Thursday, January 8, 2015

Competing device makers HTC and LG join Google, SAP in backing Samsung against Apple

Apple, Samsung and Google are three of the most significant members of an industry coalition that is fighting the good fight for balanced rules of procedure for Europe's future Unified Patent Court, particularly with respect to access to injunctive relief. But as the industry coalition stated repeatedly, including at the November 2014 hearing, some of its members are actually embroiled in patent litigation--in which they have sought or are seeking injunctions--with each other. That fact only adds to the credibility of that industry group because it shows that some of its members, such as Apple, are more interested in obtaining sales bans over patents than others, such as Google and Samsung, yet they all agree that the current proposal would make Europe a patent trolls' paradise and hurt all innovative operating companies. Nothing could better demonstrate just how bad those proposed rules are.

The most notable case in which members of the UPC industry coalition stand on opposing sides is Apple's appeal of Judge Lucy Koh's August 2014 denial of a permanent injunction against Samsung over the patents on which Apple had prevailed at the spring 2014 trial. Apple says that a feature-specific injunction should be granted here and claims to have better evidence in place this time around (Apple filed a reply brief this week that reinforces the points made in its opening brief) but Samsung argues that Apple still can't tie patented features to lost sales. Google sides with Samsung on this and has, together with other significant companies (LG, HTC, SAP, Red Hat, Rackspace), asked the Federal Circuit for permission to file an amicus curiae brief.

Apple formally opposes the proposed filing, noting that Google accepted to indemnify Samsung with respect to certain patents. However, no liability was established with respect to those patents, and as a result, they are not at issue in this injunction appeal. Apple also points to various business relationships between Google and some of the other amici curiae, even including some small-scale business partnerships compared to which there's actually a much closer cooperation between Apple and Samsung in certain (component-related) areas. Notably, HTC and LG compete with Samsung, and since HTC has a ten-year license agreement in place with Apple, it has no reason to be concerned about the particular patents at issue here.

I've seen LG enforce some of its patents (such as patents on the Blu-ray standard) rather aggressively.

There have also been some other filings. Industry group CCIA and the National Black Chamber of Commerce filed other briefs in support of Samsung, while Apple's pursuit of an injunction is backed by Ericsson and Nokia, two companies that used to build smartphones but exited that business and increasingly focus on patent licensing (and that are obviously not members of the aforementioned UPC industry coalition). While it's certainly good for Apple to have at least some support from third parties, the fact that no current smartphone maker was prepared to back Apple here shows that Cupertino is somewhat isolated in its industry when it comes to this issue. They all face too many patent assertions all the time and have to think about their interests as a defendant, even if they engage in some enforcement (Microsoft, for example). And there could be a future situation in which Apple itself will fight an injunction bid against its products and someone else will use Apple's own pro-injunction arguments against it.

I'm not an expert in the admissibility of amicus curiae briefs, so I can't predict whether Google itself will be formally allowed to appear as a "friend of the court" here, but there cannot be the slightest doubt about the other filers.

It's an interesting brief that this blog is first to make available to the general public (access is still restricted on the Federal Circuit docket; this post continues below the document):

14-12-24 Google HTC LG Rackspace RedHat SAP Amicus Brief by Florian Mueller

The amicus brief focuses on the bearing of a certain Federal Circuit decision from 2013, Douglas Dynamics, on the present case. In that case, which involved two snowplow manufacturers, then-Chief Judge Randall Rader stressed that if a workaround is available, an infringer should choose the path of legality. At the time I thought this was going to be very helpful to Apple (at that time, in connection with its first California case against Samsung, while the current appeal relates to the second case). But it turned out that it didn't help Apple too much. Smartphones and snowplows are different markets with different characteristics, and there's obviously a much smaller number of features in a snowplow than in a smartphone. While Apple won a remand of the denial of a permanent injunction in that first Samsung case, Judge Koh again (while taking into account the additional guidance from the Federal Circuit) denied an injunction. Last summer Apple dropped its related cross-appeal and, thereby, forever accepted that denial.

The above amicus brief has two parts. Section A explains that Apple still has to establish a causal nexus between the infringements identified (Samsung is appealing those findings, by the way) and the alleged irreparable harm, regardless of the scope of the injunction it is seeking. In other words, the standard isn't lowered just because a proposed injunction wording is very specific to particular features. That makes sense and may be part of the reason why Apple tries to reduce the credibility of that amicus brief, but I'm now going to focus on Section B, which addresses Apple's argument that Douglas Dynamics supports its injunction push now (though it didn't help in the previous case).

The "causal nexus" question never came up in Douglas Dynamics. That's the primary reason for which it didn't help Apple before and may not help now. According to the amicus brief (and I'm obviously not able to verify this), "Douglas's patents were directed to an entire snowplow blade assembly, not a specific feature of that assembly." The brief goes on to discuss another key difference from the Apple-Samsung dispute:

"Second, the core innovation of Douglas's patented snowplow design allows a user to easily remove the assembly, reducing stress on the vehicle's suspension. [...] Douglas promoted this 'easy on, easy off' feature in advertising for its own snowplow assemblies by incorporating the concept into its trademark – Minute Mount – to ensure that snowplow customers associate the patented feature with Douglas. [...] Here, there is no evidence that the patented features are core innovations of Apple’s products or that Apple has advertised them as such. Apple certainly has not incorporated those features into its product brand names."

As for the last part, the iPhone is certainly not sold or advertised as the "slide-to-unlock phone" or the "quick-links phone."

The brief also says that "Douglas never licensed the patents-in-suit and intentionally chose not to, thus insuring that the innovative design would (absent infringement) be exclusively associated with Douglas in the minds of its customers," and contrasts this no-outbound-licensing-ever approach with the fact that "Apple has licensed the patents-in-suit to several competitors, including IBM, Nokia, HTC and Microsoft." I would agree with the amici that "there is simply no evidence that anyone exclusively associates the patented features with Apple," with the exception that Apple's particular implementation of slide-to-unlock, with the slider bar, is certainly a signature feature, but Apple didn't even accuse the more recent products at issue in this case (and those are already a couple years old) of infringement of its slide-to-unlock patent. In the prior art context it has been stated over and over that the iPhone was not the first phone to come with a slide-to-unlock mechanism, which is why the related patent family is so weak. With respect to "quick links," that's a feature that consumers typically can't distinguish from other links, such as the ones found on a webpage like this. And autocomplete is also something that you find in all products from all sorts of vendors.

A key concern of the amici is that the way Apple would like Douglas Dynamics to be applied to cases like this one "would unfairly create a lower standard for proving causal nexus for companies with a reputation for innovation." Apple argues that Douglas Dynamics made the patent holder's reputation as an innovator a key factor. The amici concede that there is direct competition between Apple and Samsung, and that Apple has a reputation as an innovator, but say that evidence is "scant, at best," with respect to claims that Samsung has a less prestigious reputation, that Apple makes efforts to maintain exclusive control over its patented features, and that an injunction was necessary to demonstrate to consumers that Apple does protect its intellectual property rights.

Against this background, the amicus brief says:

"So the proposed 'Douglas Dynamics test,' as Apple has framed it, is this: if a patentee has a reputation for innovation and its patent is infringed by a competitor, then the patentee's reputation will necessarily be harmed by that infringement – no matter how trivial the patented feature – because consumers might believe the patentee did not enforce its intellectual property rights. No further proof of causal nexus is needed. The logical leap is astounding."

The appellate hearing will take place in a matter of months, and I'll listen to the official recording as soon as it becomes available (usually on the day of the hearing). I understand Apple's desire for a sales ban and I said before that, while Samsung doesn't need to infringe the related patents (and the liability findings are subject to an appeal, with the autocomplete patent also being under reexamination pressure), an injunction would make Apple look and feel better. However, it wouldn't make sense to lower the standard for access to injunctive relief if an injunction bid comes from a company with a reputation for innovation. In Apple's case, that reputation is based on a definition of innovation that is inconsistent with the one applied in patent law. In patent law, it's about who's first to come up with something, not who's first to convince millions of consumers to buy and use technologies that, for the most part, others created before Apple.

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