only two of the claim limitations are really critical here, and even if Samsung could prove infringement, it wouldn't solve the problem that is own products don't appear to practice all of the claim limitations. Maybe a broader interpretation of the patent would help, but in that case there's a high risk of the patent being found invalid.
U.S. Patent No. 7,450,114 on "user interface systems and methods for manipulating and viewing digital documents"
This is probably the most difficult patent for Samsung to prevail on. It was deemed invalid (for non-novelty as well as obviousness) by the ALJ and the ITC staff. Even if it was deemed novel, there would still be multiple ways to prove it obvious.
The ALJ also found it not to be infringed, even though the staff thinks Apple infringes.
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