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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