Tuesday, December 17, 2013

Samsung wants a retrial of the November retrial in its first U.S. patent litigation with Apple

Last month a federal jury in the Northern District of California awarded Apple $290 million in damages for Samsung's infringement of 13 of the 28 products accused in this first litigation between these parties, replacing a vacated $410 million portion of the August 2012 §1.05 billion verdict. When Samsung asked for a retrial, it obviously hoped to get more out of it than roughly a 10% discount, but the total of the affirmed damages from the first trial and the retrial award is still almost $930 million.

The retrial was a necessity for formal reasons after the court disagreed with the notice dates Apple presented to the 2012 jury. In my detailed Q&A, published a few days before the retrial commenced, I said that neither of the parties nor the court really wanted a retrial under these circumstances. And at the time I already discussed the theoretical possibility of one or more further retrials. As expected, Samsung is still unhappy and formally requests either a judgment as a matter of law (JMOL) in its favor or a new trial or a massive adjustment of the damages award (this post continues below the document):

13-12-14 Samsung's Corrected Motion for Judgment as a Matter of Law by Florian Mueller

Asking for an adjustment on a JMOL basis is common practice. Apple is doing the same in its motion (asking the court to hold that Apple's $379 million retrial damages claim was the only result a jury could have reasonably arrived at), but it's not asking for yet another trial (this post continues below the document):

13-12-13 Apple's Motion for Judgment as a Matter of Law by Florian Mueller

Apple's motion is considerably shorter than Samsung's not only because Apple focuses on JMOL but also because Apple conservatively applies the page limit for post-trial briefs to the total of this JMOL motion and the renewed motion for a permanent injunction that it will bring once the United States Court of Appeals for the Federal Circuit remands the injunction question to Judge Lucy Koh's court in California. Last month Apple prevailed with respect to its software patents-in-suit, but the Federal Circuit has not yet issued its mandate. Apple says this could happen as early as December 26, but I think it will take a couple more months due to an expected Samsung petition for a rehearing and it's not unimaginable that Samsung might even try to appeal this issue to the Supreme Court.

Samsung is extremely unlikely to persuade Judge Koh to order a retrial of the retrial and presumably brought this motion only to preserve its record for the appeal. Judge Koh really wants to reach the point of a final judgment so as to enable the parties to appeal the unfavorable parts (obviously, Samsung has more of a need to appeal than Apple, but Apple also can seek some improvements) to the Federal Circuit. If the Federal Circuit finds any jury instruction prejudicial or reverses any underlying liability finding, or disagrees with other relevant parts of the district court judgment, then there will be a third trial in this case (absent a settlement). Given that there are so many legal questions in this case and a multiplicity of issues either party can raise on appeal, a third trial is not entirely unrealistic. But for practical reasons it doesn't make sense to delay the inevitable cross-appeal, given that even a retrial at this stage would still involve the risk of a need for a retrial on remand.

Samsung's arguments for a retrial of the retrial have two truly interesting aspects and one that is idiotic. The stupid point Samsung makes can be addressed quickly. It claims, as it did at trial, that Apple's lead counsel, Morrison & Foerster's Harold McElhinny, appealed to "racial bias" against Asians. But he didn't use any pejorative terms of the kind you can hear at the beginning of Full Metal Jacket or say anything other that really has to do with race. At most one can say that he appealed to patriotism, but even that would be at least an exaggeration given that he just explained how domestic companies go out of business if they can't defend their intellectual property against foreign copyists. I just don't understand why Samsung made the decision to press this non-point instead of focusing on its more reasonable arguments.

Samsung's lawyers did it again and figured out how the jury arrived at its numbers. Last year they reverse-engineered almost the entire original jury verdict. This time around they can explain the jury's methodology for each of the products at issue in the retrial:

  • Six devices were found to infringe only software (not design) patents. On those, the jury awarded precisely what Apple claimed in lost profits and reasonable royalties (this was obviously easy to figure).

  • The other serven devices were found to infringe both software and design patents. On those, the jury awarded the same 100% of Apple's claimed lost profits and reasonably royalties plus the exact average of the parties' calculations of total infringer's profits (61.4% of Apple's expert's number because even Samsung didn't argue that there were no profits).

Samsung argues that the jury failed to do its job of actually deducting costs from the claimed profits and that such "compromise" verdicts are contrary to law (provided that the jury's methodology can be reverse-engineered). If there's any way Judge Koh can uphold the jury award nevertheless, I guess she will, just to make sure that the case gets appealed now rather than later.

The other interesting argument for a retrial of the retrial is Samsung's allegation that Apple violated the Entire Market Value Rule and generally misled the jury by comparing its damages claim (as well as the minuscule amount Samsung conceded it owed Apple) to Samsung's total revenues generated with the accused products in the U.S. during the relevant period of time ($3.5 billion) as well as the total number of accused devices sold (10.8 million units) despite the fact that, for example, not all of those products infringe design patents (which entitle a patentee to a disgorgement of infringer's profits). Samsung points to the January 2011 Federal Circuit decision in Uniloc v. Microsoft, which involved the grant of a new trial because of the patentee's use of an inadequate damages theory. I guess what Apple did in the Samsung retrial was not tantamount to using an inadequate theory (given that the numbers presented by its experts were based on court-approved theories), but this kind of argument yet makes more sense than the racial bias story.

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