Thursday, June 19, 2014

Supreme Court ruling in CLS Bank v. Alice makes 'generic' the new magic word for software patents

The Supreme Court of the United States just handed down its opinion in Alice v. CLS Bank, a case that some people (including the appellant) misportrayed as a case that was fundamentally about whether or not computer-implemented inventions are patent-eligible. In February I explained why this case was more of a "Bilski Reloaded", and I later commented on the March 31 Supreme Court hearing, predicting that software would undoubtedly remain patent-eligible. And indeed, today's decision is narrowly focused on issues that relate to abstract ideas such as business methods and does not provide any guidance with respect to the patent-eligibility of technical inventions involving software.

I have filed a U.S. patent application (and a simultaneous PCT application) on a computer-implemented invention and will file a couple more soon, but those fighting this category of patents also appear to agree that software patents haven't been abolished, judging by the initial reactions I've seen on Twitter and certain websites.

I'll keep this brief because everything turned out just as expected and because this ruling hasn't really changed anything. There's only one observation -- the one I already stated in the headline -- I wish to share. It's clear that post-Alice those challenging software patents and those defending them will have a favorite word and it is "generic". It's all over the SCOTUS opinion, in most instances as a qualifier before the word "computer" and sometimes before "computer implementation". And in at least one instance, "generic" itself has a qualifier:

"Wholly generic computer implementation is not generally the sort of 'additional featur[e]' that provides any 'practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself."

The word "generic" also appeared in the Federal Circuit opinion(s), but in different combinations. The Supreme Court linked it to "computer implementation" because the question on appeal was whether the Federal Circuit ruling rendered all computer-implemented inventions patent-ineligible.

In Europe, where software is excluded from the scope of patent-eligible subject matter by statutory law (Art. 52 of the European Patent Convention), the equivalent to "generic" is "as such": software as such is not patentable, but technical inventions involving software are (making "technical" the magic word in Europe). In Europe there's already a rich body of case law concerning what is or is not technical. In the U.S., courts are now going to have to figure out again and again the meaning of the term "generic". Those applying for or defending software patents will argue that their inventions are not "generic" computer implementations of abstract ideas. Those challenging such patents will try to define "generic computer implementation" as broadly as possible and argue that every software patent they attack involves previously known computing technology and an abstract idea.

The Supreme Court clearly says that it does not want the exclusion of abstract ideas from patent-eligible subject matter to "swallow all of patent law". No doubt about that intent, but this won't dissuade some from trying to interpret the Supreme Court ruling overbroadly. It's a bit unfortunate for those seeking or defending software patents that there hasn't been a recent Supreme Court ruling that would have upheld a (technical) software patent and created some kind of safe harbor for software patents. In Alice, the only safe harbor for software patents that the Supreme Court mentions is that "a computer-implemented process for curing rubber was patent eligible [...] [because it] "employed a 'well-known' mathematical equation [...] in a process designed tosolve a technological problem in 'conventional industry practice.'" That reference to Diamond v. Diehr, a 1981 decision, is not a safe harbor for software patents that are unrelated to manufacturing processes. There's a huge gap between Diamond v. Diehr and Alice v. CLS Bank, and as a result there is a need for a whole lot more line drawing, which I guess we will indeed see in the years ahead. For the sake of balance it would be helpful clarification if the Supreme Court could at some point affirm a technical software patent, such as an operating system patent. For now we just know what the Supreme Court considers a "generic computer implementation", but there's a need for more clarity as to what is not just generic.

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Monday, June 16, 2014

Appeals court issues formal mandate to trial court in Oracle v. Google Android-Java copyright case

One month and one week after the appellate opinion was handed down in the Oracle v. Google Android-Java copyright case (initial reaction to ruling, follow-up, and detailed refresher Q&A, the United States Court of Appeals for the Federal Circuit has just issued a formal mandate to the trial court, the United States District Court for the Northern District of California, remanding the high-profile lawsuit for a determination on fair use and (if Oracle prevails) remedies. Here's the document (this post continues further below):

14-06-16 Oracle v. Google Formal Mandate to District Court by Florian Mueller

In most of the Federal Circuit cases I watched, the deadline for a petition for rehearing appeared to be one month after the ruling, though in at least one case it appeared to be 45 days. In any event, the standard two-week deadline does not appear to apply in these kinds of cases. It appears that Google has elected not to file a petition for a rehearing. According to Rule 41 of the Federal Rules of Appellate Procedure, the appeals court's "mandate must issue 7 days after the time to file a petition for rehearing expires". The opinion came down on May 9. One month for a rehearing petition means the related deadline was June 9 -- and now we're seven days past that presumed deadline.

It's possible but still not certain that proceedings will resume in district court in the very short term. Maybe Google has realized that it can't prevail on copyrightability and will now focus on fair use, its sole remaining defense (I explained earlier this year why I don't see a "fair use" case here, though I now tend to agree with Google on fair use in the Google Books context), and exhaust all appeals in connection with fair use. That would make sense. But it could also be that Google files a petition for writ of certiorari with the Supreme Court of the United States. The deadline for that one is 90 days after entry of judgment. There has been speculation about the possibility of such a petition. I don't think the Federal Circuit's API copyrightability holding is "certworthy" because the Federal Circuit definitely got it right and just upheld longstanding principles of U.S. copyrightability rules that don't warrant another high-level review because they're crystal clear, but Google will obviously do what it believes is best for Google. I hope for both Google and Oracle that they can soon agree on a license deal, but until they have an agreement in place, they'll keep fighting in court, possibly all the way up to the Supreme Court.

Depending on how quickly things resume in district court, we may see a Google motion for a stay in the near term. I'll continue to watch the relevant dockets and will blog about further developments. At that stage or even before I may address some of what has been said and written about the Federal Circuit opinion since my last blog posts about this case. I continue to believe that the Federal Circuit opinion is excellent news for software developers (who need reasonably strong IP protection), while affirmance of the district court ruling would have weakened copyright protection for software to a very worrying extent (despite Judge Alsup's efforts to present his non-copyrightability ruling as a narrow decision).

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Saturday, June 14, 2014

Apple and Samsung conserve resources, drop cross-appeal of ITC ruling on Apple's complaint

It would be an overstatement to call this a small-scale settlement and there are still no unmistakable signs of a thawing period between Apple and Samsung of the kind we saw last month when Apple and Google agreed to withdraw all patent infringement lawsuits against each other. But they have to start someplace. At least Apple and Samsung have been able to agree that there was nothing for them to gain from their appeals of last year's final ITC ruling on Apple's complaint against Samsung. Samsung was trying to have the import ban (which has had no commercial effect whatsoever because the ITC had cleared Samsung's workarounds) reversed while Apple was trying to prevail on one more headset-related hardware patent. The cross-appeal has now been terminated based on the parties' motions.

On Thursday, Samsung moved to voluntarily dismiss its appeal. It told the United States Court of Appeals for the Federal Circuit that it had "conferred with Appellee International Trade Commission and Intervenor Apple Inc., and neither party object[ed] to the requested voluntary dismissal." The following day, shortly after the motion was granted, Apple requested the dismissal of its own appeal as well. Apple noted that the dismissal of Samsung's appeal "means the Commission's exclusion order and cease-and-desist orders will remain in place." That's true in a formal sense. In a commercial sense it means that Apple gets zero leverage out of its ITC case against Samsung. Samsung's own ITC complaint against Apple fared no better because of a Presidential veto of an import ban Samsung had won over one standard-essential patents and the Federal Circuit's affirmance of the ITC decision to clear Apple of another Samsung SEP. That affirmance came down shortly after a recent hearing, without any further reasoning provided, suggesting that the Federal Circuit had nothing to add to the ITC's reasoning.

Apple had filed its opening brief in late March, and since that was the day the most recent California trial between these parties started (and also the day the Supreme Court held its hearing in Alice v. CLS Bank), I haven't previously looked at that brief. I was surprised that Apple wasn't even trying to prevail on its RE'922 "translucent images" patent. A few months ago the USPTO issued a reexamination certificate for certain claims, some of which had to be amended to survive reexamination. Maybe Apple's infringement case was weakened by the concessions it had to make in reexamination, and/or it concluded that Samsung would be fine with a workaround. In the now-terminated appeal, Apple focused only on its '697 headset-related patent, which the ITC found infringed but also invalid. This is how Apple described the '697 patent in its appellate brief:

"The '697 patent claims an 'electronic device' that detects whether an 'accessory component' such as a headset is plugged into the device. Based on that detection, the device uses either the plugged-in accessory component or a different input/output component such as the device's internal microphone or speaker."

This is a pretty broad description, but nevertheless Samsung claimed to have a workaround in place and Apple apparently thought this patent wasn't worth fighting for.

Since Samsung has been doing fine with its workarounds for the two patents on which Apple had prevailed at the ITC, this appeal was not a "must-pursue" type of action. Also, the Federal Circuit recently handed down an opinion that involved, among other things, one of Apple's two winning patents, the "Steve Jobs" touchscreen heuristics '949 patent, in the Apple v. Motorola "Posner case". In my analysis of that appellate opinion I wrote that the Federal Circuit opinion didn't appear to change anything about the legality of Samsung's workaround. In formal terms, that Apple-Motorola appeal has been dismissed, but the Federal Circuit would most likely have taken the same position on this patent again.

Unless Apple and Samsung have reached some sort of agreement about this, Apple could theoretically still seek damages for past infringement with respect to its ITC patents, particularly the "Steve Jobs patent". Samsung had filed a companion complaint in Delaware to its ITC complaint against Apple, but Apple focused only on its pursuit of an import ban. The ITC's liability findings are not binding on district courts, so there would have to be a whole new trial of infringement and (in)validity. Apple is not likely to make this effort since there is so little, if anything, to gain.

Apple and Samsung are still fighting hard on other fronts. They both appealed the final district court ruling in their first California case, with Apple presumably still trying to obtain an injunction and Samsung mostly trying to bring down the damages award, the bulk of which is related to design patents. They will certainly appeal the forthcoming final ruling in the second California case as well. Late on Friday they both filed replies in support of their motions for judgment as a matter of law (JMOL), i.e., motions to overrule the jury. Apple's brief is sealed, and Samsung's filing states nothing new. Apple also filed a reply in support of its motion for a permanent injunction (no surprises there either).

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Wednesday, June 11, 2014

Samsung is trying to collect more than $2 million in damages before Apple receives its first cent

Late on Tuesday, Samsung filed a motion to enforce a preliminary injunction bond Apple had posted in the summer of 2012 after winning a U.S. sales ban against the Galaxy Tab 10.1 following an appeal. The injunction was lifted a few months later because, in the meantime, a California jury had cleared Samsung's accused tablets including the Galaxy Tab 10.1 of the tablet design patent underlying the preliminary injunction. Judge Koh declined to overrule the jury on this one. Unless the recently-filed cross-appeal results in a modification of this non-infringement holding, Samsung will be entitled to wrongful enforcement damages -- which was the scenario for which Apple had to post a bond in the first place.

The motion is sealed. A related declaration is publicly accessible and states that, as a result of Apple's enforcement of the injunction, Samsung scraped (in or about July 2012) components worth $2,049,651. Samsung wants to collect this amount from Apple now, based on Judge Koh's final judgment and before the appeals court has spoken.

The amount is so small (relatively speaking) because the Galaxy Tab 10.1 had already approached the end of its lifecycle by the time Apple finally won an injunction. It had sought one in 2011, but Judge Koh originally denied it, and Apple won it only after a partly-successful appeal. If Apple had won the injunction earlier, the value of the components Samsung would have had to scrape would have been far greater.

Relative to the scale of this patent dispute, and especially by comparison with the size of the players and the relevance of every tenth of a percent of market share one may gain at the expense of the other, a $2 million payment is unimportant. And it's even less important whether Samsung receives that amount now or, if it is still entitled to it after Apple's appeal, in a year or so. But I suspect that this is about principle, and the real risk to Apple is non-monetary: it would be rather embarrassing if the first context in which money physically changed hands as a result of the patent spat between these two companies was a damages award in Samsung's favor because of Apple's wrongful enforcement of a preliminary injunction.

Samsung's lead counsel in the recent trial (which was not about design patents but related to the second California lawsuit between these companies, filed in 2012), John Quinn, told reporters that years into its "holy war" on Android, Apple still hasn't "collected a nickel". Apple appears to be peeved at this and, for tactical reasons, pointed to that statement and similar remarks in its recent post-trial motions, one of which is a motion for a permament injunction. It would add insult to injury from Apple's perspective if Apple actually had to fork over some money to Samsung -- even if it's "only" two million dollars -- before Apple itself receives even a cent from Samsung.

Wrongful enforcement will increasingly be on the agenda in some major smartphone patent disputes. It would have been an issue between Apple and Google's Motorola Mobility, but they recently agreed to withdraw all pending lawsuits against each other. In the U.S. these two companies had not yet won anything against each other, but in Germany Apple had enforced three (permanent and provisionally enforceable) injunctions against Motorola -- two of them over patents the Federal Patent Court of Germany later declared invalid and one of them over a patent the European Patent Office may still revoke -- and Motorola had enforced a synchronization patent against Apple in Germany for 19 months. All three patents over which Microsoft enforced injunctions against Motorola in Germany have since been declared invalid by the Federal Patent Court. The Federal Patent Court's decisions can bem and presumably have been, appealed to the Federal Court of Justice. If Microsoft and Google/Motorola don't settle before, and if the nullity decisions are affirmed, then at some point Motorola will seek wrongful-enforcement damages in Germany.

It's very embarrassing for patent holders if they say over and over that someone fails to respect their "intellectual property" but, when all is said and done, it turns out that their "intellectual property" was invalid in the first place, or maybe it was valid but it wasn't actually infringed. Wrongful enforcement is theft. In many cases wrongful enforcers get away with their wrongdoing because their enforcement puts so much pressure on a defendant that a settlement occurs before wrongful enforcement is established and wrongful-enforcement damages are awarded. I've discussed this hold-up problem in connection with standard-essential patents. It is, as Samsung's motion to enforce Apple's 2012 preliminary injunction bond shows, also a serious issue in the context of non-SEPs.

There is no easy answer. Intellectual property litigation is so slow compared to the pace of certain markets (such as smartphones) that patent holders don't want to delay enforcement until all appeals have been exhausted. That's why enforcement in this industry typically does occur well ahead of a final ruling. However, if one looks at the cases in which patent infringement allegations and the related invalidity defenses come to final judgment, wrongful enforcement occurs so frequently that policy makers should be concerned about whether an intellectual property regime with a very high error rate serves its purpose in this industry or needs some serious reform.

Europe will get an even bigger wrongful-enforcement problem than it has so far unless the rules of procedure of the Unified Patent Court (UPC) are balanced. I will talk about that topic again soon.

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Tuesday, June 3, 2014

Industry group presents another theory for slashing Apple's $929 million award in Samsung case

A few days ago I blogged about an amicus curiae brief submitted by 27 law professors in support of Samsung's appeal of the $929 million aggregate damages award in the first California Apple v. Samsung case. A large part of the award is due to the fact that Judge Koh allowed Apple to seek a disgorgement of unapportioned infringer's profits. The law professors advocate apportionment (based on fairly high standard -- "causal nexus" -- that Apple wasn't able to satisfy in the injunction context).

The Computer & Communications Industry Association (CCIA), an industry group that counts Samsung but also other major companies among its members, has meanwhile published its submission to the Federal Circuit. I wouldn't have done this blog post (especially since I really intend to limit the number of monthly blog posts) if the CCIA's filing just amounted to more of the same. Only a part of the CCIA's argument (the part that explains a disgorgement of total profits for one design patent can't be the answer since Apple holds multiple smartphone-related design patents, in which case a damages claim could theoretically amount to many billions of dollars) is duplicative of the professors' simultaneous filing. The most intriguing part of the CCIA's submission arrives at the same result via a different -- at least differently-presented, but in my view also substantively-different -- route.

The CCIA (with which I disagree on Oracle v. Google and a couple of other issues, just like I disagree with some of the professors on those and/or other issues) bases its argument for apportionment on the question of what the proper "article of manufacture" should be with respect to which a disgorgement of profits can be sought. According to CCIA, the term "article of manufacture", which appears in the paragraph that enables design patent holders to demand a disgorgement (35 U.S.C. § 289), "must refer to the article in the design patent itself, not a larger device that incorporates the article as one of its components." Judge Koh agreed with Apple that the appropriate article of manufacture is an entire phone. But CCIA says Apple's D'087 and D'677 design patents "are directed to an outer shell of an unspecified electronic device," while D'305 "is directed to a display screen for a graphical user interface for an unspecified device." Interestingly, "[t]he [D]'087 and [D]'677 patents both expressly acknowledge that the device inside the patented case is irrelevant, and could be a 'media player (e.g., music, video and/or game player), media storage device, a personal digital assistant, a communication device (e.g., cellular phone), a novelty item or toy.'" The CCIA concludes from this content-unrelated definition that the article of manufacture (and thus the damages base) "must be the outer case of the device."

I'm not sure that the commercial value of the outer case alone is the proper damages base here. It's an extreme position. But the other extreme would mean that a device maker could be liable for several times or even many times the profits (because each of multiple asserted design patents would on its own entitle its owner to a disgorgement of total profits), which underscores how little sense the absence of any apportionment makes in this world, no matter how reasonable it may have appeared to Congress in the late 19th century when design patents related to no-tech products like carpets.

I agree with the professors and with the CCIA that an unapportioned disgorgement is the wrong result. It would imply that all of the technology that goes into these products has no commercial value on its own. As I wrote before, the question is what the appeals court can do about it. Can the problem be solved through interpretation or just through updated legislation? The devil's advocate perspective on the professors' brief would be that they propose a contra legem approach (a decision that intentionally goes against the language of the statute). If that was a concern, then the CCIA's proposed approach would be an alternative for addressing the issue. The CCIA's suggested interpretation and application of the term "article of manufacture" may seem ambitious, but one could interpret the statute that way without going against it.

I just wanted to draw attention to the CCIA's interesting line of thought on this issue.

A couple more things that are unrelated to design patent remedies. If you read very closely, you may have noticed that I now use, finally, the correct punctuation in connection with quotes, putting periods and other symbols inside the quotation marks. I always considered it more logical to have only the original text -- including punctuation symbols -- inside the quotes, but I wanted to get this right at some point.

Finally -- and this is infinitely more important than my punctuation -- the announcements Apple made yesterday at its WWDC developer conference. The priority platform for my own app development project is Android for various reasons, but I'm obviously aware of the iOS opportunity. I'm extremely excited about Apple's new programming language, Swift. I honestly think I've never been nearly as excited about an Apple announcement. If you follow me on Twitter, you may have noticed it yesterday (and that was even before I had the time to read about it in detail). While I liked Apple's rather expressive, verbose function and variable names, I really found Objective-C awkward and have for some time preferred the Java/.NET-style managed code approach (Objective-C seemed to me like semi-managed at best). It really appears to me that Swift will make it easier to get over the iOS learning curve and result in greater developer productivity (and greater stability of programs). This is wonderful, and enabling developers to be productive has the potential to contribute much more to Apple's bottom line than lawsuits over patents of rather limited strength.

I heard that Swift apps may run even faster than Objective-C apps. That's not the most important thing to me because the app I'm currently working on would run fine even if Swift apps had just half the performance (or even significantly less) of Objective-C apps. What's important is that developers can learn the thing quickly and be productive, and that the results make end users happy. I did a fair amount of assembly language programming in the 1980s. At the time, you couldn't avoid it for performance reasons. Nowadays computers, including the mobile computers called smartphones and tablets, are so powerful that the focus should really be on developer productivity. I'm very happy that Apple made this such a high priority. I always thought it was wrong and unfair to assume that Apple's ability to innovate depended on just one person. That one person originally didn't even like the idea of allowing third-party apps, and could have done something about the Objective-C problem years ago but didn't. The new Apple appears more developer-friendly than the old Apple. If only it could also start to think of developers' needs when lobbying for or against different patent reform measures...

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