Friday, November 8, 2013

Judge conditionally bars Samsung from pointing next week's jury to the Apple-HTC settlement deal

On Tuesday (November 12), the Apple v. Samsung limited damages retrial will commence in San Jose in the Northern District of California. In my previous post on that case I published the verdict form, which is based on Apple's clear and simple proposal. Some more pretrial decisions have come down, and the most interesting one from my perspective is an order entered late on Thursday (November 7) regarding the use of last year's Apple-HTC settlement and license agreement at the retrial.

I typically find myself in agreement with Judge Koh on technical matters (such as claim construction) to a greater extent than on commercial considerations (such as the eBay injunction factors). However, I find her order conditionally granting Apple's motion to exclude the HTC settlement agreement from the retrial very well-reasoned. It's also very balanced: while Samsung won't be able to use the Apple-HTC deal proactively, it will be allowed to bring it up to rebut any claim by Apple that it doesn't license the utility (technical) patents with respect to which the jury will have to redetermine damages for 13 of the 28 found-infringing products.

The glass is more than half-full for Apple, but it's not empty for Samsung. Apple's advantage is that it's in the driver's seat on this issue. It now has the choice of either not claiming that it never ever in any way licenses is patents or of making that claim but then having to explain to the jury why the HTC deal is not a departure from that principle.

Judge Koh's decision is based on weighing the pro's and con's of using the HTC agreement. In my view, she is right that this agreement, with its anti-cloning provision that enables Apple to still sue HTC if it builds iPhone and iPad lookalike products, would likely confuse the jury more than it would help it in its damages determination. The judge notes that the Apple-HTC deal involves all sorts of patents that are not going to be at issue next week, and also other benefits to Apple (the settlement of roughly 50 cases pending worldwide and a royalty-free back-license to HTC's patents). All in all, it's really hard to draw any reasonable inference from the Apple-HTC agreement for the damages Samsung owes Apple. And the anti-cloning provision makes the deal particularly difficult to understand. (In the injunction context I felt that Judge Koh did not attach enough importance to the unique characteristics of the anti-cloning provision.)

The truth is simply that Apple is not willing to license its patents broadly, and especially not to major competitors -- and if it grants licenses, they come with important restrictions. This is different from patent licensing firms who optimize for licensing income, not for overarching competitiveness considerations.

I guess Apple will avoid a situation in which the HTC agreement comes up, not because it would be inconsistent with Apple's IP philosophy but because it would take a significant amount of time to explain the commercial implications of the HTC deal to the jury -- with no guarantee that the jury will understand even if the parties do spend time presenting their views of that deal (and its relevance to the damages redetermination). It's better not to open this can of worms. The retrial will be complicated enough without it.

Finally, here's the order:

13-11-07 Order Re. Use of HTC License Agreement in Apple-Samsung Retrial by Florian Mueller

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