Wednesday, November 26, 2014

U.S. judge awards Apple undisclosed royalties if Samsung infringes certain patents in the future

[Update] Just after this post went live, Samsung filed a notice of appeal. Apple will do so pretty soon, too. [/Update]

Since Apple and Samsung agreed in August to drop all patent infringement actions against each other outside the U.S., there has been a much lower frequency of Apple v. Samsung news. It's now just about limited amounts of money (relative to the size of the companies involved) and whether or not Apple will get a face-saving exit from what was once intended to be a "thermonculear war" on Android.

Next week there will be an interesting appellate hearing. On December 4, the Federal Circuit will hear the parties' argument in Samsung's appeal (Apple dropped its cross-appeal in July) of the final judgment in the first Samsung case. With support from 27 U.S. law professors, Samsung is trying to get the $929 million damages amount in that first case reduced. The single biggest issue is the disgorgement of infringer's profits that U.S. patent law allows with respect to design patents.

In mid-December Samsung will respond to Apple's appeal of the denial of a sales ban in the second California litigation between these parties. Apple appealed that denial even before the final judgment in that case. It also tried, unsuccessfully, to speed up proceedings by asking the Federal Circuit to reconsider an order that granted Samsung a (customary) extension to respond. And it could now happen that the Federal Circuit will hear Apple's appeal of the injunction denial together with the parties' upcoming (we can set our watches by them) cross-appeal of the final judgment on the merits in the same case. That final judgment came down late on Tuesday by California time. It would make sense for the appeals court to discuss and adjudge the underlying liability issues and Apple's request for an extraordinary remedy at the same time.

In order to bring their appeals on the merits, Apple and Samsung had to wait for a formal final judgment in that second California case. Post-trial clean-up following the $119 million verdict (a disappointment for Apple, which demanded about 20 times as much) was already complete in September when Judge Koh denied Apple's request for a retrial and declined to overrule the jury in any significant way in either party's favor. Relatively speaking, the finding that Samsung did not willfully infringe Apple's slide-to-unlock patent (even the jury had not found any willful infringement of any other patent claim-in-suit) was the most important post-trial decision. But the final judgment couldn't come down without firstly adjudicating Apple's request for ongoing (postjudgment) royalties, filed shortly after the denial of injunctive relief.

Postjudgment royalties only come into play if products sold in the future are actually found to infringe a patent on which a party prevailed. While Judge Koh has awarded Apple some undisclosed per-patent per-product figures on Samsung products that might infringe any or all of the three patents on which Apple prevailed at trial (but pending appeal), the court has not determined that Apple is actually entitled to royalties on Samsung's future U.S. sales--just potentially. And Samsung disputes that there is any continuing infringement, as the following passage from the order on Apple's ongoing-royalties motion recaps:

"Samsung claims that there is no need for continuing remedies because it no longer infringes any of the '172, '721, and '647 Patents. [...] According to Samsung, '[n]o Samsung product released since 2012 has even been accused of infringing the '172 or '721 patents,' and 'Samsung long ago designed around these patents.' [...] As to the '647 Patent, Samsung represents that 'post-verdict sales of the accused products in this case have already ended,' and that the only version of the Galaxy S III product on sale 'incorporate[s] different code' than the relevant infringing source code."

Judge Koh agreed with Apple that it had not waived its right to obtain postjudgment royalties. She found that all patent holders who fail to win an injunction (but generally seek royalties in a given case) are entitled to ongoing royalties. As for the amounts, while those are redacted out in the public version of the order, it appears that she agreed with Apple to a large extent, but that's speculative. And she granted Apple's request (though some courts have denied such requests) for ongoing royalties relating not only to the (rather old) products presented at the trial earlier this year but also to future products that are "no more than colorably different" from the adjudged ones. But it doesn't matter if Samsung is right that it no longer infringes anyway.

If Apple indeed believes that there is any ongoing infringement, then the question of whether there was any postjudgment infringement will have to be decided by the court. Apple would have to prove not only that there was a postjudgment infringement but also that such infringement was of the same kind as an infringement previously identified by the jury. Otherwise a new decision on the merits would be needed, which would require a whole new lawsuit and another trial.

Should Apple bring any such claims, then we may find out at that time what per-product amounts Judge Koh awarded and decided to hide from the public. Those numbers will likely come to light during the appellate proceedings anyway.

Here's the order, which issued even without a hearing because Judge Koh wanted to close this case (for now) and maybe also wanted to make it possible for the Federal Circuit to consolidate the different appeals (injunction denial and liability issues) from this case:

14-11-25 Order Granting in Part Apple's Motion for Ongoing Royalties by Florian Mueller

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