Tuesday, May 20, 2014

Apple, Samsung lawyers blame each other for failure to settle patent dispute: court filing

On Monday, the Korea Times, citing unnamed sources "directly involved with the matter", reported that "Samsung has recently resumed working-level discussions with Apple and the key issue is how to dismiss all lawsuits". The sources also recognized that "[s]ome more time will be needed to fix terms of details such as royalty payments in return for using patents owned by each before reaching a full agreement". But the goal is apparently to agree on a ceasefire comparable to the truce Apple and Google (Motorola) announced on Friday, which does not shield Google's hardware partners, such as Samsung, from Apple's patent assertions (and does not even shield Google itself from the Rockstar lawsuits).

Later on Monday, a joint court filing by Apple and Samsung informed Judge Lucy Koh of the status of the parties' Alternative Dispute Resolution (ADR, i.e., mediation) efforts. After the recent verdict, Judge Koh had asked the parties to make another attempt to settle their patent spat and requested information on the status of those efforts.

It's key to bear in mind that the parties' court filing, including the attached correspondence between counsel that was apparently written for no other purpose than the blame game that is now taking place in front of the judge, relates only to ADR with the help of a mediator (which the parties tried before, more than once in fact). This is separate from the working-level discussions the Korea Times reported on. Working-level discussions can take place anytime, but the parties wouldn't tell the judge about those informal talks. Judge Koh wants them to make another formal mediation effort. And so far they can't agree on that one. But they are probably talking nonetheless, just not in a formal ADR setting. They can settle without ADR.

Apple wants assurances that its participation in an ADR effort wouldn't be held against it in court (as evidence of its willingness to license), while Samsung would be available for ADR "without seeking to impose any comparable conditions upon Apple". Samsung notes that "Apple has repeatedly used its prelitigation meetings with Samsung during trial to support its arguments".

Samsung's letter exudes confidence. In response to claims by Apple that Samsung "has now lost three jury trials and an ITC proceeding", Samsung's counsel highlights that Apple has also been found to infringe a Samsung patent, that "each verdict was far less than the amounts sought by Apple", and sums it all up by saying that "Apple has nothing to show for its years of litigation and hundreds of millions of dollars spent on attorneys' fees" -- which is true if you consider that the only feature (that end users would recognize and define as a feature) Apple has proved to own is rubberbanding.

Apple points to statements by Samsung's lead counsel in the recent trial, John Quinn, to the media. I quoted some of those statements in a recent post in which I outlined three possible ways forward for Apple ("the good, the bad and the ugly"). I'm sure Apple is genuinely outraged because Mr. Quinn brought up a painful subject: remedies. Apple hasn't been able to enforce any remedies against Samsung yet in connection with the trials that have been held in the U.S., and while Samsung exaggerates when it claims that Apple will get nothing at all in the end, I think it is realistic to expect significant reductions of those damages awards on appeal (and the award from the first case probably won't be able to stand because yet another trial will be needed if any key liability finding falls, which the one over the '915 pinch-to-zoom API patent very probably will). I do, however, agree with Apple that the "jihadist" statement was over the top.

Apple's part of the joint submission repeats the usual allegation of Samsung being unrepentant infringers, interpreting Mr. Quinn's statements to the media as an indication that "Samsung has no interest in stopping its use of Apple's patents or compensating Apple for past infringement" and alleging that "Samsung has adopted a business model that prohibits early or even timely resolution of any dispute involving intellectual property infringement".

I have said before that Apple is entitled to compensation for past design patent infringement. But as far as Apple's utility (i.e., technical) patents are concerned, it's increasingly unlikely that Samsung will ever pay any noteworthy amount of money for those. Further above I quoted Apple's statement that Samsung had "lost [...] an ITC proceeding". That is true only in formal terms, but from a business point of view, Samsung won the ITC case over Apple's complaint because the ITC cleared Samsung's workarounds. The import ban has been in force since October without any business impact (most people just don't know because there was lots of media coverage when the ruling came down, but no follow-up on the fact that end users don't even notice any change as a result of Samsung's ITC-approved workaround). If even the so-called "Steve Jobs patent" doesn't have impact, isn't it about time that Apple looked for an exit strategy from a war it apparently can't win?

For a long time I believed that Apple's primary problem was that the process (including appeals) is slow. Until August or September of last year, there were reasons to believe that Apple would get some decisive leverage. An appellate hearing on injunctive relief appeared to have gone well for Apple, the U.S. import ban had been ordered (and its impactlessness wasn't clear until it took effect in a legal sense but had no commercial effect), a German court appeared inclined to support Apple's "copying" allegation. But none of that worked out for Apple later. And while the patents Apple is asserting in the case that went to trial this year appeared stronger than the ones at issue in the first case, the patent claims Apple ultimately took to trial weren't frightening: Apple did not even claim to practice three of those five claims in its current products, which shows that one can deliver certain features without infringing on those patent claims. Apple's out-of-this-world damages claim in the second trial was a sign of despair more than anything else.

I still believe, as I told the Korea Times on Monday, that an Apple-Samsung settlement is now more likely than ever, and I would be surprised if this pointless litigation continued beyond the summer. "Boy have we patented it" was probably the biggest error, by far and away, of Steve Jobs's second tenure as CEO of Apple. If his successor hadn't realized it, he wouldn't have agreed on a ceasefire with Google.

Here's the joint Apple-Samsung court filing on ADR:

14-05-19 Apple-Samsung Joint Submission on ADR by Florian Mueller

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