Saturday, March 17, 2018

Judge Orrick inclined to grant Samsung an antisuit (anti-enforcement) injunction against Huawei

A few days ago, reported that United States District Judge William H. Orrick (Northern District of California) expressed an inclination at a Wednesday hearing to grant Samsung's motion seeking to bar Huawei from enforcing a couple of Chinese patent injunctions before the U.S. court has determined whether it is, in light of its FRAND obligations, entitled to injunctive relief.

You won't be surprised if you've been following the case here. Two weeks ago I published a post here with a headline that contained the following prognosis: "antisuit injunction looms large"

Even though I'm just a little blogger, it's a bit daring to offer such a prediction based on the briefing record, especially since antisuit (here, actually just anti-enforcement) injunctions don't come down every day. But for the reasons explained in my previous posts, above all Ninth Circuit case law, Huawei won't be able to complain.

It was hard to find out about what exactly Judge Orrick said, but as far as I'e been able to research, it comes down to the following key points:

  • He appears to apply the Gallo antisuit injunction factors as a substitute for, not (as Huawei argued) a complement to, the general preliminary injunction factors.

  • For one of the Gallo factors, the Unterweser factors are determinative: at least one of the three must be satisfied.

    The key statement by Judge Orrick in this context was that "U.S. courts hold that owners of declared essential patents that have made commitment to SSO's should be precluded from getting injunctive relief." He'll check whether an exception applies, but that will be his task and he probably won't let Huawei do a preemptive end run around a future U.S. court ruling.

    It's correct that SEP injunctions run counter to U.S. (and not just U.S.) policy. The Chinese outlier rulings may very well be overturned at the next higher level. As for the situation in the U.S., I can't think of anything more telling than the fact that Qualcomm, once a big SEP injunction advocate, decided to base all of its injunction requests against Apple (in the U.S. and abroad) on non-SEPs.

  • While the Gallo/Unterweser analysis may very well result in an antisuit injunction, Judge Orrick would like both parties to work out a deal and think again about their litigation strategies. When he said so, Samsung's counsel (Quinn Emanuel's Charles Verhoeven) tried to deflect the part relating to his client, pointing out that Samsung was just defending itself against cases brought by Huawei. But balanced as he appears to be, Judge Orrick noted that a defendant, too, has a strategy.

    So far I can't see anything particularly obstructive in Samsung's defense against Huawei's cases. Other litigants, such as Apple, would take largely the same positions and steps. Whose fault it is that negotiations haven't resulted in a deal (Samsung argues in court that it's because Huawei hasn't moved, and Huawei portrays Samsung as an unrepentant infringer) is impossible to know from the outside. Even the San Francisco judge can't know for sure.

If and when the antisuit injunction comes down, there'll probably a lot more media attention to it. I don't understand anyway why there's so little coverage of a cross-jurisdictional patent spat between the world's two leading Android device makers...

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Monday, March 12, 2018

USPTO taking another look at core Twitter patent: Indian inventor has priority but is facing Alice

It's been almost seven years since I reported on an India-based company putting a long list of companies on notice with respect to a patent application that it credibly alleges relate to Twitter/Facebook-style feeds:

"Microsoft, Yahoo, Google, Apple, Bharti Airtel Ltd., Webaroo Technology (India) Pvt. Ltd., Amazon, AOL, Nokia, Bebo Inc., ExactTarget Inc., Ford Motor, Foursquare Inc., IBM, Linkedin, MySpace, NING Inc., Research In Motion Inc., Quora Inc., Inc., Seesmic Inc., Siemens Enterprise Communications Inc., Technology Co. Ltd., StatusNet Inc., PopBox Inc., Twitpic Inc., Peek Inc., The Iconfactory Inc., Ubermedia Inc., Yammer Inc., Facebook and Twitter."

I haven't seen any infringement litigation since then, but the last company on the list above, Twitter, faces the risk of losing its own core patent family--and, if not saved by Alice, the risk of owing damages/royalties--because of an earlier priority date of Yogesh Rathod's patent application (18 July 2006 - PCT/IN2006/000260) vs. Twitter's "Dorsey et al." patent (23 July 2007):

  1. On March 25, 2013, a submission of prior art under 37 CFR1.501 was made with respect to Twitter's United States Patent No. 8,401,009 on a "device independent message distribution platform." The submission pointed to Yogesh Rathod's patent and was not a reexamination request, but is somewhat close to one.

  2. On February 25, 2016, Mr. Rathod filed a suggestion for an interference with respect to Twitter's broader U.S. Patent No. 9,088,532 (a divisional of the '009 patent). His attorneys explained why their client's patent application has priority over the one underlying that Twitter patent.

  3. The latest and most significant development so far bears today's date: the United States Patent & Trademark Office agreed to reexamine Twitter's (broader) '532 patent based on prior art including, most notably, the Rathod patent application (this post continues below the document):

    18-03-12 Reexam of Twitter Patent Ordered by Florian Mueller on Scribd

A finding that one or more substantial new questions for patentability have been raised is obviously still a far cry from holding Twitter's broader '532 patent invalid, and even if the broader '532 patent died, the narrower '009 patent might survive. But it is significant progress for Yogesh Rathod.

Mr. Rathod is trying to get the very same claims as Twitter's core patent claims granted, but based on what credibly appears to be an earlier priority date.

It could be that an Indian patentee ends up owning what was considered a core Twitter patent. But he's not quite there yet. His U.S. Patent Application No. 15/053,889 is facing an Alice (§101) rejection by the examiner, which he is appealing (the appeal was filed in late November). Most recently, the examiner sought to defend his rejection in his mid-February answer to the appeal brief.

Twitter's older and narrower patent was granted at a pre-Alice time; but the broader one was granted in 2015. The USPTO is clearly applying double standards so far, holding the same claims abstract in one case after not holding them abstract in another. That's not good.

I doubt that Twitter stands much to gain from its own patents. Twitter's business is based on network effects and a strong brand. Twitter's primary challenges relate to growth (both user base and revenues), and patents are not going to be the answer.

So the best that Twitter can hope for is that the patent application with an older priority date than its own will continue to be rejected on Alice grounds. What might otherwise happen is that an Indian inventor would own some key patent claims that Twitter temporarily owned, and sue Twitter (and others) for infringement over that patent.

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Wednesday, March 7, 2018

BlackBerry afraid of transfer of its trollish patent lawsuit against Facebook to Northern California

The company that used to be called Research In Motion is now named BlackBerry. It has always had the wrong kind of name at the given time: Research In Motion would be a typical name for a patent troll (second-best to "Innovations in Motion", more often than not with a demonym such as "American" placed in front) as those organizations try to position themselves as innovative, research-centric businesses with a view to jury trials when in reality they usually aren't. But it had that name when it was making those BlackBerry devices. Now that it has the name of the product, it's no longer making phones and becoming ever more of a patent troll. Admittedly, if I could go back in time, this blog here would have a different name, too: I didn't initially envision it to become so focused on smartphone patent and competition issues, whether or not they involve open-source software ("FOSS" stands for "Free and Open Source Software"). This blog may undergo a name change later this year or next.

BlackBerry has filed a patent infringement complaint against Facebook and its Instagram and WhatsApp subsidiaries (this post continues below the document):

BlackBerry v Facebook by Russell Brandom on Scribd

For the patents-in-suit, let me refer you to Ars Technica's article. I agree with Timothy B. Lee that the patents are extremely broad. In fact, they're so abstract and generic that many or even all of them might die an Alice death before the case even goes to trial.

I have an observation to share that other commentators don't seem to have focused on so far. The "jurisdiction and venue" section (paragraphs 25 to 36) is unusually long. In many other patent complaints it spans only a very few--and especially short--paragraphs. Here, it's almost epic.

Without a scintilla of doubt, the reason for BlackBerry's preemptive defense of its venue choice--the Central District of California (that's Greater L.A.), while Facebook is headquartered in the Northern District--is last year's Supreme Court recent decision in TC Heartland vs. Kraft Foods, which reinstated an earlier ruling (thereby overruling many years of Federal Circuit precedent) according to which "[a]s applied to domestic corporations, 'reside[nce]' in §1400(b) refers only to the State of incorporation" despite potentially broader definitions of "residency" in §1391. TC Heartland was viewed as a blow to the Eastern District of Texas, where patent trolls usually prefer to sue: it's easier now for defendants to get cases transferred out of that district.

BlackBerry's lawyers from Quinn Emanuel--a great firm though it has very much positionied itself as an anti-Apple firm (representing not only legitimate Android device makers but also antitrust violators and trolls against Apple) and apparently now also as an anti-Facebook firm (it already represented Yahoo against Facebook)--go to unusual lengths to justify the venue choice. Paragraph 34 of the complaint points to a 35,000 sq. ft. L.A. office as a "regular and established place of business" (though Facebook's new Northern California headquarters will have 1.75 million sq. ft.), and footnote 4 says there are at least 17 LinkedIn profiles of "people in this District that are dually employed by both Facebook and one of WhatsApp or Instagram." The complaint also points to "network effects" between Facebook's various services in order to establish as close a connection as possible between that L.A. Facebook office and the two Facebook subsidaries accused of infringement alongside their patent company.

BlackBerry also lists an Orange Country address for an in-house counsel, but it's actually a Canadian company and traditionally had most of its U.S. employees in Texas, though this may have changed.

It's all too obvious that BlackBerry doesn't want the case to be transferred to the Northern District of California. It appears to be realistic that it won't be a cakewalk to keep it in Southern California, but at least it wants to try. So it tries to satisfy the second part of §1400b:

"(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."

It doesn't appear that Facebook filed a declaratory judgment action in the Northern District of California before BlackBerry brought its offensive assertions. But Facebook will still try to get the case transferred to San Jose, and that's where the question of whether Instagram and WhatsApp have a "regular and established place of business" in L.A. or whether it's just Facebook (the parent company)--and whether the parent company's presence is sufficient and whether there are dually-employeed people etc.-- will come up. I'm sure that any relevant witnesses on the Facebook/Instagram/WhatsApp side will be based in Northern California.

Why is BlackBerry afraid of Northern California? Obviously, for the troll that the company increasingly is, the Eastern District of Texas would have been an obvious choice. But presumably BlackBerry didn't want to try such a long shot in light of TC Heartland. I can think of three reasons for which BlackBerry would like to stay out of the Northern District:

  1. Juries in that district tend to be rather tech-savvy. They might be underwhelmed by BlackBerry's abstract patents (unless those are held invalid under Alice as a matter of law) and be more inclined to identify overlaps between those "inventions" and the prior art.

  2. Relative to its economic and societal stature, Facebook has relatively few employees, but still enough that Northern California jurors may know Facebook employees.

  3. Paul Grewal. The former U.S. Magistrate Judge from the Northern District of California (whose opinions were always extremely well-written, not just in my opinion but that of other litigation watchers, too) became Facebook's deputy general counsel in charge of litigation. He's also quoted in Facebook's response, according to which the social network company intends to fight back (I very much hope so: please, Facebook, don't feed the troll even if you can cheaply get rid of the case!). BlackBerry may be afraid of Mr. Grewal still having a unique relationship with some of the judges in that district.

Just one other observation. BlackBerry is seeking an injunction. RIM (as it was called at the time) faced the prospect of an injunction in 2005 when it was being sued by a patent troll named NTP, and had to cough up hundreds of millions of dollars. The following year, the Supreme Court's famous eBay v. MercExchange ruling on patent injunctions came down. Under eBay, irreparable harm is key, and whatever little of an operating business (security software) BlackBerry has left is not really in a competitive relationship with Facebook, Instagram, and WhatsApp. Also, remedies will only have to be discussed if and when BlackBerry prevails on the merits, and that's a big "if."

BlackBerry's approach to patent injunctions has changed. I remember a meeting with them between their almost-shutdown and eBay. One of their in-house counsel told me that they would only pursue an injunction in extreme situations such as an employee leaving the company and stealing some of their code. None of that is at issue now. They've simply become more of a troll themselves.

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Saturday, March 3, 2018

Huawei may have overplayed its hand in Samsung patent dispute: antisuit injunction looms large

Procedural sophistication is a virtue, especially in cross-jurisdictional litigation. But in the event Judge William H. Orrick grants Samsung the antisuit (technically, just temporary anti-enforcement) injunction it is seeking against Huawei in the Northern District of California (in order to prevent the enforcement of a couple of Chinese patent injunctions), the world-class Chinese Android device maker and experienced patent litigant has no one to blame but itself--for excessive procedural gamesmanship of the kind that is all too obvious to (federal) judges. Should Judge Orrick find Huawei's attics "vexatious and oppressive," one of the three Unterweser antisuit injunction factors (a set of factors from the Fifth Circuit that the Ninth Circuit also applies) would be met, and someone who brings claims only to seek an immediate stay of some of them does appear to be suing for the sake of suing.

Huawei could have sued Samsung in only one country: China or the United States. It could also have brought perfectly non-overlapping complaints in any number of jurisdictions. Instead, Huawei sued in San Francisco one day (only to immediately seek a stay of some of its claims there), in Shenzhen the next day, and while requesting a global FRAND determination from the U.S. court it was going for the jugular--for injunctions in the country in which Samsung manufactures its smartphones--in China, meanwhile winning injunctions over two standard-essential patents (SEPs).

There are some valid points in Huawei's opposition brief (filed on February 20), but on the most critical questions it has nothing to offer but strawmen (this post continues below the document):

18-02-20 Huawei Opposition Brief by Florian Mueller on Scribd

Where I agree with Huawei is that the positions Samsung took on injunctive relief over SEPs in connection with an ITC import ban it was seeking and nearly (if not for a presidential veto) obtained against Apple were just the opposite of what Samsung has been saying since. However, for almost five years Samsung has been reasonably consistent, even supportive of advocacy groups and industry alliances that promote reasonable restrictions on access to injunctive relief over SEPs. Any inconsistency of the kind Huawei points to is, at best, a psychological issue--not a substantive or procedural one.

Huawei argues that Samsung is contradicting its own positions because it's seeking an antisuit injunction, for which it is required that the U.S. action be dispositive of the relevant issue(s) in the foreign litigation, while not agreeing that the U.S. court could set a global portfolio FRAND rate. At first sight, that may call into question the merits of Samsung's antisuit injunction. But Huawei had to grossly overstate the scope of the relevant issue (that's the most important one of the "strawmen") in order to portray Samsung as inconsistent. It's only a question of breadth. In its reply brief, Samsung stresses that it never argued that the California case would be dispositive of the entire Chinese actions--it's just about FRAND compliance and its implications for the entitlement to injunctive relief, and Samsung isn't against the U.S. court determining access to injunctive relief (this post continues below the document):

18-02-28 Samsung Reply Brief by Florian Mueller on Scribd

With respect to the legal standard, the most fundamental disagreement is whether Samsung must meet the general factors for preliminary injunctions in addition to antisuit-specific factors or whether the standard for antisuit injunctions stands on its own without having to additionally meet the general preliminary injunction factors. Samsung refers to a Ninth Circuit opinion from 2006, Gallo v. Andina, which was also cited in Microsoft v. Motorola, the closest case to Huawei v. Samsung: the propriety of an injunction is, therefore, determined based on the parties and issues being identical, on the first (U.S.) action being dispositive of the other (the foreign one), and whether at least one Unterweser factor applies. Ultimately, the impact on comity must be "tolerable." But that's it according to Microsoft v. Motorola.

Obviously, Samsung argues that if it had to prevail on the general preliminary injunction factors, it would do so handily, but it really looks like that's not even going to be reached.

Samsung's reply brief doesn't go into detail on this, but as probably the only non-party person to have watched the German Motorola v. Microsoft proceedings in person while following the U.S. Microsoft v. Motorola case via PACER, I found an oddity in Huawei's efforts to distinguish the "Robart injunction" from its Samsung case. Huawei claims that "[t]he German [Motorola v. Microsoft] court [i.e., the Mannheim Regional Court] thus issued its injunction without ever evaluating whether Motorola had complied with its FRAND commitment."

  1. When Judge Robart in the Western District of Washington issued the original temporary restraining order (which was converted into a preliminary injunction and upheld by the Ninth Circuit), the German rulings had not even come down yet. So theoretically there could have been anything in them, including an evaluation of Motorola's FRAND compliance.

  2. While it's correct that German contract law doesn't recognize the concept of third-party beneficiaries, the German Orange Book standard (which was relevant at the time, though by now the CJEU ruling in Huawei v. ZTE applies EU-wide), which is based on antitrust law and the Roman concept of "dolo agit qui petit quod statim redditurus est" (translation from Latin: "he who is seeking something he must return immediately is acting in bad faith"), does involve FRAND questions. Huawei is right that under Orange Book the question was not (though now, post-Huawei v. ZTE, it is) whether the patent holder made an offer on FRAND terms--it places the responsibility for making a FRAND offer on the license-seeking implementer of a standard. But the whole "dolo agit" theory I just mentioned requires anticompetitive conduct by the patent holder. The test applied by German courts in the Orange Book context was whether the patent holder could, without violating antitrust rules, refuse a licensing offer from the alleged infringer. That was, contrary to what Huawei claims, an analysis of FRAND compliance. Structurally different from the way U.S. courts look at it (antitrust vs. contract law; failure to accept vs. failure to make an offer) and from the way EU courts look at the issue now, but nevertheless a FRAND compliance determination.

While Samsung used to take different positions five years ago (an eternity in this industry) and is doing what any other defendant would do in its situation (seeking to put obstacles in Huawei's way, such as by firstly requiring an actual liability finding prior to a rate-setting decision, and by requiring country-by-country resolution of liability), Huawei's opposition appears fundamentally weaker to me than Samsung's motion. It wouldn't have been hard for Huawei to avoid a situation in which one can reasonably find its procedural tactics "vexatious and oppressive," and Huawei could have chosen to keep certain issues out of the U.S. case or at least to file the U.S. case after the Chinese ones. It has made its bed and must now lie in it. I believe Samsung's motion will succeed--if not in district court, than in the Ninth Circuit.

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