Friday, August 1, 2014

Apple responds to Samsung appeal of first California ruling, defends jury verdict all the way

On Monday, Apple had a deadline for its opening brief in the appeal of the final ruling in the first Apple v. Samsung case and somewhat surprisingly dropped its cross-appeal. As a result, Apple's opening brief, filed later in the day, was all about defending the jury verdict. The part that was not surprising is that Apple decided to consistently defend the jury verdict rather than run into any contradiction with itself by saying the jury got things wrong there it sided with Samsung but was absolutely right wherever it agreed with Apple. The unexpected part is that Apple finally gave up its pursuit of a permanent injunction in its first Samsung case. Apple could still seek an injunction over the same patents in connection with different products (and then try to present stronger evidence of irreparable harm), but a new complaint and a whole new liability ruling would be needed (which would take time).

Apple's defense of the 2012 jury verdict would be futile if the things certain jurors later told the media (about intentional ignorance of the prior art, for example) were a basis for setting the verdict aside. Fortunately for Apple, the United States Court of Appeals for the Federal Circuit, while aware of what the media reported, will (have to) rule on a different basis.

I don't disagree with Apple philosophically. It's true that Apple presented a pretty strong "copying" story at the 2012 trial, a story that would likely have persuaded many other juries to come down on Apple's side, even if not necessarily to the same extent. This year's trial in the second California case between these parties didn't go nearly as well for Apple because there was a bit of a disconnect between Apple's copying rhetoric on the one hand and the merits of its infringement assertions on the other hand.

There's a lot that one could say about a brief of approximately 100 pages (Samsung had also been granted additional pages for its opening brief in this appeal). I'll just share a few observations below the document:

14-07-28 Apple Responsive Brief to Samsung Appeal by Florian Mueller

Usually the table of authorities does not warrant any comment. Here, however, it's interesting that Apple's brief cites to writings by several of the 27 law professors who filed an amicus curiae brief a few months ago in support of Samsung's efforts to get the design patents-related part (i.e., the bulk) of the $929 million damages award reduced. In the "Other Authorities" section you can find writings by Professors Thomas Cotter (author of the Comparative Patent Remedies blog, which I have recommended previously), Mark Lemley, Mark McKenna & Katherine Strandburg, Michael Risch, and Ryan Vacca. It's a nice idea that Apple tries to leverage previous writings by those amici against their recent brief. (I'm sure the amici would disagree that there is any contradiction between their earlier writings and their brief.)

With respect to design patent-specific legal issues, I tend to agree with Apple that the concept of "purely functional" design elements should be interpreted more narrowly than Samsung suggests in its brief -- protection should be denied only if a design element is truly "dictated" by functional requirements. (If you have read my posts on Oracle v. Google, you know that I have a similar perspective on functional restrictions in connection with software copyright.)

Apple argues that there is no "risk of double recovery" if an unapportioned disgorgement of infringer's profits is awarded. I still believe that Samsung and its amici are right that unapportioned disgorgement is nonsensical in a world in which products, unlike some old non-tech products such as carpets, may be found to infringe more than one design patent at the same time. Apple focuses on the scenario in which "a patentee with multiple overlapping design patents could recover an infringer's profits several times over." Apple indeed didn't try this: it sought a disgorgement of infringer's profits (and not a multiple thereof) despite asserting, and establishing in the eyes of the jury, infringements of multiple design patents. But what if the same product infringes two (or more) design patents held by two (or more) entities? Apple does address this possibility: "if that hypothetical concern ever materialized, an infringer could always invoke impleader, as one of Samsung's amici [Prof. Lemley] explains." This does not seem to be a great solution, and in any event, even if a procedural solution existed, there is a conceptual problem with a rule that results in excessive remedies. Also, let's not forget that the issue is not only one of potential infringement of multiple design patents but that a high-tech product involves other intellectual property rights than just design patents. Apportionment is the only sensible solution, and it appears that the jury (which granted Apple less than half of what it wanted) somehow also felt that a complete disgorgement was over the top, but Apple now seeks to defend the verdict and, therefore, the instructions Judge Koh gave two years ago.

There are two issues with the first sentence of the introductory part (page 2) of Apple's brief, both of which show that Apple now attempts to defend a mostly design patent-based damages award by conflating design and technology:

"Apple spent years and millions of dollars developing innovative designs and features for its iconic iPhone and iPad, which revolutionized the smartphone and tablet computer markets."

First, while the iPhone and the iPad undoubtedly revolutionized the smartphone and tablet computer markets (in fact, the iPad even created the tablet computer market, practically speaking), the designs per se (which the bulk of the $930 million damages award relates to) did not revolutionize anything.

Second, the designs themselves only cost "millions". That is not a strong point when asking an appeals court to uphold a damages award amounting to almost a billion dollars. The million-billion discrepancy actually indicates that there is a risk of massive overcompensation in this case.

Having read Apple's appellate brief, I actually feel more strongly than before that the reduction of the damages award Samsung is seeking is really warranted.

Finally, I have to acknowledge that I had previously missed an important detail that footnote 22 (page 78) has now drawn my attention to: the USPTO's rejection of the '915 pinch-to-zoom API patent claims (which Apple is appealing, but which the examiner is still defending) is based on partly different prior art than theone Samsung presented at the 2012 trial. Technically, this could help Apple defend the patent in the appeal of the California ruling despite whatever else is going on in the USPTO reexamination proceedings. Still, the fact of the matter is that the '915 patent, based on where things currently stand at the USPTO, would not have been granted in the first place if the examiner had been aware of all of the relevant prior art. There are sometimes multiple ways to invalidate a given patent, so the '915 patent is still at risk in this appeal, and invalidation would most probably be the correct outcome.

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