Thursday, September 4, 2014

Apple asks court to order Samsung to pay $6.46 per unit if it infringes 3 patents going forward

It's been a week since Judge Lucy Koh denied Apple's motion for a permanent U.S. sales ban against Samsung devices infringing the three patents on which Apple prevailed at the spring trial in their second California case, and Apple has meanwhile taken two steps in response to that decision. The U.S. is the only jurisdiction in which Apple still hopes to obtain at least a little bit of leverage over Samsung after dropping all ex-U.S. patent suits in an orderly retreat because Steve Jobs's vision of a thermonuclear war on Android didn't materialize.

First, it almost immediately appealed Judge Koh's decision to the Federal Circuit. Everyone knows about the fast-paced nature of the smartphone market, but Apple's decision to bring a separate appeal of the injunction denial instead of waiting for Judge Koh's final judgment is not going to please any judge -- neither Judge Koh nor the circuit judges. It would obviously be more efficient to hear an appeal involving all issues, liability and both kinds (monetary and injunctive) of remedies. Also, any reversal on the liability side would narrow the issues to be dealt with on the remedies side, and the liability-related outcome of the jury trial is far from rock-solid. For example, the United States Patent and Trademark Office (USPTO) has meanwhile rejected one of the asserted patent claims. But bringing an immediate, separate appeal of an injunction denial saved Apple time in the first Samsung case because a final judgment didn't come down until more than 14 months after Apple's injunction-denial appeal because a limited damages retrial was needed.

If Judge Koh hands down a final judgment in the second California case soon, all of the related appellate proceedings will almost certainly be merged. This time around, Apple wants a retrial. I understand its disappointment with this year's jury verdict, but I doubt that it's going to get one.

I'm also skeptical, as I previously explained on Twitter (1, 2, 3, 4, 5), concerning Apple's chances to get the denial reversed on appeal. While it helps Apple that Judge Koh sided with it on the public interest factor, the fundamental problem is that the related features don't really drive demand for these kinds of devices (even more so since Apple asserted rather narrow claims, some of which its own current products don't even practice). Any attempt to show a "causal nexus" between the infringements identified and irreparable harm to Apple will have to distort reality in order to arrive at the results Apple wants. It's much harder to lure courts than consumers into a reality distortion field. Basically, Judge Koh's denial of an injunction in the second California case was just consistent with the standard she applied in the first one. Apple's evidence was structurally the same, for the most part. They had one or two additional elements, but those didn't seem to remedy the shortcomings of the evidence in the first case.

Apple somewhat surprisingly dropped its recent cross-appeal of the final judgment in the first case, thereby accepting as the definitive outcome that the three software patents at issue in that case don't entitle it to the injunction it had been seeking for almost three years. While this could have different tactical reasons, it definitely doesn't exude confidence in the quality of Apple's evidence concerning irreparable harm in the first case -- but it seems that the evidence in the second case isn't structurally hands-down superior over the one in the first case.

Now on to the second response by Apple to the injunction denial. Late on Wednesday, Apple brought a motion for ongoing royalties, also called postjudgment royalties. This is the standard remedy at law that is available to patent holders if they can't prevent future infringement by means of an injunction.

Apple's motion for postjudgment royalties makes clear that the fight for an injunction is far from over ("Apple believes that it has been and continues to be irreparably harmed by Samsung's infringement and that only injunctive relief would suffice to remedy that harm — and Apple will urge that position before the Federal Circuit"). But if Apple (regardless of how likely it is or not) finally obtained an injunction, there would be no more need for the court to set postjudgment royalties. Therefore, Judge Koh may be quite inclined to postpone any decision on this motion until after the Federal Circuit appeal (which could also narrow the scope of any postjudgment royalties decision due to reversals of liability findings).

In December 2012, after Judge Koh first denied Apple an injunction in the first case (where it denied one again after an appeal), I already raised the issue of postjudgment royalties. Interestingly, Apple still hasn't brought such a motion in the first case. I guess that's because Samsung hasn't implemented the rubberbanding patent in years, the tap-to-zoom-and-navigate patent is way too narrow to be of any use (Samsung worked around it a long time ago and has no reason to infringe), and the '915 pinch-to-zoom API patent faces serious validity issues (plus, Samsung claims to have worked around that one, too). But what about the patents at issue now?

Apple wants "at least" $2.75 per product infringing the '647 "data tapping" ("quick links") patent, $2.30 for the '172 autocomplete patent, and $1.41 for the '721 slide-to-unlock patent. That would be a hypothetical total of "at least" $6.46 per unit. Let's look at it on a patent-by-patent basis.

The '172 autocomplete patent is the one the USPTO now considers invalid (the asserted claim is among the ones it recently rejected). The jury didn't hold it invalid, but juries rarely do. In any event, it can be worked around.

The '721 slide-to-unlock patent is weak in all respects. Maybe Judge Koh will be the first judge in the world of eleven judges to look at it (ten in Europe and now Judge Koh) to conclude that Apple deserves a patent on its slide-to-unlock image (even though slide-to-unlock per se had been invented before). But even Apple doesn't believe that Samsung's (relatively speaking) more recent products infringe that patent. Apple didn't even assert it against devices like the Note 2 (which is not exactly new; yesterday Samsung announced and demonstrated the Note 4 at the IFA trade show in Berlin).

The '647 "quick links" patent is the most interesting one of the three, at least in terms of the legal issues that a claim of continued infringement (in which case Samsung would likely disagree and the court would have to decide on whether Apple is indeed entitled to royalties) could raise. The way I see it, Samsung is in the clear if, together with Google, it copies certain Android code into the apps that use it. The Federal Circuit adopted Judge Posner's claim construction of this patent in Apple v. Motorola. In May, Apple and Google/Motorola dropped all of their pending cases against each other including the "Posner case", but it's hard to see how Apple would, even though it would be formally possible, persuade any court in the U.S. of a different claim construction. The Federal Circuit didn't explicitly comment on Judge Posner's workaround theory, but to me that one is an inevitable and logical conclusion from his claim construction, so it was implicitly endorsed by the appeals court.

If Apple had gotten its way at the spring trial in terms of the damages it claimed, it would now be demanding a far higher per-unit royalty for future infringement. Still, the amounts seem too high considering the huge number of patents in a smartphone or tablet.

Finally, here's Apple's motion:

14-09-03 Apple Motion for Ongoing Patent Royalties From Samsung by Florian Mueller

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