Tuesday, September 13, 2016

Samsung to Supreme Court: Apple has made a "remarkable about-face" on design patent damages

This tit-for-tat took almost four years. In December 2012, Apple informed the United States International Trade Commission of what it portrayed as a "remarkable about-face" by Samsung in the form of withdrawing injunction requests in Europe. Samsung's August 29, 2016 reply brief in support of its Supreme Court appeal concerning design patent damages--thankfully published by the SCOTUSblog (PDF)--says the following about Apple's opposition:

"In its brief, Apple makes a remarkable about-face. It now admits, agreeing with Samsung and the government, that the "article of manufacture" to which a patented design is "applied" may be only a component of a product. And it now admits, agreeing with Samsung and the government, that, where the patented design is applied only to a component of a product, the total profit under Section 289 is the profit attributable to the component, not the product."

On page 36 of Apple's July 29 brief, Apple indeed says that "article of manufacture" has a broad definition ("anything made by human labor"), specifically, "that it may include a complete final product or a component thereof." Apple, hgowever, argues that this broad definition works in its favor and doesn't limit application of the total-disgorgement rule to "decorative" articles. Apple continues to argue that even highly complex, multifunctional products may fall under that rule for infringing a single design patent.

Having re-read some older documents from this litigation, I can't help but feel that Apple has indeed adjusted--or one might just say "softened"--its position as a result of the amicus curiae brief filed by the Solicitor General on behalf of the U.S. federal government.

Very closely related to this is how some of the "friends of the court" supporting Apple argued in their filings. There's something rather atypical about it when you see certain amici raise very case-specific, partly just procedural reasons for or against a decision instead of focusing more or less exclusively on a fundamental, substantive legal question. To a non-party it normally shouldn't matter too much whether a certain party did or did not present a particular kind of evidence or raise a particular kind of objection somewhere in the process. If anything like that turned out outcome-determinative, the key substantive issue in the case might not (and often would not) be adjudicated.

If an amicus curiae just wants to do one of the parties a favor, that's a different story. But the likes of Calvin Klein aren't Apple vassals. They have an interest in design patents being as powerful as possible, and the power of design patents is a more generic question than the specifics of this litigation.

Amici should care about clarification in their favor, and somehow they appear to be afraid that the Supreme Court might agree with the U.S. government on the definition of "article of manufacture"--in fact, on the broad and inclusive definition that Apple now also, suddenly, accepts.

A simplistic way to put it is that Apple and some of its amici would now content themselves with Samsung being the last victim of Judge Koh's and the Federal Circuit's interpretation of § 289, knowing that any remotely savvy litigant in future cases would know how to avoid the same problem. For Apple, winning is the only thing. And its amici primarily just don't want to lose. Another plausible explanation is that some amici believe that even a finding by the Supreme Court that the district court was too narrowminded on "article of manufacture" wouldn't affect the value of design patents too much in the public perception because people would just see that Apple gets many hundreds of millions of dollars. That would, of course, benefit trolls asserting design patents, at a minimum by showing to prospective defendants that an unapportioned disgorgement can be the ultimate outcome. The worst-case scenario makes trolls money.

We're still about four weeks away from the Supreme Court hearing, and I'll write about this case again in the meantime. For the remainder of this post I just want to focus on what's very likely (not certain though) to be the outcome-determinative issue. A few months ago I would have assumed that the meaning of "article of manufacture" would be at the center of the hearing. It still might be if that's what the justices focus on. But if the top U.S. court agrees with both parties and the U.S. federal government that "article of manufacture" can also be a component, then the question would be whether the record of this case supports one party or the other. Unsurprisingly, either party argues that the other has the burden of proof and failed to shoulder it, so the respective party could win even without a remand. With respect to the burden of proof, Apple has the U.S. government on its side. It's the only key issue on which the DoJ agreed with Apple (the rest doesn't really matter). At the October 11 hearing, the most important indication of the outcome that the justices give could be what they say about who has the burden of proof on what the appropriate "article of manufacture" in this case was.

Samsung's argument concerning the burden of proof is that patent holders generally bear the burden of proof for their claims and that § 289 differs from other disgorgement statutes that "explicitly shift burdens to defendants." Samsung also quotes from the legislative record, and the following passage suggests rather strongly that Apple had the burden of proof:

"'the patentee recovers the profit actually made on the infringing article if he can prove that profit' H.R. Rep. No. 49-966, at 3 (emphasis added)"

If the Supreme Court (or Judge Koh on remand) finds that Apple failed to identify the relevant "article of manufacture," then there won't have to be another jury trial--and the clear message to the rest of the world would be that rationality has been restored with respect to design patent damages, period.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn:

Friday, September 9, 2016

Oracle files proposed notice of deposition of Google witnesses regarding discovery misconduct

On August 25, Oracle and Google filed sworn statements (and Oracle also filed an objection) regarding Oracle's motion for an Android-Java copyright re-retrial over alleged discovery misconduct and lies to the jury. Judge Alsup then ordered the parties to respond to each other's filings with new sworn declarations, which were due today.

To be of service to loyal readers following the case in detail, I have uploaded Google's declaration as well as Oracle's filing (a declaration as well as a proposed notice of deposition of Google witnesses) to Scribd.

Unfortunately, I don't have time, at least at the moment, to analyze these documents in detail and share any observations. However, I don't want this to be misunderstood as my positions on the issues in this case or my belief as to the most likely outcome having changed. So I'd like to explain, just quickly:

Due to my focus on two app development projects, my blogging has slowed down massively in recent years. For example, this is only my 36th post this year (with more than two thirds of the year already behind us), while I wrote a minimum of 40 posts in any given month of the year 2012. Some slowdown would obviously have resulted from the fact that many smartphone disputes have been settled, but not to this extent.

I'm working very hard right now to launch both games (one on iOS first, the other one on Android and iOS simultaneously) before Thanksgiving weekend. Both games are almost feature-complete, with a lot of the current efforts already relating to final touchup and testing. Both have taken much longer to develop than initially planned, but they've also become even better than I would have predicted at the outset--and those were ambitious projects from the beginning.

I have to focus as there still is some hard work on my part to be done, though I have recently stopped doing any coding myself. Now, after six years of "smartphone IP wars," there are only two really big cases pending: this copyright case here and the Apple v. Samsung design patent matter. As a right holder who has already invested a huge amount of money as well as "sweat equity" in software development, I care very much about Oracle v. Google, which is no longer really about APIs as much as it is about software copyright in general. As a potential future defendant against trolls, I'm deeply concerned about the prospect of an unapportioned disgorgement of profits over a design patent on a single icon or whatever other design.

The Supreme Court will hear Samsung's appeal in a month (one month and two days, to be precise). This is obviously not the time to reduce or discontinue my coverage of that matter. It will be over soon. I guess the decision will even come down before Christmas, or in January maybe.

By contrast, Oracle v. Google will take much longer. I honestly can't predict how much time I'll find to comment on it. It could be that I'll somehow manage to find the time to blog about it like in the past, especially because I disagree with 99% of everything else I read about that case, but it could also be that my next post on this case after this one will be my commentary on the final outcome after a settlement or after all appeals have been exhausted. Or anything in between those extremes. Whatever it may be, it has nothing to do with how important this matter is to software developers like me or with what I believe the legally and factually correct outcome should be.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: