Thursday, June 9, 2022

Apple's credibility waning: federal judge 'puzzled by the hot-then-cold positions taken by Apple' throughout 5G patent litigation with Ericsson

Chief Judge Rodney S. Gilstrap of the United States District Court for the Eastern District of Texas is presiding over two Ericsson-Apple cases (which the parties have thus far been unable to settle) and has just entered an order exposing Apple's shifting-sand positions. It's not just one court and one case. The problem is deeply-rooted. Apple has many reasons to be concerned about its credibility, on multiple fronts. But before I talk about the wider problem, let me show you Judge Gilstrap's order:

The order came down in the -460 case, which started as a declaratory-judgment attack by Apple on three of Ericsson's numerous 5G patents. For someone following U.S. patent litigation, it was easy to figure out that Apple brought those DJ claims only to sidestep the appellate jurisdiction of the United States Court of Appeals for the Fifth Circuit. What did, however, surprise me was that Ericsson opposed Apple's motion to stay the DJ case. Those claims were the only ones left in one of the two cases as all FRAND claims had been incorporated into Ericsson's original case: given that Apple had chosen those patents as targets, presumably because Apple thought those patents were weak--and Ericsson could simply have decided not to oppose Apple's motion for a stay, without waiving any of its rights. Instead, Ericsson insisted on moving forward with that case, too.

Judge Gilstrap denied Apple's motion for a stay, and the key passage speaks for itself:

"The Court is puzzled by the hot-then-cold positions taken by Apple throughout this case and the co-pending -376 action. When Ericsson argued that Apple’s agreement to be 'bound' in the -376 action 'should mean that Apple would perform under Ericsson's offered contract if that offer is adjudicated FRAND,' Apple resisted vehemently, arguing that the -376 action would serve to 'determine[e]…FRAND terms' that could be used by the parties in a global cross-license. [...] This Court agreed with Apple, finding that Apple is not bound to enter into a license agreement based on any FRAND rate set in the -376 action. In this case, Apple now presents a diametrically opposed theory—namely, that 'the -376 action [will] lead to a binding resolution of the parties’ dispute' such that the patent-based claims in the instant case will be 'moot[ed]' by the outcome of the -376 action. [...] Apple now seems to backtrack on its earlier argument that it need not be bound to enter into a license with Ericsson by equating global rate setting for a cross-license [...]"

It's also a "hot-then-cold" position that Apple originally wanted to prove that those Ericsson patents are, in each case, invalid and/or not infringed, only to then seek a stay--but no court that respects itself will let Apple play that kind of game.

The Apple of roughly ten years ago also took self-serving positions, but at least Apple was being reasonably consistent. At this stage, Apple, its outside counsel and its astroturfers will indiscriminately say anything they believe supports their positions, no matter whether it is an insult to human intelligence (at least if one really understands the issues, such as Apple's totally ridiculous "national security" argument in the App Store context) or contradicts Apple's own positions on similar questions. Apple should think about this because it's becoming ever less effective at persuading courts or policy makers (case in point, the Biden Administration is not going to adopt a policy position on standard-essential patents (SEPs) that would suit Apple). It's not a sign of political success if you dump a lot of money on some "experts" (academics, former government officials, whatever) and they'll suck up to you and say whatever you want. Those are just shills and sycophants. Success is when independent and informed opinion leaders and decision-makers wholeheartedly agree with you that your positions are in the public interest and that you stand on higher ground.

Seriously, I don't know when Apple last stood on higher ground. Relatively speaking, I would say Apple is less inconsistent with respect to environmental policy than it is in other contexts. Its positions on the right to repair are also somewhat controversial, but there can be no doubt they're serious about reycling. Planned obsolescence and intentional incompatibility raise environmental concerns, but fortunately the EU has agreed on requiring a common charger standard for all smartphones. What about privacy? Just a pretext as Apple itself is now telling its users how great personalized ads are, provided that Apple is the one tracking them. As Shopify founder Tobi Lutke noted on Twitter, Apple's Russell Conjugation in this context is: "I personalize, you track across apps, they invade your privacy."

In patent litigation, I sharply criticized Apple in 2014 for taking a position on "reasonable royalties" ($40 per Samsung Galaxy phone over five software patents) that was inconsistent with how it usually interprets the R in FRAND. But that was an outlier at the time. By now, that kind of self-contradictory behavior is the new normal for Apple--and again, I don't think it serves Apple well.

I really amm convinced that Apple would benefit from greater intellectual honesty. Apple should prioritize those arguments supporting its positions that withstand scrutiny, and it must realize that it will never be able to claim on a credible basis that its positions are in the public interest as long as it's just abusing its immense market power to diminish opportunities for other companies. But again and again, Apple can't resist the temptation to try to fool people, to emphasize arguments that work only if someone doesn't figure things out.

In the App Store antitrust dispute with Epic Games, even Apple's own counsel couldn't consistently deny that iOS competes with Android, regardless of whether iOS is sold or licensed separately from Apple's devices. Inconsistencies, contradictions, and ultimately a loss of credibility--Apple can do better than that.

Judge Gilstrap in the Eastern District of Texas is nobody's fool. I'm sure he knew exactly what to think of Apple's claims earlier this year that the Eastern District of Texas was its preferred venue to resolve its 5G patent dispute with Ericsson--the same Apple that had closed two Apple Stores in that district (and instead opened at least one shop as close as possible to the district's border) only to be in a better position to get patent infringement actions transferred to other venues, particularly the Northern District of California.

Apple's gamesmanship in the early stages of the dispute with Ericsson was transparent--and Judge Gilstrap wasn't buying any of that, though he did grant Apple one wish: early trial dates. Even that wasn't really in Apple's interest: Apple would have wanted those early trial dates only if it had gotten its way in other respects. The fact that Ericsson felt forced to bring a motion to compel Apple to identify fact witnesses casts doubt on Apple's commitment to a swift adjudication of the Texas FRAND case. The issues that Apple is uncomfortable with include, but are not limited to, its SEP devaluation campaign and its App Store practices, including its position that its 30% app tax is a reasonable IP royalty.

And now Apple has made itself ridiculous by unsuccessfully requesting a stay of a patent infringement case that is simply the consequence of its own declaratory-judgment attack on three Ericsson patents, arguing that the FRAND action would result in a license when Apple could actually elect not to accept such a licensing offer (even after the court has found it to be FRAND, which is what Ericsson wants). Judge Gilstrap is not the only person to be puzzled.

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