Saturday, June 8, 2013

Apple says Samsung keeps launching devices with features the court found likely to infringe patents

Samsung has just won an import ban from the Washington, DC-based United States International Trade Commission (USITC, or just ITC) against older iPhones and iPads (CNN Opinion op-ed, blog post on decision, blog post on preparations for enforcement), but the Northern District of California continues to be the center of gravity of the U.S. part of this earth-spanning dispute.

In April Judge Lucy Koh ordered Apple and Samsung to narrow their second two-way California litigation with a view to next year's trial and, in that context, encouraged the parties to reach an agreement on "representative products", i.e., devices that the jury evaluates to determine infringement not only for the device it looks at but also for all others having the same alleged infringement pattern. I predicted that they weren't going to agree because Samsung wants to capitalize on the fact that it has a broader product range than Apple, making it easier for Samsung to target, with a limited number of products to be shown to the jury, a large portion of Apple's revenue base than vice versa.

In my opinion, the root cause of the whole problem is Judge Koh's equal-treatment approach, which I already criticized in connection with these parties' first California case. Justice is not to give the same to everyone, but to give either side what's appropriate under the circumstances in order to provide everyone with a fair opportunity to prevail on meritorious claims. I concur with Samsung that "[t]hese different business models are not, by any means, a litigation-driven strategy". But if the parties agree that they have different strategies for reasons unrelated to litigation, then the court should simply let Apple accuse more different Samsung products in order to avoid an asymmetry in exposure for the sake of an unjustified symmetry in the number of accused devices. (A recent claim construction ruling furthermore provides an early but reasonably reliable indication that Apple's claims are far more likely to succeed at trial than Samsung's.)

Late on Friday the parties' lawyers filed a joint status report regarding representative products. It's a "joint" filing in the sense of one document containing two diametrically opposed positions (this post continues below the document):

13-06-07 Apple-Samsung Joint Status Report Re. Representative Products

Apple is accusing Samsung of insisting on too granular a count of accused products by arguing that different Android versions and adaptations made for carriers result in a greater number of accused products to be discussed at trial than the names used in marketing suggest. For example, "[t]he Galaxy SIII alone could constitute 28 separate products (based on Samsung's interrogatory responses)". Apple says Samsung's position is inconsistent because, for the purpose of its infringement counterclaims, it claims that a whole range of Mac computers (even with different hardware components and operating systems) is just the same, and it doesn't distinguish iPhones by carrier. Samsung argues that its asserted standard-essential patents are so fundamental that all iPhones infringe them, across carriers. I believe Samsung is just doing all of this for tactical reasons: it wants to force Apple to claim differences between different product versions.

The strategic problem for Apple is that it can only pursue two remedies to prevent or at least discourage Samsung's implementation of features Apple has patented: damages and injunctions. Injunctive relief is hard to obtain in U.S. district court (though it may, again, be easier if Apple prevails on its related appeal, which it may). Injunctions of the "colorable difference" type have scope for more than the products accused in an infringement proceeding. For damages (including postjudgment royalties) you really need to accuse a particular product and have a jury render a verdict. Apple says that it would have to bring "more than a dozen cases" in order to collect damages on all of the products it initially accused in this litigation if Samsung's granular approach (including its reluctance to agree to "representative products") is adopted by the court in determining how many products a party may accuse at next year's trial.

In this context Apple accuses Samsung of what I mentioned in the headline of this post:

"[This approach] would allow Samsung to stay ahead of any meaningful remedy, and reward its serial and frequent launch of infringing devices – including devices that contain features this Court already found, in this case, likely to infringe Apple's patents – because Apple would need to bring case after case (indeed, more than a dozen cases) just to capture the Samsung products accused in this case, even as Samsung continues to launch new infringing devices."

Without a doubt, Samsung is playing hardball, but just like Apple may have good-faith reasons to believe that Samsung continues to launch infringing devices, Samsung may also have good-faith reasons to assume that it doesn't infringe (or that any patents it does infringe aren't valid). And a likelihood assessment by the court as part of a decision on a preliminary injunction motion is not the same as a final ruling, such as a summary judgment of infringement. Still, many other defendants would probably be less bold than Samsung after a preliminary injunction ruling identifying infringements of four patents.

I understand Apple's problem, and I do realize that Samsung seeks to minimize its exposure. But the primary problem, apart from Judge Koh's understanding of fairness (equal treatment), is that patent enforcement in the U.S. is incredibly, ridiculously inefficient. A lot of these issues wouldn't matter as much (if at all) with a view to a bench trial where a professional judge would simply figure out if multiple products infringe in the same way. But they do complicate things when a jury has to be informed (and not confused).

It's not Samsung's fault that these issues are put before juries in the U.S. -- and not really Apple's, but I'm not aware of Apple ever having made a serious effort to convince U.S. lawmakers that more efficiency is needed. About a year ago Judge Posner proposed, among other things, "eliminating court trials including jury trials in patent cases by expanding the authority and procedures of the Patent and Trademark Office to make it the trier of patent cases, subject to limited appellate review in the courts", and more recently he explained at a conference that juries often don't understand that workarounds are legitimate. But there's no momentum for change in this regard. This week's patent reform proposals by President Obama are largely defendant-oriented (except for more efficient enforcement of ITC exclusion orders).

If the previous litigation between the two is any indication, it's only a matter of time in this litigation when I'll agree with Apple that Samsung is not constructive. But for the time being I tend to agree with Samsung that it's too early to agree on representative products now. I've read and thought about the reasons for which Samsung claims that litigation must be at a more advanced stage before it can be determined which outcome-determinative differences exist between different product versions. I'm sure there aren't 28 different versions of the Galaxy S III with respect to any particular patent-in-suit. But Samsung has made some reasonable arguments at the technical level that indicate there may (note: may) be different sets of products corresponding to a given representative product for each patent-in-suit. Some of Samsung's related arguments may not hold much water, but it's too early to tell.

Samsng warns that "[a] piecemeal set of 'representative-for-some-patents-but-not-others' stipulations would require the jury to keep track of different sets of representative products for each patent during a fast-paced trial -- again culminating in a convoluted verdict form and potential jury confusion". It may ultimately be inevitable to have different sets of representative products for each patent, and I'm not sure it's unmanageable -- Samsung just doesn't want this to happen. But again, Samsung has raised some patent-specific arguments that suggest there are factual disputes that the court probably can't resolve too long (if at all) before the summary judgment stage of this litigation.

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