Tuesday, September 29, 2015

Judge sends Apple, Samsung to mediation with Nov. 15 deadline -- #1 problem: Apple's self-righteousness

On Monday, Judge Lucy Koh of the United States District Court for the Northern District of California received a joint ADR (Alternative Dispute Resolution) statement from Apple and Samsung, which is not publicly accessible. Further to that statement, Judge Koh referred the parties to mediation before Magistrate Judge Spero, which was the common ground of the positions they stated on ADR earlier this month. As per the parties' suggestion, that settlement effort will have a November 15 deadline.

More than a year after Apple and Samsung dropped all lawsuits against each other in jurisdictions outside the U.S. (i.e., numerous neutral jurisdictions as well as Samsung's country, Korea), it's time they also put aside the U.S. part of their dispute. I've always said that Apple should get something, but the longer this dispute has taken, the clearer it has become that Apple's leverage is limited, and let's not forget that Apple at some point needs a license, on FRAND terms obviously, to Samsung's standard-essential patents. Apple's iPhone patents are not nearly as great as its products, and even though Apple also has far better lawyers than patents, Apple's litigation would have gone nowhere if not for certain peculiarities of the U.S. patent system such as jury trials, which are statistically biased in favor of domestic companies suing foreign rivals (see Xenophobia in American Courts).

There isn't really much to gain for Apple. At this stage, if Apple wanted to really make a strong statement about its iPhone-related intellectual property, it would have to sue major Chinese companies such as Huawei, ZTE, and Xiaomi. But as far as I know, while Apple is paying standard-essential patent royalties to Chinese patent holders, no Chinese company is paying Apple anything for building iPhone-like Android-based smartphones.

A settlement on undisclosed terms, no matter what speculation it might trigger, would be a face-saving exit strategy for both Apple and Samsung, especially since they've had a commercial relationship for a long time and could somehow mix the patent settlement with some new commercial agreement (a structure that I've seen in connection with a couple of Microsoft patent cases).

As I've already said this month, a settlement at this stage would make Apple look stronger than it could have expected at any time since the spring 2014 trial. While I could see reasons for Samsung and its allies (such as Google) to push for Supreme Court clarification of one or more key issues, there's no reason why Samsung couldn't or shouldn't simply do a deal with Apple that makes business sense.

My primary concern about the prospects for a settlement at this stage is that, in my observation, Apple has become self-righteous beyond imagination and potentially even a bit too emotional about this matter.

Any reasonable person in the civilized world has a simple definition for theft: you take something you don't rightfully own. And if you take money by collecting a damages award over half a dozen patents, even though the most valuable software patent of them is a zombie patent by now and a key design patent has also been deemed invalid (for lack of inventiveness) by the very patent office that once granted it, then you are not a thief in a legal sense because you merely take advantage of a broken patent system, but in moral terms, you still take what's not rightfully yours.

I've been thinking a lot in recent weeks about why Apple, a company normally much more concerned about its reputation, is doing this. In a recent court filing, I found what might be a clue in this regard. Apple's lawyers mentioned that after last year's trial (in the second California Apple v. Samsung case), Samsung's lead counsel, John B. Quinn of Quinn Emanuel, said in public that after years of litigation, Apple still hadn't collected a penny.

My unsolicited advice to Apple would be: don't compromise your moral standards just because of what Samsung's trial counsel told the press.

I've tried to put myself in the shoes of Apple's lawyers. Such major trials are an enormous logistical effort for everyone involved. The lawyers get little sleep, yet have to concentrate on each and every detail and fight very hard day and night. Apple's lawyers did that in 2012 and got a billion-dollar award. They did it again for a 2013 limited damages retrial. And then again in early 2014 for that trial in the second case, which ended with a major disappointment for them because even a jury picked from Apple's backyard only awarded a small fraction of what Apple had demanded. After all this effort, it hurts to have nothing to show yet, and then Mr. Quinn put his fingers into that wound. It must have hurt.

No matter what Apple's lawyers may or may not do now, Steve Jobs's "thermonuclear war" on Android will always be remembered as an abject failure. Mr. Jobs simply overestimated the strength of his company's patents, as did so many other people.

The question is now: how can Apple at least lose like a winner? By trying to win like a loser (on an ethically problematic basis), it only makes things worse.

Apple appears very self-righteous. Only because Apple has believed all along that Samsung owes huge payments, Apple's patents aren't any more valid. At last year's trial, Apple's lead counsel argued that Apple just couldn't (for logistical reasons) assert 50 patents against Samsung in one case, it picked only a few. But Apple obviously picked the ones that its lawyers thought were going to be the strongest ones, and in the aggregate of two California cases and an ITC complaint, Apple has already asserted dozens of patents against Samsung, though not all of them until the bitter end. Maybe some people at Apple believe that since certain inefficiencies of the law (such as limits on how many patents a U.S. judge will let you take to a jury trial) can also affect a right holder, they can now seek to capitalize on a loophole for the monetization of zombie patents.

In Europe, it appears that not even one of all the patent claims Apple asserted against Android will stand. Slide-to-unlock, for example, has been deemed invalid by 15 different judges in three countries. Apple should realize that its complete failure in neutral jurisdictions is a major credibility and legitimacy issue. Taking advantage of structural flaws of the U.S. patent system, and protectionist tendencies of juries and possibly even certain "fanboy" judges, is not the answer.

If not for the emotional self-righteousness Apple has recently displayed, I would be very optimistic about a settlement.

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Friday, September 18, 2015

Judge enters partial final judgment for Apple against Samsung -- Samsung said it would appeal

For the factual background of this Apple v. Samsung matter, I would like to refer you to my previous post on this one and just sum it up like this: two key Apple patents underlying the 2012 and 2013 jury verdict against Samsung have serious validity issues, one of them even at a rather advanced stage of proceeding, but the Federal Circuit had not held those patents invalid and Apple, on that basis, requested entry of partial final judgment.

Judge Lucy Koh of the United States District Court for the Northern District of California has just denied Samsung's motion for judgment as a matter of law on the '915 patent as well as Samsung's alternative request for a stay, and has entered the following partial final judgment for Apple to the tune of $548 million (this post continues below the document with a quote from a previous Samsung filing announcing an immediate appeal):

15-09-18 Partial Final Judgment Over 548 Million Dollars by Florian Mueller

In preparation of a hearing held a few hours ago, Judge Koh had asked Samsung whether it would, in the event of partial final judgment for Apple, use a bond posted back in 2012 to make a payment. Samsung replied as follows (in a supplemental case management statement):

"Samsung objects to the entry of partial final judgment and, were such judgment entered, would appeal to the U.S. Court of Appeals for the Federal Circuit pursuant to 28 U.S.C. § 1295(a)(1), arguing, among other things, that the judgment is not authorized by Fed. R. Civ. P. 54(b). See, e.g., Unitherm Food Sys. v. Swift-Eckrich [...]. Because Samsung's existing supersedeas bond [...] remains in effect, during Samsung’s appeal any partial final judgment would remain secured by the bond or any modified bond that the Court may approve, and execution of the judgment therefore would be automatically stayed pursuant to Fed. R. Civ. P. 62(d). If any partial final judgment were affirmed on appeal, Samsung would satisfy that judgment when it becomes executable and then move to release the bond."

It will be interesting to see how the Federal Circuit now addresses the issue that the United States Patent and Trademark Office has changed its mind and believes it shouldn't have granted Apple the '915 patent in the first place. The D'677 iPhone design patent is also deemed invalid on the current basis, at an earlier stage of proceeding.

It's disappointing that Apple is trying to collect money (partly) over patents it doesn't even rightfully hold based on the USPTO's current analysis. Over all these years Apple struggled to achieve a breakthrough in its patent spats with three major Android device makers (HTC, Motorola, Samsung), but recently U.S. courts, especially the Federal Circuit, have handed down some controversial decisions that may give Apple some leverage in forthcoming settlement talks. However, that leverage has its limits: it's not like Apple could prevent anyone from selling highly functional Android-based multitoch smartphones in the U.S., and it remains to be seen what comes out of those recent decisions in the months ahead. Apple is closer than ever to actually receiving a payment, but it's not there yet.

I've said repeatedly that this thing should finally be settled, but I have no idea whether those rulings make it more likely to work out (because a settlement at this stage would make Apple look stronger than it could have expected at any time since the spring 2014 trial) or less likely to happen (because Samsung and other industry players may see a pressing need to get clarification on some key legal issues, such as how to deal with patents deemed invalid by the patent office or on the value of design patents).

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Judge denies motion to preclude Oracle from arguing Google's Java copyright infringement was willful

Judge William H. Alsup of the United States District Court for the Northern District of California has just denied a Google motion to preclude Oracle from arguing at next year's retrial that the search giant's infringement of Java copyrights (through incorporation of the declarations of 37 Java API packages into Android) was willful. In its opposition to Google's motion, Oracle had pointed to a particularly "expressive" piece of evidence: a Google-internal email according to which one of its key Android developers found Android's original Java libraries "half-ass at best" and identified a need for "another half of an ass."

The federal judge sees two legal reasons for which Google's motion couldn't succeed. Willfulness would have a bearing on the deduction of certain costs from profits that would have to be disgorged. Should Oracle, however, elect to seek statutory damages instead of, for example, a disgorgement of profits, then up to $150,000 per work infringed, as opposed to the standard maximum of $30,000, would be available. No matter how unlikely Google (and presumably many observers) consider a later Oracle choice to seek statutory damages, Judge Alsup interprets the law as preventing his court "from compelling Oracle to elect its measure of damages early on."

But the outcome isn't all bad for Google. The good among the bad from Google's perspective is that Judge Alsup has simultaneously decided that the trial would be bifurcated. The jury would firstly rule on Google's "fair use" defense without being briefed on Oracle's damages theories; then, if Oracle prevails (which I'm sure it will), damages and willfulness evidence will be presented in the second phase of the trial.

After a "fair use" finding, the next factual issue for the jury to decide will be willfulness. Thereafter, depending on the outcome, cetain damages theories may or may not be presented.

This approach means Google avoids its worst-case scenario, which would have been for the jury to hear about evidence such as the second "half of an ass" before making a decision on the "fair use" defense. I don't know how Google and its lawyers feel about this, but I wouldn't be surprised if they were actually rather pleased. They might have known all along that it was (at best) a long shot to try to avoid any willfulness discussion, so this here may be the best outcome they could have realistically expected.

For now, it appears that Google will be able to present some evidence and argument relating to its equitable defenses. Oracle might use some of the evidence that also has a bearing on willfulness to counter Google's claims that it relied on certain public statements by Sun. If not, Oracle would be substantially disadvantaged as a result of Judge Alsup's pretrial decisions.

So I expect to see some fights further in the process over which pieces of evidence that relate to willfulness are admissible as evidence in the first trial phase anyway (because of some other kind of probative value).

It's worth noting that Judge Alsup was much less concerned back in 2012 about a jury hearing more evidence than necessary. At the time he decided to put Google's defenses, especially "fair use," before the jury even though he ultimately held the infringed declaring API code non-copyrightable (which, as everyone knows, the Federal Circuit reversed and the Supreme Court declined to even take a look at). If he had made his finding before the jury trial, and if it had been upheld (in a parallel universe), the first jury would never even have had to think about "fair use." But this remand is different in some respects, including this one.

A key issue to decide will be whether the court-appointed expert from the first trial, Dr. Kearl, can still testify even though he has in the meantime done work for Samsung, a Google Android partner. I would be extremely surprised if a judge who showed concern in 2012 about the court, including appeals courts, being potentially influenced by bloggers now had no problem with a court-appointed expert--who undoubtedly and massively influences the court and the jury--being aligned with one "camp." I can't imagine that we'll see Dr. Kearl appear at next year's trial, but a formal decision has yet to be made.

Here's the order:

15-09-18 Order Denying Google Motion to Preclude by Florian Mueller

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Thursday, September 17, 2015

Chief judge disagrees with appellate ruling that would pave the way for Apple injunction against Samsung

At a hearing in March, Apple faced a skeptical court for its fourth or so attempt to obtain a U.S. patent injunction against Samsung. Today, the United States Court of Appeals for the Federal Circuit issued a ruling that vacates Judge Koh's August 2014 denial of an injunction in the second California litigation between Apple and Samsung and remands for further proceedings. However, Chief Judge Sharon Prost strongly disagrees with her two colleagues on the panel, Circuit Judges Moore and (notoriously Apple-admiring and generally patentee-friendly) Reyna, who outvoted her.

Last year, I absolutely liked and agreed with Judge Prost's dissent (on the reasons, not the outcome) in the "Posner" appeal with respect to injunctions over FRAND-pledged standard-essential patents. Today I am once again more convinced by what she writes than by the majority opinion. Last year, her position was favorable to Apple. Today, what she writes supports Judge Koh and, by extension in this particular context, Samsung.

Presumably Samsung will view the Chief Judge's loud and clear dissent as an invitation to request a full-court review.

Very remarkably, Chief Judge Prost's dissent begins with the following five words:

"This is not a close case."

After reading that first sentence on page 41 of the PDF document, it was clear to me that this was one of the most fundamental disagreements ever of a panel member with the majority opinion. The next two sentences then put the (in)significance of the scope of the asserted patent claims masterfully into perspective:

"One of the Apple patents at issue covers a spelling correction feature not used by Apple. Two other patents relate to minor features (two out of many thousands) in Apple's iPhone—linking a phone number in a document to a dialer, and unlocking the screen."

A feature "not used by Apple" plus two "minor" features. That contrasts completely with the majority opinion's unbelievable attempt to blow the importance of the slide-to-unlock idea--something that 15 (fifteen!) European patent judges in three countries have unanimously found to be less than patentworthy--out of proportion:

"Although seemingly straightforward, Apple considered this feature so core to the Apple iPhone user experience that it opened the first iPhone ad with imagery illustrating the operation of this 'slide to unlock' feature."

It's a very simple, thus intuitive feature. That's why it came in handy when Apple was trying to explain to consumers what the iPhone user interface was about. That still doesn't make it a technological achievement. Chief Judge Prost and 15 European judges, eight of them serving on courts that have more power in their countries than the Federal Circuit has in the U.S. (where it is often overruled by the Supreme Court), got this right, and two circuit judges are either Apple fanboys or patent radicals or both.

In one respect, Apple could not even convince the majority: Apple argued that an injunction request relating to features as opposed to products should face a lower standard. Samsung's counsel on appeal said Samsung makes products, not features. Chief Judge Prost says: "The majority correctly rejects this theory and the case should have ended there." And then she asks: "So why doesn't it?" The answer:

"Because the majority finds legal error by the district court where none exists. Then, under the guise of the purported 'legal error,' the majority reverses without deference the district court’s rejection of Apple's survey evidence, never mentioning that the survey was rejected by the district court because Samsung's serious challenges to its techniques and conclusions were unrebutted by Apple. The majority further relies on 'evidence,' found nowhere in the record, that carriers or users preferred having the patented features on Samsung's phones. It also concludes—contrary to our case law—that Apple's alleged evidence of 'copying' is sufficient to show nexus to Apple’s alleged lost-sales. Because the majority here reaches a result that comports with neither existing law nor the record in this case, I must respectfully dissent."

It's almost an understatement to say that the Federal Circuit majority shows no "deference" to the district court's factual holdings. What's happened here over these past few years is an insanity because whatever Judge Koh did was overruled. Judge Koh tried hard to apply the Federal Circuit's latest ruling when issuing her last one, and time and time again, she was reversed.

Today's ruling looks to me like some judges realized the standard they had set in the past (for good reasons, actually) was an insurmountable hurdle for Apple, so they centered today's opinion around the suggestion that "some connection" between an infringement and irreparable harm was sufficient and the made-up claim that Judge Koh had required Apple to "prove that the infringement was the sole cause of the lost downstream sales." Chief Judge Prost, however, says:

"But the majority quotes nothing from the district court’s opinion to show there is such an error. And for good reason: there is nothing. Hence, there is no error.

The words 'sole' and 'predominant' are not even present in the district court's opinion. There is simply nothing in the district court's opinion that explicitly or implicitly required Apple to show that the patented features were the 'sole,' 'predominant,' or 'exclusive' reasons for purchasing Samsung’s products."

A footnote clarifies that Judge Koh's decision used the words "exclusivity" and "exclusively" only in the context of irreparable reputational harm, an aspect the majority opinion didn't even reach.

In Chief Judge Prost's opinion, Judge Koh correctly applied the Federal Circuit's case law but her colleagues chose to be inconsistent with it:

"In making these factual findings [concerning the "Hauser survey"], the district court followed our case law faithfully. Nothing in the district court's opinion suggests that it deviated from our precedent. Rather, the majority deviates from our precedent by repeating as a mantra the phrase 'some connection' in [...] ('Apple III') detached from the causal nexus standard explained in our prior cases."

The following sentence also vents the chief judge's anger:

"The majority has no legitimate basis to reverse the district court."

As for the aforementioned Hauser survey, Chief Judge Prost is underwhelmed by it:

"Hamstrung by the deficiencies in Apple's direct survey evidence, the majority trumpets instead Apple's 'copying' evidence and even creates new evidence." [...]

"[T]here was no evidence at all of such 'carriers' or users' preference;' there was no 'strong' evidence of 'copying;' and 'copying' alone is not dispositive to establish a causal nexus to Apple's alleged irreparable harm from lost sales."

In the copying context, Chief Judge Prost criticizes her colleagues for quoting as a district court holding what was actually a reference to certain Apple theories Judge Koh disagreed with.

The final paragraph from the dissent:

"Based on this record, I cannot agree with the majority's broad warning that '[i]f an injunction were not to issue in this case, such a decision would virtually foreclose the possibility of injunctive relief in any multifaceted, multifunction technology.' See Majority Op. at 22. Rather, injunctive relief will be appropriate when and if, consistent with our case law, the causal nexus requirement is met. This is not such a case."

The only part of Chief Judge Prost's dissent that I don't agree with is her take on the public interest. On that one I'm closer to the majority position. However, that factor doesn't matter if one follows Chief Judge Prost's reasoning on the causal nexus requirement.

Apple will benefit from this decision in any near-term settlement talks, but this is not over yet. There could be a full-court review, and while the majority opinion strongly suggests that Judge Koh should enter an injunction, Judge Koh denied one in the first case despite an appellate victory for Apple, and Apple then dropped its appeal of that decision on remand. Furthermore, an injunction over something like slide-to-unlock would be merely symbolic because even Apple didn't claim in the second California case that Samsung's more recent devices were infringing that patent. The only patent that would likely give rise to disagreement between the parties is the '647 "quick links" patent.

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Samsung presents legal argument against 'manifest injustice' that would result from Apple's proposal

Apple and Samsung have agreed to try to resolve whatever little is left of their patent spat by means of mediation before Magistrate Judge Spero. But for now, they are fighting over whether or not Apple can collect more than $540 million in damages in the near term despite a USPTO decision according to which Apple's most valuable software patent in the 2012 trial (and 2013 retrial) shouldn't have been granted in the first place.

Apple says: "Enough is enough." It wants to finally get something out of almost four-and-a-half years of litigation with Samsung. There are, however, various ways to look at this situation. On the one hand, the fact that it takes Apple so many years to get paid calls into question the efficiency of the overall process. On the other hand, Apple also has itself to blame for a substantial part of the problem. If Apple had gone into those Android lawsuits (not just with Samsung, and not just in the U.S.) with more modest expectations, asserting its most defensible patent claims (even if those are usually not broad) and presenting reasonable damages theories (consistent with Apple's FRAND defenses, for example), then it would have received something a while ago. Apple, however, engaged in moonshot-style litigation.

Most of the time, I also believe that "justice delayed is justice denied," as the saying goes. But the solution to that problem is not an outright denial of justice. Ultimately, delayed enforcement is the lesser evil when compared to premature enforcement, as proposed by Apple, which could lead to irrecoverable payments over non-property. The Apple that demands this is not the Apple that so many people like.

Late on Wednesday, Samsung filed a reply in support of its motion to either hold the '915 (pinch-to-zoom API) patent invalid as a matter of law or stay the first California case so the USPTO can finish its job (this post continues below the document):

15-09-16 Samsung Reply in Support of '915 JMOL or Stay by Florian Mueller

It's easy to disagree with Apple philosophically on the wider issue. Invalid patents should not entitle anyone to a payment of any kind. But Apple never addressed the question of what was right or wrong: it argued that the law simply entitled it to this. Samsung's reply brief contains stronger arguments against Apple's demand for immediate (i.e., premature) enforcement than I would have expected.

Apple argued that the Federal Circuit's appellate ruling required the court to enter partial final judgment for Apple "immediately" and that the appeals court had implicitly rejected Samsung's argument that Apple's defeat before a Patent Trial and Appeals Board (PTAB) last year had the effect of collateral estoppel on the parties' first California litigation. Samsung's latest filing now points out that its notice to the appeals court came after briefing and even after the oral hearing, and no briefing took place.

Samsung's reply brief points to case law that says a district court "should not be foreclosed from considering [an] issue on remand" if there is substantial doubt as to whether it had actually been decided by the appellate panel, and then goes on to say the following:

"It is highly unlikely that the Federal Circuit chose to resolve the merits of the collateral estoppel (or stay) issues without briefing, and there is at a minimum substantial doubt as to whether these issues were decided. The issues certainly were not necessarily decided when they were raised only in a Rule 28(j) letter and were not addressed by the appellate court at all. The issues thus fall outside the scope of the mandate rule."

"Rule 28(j)" means "supplemental authority": Samsung showed the PTAB decision to the Federal Circuit in order to increase the likelihood of the appeals court holding the '915 patent invalid (which it didn't). That's different from a collateral estoppel argument or a motion for a stay.

Even this traditionally rather patentee-friendly appeals court has held that "a district court must apply intervening legal developments affecting [an] asserted patent's validity, even if the court of appeals already decided the validity issue the other way." (emphasis added) The Federal Circuit said so in its mid-2013 Fresenius decision and based this holding on "[t]he Supreme Court's decision in Simmons Co. v. Grier Bros. Co. (from 1922).

Even though the case law Samsung cites gives Judge Koh more than enough ammunition to at least stay the case, Samsung's lawyers also present an argument that would enable the district court to reject Apple's demand for premature enforcement even if the court interpreted the Federal Circuit's mandate the way Apple proposes: "Manifest injustice would warrant deviation from a decision rejecting, without briefing, collateral estoppel or a stay"

"Manifest injustice" is an accurate description of what Apple unfortunately wants here.

The second part of Samsung's reply brief argues that case law supports Samsung's theory of collateral estoppel here rather than Apple's argument that the technically non-final nature of the USPTO decision makes estoppel a non-option. That part of Samsung's argument is more about what the decisions cited by Apple did not specifically say than about what they did say. Finally, the third part explains that there should at least be a stay, considering that the Federal Circuit remanded for "any further proceedings necessitated" by its decision, giving (in Samsung's lawyers' opinion) Judge Koh every opportunity to stay those proceedings.

Toward the end of Samsung's brief I found a quote from what Judge Koh said at an April 29, 2013 hearing in this case:

"If the examiner decides not to reopen the case and Apple is forced to file a notice of appeal, then I think that that third factor may then swing into Samsung's favor, because if this an invalid patent, then certainly it would be more prejudicial and more of a tactical disadvantage to Samsung to have to do a second trial and to have to do, you know, further litigation on I.P. that may ultimately not be valid."

Considering where the '915 proceedings stood then, Samsung has made lots of headway. The examiner refused to reopen the case, and a PTAB decision affirmed the rejection.

I have previously said that the problem with some of Apple's arguments in the Samsung litigation (design patent damages, for example) are even against Apple's own interests with respect to other litigation, especially where Apple has to defend itself against patent trolls. Less than two weeks ago, Apple made the following argument in the Eastern District of Texas for a stay of case brought by a company named Smartflash LLC. Apple's argument for a stay of that case was merely based on the fact that the USPTO had initiated reexamination proceedings. Nevertheless, Apple stated all the reasons for which Samsung (on a stronger basis, since the proceedings concerning Apple's '915 patent are more advanced) is now also asking for a stay:

"Apple argues there that '[t]his is a case about money, and money would be an adequate remedy for any compensable injury to Smartflash resulting from delay,' [..] and that 'although a trial date was recently set, numerous discovery tasks remain to be completed, including the exchange of supplemental or amended expert reports for the damages retrial and related depositions, as well as motions practice, jury selection, and trial,' [...]"

I wish Apple could just put the remainder of the Samsung dispute aside and then work with companies like Samsung to defend the interests of operating companies (and I also wish Samsung would then support Apple on FRAND licensing questions such as the availability of injunctive relief and the royalty base).

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Tuesday, September 15, 2015

Leadership of European Patent Office pressures staff union to remove links to FOSS Patents blog

What's so outrageous about my two most recent posts on the EPO labor conflict (1, 2) that the Staff Union of the European Patent Office (SUEPO) had to remove its links to (and quotes from) those posts?

On SUEPO's homepage there are now at least two entries that used to point to this blog and now say the following:

Document temporarily removed due to threats of reprisals from EPO management. SUEPO is taking appropriate action to counter the threats.

Here's a screenshot (click on the image to enlarge):

It's not even the first act of censorship against an independent blog. In July it became known that the EPO blocked examiners' access to TechRights, another blog that calls the EPO leadership out on its wrongdoings.

This blog here is critical of what's going on at the EPO but far from SUEPO-aligned.

In the earlier one of the two posts, I actually concurred with EPO president Battistelli on the complicated issue of how SUEPO should deal with a suicide rate that appears to be more than twice as high as that of the average Dutch or German populations but still, in my opinion, is not necessarily attributable to the lamentable situation at the EPO (given that such small statistical samples are not reliable).

In the more recent one, published earlier today, I explained why I didn't agreed with SUEPO's choice to march to a local authority today, given that the EPO enjoys diplomatic immunity and local authorities can only enter the EPO's premises with the EPO president's consent.

What may have riled the EPO leadership is that I published documents from internal proceedings targeting the chairwoman of SUEPO's Munich chapter. The EPO's internal "ServRegs" contain some strict prohibition of such disclosures, which is acceptable in connection with what really needs to be kept confidential but unfortunately also used in areas where the EPO needs more transparency.

Article 20, Unauthorized disclosure: "A permanent employee shall exercise the greatest discretion with regard to all facts and information coming to his knowledge in the course of or in connection with his duties; he shall not in any manner whatsoever use or disclose to any unauthorized person any document or information not alreayd made public. A permanent employee shall not, whether alone or together with others, publish or cause to be published, without the permission of the president of the Office, any matter dealing with the work of the Organization."

Article 22, Disclosure in legal proceedings: "A permanent employee shall not without permission from the president of the Office disclose, on any grounds whatever, in any legal proceedings, information not alreadyy made public of which he has knowledge by reason of his duties. Permission may be refused only where the interests of the Organization or of a Contracting State so require. It may not, however, be refused if, in the opinion of the court, this would be likely to lead to a miscarriage of justice."

"Miscarriage of justice" is definitely a major concern with respect to legal proceedings relating to the EPO labor conflict.

Finally, some recommended reading for whomever at the EPO believes that it's a good idea to prohibit links to this blog: the Streisand effect.

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European Patent Office threatens legal action against staff union leader: escalating conflict

Last week, the TechRights blog published a letter by the head of the EPO's investigative unit to Elizabeth Hardon, the chairwoman of the Munich chapter of the Staff Union of the European Patent Office (SUEPO), summoning her to a hearing last Thursday. I also blogged about this development because it shows that the promise of "union recognition" is just a carrot the EPO leadership has been dangling to staff without any genuine desire to improve the internal climate.

Mrs. Hardon has probably never been at a greater risk of being fired, and the EPO is now not only talking about that scenario but additionally threatening "to take any other legal measures against [her]" over the alleged disclosure of the letter that was published last week. Here's the latest letter, signed by Elodie Bergot, Principal Director Human Resources of the EPO (this post continues below the document):

15-09-10 EPO Letter to SUEPO Munich Chair by Florian Mueller

Since I didn't receive a copy of either letter from Mrs. Hardon (whom I listened to at a couple of EPO demonstrations in Munich), I have no idea whether she is the source of the leak. Even if a letter is marked as "confidential," the EPO is so large an organization that the source could be anywhere, especially in light of the fact that presumably more than 99% of the staff is against the current leadership style.

As an employer, I also care a lot about confidentiality. However, confidentiality obligations can only apply to what is reasonably designated as confidential. I find it hard to see how the EPO could realistically demand silence over repressive action against one of the leaders of its staff union. Of course, if this involved third-party secrets (such as patent applications that haven't been published yet), then everyone would have to maintain strict confidentiality.

If, for example, Allianz or BMW (two other large Munich-based employers) threatened to fire one the labor union leaders among its employees, that story would draw press coverage within less than 24 hours.

More than anything else, this appears to be an attempt by the EPO to prevent SUEPO from communicating with the outside world on a level playing field. Obviously, the EPO's own website states the positions of its leadership, and that is something SUEPO has to live with. But SUEPO must at least be allowed to create transparency in such a critical context as this one.

SUEPO is holding another demonstration today as I read on its website. While previous demonstrations involved marches from EPO buildings to diplomatic representations of key EPOrg member states, staff will "march to the local Labour Inspectorate, Gewerbeaufsichtsamt" today. That one is an institution of the Bavarian government (part of the administration of the district of Upper Bavaria, to be precise). In a letter addressed to that institution, SUEPO argues that the German government has a particular duty of care for the many EPO employees based on its territory (and notes that approximately 25% of the EPO staff are German citizens).

I understand SUEPO's desire to draw attention to certain issues, but as the law stands, German authorities are not allowed to supervise the EPO in any way other than the influence the German government has by virtue of its status of being a contracting state and, therefore, being represented on the Administrative Council of the EPOrg.

Just like in my previous post on the EPO labor conflict, my message to EPO staff is that you can't have your cake and eat it. In a perfect world for you, you would have all the benefits (including tax benefits) of being employed by a famous international organization and would be under the protection of local authorities. That won't work. You either have to bite the bullet, stay at the EPO, enjoy certain privileges but also live with the fact that you won't have all the rights that your colleagues right across the street at the German Patent and Trademark Office don't have (though German patent examiners are not allowed to go on strike, by the way). Or you have to determine that the overall "package" you get at the EPO is still better than your best alternative on the job market. If you elect to take that package, you must accept certain structural shortcomings.

Far be it from me to justify human rights violations, cronyism, or crookery. Certain aspects of what the EPO leadership (including the Administrative Council) does are truly problematic and unacceptable. But instead of demonstrating in front of a Bavarian government agency that has no legal basis for helping you, you should think hard about whether you want to stay or leave. While Art. 20 of the Protocol on Privileges and Immunities of the European Patent Organization says the EPO should cooperate with national authorities in certain areas, Article 1 (2) of the PPI comes with the following practical restriction:

"The authorities of the States in which the Organisation has its premises shall not enter those premises, except with the consent of the President of the European Patent Office. Such consent shall be assumed in case of fire or other disaster requiring prompt protective action."

As a reaction to my previous post, someone told me that only a privileged few could simply choose their job. Obviously, with thousands of EPO employees affected, there are thousands of individual situations. But in general engineers and other scientists with multilingual skills are definitely in demand. As I wrote last week, most EPO employees would simply have to accept an initial pay cut (especially from an after-tax point of view) if they decided to work in the private sector. Some might reach their previous income level again over time; others might never reach it again. But if you left, then the Gewerbeaufsichtsamt of Upper Bavaria would indeed be responsible for your labor conditions.

I also don't consider it a valid argument that many EPO employees may have bought a house in the Munich area and would have to stay here due to long-term mortgage arrangements. First, there are many tech jobs in the Munich area itself. Second, if you had to move to another city or country, German banks would have to accept that you rescind your mortgage contract. Third, house prices have gone up a lot in Munich in recent years, so you wouldn't have to sell at a loss.

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Friday, September 11, 2015

Apple and Samsung will try to avoid fourth California patent trial: court-moderated settlement talks

A little over a year ago, Apple and Samsung withdrew their pending claims against each other everywhere but in the United States. Now there is more hope than ever that even the U.S. part of their dispute may come to an amicable end. In a joint case management statement filed in the Northern District of California late on Friday by local time, both parties have responded favorably to Judge Koh's recent inquiry about their willingness to engage in yet another mediation effort.

Here's the document, from which I'll then quote the relevant statements on alternative dispute resolution:

15-09-11 Apple-Samsung Joint Case Management Statement by Florian Mueller

"Apple's Statement: The remaining issues to be tried to a jury are limited to the amount of damages that Samsung owes for its sales of five infringing products. Thus, as an alternative to a fourth trial, Apple would be willing to participate in binding, final, and non-appealable arbitration to calculate the final amounts owed to Apple for those five products, provided that such arbitration take place on a schedule that would conclude no later than December 31, 2015 and the Court's prior 'Groundhog Rules' apply to the arbitration. To the extent supplemental damages are not resolved by motion, Apple would be prepared to include those issues in the arbitration. Multiple prior efforts at private mediation have been unsuccessful. However in advance of and in addition to arbitration, Apple would also be willing to mediate again with Magistrate Judge Spero as ordered earlier in the case. If Samsung is unwilling to agree to this procedure, Apple requests that the Court schedule a trial for March pursuant to Apple's proposal above.

Samsung's Statement: Samsung is willing to engage in a mediation with the private mediator previously used by the parties or another mutually agreed upon private mediator. While Samsung suggests a mediation before a private mediator to avoid burdening the Court, Samsung is also willing to mediate with Magistrate Judge Spero. Samsung proposes that the mediation be completed by November 15, 2015."

The passages quoted above show different approaches. Apple talks about arbitration; Samsung doesn't. Samsung would have a preference for private mediation; Apple only mentions court-moderated mediation. But court-moderated mediation--in front of U.S. Magistrate Judge Joseph C. Spero, as in 2012--is the common ground between those two statements, and in that case, the court will set the rules, so Apple can't impose any conditio sine qua non of the kind it proposes for arbitration.

While arbitration would also have been just limited to a certain damages question, mediation can address anything that remains to be resolved between the parties. If mediation succeeds entirely, the whole dispute will go away. If it succeeds in part, it will at least be narrowed.

More than anything else, both parties need a face-saving exit strategy now. It would really be nice to avoid a situation in which Apple would behave like a sore loser (not a loser in legalistic terms, but in practical terms, given that its "thermonuclear war" on Android went nowhere) and kept trying to collect money over invalid patents, which could also set a terrible precedent (well, Apple's lawyers obviously argue this would just affirm the law as it stands) with a view to future cases in which patent trolls will do the same against operating companies including, but not limited to, Apple. It just wouldn't look good if Apple collected money on an ethically questionable basis, under circumstances that make it so needless and pointless given that Samsung had posted a billion-dollar bond anyway and Apple would get paid later with interest if it ultimately prevailed. Maybe this common ground in terms of court-moderated mediation will help avoid all of this. I'd be very, very happy for both parties if it worked out.

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Apple to court: let us collect hundreds of millions of dollars regardless of how weak some patents are

Due to previous press reports on what Apple was going to show at Wednesday's event, there were no surprises for an informed audience, but I actually liked--as an app developer and as a user--what I saw. Before the official announcement of 3D touch I had already discussed with the lead user interface programmer on one of my projects how we were going to make use of 3D touch in that app. In my opinion, many people understimate how the lack of "right-clicks", hovering and similar alternatives has really limited smartphone app UIs for some time.

But Apple wasn't first to come up with this. As The Verge noted, Huawei brought a comparable technology to market first. That is so symptomatic of Apple's problems in patent litigation: Apple is often first to do it right, no doubt about that. But the patent system is about being first, period, and the difference between "first" and "first to do it right" is either not patentable at all or, where it is, it usually doesn't result in a scope of protection that gives a right holder serious leverage in court.

I wouldn't have thought so. I learned it over the years watching those Apple v. Android cases unfold. There came a point at which I had to face this reality, even at the risk of being portrayed as a flip-flopper on some Apple investor discussion board or wherever.

At least it's comforting to know Steve Jobs himself apparently used to think that his patents were nuclear weapons.

Apple may be an even better company under Tim Cook than it was under Steve Jobs. I just can't reconcile with Apple's aspirations to be the greatest company in human history its inexplicable approach to honor and justice in connection with invalid patents. I have no idea whether Steve Jobs would have done the same, but according to his biography, he wanted to sue Android device makers "to right this wrong" (of Google having imitated iOS; "a stolen product" in Steve Jobs's opinion) as opposed to committing a whole new wrong. The latter is, regrettably, what Apple is doing now.

Simply put, Apple wants to cash in to the tune of hundreds of millions of dollars over intellectual property rights some of which shouldn't have been granted in the first place. The one who set out in 2010 to chase thieves would become a large-scale thief himself if this happened, not in a purely legalistic sense, but in ethical terms.

The contrast between the two Apples--the one people all over the world love and the one whose patents just haven't proven to be strong enough--has never been clearer than on Wednesday. Within hours of Apple's San Francisco product event, its lawyers filed the following document, telling the United States District Court for the Northern District of California that Apple wants $540 million from Samsung irrespectively of the fact that two key patents underlying that partial award are invalid in the (latest) opinion of the very patent office that granted them (this post continues below the document):

15-09-09 Apple Opposition to Samsung Motion for Stay by Florian Mueller

In a nutshell, Apple wants a license to steal. I'm not saying that what Apple demands isn't possible under U.S. patent law: unfortunately, it could happen, especially since invalidations resulting from reexamination proceedings don't have retroactive effect with respect to damage awards in previously-concluded cases. But as the saying goes, it takes good people to do nothing in order for bad things to happen. Some people at Apple have unfortunately chosen to keep pushing for something that would be bad. Now the ball is in the court of... the court.

A little over three years ago, within only five days of the 2012 verdict in this case, I already wrote a blog post with the following headline: "The biggest issue with the Apple-Samsung jury verdict: are all those patents really valid as granted?" In that post I already offered the following prediction:

Samsung accurately noted in its post-verdict reaction that at least some of these patents are being reexamined by the patent office, and I think we are definitely going to see some invalidations there.

The invalidations have indeed happened. The '915 patent, which Apple considered its most valuable software patent in the 2012 trial, has been held invalid by the USPTO's Central Reexamination Division, a decision that has been affirmed by a Patent Trial and Appeals Board (PTAB). The reexamination of the D'677 iPhone design patent is at an earlier stage, but it took more than two years for a first Office action to come down, and it appears very solid.

Apple now argues that the '915 rejection isn't formally final because Apple will appeal any rejection decisions further. It wants a rehearing. Should the rehearing be denied or not change the outcome, Apple will appeal the case on to the Federal Circuit.

No matter how right Apple may be on any formal aspects of this, I don't understand why Apple thinks it's a good idea to request a partial final judgment in order to collect money over what appears to be, in part, non-property. Some of the patents Apple holds will, unless things change in the further process, be ultimately found never to have rightfully belonged to Apple in the first place. Apple is not entitled to a payment over such "rights" any more than it would be to the price of an iPhone from someone who never got an iPhone.

The key legal argument with which Apple's filing, shown further above, urges Judge Koh to enter a partial final judgment is that the Federal Circuit, in its mandate to the district court, directed "immediate entry of final judgment on all damages awards not predicated on Apple's trade dress claims." Apple says that the court should therefore reject Samsung's motion for judgment as a matter of law (JMOL) that the '915 patent is invalid as well as a motion for a stay.

Apple obviously wasn't going to become the first patent holder not to oppose JMOL on invalidity. But the alternative request for a stay would not hurt Apple. After the 2012 verdict Samsung already posted a billion-dollar bond (which was adjusted after the retrial). There's no risk--none at all, even if Samsung theoretically went out of business--that Apple wouldn't get paid. Apple will get paid with interest.

Since there is really no need for immediate enforcement of a partial final judgment, I wonder why the Federal Circuit ordered it at all. It benefits Apple, but it just doesn't seem right. I defended the U.S. government's FRAND-based veto of an ITC import ban in 2013 and wrote that allegations of protectionism failed the plausibility test. If U.S. courts simply allowed Apple to cash in on patents that shouldn't have been granted in the first place, instead of letting the USPTO finish its job, the question of protectionism would be on the agenda again, and the answer would be a different one than two years ago in a disparate context.

I also found it a bit strange that Judge Koh recently set a retrial date, given that Samsung's intention to appeal the design patents-related part of the case to the Supreme Court is well known. By contrast, in Oracle v. Google the district court did absolutely nothing on remand from the Federal Circuit in light of Google's Supreme Court petition, much less set a retrial date.

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Thursday, September 10, 2015

In the face of repression, EPO employees should quit their jobs to promote innovation in industry

Political initiatives to improve the terrible situation at the EPO appear to be "too little, too late." Now that the summer vacation season has ended, it's apparent that things keep getting (even) worse.

Skeptics of the EPO leadership's intentions with respect to "union recognition" have already been proven 100% right. Contrary to resolving conflicts with the staff union, president Battistelli (aka Blatterstelli) and his minions have only one objective with respect to SUEPO: total suppression. As you can read in this TechRights post, the EPO's Investigative Unit (which would be more appropriately named Stasi) scheduled an "interview" of the staff union's Munich chairwoman for today. Her name is actually no secret: Elizabeth Hardon. She's one of the signatories you find here (this post continues below the document):

15-09-07 SUEPO Flyer on Suicide by Florian Mueller

I have heard from EPO staff that Mrs. Hardon was demoted last year by personal decision of Mr. Battistelli, on a basis that my sources consider unfair. She may now even be fired.

The above PDF document, which actually contains a SUEPO flyer as well as correspondence between SUEPO and Mr. Battistelli, relates to a very sad incident: the fifth suicide of an EPO employee in 39 months. But in this regard I neither support Mr. Battistelli nor SUEPO. I agree with either one to a limited extent and mostly disagree with both.

Mr. Battistelli -- and this is the first time for me to agree with him and it may also be the last -- is absolutely right that it was not enough for SUEPO to wait for a limited period of time before it tried to gain political mileage out of the latest suicide. Should Mr. Battistelli's representation (which I don't doubt in this particular case) be correct that the widow didn't want anyone to talk about the personal circumstances of this tragic incident, then SUEPO should have respected that forever, not just for two weeks.

The part of Mr. Battistelli's letter that I find ridiculous is where he asks for a climate of trust for his reforms, some of which violate long-standing principles of European labor law.

Another problem that SUEPO has here is that even five suicides in 39 months (almost one tenth of a percent of the EPO's workforce) are too small a number to be statistically reliable. There are definitely serious issues at the EPO, but small statistical samples have too much variance. Five suicides can happen among thousands of EPO employees even for circumstances that have nothing to do with the social and human rights conflict at that organization. SUEPO has far stronger -- and ethically less debatable -- arguments to demand a change for the better.

Should those suicides have had anything to do with the social conflict at the EPO, those people would have died for the wrong reason. I'd like to quote the following from TechRights:

"Staff at the EPO needn't be suicidal or depression-leaning. Many employees — and examiners in particular — are highly qualified, often with Ph.D.-level degrees and many years of technical experience."

I'll take this one step further: EPO employees who are unhappy about the situation should try to find a better way to vote with their feet than taking to the streets of Munich (and other cities) to no avail. They should quit their jobs at the EPO and take jobs in the private economy. Engineering jobs, especially.

Dear EPO Employees: if you truly wish to promote innovation, the EPO is the wrong place to be. If you believe that this system -- broken beyond repair -- is good for innovation, you just believe and propagate the same lies that the EPO leadership you hate so much has been telling for a long time.

If you want to help Europe to be more innovative (let's face it: Europe has a major innovation problem), bring your education, your skills, your talents and your energy to the table where you can contribute to the creation of actual products. Wouldn't it be so much more rewarding for you to learn about customers using products you helped create than to grant patents, most of which won't be upheld in court (at least not in the form in which you grant them) when seriously challenged (see 1 and 2)? Apart from that, most of the patent applications you process aren't filed by European companies anyway.

I know that your net salaries at the EPO may not be immediately matched by private sector employers (though it may happen if you get promoted over time). You would have to accept an initial pay cut. But money should never be the only reason to go to work. For you, the risk-reward ratio is actually much better than for patent attorneys. Patent attorneys -- who make far more money on the patent applications you process than you do, as you know -- have to invest a lot more time and money in their education, and when they start to make serious money, the likelihood is next to zero that they could reach the same income level in an engineering capacity (they'd have to get very senior management positions at large corporations). Your situation is different.

For the overall economy, a bloated patent system with too many examiners and too many patent attorneys is a waste. It's a waste because Europe needs scientists and engineers to create true innovation.

Let me tell you about my own perspective, too. I've been fortunate to do some really interesting patent-related work for some time without ever having received formal training. Last year I founded an app development company and closed down my consulting firm. I've also reduced my patent-related blogging a lot, as you can see in the right column here. It's so much more enjoyable to create "real stuff" that people will use (I'll launch both games early next year) than to deal with discussions of what the state of the art was in 1997 or how a certain claim term should be interpreted. I don't want to be a hypocrite: I'm convinced I'll make far more money with my apps than I ever would have with consulting (and my consulting business was actually quite successful in all respects). But even if I knew that I was going to make only half as much money in app development, I would still prefer it by a wide margin.

It's self-delusionary for you to think that the EPO is the best place for you to work, or the best place for you to promote innovation. Start a new life. European industry needs you to build, for example, electric and self-driving cars before that market will be dominated by Silicon Valley companies. Your scientific knowledge, your overview of the state of the art, your experience in analyzing technologies, your ability to express yourselves in the three official languages of the EPO -- those assets are underutilized where you presently are.

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