Friday, November 1, 2013

Samsung's appeal of ITC ruling on its complaint against Apple only about standard-essential patent

Right after the Presidential veto of an import ban of older iPhones and iPads over a standard-essential patent, Samsung told reporters that it had appealed the unfavorable parts of an ITC ruling: Apple was cleared of infringement of three of the four patents-in-suit at the time because the Commission (the six-member decision-making body at the top of the U.S. trade agency) reversed the Administrative Law Judge's decision with respect to only one patent-in-suit. So Samsung had the opportunity to pursue three patents on appeal: one standard-essential one and two non-SEPs.

Samsung filed its opening brief with the Federal Circuit yesterday, and the public redacted version of that one became available today. Two things I want to mention up front:

  1. Samsung is pursuing only the (other) SEP on appeal (U.S. Patent No. 7,486,644, which is about HSUPA), despite the Presidential veto relating to the other SEP-in-suit (the '348 patent), but none of its two non-SEPs-in-suit, over which it would certainly win an import ban if it prevailed on liability.

    This suggests that Samsung is primarily interested in keeping that SEP alive for damages purposes, since it would be a long shot to win an import ban (on the remand it seeks) in light of the last veto (though not 100% impossible if the FRAND-related facts changed in the meantime, such as new offers made in negotiation that might warrant a new public interest analysis down the road, most likely in 2015). The veto itself is not appealable.

    Furthermore, Samsung's choice indicates that it doesn't believe too much in the strength of its non-SEPs-in-suit. On a worldwide basis it has not been able to prevail over Apple on a single one of its own non-SEPs.

    More than a year ago I analyzed the Administrative Law Judge's initial determination (preliminary ruling) and said the '348 patent (the one on which Samsung prevailed in the decision that then got vetoed) was its best shot. For the '644 patent, which it's now pursuing on appeal, I saw a "steep challenge" after not only the judge but also the ITC staff cleared Apple of infringement. I considered one of the two non-SEPs unwinnable and was skeptical about the other one, too.

    The ITC cannot award damages. But a Federal Circuit finding of infringement would be binding for a district court. Samsung filed a companion federal lawsuit in Delaware, and the Delaware case was stayed pending the ITC investigation (including any appeals) but will be resumed at some point (most likely in 2015).

    Regardless of the Delaware damages case, by simply pursuing this appeal, Samsung improves its ability to argue to a court, in the event that an Apple-Samsung FRAND rate determination is made in the meantime, that the patent is still alive.

  2. With respect to the '348 patent (the "vetoed" patent), Samsung affirmatively said that an import ban would not affect Apple products incorporating Qualcomm baseband chips. But now, for the '644 patent it's pursuing on appeal, Samsung does argue that Qualcomm chips, too, infringe it. The exemplary accused product with a Qualcomm chip is the iPhone 4S, which comes with the Qualcomm MDM6610 baseband processor; older iPhones and iPads came with Intel chips. What I haven't found out yet (and may never find out due to heavy redactions of confidential business information such as license agreements) is whether Samsung simply thought that Qualcomm's chips didn't infringe the '348 patent (the "vetoed" patent) for technical reasons, or whether it feels it has a better chance to overcome a patent exhaustion defense with respect to the '644 patent (the patent-on-appeal). Patent exhausion and similar theories (third-party rights under a covenant not to sue customers or whatever) will likely play a role in this appeal, just in case Samsung wins a reversal of the ITC's non-infringement finding. In Europe it lost a couple of cases because of Qualcomm-related licensing issues. If the Federal Circuit sided with Apple on this question with respect to the '644 patent, it would have implications for Samsung's dispute with Apple beyond this ITC case.

From a tactical perspective this is going to be a very interesting appeal to watch. Finally, here's the public version of Samsung's opening brief:

13-10-31 Samsung Opening Brief in Appeal of ITC-794 Ruling by Florian Mueller

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