Monday, February 3, 2014

Samsung concerned about resellers' fear and uncertainty in case Apple wins an injunction

On Thursday (January 30), Judge Lucy Koh (Northern District of California) held a hearing on Apple and Samsung's post-trial motions following the recent limited damages retrial and, which was the more important item on the agenda, Apple's renewed motion for a permanent injunction against Samsung's Android-based devices over three multi-touch software patents (that blog post includes a patent-by-patent impact assessment; for my report on Samsung's opposition brief, see this post). The injunction issue is important with a view to the proceedings that will follow the trial scheduled to begin on March 31. Apple has already won its first new infringement finding ahead of trial (though it still needs to defend the validity of that patent).

I have seen two news agency reports on the Thursday hearing (Bloomberg, Reuters), neither of which says whether Judge Koh indicated an inclination. I'm sure that an injunction will issue, but I believe that it should be stayed with respect to the '915 pinch-to-zoom API patent and would be disappointed if a patent of such dubious validity got enforced.

What I gather from the hearing reports is that Samsung emphasized its concern over the effect an injunction would have on its newer products. The products found to infringe Apple's patents at the summer 2012 trial are no longer commercially relevant. But Apple is seeking an injunction not only against specifically-named products evaluated by the 2012 jury but also against "any other product not more than colorably different from an Infringing Product as to a feature found to infringe". The question of scope is also going to be key to the injunction Apple will presumably seek after the upcoming spring trial. Even in the case that will go to trial this spring, Samsung's currently-relevant devices are not at issue. That lawsuit was filed almost two years ago. The parties were later allowed to add certain accused products, but, for example, the Galaxy S4 was launched too late to be included. As a result, this year's Apple v. Samsung trial is not even going to be a trial about last year's products: it will, essentially, be a trial about products released in 2012 or earlier. Therefore, an injunction will be useful to Apple only if it covers newer products having the same infringement patterns.

I understand Samsung's concern about how the channel (resellers including, particularly, carriers) might be affected in its purchasing decisions by the legal uncertainty surrounding an injunction that is not limited to old, specifically-named devices but has a more inclusive scope of the "colorable difference" kind. In practical terms, I don't think the injunction Apple is currently seeking would have any reseller worried if its enforcement was stayed with respect to the '915 patent. For rubber-banding, it's clear Samsung isn't offering it anymore (it removed this feature a couple of years ago), and the tap-to-zoom-and-navigate patent doesn't matter because it can be worked around merely by ensuring that a second tap on the screen doesn't center the display around another part of, for example, a webpage. But Samsung's purported workaround for the pinch-to-zoom remains controversial between the parties, and due to heavy redactions of certain filings I haven't been able to form an opinion on Samsung's workaround theory.

So the concern about "colorable difference" is again mostly about the injunction Apple will presuambly seek after the spring trial. The patents-in-suit in that case are more technical in nature than the user interface elements at issue in the first trial. There's greater potential for enforcement disputes (i.e., disagreements on whether a purported workaround really is a workaround) in that context.

While I understand Samsung's concern, the two most important questions are what the law says about the scope of patent injunctions and what workable options exist under the law. Google's counsel in the Android-Java copyright case said a few years ago that smartphones are like "cabbage" and have a shelf life of "about six months". Regardless of whether one supports patent injunctions in general and software patent injunctions in particular, they exist, and a proposal that they apply only to products that are long obsolete by the time an injunction issues would render this remedy almost entirely useless in a fast-paced market such as the one for wireless devices.

The Apple-Samsung dispute has led to several appeals and some landmark decisions that now serve as important precedent in U.S. patent cases across all industries. It's fairly possible that (absent a settlement) there will be some further clarification concerning the scope of "colorable difference" injunctions. But some uncertainty will always remain.

There's one Federal Circuit decision, handed down almost three years ago, that is more relevant to the Apple-Samsung "scope" issue than any other precedent I'm aware of: the en banc opinion in TiVo v. EchoStar.

I agree with the way Apple's lawyers read that one: a patent injunction will apply to a future product (or a modified version of a specifically-named product) if the infringement pattern is essentially the same -- but other differences between a newer product and one previously found to infringe (such as a new name, a different visual appearance, updates to the operating software that relate to other features than the patented one) don't matter. That's why Apple is seeking an injunction against "any other product not more than colorably different from an Infringing Product as to a feature found to infringe" (emphasis mine).

The Federal Circuit clarified in TiVo (page 21) that "[t]he analysis must focus not on differences between randomly chosen features of the product found to infringe in the earlier infringement trial and the newly accused product, [...] but on those aspects of the accused product that were previously alleged to be, and were a basis for, the prior finding of infringement, and the modified features of the newly accused product". It goes on to say that "[s]pecifically, one should focus on those elements of the adjudged infringing products that the patentee previously contended, and proved, satisfy specific limitations of the asserted claims". Assuming that an analysis of this purposely-limited scope (excluding "randomly chosen features") results in only an insignificant difference, "a finding that the newly accused product continues to infringe the relevant claims is additionally essential for a violation of an injunction against infringement".

While there was a partial dissent (supported, notably, by Chief Judge Rader), even the dissent says "[t]he majority [of the circuit judges] correctly describes the colorable differences requirement as involving a comparison between the specific features relied upon to establish infringement and the modified features of the newly accused product on a limitation-by-limitation basis" (emphasis mine; quoted from page 23 of the dissent).

TiVo overrules explicitly, in one regard, the much older (1985) Federal Circuit opinion in KSM Fastening Systems v. HA Jones Co.. And it formally clarifies other parts. After TiVo it's rather daring to rely on KSM on any issue that TiVo explicitly addressed -- and even more so if the 2011 court was unanimous on such an issue.

These are my three key take-aways from TiVo with a view to the further Apple v. Samsung injunction proceedings:

  1. Apple is seeking an injunction of a scope that I believe is consistent with Federal Circuit law, but if Samsung disagreed, it would have to appeal (which EchoStar didn't do) the scope of the injunction immediately because a majority of the 2011 Federal Circuit held in TiVo that it's too late to complain about the vagueness and excessive breadth of an injunction in the contempt context. This may be part of the reason why Samsung places so much emphasis on scope at this stage.

  2. Samsung won't be able to point to new product names, form factors, new Android versions etc. as a defense to a contempt motion but will have to show that the specific feature found to infringe has been modified to be more than just colorably different from the same feature of the products evaluated in the 2012 trial. It could be that a workaround would be found to be more than just colorably different but would later still be found to infringe. However, this would take much longer because after the identification of such differences, Apple would need a new proceeding on the merits to establish infringement. Some of the work court did before (claim construction etc.) might be recycled, but what would be required is nothing short of a new liability determination based on a modified set of facts.

  3. The Federal Circuit did not address in TiVo whether a new equitable determination of the appropriateness of injunctive relief is needed after modifications unrelated to the specific feature found to infringe. One can interpret that silence in two ways: either it means that if you've lost on the equitable side once, you don't get a new bite at the equity apple with future infringing products, or it means that this just wasn't relevant at that stage but could be relevant now, considering that so much emphasis has been placed in the Apple-Samsung dispute on the "causal nexus" between an infringement and the alleged irreparable harm. In practical terms, I doubt that the equitable analysis would be more favorable to Samsung in, say, 2015 than it is now. We're not talking about a smartphone having been found to infringe in 2012 and a future contempt proceeding relating to, for example, an airplane that comes with the same feature. But if the competitive sitaution changed fundamentally (from the current "two-horse race" situation), there could be a new situation further down the road, and it's a legitimate question whether the Federal Circuit meant to rule out a new equitable determination even in that scenario. I wouldn't be surprised to see Samsung raise that issue on direct appeal. Such an appeal would not be resolved before the next (post-spring-trial) injunction issues.

There are, as almost always, different opinions out there. For example, Santa Clara Professor Brian Love authored an op-ed in December 2012 for TechCrunch on the impact of an Apple injunction on subsequently-released Samsung products (at that point, the Galaxy S III was the latest one). I always find his writings interesting and I often agree with him. For example, the following two sentences from a May 2013 opinion he expressed in the Wall Street Journal are great and highlight a key point that many other participants in the patent reform debate miss:

"The goal of the patent system isn't to reward all novel inventions. It is to encourage inventions that wouldn't exist without the added incentive of patent rights."

But I disagreed with him strongly on two occasions. The more recent one of the two was an amicus curiae brief in Oracle v. Google submitted by dozens of professors -- and the Federal Circuit appears to be coming down on the same side as I. The previous one was the aforementioned TechCrunch op-ed. That op-ed doesn't mention TiVo even once. It relies only on KSM as if TiVo didn't exist. Professor Love ignores that devices are covered by an injunction if they have the same infringement pattern, not if they are "essentially the same" in all sorts of other ways. He argues (in the context of the same three multi-touch software patents at issue now) that a newer device is "almost certainly" not covered and, in that context, points to the fact that it "is taller and wider, has a larger screen and rounder corners, and is sold with an operating system four versions newer than the one running on devices found to infringe at trial". Those are exactly the kinds of "randomly chosen features" a unanimous Federal Circuit held, in TiVo (26 years after KSM and the year before Professor Love's op-ed), not to matter. I don't see a get-out-of-jail-free card for Samsung here, unless the market changes so dramatically that a new equitable analysis would be warranted -- and even then (i.e., not anytime soon anyway) one would have to read TiVo in a rather defendant-friendly way.

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