Friday, August 3, 2018

Huawei, Qualcomm, and patent holders' three preferred ways to gain anticompetitive leverage

Over the last year and half, it turned out that Huawei's patent enforcement campaign against Samsung and Qualcomm's antitrust issues as well as the parallel patent infringement cases raise bigger and more interesting issues than any other smartphone patent disputes going on as we speak.

Qualcomm is just being Qualcomm: it's always leveraged its wireless standard-essential patents more aggressively than the rest of the industry (maybe even more than the rest combined). But now it has competition watchdogs from around the globe going after it; it's embroiled in cross-jurisdictional litigation with Apple (large parts of which are effectively an Intel-Qualcomm dispute in the first place, with Apple purportedly having decided to use Intel's instead of Qualcomm's baseband chips in new iPhones); and someone else (analysts believe Huawei) stopped paying royalties, too.

Huawei, however, has been undergoing a steady transformation for a while. The first time it took center stage as a patent enforcer was in 2012 when it went after fellow Chinese device maker ZTE--in Germany, where Huawei obtained an injunction it never elected to enforce and took the question of injunctions over standard-essential patents (SEPs) all the way up to the Court of Justice of the EU. But for about two years it's now been trying to coerce Samsung into a license agreement on terms that the Korean electronics giant considers utterly unreasonable according to court filings.

Both Huawei and Qualcomm have anticompetitive intentions. Huawei and Samsung are the two leading Android device makers, so any transfer of supra-FRAND royalties from one to the other would distort competition in the device market centered around Google's mobile operating system. Qualcomm is clinging to its business model where patents are leveraged to drive chip sales and chip sales are leveraged to the benefit of the patent licensing business. As I noted above, when Qualcomm enforces patents against Apple, it quite often looks almost like Apple is in the crosshairs as a proxy for Intel.

As I'm keeping an eye on Huawei and Qualcomm's patent-leveraging strategies, I'd like to highlight the three ways in which some aggressive patent holders are seeking undue, anticompetitive leverage in our times (in no particular order):

1. Chinese patent injunctions

In the original "anti-Android" smartphone patent wars, China didn't play a role yet. Even Apple and Samsung weren't suing each other there (just in about ten other countries before the dispute lost steam and, ultimately, settled out).

By now, China is a patent litigation hotbed. In October (2017) it became known that Qualcomm brought patent infringement claims against Apple in China, where the iPhone is manufactured and where Apple enjoys strong sales). In its home court, Huawei won a couple of patent injunctions against Samsung, but due to a U.S. antisuit (anti-enforcement in this case) injunction, it doesn't get to enforce them. Huawei is trying to overcome that roadblock through a Ninth Circuit appeal filed with the Federal Circuit, but the latter declined to shorten the time for Samsung's brief, which will be due on the 27th of this month.

2. United States International Trade Commission (ITC)

If Huawei had known in 2016 (when it started suing Samsung) that Presidents Clinton and Obama weren't going to get the next best thing to a joint third term, it might have given an ITC complaint against Samsung a try. It didn't, but Qualcomm has already brought two such complaints against Apple. In one of them, it may prevail on one patent, but its strategy of targeting iPhones incorporating Intel baseband chips raises serious antitrust and public-interest issues.

This Qualcomm scheme, like Huawei's Chinese scheme, may be thwarted by an antisuit (anti-enforcement, to be precise) injunction in the Northern District of California. An antisuit injunction motion was brought on behalf of consumers in an antitrust class action against Qualcomm. Judge Lucy Koh will hear the motion on the 30th of this month. She denied the parties' motion for a rescheduling, and in the same order indicated that she won't necessarily rule on the motion at the end of the hearing but may take it under advisement.

3. German patent injunctions

Germany is still a top three patent infringement jurisdiction and the undisputed #1 in Europe.

Whatever the reason may be, Huawei is not--or not yet--known to be going after Samsung in Germany, but Qualcomm is actively seeking to gain leverage in Mannheim and Munich. There are currently six-week school vacations in the relevant states, Baden-Wurttemberg and Bavaria, but in the middle of September, just days before the late-September start of the 2018 Oktoberfest, Qualcomm and Apple will square off in Mannheim (September 18) and Munich (two days later). And there'll be more to come, including but not limited to another Mannheim trial in early October.

Not only, but particularly in Germany, the current hiatus is the quiet before a scheduled set of storms.

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Sunday, July 22, 2018

Qualcomm's own experts concede Intel's baseband chipsets are good for innovation and pricing

At this stage, the Northern District of California is a standard-essential patent (SEP) litigation hotbed. The previous post was about Huawei's shrinking case against Samsung, but there are some extremely interesting developments in a consumer class lawsuit against Qualcomm, related to FTC v. Qualcomm. Late last month, the consumer plaintiffs brought a motion to bar Qualcomm from enforcing a potential U.S. import ban against certain (in practical terms, Intel-powered) iPhones. Qualcomm filed its opposition brief on July 12 (this post continues below the document):

18-07-12 Qualcomm's Opposition to Consumers' PI Motion by Florian Mueller on Scribd

Qualcomm's legal arguments against the motion involve timing (the same consumer plaintiffs had filed a public interest statement with the ITC a long time ago, thus they knew about the ITC case, but waited until recently to thwart Qualcomm's pursuit of an exclusion order, i.e., U.S. import ban), standing (whether those consumers are harmed or not), the preliminary injunction factors, whether an ITC case involving non-SEPs has a bearing on an antitrust case involving SEPs, the ability of a district court (under the All Writs Act) to prevent an ITC plaintiff from enforcing an exclusion order, and the Noerr-Pennington doctrine, according to which litigation does not constitute an antitrust violation in its own right. In similar contexts in recent years, U.S. courts have consistently not deemed the enforcement of injunctions to be covered by Noerr-Pennington. The difference between SEPs and non-SEPs is also at issue (but hasn't been addressed yet by a court of law) in Qualcomm's German cases against Apple, but the heart of the issue is not a FRAND licensing commitment and the related rights of third-party beneficiaries: it's all about forcing competitors like Intel out of a market.

Qualcomm's timing-related arguments appear potentially more interesting to me than the other points it makes, but Qualcomm does contradict itself in that context. Qualcomm says:

"Here, any possible injury to Plaintiffs depends upon an attenuated chain of events transpiring. The exclusion order must issue, the presidential review period must pass, the investigation must result in actual exclusion of the accused iPhones, and the exclusion order must leave Apple with no reasonable opportunity to 'design around' the patents at issue. Such an attenuated 'chain of inferences' cannot confer standing."

Apart from the fact that everything on that list is precisely what Qualcomm is pursuing (it naturally wants to prevail, it would seek to dissuade the Trump Administration from a veto, and it seeks leverage from patents that it hopes cannot be designed around, at least not without incurring a prohibitive cost), Qualcomm itself blames those consumers in the timing context for not having brought their motion for a preliminary antisuit injunction a year ago--but consumers argue that there was a possibility at the time of Qualcomm's case not making any headway, and only now that the ITC staff has lately recommended (at the ITC hearing) to hold Apple in violation of one Qualcomm patent, there was a clear and present danger of anticompetitive effects and, therefore, consumers believe their motion was warranted.

From an industry point of view, the consumers' reply brief contains some very interesting quotes from the aforementioned ITC hearing, showing that even Qualcomm's own expert witnesses had no way of denying that Intel's efforts to compete with Qualcomm in the mobile baseband chipset market are good for innovation and choice (this post continues below the document):

18-07-19 Consumers' Reply in Support of PI Motion by Florian Mueller on Scribd

The most interesting passages of the reply brief are about the question of whether the fact that Intel is at least trying hard to compete with Qualcomm in the mobile baseband chipset market benefits consumers. At the recent ITC hearing, ITC staff lawyer Lisa Murray said:

"If Intel is taken out of the 5G race, this would slow the pace of U.S. innovation."

That assessment, which is actually just common sense, will serve as a silver bullet in the further proceedings.

But even Qualcomm's own expert witnesses in the ITC proceedings felt forced to concede that Intel's competing baseband chipsets make an important difference:

  • One Qualcomm expert conceded that the Intel-based iPhone "is the only top-tier phone that currently uses a competing company's chip."

  • A Qualcomm expert also agreed that the "two premium chipset providers based right here in the U.S. are Qualcomm and Intel" and that "every top-echelon smartphone that could potentially serve as a consumer substitute for iPhones blocked from the U.S. uses Qualcomm’s modem chip, with the exception of some Samsung phones that use chips built in-house."

  • And here comes the most impressive passage from the expert witness testimony:

    "Q. In fact, you agree that having Intel as a competitor in that market is good for competition; correct? A. I do agree. Q. Having Intel as a competitor in that premium chipset market is good for quality of chipsets; correct? A. Generally competition is good, yeah. Q. And competition from Intel in particular is good; correct? A. Yes. Q. It's good for pricing; correct? A. Yes. Q. It's good for innovation; correct? A. Yes. Q. Good for innovation as we move into 5G; right? A. Yes. Q. Which is an absolutely critical market for the country as a whole; correct? A. Certainly for Qualcomm, yeah. We believe it is, yeah. Q. And it's good to have Qualcomm in that market; right? A. Yeah, that's right. Q. And it's good to have Intel there too? A. Yes. Q. It's good for the public? A. I agree. Q. Good for the public interest? A. I agree."

    "Good for the public interest" to have not only Qualcomm but also Intel in that market--quite an important concession.

  • One last quote:

    "Two companies competing in this premium baseband chipset market in the U.S. is better than one monopolist for the public interest; correct? A. Well, as a general proposition, yes."

Unlike Samsung, Intel supplies other companies with its baseband chipsets and would like to sell to as many customers as possible, with Apple being its key reference customer. The consumers' reply brief notes that "only the AT&T Samsung Galaxy S6 devices contain an Exynos System-on-a-Chip" (Exynos is Samsung's mobile chipset brand), while "[t]he Verizon and Sprint Samsung devices contain Qualcomm chips."

In light of all of that, it's not hard to see why Qualcomm would like to force Intel out of the market as soon as possible. But what follows from the above admissions by Qualcomm's own expert witnesses is that this would be bad for innovation and harm consumers in two respects (less innovation and higher prices).

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"Huawei, I shrunk the case": scope of December patent trial against Samsung whittled down

This week in Huawei v. Samsung delivered two more setbacks for the Chinese Android device maker and increasingly aggressive patent enforcer (I don't want to call them a "patent bully" just yet, though it may be an appropriate label at a later stage).

First, the trial that Judge William H. Orrick will preside over in the Northern District of California in December is going to be far narrower, and potentially less impactful, than Huawei had hoped. As I had noted toward the end of this recent post, Huawei previously informed of the court of its willingness to withdraw its request for a declaratory judgment on worldwide FRAND licensing terms to its standard-essential patents, subject to an agreement with Samsung on the specifics. That agreement has indeed materialized, suggesting that Huawei saw a high risk of Judge Orrick throwing out the claim (whose dismissal Samsung was already formally seeking) at any rate. Instead of having to make a decision, Judge Orrick merely had to grant the parties' stipulation of a dismissal that is formally without prejudice, allowing Huawei to try again, but only in a different case and not for at least nine months (this post continues below the document):

18-07-18 Stipulated Dismissal of Huawei-Samsung FRAND Claim by Florian Mueller on Scribd

Just last month, Huawei's offensive case already got narrowed as Judge Orrick, in a matter involving the Supreme Court's recent SAS ruling, stayed two patent infringement claims. So all that's left for the December trial is a bunch of patent infringement claims and the question of a potential breach of a FRAND licensing commitment. Huawei portrays Samsung as an unwilling licensee, and Samsung argues that Huawei's demands are unreasonable and that there hasn't been enough progress of the give-and-take kind.

The second thing that didn't go too well for Huawei this week was its attempt to expedite its Ninth Circuit appeal before the Federal Circuit of the antisuit (more specifically, anti-injunction-enforcement) injunction Samsung obtained three months ago. Huawei was using two procedural attack vectors in parallel, seeking a reconsideration of Judge Orrick's decision in district court while pursuing the aforementioned appeal in Washington, D.C.--but the Federal Circuit told Huawei it should firstly await resolution of its motion in San Francisco. After Judge Orrick's decision to uphold the injunction, Huawei informed the Federal Circuit, which then resumed the proceedings, and Huawei, before even filing an opening brief that isn't publicly accessible yet, brought an emergency motion to expedite the appeal.

Samsung opposed this emergency motion, arguing that Huawei's procedural tactics had caused delay and pointing to the prejudicial effects of having to respond to a Huawei opening brief on a tight schedule, three months after the notice of appeal (meaning Huawei had plenty of time to prepare its argument) and while working hard on some motion practice in the district court case the appeal originated from. The Federal Circuit told Huawei to be patient and suggested that it could file its reply brief as soon as possible--ahead of the court's deadline--after Samsung has had the chance to react to the opening brief. The appeals court will then hold a hearing as soon as possible, but just like Judge Orrick, it doesn't accomodate all of Huawei's procedural preferences.

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Wednesday, July 4, 2018

Shareholder class actions against Qualcomm over frustrated Broadcom merger may turn on secrecy of CFIUS proceedings

Before we get to the actual topic of this post, a quick follow-up to the previous one: the Deseret News reports that President Trump has interviewed Senator Mike Lee, so the possibility of a FRAND-friendly Supreme Court Justice is real (though other candidates have been interviewed as well).

Last week, an interesting class action complaint was brought against Qualcomm in the Northern District of California by a group of consumers, with the class being defined broadly enough to include any U.S. smartphone buyer. I've run a couple of online searches and found that there's a whole bunch of other class lawsuits pending against Qualcomm, and they're all about Broadcom's acquisition of Qualcomm, which couldn't materialize after a presidential veto.

Many complaints were filed by small firms, but I've also found some complaints that were filed by firms with a strong track recordin securities litigation. Here's a particularly well-crafted complaint by the Pomerantz firm, which a United States District Judge called "some of the best lawyers in the United States, if not in the world" and which recently achieved the largest securities class action settlement in a decade as Petrobras coughed up $3 billion (this post continues below the document):

18 06 26 Jadhav Complaint by Florian Mueller on Scribd

I've also uploaded another complaint filed in the Southern District of California and a March complaint filed with the Delaware Chancery Court to Scribd. The Delaware complaint argued that Qualcomm's directors made an end-run around Delaware corporate law by seeking a presidential veto against a vote on the composition of Qualcomm's board.

Qualcomm's directors and officers now have to defend themselves against accusations that they "defrauded" the market by not disclosing their company's secret request that the Committee on Foreign Investment in the United States (CFIUS) preclude Broadcom from acquiring Qualcomm (and, on the way to that destination, getting deal-friendly board members voted in). Failure to disclose material information of this kind can constitute securities fraud and give rise to insider-trading claims.

One doesn't have to be an expert in securities law to understand that Qualcomm's request for a presidential veto was very significant. However, the fact that something very significant wasn't disclosed isn't necessarily sufficient. As a patent litigation watcher I obviously find it inconsistent that a company would publish an infographic to announce and promote a patent infringement complaint, but would remain silent about its volunary request that the CFIUS initiate an investigation into Broadcom's unsolicited takeover bid. But that's just a personal opinion.

Qualcomm hasn't filed its answer to the complaints yet. It has merely sought an extension, especially since a number of parallel actions need to be consolidated.

The most interesting legal question will be whether Qualcomm's leadership--which was undoubtedly pursuing an agenda of entrenchment--had a stronger obligation to protect the confidentiality of its CFIUS request (in the interest of the United States) than to inform actual or prospective shareholders.

The website of the Department of the Treasury says the following:

"Confidentiality

In reviewing a transaction, CFIUS considers national security matters and commercially sensitive information provided by the parties. By law, information filed with CFIUS is subject to strong confidentiality requirements that prohibit disclosure to the public. Accordingly, CFIUS does not disclose whether parties to any transaction have filed notices with CFIUS, nor does CFIUS disclose the results of any review. When a transaction is referred to the President, however, the decision of the President is announced publicly."

None of that says that Qualcomm couldn't have told shareholders of the mere fact that it made a request for a CFIUS review (aiming to obtain, as Qualcomm did, a presidential veto). However, courts may still prioritize the national security interests of the United States over the obligation of publicly-traded companies to disclose certain material information.

In the further process, the parties will have to find apposite cases. Also, the United States' federal government might support Qualcomm on this one in case the Trump Administration feels that companies secretly raising national security concerns should not have to fear shareholder lawsuits.

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Saturday, June 30, 2018

Tech industry should lobby President Trump to nominate Senator Mike Lee to succeed Justice Kennedy on the Supreme Court

While Justice Anthony Kennedy has decided to retire from the Supreme Court after 30 years, his concurrence in eBay v. MercExchange, which stressed the unreasonableness of injunctive relief over a minor feature of a multifunctional product, will be a lasting legacy for which the tech sector (apart from patent trolls and companies that used to make or are still making devices, but largely or entirely relying on patent licensing revenue) will be forever grateful.

With this voice of reason in connection with patent enforcement leaving the Supreme Court, and with someone like Assistant Attorney General Makan Delrahim mislabeling as "the United States' policy" an unFRANDly agenda hostile to innovators focused on making actual products, the product-making, truly innovative majority of America's technology industry should make an effort to ensure that Justice Kennedy's successor will have a very balanced approach to patent enforcement. Where the rumored candidates stand on patent policy is usually unknown: you'd only have a clue if they had previously served on the United States Court of Appeals for the Federal Circuit, or maybe if they had demonstrated a certain approach to patent cases at the trial stage (Judge Rodney Gilstrap--obviously not a candidate--is undoubtedly unbalanced). But that's rarely the case. For an example, no one really knew where Justice Gorsuch would stand, but he's a judge whom I would always trust that he'll go to extreme lengths to interpret the law correctly and reasonably (and to explain his reasoning in an intelligible way).

At this stage, there is a high-potential candidate we should rally behind: Senator Mike Lee (R-Utah).

He's on the President's shortlist of about two dozen potential nominees. Senator Ted Cruz (R-Tex.), himself often considered a potential Supreme Court nominee and probably one of the smartest jurists ever to hold elective office, vouches for his colleague's judicial conservatism. As does Mark Levin. Or the Hoover Institution's Adam White. And Senator Lee would gladly accept.

There are, however, two obstacles, apart from the fact that there are many other impressive people on the list of potential nominees. They aren't insurmountable, but they are significant. One is that Senator Mike Lee is not a sitting judge, unlike other recent nominees. The other issue is that he called on then-candidate Trump to withdraw before the general election when the "p***y-grabbing" recording came up. I must admit that even I, as a longstanding Trump supporter (even on this blog I voiced support for him in early 2016), was very concerned at the time that the recording would cost him too many female votes. Fortunately, he won anyway, and more and more people believe that he may go down in history as one of the most impactful presidents ever. But in that situation so close to the election, Senator Lee was skeptical, for understandable reasons.

I'm reasonably optimistic that President Trump will let bygones be bygones, and that he's not too much bound to this conventional thinking that only a sitting judge should be nominated. He's the first president never to have held political office or to have been a general.

Silicon Valley, and Microsoft and Amazon up north, and many other tech innovators across the United States, should support Senator Lee. The Supreme Court will continue to hear many patent cases in the coming years and beyond. Sooner or later, a FRAND case will reach the Supreme Court, given all that is going on with the controversy surrounding Qualcomm's business practices (most recently, an extremely interesting motion for an anti-enforcement injunction brought by consumers) or the patent dispute between the world's two leading Android device makers (Samsung v. Huawei), and numerous other issues and disputes. If Apple and then-Google's Motorola hadn't settled, even Judge Posner's historic FRAND decision could have gone all the way up to the top U.S. court.

There also is some potential for legal questions involving the United States International Trade Commission (USITC) and its sole remedy (equivalent to injunctive relief) reaching the Supreme Court in the not too distant future.

A hypothetical Justice Mike Lee would understand how to strike a reasonable balance between the interests of right holders and those of innovators who don't intend to infringe but simply implement industry standards or independently create products. He's knowledgeable on antitrust as well, and patent and antitrust matters overlap ever more often.

I've previously mentioned Senator Lee's advocacy of reasonableness in patent enforcement:

Please support him if you can.

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Thursday, June 28, 2018

Consumers bring motion to bar Qualcomm from enforcing a potential U.S. import ban against certain iPhones

Qualcomm's efforts to obtain a U.S. import ban against iPhones without a Qualcomm chip--simply put, against iPhones using an Intel chip--are facing a new challenge: a group of consumers (whose class action against Qualcomm was merged with the FTC v. Qualcomm antitrust case in the Northern District of California last year) just brought a motion for an anti-enforcement injunction that would bar Qualcomm from the enforcement of a potential future ITC exclusion order (this post continues below the document):

18-06-28 Consumers' Motion for Anti-Enforcement Injunction Against Qualcomm by Florian Mueller on Scribd

Yesterday, Judge Lucy H. Koh had the pleasure to terminate the long-running Apple v. Samsung dispute by granting an order of dismissal based on a settlement. Some of the time she'd otherwise have spent on the adjudication of post-trial motions can now be dedicated to this extremely interesting and important motion for a preliminary anti-enforcement injunction.

There's a precedent in the Northern District of California. By that I don't even mean my favorite antisuit injunction process in recent months (Samsung's anti-enforcement injunction against a couple of Chinese standard-essential patent (SEP) injunctions obtained by Huawei. I mean something much older, and I blogged about it at the time and hailed it as a "landmark decision": about five years ago, Judge Ronald Whyte (whom Judge Koh succeeded when he became a senior judge), enjoined two WiFi (IEEE 802.11) SEP holders named LSI and Agere from enforcing a potential ITC exclusion order against RealTek Semiconductor.

In that 2013 case, it was "only" about patent holders seeking maximum leverage for the purpose of dictating supra-FRAND royalties (which Judge Whyte didn't allow them to do). In the present Qualcomm case, the situation is a whole lot worse for two reasons:

  • Qualcomm's conduct has already been held to be anticompetitive. So far, Judge Koh also appears to have been rather skeptical of the legality of some of Qualcomm's business practices.

  • Qualcomm isn't merely seeking leverage to impose high royalties. That's part of the plan, obviously, but what makes Qualcomm's two ITC complaints against Apple particularly problematic is that Qualcomm wants an import ban against iPhones that come with a baseband chip from Intel--the only company that presently poses a significant competitive threat to Qualcomm's cellular baseband chips.

    Qualcomm's position is that it doesn't want all iPhones banned since this would raise issues in the ITC's public interest analysis (impact of an import ban on the economy at large, and on society). But Qualcomm's anti-Intel focus hasn't solved the public-interest problem at all: it has merely traded one set of issues for another. It's hard to tell which one is worse. The court may very well find that the focus on Intel--i.e., the use of patents in order to defend a monopoly--is an unusually clear antitrust violation. Monopolies aren't necessarily illegal; but some monopolization tactics are.

The consumers' motion argues that Qualcomm must be enjoined from enforcing a potential ITC exclusion order because of the additional harm to consumers that it would result in (beyond what Qualcomm has already been doing anyway). The motion makes a number of good points, and I'll quote one such passage here:

"Other modem chip suppliers are unlikely to enter the market in Intel's place if Qualcomm can selectively target devices using a non-Qualcomm modem chip for exclusion. Both the potential modem chip vendor and its customers make significant (joint) investments when deciding to work together on a modem chip project, and thus both face substantial risks. For example, “Intel has invested billions of dollars to develop next generation advanced modems and technologies to improve the performance and functionality of modern smartphones and cellular communications [...]"

And here's an interesting footnote (no. 15):

"Given the delicate and high-stakes business decisions in play, the Court should not feel obligated to wait and see if the ITC actually issues the order Qualcomm has requested. The market is already very difficult to penetrate due to Qualcomm’s anti-competitive practices, and the mere uncertainty faced by Intel and Apple because of Qualcomm's ITC action itself compromises the possibility of free and open competition."

Federal judges--including, but not limited to, Judge Whyte--are well aware of how certain patent holders turn to the ITC in an attempt to make an end-run around the eBay v. MercExchange standard for patent injunctions. Normally, the federal courts don't pay much attention to what's going on at the ITC. Also, there was an InterDigital case in Delaware where the district court declined to fast-track a FRAND determination just because the defendants sought to pre-empt an ITC order. But RealTek was a case where a federal court determined it just had to thwart an anticompetitive plan by certain plaintiffs that involved the ITC.

There are two ITC investigations of Qualcomm complaints against Apple. In the first one, where only three of the six originally asserted patents are still in play, a hearing was held a couple of weeks ago. The ITC staff, which does not formally make decisions but whose input bears considerable weight with the ITC's Administrative Law Judges (and with the Commission itself), believes Apple's iPhones infringe one of the asserted patents. So there is a clear and reasonably present danger of a U.S. import ban. It's hard to predict what position the Commission (the final decision-makers at the ITC) will take on the competition-related public-interest concerns here.

Meanwhile, Qualcomm will oppose the motion, and most likely there will also be some amicus curiae briefs (just like last year--in that case, because of a Qualcomm motion to dismiss the FTC's case). For now, it's intriguing enough that consumers, in their role as class plaintiffs, have taken this initiative. But these consumers deserve broadbased support from industry!

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Wednesday, June 27, 2018

After more than 7 years of suing, Apple and Samsung finally call a truce

Apple v. Samsung, the longest-running patent dispute that this blog has consistently covered from Day One to Settlement Day, has come to an end--one day and one month after one of multiple jury verdicts. Within about eight minutes (!) of Apple and Samsung notifying the court of a settlement and seeking dismissal, Judge Koh signed the proposed order (this post continues below the document):

18-06-27 Order of Dismissal of Apple v. Samsung by Florian Mueller on Scribd

I'm torn between saying "Good riddance!" or, quite the opposite and in Spanish, "Fue bonito mientras durĂ³." ("It was nice while it was ongoing.") This dispute raised some important issues and contributed to the evolution of patent case law, but the part related to design patents was going in circles. Apparently the parties thought so as well, at this point. At long last.

This megadispute gave rise to some of the highest-quality legal work (on both sides) one could have had the privilege to read. Apple's original complaint told a coherent and compelling story of the alleged infringement of a multiplicity and wide variety of intellectual property rights. No one should write a multi-IPR complaint without at least reading that complaint once, for the purpose of inspiration.

But Samsung's lawyers delivered a first-rate answer to that complaint, and the mantra of that pleading was one of the best passages I ever read in a court filing:

"The Samsung Defendants admit that they have not ceased competing with Apple notwithstanding Apple's efforts to avoid such competition."

The complaint and the answer to the complaint laid out the fundamental question underlying the dispute: Was Samsung competing lawfully--or had it gone too far? Or, conversely, was Apple taking action against theft or simply trying to eradicate competition the thermonuclear way?

There was and there is no general answer, except that the impact obviously ended up being far from nuclear. One has to look at one patent (or other intellectual property right) at a time, and jurisdiction by jurisdiction.

Samsung managed to fend off many accusations, in multiple jurisdictions. It countersued, mostly over standard-essential patents (SEPs), and in that context I criticized it far more harshly than in connection with the alleged or adjudicated infringement of design or software patents. Fortunately, Samsung is now a proponent of reasonableness in SEP licensing and enforcement. Case in point, it signed an open letter to U.S. Assistant Attorney General Delrahim earlier this year--alongside a few industry bodies and dozens of companies, including... Apple!

Apple has clearly proven that it's prepared to enforce its intellectual property rights. Vigorously. Persistently. Patiently. And Samsung has shown that it's a formidable defendant.

Let's not underestimate the effect this will have had on other parties. Who knows whom else Apple might have had to sue over design patents if it had not demonstrated in its dispute with Samsung how it responds to (alleged) design patent infringement? Who knows who else might have picked a fight with Samsung if Samsung hadn't mounted such a strong and tireless defense as in the Apple case?

Normally, those companies strike license deals, and when they wind up in court, they typically settle reasonably early. Somehow, it took them a lot longer in this case. And now either one of them has a dispute going that looks like it could become the next long-running one: Apple with Qualcomm, and Samsung with Huawei.

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Tuesday, June 26, 2018

Assistant Attorney General Delrahim appears unreceptive to FRAND arguments, yet the DoJ is not above the law

This is a follow-up to last month's post on an open letter that 77 former government officials and professors (of law, economics, and business) sent Assistant Attorney General Makan Delrahim in order to remind him of long-standing and consistent U.S. policies on standard-essential patents (SEP) under both Republican and Democratic administrations. I've meanwhile become aware of the AAG's reply, which does not provide any indication that he's on the side of innovation and fair competition.

To his response, Mr. Delrahim attached a letter dated February 13, 2018 from about a dozen academics and former government officials that support the statements he makes, which he describes as "the United States' policies" (we'll talk about that further below). With the greatest respect for those individuals, they do not collectively counterbalance the 77 signatories of the letter that criticized Mr. Delrahim's statements. That's not just a matter of numbers: for an example, there is no former FTC chairman among them.

Also, before the academics' February letter, there was a very impressive industry letter to AAG Delrahim in January, signed by industry bodies such as CCIA, the Fair Standards Alliance, the Software & Information Industry Association (SIAA), and ACT | The App Association, but also by major tech companies such as Apple, Intel, Microsoft, Samsung, HP, Dell, and Cisco. It's very hard to understand why neither of those letters appears to have given AAG Delrahim pause. Does he seriously think he can make his contribution to #MAGA by acting against the likes of Apple, Intel, HP, and Microsoft--and trade organizations that have such companies as Google among their membership?

There's one little passage in Mr. Delrahim's response to the professors and former government officials that strikes me as being hostile in a way that isn't particularly subtle: "[...] we are happy to receive your or your clients' views [...]" (emphasis added)

The 77 signatories wrote him in their own names, not on behalf of clients. Just like I could cite examples of signatories of the other (anti-FRAND) letter who have attorney-client relationships with certain organizations, that may very well also apply to some of the 77 FRAND defenders. However, the FRAND cause really does get a lot of support from competent people who simply understand the devastating impact on innovation and competition that standard-essential patents (SEP) abuse has. The cause is so strong and important that many thought leaders are glad to defend it without anyone paying them for it.

In general, one of the things I like about President Trump and his administration is that they speak out without too much constraint from traditional, conventional etiquette (including, but not limited to, political correctness). It's important to be open and direct. However, in AAG Delrahim's case I'm afraid that his thinking (that anyone who disagrees with him likely does it because he's retained by someone) makes it even harder to help him understand the real issues. He appears to genuinely believe that holdout (companies not paying license fees they owe) is a bigger problem than holdup (SEPs being used as "one bullet to kill"). That's unsupported by any evidence. It would obviously be inappropriate, regardless of his gratuitous reference to the signatories' "clients," to suspect some kind of conspiracy between him and the enemies of FRAND access to industry standards, but according to Wikipedia, Qualcomm is one of his former clients.

What's way more important than present or past, disclosed or undisclosed, existing or imaginary attorney-client relationships is what the law says. Further above I mentioned that he refers to his outlier positions as "the United States' policies." With the greatest respect for the Department of Justice and its officials (though the DoJ has, to the best of my knowledge, never been under even a fraction of this much fire from the White House), "the United States' policies" on antitrust were never made by the DoJ's related division. There's also the Federal Trade Commission (FTC), but above all, let's not forget about the judges.

An article (PDF) written by two Washington, DC-based antitrust lawyers, Orrick Herrington Sutcliffe's John "Jay" Jurata, Jr. and Emily Luken, for the Global Competition Review explains that Mr. Delrahim's positions "lack legal support" and are simply "out of sync with a large and growing body of US case law" on such issues as injunctive relief and FRAND royalty rates. As a tech litigation watcher I couldn't agree more.

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Saturday, June 23, 2018

Judge Orrick upholds Samsung's anti-enforcement injunction against Huawei

The fact that Samsung und Huawei are the world's two leading Android device makers always lent some significance to their patent infringement dispute, but it wasn't really too interesting to watch until the motion process that culminated in Samsung's antisuit injunction, preventing Huawei from enforcing a couple of Chinese patent injunctions for the time being.

Huawei has since been trying to get rid of that decision, which prevents it from getting huge leverage in China in the shortest term. It asked Judge William H. Orrick of the United States District Court for the Northern District of California to revisit his decision, and it filed a Ninth Circuit appeal with the Federal Circuit. The latter then told Huawei: you can't keep two courts busy in parallel with the same matter, so please wait for your California-based judge, then we'll see.

A few days ago, Judge Orrick denied Huawei's motion for reconsideration (this post continues below the document):

18-06-19 Huawei v. Samsung - Denial of Motion to Alter Judgment by Florian Mueller on Scribd

While there's nothing unusual about a judge standing by his decision, this order is quite important in one respect: Huawei argued that Judge Orrick should have applied, in addition to the Gallo antisuit injunction factors, the Supreme Court's traditional Winter preliminary injunction factors. Judge Orrick still disagrees that Ninth Circuit law requires both, but--and that is a setback for Huawei--he explained in his order that "[the other Winter] factors would not alter [Judge Orrick's] conclusion." Judge Orrick elaborates on that part in his footnote 3:

"The analysis of these factors largely tracks that of the district court in Microsoft Corp. v. Motorola, Inc., [...](Microsoft I). Samsung faces irreparable harm in closing its manufacturing plant and ceasing the sale of infringing devices in China. See id. at 1102 ('Microsoft has provided this court with convincing evidence that it will lose market share, which will be difficult to regain, and suffer harm to its business reputation.'). The balance of equities tips in Samsung's favor because it would be placed in an untenable bargaining position, which would have lasting effects, whereas Huawei is only being enjoined for approximately six months. See id. at 1103 ('It would seem clear that a negotiation where one party (Microsoft) must either come to an agreement or cease its sales throughout the country of Germany fundamentally places that party at a disadvantage.'); id. ('By issuance of an anti-suit injunction, this court is in no way stating that Motorola will not at some later date receive injunctive relief, but only that it must wait until this court has had the opportunity to adjudicate that issue.'). And the public interest lies in this court adjudicating the propriety of injunctive relief for the parties' standard essential patents (SEPs). See id. ('The court finds that the public interest is served by issuing an anti-suit injunction and permitting Microsoft to continue its business operations without interruption until this court has had the opportunity to adjudicate the injunctive relief issue before it.'); see also Order at 15–17 (analyzing the Unte[r]weser factor of whether foreign litigation would frustrate a policy of this forum). The overlap between the Unte[r]weser factors and the Winter factors further bolsters the conclusion that the full Winter analysis is unnecessary when applying the Gallo test. See Gallo, 446 F.3d at 991 ('Gallo need only demonstrate that the factors specific to an anti-suit injunction weigh in favor of granting the injunction.')."

This ups the ante for Huawei before the Federal Circuit.

In other Huawei v. Samsung news, Samsung brought a motion for judgment on the pleadings about two weeks ago, seeking the dismissal of Huawei's FRAND rate-setting claim. Huawei has meanwhile opposed it, arguing that Samsung's consent isn't necessary since Samsung (just like Huawei) agreed to reciprocity in its FRAND declaration to ETSI (the relevant standard-setting organization), so Huawei is entitled to a license to Samsung's patents, but the terms of such a license must also involve a cross-license. I'll talk about that motion process in more detail later, but for now it's worth noting that, according to Huawei, "[the] parties have discussed the possibility of stipulating to the dismissal of Huawei's rate-setting claim without prejudice." Huawei promises to "promptly inform the Court" should such agreement still be reached. So maybe Judge Orrick won't even have to rule on that motion.

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Sunday, June 17, 2018

Judge stays two Huawei patent infringement claims against Samsung due to recent Supreme Court SAS decision

In its litigation with Samsung, Huawei has been a bit hapless so far. At least it's fair to say that the chronology of events hasn't really favored the Chinese tech giant:

  • By filing its case against Samsung in the Northern District of California technically on the calendar day (though it may have been more or less the same hour) prior to its Chinese patent infringement filings, Samsung's successful anti-enforcement injunction was brought in an earlier-filed (or at least simultaneously-filed) U.S. case.

  • Huawei then tried two things, again near-simultaneously, to overturn the antisuit injunction: a motion to alter the decision as well as an appeal to the Federal Circuit. The Federal Circuit didn't like this and had a simple message to Huawei: let Judge Orrick in San Francisco rule on your motion, and if you don't like the outcome, you can ask us for help, but not before.

  • And now the Supreme Court's recent decision in SAS v. Iancu, according to which the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO) must reexamine all challenged claims if a petitioner shows a reasonable likelihood of invalidatio for just one challenged claim, enabled Samsung to obtain a stay of two patent infringement claims brought by Huawei (this post continues below the document):

18-06-13 Order Granting Stay of Huawei Infringement Claims by Florian Mueller on Scribd

Samsung challenged multiple claims of two of Huawei's patents-in-suit. The USPTO decided to institute reexamination with respect to some of them, but it had to issue a supplemental order in the wake of SAS and look--nolens volens--at all challenged claims, though it encouraged Samsung to drop its challenge to the ones with respect to which the USPTO was originally unconvinced.

Huawei had actually focused, for the purposes of infringement litigation, on the claims the USPTO viewed more favorably, but the SAS decision changed everything.

As I wrote in my commentary on SAS, this isn't good for the efficiency of the PTAB inter-partes review (IPR) process, but the conservative Supreme Court majority was right that the way the law was worded didn't leave room for any other decision, short of legislating from the bench, which most justices declined to engage in.

Judge William H. Orrick of the United States District Court for the Northern District of California still didn't necessarily have to stay the related infringement claims. He had previously stayed a Samsung infringement claim at Huawei's request, but in that case, the USPTO instituted reexamination of the relevant patent claim because it held that Huawei had shown a reasonable likelihood of invalidation. Not so here.

Nevertheless, Samsung obtained its stay. All things (including the state of proceeding) considered, Judge Orrick felt that it made sense, and that the focus of this case was on FRAND licensing issues. Also, either party will have to narrow its case to five patent claims for the trial, and Huawei still has plenty of claims in play.

It's an interesting example of the procedural impact that the SAS ruling can have on patent infringement lawsuits.

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Saturday, June 9, 2018

USPTO holds key claims of core Twitter patent invalid: Indian inventor was first

Yesterday the United States Patent and Trademark Office had bad news for a particularly broad member of Twitter's key patent family, U.S. Patent No. 9,088,532 on a "device[-]independent message disribution platform." As I reported in March, the '532 patent is being reexamined based on a patent application by independent Indian inventor Yogesh Rathod as well as a couple of other prior art references. The reexamination requested related to claims 1-3, 8, 9, 13-15, 17, 20, and 21, all of which are being reexamined. In a (first) Office communication since opening the reexamination proceedings, the USPTO has held all of the reexamined claims invalid, challenging Twitter to persuade the examiner that its patent claims should be upheld. Here's the Office communication (this post continues below the document):

18-06-08 USPTO Rejection of Twitter Core Patent Claims by Florian Mueller on Scribd

All of the claims under reexamination have been found to have been anticipated by Yogesh Rathod's international patent application. In addition, all claims but one (claim 17) are deemed non-novel in light of U.S. Patent Application with publication no. US 2011/0289574 by three Northern Californian inventors (Mark Hull, Randall Farmer, and Ellen Perelman).

Note that rejection rates are very high at this stage of proceeding. Some examiners simply reject all challenged claims in their first action in order to challenge the patentee to make the strongest case possible in defense of the patent in question. Some patent claims are rejected multiple times before finally being confirmed by the USPTO.

That said, things are looking bleak for Twitter's patent claims. To salvage those claims, Twitter would have to

  • overcome the non-novelty holding with respect to two different patent applications (Yogesh Rathod's application and the application by Mark Hull et al.); and then

  • additionally overcome any obviousness argument (the first Office action already notes that, even if one disagreed on non-novelty, a person of ordinary skill in the art could combine either one of those references with a third patent application, publication number US 2007/0105536, by George Tingo.

As for the commercial implications, let me refer you to my March post.

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Tuesday, June 5, 2018

No quick win for Qualcomm over Apple in Germany: stipulated stay

Four months back, Qualcomm's lead counsel in the German Qualcomm v. Apple cases, Quinn Emanuel's Dr. Marcus Grosch, hoped to obtain a Germany-wide patent injunction against Apple this summer. The related case (one of various patent infringement claims Qualcomm has brought against Apple in Germany) went to trial this afternoon, and it's unlikely that anything, if ever, will happen in that particular matter before the summer of 2019.

The patent-in-suit, EP2954737 on a "power tracker for multiple transmit signals sent simultaneously," is under massive pressure because of Apple and Intel's opposition to its recent grant. Of the four prior art references cited, Alcatel Lucent's European patent application EP2442440A1 poses the greatest--though not the only--threat to Qualcomm's patent.

At today's trial it turned out that Qualcomm itself recognized that this patent, granted only about a year ago, is not the most defensible one. After reviewing Apple and Intel's petition for revocation, Qualcomm decided to narrow the claim scope by filing an application for a divisional patent that would (if granted, which is a huge IF) be limited to wireless devices. However, Presiding Judge Dr. Holger Kircher of the Mannheim Regional Court indicated in his initial summary of the court's preliminary position that he and his two colleagues were inclined to stay the case pending the EPO's decision on Apple and Intel's opposition--and the divisional patent that Qualcomm was seeking to obtain wouldn't have affected the court's validity assessment where we stand, given that a new filing, which may or may not result in a patent grant, just doesn't enjoy the strong presumption of validity that applies to actually-issued patents.

While the court was inclined to agree with Qualcomm's infringement theory and unconvinced of Apple's defenses (including its claim that Intel, its supplier, had prior use rights), validity was a lost cause for Qualcomm based on the current state of affairs. Therefore, Qualcomm's counsel didn't really see an alternative to a stipulated stay. He'd have preferred to limit the stay to the first decision by an EPO examiner on the new divisional patent application, but Judge Dr. Kircher reminded him of his procedural options: should there be other relevant developments, Qualcomm could bring a motion and the court would take another look at whether the stay might be lifted.

The parties finally stipulated to a stay. The opposition proceeding will likely result in a decision in mid-2019, given--as Samson & Partner's Dr. Wolfgang Lippich (a patent attorney on Apple's defense team) explained--the EPO's internal timelines for opposition proceedings involving patents that are being asserted in litigation.

On the infringement side, the court applied a broad claim construction, particularly with respect to the words "based on". Those words are followed by "a plurality of [components]," but despite Hoyng ROKH Monegier's Klaus Haft (lead counsel for Apple) explaining how the claim and certain paragraphs of the specification require multiple measurements to take place, the court remained convinced that this claim language dictated a rather broad interpretation (which, of course, has implications for validity as well, though validity will have to be resolved in a different forum, the European Patent Office).

By contrast, the court tends to interpret the statute governing prior use rights in Germany (§ 12 of the German Patent Act) rather narrowly. Reference was made today to an internal Intel presentation, but Judge Dr. Kircher's preliminary opinion was that Intel, while it had the relevant technical idea, had not actually implemented it to a sufficient extent by the priority date of Qualcomm's patent. He felt it was more like some people at Intel--and this must actually be about the mobile chipset division Intel acquired from Infineon--had said: "Wouldn't it be a nice idea to do this?" Unsurpisingly, Mr. Haft disagreed and pointed to the multi-year periods it takes from a firm technical decision to the actual availability of a chipset.

Apple had also raised antitrust defenses. However, Judge Dr. Kircher said that only the enforcement of an injunction would have antitrust implications, while Qualcomm could seek damages. Therefore, Qualcomm's allegedly anticompetitive behavior would not justify a stay of the entire case.

Since Apple convinced the court--and, by extension, even Qualcomm--that a stay was warranted, Apple's other defenses (such as its non-infringement theories, prior use, and antitrust defenses) are moot for the time being. Qualcomm now has to deliver a valid patent. Unless and until it does so (which will take time), this case here won't be resumed. Meanwhie, other Qualcomm v. Apple patent infringement assertions will go to trial. For the second half of the year, the Mannheim court has scheduled two Qualcomm v. Apple trials, and the Munich I Regional Court will hold three (there have already been first hearings in those cases).

Qualcomm's quest for leverage has been dealt a significant setback, but will continue without a doubt. But most likely today's stay wasn't the last one in that dispute.

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Friday, June 1, 2018

Apple, Samsung trying to put patent dispute behind them through mediation

After last week's Apple v. Samsung damages verdict (largely over design patents) in the Northern District of California, counsel for both parties told Judge Koh that they were both willing to put an end to their long-running dispute, which started with a complaint filed by Apple in April 2011 and quickly escalated into a global dispute with filings in ten countries.

Late on Thursday, Samsung filed an administrative motion asking Judge Koh to keep a joint notice regarding alternative dispute resolution out of the public eye (this post continues below the document):

18-05-31 Samsung Motion to File Under Seal ADR Notice by Florian Mueller on Scribd

All that one can learn from the public filing is that there is a "forthcoming mediation." It's unclear whether a judge or a private mediator will try to work out a settlement.

What's furthermore unclear (and no one may know at this stage) is whether the parties will try to resolve both California cases (the one that went to re-retrial in May, and a second one that turned into a roller coaster) or just the first one.

High-profile smartphone disputes between handset and platform makers (unlike litigation brought by non-practicing entities or increasingly-"trollified" former phone makers such as Nokia and Ericsson) haven't recently resulted in license agreements. Instead, parties just dropped pending cases but reserved all options for bringing new complaints anytime, with some license agreements--or covenants not to sue--of extremely limited scope possibly having been part of some of those confidential deals. I would expect the same if Apple and Samsung finally called a truce. Apple obviously isn't going to extend a design patent license to Samsung; the result might involve a license (or a convenant not to sue with the practical effect of a license) to a few software patents, though some have expired and others have been worked around. But by and large the question is just whether Apple will withdraw any pending claims. And, even if this works out now at long last, no one knows when hostilities might flare up again.

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Friday, May 25, 2018

Retrial jury awards Apple $533 million in design patent and $5 million in utility patent damages from Samsung

A cartoon showing Homer Simpson using an iPhone may indeed have had an impact on a high-profile smartphone patent dispute as the screen design patent it relates to apparently accounts for approximately half a billion dollars in design patent damages. After three days and a half of deliberation, the re-retrial jury in the first Apple v. Samsung case in the Northern District of California awarded Apple a total of approximately $538.6 million in damages from Samsung (related to some old phones--mostly the first two generations of the Galaxy S), $533.3 million of which relate to design patents and $5.3 million to utility (i.e., technical) patents. Here's the verdict form (this post continues below the document):

18-05-24 Apple v. Samsung Jury Verdict by Florian Mueller on Scribd

The amount is similar to what Apple won in previous trials. The August 2012 billion-dollar verdict included trade dress (later thrown out by the Federal Circuit) and a third utility patent (the '915 pinch-to-zoom API patent, which has been held invalid in the meantime, though theoretically it could still be revived). A retrial over some products was materially consistent with the original verdict. And so is, after years of appellate and post-appellate proceedings and despite the extremely important clarification of the law that Samsung had obtained from the Supreme Court, the latest verdict.

The jury had asked two questions, and both questions showed they were really struggling with determining the relevant article of manufacture (AoM). If the jury had determined that the design patents in question covered only certain components (casing and screen), the amount would have been in the tens--not hundreds--of millions of dollars, but given that Apple was seeking more than $1 billion, the jury would probably have been inclined (in that hypothetical scenario) to award substantially more than the amount Samsung described as reasonable (less than $30 million). At the same time, given that juries often come down somewhere in the middle, a billion-dollar award was a possibility, but far less probable than the combination of agreeing with Apple on the AoM but with Samsung on most or all of its deductions.

One juror explained to Law360's Dorothy Atkins how the jury arrived at the conclusion that the design patent damages award had to be based on the entire smartphone, not on components (this post continues below the two tweets):

Throughout the years, including this month, I've repeatedly expressed concern over software patents styled as screen design patents. The amount wasn't shocking because, again, it was consistent with previous verdicts, even though I, as a juror, would have arrived at a different AoM determination and, therefore, a lower amount. In my opinion, the law should be changed to allow apportionment because an AoM-based figure is quite often going to be the wrong one, especially in a case like this where there was a huge discrepancy between the economics of the two approaches to the AoM. But with the current statute, the question was just whether Apple would be undercompensated or hugely overcompensated, and the latter is what that jury verdict comes down to. But the shocking and somewhat unexpected part is the fact that a screen design patent was ultimately considered decisive is what I'm concerned about. That will encourage patent trolls to obtain and assert more screen design patents.

According to media reports, Apple reiterated how much value it attaches to design, and Samsung is now going to consider its options. Those options are post-trial motions and, possibly, another appeal.

While the focus in recent years was on the AoM question and proper interpretation of 35 U.S.C. § 289, I have already expressed on prior occasions that I'd have liked to see more of a focus on the question of whether screen layouts should be patentable.

I read on Twitter that Apple and Samsung may actually settle the case now, which would be good. Better late (more than seven years after the filing of the initial complaint) than never. Let's see what happens now. And regardless of what happens here, it's high time that more people woke up and understood the threat that screen layout design patents--which can cover subject matter that wouldn't pass the patentability criteria (including, but not limited to, patent-eligibility) for utility patents--pose. Apple v. Samsung is an extraordinary case in various ways. My concern is about a huge number of other cases in which such patents might be asserted.

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Saturday, May 19, 2018

Will Homer Simpson sway the Apple v. Samsung design patent damages retrial jury?

It would have been preferable to give the Apple v. Samsung design patent damages re-retrial jury in San Jose (Northern District of California) a chance to render a verdict before the weekend. In that case, jurors might have put an end to this disruption of their lives. But the way things worked out, they're now going to think about what position to take on Monday morning when official deliberations begin. In the meantime, they're not allowed to talk to anyone about the case or to take a look at any media reports (whether some jurors do so anyway is another question, but they're not supposed to).

As in the previous trials in this case, and as I mentioned a few days ago, Apple's lawyers portrayed Samsung as an intentional infringer, an unrepentant copyist, with Samsung being barred from presenting some evidence that could have shed a different kind of light on that question.

The holdings that (i) Samsung infringed those three design patents (a long time ago) and (ii) that those patents are valid are "law of the case" and the re-retrial jury must presume both to be the case. It is worth noting, however, that courts in other jurisdictions looked at international equivalents of those intellectual property rights (and at devices from the same generation of Android-based Samsung products) and reached rather different conclusions. But things are the way they are for the purposes of this U.S. case, so the focus is just on damages, and the single most important question in this regard is what "article of manufacture" a disgorgement of Samsung's profits should be based on: the entire device (which was considered a foregone conclusion in previous trials, but the Supreme Court and, previously, the United States Department of Justice disagreed with Judge Koh, the United States Court of Appeals for the Federal Circuit, and Judge Lucy H. Koh) or one or more components?

In that context, the most surprising tweet from the courtroom (thanks to Mike Swift, Joshua Sisco and Stephen Shankland for some excellent coverage!) indicated that Apple's lead counsel, Bill Lee, could live with a $370 million verdict:

Given that Apple's own damages demand is almost three times as high, the above observation suggests more than a crack in the shell. As I followed the trial on Twitter, I felt that Samsung's lawyers and experts drove some very important points home, though Apple also made some good points, considering that Apple's position is a very extreme one in this case. Is Apple now happy with getting a little bit less for those design patents than before? Or is it simply waving a white flag because it's afraid the jury might arrive at a much lower figure? W won't ever know.

If stakeholders could file amicus curiae briefs with this jury, Apple would really be in trouble and even the $370 million "compromise" proposal would be ambitious. Hardly anyone wanted to support Apple's "entire device" position in filings with the Supreme Court. Most of those who supported Apple said they just wanted to ensure that a disgorgement of infringer's profits under 35 U.S.C. § 289 would continue to be available in other cases (such as with respect to running shoes).

The world outside that San Jose courtroom overwhelmingly prefers a component-based damages determination. This InsideSources article on the problems that an excessive damages amount in the Apple v. Samsung case could cause tech and non-tech companies alike is a good example. But jurors won't have the benefit of such information on the wider ramifications of what they're required to decide.

The tech sector at large (with a few exceptions merely proving the rule) is also concerned about patents on screen designs. The D'305 patent covers a screen layout. That one is a software patent styled as a design patent because it wouldn't meet the patentability (including, but not limited to, patent-eligibility) standards for utility (i.e., technical) patents. While I can imagine Samsung saw the most immediate threat in this case in the original "it must be a complete device" standard for the determination of the relevant article of manufacture, it was very unfortunate that Samsung didn't additionally ask the Supreme Court to hold such subject matter ineligible for design patents. Now Samsung's lawyers say that a screen is the proper article of manufacture for a software user interface patent. That would mitigate the damage to Samsung, but it doesn't alleviate my concern, as an app developer, over patents like D'305 in the slightest.

Apple has some of the best lawyers in the world, and they dug up something that might have impressed the jury (this post continues below the YouTube video):

That video shows Homer Simpson with an iPhone, and what makes the iPhone particularly identifiable is the app menu matrix everyone knows. Actually, most non-iPhone devices have such a matrix as well. They still do, despite Apple's lawsuits against Samsung, Motorola, and HTC (the three leading Android device makers earlier this decade, i.e., when Apple's patent assertions against Google's ecosystem began). In other words, this is iconic and hard to protect at the same time. And the reason it's hard to protect is because it's just a very logical screen layout.

Should Apple get many hundreds of millions of dollars, or theoretically even a billion dollars, then Homer Simpson--or, in the real world, Homer's creator, Matt Groening--deserves a commission.

One of the questions that jurors will be asking themselves this weekend is likely whether (again, basing everything on the previous findings of infringement and validity, irrespectively of what courts in other countries concluded) Samsung should face the maximum penalty, a slap on the wrist, or something in between.

For more than one reason, there's no way I could ever have ended up on that jury. If--in a hypothetical alternative reality--I had to make a decision, I wouldn't agree with either party, but I'd sooner award Apple two or three times of what Samsung considers reasonable than half or a third of Apple's demand. The primary reason for this would be that such components are manufactured separately and can be bought as replacement parts--and there are hundreds of thousands of other potentially-patentable elements in a smartphone, not just three design patents.

That's why this is not a question of whether one respects Apple's designs, Apple's investment in design and innovation, or Apple's right to defend the uniqueness of its products. Over the course of almost eight years, this blog has repeatedly stated that Apple couldn't be different and think different if everyone else was allowed to "copy." Even the fact that Apple founder Steve Jobs once said that "good artists copy, great artists steal" and that Apple had "shamelessly" stolen other people's creations doesn't mean too much in this context.

The problem is just that, no matter whether a screen layout covered by a design patent appeared in a Simpsons episode, the kinds of products at issue in this Northern California case contain many technical components--hundreds of thousands of at least potentially patentable concepts--and so many visual designs (for instance, many other screen layouts than just the app matrix) that a damages award over a very few patents just shouldn't be excessive. Otherwise everything else in such a phone would be implicitly devalued, and that would neither be fair not would it be in the interest of consumers who expect an electronic device not only to look good but also to be fully functional.

When it's not about design patents, Apple itself is a proponent of the "smallest salable patent-practicing unit" (SSPPU) rule (damages or royalties should be determined based on the smallest component that is deemed to infringe or practice a patent) as opposed to complete products. I've supported Apple's related thinking in disputes with Google/Motorola, Ericsson, Qualcomm, and... Samsung. After all those years, I'm not going to be inconsistent. That's why I hope the jury will do precisely what Apple advocates when the shoe is on the other foot, and focus on the smallest salable patent-practicing unit(s).

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