Wednesday, January 23, 2013

No U.S. import ban against Samsung for now: Apple's four-patent win to be reviewed

The top-level decision-making body of the United States International Trade Commission (USITC, or ITC) just gave notice of its decision to review all parts of a preliminary ruling by an Administrative Law Judge (ALJ) that held Samsung to infringe four Apple patents and found no violation of two other patents. Apple and Samsung had each filed petitions for a review of the parts of Judge Pender's initial determination that are unfavorable to the respective party. An investigative attorney from the Office of Unfair Import Investigations ("ITC staff") had supported Judge Pender's findings with only one minor exception that he thought could be addressed without conducting a review.

In late December, Judge Pender's recommended remedies became known. He proposed a U.S. import ban, a cease-and-desist order concerning products already imported into the U.S., and a bond of 88% of the value of all mobile phones, 32.5% of the value of all media players, and 37.6% of the value of all tablet computers found to infringe Apple's patents-in-suit during the Presidential review period.

Unlike in most cases in which a review of an ALJ's initial determination is ordered, the Commission is not yet asking the parties for briefing on the issues under review. Before any review questions will be raised, the investigation has now been remanded to the ALJ with specific instructions concerning two of the four Apple patents deemed infringed. After the ALJ makes an initial determination on remand, the Commission will then enter the review stage. This may cause considerable delay, which is not in Apple's interest, but apart from timing considerations, the remand instructions (which were filed separately from the notice I linked to further above) are an opportunity only for Apple (and, consequently, a risk for Samsung). Apple could broaden its preliminary win with respect to two patents:

  • U.S. Patent No. RE41,922 on a "method and apparatus for providing translucent images on a computer display":

    While Samsung was found to have infringed multiple claims of this patent (29, 30, 33-35) in certain ways, the text selection feature of the accused Samsung products was not found to infringe claims 34 and 35. The preliminary ruling based this finding on non-infringement of claim 33 by that feature, but there was an infringement finding concerning that claim. The ALJ now has the opportunity to address this inconsistency.

    A reexamination of this patent by the United States Patent and Trademark Office (USPTO) was requested in December.

  • U.S. Patent No. 7,912,501 on an "audio I/O headset plug and plug detection circuitry":

    Various Samsung products were found to infringe certain claims of this patent. The ITC staff attorney argued that the SPH-M920, distributed through Sprint and also known as the Samsung Transform, should additionally be found to have infringed claim 3 of this patent. While the staff did not see a need for a review and recommended that the Commission enter such a finding directly, the Commission has opted to give Judge Pender the chance to modify his related finding himself.

Within 30 days Judge Pender will now have to set a target date for his remand ruling. Given the narrow scope of the issues, such a ruling is likely going to come down within a very few months, and presumably without the need for an evidentiary hearing. If the Commission agrees with the modifications, those parts of the decision will become the final decision 60 days after issuance, but there could also be a review, in which case the final decision on these issues comes down four months after the initial ruling. Other parts of the initial determination are certainly going to be reviewed, but it's unclear which ones the Commission is most likely to modify. The whole review process, concerning the parts that have been remanded as well as those that have not been, will begin at a later stage. For now, the ball is back in Judge Pender's court. Since the Commission decided to review the decision in its entirety (even though only some smaller parts of the decision have been remanded), the final outcome could still be anything, but a finding of no violation at all is unlikely.

Today's Commission notice and remand instructions do not address the disputed question of whether Judge Pender had jurisdiction over designaround products presented by Samsung. Based on the initial ruling, Samsung would be able to sell products in the United States that steer clear of infringement of any of the patents Samsung was deemed to have infringed, but the impact of such designarounds on the usability of Samsung's products is unknown. Samsung has sold some products with designaround functionality, but I don't know whether the implementation of such designarounds in its flagship products, such as the Galaxy S III, would adversely affect the market potential of those devices. It will take time to find out.

In a parallel case the Commission is reviewing an initial determination that cleared Apple of the alleged infringement of various Samsung patents.

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