Sunday, June 30, 2013

Qualcomm may have to modify Snapdragon chip for Nokia to work around HTC graphics patent

On Friday the Mannheim Regional Court held a trial on HTC subsidiary S3 Graphics' patent infringement complaint against Nokia over the Qualcomm Snapdragon chip. As counsel for S3G confirmed when Judge Voss ("Voß" in German) asked about the possibility of a settlement, this lawsuit is "part of the wider dispute between HTC and Nokia". Between the U.S., UK and Germany, Nokia is asserting roughly 50 patents against HTC, and HTC (including S3 Graphics) has brought at least five German countersuits.

The longer I've been watching HTC's patent lawsuits, the more impressed I am with its handling of patent disputes. I admit that I underestimated HTC, as many others did, but I've come to recognize its defensive skills beyond stalling (a tactic at which HTC undoubtedly excels). And while S3 Graphics' first ITC complaint against Apple was dismissed in 2011 and a second one wasn't adjudged prior to the parties' settlement, this acquired patent portfolio may prove helpful to HTC in settlement negotiations with Nokia. Based on how the Friday trial went, I think HTC is more likely than not to win a German injunction against Nokia devices incorporating the Qualcomm Snapdragon chip, though the leverage this gives HTC will depend on whether the court agrees with its preferred or merely its alternative infringement theory. In the latter event, I believe leverage will be rather limited because Qualcomm would just have to remove a feature that Nokia doesn't use anyway, and the primary effect of a win for S3G would be that HTC could point to it whenever Nokia says HTC should cease its infringement of Nokia's patents.

The patent-in-suit is EP0797181 on "hardware assist for YUV data format conversion to software MPEG decoder". For information on the analog YUV format and the related YCbCr digital format, which is often referred to by the term YUV as well, let me refer you to Wikipedia (YUV, YCbCr) and provide my own condensed explanation:

While computers generally process and store images in a bitmap format (from left to right, from top to bottom), YUV is a format that separates for each pixel a luminance (brightness, Y) value from two chrominance (color, U and V) values. So you get one matrix of Y values (which would be enough to produce a black-and-white picture), one of U values, and one of V values. It's easy to convert a YUV image into a bitmap, but in connection with high-resolution video with a high frame rate, this transformation can put a drain on the central processing unit. The patent-in-suit covers the idea of assigning this task to a coprocessor. (Whether this idea should entitle someone to a patent is another question, a question that is not unique to this patent or company.)

Even though Nokia's litigators led by Bird & Bird's Boris Kreye (the same team is also defending Nokia against HTC's power management patent in four parallel actions) have developed various credible defenses, S3G (represented by Wildanger's Wolf Graf von Schwerin and Peter-Michael Weisse) appear to have persuaded the court of key parts of their infringement contentions.

I considered two of Nokia's defenses particularly important. One of them was discussed only toward the very end of the trial and relates to the claim element of a "predetermined address range", within which certain "video data addresses" must be. Nokia says that the accused technologies merely transfer information enabling the chip to determine the addresses, but that there's no separate communication or computation of a "predetermined address range". Without seeing the detailed infringement contentions I can't rule out that S3G's claim construction effectively renders the "predetermined address range" limitation meaningless. However. the court did not indicate that this issue might be outcome-determinative.

The more fundamental issue is the one that makes all the difference between S3G's primary and secondary infringement contentions. The specification of the patent, which is supposed to serve as its own dictionary, defines "component YUV format" as a planar format, meaning that there's one contiguous set of data for the Y, U and V values. But Nokia avers that its products only process something that can be described as pseudo-planar: instead of separate U and V planes, there's a single data block containing a pair of U and V values for each pixel. S3G's key argument in this regard is that the claim only requires "at least one second contiguous block of data of a second component" (as opposed to requiring two blocks) to be transmitted, and the only way in which this can make technical sense if there's a single block containing U and V data. But according to Nokia this still doesn't change the meaning of "YUV component data".

I saw some merit in both parties' claims. On the bottom line I would be inclined to agree with Nokia that the specification clearly defines "YUV component data" as a planar format and to attach more importance to this than to the "at least one ... block" argument. It appears to me that a significant part of the transformation the patent covers has occurred, or need not occur, if U and V data are already kept in a single block of paired values.

S3G has an alternative infringement theory for the event that Nokia's "not planar" defense succeeds: this is a hardware patent, and the hardware built into the accused Nokia phones can be configured to process fully planar data as well. There are registers, and the operating system (Windows Phone) could, though it doesn't at this stage, instruct the chip to handle planar data. S3G argues that a hardware patent claim like this is infringed if the capability is provided, even if not utilized in practice. The parties agree that hardware can't run without software. Still, S3G argues that shipping certain hardware functionality constitutes infringement -- and in this case, considering the structure of the claim-in-suit, I tend to agree with S3G.

If the court rules in S3G's favor based on its primary infringement theory (of pseudoplanar data falling within the scope of the claim), S3G's corporate patent, HTC, gets considerably more mileage out of this lawsuit than otherwise. If the court finds Nokia to infringe only to the extent that never-actually-utilized hardware functionality is shipped, it would be a minor tweak for Qualcomm to remove the "planar" option, such as by eliminating the related register or by having the chip ignore it (so as to always require data to be provided in a pseudoplanar format). There would be no performance impact. A special version of the Snapdragon chip for Nokia to use in Germany might affect Qualcomm's manufacturing costs as compared to a one-chip-fits-all scenario, but at the end of the day Qualcomm will want to ensure that its chips don't expose its customers to major IP liability issues if those can be avoided.

In March Nokia won its first German injunction against HTC over a power-saving patent, and HTC also worked around it, presumably by removing certain functionality without a non-infringing replacement delivering the same benefits. Here, the related functionality can always be removed, but if HTC's primary infringement theory succeeds, then there will be some impact on video processing performance. If a patent injunction issues, there will always be a workaround unless the patent-in-suit is a truly standard-essential patent. The key question is then whether the workaround is merely an internal thing or has effects (such as a degradation of battery life or video performance) that end users will notice.

A decision, which may or may not be a final ruling, has been scheduled for September 20, and if S3G wins, it will be interesting to see what Nokia says about a workaround.

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Preliminary ITC ruling against InterDigital involves four patents separately asserted against Samsung

On Friday Administrative Law Judge David Shaw published a summary of his initial determination (preliminary ruling) in the ITC investigation of InterDigital's mid-2011 complaint against Nokia, Huawei, and ZTE. Six of the seven patents-in-suit were held not to be infringed at all (not a single claim); some of the asserted claims from the seventh patent were found infringed, but this patent and two of the non-infringed patents were deemed invalid. Therefore, Judge Shaw identified no violation. The announcement also says that "Respondents have not prevailed on any equitable or FRAND defense".

I've been an InterDigital skeptic for some time. Its litigation results don't support its claims of a supervaluable portfolio. I'm concerned about its tactics (1, 2). I don't believe the world needs InterDigital to develop cellular standards. According to its annual report, it spent $68 million on "development" in 2012 -- but it generated $277 million in patent licensing royalties and spent almost twice as much on "patent administration and licensing" as on R&D. It would make more sense for companies that build real products to hire InterDigital's engineers and to license the related patents as part of larger portfolios with economies of scale benefitting licensees. And -- which is not specific to InterDigital -- a lot of patenting around standardization has more to do with obtaining patents on what standard-setting committees discuss or what someone anticipates may become part of a standard, so some of this activity is just about securing rights to what would be created anyway.

Judge Shaw's initial determination will almost certainly be reviewed by the Commission, the six-member decision-making body at the top of the U.S. trade agency. The reversal rate in such reviews is relatively high. There are seven patents-in-suit, so the final outcome could be different with respect to one or two patents. But there could also be modifications to the preliminary ruling that aren't outcome-determinative. For example, a patent that the judge didn't find infringed might be deemed infringed, but if it's then found invalid, the outcome remains the same.

At the start of this year, InterDigital filed yet another ITC complaint (and instigated mirror litigation in the District of Delaware). The January 2013 complaint primarily targets Samsung, against which all of the patents-in-suit in that investigation are asserted, while Nokia, Huawei and ZTE have to defend themselves against fewer patents because they were previously sued over some of the patents.

Four of the patents asserted against Samsung have now come to judgment in the 2011 Nokia/Huawei/ZTE case. The '830, '686 and '406 patents were not found infringed. The '970 patent, which Judge Shaw held infringed in part but invalid in its entirety, is also at issue in the Samsung case. And InterDigital amended its 2013 complaints to assert a continuation patent from the '970 patent.

While a patent could be infringed by Samsung even if it's not infringed by Nokia, Huawei and ZTE, a finding of non-infringement in a case like this would mean that the patent isn't truly essential. Also, the baseband chipsets at issue may be the same (Qualcomm).

Samsung is going to follow the Commission review in the Nokia/Huawei/ZTE case with great interest and keep its fingers crossed for Nokia, Huawei and ZTE with respect to the infringement and validity issues. On FRAND questions Samsung is unfortunately, at least in part, aligned with InterDigital because of its own strategic interests (its use of SEPs against Apple and Ericsson has also drawn criticism).

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Saturday, June 29, 2013

Apple and Samsung drop two patents each from California litigation, still a dozen patents-in-suit

Late on Friday Apple and Samsung took the second step in accordance with Judge Koh's order to narrow their second California lawsuit, which is scheduled to go to trial on March 31, 2014. Ultimately, by February 6, 2014, the parties will have to limit their asserted patents claims to five (per side) and their accused products to ten (per side).

The first step occurred in mid-May: each party listed 22 accused products (the lists are at the end of this post). But they also disagreed on how to count the accused products. They're still trying to resolve at least some of their related disagreements. Last week they asked Judge Koh to postpone a case management conference (but not to delay the overall case schedule) because "the parties continue to confer regarding case issues relating to the Case Management Conference and believe that additional time to meet and confer regarding these issues would be helpful in narrowing the points that may be in dispute at the Case Management Conference".

In the Friday (June 28) filings, the list of accused products (per party) was narrowed to 18 items. For the most part, the parties threw out the oldest ones of the accused devices. Apple is no longer targeting in this action the Galaxy Player 4.0 and 5.0, and the Galaxy Tab 7.0 Plus and 8.9. Samsung dropped the iPhone 3G, the original iPad, and the third-generation iPod while still accusing newer generations of those products, but what's interesting is that Samsung previously accused the first and the third generation of Apple TV, and it has now dropped the third generation to focus on the first. This suggests that some technological change has occurred that makes it harder (or impossible) for Samsung to prove infringement. Otherwise it makes no sense to drop a newer technology and accuse an older one. Therefore, the only context in which Apple TV will play a role in this case is damages. An injunction doesn't matter if a workaround is already in place.

This week the court didn't allow the addition of the Galaxy S4 to this case.

As per Judge Koh's order, the parties had to narrow the lists of asserted patent claims to 15 claims per side, and had to select those from six patents, requiring each party to drop at least two patents. These are dismissals without prejudice, enabling the parties to pursue claims in subsequent cases.

On this basis, Apple has withdrawn U.S. Patent No. 5,666,502 on a "graphical user interface using historical lists with field classes" and U.S. Patent No. 8,086,604 on a "universal interface for retrieval of information in a computer system". The '502 history-list patent, which in Judge Koh's words "aims to provide solutions to improve the speed and efficiency of data entry into user interface fields", had actually been construed according to Apple's proposals, so if this is ever reasserted, Apple may prevail on it (unless Samsung has a strong non-infringement argument even under Apple's construction). But it's going to expire in 2015, so there probably won't be a window of opportunity for obtaining an injunction (since reassertion would probably not occur until after the spring 2014 trial). The '604 "Siri-style unified search" patent won Apple a preliminary injunction against the Galaxy Nexus last year, which the Federal Circuit reversed. Apple claims that even under the Federal Circuit's modified claim construction there's still an infringement. Apple has not given up on unified search in this action: it's still asserting U.S. Patent No. 6,847,959, which is from the same patent family as the '604 patent (and raises the same claim construction issue on which the Federal Circuit spoke out last year). It was obvious that, given the narrowing pressure the court puts on the parties, Apple would not take two "Siri" patents, from the same patent family, to trial.

Samsung dropped U.S. Patent No. 7,672,470 on an "audio/video device having a volume control function for an external audio reproduction unit by using volume control buttons of a remote controller and volume control method therefor" U.S. Patent No. 7,232,058 on a "data displaying apparatus and method". These patents were not addressed by the aforementioned claim construction order.

Between now and the trial, either party needs to withdraw only one more patent. Usually each party would choose five claims from five different patents for trial, unless summary judgment rulings and other circumstances create a situation in which a party doesn't even have five sufficiently strong patents left, in which case it can afford the "luxury" of asserting more than one claim per patent. The record of pretrial decisions clearly favors Apple in both California cases (as does the overall worldwide litigation track record between these parties), so Samsung would be more likely than Apple to ake fewer than five different patents to next year's trial.

Updated list of patents (and patents claims) at issue in this case

Apple's asserted patents and patent claims:

  1. U.S. Patent No. 5,946,647: claims 1, 4, 6, 8, 9

    ("data tapping" patent)

  2. U.S. Patent No. 6,847,959: claims 24, 25, 27

    (remaining Siri-style unified-search patent)

  3. U.S. Patent No. 7,761,414: claims 11, 20

    (asynchronous data synchronization)

  4. U.S. Patent No. 8,014,760: claims 10, 11, 19

    (missed telephone call management)

  5. U.S. Patent No. 8,046,721: claim 8

    (slide-to-unlock image)

  6. U.S. Patent No. 8,074,172: claim 18


Samsung's asserted patents and patent claims:

  1. U.S. Patent No. 7,756,087: claims 10, 35 40

    (non-scheduled transmission over enhanced uplink data channel; declaration of standard-essentiality to ETSI in May 2006)

  2. U.S. Patent No. 7,551,596: claims 1, 13

    (signaling control information of uplink packet data service; declaration of standard-essentiality to ETSI in May 2010)

  3. U.S. Patent No. 7,577,757: claims 1, 14, 15

    (multimedia synchronization)

  4. U.S. Patent No. 6,292,179: claims 1, 7

    (related to software keyboards)

  5. U.S. Patent No. 6,226,449: claims 25, 27

    recording and reproducing digital image and speech

  6. U.S. Patent No. 5,579,239: claims 1, 7, 15

    (remote video transmission system)

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Thursday, June 27, 2013

Microsoft wins release of $100 million bond posted in Google FRAND case to avoid German sales ban

Last year Microsoft obtained in the Western District of Washington an anti-enforcement preliminary injunction that barred Google's Motorola Mobility from enforcing a set of German permanent, provisionally-enforceable injunctions relating to two H.264 standard-essential patents (SEPs) and in late November 2012 was replaced by a summary judgment ruling denying injunctive relief.

In order to enforce the U.S. anti-enforcement injunction Microsoft had to post a $100 million bond to ensure that even in the (no matter how inconceivable) scenario of a Microsoft bankruptcy Google's Motorola would be made whole. Microsoft had even offered Motorola a $300 million bond and indicated a potential willingness to increase the amount, but Motorola wanted to ban Windows and the Xbox in Germany rather than receive security for royalties, so the court had to decide, and Judge James Robart felt that a $100 million bond was easily adequate. That bond was posted on April 13, 2012, and Motorola never got to enforce anything against Microsoft.

In the meantime, a FRAND royalty determination had been made, finding Google entitled to a few million (not several billion) dollars. Last week it became known that, in light of these developments, Microsoft offered Google a payment of $7 million in royalties owed in accordance with the court's rate-setting opinion, but Google refused the payment and insisted on the $100 million bond. The parties couldn't agree, so Microsoft brought a motion for release of the bond (or, in the alternative, adjustment of the amount). Google opposed the motion without presenting any particular derivation that could justify the amount of $100 million. In its reply brief Microsoft said it wants to tell the jury at the breach-of-FRAND-contract trial (scheduled to start in two months) about this conduct, which it considers evidence of Motorola's hold-up tactics.

The court held a telephone conference with the parties on Tuesday. Yesterday a minute entry showed up on the electronic docket for this case and indicated that a decision has been made at the hearing, but didn't indicate which one. This morning Microsoft filed a proposed written order that sheds light on the outcome -- Google lost:

"By motion dated June 18, 2013 (Dkt. #701), Plaintiff Microsoft Corporation moved for release of the $100 million security bond that it was required to post by Order dated April 12, 2012 (Dkt. #261). On June 25, 2013, the Court held a telephonic hearing on the issue at which it ordered the release of the bond. For the reasons stated in its oral ruling, the bond is hereby released."

Between the U.S. and Germany, this is already the third time that a bond Microsoft had to post in connection with its patent dispute with Google's Motorola has been reduced or released. The total amount of all bonds Microsoft had to post in the U.S. and Germany to enforce injunctions (the anti-enforcement injunction to preclude FRAND abuse as well as its own non-SEP injunctions) against Motorola Mobility was in the hundreds of millions of dollars at some point, but one of the German bonds was adjusted in November and Google's Motorola consented to the reduction of another bond (due to the bankruptcy of a Motorola co-defendant, a 38.5 million euro bond has yet to be adjusted to 6.5 million euros).

I said in a previous post on this subject that the way to look at this is not in terms of what Microsoft (or Apple, which also has to give an unreasonable amount of security to Google in Germany) can afford, but to consider the implications for smaller companies who may be tight on cash. There are situations in legal disputes in which security is reasonably required. But the amounts must be reasonable, and bonds must be released when there is no longer a good reason to insist on them. In this case, a U.S. federal judge of worldwide repute (for example, on June 14 he gave several talks on patent damages at a high-profile conference in Munich, Germany) has determined that the bond no longer served its intended purpose. The whole motion process could have been avoided if Google had agreed on this in the first place. I believe Google should also be more reasonable in its German dispute with Apple and release a substantial part of the security Apple had to give based on Motorola's out-of-this-world 2.25% royalty demand, which the Mannheim Regional Court is apparently inclined to consider excessive.

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HTC recently filed two additional lawsuits in Germany to target newer Nokia Lumia phones

The patent dispute between Nokia and HTC continues to escalate. With Nokia's recently-lodged second ITC complaint against HTC, which is now being investigated, and simultaneous filings in the Southern District of California the number of patents Nokia is currently asserting against HTC has reached (if not surpassed) 50. Meanwhile, the number of HTC complaints against Nokia (all of them filed in Germany) has increased from three to five. At an HTC v. Nokia trial held in Munich today I learned about HTC's attack on half a dozen new (Windows Phone 8-based) Nokia Lumia smartphones, which it is targeting in two courts in parallel (HTC is suing Nokia's German subsidiary in Mannheim and the Finnish parent company in Munich) over a power-saving patent it's also asserting in Mannheim and Munich against older (Windows Phone 7-based) smartphones. The accused functionality is implemented by chipsets, not the Windows Phone operating system per se.

The number of distinct patents asserted by HTC against Nokia is still the same: two. In one Mannheim case, HTC subsidiary S3 Graphics is alleging infringement of a video processing patent by Qualcomm's Snapdragon chip. That case will go to trial tomorrow. In another Mannheim case, which went to trial on May 31 and in which a decision (which may or may not be a final ruling) has been scheduled for August 23, and in a Munich case that went to trial this morning (with a decision scheduled for September 12), HTC is asserting EP2073096 on "power management systems and methods for electronic devices". The cases that have already gone to trial involve previous-generation devices. HTC's amendments to both power management patent complaints for the purpose of accusing newer Lumia phones were severed by the Mannheim and Munich courts and put on separate schedules. The Munich case will be heard on October 31.

In all jurisdictions the fast pace of this industry poses challenges to patent enforcement. Yesterday a United States Magistrate Judge suggested to Apple (in a footnote of a ruling) that it bring a third infringement complaint against Samsung in the Northern District of California in order to accuse the Galaxy S4.

In mid-February I reported on the first Munich hearing (patent infringement cases in the Munich I Regional Court typically involve an "early first hearing" and a second trial, which is tantamount to a trial). Since then HTC has apparently, besides bringing an amendment, addressed some of the evidentiary issues highlighted in February. The court had suggested some measurement of power-saving effects, and some such effort was mentioned today (without much detail). And HTC has amended its infringement contentions so as to capture non-literal infringement based on the German equivalent of the Doctrine of Equivalents (DoE).

Even though Nokia filed a nullity (invalidation) complaint with the Federal Patent Court of Germany in December 2012, today's discussion was solely about administrative issues (court fees and a bond covering Nokia's legal fees in the event HTC loses and fails to pay) for the first hour and about claim construction and infringement analysis during the next two hours. There was no time to discuss Nokia's motion to stay the case (should an infringement be identified) pending the nullity proceeding. Judge Dr. Zigann said that an unusual (but not unheard of) third hearing may have to be held to discuss the likelihood of success of Nokia's nullity action, but this will be necessary only if the court is convinced of there being an infringement. The court did not take a clear position on the merits of the infringement allegations, but if it felt that HTC had a strong infringement theory, it would have set aside some time today for the (in)validity part of the case or at least would have scheduled a near-term subsequent hearing for that purpose rather than wait until mid-September to decide whether to hold that other hearing at all. Should the third hearing be necessary, HTC has already requested that it take place on October 31 when its more recently-filed claims will be heard as well.

The challenge HTC faces here is the same that Nokia faces in the dozens of cases in which it is the plaintiff (and in which HTC has so far been an amazingly effective defendant, so far losing only one case that didn't have devastating consequences): a defendant can raise multiple non-infringement arguments, and if only one of them succeeds, the case is dismissed. I don't know whether HTC has a stronger infringement case for those newer Nokia Lumia devices, which come with different chips, but today it was clearly struggling to deal with Nokia's defenses to infringement.

The patent's literal scope is that a telecommunications chip will wake up an application processing chip from its sleep state if certain messages are identified based on patterns. This way the application processing unit can save power when not needed, but incoming calls (including voice-over-IP calls) won't be missed. Simply put, Nokia's noninfringement arguments are that the devices accused in this action don't conduct positive filtering (finding and processing matches) but sort out by means of negative filtering (throwing out non-matching messages), which HTC says is, if not a literal infringement, an equivalent. Nokia says there's neither a literal nor a non-literal infringement because, in any event, what's missing is a wake-up messages to the application processing unit. In response to this, HTC contends that the inter-chip messaging by means of interrupts has the effect of a wake-up message. Nokia does not dispute that interrupts are involved (it's simply the way chips typically communicate with each other) -- but it says that the interrupts HTC means don't fall within the scope of the claims. Not all interrupts are wake-up signals.

According to Nokia, HTC's broad construction of the term "wake-up signal" would result in an extremely high frequency of switches from sleep to normal state, which Nokia says cannot possibly be meant to be the idea covered by this patent. Nokia does not deny that its chips consume more power if they have more work to do. It does dispute, however, that the claim language, which also refers to the process of entering a state, has scope for the usual inter-chip communication by means of interrupts unless there's such a thing as an identifiable wake-up signal, triggered by identification of a certain data pattern.

These are just HTC's primary challenges on the infringement side; Nokia may also have raised some other points that weren't discussed today. And even if there is an infringement, an injunction won't issue unless HTC fends off Nokia's motion to stay.

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Judge keeps Galaxy S4 out of second Apple-Samsung case in California, suggests third lawsuit

Last month Apple said it wanted to add the Samsung Galaxy S4 smartphone to the second California litigation going on between these two companies. It specified certain patents it considers the S4 to infringe in the same way in which ealier Galaxy devices do. Samsung opposed; Apple insisted. The trial in this case is set to take place in the spring of 2014.

Late on Wednesday by local time, Magistrate Judge Paul S. Grewal ruled on a variety of motions relating to the parties' arguments (and evidence from certain ITC investigations to which Apple was a party). While I found a lot of useful information in his ruling that will come in handy during the further process (summary judgment motions, motions in limine, trial), I want to focus in this post on the S4.

The court would potentially have agreed with Apple that Samsung failed to present reasons for which the infringement issues concerning the S4 are any different from those surrounding older Samsung products already at issue in this case. But that's only one part of the story. Judge Grewal notes that Apple is (obviously) seeking remedies: damages and an injunction. This would involve extensive discovery of financial data, marketing strategies etc. The court agreed that Samsung would be prejudiced if it had to provide such information and prepare witnesses for depositions relating to, among other devices, the S4. On the liability side, Apple had a point that its late-stage request to add the S4 was different from Samsung's failed attempt to attack the iPhone 4S in the first California trial (the iPhone 4S was the first iPhone to include a Qualcomm baseband chip, which represents a fundamental difference with respect to Samsung's standard-essential patents). But the remedies part of the story was important enough on its own.

Judge Grewal, to whom Judge Koh has delegated certain aspects of this litigation, is also interpreted Judge Koh's April 2013 narrowing order as requiring Apple to drop, not replace, products. In my commentary on Apple's reply in support of its motion to amend its infringement contentions I already wrote the following:

Apple is right that her order didn't explicitly state that new products couldn't replace older ones: she only talked about the number of accused devices. Still, one could understand the spirit of her order to mean that the parties started with certain lists of accused products and should now, step by step, drop products from that list (as opposed to replacing products).

Judge Grewal bases his denial of the addition of the S4 in part on "Judge Koh's directives regarding the management and progression of this case" suggesting that his reading of the narrowing order is similar as the way in which I said the narrowing order could be understood.

The real problem is that as long as Apple and Samsung don't settle, but Samsung continues to launch devices Apple considers to infringe on its IP, Apple will be forced to bring new lawsuits to go after additional products. The order says that Apple made this point at a couple of hearings (the one before Judge Koh's narrowing order and the one before Judge Grewal's order denying the addition of the S4, where, according to order, "Apple warned that excluding the Galaxy S4 would result in yet another case with more claims of infringement and would require Apple to continue to play, in counsel's words, 'whack-a-mole' with Samsung").

Judge Grewal brushes this argument aside. He thinks Apple is going to reassert some of the products it has to drop from this case (without prejudice, meaning it can reassert them later) anyway, "so a new trial would be likely regardless".

And in a footnote, Judge Grewal even suggests this course of action as an avenue providing Apple with greater chances of getting the S4 banned:

"Although Apple did not raise the issue, the court notes that to the extent that Apple believes it is irreparably harmed by Samsung's sale of the Galaxy S4, a new case might actually be the better option to prevent sales as the time for a preliminary injunction in this case has long passed."

I agree that a new case will be inevitable (absent a settlement). I doubt that Apple would bring a new case in the near term to seek a preliminary injunction against the S4 over any of the patents at issue in the second Calfornia litigation. If Apple did so, Samsung would definitely request consolidation of the third case with the second one, and if consolidation was granted, the trial date would certainly slip. Apple won't take that risk. We may see a third Apple v. Samsung complaint in California before the trial, but only at a point when Apple doesn't have to fear consolidation, and it would probably involve a different set of patents.

Also, with the Federal Circuit's Galaxy Nexus "causal nexus" precedent Apple firstly needs to succeed with its appeal of last year's denial of a permanent injunction against multiple Samsung products before the California-based court is going to be likely to grant Apple another injunction (and a preliminary one is even harder to win than a permanent one). Briefing is complete in that appeal, and a decision will almost certainly be made before Apple's permanent-injunction request in the second California case is adjudicated next spring or summer. A new preliminary injunction motion at this stage would, however, likely be adjudged under the Galaxy Nexus "causal nexus" rule, and therefore be doomed to fail.

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Wednesday, June 26, 2013

Apple urges United States Trade Representative to toss iPhone, iPad import ban won by Samsung

Three weeks ago the United States International Trade Commission (USITC, or just ITC) issued its final ruling on Samsung's complaint against Apple and entered a limited exclusion order (i.e., U.S. import ban) against older iPhones and iPads over a patent Samsung once declared essential to the 3G cellular telecommunications standard and promised to license to all comers on fair, reasonable and non-discriminatory (FRAND) terms. After a series of FRAND-friendly rulings in different jurisdictions denying injunctive relief over standard-essential patents (SEPs), it came as a surprise that the ITC granted Samsung's request for a ban. "[This] decision makes the ITC an outlier internationally and domestically", argues Apple in a submission to the United States Trade Representative (USTR), to whom President Obama has delegated the authority to veto ITC exclusion orders. The term USTR refers to the special ambassador in charge of U.S. trade policy as well as to his office, which is part of the Executive Office of the President [of the United States]".

Further to its early-June decision the ITC has already instructed U.S. Customs and Border Protection to hold all shipments of devices subject to the order. But the order has not yet taken effect. There is a 60-day Presidential review period following transmittal of the order to the President. Typically the 60-day period expires without a veto, and the order enters into force. But this is a high-profile case raising serious issues, and Apple is urging disapproval of the ITC's order because "this is a case with much broader ramifications" than a mere legal or factual error that the United States Court of Appeals for the Federal Circuit could correct. (Note that Apple can appeal the ITC decision to the Federal Circuit only after the Presidential review.)

Apple's submission indicates that "USTR has decided to conduct a full review" and hopes that the ITC decision will be blocked. Samsung wants this import ban to enter into force but believes other ITC investigations involving SEPs, such as those of Ericsson and InterDigital's complaints against the Korean device maker, will be "more appropriate opportunities for the ITC and/or the USTR to weigh in on the potential abuse of SEPs at the ITC". I have obtained public redacted versions of Apple and Samsung's submissions tot he USTR's Trade Policy Staff Committee. While I have been unable to find these filings on the Internet, these documents are meant to form part of the public record and have been shared widely with U.S. government officials and lawmakers. I'm now going to show you both documents and discuss them.

Apple's submission (73 pages including a declaration)

Apple Submission to USTR Re. ITC Exclusion Order

A public redacted version of the full-length ITC decision has not become available yet. But the parties' submissions (especially Apple's) contain some indications as to the ITC's rationale, and it's not the kind of reasoning that I like.

In Apple's opinion the ITC's public-interest analysis had the wrong focus because it focused "exclusively on its views regarding the immediate, short-term effects from excluding older Apple products from the U.S. market" (emphasis in original) but "wholly failed to engage with the policy dimensions of its decision". According to Apple, "{t]he ITC did not address the dynamic and long-term harm that an exclusion order will bring to standard-setting activities and innovation for differentiating features that distinguish standard-compliant products in the marketplace" (emphasis in original). The wider ramifications are also described as "the long-term, dynamic harm to competition and innovation in the United States that would come from subverting the standard-setting process and facilitating patent hold-up". Subversion of the standard-setting process relates to Samsung's conduct of making but not really honoring a FRAND promise. The last part, "facilitating patent hold-up", is what the ITC is (in Apple's view as well as my opinion) doing in this case.

This ruling is more controversial within the ITC than I knew before. The ITC's official announcement of its decision already mentioned that "Commissioner [Dean A.] Pinkert dissents on public interest grounds from the determination to issue an exclusion order and cease and desist order". Mr. Pinkert has previously advocated "more searching inquiry" of public-interest considerations. Apple describes his dissent as saying that "this decision will have grave consequences if left unchanged", and that the patent-in-suit "constitutes at a most a 'tweak' of the TFCI [transport format combination indicator] encoding in the standard". It was also known that Commissioner Shara L. Aranoff felt that the parties already had every opportunity to brief the ITC on public-interest issues last year. But in connection with the final decision Commissioner Aranoff interestingly said "[t]he President may, should he so choose, weigh the relative risks of hold-up and reverse hold-up in deciding whether to disapprove the remedy the Commission is issuing today". In Commissioner Aranoff's view is "not a policy-making body and is not empowered to make that decision" (denying Samsung an import ban for SEP hold-up reasons).

Apple's submission quotes two things from the ITC ruling that I find troubling:

What I consider the strongest point in Apple's argument is that U.S. companies could suffer internationally if other jurisdictions adopt the ITC's stance:

"That could well cause other jurisdictions to reverse course and begin excluding American goods--including computers, mobile devices, and other consumer electronics--from their markets based on FRAND-committed patents. The United States would be unable to protest, given the actions of its own ITC."

Apple also notes that the U.S. gave "assurances to foreign countries countries--in the context of a 1989 GATT proceeding--that Section 337 exclusion orders are the 'functional equivalent' of a district court injunction against a domestic manufacturer, made necessary where the supplier of the accused infringing products is outside United States jurisdiction or otherwise difficult to reach or identify". It's certainly a problem if the ITC provides certain categories of patent holders -- SEP abusers, trolls etc. -- with remedies they couldn't obtain in U.S. district court.

While Apple would ideally like the import ban vetoed for SEP reasons, it would also be fine with a veto based on the fact that the ITC did not give Apple a grace period. I'll probably never understand why the ITC gave HTC four months to modify its products (as Apple notes, the patent-in-suit had already been deemed infringed five months earlier in a preliminary ruling) to work around the data tapping product, but did not give Apple any grace period.

Samsung's submission (8 pages)

Samsung Submission to USTR Re. ITC Exclusion Order

Samsung's argument is centered around the allegation that Apple is an "unwilling licensee to Samsung's portfolio of declared essential patents, including the '348 patent at issue here". It's difficult to verify because little is known about negotiations between the parties. Samsung says Apple "is unwilling to engage in licensing negotiations or neutral arbitration to arrive at a FRAND license", and it's not clear whether "neutral arbitration" would also include a FRAND determination by a district court or comes down to alternative extortion schemes like "baseball arbitration" (a misnomer since salary arbitration in baseball works differently). The claim that Apple is "unwilling to engage in licensing negotiations" is inconsistent with Samsung's statement that "[t]he Commission's Opinion sets forth the parties' license negotiations in great detail" -- how can there be great detail about negotiations, but no willingness to negotiate? At any rate, there's nothing that would have stopped Samsung from asking a district court to award damages for past SEP infringement and postjudgment royalties for future use. That's what Samsung could and should have done instead of seeking an ITC import ban.

Samsung mentions that the import ban Apple won and enforced against HTC was described by Apple as having "no material impact on competitive conditions" in light of the "small share of the industry" of the affected HTC products. Samsung apparently says (in a redacted passage) that if this is so, excluding older iPhones and iPads won't have any material impact either. In any event, this is a straw man. Samsung defends the part of the ITC's reasoning that isn't really the focus of Apple's argument for a veto. Samsung focuses on the case-specific impact of the exclusion order, while Apple has built its argument around the wider ramifications of SEP-based exclusion orders.

This is what Samsung says about its use of SEPs:

"Samsung has always honored its commitment to license its declared-essential patents on FRAND terms and conditions. Samsung has never refused to license its SEPs to other companies, including direct competitors like Apple. And Samsung has never offensively used its patents, essential or not, to keep competitors out of the market."

I don't know if the ITC ruling actually finds Samsung's demands to have been consistent with FRAND -- the final ruling will tell. Prior to the ITC ruling no other authority found Samsung's 2.4% royalty demand to be FRAND. Samsung claims it has "never refused to license its SEPs", but if the terms of an offer are prohibitive, then the effect is the same. As for "keep[ing] competitors out of the market", that's precisely what Samsung wants to do now with the ITC exclusion order. It says it has never done this "offensively", but as far as SEPs are concerned, it certainly is the aggressor against Apple. Apple sued first, but over non-SEPs, which Samsung can work around. SEP assertions are not an acceptable response to non-SEP infringement claims.

As I mentioned further above, Samsung wants its ban against Apple to enter into force, but it knows that there are other ITC investigations in which the shoe is on the other foot:

"Other upcoming Section 337 investigations will provide a better opportunity for the ITC or USTR to address the potential misuse of standard essential patents at the ITC

While policy grounds for disapproval of the remedial orders are not present here, there are currently several investigations involving SEPs, including complaints filed by InterDigital and Ericsson, working their way through the ITC. These investigations have far different facts regarding the patent holders' compliance with their FRAND obligations and the willingness of implementers to license on FRAND terms. There will therefore be other, and more appropriate opportunities for the ITC and/or the USTR to weigh in on the potential abuse of SEPs at the ITC. Indeed, it may be appropriate for USTR to make a public statement here, as it did after the Broadcom/Qualcomm review, that although this is not the right case, it will continue to carefully scrutinize all LEOs based on infringement of SEPs for public interest implications."

The final point about the possibility of a public statement (with a view to future cases) outlines an alternative approach to the veto Apple is urging.

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Presumptive Acacia subsidiary sues HTC, LG, ZTE, BlackBerry over Nokia Siemens Networks patents

Nokia's wireless patents are ubiquitous. In addition to Nokia's direct monetization, a number of ex-Nokia patents have been sold to different licensing firms, who occasionally try to enforce such patents in court. Last week I noted that Intellectual Ventures' second patent infringement lawsuit against Google's Motorola Mobility involves, among other things, two former Nokia patents. Yesterday a handful of lawsuits against wireless device makers and carriers by what appears to be an Acacia subsidiary were filed in the Eastern District of Texas, and they are all about former Nokia Siemens Networks patents. The assignment record of at least one of the patents-in-suit reveals Acacia's involvement. In late December, Nokia Siemens Networks, a telecommunications infrastructure maker, entered into a license agreement with Acacia and a few days later (on December 31, 2012) Acacia announced that "a subsidiary has acquired patents for Wireless Infrastructure and User Equipment Technology from Nokia Siemens Networks relating to second (2G), third (3G) and fourth (4G) generation wireless technologies".

Cellular Communications Equipment LLC, whose name never showed up on the Internet prior to yesterday's patent infringement complaints, brought separate lawsuits targeting HTC, LG, ZTE, BlackBerry (Research In Motion) and Pantech. Each of these complaints also targets wireless carriers who redistribute devices by those companies. Verizon and AT&T are a defendant in each case. T-Mobile as well as Sprint and its Boost Mobile subsidiary are named as defendants in all cases but the Pantech-related one.

This tactic of separate suits per device maker but with significant overlap among co-defendants is interesting in light of the America Invents Act's multi-defendant joinder rule. Each device maker would presumably like to get their lawsuit transferred to the home state of their U.S. subsidiary. But in that case there would be some duplicative discovery effort involving the same carriers in multiple districts.

The sale of those Nokia Siemens Networks patents to Acacia was announced about a week after the BlackBerry company's recent settlement with Nokia. It appears that BlackBerry was not licensed to the Nokia Siemens Networks patents that were subsequently transferred and now asserted against it, or maybe to none at all.

HTC is still embroiled in litigation with Nokia over approximately 50 patents (and countersuing over two patents of its own, with trials taking place in Germany on Thursday and Friday). It will have to sort out licensing issues not only with Nokia itself but also with Acacia.

Acacia is asserting different sets of patents in yesterday's lawsuits. Some were obtained by Nokia Siemens Networks, while others previously belonged to Nokia or Siemens before being assigned to their joint venture. Here's a list of the patents-in-suit and the patent-specific defendants:

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Tuesday, June 25, 2013

German court inclined to hold Samsung liable for unfair exploitation of iPhone design elements

On August 9, 2011 the Düsseldorf Regional Court shocked the wireless world by ordering a preliminary injunction against Samsung's Galaxy Tab 10.1 over a Community design (EU equivalent of U.S. design patent) held by Apple. Apple won several other cases against Samsung in different jurisdictions over a diversity of intellectual property rights, but Apple prevailed on design-related rights in only two countries: Germany and the United States.

Almost to the day two years later, on August 8, 2013, the same German court tentatively plans to announce a ruling on Apple's allegation that six Samsung smartphones (Galaxy S I , S Plus, S II, Galaxy Ace, Galaxy R, and Galaxy Wave M) and one Samsung media player (Galaxy S WiFi 4.0) constitute unlawful imitations of its iPhone and iPod products. Apple claims confusion of consumers about the origin of those products, exploitation of its reputation, and competitive harm arising from the systematic imitation of various of its products. This is not about Community designs or other registered rights. Apple's claims in this case are based on Article 4 para. 9 of German unfair competition law. This is all about the behavior of the parties and about Apple's rights as a market actor vis-à-vis a competitor (Samsung) as opposed to its rights as an innovator/creator.

I have information from an absolutely reliable and independent source that the court indicated to the parties at the outset of today's trial its preliminary position that Samsung has created a derivative imitation of key characteristics of the iPhone. The debate focused particularly on the question and implications of an exploitation of the iPhone's product image ("Rufausbeutung") by Samsung.

The same court had stayed a design rights-based case against multiple Samsung phones because of doubts that Apple's asserted Community designs would be upheld at the end of a revocation proceeding before the Office for Harmonization in the Internal Market, an EU agency in charge of Community (= Eu-wide) trademark and design registration. But Apple's unfair competition claims are about whether Samsung deliberately imitated the iPhone, not about whether other parties created prior art to an iPhone design patent.

German unfair competition law prohibits imitation of a unique product or service. The analysis is holistically based on the overall impression made by the parties' products. Imitation requires a defendant's knowledge of the imitated product, which is an established fact in this case (the evidence presented to the California jury spoke for itself). Independent creation does not count as imitation, nor does copying of a third party's creation. There are three different degrees of imitation: "unmittelbare Leistungsübernahme" (identical imitation); "nahezu identische Leistungsübernahme" (near-identical imitation); and "nachschaffende Leistungsübernahme" (derivative imitation, involving a greater amount of creative effort on the defendant's part than the other two degrees of imitation). The key test for the derivative imitation the court is inclined to find here is whether the design elements the defendant adopted (i.e., copied) are those who are characteristic of the plaintiff's asserted product.

I'm against overbroad monopolies. The "rounded corners" myth is just propaganda, though the first Düsseldorf ruling on the Galaxy Tab 10.1 (at a time when Samsung had not yet presented some of the prior art it identified later) came close to the notion of a monopoly over flat, rectangular devices with rounded corners. Design patents and Community designs can indeed be interpreted broadly in some cases. By contrast, an unfair competition claim based on intentional copying of key characteristics of a product faces a reasonably high hurdle. In this particular case, I think the court's inclination is right. Samsung's products didn't become iPhone lookalikes by happenstance (this CONAN video is a funny version of the story). Samsung wanted it this way. And under German competition law a business strategy centered around imitation exposes you to liability.

Apple alleged consumer confusion about the origin of those products. The court doesn't have to agree with that theory in order to hold Samsung liable. Nor does it have to be convinced that the iPhone's reputation was adversely affected. The intentional, unfair exploitation of the iPhone's product image will suffice.

The products at issue in this unfair competition case are rather old. Samsung's business in Germany won't be disrupted no matter what happens. But Apple could be entitled to a substantial amount of damages if the court's final ruling is consistent with the preliminary inclination indicated today.

Very importantly, a win in this unfair competition case involving Galaxy smartphones in a "neutral" country (where neither of the parties is headquartered) would buttress Apple's story of reckless copying by Samsung. In the public perception game and in psychological terms this would really benefit Apple.

In connection with the Galaxy Tab 10.1 Apple ultimately also fared better under German unfair competition law than on the basis of (European) Community designs. The August 2011 preliminary injunction was upheld by the appeals court (Düsseldorf Higher Regional Court) on a right-for-the-wrong-reasons basis: a Community design infringement was denied (due to Samsung's identification of additional, outcome-determinative prior art), but Apple's second claim, which the lower court had not reached at the preliminary injunction stage, succeeded in the appeals court. And that one was also based on German unfair competition law.

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Microsoft wants to tell jury in patent contract case about Google's refusal to release $100M bond

A week ago Microsoft formally requested the release of a $100 million bond it had posted about a year ago in connection with an anti-enforcement injunction against a patent injunction obtained by Motorola Mobility in Germany. Microsoft argues that the bond is no longer necessary because the United States District Court for the Western District of Washington ruled in November 2012 that the Google subsidiary wasn't entitled (on a global basis) to injunctive relief. Should the court believe that a bond is still necessary to give security to Google in the event that it prevails over Microsoft on appeal (the Ninth Circuit rejected Google's appeal of the preliminary anti-enforcement injunction last year, but the final district court ruling can still be appealed), Microsoft says the court's recent rate-setting decision indicates that $100 million is far more than Google could ever be owed for Microsoft's alleged use of certain declared-essential patents.

Google's Motorola opposed Microsoft's request on Friday, and Microsoft filed a reply brief reinforcing its request late on Monday. I've uploaded both documents to Scribd (Google's opposition brief, Microsoft's reply brief).

The controversy is mostly about what purpose the bond was meant to serve (i.e., what kinds of damage it should protect Google against). Google basically claims that Microsoft defines the purpose too narrowly and argues that it was never just about FRAND royalties. Microsoft points to Judge Robart's May 14, 2012 order granting a preliminary injunction, which said that Google "must wait until this court has had the opportunity to adjudicate [the availability of injunctive relief]", and in the very next sentence says Microsoft had to post the bond "to compensate Motorola for its losses in the event that this injunction is reversed or vacated". The anti-enforcement injunction was affirmed by the Ninth Circuit, and injunctive relief was ruled out by summary judgment. But again, the final district court ruling can still be appealed, so an adjustment of the bond is more likely than a release without any replacement. The one thing I can't imagine is that the $100 million bond stays in force -- the amount makes no sense now that a rate-setting decision has established the limited commercial value of Google's (Motorola's) H.264 and IEEE 802.11 SEPs. We'll probably know the decision soon because the court will hold a hearing by telephone today.

Microsoft also notes that an FTC consent decree requires Google to "cease its [SEP-based] injunction efforts".

The most interesting part of Microsoft's reply brief is this paragraph (the penultimate one):

"Thus, as it stands now, Motorola continues to insist on an out-sized bond to protect against 'damages' stemming from being unable to obtain injunctions against Microsoft that Motorola has no right to have entered. Motorola's refusal to release the bond is further evidence of Motorola's hold-up tactics, evidence that the jury should be able to consider when evaluationg Motorola's breach of contract."

The breach-of-contract jury trial will start in about two months (late August 2013). If Microsoft gets to present this "evidence of Motorola's hold-up tactics" to the jury, Google may actually regret that it didn't simply accept a release of the bond or reduction of the amount. It just doesn't look too good to independent observers that Google, after all that has happened, still wants a $100 million bond.

The total amount of all bonds Microsoft had to post in the U.S. and Germany to enforce injunctions (the anti-enforcement injunction to preclude FRAND abuse as well as its own non-SEP injunctions) against Motorola Mobility was in the hundreds of millions of dollars, but one of the German bonds was adjusted in November and Google's Motorola consented to the reduction of another bond (due to the bankruptcy of a Motorola co-defendant, a 38.5 million euro bond has yet to be adjusted to 6.5 million euros).

Motorola's litigations have also required Apple to post (for some time now) 2.25% of its German sales receipts of 3G-capable devices. Under the German Orange-Book-Standard procedure allowing defendants to avoid injunctive relief over patents subject to compulsory licensing, a willing licensee has to pay royalties, or provide security to the amount of such royalties, as if its offer to take a license had already been accepted. In this particular case, Motorola actually accepted the offer in April 2013. At a FRAND rate-setting trial held by the Mannheim Regional Court on Friday it was pretty clear that Motorola isn't going to be awarded 2.25% of Apple's sales. The court is going to focus on the intrinsic value of Motorola's cellular SEPs and subtract hold-up value from Google's demands. But until there is a rate-setting decision, Apple has to make payments or give security to the amount of 2.25% of its German sales of 3G-capable devices only because that was Motorola's initial demand. This is a very significant and, in my view, unreasonable liquidity cost. Apple can afford it, but there's no good reason for this -- and other defendants in such cases are generally less well-heeled than Apple. It would be a mistake in such contexts to focus on what the Apples, Googles and Microsofts of the world can do. These disputes have further-reaching implications also for smaller players and companies of all sizes that are, unlike Apple and Microsoft, tight on cash.

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Google asks German high court to review one of Microsoft's patent injunctions against Android

In April, the Munich Higher Regional Court affirmed the Munich I Regional Court's May 2012 decision to grant Microsoft a Germany-wide patent injunction against Motorola Mobility's Android-based devices implementing a multi-part text messaging (SMS) layer. The patent-in-suit is EP1304891 on "communicating multi-part messages between cellular devices using a standardized interface". In rejecting Google's (Motorola's) appeal, the Munich-based circuit court also denied the wholly-owned Google subsidiary the right to appeal the case further to the Bundesgerichtshof (Federal Court of Justice). It's common for circuit courts to deny leave, but it's not necessarily the last word: a would-be appellant can lodge a Nichtzulassungsbeschwerde (complaint over denial of leave to appeal), which is the closest thing under German law to a petition for writ of certiorari to the Supreme Court of the United States.

Today a spokeswoman for the Federal Court of Justice confirmed to me that Motorola Mobility has filed two Nichtzulassungsbeschwerden with respect to the Munich Higher Regional Court's rulings. Formally these are two cases: same patent, same accused products, but different legal entities on the defendants' side. The case record will be transferred by the Munich Higher Regional Court to the Federal Court of Justice next month. Motorola has until late September to file the memorandum of law supporting its petition. Then Microsoft will have two months to file an opposition brief. A decision on whether the Federal Court of Justice takes the case will be made subsequently -- most likely toward the end of this year or early next year. The fact that two patent-savvy courts have already agreed with Microsoft's counsel from the Bardehle Pagenberg firm that Android infringes Microsoft's patent-in-suit makes it less likely that a third court will take a look at the infringement issues in this case, but it's not impossible if Google's counsel from Quinn Emanuel manages to raise a legal issue that ignites the interest of the high court.

In the event that certiorari is granted, the appellate proceedings will take approximately 18 months (there's no hard time limit, but this is the usual duration of patent infringement appeals to the Federal Court of Justice). It would be the first patent infringement case from the current wave of smartphone patent disputes between major players (which started with Nokia's lawsuit against Apple, settled in 2011) to be heard by the Federal Court of Justice. Other petitions for certiorari are definitely going to follow. No smartphone patent case has reached the Supreme Court of the United States yet, but it may very well happen at some point in the not too distant future.

If certiorari is denied, the infringement ruling per se becomes final. But under Germany's bifurcation regime, the validity of patents is challenged in separate nullity proceedings that start before the Federal Patent Court. Google's Motorola is attacking the patent-in-suit there. The Federal Patent Court's decisions can be appealed, as a matter of right, to the Federal Court of Justice. Typically the nullity proceedings lag behind the infringement cases. In such cases as this one, there are even two infringement rulings (regional court and higher regional court) prior to the Federal Patent Court's decision; in other cases, the Federal Patent Court's decision comes in just about in time for the appellate hearing. Assuming that Motorola can't reverse the infringement finding (it could be "game over" in that regard before the end of the year if cert is denied), its only chance is to take down an asserted patent claim. If a patent claim-in-suit is invalidated entirely, the infringement ruling becomes irrelevant. If it survives only in an amended form, infringement has to be re-evaluated in light of the modified claims.

Google can't afford to leave a stone unturned in this context. While Google executives try to dissuade Android device makers from taking royalty-bearing patent licenses from Microsoft, 20 companies (including leaders like Samsung, HTC, ZTE, LG, and Foxconn) have chosen to pay for legal certainty that Google just can't provide. They simply don't believe Google that Android doesn't have serious patent infringement issues. Google has not yet won any enforceable ruling against Microsoft (neither in the U.S. nor in Germany), while Microsoft has already won three German injunctions (the multi-part SMS layer case is the first one of the German cases Microsoft won, and was followed by a file system injunction and a soft input panel injunction) and a U.S. import ban, which it will try to broaden at the appellate hearing in early August. And numerous Microsoft patent assertions against Motorola haven't even come to judgment yet because things take time in U.S. courts.

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