Monday, February 3, 2014

ITC staff thinks Apple is not nearly as close to a U.S. import ban of Motorola's devices as it argues

Approximately three months ago the United States Court of Appeals for the Federal Circuit denied Google's Motorola Mobility a rehearing and subsequently remanded to the United States International Trade Commission (USITC, or just ITC) the investigation of Apple's complaint against Motorola with respect to two patents-in-suit.

On January 7, 2014 the Commission (the six-member decision-making body at the top of the U.S. trade agency) asked the parties and the Office of Unfair Import Investigations (OUII, commonly referred to as "the ITC staff") for input on how to handle the remand proceedings necessitated by Apple's successful appeal. Naturally, Motorola Mobility would like to have a maximum number of opportunities to avoid an import ban on remand and raises a variety of issues that would have the desired additional effect of delay: if the Google subsidiary got its way, the investigation would have to be remanded by the Commission to an Administrative Law Judge (ALJ). Apple, equally unsurprisingly, tries to convince the Commission that the Federal Circuit opinion is the next best thing to an appellate opinion that would have directed entry of an exclusion order. In Apple's view, there's no need whatsoever for an ALJ to become involved: the Commission could directly resolve the two questions that remain in Apple's view, and obviously with the result being an import ban. The two questions Apple believes the remand is exclusively about are whether claim 10 of the '607 multipoint touchscreen patent is invalid for obviousness and whether the '828 ellipse-fitting patent is infringed under the Federal Circuit's claim construction. The additional issues raised by Motorola relate to the domestic industry requirement with respect to claim 10 of the '607 patent, a priority date issue relating to that patent, and the alleged invalidity of the '828 patent.

The parties' interests go beyond this particular investigation. Apple also asserted and withdrew -- but could at any point in time reassert -- the same patents against Samsung. It would presumably like to do so after prevailing over Motorola Mobility. And for now, Motorola Mobility still belongs to Google, which has a strategic interest in protecting Samsung (which is represented against Apple by the same lawyers).

After last week's announcement of an agreement under which Google will sell Motorola Mobility (except for most of its patents) to Lenovo (commentary on announcement, today's follow-up on the deterrent potential of Motorola's patents), a delay is even more desirable for Google because any import ban would then be only Lenovo's problem. And Lenovo might be in a better position to reach a settlement with Apple because it would be a lower-priority target.

I don't always agree with the ITC staff, and it doesn't make actual decisions but participates in certain investigations as a third party. Still it's useful to look at its recommendations. The ITC staff doesn't necessarily believe that a remand to an ALJ is necessary, but doesn't rule it out completely. It sides with Motorola on the domestic industry issue surrounding claim 10 of the '607 patent: in the original investigation, Apple satisfied the domestic industry requirement based on claim 1, and now makes more of a procedural argument that it has met the requirement and that Motorola waived this issue by not raising it on appeal. The ITC staff feels Apple still needs to prove the existence of a domestic industry in a technical sense for claim 10 of the '607 patent, and that Motorola didn't have to bring a cross-appeal (which Motorola says it couldn't even have done because it originally fended off Apple's complaint in its entirety).

The priority date issue for the '607 patent that Motorola would like raise (and which affects Motorola's ability to still pursue its invalidity defense) is real in the ITC staff's view, but "cannot be addressed on remand under the mandate rule because the Federal Circuit has already decided the larger issue of whether Perski [the prior art reference with respect to which the priority date issue is relevant) anticipated claim 10", so it can't be religitated in the staff's opinion. That part is good for Apple.

What's not so good for Apple is that the ITC staff thinks it's proper for Motorola to bring an invalidity defense against the '828 ellipse-fitting patent.

As a result of all of this, the ITC staff sees four issues to be addressed on remand, twice as many as Apple and almost as many as Motorola.

What's good for Apple, however, is that the ITC staff believes the ellipse-fitting claim construction adopted by the Federal Circuit is consistent with Apple's, basically saying that "to calculate" and "to compute" are the same thing here. But if the Commission disagreed, then the ITC staff recommends further proceedings (including the taking of additional evidence) before an ALJ.

Apple faces some hurdles before the desired import ban. If it obtains one, it will most likely be after the closing of the sale of Motorola's handset business to Lenovo.

This is a two-way dispute, and Motorola is still pursuing an import ban against Apple as well. Last month, its first of two appeals of the ITC's dismissal (there were two decisions involving different patents but relating to the same investigation) failed. But in May 2013 Google (Motorola) had filed an appeal of the final ITC decision relating to the sole patent-in-suit remaining at that stage, a proximity sensor-related patent, U.S. Patent No. 6,246,862 on a "sensor controlled user interface for portable communication device". Apple revived claim 10 of the '607 multipoint touchscreen patent on appeal thanks to secondary considerations of non-obviousness (such as the success of a new invention in the marketplace, which shows that there was something unique and non-trivial about it), and that's also a key part of Google's (Motorola's) strategy for the '862 patent: about a year ago, Google (Motorola) even quoted the official Steve Jobs biography in an attempt to persuade the ITC of its validity theory. But the Commission concluded that "there were already known solutions and market pressure to solve the problem addressed in the '862 patent of preventing inadvertent actuation of the touch sensitive inputs of a mobile device".

The ITC is now defending is dismissal of the final part of Motorola's complaint, and Apple, as an intervenor, is supporting it. In its appellate brief, the ITC says that "Motorola presented no evidence below [i.e., in the ITC proceedings], and cites to none on appeal, that sales of the iPhone were based on the features of the invention recited in claim 1 of the '862 patent". The ITC is very much focused on just defending the logic of its ruling, while Apple presents additional theories that could result in affirmance. Apple says that the ITC's claim construction was wrong, and while the ITC enjoys a whole lot of deference in some areas ("arbitrary and capricious" standard of review), its claim constructions are relatively easily overturned. If the Federal Circuit adopted Apple's claim construction, then, Apple argues, the patent is either invalid or not infringed. Apple not only supports the ITC's invalidity finding but additionally advocates a second invalidity theory. Apple is undoubtedly giving Google (Motorola) a run for the money.

The Google-Lenovo deal could also affect Google's ability to satisfy the domestic industry requirement.

I haven't looked into these cases in complete detail. If I had to make a guess based on my limited research, it would be that Google's (Motorola's) appeal is going to fail and that Apple may prevail on one of the two patents-in-suit but probably not on both at the same time.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: