Thursday, June 27, 2013

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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