Thursday, November 29, 2012

Oracle's appeal of ruling in Google/Java case focuses entirely on copyright, drops patents

On October 3, Oracle gave formal notice of its previously-announced appeal of Judge Alsup's non-final final ruling on the Android/Java copyright and patent case. On that occasion I explained how Oracle's appeal might succeed. It's not going to be easy, but it's far from impossible or unrealistic. Five weeks ago I discovered that Oracle had enlisted several high-profile lawyers with a strong background in copyright issues and in appellate proceedings.

For the first time since the notice of appeal (which Google also gave, just a day later, with respect to the parts of the ruling that didn't go in its favor), some information on Oracle's strategy just entered the public record. After agreeing with Google that both parties should get an extra 55 days for their opening briefs in light of the sheer size and complexity of this case, Oracle brought a motion for such an extension of time. If the motion is granted, Oracle will have until February 11, 2013 (instead of December 18, 2012) for its opening brief; Google will have until May 23, 2013 for its first brief (which will be a response to Oracle's opening brief as well as Google's opening brief on the issues it decided to raise); Oracle would reply to Google's brief on July 3, 2013; and Google would make another filing on July 14, 2013 in order to reply to Oracle's response to Google's appeal.

The most interesting piece of information is that "[t]his is a copyright infringement case" only: Oracle's motion mentions that it "also asserted patent infringement", but only to clarify immediately that "patent issues are not raised on appeal".

I believe there are three reasons for Oracle's decision to drop the patent infringement part of the case at the stage of the appeal:

  1. The copyright issues, especially the crucial part concerning API copyrightability, are complex and fundamental. They require undivided attention.

  2. The "Gosling patent" (U.S. Patent No. RE38,104) is about to expire. Even if Oracle prevailed on its claims, justice delayed would be justice denied as it wouldn't be enforceable through an injunction (it would all just come down to past damages).

  3. The other patent-in-suit, U.S. Patent No. 6,061,520 (the "static initialization patent"), won't expire for another five years, but even Oracle's own expert considered it the least valuable one (from a commercial point of view).

These three reasons are unrelated to the merits of the patent infringement issues that were put before the jury. These reasons would apply even if Oracle was almost 100% sure to prevail. I don't think the appeal of the related parts of the jury verdict would have been a slam dunk, but it's a fact that Google's non-infringement arguments directly contradicted some of the comments in the Android source code.

Regardless of tactics and merits, I'm glad that the focus will be entirely on the copyright part of the case. Both parties have brilliant legal teams and will present excellent arguments for and against API copyrightability (and with respect to fair use). And presumably there will be some highly interesting amicus curiae briefs as well, from industry players and non-governmental organizations.

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ITC staff supports judge's preliminary finding that Samsung infringes four Apple patents

On October 24, an Administrative Law Judge (ALJ) of the International Trade Commission (ITC), a quasi-judicial agency that can impose import bans on patent-infringing products, made an initial determination (preliminary ruling) according to which Samsung was held to infringe four Apple patents (one phone design patent and three utility patents). Since the summary of those findings was announced, no details on the reasons and on the parties' petitions for review -- other than the fact that both parties did ask the Commission, the six-member decision-making body at the top of the ITC, to overrule the judge in their favor on some items -- entered the public record until today. Now, finally, there is at least one document containing substantive information that has been made available to the general public in a redacted form: the Office of Unfair Import Investigation's ("ITC staff") response to the private parties' (Apple and Samsung) petitions for review.

The ITC staff, which acts as a third party defending the public interest and makes recommendations that don't have to be adopted by the Commission or an ALJ, had not filed a petition of its own. In many of the investigations I have watched so far, the ITC staff also petitioned for a review. The fact that it did not do so in this case likely constituted a tacit form of support for the ALJ's findings, but theoretically there could have been other reasons for this, such as resource constraints.

Today's filing by the ITC staff (a redacted version of a filing that was already made ten days ago) affirmatively supports the initial determination, saying that the ALJ "did not commit legal or factual error" and that Samsung's petition should be denied in its entirety and Apple's in all respects except for one: one of the claims (claim 3) of one of the patents deemed infringed by some Samsung products, U.S. Patent No. 7,912,501 on an "audio I/O headset plug and plug detection circuitry", should additionally be considered to have been infringed by the SPH-M920, distributed through Sprint and also known as the Samsung Transform, but the ITC staff believes that this finding does not require a lengthy Commission review of the initial determination: the staff suggests to make this correction in the form of a conclusion of law.

If the Commission adopted the staff recommendation, a U.S. import ban against Samsung products having the characteristics underlying the infringement findings could enter very quickly. But as I explained in my comments on the announcement of the initial determination, it's strategically irrelevant which past products are banned if commercially viable workarounds (meaning that they don't result in degradations of the user experience and a loss of competitiveness) are available, and the initial determination cleared various unspecified Samsung workarounds of infringement. In the coming weeks I expect a redacted version of the initial determination as well as redacted versions of the parties' petitions (and their responses to each other's petitions) to become available, and as a result, we may all find out more about Samsung's workarounds.

The staff document filed today reflects the theories based on which Apple and Samsung would like to achieve improvements over the initial determination:

  • Apple obviously wants a broader ruling in its favor. Above all, it would like to prevail on the two patents the ALJ did not deem violated: U.S. Design Patent D558,757 on a certain "ornamental design for an electronic device" found on the iPhone 3GS (asserted against the Fascinate and Transform smartphones) and U.S. Patent No, 7,789,697 on "plug detection mechanisms". At the evidentiary hearing (i.e., trial), the ITC staff had sided with Apple on the D'757 patent, but it now respects the ALJ's factual determination, saying it is not "clearly erroneous, as is required to warrant Commission review". On the '697 patent the staff never appears to have sided with Apple.

  • While Apple's quest for a broader win is more about a nice-to-have than a must-have, Samsung really needs some improvements because a finding of four patent violations would look bad, even if Samsung could work around all of those patents without much commercial impact (again, the impact can't be assessed until the workarounds are described). Samsung's petition for review appears to re-raise pretty much every issue: claim construction, infringement, validity, domestic industry. Samsung also complains about "prejudicial procedural errors" relating to the admission or exclusion of certain evidence. But none of Samsung's arguments have persuaded the ITC staff that a review of the initial determination is warranted.

While the staff's position ups the ante for both parties' push for the ALJ to be overruled in different areas, I doubt that the ITC will order an import ban in such a high-profile case without any Commission review. I guess the parties will get the chance to comment again on some of the key issues raised in the petitions for review. This will also help the Commission to bulletproof its ruling for the appeals. In this case, the most likely scenario is that either party will appeal the unfavorable parts of the final ITC decision to the Federal Circuit.

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Nokia suing Android device makers over patent on sorting text messages (SMS) by conversation

A few hours after Nokia's arbitration victory over BlackBerry maker Research In Motion and the ensuing enforcement actions became publicly known, the Munich I Regional Court held a first hearing (the second one will be a trial) on one of Nokia's various infringement actions against Android device maker ViewSonic. The patent-in-suit, EP0982959 on a "mobile telephone user interface for short messages", is also among the 32 patents Nokia is asserting against HTC. Due to scheduling conflicts, the first hearing in the HTC litigation will take place in January, with the trials in both cases being scheduled for the same day (May 29, 2013). What's at issue here is the Android messaging app, and potentially also any custom or third-party apps that device makers may ship with their Android devices.

Apart from some of Apple's multi-touch gesture patents, the utility patents-in-suit in the major wireless disputes tend to be difficult to explain in non-technical terms. But this one is unusually straightforward. It's about sorting text messages (SMS) by the other person so they can be displayed anytime in the form of a conversation thread. The patent doesn't prevent others from implementing a threaded view of SMS conversations, but it covers the most efficient solution strategy, which is to attach a thread ID to every new message and keep all messages in a given thread together in one folder.

In his introductory remarks, Judge Andreas Mueller ("Müller" in German), the judge presiding over some of Nokia's Munich actions including the ones over this patent and the three cases discussed at last week's series of first hearings, highlighted that the claimed invention sets itself apart from the prior art because it stores the relevant messages in multiple folders as opposed to a single place. This characteristic also came up in the court's preliminary infringement analysis, which was stated based on what ViewSonic's answer to Nokia's complaint represented and, as Judge Mueller stressed, subject to verification of ViewSonic's technical representations in the further process. The outcome-determinative issue is going to be that the accused messaging app stores all text messages in an SQLite database as opposed to multiple folders in a directory structure on a storage medium. While ViewSonic would be cleared of infringement if the court agreed with its related theories, Nokia's lead counsel in this litigation, Klaus Haft of Reimann Osterrieth Koehler Haft, insisted that the accused devices implement the patented invention, with the internal index of an SQLite database grouping text messages by thread in technically the same way that file systems keep track of all the files stored in a given directory.

In order to explain this, Mr. Haft made use of a flip chart in the courtroom to visualize the parallels. ViewSonic's lead counsel, Dr. Matthias Sonntag of Gleiss Lutz, initially stated that he didn't want to dignify these "suggestive little graphics" with a detailed response, but at the end of the one-hour hearing he nevertheless asked for permission to photograph the content of the flip chart.

ViewSonic's argument is centered around the fact that an SQLite database is, from the perspective of the operating system, a single file as opposed to a group of folders. But this argument is, at best, specious. The patent does not take the perspective of the file system part of the operating system. It focuses on how a messaging application stores (and accordingly retrieves) data. What appears to be one file to the operating system can actually contain multiple folders inside. A simple example would be a ZIP archive. Databases differ in how they store data in files. For example, MySQL's default storage handler, MyISAM, creates separate files for its tables, while the more powerful InnoDB storage engine creates one or more large files on a storage medium with the help of the operating system and then manages the content in such a way that it typically stores a multiplicity of databases and tablets in one or a few large files.

A fundamental flaw in ViewSonic's theory was exposed when it likened an indexed SQLite database to a "glass case containing stuffed animals, with a robot arm picking one of them randomly when a customer makes a purchase". An unsorted heap of items is a different animal than a pre-sorted database.

The file systems of operating systems are, as a matter of fact, simple databases. Some of the newer ones are not necessarily simple (for example, they can come with sophisticated full-text search functionality), but in any case, those file systems are, fundamentally, databases. There's no question that relational SQL databases, even SQLite (which is the most rudimentary one among the popular ones), come with a lot of functionality that file systems don't have, but those differences don't matter for the purposes of the asserted patent, which is only about grouping, at the time of storage, an incoming or outgoing text message. Just like an operating system stores files wherever it finds space on a storage medium (typically fragmenting files by storing different parts of their content on different parts of the medium), a database simply adds new items to the end of a table or inserts them where space has been freed up by earlier deletions. And just like a file system keeps groups of files together by means of folder IDs, a database uses one or more index fields, in this case including a thread ID. It's the index information (or directory information in the case of a file system) that organizes items as groups -- regardless of the physical storage location.

Mr. Haft explained that a storage medium has a capacity limit but there is no such thing as a folder-specific capacity limit. Folders exist because of a logical grouping. The same grouping is achieved by a database index that provides access to all items sharing a given thread ID. By contrast, a physical folder is full even if space would be available in other folders.

The functional parallels between file system folders and indexed databases are a reality in everyday computing. For example, I have a huge archive of court filings in patent cases on my hard disk. There's a folder for each lawsuit. This is a document database. I use Explorer for retrieval, and if I had stored all those documents as large binary objects in an SQL database, I would perform a SELECT command. Either way, what keeps all of the files in a given folder together just happens at the logical level with the help of a unique identifier and an index that allows efficient access, as opposed to physical storage in a drawer or a file.

Judge Mueller tends to interpret claims rather literally and, as a result, narrowly. But Nokia's arguments against ViewSonic's "one file" claim are compelling, and Nokia may very well make headway between now and the HTC hearing in January and, especially, in the build-up to the May 2013 trials. In the meantime, there will be a number of other court hearings in Munich and, starting in mid-December, some infringement trials in Mannheim (the first one of which involves the Google Play store).

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Apple wins modification of dismissal to keep FRAND defense alive against Google's Motorola

Apple has won a strategically important modification to a recent dismissal of a FRAND contract lawsuit in the Western District of Wisconsin. As per an order entered late on Wednesday, the district court's final ruling, which was originally stated in a minute order as a dismissal with prejudice, has been modified so as to be a dismissal without prejudice as far as the claims Apple wanted to take to trial are concerned. This was key to enable Apple to preserve its FRAND defenses against Google's (Motorola Mobility's) ongoing or future infringement actions over standard-essential patents (SEPs).

Keeping the full range of its FRAND defenses alive against Google's Motorola Mobility even though its FRAND contract claims and estoppel theories temporarily (based on the aforementioned minute order) appeared to have been dismissed with prejudice, is a noteworthy success for Apple's outside counsel from three firms (Covington & Burling, Tensegrity Law Group, and Wisconsin-based CETRA).

The Wisconsin FRAND dispute between Apple and wholly-owned Google subsidiary Motorola Mobility, which started when Apple brought counterclaims in the spring of 2011 to an ITC complaint involving standard-essential patents, was a rollercoaster ride and serves to confirm that no one is ever beaten unless he gives up the fight. A trial was supposed to take place earlier this month, and until the week before the scheduled date, Apple was on the winning track, but then Motorola's litigators from Quinn Emanuel brilliantly drew the court's attention to Apple's unwillingness to commit to a license deal on court-ordered terms. Apple wanted the court to order Google (Motorola) to make an offer, but it also wanted to reserve the right to decline the offer unless the per-unit license fee was going to be $1 or less. Judge Barbara Crabb, the federal judge presiding over this lawsuit, then doubted that a trial would serve a useful purpose under these circumstances. In an effort to salvage the trial and put all the blame on Google, Apple proposed that the trial result in a cross-license, or at least define key parameters for an SEP license Apple would grant to Motorola in the future. But this was too complicated and too late, and after a hearing, the trial got canceled on November 5.

Three days later I discovered that Apple and Google were still fighting over the nature of the dismissal, and that Judge Crabb had agreed to think about this issue some more. During the November 5 hearing as well the briefing process on prejudice, Google proposed arbitration over the parties' FRAND issues, and Apple reacted favorably in a formal sense, but the parties disagreed on various key parameters. An exchange of letters between Apple and Google was filed with the court and highlighted some of the contentious issues. I also doubt that Apple would want to accept Google's proposal of "baseball arbitration", an all-or-nothing gamble that has more to do with gamesmanship than with a serious resolution of a FRAND royalty rate dispute. (Even in baseball it isn't done the way Google apparently would like it to work in the FRAND context because of rules protecting players who are forced to renew, just like an implementer of a FRAND standard is forced to take a license to truly essential patents.)

Judge Crabb has meanwhile taken her time to arrive at a well-considered decision on prejudice. She decided to uphold prejudice only with respect to those of Apple's claims that were dismissed at the summary judgment stage. Apple did not even make an argument at this stage that the relevant dismissals should be without prejudice. The theories underlying those claims were based on antitrust and tortious interference with contracts. As far as contracts are concerned, Apple is nevertheless still pursuing a Qualcomm-related patent exhaustion action in the Southern District of California, which is entirely unaffected by the Wisconsin dismissal. The dismissal of the antitrust claims was only a question of damages, with Judge Crabb holding that under the Noerr-Pennington doctrine, Apple's cost of defending itself against Motorola's infringement actions in the many millions of dollars does not count as antitrust damage. This does not clear Google of the abuse allegations themselves, and has no effect on the Federal Trade Commission's ability to take Google to task over its SEP-related conduct. Also, Apple is obviously free to appeal.

But Judge Crabb agreed with Apple that a dismissal with prejudice can't relate to claims that weren't adjudged on their merits. These relate to Apple's claims for equitable estoppel (a key defense theory in the FRAND context), breach of contract, and declaratory judgment. The dismissal was based only on a holding that Apple wasn't entitled to extraordinary injunctive relief (in the form of ordering specific performance, i.e., ordering Motorola to make an offer on particular terms) and to discretionary declaratory relief (discretionary meaning that the court can make the requested declarations but can also find, as it did in this case, that this would not be a good use of judicial resources). Apple pointed to multiple decisions according to which dismissals that are not based on the merits of a claim must be without prejudice. Judge Crabb now states that "[u]nder different circumstances, it may be appropriate for a court to entertain Apple's requests for declaratory relief and consider the merits of Apple's claims", mentioning as a particularly important example that "it may be appropriate for a court to consider Apple's arguments [as defenses and/or counterclaims] in the context of a patent infringement suit".

Simply put, Apple's seemingly-arrogant conduct in Wisconsin does not result in a situation in which Google would get away with FRAND abuse. That would have been an unintended consequence of the dismissal, and Judge Crabb's latest and final order resolves this issue.

Toward the end of the order, Judge Crabb makes reference to the parties' discussion of a possible arbitration proceeding, noting that "they have disagreements about the scope and form of the arbitration". Judge Crabb then says that "the possibility that this dispute can be resolved through binding arbitration is another reason" for a dismissal without prejudice because "[a] dismissal with prejudice could inhibit the parties' efforts at resolving their disputes through binding arbitration". There's no further explanation and it's not clear to me what is meant, given that the parties could always have agreed to put issues before an arbitration tribunal regardless of any dismissal with prejudice. If Judge Crabb meant (and I'm not suggesting that this is the reason, just speaking hypothetically) that a dismissal with prejudice would have been too much of an encouragement for Google to keep on suing Apple for SEP infringement (without having to overcome at least certain FRAND defenses and fend off certain FRAND counterclaims), then I would agree that this would indeed have made arbitration less likely to happen (and it's difficult enough to work out even under the current circumstances).

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Wednesday, November 28, 2012

Dutch ruling on Apple's photo gallery patent assertion against Samsung doesn't change anything

Today Apple formally won a Dutch injunction against Samsung over the photo gallery page-flipping patent (EP2059868 on a "portable electronic device for photo management"), and it's entitled to damages that have yet to be determined. This ruling by the Rechtbank 's-Gravenhage (The Hague District Court) is a follow-up, after a full-blown main proceeding, to a preliminary injunction granted in August 2011.

I have analyzed the ruling, which you can find here (in Dutch). Having already discussed this patent on several occasions I'll just sum up the key takeaways:

  • This is an injunction. Someone wrote that it's not, since the court only ordered Samsung to pay up to 100,000 euros ($128,000) per day of infringement, but that's high enough a fine that there won't be any infringement. The amount is meant to be a sanction, not a fee for compulsory licensing. In Germany, a jurisdiction that has some elements in common with the Dutch system, contempt of injunctions costs up to 250,000 euros per incident (which would be, for example, a single shipment of infringing goods to a customer) with the theoretical possibility of confinement (if the fees don't bring about the desired effect, a highly unlikely scenario). In the U.S., injunctions usually don't specify the sanctions for contempt of court beforehand, but the possible consequences of contempt are similar to the ones in Europe.

  • Samsung has already done all the work necessary to work around this injunction. It made that effort last year after the preliminary injunction that today was converted into a permanent one. Instead of a bounce-back in the photo gallery, there's a "blue flash", which the court recognizes to be a valid workaround. Also, there won't be any impact on product sales.

  • The amount of damages Samsung owes Apple will have to be determined in a separate proceeding. Given the limited size of the Dutch market and the fact that this is not a jurisdiction known for outrageous damages awards, the absolute amount will likely be small, presumably even below the legal fees incurred. I said the same about another Dutch case based on which Apple will owe damages (and future license fees) to Samsung.

  • Last week I reported on a German appeals court hearing involving this patent (in an Apple v. Motorola Mobility case) and discussed a potentially broader interpretation of the patent, which was previously adopted by the Mannheim Regional Court. The key issue in this regard is whether the two gestures the patent claims refer to (one to navigate within one picture and another one to flip pages and bring up the next item) must be sequential or whether there is also an infringement if there are two distinguishable (such as by length) gestures, one of which navigates within an (enlarged) object while the other has the page-turning effect. Today's Dutch ruling rejects the broader claim construction as "incorrect". In my view, the word "incorrect" goes too far because there is no absolutely hard evidence that the two gestures must be sequential, even though it's also how I intuitively understood the patent when I read it the first time. There are various indications that seemingly support the narrower interpretation -- but for each and every one of them there are also some counterarguments for why there is still a possibility of the broader interpretation being correct.

    Motorola will provide a certified translation of this ruling to the Munich Higher Regional Court. That's what all these litigants routinely do if they wish to notify a court of a decision supporting their positions. Judge Konrad Retzer, the judge presiding over the appeal in Munich, said at the outset of last week's hearing that his court already has various domestic and international decisions to choose from. The previous Dutch decision was only a preliminary injunction decision, which has much less persuasive value than a final (post-main-proceeding) decision by the same court.

  • Based on its narrow claim construction, the Dutch court doesn't consider this patent invalid.

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RIM loses arbitration, has to agree with Nokia on royalties or stop selling WiFi products

Nokia has announced filings with courts in the United States (Northern District of California, to be precise), the UK and Canada to enforce an arbitration award against BlackBerry maker Research In Motion (RIM). I have downloaded the petition filed with the U.S. court.

The arbitration proceeding took place in Sweden. I was aware of it because it was mentioned twice in open court in Munich. At a mid-August Nokia v. RIM hearing, a judge was markedly skeptical of RIM's motion to stay the case pending the arbitration proceeding, and three months later, his successor didn't appear to be convinced of the merits of RIM's arbitration-related claims either. What Nokia's filing says about the outcome of the arbitration proceeding validates the apparent inclinations of the Munich judges. RIM lost with respect to WiFi-essential patents, and in Munich it even wanted to defend itself against non-standard-essential patents by pointing to the arbitration clause under the existing (SEP) license agreement.

Nokia's petition says that the parties previously entered into a patent license agreement under the laws of Sweden. The agreement has a binding-arbitration clause, and arbitration awards can be enforced worldwide, without restrictions.

Nokia and RIM have been negotiating for some time but couldn't agree on license fees. RIM mistakenly thought it would benefit from triggering an arbitration proceeding, which it did in April 2011. This backfired. After a nine-day arbitration hearing in September (which was also mentioned obliquely in the Munich court), an arbitration award was issued on November 6. Nokia says that "[t]he Tribunal found unanimously for Nokia on all but one of its requests for declaratory relief, and denied all but one of RIM's requests for declaratory relief", and "required RIM to bear the costs of the arbitration and compensate Nokia for the majority of its legal fees".

My intepretation of Nokia's representation of the terms of the license agreement in its U.S. petition is that this agreement has a mechanism according to which it must either be renewed at some point or the licensee (RIM) must stop implementing the relevant standard. This is a patentee-friendly deal structure: it eliminates the need for infringement proceedings after the expiration of the agreement. The license agreement leaves no doubt that there will be an infringement once the agreement expires before the relevant patents expire. One of the arbitration tribunal's findings is that "RIM has not contested that it manufactures and sells products using WLAN [WiFi, IEEE 802.11] in accordance with Nokia's WLAN patents", and on this basis it was determined that RIM is "not entitled to manufacture or sell products compatible with the WLAN Standard without first agreeing with Nokia on the royalty to be paid for its manufacture and/or sale of Subscriber Terminals compatible with such Standards".

Nokia's petition avers that the parties "have not agreed on the royalty to be paid for the manufacture and/or sale of RIM Subscriber Terminals compatible with WLAN", and Nokia now asks the U.S. court for declaratory judgment, an award of litigation costs, and "such other and further relief as this Court deems just and proper, including but not limited to such relief as may be necessary or proper to give effect to the declaratory judgment sought". This final prayer for relief suggests to me that Nokia reserves the right to request, if all else fails, entry of an injunction barring RIM's sale of WLAN-capable products in the United States. The way Nokia phrased this prayer for relief suggests to me, however, that it would much prefer to RIM to take a license on FRAND terms.

In my view, there can be no question that RIM is entitled to a license on FRAND (fair, reasonable and non-discriminatory) terms to Nokia's WiFi SEPs. But at this point there is no indication of Nokia having made any demand in excess of FRAND, and any FRAND issues may have been discussed in the arbitration proceeding.

In July, RIM filed a letter with the ITC that I considered quite outrageous and argued vehemently in favor of injunctive relief based on standard-essential patents. That RIM letter is in the public record and definitely increases the likelihood of an injunction being ordered against it. RIM may finally get to savor the impact of the SEP injunctions its legal department advocated this summer (unless it reaches an agreement with Nokia in time).

RIM faces some fundamental problems, and now it's coming under very serious pressure after the arbitration proceeding it initiated worked out in its rival's favor. Nokia also has its challenges, but it's definitely doing very well in litigation (I'm following all of its enforcement efforts closely and will, by the way, attend a Nokia v. ViewSonic patent infringement hearing in Munich in a few hours) and I also saw some news indicating that the Lumia 920 is selling very well. Compared to RIM, Nokia is in a relatively stronger position in all respects, and especially as far as intellectual property issues are concerned.

It's worth noting that HTC is in a structurally similar position vis-à-vis Nokia as RIM. In the ITC investigation of Nokia's complaint against HTC, a motion was brought to refer one of the patents to arbitration. Of course, the terms of the Nokia-HTC agreement could be more favorable to HTC than the terms of the Nokia-RIM agreement are to RIM, but there's no particular reason to assume that HTC had more leverage when negotiating with Nokia than RIM did. Relatively speaking, RIM's patent portfolio is actually less weak than HTC's. I don't know when there will be any decision in a Nokia-HTC arbitration proceeding, but if and when there is one, I'm sure it will be announced by the prevailing party.

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Tuesday, November 27, 2012

Apple files terminal disclaimer for a design patent the California jury found Samsung to infringe

Apple just notified the court of its filing of a terminal disclaimer for U.S. Design Patent D618,677, which is one of the patents that a California jury found Samsung to infringe. Apple's notice says: "This disclaimer moots Samsung's Motion for Judgment as a Matter of Law, as set forth in Samsung's reply brief, that Apple's U.S. Patent No. D618,677 is invalid for obviousness-type double patenting over U.S. Patent No. D593,087."

The effect of this terminal disclaimer is that the D'677 patent won't be enforceable beyond the term of the D'087 patent. It continues to exist, but it can't exist after expiration of the earlier-filed patent allegedly covering essentially the same invention. This means that even if Samsung was right and both patents were duplicative, Apple wouldn't have extended the term of its design monopoly by filing two different patent applications, at different times and therefore with different expiration dates, on essentially the same invention.

Apple clarifies that this terminal disclaimer does not constitute an admission of invalidity.

While Apple cites two Federal Circuit decisions that it summarizes as holding that "obviousness-type double patenting is cured by terminal disclaimer", I doubt that Samsung will agree that its motion is mooted by Apple's unilateral action. Apple asserted both the D'677 patent and the D'087 patent at the summer trial, but the lists of accused products aren't identical, and several of the products found to infringe the D'677 patent were cleared of infringement of the D'087 patent. Samsung will presumably argue that it was prejudiced by the fact that Apple filed for two patents on allegedly the same invention and asserted both of them at the same trial.

If the D'677 patent was held invalid, roughly 50% of the billion-dollar verdict might have to be vacated because of a need to have the court or, if necessary, a new jury determine damages for multiple products. That's because the court had rejected Samsung's demand that the jury provide damages figures not only on a product-by-product basis but also in a more disaggregated form, which would have shown how much of the damages figure for a given product was attributable to which particular intellectual property right. Since there are only total per-product figures, it's not possible to simply deduct a particular amount that relates to the D'677 patent: according to a theory Samsung presented shortly after the verdict, a whole new damages trial would be needed for any product with respect to which any part of the liability findings is later overturned.

The products accused of infringing the D'677 patent were the Fascinate, Galaxy Ace, Galaxy S (i9000), Galaxy S 4G, Galaxy S II (AT&T), Galaxy S II (i9100), Galaxy S II (T-Mobile), Galaxy S II (Epic 4G Touch), Galaxy S II (Skyrocket), Galaxy S Showcase (i500), Infuse 4G, Mesmerize, and Vibrant. The jury found Samsung to infringe the D'677 patent with all of those products except the Galaxy Ace.

Since Samsung argued that the D'677 patent and the D'087 patent are pretty much identical (to the extent that their co-existence amounts to double-patenting), Apple would have a strong point if it argued that double patenting is irrelevant to the damages figures relating to products that were found to infringe both these design patents. But the list of products accused of infringing the D'087 patent was shorter. The Galaxy S (i9000), Galaxy S 4G and Vibrant phone were deemed to infringe both patents. The Galaxy S II (in the AT&T, i9100, Epic 4G Touch and Skyrocket) versions and the Infuse 4G were cleared of infringement of the D'087 patent. The other D'677-infringing products were not even accused of D'087 infringement.

These are the damages figures for products found to infringe the D'677 patent but not the D'087 patent:

ProductDamages Award
Galaxy S II (AT&T)$ 40,494,357
Galaxy S II (9100)- (not sold in U.S.)
Galaxy S II (T-Mobile)$ 83,791,708
Galaxy S II (Epic 4G Touch)$100,326,988
Galaxy S II (Skyrocket)$ 32,273,558
Galaxy S Showcase (i500)$ 22,002,146
Infuse 4G$ 44,792,974
Mesmerize$ 53,126,612

Samsung will want to get those $520 million in damages vacated until there is a new damages award by a court or a jury. A new award could theoretically be even higher than what Apple won last time, but it could also be much less. A new damages trial would be a gamble for both parties. But since Apple won so much last time, it stands more to lose at this stage.

Apple's strategy is interesting but I'm not sure that it will be able to convince the court that a terminal disclaimer affecting the expiration date of the D'677 patent further down the road (at a time when it probably won't even be commercially relevant anymore) really cures the problem with a view to Samsung, considering that approximately 50% of the jury's total damages award relates to products found to infringe the D'677 patent but not the D'087 patent. I have taken a quick look at the two Federal Circuit opinions Apple cites, and there's no indication in them that a terminal disclaimer had occurred after a jury awarded damages based on a patent that maybe should never have been filed from a double-patenting point of view. Here, Samsung is probably going to argue that the jury trial might have had a very different outcome if Apple had not engaged in the alleged double-patenting.

A patentee-friendly perspective is that if there are two duplicative patents, any finding of infringement based on at least one of them should benefit the patent holder, regardless of any other findings. But a defendant-friendly position is that if a product is not found to infringe both of these patents (either because one of them is deemed not to be infringed, or because no infringement contention was brought in the first place), then there's too much doubt about whether there really is an infringement since a strong case for an infringement should result in consistent verdicts with respect to either duplicative patent. A more moderate variation of this would say that infringement is not proven if a jury looks at both patents and arrives at inconsistent results, clearing the accused product of infringement of one of them (while not holding it against the patentee if some products weren't even accused of infringement of both patents). In this case, $361,427,056 of the damages figure relates to products that were found to infringe the D'677 patent but were cleared of infringement of the D'087 patent. With so much money at stake, there will be some controversy over what implications Apple's terminal disclaimer has at the post-trial stage of this litigation.

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New Ericsson lawsuits against Samsung indirectly help Apple in fight against FRAND abuse

Ericsson just announced that it has sued Samsung -- not for the first time in history -- over various wireless standard-essential patents (SEPs). This dispute is interesting in its own right, but the issues it raises are even more interesting in light of the SEP issues pending between Apple and Samsung. Apple could benefit from this in some ways, as I'll explain further below.

Ericsson filed two complaints bearing today's date in the Eastern District of Texas. While this district is particularly popular among so-called patent trolls, Ericsson actually has its U.S. headquarters in that district.

Ericsson and Samsung previously had a dispute over FRAND terms, and Apple has quoted in its own litigations with Samsung some of the Korean company's positions on FRAND that it took when the shoe was on the other foot (this letter is an example). Ericsson says that Samsung licensed its SEPs in 2001 and renewed the deal in 2007, but has recently refused to pay what Ericsson believes to be a FRAND royalty for its SEPs. Ericsson claims to have offered to Samsung "many alternative FRAND royalty structures and frameworks", all of which have been rejected over the course of two years of negotiations.

"Even more egregiously", Ericsson's lawyers write, "Samsung has refused to provide Ericsson a license to its allegedly standard-essential patents on FRAND terms. Upon information and belief, Samsung refuses to license Ericsson under any declared standard-essential patents that it owns in an effort to compel Ericsson to license its patent portfolio at a small fraction of the rates that its competitors pay. This position violates Samsung's FRAND commitment."

That allegation is similar to Apple's claim that Samsung was making excessive demands based on its SEPs in order to get Apple to agree to a broad cross-license agreement on terms favorable to Samsung. Apple will presumably point certain courts to this allegation.

Ericsson is seeking an injunction. While Ericsson's complaints talk a lot about FRAND, this is a situation in which Ericsson apparently believes that it's dealing with an unwilling licensee and should, therefore, be entitled to injunctive relief. I have previously disagreed, and continue to disagree, with Ericsson on this one. Instead, I agree very much with Judge Posner. But in this case, the defendant, Samsung, has recently also been quite aggressive in its SEP assertions.

Apple may benefit from this hugely because Samsung will now have to argue that Ericsson's demands, which were presumably not nearly as outrageous as what Samsung wanted Apple to pay, were outside the FRAND ballpark. Ericsson's litigation forces Samsung to argue that FRAND rates should be low, while in the dispute with Apple, it takes the opposite position. Litigation proceeds pretty quickly in the Eastern District of Texas, so there's a good chance that Apple will be able to use in its second California lawsuit (in which several of Samsung's counterclaim patents are wireless SEPs) some of what Samsung has to argue in its defense against Ericsson.

Conversely, Ericsson will certainly try to get some mileage out of Samsung's statements made in the Apple litigation.

In the second one of the two Texas lawsuits filed today, Ericsson is pursuing not only its own infringement claims but also bringing FRAND contract claims against Samsung. These are the related prayers for relief -- the "specific performance" demand (item J) is consistent with the key remedy sought in Apple and Microsoft's FRAND contract actions against Motorola Mobility:

H. Adjudge that Samsung Electronics's commitment to license patents they claim are essential to a standard adopted by an industry standard-setting group on FRAND terms is a binding contractual obligation, enforceable by Ericsson;

I. Adjudge that Samsung Electronics’s refusal to provide Ericsson a license on FRAND terms, despite their obligation to do so, is a breach of contract;

J. Order specific performance, requiring that Samsung Electronics offer Ericsson a license on FRAND terms for any patent claim that Samsung Electronics contends or has alleged in any context is necessary to implement a standard adopted by an industry standard-setting group;

K. Award Ericsson damages in an amount adequate to compensate Ericsson for the Defendants' breach of contract and equitable estoppel[;]

L. Adjudge that any patent claim that Samsung Electronics contends or has alleged in any context is necessary to implement a standard adopted by an industry standard-setting group is unenforceable against Ericsson;

M. Enter an injunction enjoining Defendants, and all others in active concert with Defendants, from enforcing any patent claim that Samsung Electronics contends or has alleged in any context is necessary to implement a standard adopted by an industry standard-setting group;

N. Enter an injunction requiring Defendants, and all others in active concert with Defendants, to license any patent claim that Samsung Electronics contends or has alleged in any context is necessary to implement a standard adopted by an industry standard-setting group on fair, reasonable, and non-discriminatory terms to Ericsson;

Two dozen patents-in-suit

These are the patents asserted in Ericsson's first complaint:

  1. U.S. Patent No. 6,029,052 on a "multiple-mode direct conversion receiver"; Ericsson believes to have a particularly strong willfulness case here beause it already asserted this patent against Samsung in an ITC complaint (investigation no. 337-TA-583)

  2. U.S. Patent No. 6,058,359 on a "speech coding including soft adaptability feature"; Ericsson already asserted this patent against Samsung in a 2006 complaint, which has implications for willfulness

  3. U.S. Patent No. 6,278,888 on "radiotelephones having contact-sensitive user interfaces and methods of operating same"; this patent is currently undergoing reissue proceedings and Ericsson will, after the patent reissues, mvoe to amend the the complaint accordingly

  4. U.S. Patent No. 6,301,556 on "reducing sparseness in coded speech signals"

  5. U.S. Patent No. 6,418,310 on a "wireless subscriber terminal using Java control code"

  6. U.S. Patent No. 6,445,917 on "mobile station measurements with event-based reporting"

  7. U.S. Patent No. 6,473,506 on "signaling using phase rotation techniques in a digital communications system"; previously asserted against Samsung in 2006

  8. U.S. Patent No. 6,519,223 on a "system and method for implementing a semi reliable retransmission protocol"

  9. U.S. Patent No. 6,624,832 on "methods, apparatus and computer program products for providing user input to an application using a contact-sensitive surface"

  10. U.S. Patent No. 6,772,215 on a "method for minimizing feedback responses in ARQ protocols"

  11. U.S. Patent No. 8,169,992 on "uplink scrambling during random access"

These are the patents asserted in the second complaint:

  1. U.S. Patent No. 6,259,724 on "random access in a mobile telecommunications system"

  2. U.S. Patent No. 6,400,376 on a "display control for hand-held data processing device"

  3. U.S. Patent No. 6,466,568 on "multi-rate radiocommunication systems and terminals"

  4. U.S. Patent No. 6,502,063 on a "method and apparatus for recursive filtering of parallel intermittent streams of unequally reliable time discrete data"

  5. U.S. Patent No. 6,597,787 on an "echo cancellation device for cancelling echos in a transceiver unit"

  6. U.S. Patent No. 6,732,069 on a "linear predictive analysis-by-synthesis encoding method and encoder"

  7. U.S. Patent No. 6,865,233 on a "method and system for control signalling enabling flexible link adaptation in a radiocommunication system"

  8. U.S. Patent No. 6,985,474 on "random access in a mobile telecommunications system"

  9. U.S. Patent No. 7,660,417 on an "enhanced security design for cryptography in mobile communication systems"

  10. U.S. Patent No. 7,707,592 on a "mobile terminal application subsystem and access subsystem architecture method and system"

  11. U.S. Patent No, 7,769,078 on an "apparatus, methods and computer program products for delay selection in a spread-spectrum receiver"

  12. U.S. Patent No. 7,961,709 on "secondary synchronization sequences for cell group detection in a cellular communications system"

  13. U.S. Patent No. 8,036,150 on a "method and a device for improved status reports"

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Patent exhaustion and possible EU intervention at issue in German Samsung v. Apple SEP lawsuit

The dispute between Apple and Samsung is a good example of how much faster patent holders can enforce their rights in Germany than in the United States. This earth-spanning patent war started with Apple's first federal lawsuit, filed in April 2011, in response to which Samsung retaliated in several countries including Germany. By the standards of the Northern District of California, Apple v. Samsung went to trial (in August 2012) after a relatively short period of time. On December 6, the court will hold a hearing on injunctive relief, and a ruling may or may not come down this year. By contrast, Samsung filed two waves of Mannheim lawsuits against Apple, one in April 2011 and the other in December 2011. The first wave was adjudged -- and appealed -- earlier this year. Rulings on the second wave will come down on December 7 (smiley input method) and January 25 (two standard-essential patents and a non-standard-essential screen-to-speech patent).

By Mannheim standards, this is just an average -- not record -- speed. In fact, one of these cases even got slowed down a bit by a change in the composition of the judicial panel. A trial was already held on September 14, but a retrial was needed and took place on Friday.

The patent-in-suit is EP1720373 on a "method and apparatus for reporting inter-frequency measurement using RACH message in a communication system". It has been declared essential to 3G (UMTS).

In my report on the first trial I already mentioned that the infringement question is in the court's discretion. There's a gray area. Infringement wasn't rediscussed on Friday.

Apple's challenge to the validity of this patent was addressed once again, but only as far as Apple's reliance on a Nortel change request to UMTS is concerned. In this context, Judge Andreas Voss ("Voß" in German), by now clearly the world's most experienced judge when it comes to wireless patents, expressed his regrets over how little attention used to be paid to these specifications of industry standards in patent examinations. Standardization-related documents frequently serve as prior art references in litigation.

The discussion on Friday focused, for the most part, on Samsung's rebuttal of Apple's Qualcomm-related patent exhaustion defense and on the question of a possible European Commission opinion on the FRAND antitrust issues in this litigation.

Patent exhaustion is a complicated question. The answer hinges on the scope of a license agreement as well as the technical details of how an accused device actually practices the claimed invention. There was no discussion of contractual details (which wouldn't have taken place in open court anywy). Samsung primarily counters Apple's exhaustion defense by arguing that there are "many parts involved in between the antenna and the [Qualcomm] baseband chipset" to perform the patented interfrequency measurement, and that the relevant measurement is actually performed mostly by the transceiver chip. Apple essentially argues that the baseband chipset does what's important. But the court indicated that Apple's exhaustion theory might fail if Samsung showed that the received signal strength indicator (RSSI) value is provided by the transceiver to the baseband chip, which would call into question that the baseband chip is the sole measurement unit in the accused devices.

Samsung has to surmount certain hurdles here, but all in all it's far from unlikely that the court may identify an infringement of a non-exhausted patent. And if the case then isn't stayed because of doubts about the validity of the patent (there appears to be reasonable doubt, but it could fall short of the standards of German infringement proceedings), Samsung would win an enforceable German injunction against all Apple products implementing 3G (UMTS). The history of Apple's dispute with Motorola shows that this wouldn't be the end of the story, but if the appeals court didn't stay enforcement on any other grounds, Apple would then have to enter into the so-called Orange Book procedure and agree to take a license from Samsung on FRAND terms, the determination of which terms would most likely require a follow-on lawsuit.

At the first trial, the court and the parties already discussed Apple's motion to stay the case (if an injunction resulted from it otherwise) for the duration of the European Commission's antitrust investigation of Samsung's use of standard-essential patents, including the patent-in-suit, against Apple. In order to enable the court to determine whether there would be a risk of inconsistent decisions on the antitrust issues in this case (with the European Commission potentially reaching different conclusions from those of the Mannheim court), Apple proposed that the court write to the Commission to request its input. The court appeared to give this serious consideration at the first trial but didn't give any such indication on Friday.

According to its counsel, Samsung wrote a letter to the European Commission the week before the retrial (i.e., the week before last) to officially inform the Commission of this proceeding. Judge Voss noted that there wasn't much time between the letter and the retrial for the Commission to make a decision, and Apple said that Samsung's letter didn't change the facts. According to Apple, the Commission had been informed of this litigation all along, which is what I would also have assumed, but Samsung's letter did not ask the Commission to send a statement to the Mannheim court.

Wolrad Prinz zu Waldeck of Freshfields Bruckhaus Deringer, who presented Apple's antitrust arguments, mentioned that the Commission does not routinely intervene in such litigations. Since 2006 it has intervened in only four cases.

Judge Voss mentioned that the German antitrust authority (Bundeskartellamt) only intervenes in cases before the country's highest court in such matters, the Federal Court of Justice, and not at the stage of a proceeding in a regional court. I still think there's a possibility of some European Commission input to the court in this case. The key issue is that an injunction in Samsung's favor (which would be preliminarily enforceable against a bond or deposit) would immediately create facts. The ruling is scheduled for January M;25, 2013 as I mentioned, and for practical reasons, enforcement could begin as early as mid-February.

The window of opportunity for Brussels to give meaning to FRAND is, therefore, closing long before any proceedings in the Federal Court of Justice. If the purpose of an intervention is to make a statement on general, high-level issues, it certainly makes sense for antitrust regulators to make their submissions only to the final appeals court. But in this case, there is an ongoing investigation involving, among others, this particular patent-in-suit and this particular litigation in which Samsung is seeking injunctive relief over it. By sending a signal to the Mannheim court that Samsung's pursuit of injunctive relief after a totally unFRANDly 2.4% royalty demand is likely to be deemed an EU antitrust violation, the Commission could ensure that no commercial facts are created before the underlying key issues have been fully evaluated by Europe's top antitrust regulator.

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Apple insists that Samsung's purported workaround still infringes pinch-to-zoom API patent

In the build-up to the December 6 injunction hearing in Judge Koh's court, Apple and Samsung are fighting hard over which evidence and arguments will be admitted. The dispute over Samsung's lawyers' access to the full Apple-HTC settlement agreement including license fees (all other parts were not in dispute) has been resolved by the court, which basically said that access is granted but relevance is doubtful. Now there's an actually much more important evidentiary dispute going on and it relates to Samsung's claim that it has worked around the asserted claim (claim 8) of Apple's '915 patent (U.S. Patent No. 7,844,915 on "application programming interfaces for scrolling operations"), which I generally call the "pinch-to-zoom API patent" and which I have previously described as a "pinch-to-zoom-essential patent", meaning that while it's not a gesture patent in a literal sense, it is, in the opinion I've held thus far and continue to hold until I see surprising evidence to the contrary, inevitably infringed by any reasonable implementation of the pinch-to-zoom gesture.

The idea of a pinch-to-zoom workaround is not that new. For example, a journalist recently claimed that all of this colleagues in the media were "confused" in giving Apple a monopoply on pinch to zoom that it never had in his opinion, and his article included a Google statement that said Apple's patent only covered "a very specific software implementation" of pinch-to-zoom -- as opposed to pinch-to-zoom as a whole. Just like Samsung's workaround theories, he also focused on one particular claim limitation: the distinction between a one-figure and a two-finger gesture (one finger meaning scrolling, two fingers meaning a pinch), which is the core of the '915 patent.

There's no question that one can work around that claim limitation, like any claim limitation of any given patent, in a legal sense, and there's also no question that the '915 patent doesn't cover all scrolling and all pinching operations, but the question is what price one has to pay for non-infringement in terms of a degradation of the user experience. Is it intuitive? Are more fingers needed to get the job done than would otherwise be necessary? Is valuable screen real estate sacrificed? For example, you don't infringe if scrolling is performed with the help of a traditional scroll bar, but that would be pre-iPhone-like. Also, you don't infringe if your phone has an on-screen or physical button that you push to put the device in a pinching mode. You might even have a non-infringement argument (not necessarily meritorious, but sufficient to require some new discussion) if scrolling requires the use of two fingers and pinching the use of five fingers. But the question is whether the pinch-to-zoom gesture that Apple has made so popular that it's commonly expected, and instinctively performed, by users can be implemented without infringing the '915 patent or adversely affecting the user experience.

The way to make pinch-to-zoom work smoothly, without introducing additional icons or requiring awkward gestures such as zooming in and out by drawing circles on a screen in a clockwise or counterclockwise direction, is to interpret a single-finger gesture as a scrolling operation and certain two-finger gestures as pinching operation (zomming in or out, depending on whether the two fingers move closer to each other or away from each other).

Samsung apparently agrees. That's why it recently claimed that its workaround still allows users "to scroll web pages using one finger and zoom in and out of web pages using two fingers". I reported on this claim more than a month ago and commented that "what Samsung does and does not say in public about the '915 'pinch-to-zoom API' workaround suggests to me that an enforcement dispute over this one is at least somewhat likely". I was right that the '915 workaround theory was debatable, and the dispute is already in full swing, even prior to the enforcement stage. With Samsung arguing that an injunction should not be granted since it has a workaround (which in my view would actually, if true, weigh in favor of an injunction since there wouldn't be any harm from discontinuing the infringement identified), the question of whether or not the '915 patent is still being infringed is part of the debate over injunctive relief.

On November 9, Apple filed a reply declaration by a professor from Toronto, Karan Singh, who went to the offices of Quinn Emanuel, Samsung's law firm in this dispute, to look at the workaround code and while "Samsung failed to provide a full code tree or folder as it would typically be kept in Samsung's ordinary course of business" (and as Samsung apparently did earlier in this litigation), saw enough code to opine that "the modified code [he] reviewed demonstrates continuing infringement of the '915 patent".

The Singh reply declaration is heavily-redacted, especially in the parts that are most interesting (the ones in which he discusses Samsung's source code). The publicly-accessible parts of the declaration show that Professor Singh identified literal infringement as well as (which represents only a fallback theory) infringement under the doctrine of equivalents (DoE), and that he contradicted Samsung's claims that prosecution history estoppel prevented Apple from presenting an infringement theory under the DoE.

On November 20, Apple claimed that "Dr. Singh exposed the fiction in [Samsung expert] Mr. Gray's declaration that dressing up infringing code in different clothing renders it non-infringing".

Meanwhile, Samsung has brought a motion to strike three declarations attached to Apple's reply brief in support of a permanent injunction, and the Singh declaration is one of them, with Samsung's motion to strike arguing that Apple "never discusses the content of the Singh Declaration in its Reply". Courts don't want parties to circumvent page limits by making arguments in declarations that aren't really referenced in the actual pleading. But Apple filed a reply to that motion late on Monday and says that its reply brief "described Dr. Singh's declaration as showing that Samsung's 'modified code still infringes because it distinguishes between a single input point and multiple input points.'" Apple says this is more than Samsung said about the declarations in which it presented its workaround theories. Samsung just said that it "has implemented non-infringing design-arounds" and then pointed to three declarations.

Samsung's motion to strike also argued that Dr. Singh offered a "new infringement theory", but Apple says this is "overstated" given that Dr. Singh made these two observations:

  • Samsung's "modified code flow is very similar to that for the Galaxy Tab 10.1, which the jury found to infringe".

  • "When Dr. Singh used a Samsung device with the modified code, he 'observed the exact same infringing behavior as in the old code.'"

I doubt that Apple's reply declaration will be stricken unless Samsung's '915 workaround declaration is stricken, too. If the court doesn't strike the parties' workaround-related declarations, there may have to be some '915 infringement discussion at the December 6 hearing, unless Judge Koh declines to adjudge this issue at this stage. She could declare it irrelevant to the injunction analysis and say that the parties can still have an enforcement dispute over it later, after an injunction (if one is granted after the hearing).

At any rate, the fight the parties are having over the workaround theory shows how important this issue is. It's all about whether Samsung will have to modify its pinch-to-zoom implementation in a way that would affect the user experience. Samsung says it can provide the same functionality by merely changing the inner workings of its code. Apple says that those modifications to the code amount to "dressing up infringing code in different clothing", and I already saw this dispute coming more than a month ago, while I thought Samsung had presented credible workarounds for the other two multitouch patents the jury found infringed.

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Sunday, November 25, 2012

Samsung attacking Apple's screen-to-speech functionality with German patent

At the end of my post on Apple's Black Friday motion to bring infringement claims against six more Samsung products in California I promised that I would report on the two Samsung v. Apple trials that took place in Mannheim on the same day. I'll start with the one relating to a non-standard-essential patent. DE10040386 (B4) is the German equivalent of U.S. Patent No. 6,937,700 on a "device for and method of outputting data on display section of portable telephone". The lengthier English title of the underlying patent application is "speech output device for data displayed on mobile telephone converts data from display into speech data for output via loudspeaker". In a nutshell, it's a patent on pushing a button and getting the screen content, including not only text but also icons, read aloud to you.

I haven't seen Samsung assert the aforementioned U.S. patent yet. I believe it would be very, very hard for Samsung to obtain a favorable claim construction in the U.S. given what its patent attorneys stated during prosecution. In order to get this patent granted, they argued that the patent sets itself apart from the prior art by teaching that there be two different kinds of memory, one for the screen content and a separate one for the audio data that is generated, but Samsung's infringement theory against Apple is that it's sufficient to have two different blocks of memory (even if we're talking about the same physical memory unit). Apple's lead counsel in this action, Dr. Frank-Erich Hufnagel of Freshfields Bruckhaus Deringer, said he had never before seen such an extreme case in which a patentee claims in an infringement action the exact opposite of its position during the original examination process. But he did recognize that prosecution history doesn't have much of a bearing on claim construction in Germany -- which is exactly why I believe Samsung decided to assert this particular patent in Germany and not in the United States. Samsung is a global player of increasing sophistication in tactics commonly referred to as "forum-shopping".

Apple also has other non-infringement arguments, the first one of which is that the claim language requires an "audio output key", a limitation that Apple believes is not practiced if audio output is triggered by tapping on an on-screen button, considering that the patented invention was very much about helping the visually impaired. Samsung reacted to that non-infringement argument by presenting an additional infringement theory on Friday, arguing that the iPhone can be configured in such a way that triple-pressing the Home button results in speech output of the screen content. This introduction of a new infringement theory at trial time might delay adjudication of this case.

I don't think too highly of this particular patent, but Samsung made a smart tactical choice by bringing this assertion in Germany. The question of two different memory units -- "a memory for storing data displayed on the display section of the portable telephone" and "an audio memory for storing audio data corresponding to the audio output mode of the portable telephone" -- is probably going to be outcome-determinative. Under German law, Samsung may indeed get away with a flagrant contradiction between the prosecution history and its infringement contentions. But even if it does succeed on the infringement side and the court accepts that the distinction between two kinds of memory must be made from a software and not hardware angle, the case may well be stayed over doubts concerning the validity of this patent in light of such a broad construction. In this regard, Apple made an argument that is specific to the European legal framework: since computer programs "as such" aren't patentable under the European Patent Convention, computer-implemented inventions must make a technical contribution to the state of the art, and a mere distinction between two logical memory blocks doesn't have a technical effect. It would be a software patent "as such". This is the first time that I saw Apple argue on the basis of Article 52 of the European Patent Convention.

Apart from the question of patent-eligible subject matter, there is also some prior art, but Samsung argues that earlier inventions simply provided text-to-speech output but were unable to convert such information as "87% battery power", which may be represented through icons, into speech. Dr. Joel Naegerl of Zimmermann & Partner, a patent attorney representing Samsung in this matter, conceded that "the scope of this patent is, if you will, minimal", but noted that "it is being practiced". This takes us back to the question of a technical contribution, as Apple's patent attorney in this litigation, Dr. Thomas Koch of Hoffmann Eitle, noted. Dr. Koch stressed that novelty hinges exclusively on technical contributions to the state of the art, and he can't see which technical problem is solved by distinguishing between two kinds of information.

All in all I would be surprised if the decision, which has been scheduled for January 25, 2013, would go in Samsung's favor. I believe the court is more likely to either reject the infringement theory or, perhaps even more likely, stay the case pending a parallel nullity (invalidation) proceeding. Or maybe there has to be a new trial due to Samsung's late-stage introduction of a second infringement theory (triple-pressing the Home button after reconfiguring the system). But the fact that Samsung wasn't given short shrift at the trial because of a blatant contradiction between its position during examination and its infringement theory against the iPhone shows how plaintiff-friendly the German legal framework is. Knowing that many of my readers are interested in the intricacies of parallel multijurisdictional litigation, I'll elaborate now on the relevance of prosecution history to German infringement cases.

In all jurisdictions, any claim construction analysis naturally begins with the claim language itself, and is followed by what the specification states. The patent should serve as its own dictionary. But in the United States, proseuction history is part of the intrinsic evidence considered in claim construction, i.e., it's part of the most important category of evidence. Let me quote two paragraphs from one of Judge Koh's claim construction orders in Apple v. Samsung (case no. 11-cv-1846, N.D. Cal., Doc. No. 1266, filed on July 20, 2012):

"The court may also consider the patent’s prosecution history, which consists of the complete record of proceedings before the United States Patent and Trademark Office ('U.S. PTO' or 'PTO') and includes the cited prior art references. The court may consider prosecution history where it is in evidence, for the prosecution history “can often inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it otherwise would be.' Id. at 1317 (internal citations omitted).

Finally, the court is also authorized to consider extrinsic evidence in construing claims, such as “expert and inventor testimony, dictionaries, and learned treatises.' Markman, 52 F.3d at 980 (internal citations omitted). Although the court may consider evidence extrinsic to the patent and prosecution history, such evidence is considered 'less significant than the intrinsic record' and 'less reliable than the patent and its prosecution history in determining how to read claim terms.' Id. at 1317-18 (internal quotation marks and citation omitted). Thus, while extrinsic evidence may be useful in claim construction, ultimately 'it is unlikely to result in a reliable interpretation of patent claim scope unless considered in the context of the intrinsic evidence.' Id. at 1319."

Now contrast this with a quote from Lord Justice Jacob in the UK that Judge Voss ("Voß" in German) mentioned on Friday: "the meaning of the patent should not change according to whether or not the person skilled in the art has access to the file and in any case life is too short for the limited assistance which it can provide". In Europe, the law does not require courts to look at prosecution history. Proposals were on the table but not adopted. In Germany, there's only one scenario in which the positions taken by a party in prosecution can result in some kind of estoppel in an infringement proceeding: a statement made in defense of the patent in a parallel nullity action can be held against an assertion made in the infringement proceeding, but only between the same parties -- and infringement cases are adjudged more quickly than nullity actions, which further reduces the likelihood of this being any useful.

There are two key reasons for which the case law in Germany disfavors references to the prosecution history. The first one is also part of the above quote from Lord Justice Jacob -- the prosecution file isn't publicly accessible over here. I don't think that argument deserves much weight, if any at all, given that a defendant against an infringement allegation could still make use of it in a legitimate way after having been sued. The other argument is that the prosecution history involves not only documents but also oral communication that cannot be researched or verified later on. This is a better point than the first one, but I still believe it would be better policy to take prosecution history into consideration, given that a patentee can always take measures to ensure that relevant statements are well-documented for future use and that some statements are so very clear, such as Samsung's position on the two kinds of memory, that there can't possibly be any oral statements that substantially affect their meaning.

Unlike in the U.S., where lawyers can unapologetically argue based on prosecution history, defendants' lawyers in Germany can only argue (except in the situation outlined above in which the parties to a nullity and an infringement proceeding are the same ones) that the patent examiner is an example of a person skilled in the art whose understanding is, therefore, a relevant indication. But this only benefits a defendant if the claim language coupled with the specification supports a given non-infringement theory, with prosecution history providing just another indication of the defendant's proposed claim construction being the correct one.

This is a mental detour and clearly diminishes the weight of prosecution history. But I see defendants in Germany argue on the basis of prosecution history all the time, presumably because they believe that for psychological reasons the persuasive value of arguments based on prosecution history is greater than its formal legal weight. For example, Dr. Marcus Grosch of Quinn Emanuel, who represents Google and its Motorola Mobility subsidiary in its German patent disputes with Apple, Microsoft and Nokia (in the Nokia lawsuits against HTC and ViewSonic, Google is a third-party intervenor), points to prosecution history in most of the cases in which he acts for a defendant. Another Quinn Emanuel partner, Dr. Johannes Bukow, is Samsung's lead counsel in this screen-to-speech case and obviously argues the other way on this occasion.

In the overall context of European patent harmonization and the creation of a unified European patent judiciary, some of these issues that matter to defendants may spark further political debate in the years ahead. There is concern in the industry that the opportunity for patent holders to win Europe-wide injunctions under the German patentee-friendly framework could result in an explosion of European patent litigation. Those who advocate a more balanced framework should definitely make a greater weight for prosecution history one of their top five objectives.

As for this particular case, the court didn't give any indication that was clearly negative for Samsung, but I just see a combination of non-infringement and invalidity arguments here that make it hard for Samsung to win an injunction right away. I've been watching Judge Voss's court a lot lately. I've visited Mannheim roughly 30 times since November 2011. I blogged about most of the hearings, trials and announcements I attended there, except for a couple of trials I followed only as a consultant to third parties. Initially I thought this was the Eastern District of Texas on steroids, an impression based in no small part on the court's rather limited receptiveness to the FRAND defense, but I have come to adjust my opinion over time and I have the greatest respect for the court's competence. Judge Voss understands technical issues extremely well, and his panel appears to be a great team. Its other members also ask really great questions. If a patent holder asked me about my opinion on Mannheim as a venue, I would never recommend against that choice (though it's obviously not the only option here), but Judge Voss wouldn't easily hand down injunctions based on spurious infringement allegations or patent of dubious validity. If he's too skeptical, he tends to at least order a stay.

In one case -- Apple's photo gallery patent -- Judge Voss ordered a stay even though courts in The Hague and Munich had granted Apple injunctions. I was initially surprised, but his decision made a lot more sense to me once I found out that his claim construction was broader than that of the other courts. The broader a patent is (or is deemed to be), the more likely it is to be invalid.

There's been only one case so far in which I strongly disagreed with the Mannheim court's decision, and that was one of the first ones I watched in that venue: Motorola's (thus far) successful assertion of a push notification patent against Apple. That patent is from the era of pagers and the invention was very much about that technology, which is different from email in various ways. While the claim language can be interpreted broadly, I think it shouldn't be because a 20-year monopoly on all push notifications is overreaching in light of the background of this patent. I'm not affected by it at this point since I use GMail and (Hotmail), not the iCloud email service. But for many German Apple customers Motorola's enforcement of that patent is a hassle that could have been avoided by either interpreting the patent more narrowly or doubting its validity based on a broader claim construction. This exception aside, I never disagreed strongly with Judge Voss's infringement findings and validity assessments, and in two months we'll see what comes out of this screen-to-speech case.

In a subsequent post (probably the very next one) I'll also report on the standard-essential patent case that was discussed, for a second time, on Friday.

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