Tuesday, November 24, 2015

Shame on the European Patent Office for its legal threats against TechRights author Dr. Roy Schestowitz

The European Patent Office is the last dictatorship on Central European soil. Local police cannot allowed to enter the EPO's facilities without an invitation from the president. National court rulings cannot be enforced; compliance is voluntary. Employees and visitors are subjected to covert surveillance. And if employees are fired (or "suspended"), which just happened to several staff representative, they won't get their day in court for about ten years.

The EPO's leaders have a rather selective attitude toward the law. When it's about their wrongdoings, they want their organization to be a lawless, autocratic island that disrespects human rights. But when the rules of the world around the EPO come in handy, the leadership of the EPO tries to leverage them against those who dare to criticize it.

A Munich newspaper reported last week that the EPO even tried to get a staff union lawyer disbarred. And today World IP Review has reported on legal threats by the EPO against Dr. Roy Schestowitz, author of the TechRights blog (temporarily the link was broken, but at the time of publication, it worked). In July it became known that the EPO blocked access from its local network (which examiners use for prior art searches) to TechRights. I strongly criticized that move, and found it futfile. But the EPO leadership stops at nothing, and is now trying to silence its fiercest and most frequent critic in the entire blogosphere.

Dr. Schestowitz had mentioned this on Twitter, but he had not revealed any specifics before the WIPR article. You can find his commentary on the WIPR story--and information that purports to indicate a publisher has also been threatened--here.

TechRights has always been an opinionated, rather combative blog. Still, with almost 20,000 blog posts, Dr. Schestowitz had not received a legal letter before an EPO lawyer sent him one.

Many thousands of TechRights posts took aim at Microsoft, and typically not in diplomatic terms. But Microsoft, which has a huge and sophisticated legal department, never thought it prudent to send a cease-and-desist letter. Nor did any other company that was criticized, and there were many (though Microsoft used to bear the brunt of TechRights' criticism).

The EPO leadership must be very afraid of TechRights. It should be. Dr. Schestowitz is doing a first-rate job at keeping track of developments at and around the EPO. He doesn't miss a beat. I don't mean to say that I would always use the same terminology, but the EPO should respect the freedom of speech. If the EPO leadership wants more positive press coverage (and not just from its "media partners" like Les Échos), then it should tackle the underlying issues.

If the EPO ever sued Dr. Schestowitz, I would contribute money and lend an endorsement to a crowdfunding effort to finance his defense.

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Privateering: UK court holds Ericsson patent valid, essential to LTE in case against Huawei, Samsung

In March 2014, Unwired Planet sued several smartphone makers over various patents it had "acquired" from Ericsson. Actually, "acquired" misses the key commercial point here. In April I took a closer look at the related arrangements and couldn't help but conclude that this was just a pseudo-sale of patents and simply an act of what is commonly referred to as "privateering."

The first decision relating to Ericsson's (technically, Unwired Planet's) infringement claims came down yesterday in the England and Wales High Court. Judge Colin Birss held that EP2229744 on a "method and arrangement in a wireless communication network" is valid (and in the UK) and "infringed by wireless telecommunication networks which operate in accordance with the relevant LTE standard," or more specifically, "essential to standard 3GPP TS 36.322 release 8 version 8.8.0."

This decision came down against Huawei and Samsung's challenges to this patent. According to Bloomberg, "Samsung said it was confident it had not infringed Unwired Planet's patents." I don't know whether this means Samsung will appeal and/or whether Samsung will argue that its own implementations of the LTE standard don't make use of the technique covered by the patent in Judge Birss's opinion.

If the patent was ultimately deemed valid as well as infringed by Huawei and Samsung's LTE devices, there might be equitable defenses (relating to privateering) and there almost certainly would be a debate over what constitutes a FRAND royalty for that patent and possibly some other patents. Privateering and FRAND are the two issue heres that I'm going to be more interested in. Those two parts are intertwined, especially because Ericsson once made a promise not to demand more than a certain royalty rate for all of its LTE patents--a promise Ericsson may have circumvented by "selling" some patents to a privateer like Unwired Planet.

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Oracle v. Google: Judge Alsup, who reportedly taught himself Java, gets the law wrong again

Many people were impressed by Judge William H. Alsup's claim (according to media reports) that he had taught himself Java to better be able to judge the Oracle v. Google Android-Java case. After the Federal Circuit threw out his non-copyrightability decision as fundamentally wrong, many Judge Alsup admirers remained loyal to their hero and thought that the Federal Circuit judges just didn't understand the issues. I have said all along that the Federal Circuit showed a better understanding not only of the law but also of the underlying technical aspects than Judge Alsup. I can now show you a major error in the introductory part of a new decision by Judge Alsup that shows the Federal Circuit understood the API copyright issues at the intersection of law and technology far better than Judge Alsup.

What the Federal Circuit has decided is now law of the case, and Judge Alsup has just incorrectly described the law of the case. Here's what he wrote in a procedural order he handed down yesterday:

"The United States Court of Appeals for the Federal Circuit held that the remaining five percent infringed Oracle’s copyright in the structure, sequence, and organization of the Java Application Programming Interface, reversing a decision by this Court that had held the Java structure, sequence, and organization constituted a non-copyrightable 'method of operation' within the meaning of Section 102(b) of the Copyright Act."

Something that omits an important part in such a context is also an error. The above passage is, therefore, an incorrect summary of what the appeals court actually decided. The easiest way to see that Judge Alsup missed a key point here is to look up the "Conclusion" part at the very end of the Fed. Cir. opinion:

"For the foregoing reasons, we conclude that the declaring code and the structure, sequence, and organization of the 37 Java API packages at issue are entitled to copyright protection." (emphasis added)

There you have it. Judge Alsup refers exclusively to the structure, sequence and organization, when in reality the Federal Circuit determined that not only the SSO but also "the declaring code"--approximately 7,000 lines--was protected by copyright. That's important because the declaring code was copied literally, while you can't literally "copy" an SSO any more than you could eat a recipe.

This error regarding the law (of the case) should give the remaining die-hard Judge Alsup fans out there pause.

By the way, his focus on a percentage, when copyright law actually doesn't care about percentages if the heart of a protected work was taken and especially doesn't care about the percentage of stolen material relative to what it gets incorporated into, does nothing to dispel concerns about him being "hostile" to Oracle's case. I just quoted "hostile" from The Recorder's article on yesterday's decision.

For the context in which that statement was made, let me refer you to my previous postings on the related Oracle v. Google motion process (in reversely chronological order):

Judge Alsup denied Oracle's motion to disqualify the court-appointed expert, Dr. Kearl. I disagree with that decision and I will talk about it some more on another occasion, but before I do so, I want to see (i) what the scope of the expert's testimony will be (a footnote says a tentative order on that question will come down shortly) and (ii) whether or not Oracle is going to live with this decision or fight it.

Finally, here's the order:

15-11-23 Order Denying Oracle Motion to Disqualify Dr. Kearl by Florian Mueller

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Friday, November 20, 2015

Oracle apparently facing an unfair judge and a tainted expert in its copyright case against Google

On Wednesday, a motion hearing was held in the San Francisco courthouse of the United States District Court for the Northern District of California to discuss Oracle's motion to disqualify the court-appointed damages expert, Dr. James Kearl, who since his original appointment in this case has effectively defended Google's interests in connection with an Apple v. Samsung case.

Having just read this Courthouse News report on the hearing, I can't help but conclude that Oracle's problem in this case is not limited to the damages expert. There appears to be a bigger problem: I've been watching the remand proceedings for a while and feel that Judge Alsup is not fair. Instead of recognizing that the only reason this case hasn't been resolved yet is a decision he made on (non-)copyrightability, which the Federal Circuit found completely wrong and the Supreme Court declined to reinstate, and now doing his best to ensure that justice finally be served, Courthouse News reports that Judge Alsup said the case would be delayed by at least 18 months, or possibly until 2019 or 2020, if he granted Oracle's motion. It's obvious that Google would love this delay to happen, and for Oracle it would be very bad.

He says that he'd only appoint a new damages expert if necessary but makes it sound like that will probably happen. That is rather different from how other big commercial cases are handled in the U.S., where court-appointed damages experts are few and far between.

It would only be human if Judge Alsup hated Oracle (I don't know if he does; just saying it would be understandable) for having defeated his non-copyrightability decision on appeal. He's been described as an ego-driven judge, and a journalist said in 2012 that he appeared to be the smartest person in the room (at the 2012 trial), which contrasts with the circuit judges' remarks at the December 2013 appellate hearing: they found him "confused" and incorrectly conflating copyrightability and "fair use" aspects. The written opinion was even tougher. It was totally damning for the district judge.

Years ago I had proactively disclosed a consulting relationship with Oracle. Let me state this very clearly: there is no such relationship at this time and I have no reason to assume that there would ever be one again. Not with Oracle, not with any Oracle partner, not with Oracle's counsel, neither directly nor indirectly. I'll be happy to see many people at Oracle and its law firms download my apps next year, but I doubt Oracle and its counsel will do a lot of in-app purchasing of boosters and exclusive game content :-) I wanted to clarify this so it won't look like I was criticizing the judge to do Oracle a favor or, worse, that Judge Alsup would attribute my independent opinion (I've never discussed the damages expert or the way Judge Alsup runs this show with anyone even close to Oracle) to a company I'm completely independent from.

I've had the same positions on API-related copyrights for more than ten years. Before and after fighting against Oracle's acquisition of Sun. Before and after helping Oracle in connection with standard-essential patents.

In the first quarter of 2012, about two years after fighting against Oracle, and still a while before doing any work for Oracle, I noted that "threatening with a delayed trial gives the judge leverage only against Oracle, but even if he has leverage of a certain kind, he should use it fairly" and said I was surprised that after Google had delayed the case through a meritless mandamus petition, he faced Oracle with the choice of either leaving a key piece of evidence out of the case or the case being delayed. That was not balanced. Still in the first quarter of 2012, I wrote that Judge Alsup "can't force Oracle to withdraw anything, but he can delay resolution of the case, and that gives him enormous leverage." Unlike Judge Koh in the same district, who allowed both Apple and Samsung to reassert withdrawn patents in a separate case (they haven't made use of that option so far and maybe never will, but they could do so), and who even wants to let Apple enforce a patent that has been held invalid at a far later stage of proceeding, Judge Alsup required Oracle to drop patents with prejudice just because of rather early and not too meaningful USPTO findings. Actually, even during the earliest phase of the trial, one withdrawn patent was suddenly affirmed despite a prior "rejection" but Judge Alsup barred Oracle from asserting it again. Another withdrawn patent was revived on appeal this March. So much for justice and fairness in connection with reexamined patents.

After the appellate proceedings, I hoped and even thought that he would, despite his reportedly ego-driven way of running the show, try hard to be fair. I already had some doubts, but only voiced them cautiously between the lines, when he allowed (tentatively so far) Google to present its equitable defenses at the retrial, though this could greatly confuse the jury with respect to the (actually distinct) "fair use" factors, but did not want Oracle to bring up its willfull-infringement arguments (which are extraordinarily strong here and I will publish some of the evidence that is already in the public domain when the trial begins) in a first phase of the trial because he thought this time could be saved in case Oracle doesn't prevail on the merits: Oracle should only argue willfulness after prevailing on the merits, i.e., at the remedies stage.

Admittedly, if Google prevailed on an equitable defense, that would be dispositive. It's just very unlikely. There's a strong basis for saying Google actually lost on those defenses at the first trial and didn't preserve them on appeal. Anyway, it's true that willfulness is a remedies-related matter. But why would a judge who ran the 2012 trial in a very uneconomic way (letting a jury consider "fair use" even before he handed down his flawed non-copyrightability ruling) now all of a sudden be concerned about a limited amount of willfulness argument in the early phase of the trial? The simplest explanation would be because he might love to see Google defend itself on the merits, so if the jury gets confused by Google, that's fine, but if the willfulness arguments Oracle could present would psychologically influence the jury with respect to "fair use," then that must be avoided. I'm not saying I know what's going on in his mind, but the freedom of speech also extends to speculation about potential reasons.

I'll try to find that story again but I remember once having read something about Judge Alsup having written a letter to an appeals court to disagree with an appellant (he felt he needed to correct some misrepresentations) and to defend his ruling. I'm not aware of any other district judge ever having done that anywhere in the world. Apparently he cares a great deal about what happens to his decisions on appeal, and the highest-profile decision he made, at least in an IT/IP context, was the non-copyrightability finding that turned out to have been wrong on each point. But that wasn't Oracle's fault. Oracle's counsel tried hard to educate Judge Alsup about the way U.S. software copyright law works. If he had agreed with Oracle, the Federal Circuit would have affirmed his decision.

Since the beginning of 2012, this judge has not been fair in my opinion. He's also been completely wrong on a key issue, which is not just my opinion but also that of the Federal Circuit judges, who wield a far bigger stick every day than he ever has. He called Oracle v. Google the World Series of IP cases. The Northern District of California is a major IP litigation venue, but the World Series of IP finals take place in Washington, DC. Unlike in baseball, however, the local venue can delay things a lot. I hope Oracle will not back down because that would be a bad precedent for everyone who believes courts should be fair, experts should be neutral, and judges should be fair in light of the fact that "justice delayed is justice denied" almost always affects only the plaintiff.

I will continue to follow this case, and I won't mince words if I find more signs of unfairness. In my totally independent role, in which I can testify under oath that there is no relationship with Oracle, I can do so without having to fear that someone else would be penalized for what I say.

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Thursday, November 19, 2015

Federal Circuit denies Samsung petition for rehearing in Apple case: next stop Supreme Court?

What's an invalid patent worth? As I noted at the end of my previous post on Samsung's appeal against a partial final judgment that would allow Apple to collect half a billion dollars over a set of patents including one the United States Patent of Trademark Office has held invalid, it should be worth nothing at all; actually, it should even have a negative value (an invalid patent is a non-material form of pollution). It appears, based on litigation results, that most patents in this industry are not valid in the form in which they were originally granted. Patent(ee)-friendly judges have a problem with that fact.

The United States Court of Appeals for the Federal Circuit is markedly patent(ee)-friendly, and it has just denied Samsung's request for a full-court review of a summary decision against Samsung's appeal of that partial final judgment. The document doesn't state any reasons:

15-11-19 CAFC Denial of Samsung v. Apple en Banc Petition by Florian Mueller

With the mandate scheduled to issue on November 30, I guess Samsung will have to make it clear pretty soon whether it will appeal further (i.e., to the Supreme Court). Its petition for a rehearing already looked very much like a petition for writ of certiorari. A cert petition appears more likely than not, and it will be very interesting to see which other companies support Samsung's position that a patent that has been held invalid not only by the Central Reexamination Division of the USPTO but also by a PTAB (in-house court) must not be enforceable at that advanced stage of the reexamination proceedings.

One could even ask the question of who will support Samsung on this one the other way round: who except for non-producing entities and companies with a stronger interest in patent monetization (in general or in certain markets) than in making products would seriously want to give any leverage to holders of invalid patents?

Long-term I don't even believe that Apple really wants this. It just wants it now, more than four-and-a-half years after bringing its first patent infringement lawsuit against Samsung.

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FRAND flurry: two new initiatives promote fair licensing of standard-essential patents, Qualcomm in trouble

FRAND-pledged standard-essential patents (SEPs) were a major topic (actually, the #1 topic) on this blog a few years ago. Then my focus shifted, but my positions on this issue did not. I'm following with great interest Apple's efforts not to bow to Ericsson's notoriously-aggressive SEP royalty demands and pleased to see that two new industry initatives relating to FRAND were launched this week:

  1. ACT | The App Association has announced a new web resource for innovators, policy-makers, and academics. It's called All Things FRAND and supported by significant players including Cisco, Intel, and Microsoft. ACT is headquartered in the U.S. but also quite active abroad.

  2. The new FairStandards Alliance is based in Brussels, the de facto EU capital. Its website says: "We are friends of FRAND"

    The FairStandards Alliance is off to a pretty good start with this position paper and support from an interesting mix of IT (Cisco, Dell, HP, Intel, Juniper), mobile/IoT (Fairphone, India's Micromax, Lenovo, Sierra Wireless, Telit) and--this is particularly interesting but not surprising to me given that cars are increasingly "smartphones on wheels"--automotive companies (BMW, Volkswagen).

Both these initiatives are interested in various FRAND-related issues. The FairStandards alliance is particularly clear in its support of a proper royalty base. That question (on which Apple has been vocal in court and in standard-setting organizations) also appears to be key to findings of South Korea's Fair Trade Commission in an investigation of Qualcomm's licensing practices, including its device-based pricing strategy. I agree with analysts who view this as spelling trouble for Qualcomm. South Korea's FTC may very well get support, in political terms, from the two new FRAND initatives launched this week.

In the past, Qualcomm got away pretty much unscathed, at least in the EU. Even its Chinese settlements appears not to have caused similar worries in the investment community. South Korean antitrust enforcers are apparently taking the lead now with respect to this particular SEP holder, and I applaud them for their courage and steadfastness.

It would be great if Apple (which has always been on the good side of FRAND) and Google (which appears to be on the good side by now) could also lend support to one or more initatives of this kind. Google and Cisco have often agreed on patent policy matters. Why not on this one?

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Wednesday, November 18, 2015

EPO labor dispute getting completely out of hand: three union leaders suspended, others pressured

The conflict between the leadership and staff representatives of the European Patent Office appears to be totally out of control now. The latest information would be unthinkable anywhere in the civilized world, but the European Patent Organization simply isn't part of the civilized world around it.

On Monday, the Staff Union of the European Patent Office (SUEPO) published a flyer about what allegedly happened in The Hague (the EPO's #2 seat in terms of the number of employees) on Friday (this post continues below the document):

15 11 16 SUEPO Flyer by Florian Mueller

Let me copy the three key allegations here--they just refer to two of the staff representatives by their first names, with "Jesus" being a typical Spanish first name (with an accent over the "u") and "Laurent" being a common French first name:

  • Jesus was picked up from his office by President's emissaries. Upon return, he was visibly shaken and appeared to have suffered a nervous breakdown. Medical help was called, and he had to be wheeled out of the office in bad shape. He appears to have been subjected to severe, concerted and wilful pressure, especially intended to harm and destabilise.

  • Laurent got or was scheduled to get a similar treatment. Noticeably distressed, he had to rush for medical help externally.

  • The other members of the Staff Committee who witnessed the event were also deeply perturbed.

The last time I read stories like that they referred to Romania under its communist dictatorship. They also picked up people who returned in a perturbed state, though they also made them disappear quite often.

Last night I got a message--from a reliable source I won't disclose but it's nowhere near Munich--that three leaders of SUEPO's Munich chapter have been "suspended," among them Elizabeth Hardon, who recently wrote a letter complaining about the way she was treated. Also, the EPO had threatened legal action against her.

According to what I read on Twitter, TechRights blogger Dr. Roy Schestowitz (whose blog cannot be accessed from the EPO network without the use of software work-arounds for this kind of censorship) has also received legal threats from the EPO leadership. No details have become known yet.

I have not been threatened so far, but I am deeply sorry for those who have been. Rumor has it that Mrs. Hardon and Dr. Schestowitz are not the only ones.

It appears that Mrs. Hardon has decided to rather be proud and "suspended" than bow to lawlessness, corruption, and evil. I am so sorry for her and the other suspended union leaders, and I truly admire them for their steadfastness.

Dr. Schestowitz also deserves the greatest respect for his principled stance. Despite all the bullying, he continues to call out the EPO leadership on its actions and decisions. Most recently, TechRights has started to talk about the unbelievable, extraordinary career path of Mrs. Elodie Bergot. It appears that the juiciest part of the story is actually not even on that blog but hidden somewhere between the lines of that post or the forthcoming one (Part II) on the same topic.

TechRights is a blog I recommend all those concerned about the EPO's corrupt ways to read regularly. I will write about EPO issues from time to time, but not nearly as often. Also, I wish to highlight the IP Kat blog's announcement of forthcoming reports on staff suspensions and other EPO issues for this week.

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Saturday, November 7, 2015

Hypocritical Red Hat hopes to leverage patents to cement its Linux market leadership: Microsoft deal

This commentary on the Microsoft-Red Hat partnership is a back-to-the-roots post for me. This blog started as a Free and Open Source Software Patents blog--hence the FOSS Patents name-- and only because of all the (ultimately not too meritorious, let alone impactful) patent attacks on Android, it effectively became a smartphone patent wars blog (but by then it was too late to rename it without losing traffic).

While I don't mean to endorse everything Dr. Roy Schestowitz has written about Microsoft on his TechRights blog (and certainly not everything he's ever written about me), I agree with him that media reports on the Microsoft-Red Hat deal could have dug deeper, especially into the patent aspects of that deal. I furthermore agree that Red Hat is apparently happy about making it easier for Microsoft to impose a patent tax on Linux and that Red Hat has simply sold out FOSS values. According to TechRights, Red Hat executives tried to dissuade Dr. Schestowitz from his vocal criticism of the deal, but failed.

I've been saying for years that Red Hat is utterly hypocritical when it comes to patents. It has a history of feeding patent trolls and fooling the open source community. There is, to put it mildly, no assurance that all of its related dealings actually comply with the GPL.

Sometimes I like the positions Red Hat takes in its amicus curiae briefs on patent issues, but more than once I got the impression that those filings were written primarily in an effort to create the appearance of defending the FOSS cause in this context. It was just window dressing.

The fact of the matter is that Red Hat seeks to be a major beneficiary of the software patents mess.

Red Hat is large enough by now that it can just make the trolls go away by paying them off, giving them funds and legitimacy to go after other companies, including other open source companies.

Red Hat has also accumulated a certain amount of patents over the years, which puts it into a better position than individual open source developers and smaller companies in this space to retaliate in the event of a strategic attack by a competitor.

Red Hat now wants to tell Linux users that the way to be protected with respect to patents is to use Red Hat Linux. "Reduce your exposure, buy from us." That is a way of seeking to benefit from software patents.

All of this is no surprise when considering that Red Hat has always just been about taking advantage of something. In terms of its product and licensing policies, Apple may be the very opposite of a "free software" company (no matter what it may do with respect to its Swift programming language). But you have to grant them one thing: they're not fooling anybody about their philosophy. They never even tried. They don't "openwash" anything. They don't pretend to be a charity. They want to make money, more than any company before them. But one could not create products more independently and single-handedly than Apple. And all by themselves they have brought about a revolution that the likes of Nokia and Microsoft would never have created.

By contrast, Red Hat's business model is parasitic (though some like to euphemistically describe it as symbiotic). While Red Hat has been a major contributor to Linux, Red Hat became what it is not because of what it did but because of what Linus Torvalds and others had done. And Red Hat is not nearly as honest as Apple. "Not nearly" may even be an understatement.

The question of whether covenants not to sue over patents (which appears to be the structure of the Microsoft-Red Hat deal and would be consistent with a Microsoft Android patent agreement that was filed publicly last year) violate the GPL v2 has not been addressed by a court of law yet. I would actually like to see someone sue Red Hat for breach of the GPL and obtain clarification, but even the Free Software Foundation and its satellite organizations are not as principled as they pretend to be. They never compromise their values per se, but they have their strategic priorities when it comes to where and how forcefully to defend them. It will be interesting to see their reaction to the Microsoft-Red Hat announcement--not in terms of what they say but in terms of what, if anything, they will do. I guess they won't do anything. Why? Red Hat is a donor, Red Hat is a code contributor, the deal offers benefits for "GNU/Linux" as they call it...

I want to give Simon Phipps (with whom I've often disagreed) credit for distinguishing between the positive and not so positive ramifications of this partnership from an open source point of view. The Open Source Initiative is an organization on whose board Simon Phipps serves with, among others, a Red Hat lawyer.

Without the Red Hat connection, Simon Phipps would presumably have criticized Red Hat clearly as opposed to just making it sound like Microsoft should do more. He says Microsoft should relinquish its patent rights because that's how he defines "love" for Linux. However, he doesn't talk about what Red Hat could have done. Red Hat could have challenged any Microsoft patents that allegedly infringe Linux: in court (declaratory judgment actions) and through reexamination requests. That course of action would have done free and open source software a greater service than a deal.

I, too, have a (past) Red Hat connection, but it's none that I would be proud of. Over the decades I've done work for a variety of companies, and Red Hat is the only one I wish I had never worked with. They supported my NoSoftwarePatents campaign in late 2004 and early 2005, probably because they just thought a sponsorship was useful for currying favor with the FOSS community. They were far larger than MySQL AB but contributed a far smaller amount. In terms of commitment relative to company size, MySQL AB was like 100 times more committed to the cause. But the worst part was that shortly before the European Parliament's decisive vote on a software patentability bill, Red Hat tried to keep the legislative proposal alive. The Red Hat lawyer who did so later responded to that, and he never denied the simple truth that he wanted the legislative process to continue.

On this blog I announced, years ago, working relationships with Microsoft and Oracle. Both are a thing of the past. But I would never say that I wasn't proud of them.

The Microsoft I worked with as a consultant was not the Microsoft under Bill Gates that made artificial scarcity of software a strategic objective and got into serious antitrust troubles. I found Microsoft to be no better or worse than the vast majority of companies in this industry. I overestimated the merit of their allegation that Android infringed on many of their patents, but I corrected that assessment more than a year ago based on the results of numerous Android-related patent lawsuits and, after a second-class settlement between Microsoft and Google/Motorola, declared Google the strategic winner. The number one priority of my work for Microsoft was about giving FRAND meaning, a cause I continue to promote (see today's post on Apple v. Ericsson). In that regard, Microsoft was the victim of abusive tactics by Motorola. Sure, that was just Motorola's retaliation for Microsoft's patent assertions against Android, but two wrongs don't make a right (as Microsoft accurately said in the FRAND context).

Oracle has been a longstanding advocate of reasonableness with respect to standard-essential patents, and of open (and ideally free-of-charge) standards. I'm happy to have helped them in that regard, too. As for their Google copyright lawsuit, everyone can see on this blog that I've always taken the same pro-interface-copyright positions. I took them before (going back to a conference in the European Parliament in 2004) and after working against Oracle's acquisition of Sun Microsystems, and before and after doing work for Oracle. I view Google's position on API copyrights as a wholesale attack on the copyright protection of all computer software. Google doesn't call for the abolition of software copyright, but there appears to be no limit to the collateral damage it's willing to inflict to software copyright only to avoid paying Oracle for using Java in Android.

I am now in the most independent position to comment on IP, antitrust and industry policy issues ever. I'll continue to be consistent, just like I'll continue to draw the necessary conclusions from new intelligence (as I did when all those anti-Android patent assertions turned out to have no merit in most cases and negligible merit in the remaining cases). That's why I can just say what I think about the Microsoft-Red Hat deal. I think it's great for Azure, and I like Azure, though my app development company is using it only to a small extent and will use a different cloud service provider for most purposes. The free and open source software community should, however, be opposed to this and shouldn't trust Red Hat with respect to patents. They weren't trustworthy with respect to the European legislative process on software patents; they weren't trustworthy with respect to various settlements with patent trolls; and they aren't trustworthy now in connection with what appears to be a covenant not to sue, which is a license by any other name, with Microsoft, when the alternative would have been to bring a declaratory judgment action that says "Linux does not infringe a single valid Microsoft patent claim and we're now going to prove it."

It's one thing to be a Linux parasite. It's another to be a Trojan horse. And the worst option is to be both at the same time.

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Ericsson wants to obtain Apple's carrier agreements in order to buttress its patent royalty demands

I write about discovery disputes only once or twice a year because most of them don't matter to anyone other than the parties. But two letters filed by Apple and Ericsson in the Northern District of California last night are worth taking a look because the underlying legal question is of the utmost importance--even more important than their Alice motion process.

Ericsson wants to compel Apple to show its carrier agreements so Ericsson can see which commercial benefits Apple derives form those partnerships, such as

  • volume commitments,

  • preferential marketing treatment,

  • network traffic priority,

  • agreements to sell other Apple products,

  • development subsidies,

  • lump sums for the right to resell and service Apple devices, and

  • portions of monthly subscriber fees

Ericsson argues that this information is relevant because it shows what commercial benefits Apple derives from wireless technologies (co-)developed by Ericsson, and describes other discovery methods such as depositions of Apple witnesses as inadequate (this post continues below the document):

15-11-06 Ericsson Letter Re. Apple's Carrier Agreements by Florian Mueller

Apple opposes this discovery request. Apple basically says that those carrier agreements might be relevant in connection with damages over non-standard-essential patents, but have no bearing on a fair, reasonable and non-discriminatory (FRAND) royalty, a context in which standard patent damages rules can only be applied with certain modifications of the Georgia-Pacific factors (this post continues below the document):

15-11-06 Apple Letter Re. Ericsson's Discovery Request for Carrier Agreements by Florian Mueller

When this dispute started, I wrote that the question of the proper royalty base was going to be the most important one in this dispute. Apple's position is that the difference between the price of an iPhone and that of a cheap "feature" phone (colloquially also called "dumbphone") is unrelated to wireless communications standards. I support Apple on that one; I'm just more consistent in that regard than Apple, so I believe the "smallest saleable unit" approach should, for example, also apply to mobile operating systems, which in Android's case suggests minimal royalties.

In the famous Microsoft v. Motorola "Robart case" the question of the proper royalty base was not resolved the way I'd have liked to see it addressed. In a way, Judge Robart did everything right because the Ninth Circuit handed him a first-class affirmance (even twice: the first one with respect to a preliminary injunction preventing Motorola from enforcing two German patent injunctions against Microsoft, and the second one with respect to his final FRAND ruling). First-class, wholesale affirmance is truly remarkable when someone has to actually venture into unchartered territory, as Judge Robart had. Commentators thought that Judge Alsup had made his non-copyrightability decision in Oracle v. Google very appeals-proof, but it was a flawed ruling in various respects, so very hard to defend on appeal that it would be too diplomatic to say it merely failed to impress the circuit judges. By contrast, Judge Robart really made all the right choices, and the results speak for themselves.

But Judge Robart just stopped short of holding Motorola's royalty demand to be out of the FRAND ballpark simply for using an impermissibly broad royalty base, though he did express skepticism about a FRAND royalty rate based on the entire price of a multifunctional device. It was the only context in which I was disappointed because I thought Judge Robart could have done (even) more to give meaning to FRAND.

Apple v. Ericsson is now the dispute in which this unfinished FRAND business has to be dealt with, and which (given how much is at stake between these parties) might fix the problem. Injunctive relief over standard-essential patents is still a bit of a problem because of the way the ITC approaches cases (just like the ITC is also considered to largely ignore the Alice case law), but it's no longer a pressing problem. By contrast, royalty demands based on the entire price of a complex device still are a huge issue.

Judge Robart had basically said that a percentage of the price of an entire device just has to be low enough in order for the bottom line (the royalty) still to be in compliance with a FRAND licensing obligation. He doubted that it would work, and in Microsoft v. Motorola, it obviously didn't for Google/Motorola. But he didn't rule it out categorically.

Without a bright-line rule on the royalty base, Ericsson is right to demand access to Apple's carrier agreements. But I keep my fingers crossed that Apple will ultimately prevail over Ericsson in such a way that the much-needed bright-line rule against SEP royalty demands based on entire revenues from the sale of multifunctional devices will be established. The current discovery dispute only underscores the need for such a rule. For SEP trolls (and Ericsson is unfortunately a non-practicing entity now with respect to Apple's product markets), the ability to obtain carrier agreements is desirable because someone might pay up to (among other things) avoid that details of those deals end up being discussed in public filings or at trials.

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Thursday, November 5, 2015

Broadbased support for Samsung's petition for rehearing en banc in Apple injunction case

With an unusually strong dissent, Federal Circuit Chief Judge Sharon Prost practically invited Samsung to request a rehearing en banc (full-court review) of a 2-1 decision that would, unless overturned, pave the way for a permanent injunction for Apple against Samsung over patents covering limited aspects of some of countless smartphone features. Samsung accepted the de facto invitation and petitioned accordingly. On Monday, five amicus curiae briefs in support of Samsung's petition were filed. These amici include:

Chief Judge Prost must be pleased that her dissent from the majority opinion has support in academia, NGOs, and industry.

Apple, however, has a particular problem with the brief filed by the Google-Facebook group. It has asked the Federal Circuit to reject the brief because the filers allegedly didn't meet and confer with Apple prior to filing and because Google should, in Apple's opinion, be treated as another party to the dispute lest its amicus brief constitute an end-run around page limits. I don't have an opinion on the procedural argument, and it doesn't seem overly important to me whether Google is a legitimate amicus curiae in this case, given that there is no way Apple could prevent all the other members of that group of companies from filing an amicus brief. Also, even if the court formally agreed with Apple, the circuit judges would get to see that brief anyway. By far and way the most important aspect of this brief is that it shows the support Samsung has in industry. That political weight would not be diminished by a potential rejection.

Here's the "Google et al." brief (this post continues below the document):

15-11-02 Google Facebook Et Al. Amicus Curiae Brief ISO en Banc by Florian Mueller

Just like Chief Judge Prost, these companies seek to defend the causal nexus standard the Federal Circuit established in its first three Apple v. Samsung injunction decisions. Part A of the brief explains why there is now an inconsistency that must be settled by means of a rehearing en banc. In the second half of their filing, these companies focus on their concerns as major high-tech companies. They refer to an analogy that came up in a previous Apple v. Samsung injunction-related ruling (and to Justice Kennedy's famous concurrent opinion in eBay v. MercExchange):

"To borrow from this Court's analogy in Apple III, if a laptop computer maker was required to change the design of its battery, cooling fan or screws (and the list goes on and on) every time it was found to infringe one of the thousands of patents covering minor features of its product, and was then forced to litigate whether its design-around complies with the injunction, the laptop maker would face the constant threat of coercive patent litigation."

Instead of injunctions, they propose cross-license agreements such as the one Google and SAP announced last week. They note that Apple has licensed the patents at issue, as the record of this case irrefutably shows.

There is a significant overlap between these amici and the membership of CCIA, but CCIA also has a number of very significant other members, such as the ones I listed further above. Here's CCIA's brief (this post continues below the document):

15-11-02 Apple v. Samsung CCIA Amicus ISO Petition for en Banc by Florian Mueller

I have repeatedly disagreed, but also agreed on more than one occasion, with CCIA. I agree this time around, with one exception:

"There is no dispute that patents are a critical part of protecting innovations."

There are industries in which that is the case, but in this industry, there's a constantly-growing number of companies and individuals who believe the patent system does more harm than good. CCIA notes that its member companies file for patents, and they probably didn't want to appear as an anti-patent group here. So they diplomatically chose to say something about information and communications technology (ICT) patents that is actually rather controversial in this industry. That tactical choice has nothing to do with the strength of CCIA's arguments for a rehearing, of course.

CCIA's brief is very focused. The concern is all about outsized, undue leverage for patent holders over high-tech companies that build highly multifunctional products. It's a concise and convincing brief that has drawn my attention to a brand-new academic paper I wasn't previously aware of:

"The majority's 'new and lower causal nexus appears disconnected from the reality of multicomponent devices. It fails to appreciate that even those most innovative technology products are made up of countless small advances, not a few pioneering ones.' Bernard Chao, Causation and Harm in a Multicomponent World at 9 (U. Denv. Sturm C. of Law Legal Studies Research Paper Series, Working Paper No. 15-56, Oct. 27, 2015), http://ssrn.com/abstract=2681204"

The five amicus briefs nicely complement each other. There are, of course, overlaps (for example, the thrust of the two filings from industry is very similar). But each of these filings raises issues and arguments that increase the likelihood of a rehearing. I'm optimistic about the prospects of this, and we'll likely see even more amicus brief activity if the rehearing is indeed granted.

Apple will likely also get some support for its opposition to Samsung's petition, including, if the not too distant past is any indication, from Ericsson, a company that would not hesitate to leverage a patentee-friendly final decision in Apple v. Samsung against Apple...

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Apple reinforces its Alice attack on two Ericsson patents, says claims don't specify solutions

Last month, Apple brought a motion for summary judgment of invalidity against two Ericsson patents, based on the exclusion of abstract subject matter under 35 U.S.C. § 101 and its interpretation by the Supreme Court in the famous Alice case, in the declaratory judgment case in the Northern District of California. Ericsson's opposition brief argues that there is so much technology involved in the operation of a wireless network, it's just impossible to hold such patents to cover abstract subject matter, lest an extreme interpretation of Alice spell doom for patent law as a whole.

Reply briefs are often very repetitive, reinforcing points already made in the motion in light of the opposition brief. Over the years I was actually bored by many such filings, including a number of Apple replies. Apple's reply brief in this context is one of my favorite ones, however, because it addresses some important post-Alice legal questions and convincingly dismantles Ericsson's arguments with great specificity (this post continues below the document):

15-11-04 Apple Reply in Support of Alice Motion Against Two Ericsson Patents by Florian Mueller

The first footnote counters Ericsson's assertion that the clear-and-convincing-evidence standard of proof should apply to Alice. Apple points to case law that supports applying the preponderance standard. The recent Supreme Court decisions on § 101 (Alice, Bilski, Mayo etc.) didn't address the evidentiary standard. The Federal Circuit has clarified that "while a presumption of validity attaches in many contexts, no equivalent presumption of eligibility applies in the section 101 calculus." A decision from the District of Oregon cites Justice Breyer's concurring opinion on Microsoft v. i4i (where clear and convincing evidence was held to be the applicable standard for other invalidity theories):

"Where the question of invalidity depends 'not upon factual disputes, but upon how the law applies to facts as given,' the clear and convincing evidentiary standard simply does not come into play."

Apple then addresses the two Alice steps (is there an abstract idea in play, and does the patent claim go beyond the abstract idea identified) for either patent it challenges. If you're interested in the details of this, you may find Apple's argument worth reading in detail. I'd like to just talk about a couple of aspects.

I know that those who would like to mitigate the impact of Alice tend to argue that the § 101 patent-eligibility analysis should be totally separate from novelty and non-obviousness considerations. Admittedly, my previous post on this motion process may have appeared to blur the line. But the Alice logic is simply that if you only use "generic" hardware to implement what you claim to be an "invention" (referring to the claim limitations, not whatever the description might contain beyond the claim elements), your "invention" isn't patent-eligible. While "generic" is not the same as "new" or "non-obvious," it's still a somewhat similar analysis. Before the first computer or the first mobile network was invented, it wouldn't have been generic.

Over here in Europe, we've had this kind of discussion for a long time because of the exclusion of computer programs "as such" from the scope of patent-eligible subject matter under the European Patent Convention. I've followed numerous nullity cases before the Federal Patent Court of Germany and related discussions in courts hearing infringement cases (where nullity cannot be decided, but the outcome of nullity cases must be predicted because a strong prognosis of invalidation results in a stay). Both the lawyers arguing these cases for parties challenging patents and the judges rarely conclude that an entire patent claim falls under the exclusion. They're much more comfortable arguing on the basis of (non-)novelty) and (non-)obviousness and then finding that the question of patent-(in)eligible subject matter doesn't even have to be reached.

In no small part, this is due to the fact that it would simply be bad for the business of those lawyers and bad for the domain of patent-specialized judges if many patents were declared invalid on the basis of wholesale ineligibility. It would be a show stopper, and the show must go on for the professionals working in that area, which at least subconsciously and in some cases probably also at the conscious level prevents them from proposing or establishing rules that would end the discussion about most software patents. For example, the Federal Court of Justice affirmed the nullity ruling on Apple's slide-to-unlock patent, but disagreed with the Federal Patent Court for fear that its decision contained at least one statement that would get too many user interface patents invalidated. What they are more willing to do over here (though they still prefer decisions to be based on obviousness or non-novelty) is that they identify the novel claim elements and then determine whether those are technical under the EPC.

While it's easy to imagine patents that are so abstract one wouldn't have to consider what is "generic" (Alice logic) or "software as such" (EPC logic), those are hard to come by, and patent claims like the ones at issue in Alice were not like that. In most cases, the claim drafters had tried to inject some token references to technical means of solving a technical problem. Therefore, Apple is right to refer to the following Alice passage:

"A claim that recites an abstract idea must include 'additional features' to ensure 'that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].'" (bracketed language in original)

And an indirect Mayo quote by Apple shows again that novelty/non-obviousness considerations inevitably overlap with the abstract subject matter analysis:

"explaining the additional elements within the claims, apart from the abstract idea itself, must involve more than ''well-understood, routine, conventional activit[ies]' previously known to the industry' (quoting Mayo [...]; bracketed language in original)"

Here, the Ericsson patent claims at issue are just about abstract protocols and their generic implementation on run-of-the-mill mobile communications technology.

Finaly, a really good quote from Source Search Techs., LLC v. Kayak Software Corp., District of New Jersey:

"DDR Holdings tells us that when a patent holder seeking to establish § 101 eligibility for an otherwise abstract idea points to a particular element of a patent's claims as solving a computer-centric problem, the claims must specify how that solution works. [emphasis in Apple's filing] That specificity removes the claims from the abstract realm."

Apple says that Ericsson's claims just don't meet that requirement, and many pages of legal argument that now tries to portray the subject matter of those patent claims as technical inventions can't change what's written in the claims. I agree.

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Oracle to court: Samsung's offense was also Google's defense in Apple case, expert not neutral anymore

In the Android-Java copyright infringement litigation in the Northern District of California, Oracle filed a reply Wednesday evening in support of its motion to disqualify the court-appointed damages expert Dr. James Kearl. In the meantime I had published and commented on Dr. Kearl's filing, which was a de facto opposition brief. Google formally opposes the motion, but I found nothing of interest in Google's opposition brief other than Google offering the prediction that Oracle's damages claim in next year's retrial would be substantially greater than the billion-dollar claim from 2012.

Here's Oracle's reply brief (this post continues below the document):

15-11-04 Oracle Reply in Support of Disqualification of Court Dr. Kearl by Florian Mueller

In the first section, Oracles notes, as I had after Dr. Kearl's filing, that a number of facts about Dr. Kearl's involvement with Apple v. Samsung on Samsung's and, by extension, Google's behalf are undisputed. One of those facts is that the law firm of Quinn Emanuel represented both Google and Samsung, with Google paying directly for some of QE's work:

"That Quinn Emanuel represented both Google and Samsung shows that the important strategic decisions—like asserting counterclaims—likely served the best interests of both companies. [...] It would have been impossible for Google's attorneys to participate in some parts of the litigation while only Samsung's attorneys handled other parts. Google's attorneys were Samsung's attorneys."

The paragraph quoted above is not wrong, but it is obviously a bit one-sided. First, Google was a beneficiary of the counterclaims Samsung brought (in order to discredit Apple's out-of-this-world damages claims in that case), but I doubt Google was involved in any of the decisions relating to those counterclaims, other than maybe as an informal advisor. Second, QE is a big firm and had (actually, still has) a huge team involved with Apple v. Samsung: not just the size of a soccer team but more attorneys than you see different plays in a World Cup semifinal. Such Texas-size teams are not manageable in any context unless there is some division of labor, and I guess different lawyers will have worked on the details of the various patents-in-suit.

That said, I do believe the fact that Dr. Kearl worked with QE in Apple v. Samsung, a case in which QE also represented and presumably continues to represent Google, warrants his disqualification, and it's by far not the only and not even the strongest reason.

The next passage is even stronger in my mind:

"Second, Dr. Kearl helped the Samsung/Google team by offering his analysis of Samsung's counterclaims at trial. Google had two ways to lower Apple's damages, and thereby its liability: on defense, by undermining Apple's expert's analysis; and on offense, by convincing the jury that smartphone patents are not worth much. To execute the offensive strategy, Samsung counterclaimed for $6 million to argue that Apple's $2 billion demand was overstated. When Dr. Kearl testified about Samsung's counterclaims, he also helped to defend Google. In other words, Samsung's offense was also Google's defense."

The above is absolutely true. Even though Dr. Kearl denies that he had sandbagged his damages figures, there cannot be the slightest doubt that he knew, before starting his analysis, what his client wanted to achieve. They won't have told him to arrive at a lowball damages figure. They will have said something to that effect in a slightly more subtle way. For example, they might have told him something like "look at Apple's lunacy of a damages claim and just so you know, we don't want to reciprocate that but we want to show the jury what a more reasonable damages claim looks like." He must have known that he was expected to come up with something that would contrast with Apple's approach.

The second, shorter part of Oracle's reply brief explains why there should be no other court-appointed damages expert either. Oracle's argument is convincing to me when looking at it through the lens of U.S. litigation. In other jurisdictions, such as the one in which I live, court experts are the norm. In the U.S., they are meant to be a rare exception, and if there were reasons for a rare exception last time, the threshold will hardly be met now that the case no longer involves any damages theories related to patent claims.

I guess Dr. Kearl will be disqualified later this month. Anything else would be outrageous.

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Wednesday, November 4, 2015

Samsung says Apple is jumping the gun, Apple says Samsung is stalling: what's an invalid patent worth?

The week before last, Samsung filed a petition for an en banc rehearing (full-court review) of summary affirmance of a partial final judgment that would allow Apple to collect roughly half a billion dollars over a set of patents, the most valuable software patent of which has meanwhile been held invalid by the United States Patent and Trademark Office (the Central Reexamination Division as well as a Patent Trial and Appeal Board). On Tuesday, the Federal Circuit invited Apple to file a response on or before November 13, 2015, but Apple didn't want to wait nearly that long: it filed its opposition the next day, Wednesday. (Obviously, Apple's lawyers were able to already prepare for this as soon as they saw Samsung's filing on October 19, so I doubt anyone had to work for 24 hours without sleep.)

Here's Apple's opposition filing (this post continues below the document):

15-11-02 Apple Opposition to Samsung Petition for Rehearing by Florian Mueller

By filing on the first day of an 11-day deadline, Apple demonstrates once again that it is very serious about collecting damages from Samsung at the earliest opportunity. Of course, Apple wants this to look like a case in which a totally legit right holder should finally, after years of litigation, get paid. Apple is legit, but that is not the case for all of its patents-in-suit (in Europe, not even one Apple patent-in-suit has been upheld so far, so at least in Europe, Apple's lawsuits were not legit based on what we know today).

Apple portrays Samsung as a defendant employing stalling tactics. For example, a footnote of the above filing says the following:

"Consistent with its strategy of delay, Samsung sought and was granted an extension of 32 days in which to file its petition for certiorari."

That footnote refers to Samsung's previously-announced Supreme Court petition over design patent damages. The Chief Justice gave Samsung until December 14 (instead of November 11) to file that petition for writ of certiorari. There is, however, nothing unusual about that extension. I generally suspect that companies request extensions for their cert petitions mostly because it gives them more time for mobilization of amici curiae, while they could easily do their own filings on schedule, and that may very well be the case here. But a 32-day extension of a 90-day filing deadline doesn't really make a huge difference in the greater scheme of things. Stalling is something else to me.

Apple's opposition filing says Samsung is wrong on the law, and portrays Samsung's argument as merely policy-based. Once again, Apple does not argue policy in this context. It knows that from a pure policy perspective, it has a losing case: a patent that shouldn't have been granted in the first place should not entitle anyone to a damages award, even if the notoriously patentee-friendly Federal Circuit didn't hold it invalid. The patent had originally been granted by the USPTO, and the USPTO itself has corrected that mistake.

As for stalling, Apple is certainly not doing anything to accelerate the reexamination-related proceedings. It has made clear in various filings over the years that it would always exhaust all appeals to defend its patents even after multiple decisions holding them invalid. But that's what it's entitled to. So I don't see a reason why Apple could accuse Samsung of stalling or the other way round.

The real issue here is whether Apple is jumping the gun. It may appear counterintuitive to say that someone who wants to collect in 2015 money that had already been awarded by a jury in 2012 is jumping the gun. But the criterion is not how many years patent litigation takes, or whose fault it is (for example, a retrial in this first Apple-Samsung case would never have been necessary if Apple had made some different decisions in the build-up to the 2012 trial). The real issue here is precisely the one Law360 has raised in a recent headline:

Damages For A Canceled Patent?

The answer to that question should clearly be no.

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