Saturday, July 2, 2022

*Another* judge finds Apple's conduct in Ericsson dispute 'puzzling', denies addition to prior art list--and Ericsson opposes *another* questionable Apple motion to amend (FRAND defenses)

After a series of setbacks that Apple suffered against Ericsson, Administrative Law Judge (ALJ) Cameron Elliot handed the iPhone maker its first--partial and non-final, yet significant--win in that dispute: a claim construction order that greatly increases the likelihood of Apple avoiding an import ban over two of the three patents Ericsson is asserting in the last-filed and smallest one of this year's ITC complaints. So if there is any judge right now Apple can't possibly suspect of being biased in Ericsson's favor, that would be ALJ Elliot.

But just like Judge Rodney S. Gilstrap (the Chief Judge of the United States District Court for the Eastern District of Texas), who was "puzzled by the hot-then-cold positions taken by Apple" (emphasis added), ALJ Elliot now finds Apple's position on a procedural question "puzzling" and "implausible" (this post continues below the document):

https://www.documentcloud.org/documents/22077834-22-07-01-itc-1301-order-denying-apple-motion-to-amend-notice-of-prior-art

The favorable (from Apple's perspective) parts of the claim construction order in the same case don't render this denial of Apple's motion to amend the prior art list irrelevant: this is about a prior art reference Apple wanted to field against the '454 patent, with respect to which Ericsson fared much better at the Markman stage than in the case of the other two patents-in-suit. There is a factual dispute left to be resolved, but as ALJ Elliot noted in the claim construction order, "just the fact that the disclosed component is labelled a 'controller' rather than, say, a 'microprocessor' is sufficient to undermine confidence in Apple’s expert evidence." So Ericsson still seems to be in pretty good shape with respect to the '454 patent, unless Apple can prove it invalid.

ALJ Elliot's order denying Apple's motion to amend its notice of prior art by extension vindicates my criticism of Apple's motion (I noted that one rarely sees motions that are so obviously meritless as that one):

  • "[The point in time when Ericsson again stated its position] is both irrelevant, because the priority date is on the face of the patent, and implausible, because the priority date had been in dispute in the IPR for weeks, and because of the Complaint’s priority date allegation." (emphasis added)

  • What's worse, even at the point when Ericsson again (and even by Apple's own admission in the motion) stated its position on the priority date (May 12), Apple still had one day left to add that Pahlavan document to its notice of prior art. As ALJ Elliot notes, "although one day is admittedly not much time to revise the draft NOPA in light of Ericsson’s formal statement regarding priority date, it is puzzling that Apple did not simply just add the handful of prior art references from the IPR petition to that draft." (emphasis added)

  • The U.S. trade judge goes on to say:

    "Equally puzzling is why it took so long for Apple to do anything about the omission after it was discovered. According to Apple, it learned of the problem on June 1, 2022. See Memo. at 3. For no reason apparent from the record, it did not inform Ericsson of its intent to rely on Pahlavan until one week later, and waited to file the present Motion until June 14, 2022, almost two weeks later." (emphasis added)

  • If Apple had (as it did not) presented a good reason for having originally failed to list the Pahlavan document, ALJ Elliot actually would have granted the motion because he would have deemed it reasonable to let Ericsson take a position on the related invalidity theories within about six weeks. But "Apple’s lack of meaningful explanation for its error and lack of diligence in fixing it outweighs the balance of prejudices."

For the avoidance of doubt, ALJ Elliot is presiding over a non-SEP case.

There's also news from a standard-essential patent (SEP) case: the investigation of Ericsson's first 2022 ITC complaint. In that one (investigation no. 337-TA-1299), there's now a pattern of Apple trying to amend pleadings once the Office of Unfair Import Investigations (OUII, frequently referred to as the "(ITC) Staff") disagrees with it. It happened with respect to claim construction as well as Apple's FRAND defenses, all but one of which the Staff says are ripe for dismissal. So Apple brought a motion to amend those affirmative defenses, and yesterday Ericsson filed its opposition to that motion (this post continues below the document):

https://www.documentcloud.org/documents/22077835-22-07-01-itc-1299-ericsson-opposition-to-apple-motion-to-amend-answer-to-complaint

Sorry to say so, but Apple is once again playing tactical games to an excessive extent.

For example, Apple took an ITC precedent out of context by quoting it as follows:

"[T]he Commission generally favors allowing respondents to amend their answers to the complaint"

But this is what the decision (order no. 11 from inv. no. 337-TA-929, Beverage Brewing) really says:

"[T]he Commission generally favors allowing respondents to amend their answers to the complaint provided a showing of good cause as well as no prejudice to the public interest or to the other parties in the investigation." (emphasis added)

So there is no general presumption in favor of amendments to answers to ITC complaints: instead, there are clear criteria. Ericsson, of course, argues in its opposition brief that Apple has not shown good cause, and that an amemdment would be prejudicial as it would simply delay or, as the final part of Ericsson's brief says, "does not facilitate the efficient disposition of issues in this Investigation."

Ericsson says Apple has been pursuing a wait-and-see approach (because Apple brought its motion to amend only after Ericsson had brought a motion to strike those defenses) and is now basically just arguing that as a result of initial discovery, it can present improved versions of those defenses. But

  • legally defective defenses can't be cured by new facts (not only Ericsson but also the Staff--with the exception of one FRAND defense--considered those defenses legally defective), and

  • in cases where the ITC granted amendments in the form of new facts, the respondents clarified in their motions to amend what facts they were going to bring up (and Apple itself did so when it brought such motions in other investigations).

What Apple is doing in those Ericsson cases goes beyond leaving no stone unturned or trying the occasional long shot.

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