In response to Samsung's Federal Circuit appeal, Ericsson points to Munich anti-antisuit case law

On February 22, Samsung filed the opening brief in its Federal Circuit appeal of Ericsson's anti-antisuit injunction from the Eastern District of Texas. Yesterday, Ericsson responded (this post continues below the document):

21-04-02 Ericsson Response ... by Florian Mueller

Those 80 pages from Ericsson are probably just the tip of the iceberg. Come Friday, the Federal Circuit may very well be inundated with amicus curiae briefs in support of Ericsson's position, as there will be no shortage of U.S. companies and academics with an interest in maximizing the number of patent lawsuits brought in the U.S., including in the Eastern District of Texas, which has lately been eclipsed by the Western District.

I believe it makes more sense to go into detail when not only Ericsson's brief but also the anticipated slew of amicus briefs are on the table. But I wanted to be of service and make the document available immediately.

Just a couple of observations:

• Ericsson definitely likes the Munich case law on anti-antisuit injunctions:

  "Courts worldwide recognize the legitimacy of defensive injunctions against foreign efforts to restrict domestic relief. Appx1116; see, e.g., Nokia v. Continental, Oberlandesgericht München [Munich Higher Regional Court], Dec. 12, 2019, 6 U 5042/19 (Ger.), translation at 8 (Appx1858-1867) (granting anti-interference injunction 'as a defense against' interference with enforcement of German 'patent rights in Germany').

  "See also InterDigital Tech. Corp. v. Xiaomi Commc’ns Co., Landgericht München [Munich Regional Court I], Feb. 25, 2021, 7 O 14276/20 (Ger.), translation at 39 (Appx1868-1922) (confirming anti-interference injunction to ensure patentee is not 'deprived of his right[s]' to 'enforcement'); [...]"

  Unlike the U.S. framework for antisuit injunctions, however, German courts afford literally zero deference to courts outside the EU.

• Ericsson argues that Judge Gilstrap's misconception (believing that Samsung was seeking an ITC import ban against Ericsson over its own SEPs, when in reality those ITC complaints involved only non-SEPs on both sides) doesn't matter because Samsung could still do so and, in any event, "Samsung has attacked Ericsson 4G and 5G SEPs through IPRs in the U.S., see Samsung Elecs. Co. v. Telefonaktiebolaget LM Ericsson, IPR Nos. 2021-487, -447, -446, -486 (Jan. 29, 2021), -730 (Mar. 26, 2021)."

  Challenging the validity of another party's patents couldn't be much further from seeking an import ban over one's own patents...

  Less than 24 hours before Ericsson filed its response brief with the Federal Circuit, IAM (Intellectual Asset Management) wrote about "the extent of the assault Samsung has launched at the PTAB against Ericsson as the Korean company pursues a strategy that few can afford." Interestingly, the Unified Patents report IAM cites to notes that Samsung "is the most prolific PTAB filer (49 filings) and at the same time are the most targeted defendant in patent litigation (19 cases as first-named defendant)," while "Ericsson was the most attacked patent owner at the PTAB with 30 petitions filed against them." The passage I just quoted from Ericsson's response brief merely lists a handful of Samsung v. Ericsson IPR petitions targeting SEPs. This means that only about 10% of Samsung's IPR petitions in the first quarter relate to Ericsson SEPs, and only one in six IPR petitions against Ericsson was brought by Samsung over a SEP. All in all, Unified Patents lists 30 Samsung v. Ericsson IPR petitions, most of them relating to non-SEPs. This just a consequence of Ericsson, a notoriously aggressive enforcer, having elected to sue Samsung over a large number of patents.

  The "strategy that few can afford" (bringing many IPR petitions) presupposes a patent holder asserting many patents, which is also a "strategy that few can afford." It's also an indication of how far apart the parties' positions on a reasonable license fee must be: otherwise Ericsson wouldn't be suing so aggressively, and Samsung would consider it cheaper to accept Ericsson's terms than to litigate in multiple jurisdictions in parallel.

There would be a lot more to say about Ericsson's filing, but for the reason stated above (I predict an avalanche of amicus briefs on Friday), I'd like to leave it at that for now.

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Apple, Google, Intel, Cisco sue USPTO Director Iancu over gutting the America Invents Act: litigation to the rescue of legislation

Andrei Iancu, an IP litigator and former chairman of a firm that primarily represents patent trolls, has been persistent and creative in his efforts to prove that it's bad idea to put the fox in charge of the henhouse. The Director of the United States Patent & Trademark Office is one of the three most dangerous men in the U.S. from a patent policy perspective. The other two are Senator Chris Coons (D-Del.) and Antitrust Assistant Attorney General Makan Delrahim, with whom Mr. Iancu teamed up to abandon a very balanced U.S. policy position on the enforcement of standard-essential patents (SEPs).

The Patent Trial and Appeal Board (PTAB) has been in Mr. Iancu's crosshairs for years. After all, it's a troll patent graveyard--and that's just not conducive to the business of Mr. Iancu's former (and presumably future) firm. Last year's revision of the PTAB Trial Practice Guide raised a number of issues that made it harder to challenge weak patents. While those guidelines contain a set of roadblocks that have practical consequences, they did far less damage to the post-grant review process than Mr. Iancu's decisions to designate as "precedential" (and, therefore, binding on the PTAB) two PTAB decisions relating to discretionary denials of the institution of inter-partes reviews (IPR): NHK and Fintiv.

Taken together as the NHK-Fintiv rule, those decisions run counter to what was arguably the single most important idea behind the IPR part of the America Invents Act (AIA): patents that shouldn't have been granted in the first place (because the claimed inventions weren't new, or íf new, then not inventive) shouldn't give their owners leverage in litigation. Otherwise the owners of weak patents are overcompensated, which is a misallocation of economic resource that impedes actual innovation.

In order to strike a reasonable balance between the interests of plaintiffs and defendants, Congress decided--when the AIA was enacted in 2011--to require an IPR petition to be filed within one year of being sued over the relevant patent. Without that requirement, defendants to infringement complaints could file a petition at a late stage of litigation and then move for a stay. The twelve-month window means there is normally enough time to identify relevant prior art--but delaying tactics won't work.

The net effect of Mr. Iancu's NHK-Fintiv rule is that discretionary denials by the PTAB to institute IPR proceedings have become far more frequent than previously, especially in cases in which product-making and service-providing companies have to defend themselves against patent troll lawsuits in the Western and Eastern Districts of Texas. That's because the NHK-Fintiv "factors" make a discretionary denial of an IPR petition particularly probable if the parallel infringement litigation is pending in a district that schedules a near-term trial date (though even so-called rocket dockets often have to push their trial dates back later) and are statistically unwilling to stay their cases. Simply put, the troll-friendlier the district, the harder it is to redress balance through an IPR petition.

Actually, when the one-year deadline set by Congress has been met, it should be all about the likelihood of success of a petition. But only the last one of the six NHK-Fintiv "factors" involves that aspect, and it does so in a way that minimizes the weight of the merits:

"6. other circumstances that impact the Board’s exercise of discretion, including the merits"

As a result, ever more discretionary denials don't even address the merits.

A discretionary denial is fatal to a petition in two ways: even if the circumstances (such as a district court's trial date) change, you can't request reconsideration after 30 days; and when the PTAB has definitively denied your petition, you practically can't appeal that decision to the Federal Circuit.

The net effect is really absurd. Congress wanted IPR petitions under the AIA to bring some balance to patent litigation, considering that juries rarely hold patents invalid. While there is no formal distinction between patent assertion entities and other litigants, the problem of patent trolls was already rampant in 2011, and it was certainly part of the plan to make trolling less lucrative. But now, with NHK-Fintiv, the IPR part of the AIA ever more often fails to come to the aid of defendants when they need it the most, which is precisely when they have to defend themselves in the aforementioned troll-friendly districts.

Four Silicon Valley icons--Apple, Google, Intel, and Cisco--jointly brought a complaint in the Northern District of California (where all four are based) against Mr. Iancu (in his capacity as USPTO Director) in order to overturn NHK-Fintiv (this post continues below the document):

20-08-31 Apple Google Intel... by Florian Mueller

The second paragraph of the complaint raises a key policy question: what makes a patent system strong? Misguided policy-makers believe that a patent system is strong if it favors those enforcing patents. But the leverage a patent owner gets in litigation must be proportionate to the quality of the patent. Patents that were granted only because the very limited amount of time patent examiners (not only, but also at the USPTO) have to find prior art should be invalidated swiftly and reliably once they are asserted in litigation. Bad patents weaken a patent system.

The four co-plaintiffs explain how much they invest in innovation, how many jobs they've created, and how many U.S. patents they hold. No one will seriously believe that those companies--who, by the way, don't always agree--didn't want innovators to be fairly compensated. When they get sued, they obviously defend themselves, and they'll do what any well-advised defendant would do in their place. But all they want is a balanced, functioning system.

The relief they are seeking is declaratory ("[d]eclare that the NHK-Fintiv rule is unlawful"; "[s]et aside the NK-Fintiv rule") and injunctive ("[p]ermanently enjoin Defendant, and his officers, agents, employees, assigns, and all persons acting in concert or participating with him, from relying on the NHK-Fintiv rule or the non-statutory factors it incorporates to deny institution of IPR").

The statutory basis for this is a mix of two laws whose acronyms are distinguishable only by the middle letter: the Administrative Procedure Art (APA), which allows parties to bring challenges to certain actions by government agencies, and the 2011 AIA.

The complaint challenges Mr. Iancu's decision to designate the NHK-Fintiv pair of decisions as "precedential" in three ways:

• Ideally, the four tech giants would like the court to hold that NHK-Fintiv exceeds the USPTO Director's authority and violates the AIA. This is an argument about the limits of the USPTO Director's discretion in how his agency implements the AIA.

• Plan B would be for the court to deem the NHK-Fintiv rule arbitrary and capricious.

• As a last resort (Plan C), the complaint claims that the USPTO Director failed to fulfill the requirement of "notice-and comment rulemaking." If the complaint succeeded only on this basis, the USPTO might ultimately adopt the same rule again, but at least there would have to be some consultation of stakeholders.

The complaint doesn't mention Chevron, a Supreme Court doctrine according to which a government agency is entitled to deference when applying an ambiguous statute. Justice Gorsuch is a known critic of that doctrine and apparently waiting for the best opportunity to have it overruled. The USPTO will likely make a Chevron argument. The complaint suggests that plaintiffs anticipate that line of defense, as it stresses how clearly Congress doesn't want to limit parallel PTAB and district court proeedings other than by way of the one-year deadline. If the courts agree with the four tech giants, Chevron doesn't apply anyway.

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New USPTO trial practice guidelines overshoot as they seek to restrict parallel PTAB IPR petitions challenging the same patent

Since taking office, Undersecretary and United States Patent & Trademark Office (USPTO) Director Andrei Iancu, who previously managed a major patent litigation firm, has been on a crusade against inter partes reviews of issued patents by the Patent Trial and Appeal Board (PTAB). It will take more than one blog post to explain and comment on Director Iancu's various anti-IPR initiatives, all of which share a common goal: to keep as many weak patent claims alive as possible, contrary to the political goal of the economically most important part of the America Invents Act (AIA). Giving leverage to patent holders even though the asserted patents were obtained without an actual contribution to the state of the art is a total misallocation of resources and incentivizes legal gamesmanship while discouraging true innovation.

This month, the USPTO published the latest update to its PTAB Trial Practice Guide (PDF). The section on "Parallel Petitions Challenging the Same Patent" starts on page 26, and its first paragraph is already very telling:

"Based on the Board's prior experience, one petition should be sufficient to challenge the claims of a patent in most situtations [sic]. Two or more petitions filed against the same patent at or about the same time (e.g., before the first preliminary response by the patent owner) may place a substantial and unnecessary burden on the Board and the patent owner and could raise fairness, timing, and efficiency concerns. See 35 U.S.C. § 316(b). In addition, multiple petitions by a petitioner are not necessary in the vast majority of cases. To date, a substantial majority of patents have been challenged with a single petition."

I don't mean to attach too much importance to the typo ("situtation") in the first sentence. I usually have typos in my posts. But in an official document of this kind, typos are unusual, and most often found in sections that underwent edits until shortly prior to publication. That said, the issue here is one of substance.

The "substance" of that paragraph just amounts to vague terms expressing frequencies of occurrence ("most", "vast", "substantial", "rare", "unlikely"). Not even numbers. Just words.

As a matter of policy, that's not the way to provide workable and meaningful instructions to judges. Judges have to make decisions, and they need criteria, possibly examples, that help them do their job. Words like "most" and "unlikely" don't constitute or properly describe criteria, much less a standard, for anything.

What should the PTAB judges do then? Should they keep statistics of the cases before them and strive for a particular distribution of decisions, based on whatever range of percentages a given judge believes to be consistent with guidelines like "unlikely" and "substantial majority?" So after someone grants two petitions challenging the same patent, they'll have to reject at least the next ten?

When outsiders like bloggers or financial investors (especially risk arbitrageurs) try to predict an outcome, it's an inherently probabilistic exercise. But applying the law is different from placing bets on one outcome or the other. It should be all about the merits, not a numbers game.

The section on parallel petitions has many more paragraphs, and some do talk about criteria for whether a petition should be granted, with a particular emphasis on reasons weighing in favor of rejection. But before the reader reaches that point, the new Trial Practice Guide takes the position that two parallel petitions challenging a given patent should be "rare," and three or more should be "unlikely" to be justified--"unlikely" regardless of how many claims a patent has, how complex the relevant technology is, or how many prior art references are presented.

The good news here is that the PTAB judges can still grant parallel petitions if they deem them justified. But Director Iancu will achieve his objective of dissuading many petitioners from even trying to bring parallel petitions now.

I can think of at least four reasons why parallel petitions are sometimes not only justified, but even necessary:

1. There are maximum word counts for PTAB petitions and related filings. However, some patents have so many claims that parallel petitions are necessary. Qualcomm's envelope tracker patent is a good example: it was challenged by four petitions, each of which targeted different claims. And all four petitions were granted based on a likelihood of having merit.

2. Petitions are typically brought in response to infringement lawsuits, and such petitions must be filed within a year of the complaint. However, plaintiffs often have more time to decide which claims to ultimately take to trial, so defendants should be able to challenge all claims of an asserted patent.

3. In light of the Supreme Court's SAS ruling, the USPTO should actually welcome a partitioning of IPR petitions. Under SAS, all challenged claims must be reviewed even if a likelihood of success has been identified with respect to only one of them. Multiple petitions per patent, however, are a means of still giving the PTAB some flexibility.

4. Sometimes defendants identify additional prior art references after an initial petition.

The PTAB's enemies such as former Federal Circuit Chief Judge Randall Rader have used the highly pejorative term "death squad" because of a high invalidation rate (80%). Here again it should be about the merits, not about the numbers. The proper conclusion from a high invalidation rate would be to reject more applications in the first place. Instead of greater legal certainty through higher patent quality, Director Iancu's vision is to have ever more patents (including junk patents), ever more litigation, and ever more leverage for patent holders because defendants will face many roadblocks such as page limits, maximum word counts, the next best thing to a prohibition of parallel petitions, unfavorable claim construction standards, and so forth. While some (such as the firm Mr. Iancu used to run) stand to gain from such policies, it's bad news for legitimate innovators, for the economy at large, and for the general public.

It's very, very hard to convince a jury that a patent should be deemed invalid. Jurors have too much respect for "the Government" in a context like this. PTAB IPRs, however, can solve the problem, unless the process is sabotaged by means of a Trial Practice (Mis)Guide.

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USPTO drifting out of balance under Director (Undersecretary) Andrei Iancu: PTAB under attack

The previous director of the United States Patent & Trademark Office, Michelle Lee, had previously worked at Google and was well respected by all major product- and service-focused tech companies for her understanding of the need for a balance in the patent system: a balance between the interests of right holders in valid and enforceable intellectual property rights as well as the interest of the general public in preventing overbroad patents and, particularly, the enforcement of patents that should never have been granted in the first place.

Mrs. Lee's predecessor, David Kappos, came from IBM, a company that has for some time been known for rather aggressive patent monetization (though they rarely litigate) and has, since leaving the USPTO, been lobbying hard for broad and strong patents. That said, he respected legislative and judicial decisions without a doubt, and compared to the current USPTO director Andrei Iancu his actual decisions at the helm of the USPTO were the ones of a centrist, and clearly not those of an extremist. He had his views and beliefs, but a reasonable agenda.

Director Iancu used to be the managing partner of Irell & Manella, a renowned L.A. law firm with a particular focus on patent enforcement. Presuambly they also represent defendants, but interestingly, I've always heard of them only when they were counsel for plaintiffs.

There are various respects in which Director Iancu is trying hard to turn the legislative and judicial tide--which is an agenda that the executive branch of government shouldn't have, but sometimes that's unfortunately the way it is.

Earlier this month I mentioned a recent open letter to Director Iancu and his boss with which numerous major companies and industry organizations urged him not to withdraw the USPTO's support for a position paper on standard-essential patents (SEPs) that goes back to the Kappos era. At around that time, Professor Thomas Cotter's Comparative Patent Remedies blog mentioned a Federalist Society event at which both Director Iancu and Assistant Attorney General Makan Delrahim spoke. AAG Delrahim and his subordinates are an anti-FRAND activist cell in the U.S. government, swimming against the judicial tide--and given Director Iancu's one-sided support of the interests of patent holders, there definitely is a risk of the two becoming (not in a literal sense, of course!) partners in crime against FRAND.

So far, however, Director Iancu's focus has not been on SEPs. The two areas of activity in which his decisions and his rhetoric raise concerns on my part are patent-eligibility law (he'd like examiners to apply the Supreme Court's guidance from Alice and related cases in a way that would simply gut the case law of the top U.S. court) and, especially, the ways he tries to weaken the Patent Trial and Appeal Board (PTAB). The PTAB plays an important hygienic role and contributes to balance in patent litigation by invalidating countless patent claims that should never have been granted, but would otherwise do significant--in some cases even enormous--damage in litigation.

When Director Iancu testified before the House Subcommittee on Courts, IP, and the Internet on May 9, his statement didn't reveal his anti-PTAB agenda. Whatever he said about PTAB just sounded like ensuring greater efficiency and higher quality. But the introductory part of the speech reflected his unbalanced perspective:

"Our overall goal is to ensure that rights owners and the public alike have confidence in, and can rely on, a predictable and well-functioning IP system. This confidence spurs inventors to invent, investors to invest, companies to grow and create new jobs, and science and technology to advance. I will continue to work with my team at the USPTO, with Secretary Ross and his team, others in the Administration, this Committee, and our stakeholders to identify and advance policies and initiatives that are working and reassess those that are not."

This is the mission statement of a patent radical and of someone who doesn't appear to understand that he has a responsibility not only for patentees and for litigation firms like the one he used to chair, but also--in fact, even more so--for the economy and society at large.

The unspecified reference to "the public alike" doesn't counterbalance his focus on "rights owners" and their interests.

The way Director Iancu modified the claim construction standard for post-grant reviews (by instructing PTAB judges to apply the narrower standard used in infringement proceedings) has nothing to do with greater predictability: decisions were equally predictable before, but it used to be harder to defend weak patents.

I may go into more detail on claim construction in post-grant reviews on another occasion. What has me concerned with a view to what might happen next is a letter by Senators Tillis (R-N.C.) and Coons (D-Del.) urging him to do something he'd presuambly be more than happy to do: to disallow so-called "serial [PTAB] petitions." Those senators, and others, are also behind an attempt to vitiate § 101 (patent eligibility), which the Electronic Frontier Foundation has accurately described as a "disaster for innovation."

The "serial petition" matter is a more imminent threat because Director Iancu might take some executive action, while changing patent-eligiblity law would require a legislative process that reasonable forces could still influence.

By "serial petition," the enemies of PTAB mean that more than one petition challenges a given patent. But as a litigation watcher I know that for most patents in the field of information and communications technology there isn't just one prior art reference. Typically there are several that come very close, and sometimes ten or more. Multiple petitions challenging a patent are absolutely legitimate and positive as long as they aren't merely duplicative of each other in terms of the invalidity contentions they are based on.

The Computer & Communications Industry Association (CCIA) wrote an open letter last month that sharply disagrees with the senators. I'm concerned that the senators may even have coordinated the letter with Director Iancu beforehand so as to give him an excuse for something that he, the most aggressive and radical enemy the PTAB ever faced in such an influential position, would presumably like to do unless there is so much backlash from industry that he'll refrain from it.

Those of us promoting a balanced patent system must keep a close eye on what's going on at the USPTO under Director Iancu. I anticipate more posts on the USPTO, and especially on inter partes reviews, going forward.

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ITC judge disagrees with ITC staff, sides with Qualcomm against Apple: one patent held infringed, import ban recommended; but patent likely invalid

In 2017, Qualcomm filed two ITC complaints (requests for U.S. import bans) against Apple. In the earlier-filed case, a final determination by the Commission (the six-member decision-making body at the top of the U.S. trade agency with quasi-judicial authority) is due at 5 PM Eastern Time today, and the outcome of that one will be inconsequential as Apple has already worked around the sole remaining patent-in-suit. What's not so clear right now is whether Qualcomm may or may not gain leverage from the later-filed case. In that one, Administrative Law Judge (ALJ) MaryJoan McNamara just announced an initial determination ("initial" means the parties can seek a Commission review, and a final ruling is still four months off) according to which Apple is deemed to infringe one of three Qualcomm patents-in-suit (this post continues below the document):

19-03-26 ID on Violation by on Scribd

This preliminary decision disagrees with other findings in three respects:

1. The patent in question, U.S. Patent No. 8,063,674 on "multiple supply-voltage power-up/down detectors," was not deemed to be infringed by Apple in the opinion of the Office of Unfair Import Investigations (OUII, commonly referred to as "the ITC staff"), which participates in many investigations as a neutral third party. In my observation, decisions by ITC judges that run counter to staff recommendations are virtually certain to be reviewed and more likely than others to be reversed.

2. While ALJ McNamara recommends an import ban for the event her finding of a violation is upheld, the ITC staff originally also advised against a ban, for public interest reasons. The big public-interest issue here is that Qualcomm is specifically targeting Intel-powered iPhones, and Intel is its only competitor in the relevant market segment.

3. In January, the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office instituted two inter partes reviews (IPR2018-01315 and IPR2018-01316) against this patent. Such petitions as Apple's are granted only if at least one challenged claim is likely to be found invalid.

Originally, Qualcomm asserted five patents in its second ITC complaint against Apple. It dropped two; the ALJ ruled on three, and one of them--the '674 patent--has now been deemed infringed (contrary to the ITC staff's findings) and valid (which is the less likely outcome of the pending inter partes reviews).

The parties and any other stakeholders will soon file another round of public-interest statements (not the first one between these parties). The Commission ruling coming down in the other case later today will provide valuable guidance in that regard.

Should the Commission affirm the ALJ's decision and adopt the recommendation to issue an import ban despite concerns over the anticompetitive implications of doing so, the President of the United States (who typically delegates this authority to the U.S. Trade Representative) could still veto an import ban. Also, there would be an appeal, and the Federal Circuit could stay enforcement for the duration of the appeal. And an antisuit injunction motion that a consumer class brought last year--but which was deemed premature at the time--could still succeed after the Presidential review.

Given all the question marks related to the existence of a workaround, to the July 26 Commission determination, to the Presidential review, to a potential appeal, and to a potential antisuit injunction, it's too early to tell what the fallout from this will be. Some of this will probably become clearer only when Apple files its next public-interest statement in this case, or even at a later stage.

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USPTO and EPO post-grant reviews: Intel is beating the living daylights out of Qualcomm's envelope tracker patent

There's only been bad news for Qualcomm's envelope tracker patent family this week. So bad in fact that it's impossible to understand why Qualcomm made a $1.5 billion deposit last month to enforce an injunction in Germany that lacks legitimacy and teeth at the same time.

On Tuesday, the United States District Court for the Southern District of California considered it a crystal-clear case that Qorvo's envelope tracker chip found in certain iPhone models doesn't infringe. That's why Judge Dana M. Sabraw entered summary judgment against Qualcomm's related infringement claim. There wasn't even a point in presenting an extremely far-fetched infringement theory to a jury. Previously, the ITC had held the patent non-infringed as well. In the combination of the ITC and San Diego (Qualcomm's hometown) rulings, there is every reason to assume that the German injunction is a monumental miscarriage of justice, and Qualcomm will likely lose some part of its $1.5 billion deposit if there's no settlement before Apple will be able to seek wrongful-enforcement damages.

Also on Tuesday, German website WinFuture.de scooped everyone by finding out from resellers that Apple will apparently have a workaround ready in a month's time. It's illustrative of the utter absurdity of the envelope tracker SNAFU that a workaround would have to be created, replacing a non-infringing (in all likelihood, given the two U.S. decisions) chip. Contrary to what some people on the Internet appear to think, it's not an admission. It's simply that, should WinFuture.de be right (which I tend to believe it is), any infringement allegations by Qualcomm against the modified variants of the iPhone 7 and iPhone 8 would require a whole new determination on the merits, while a contempt proceeding involving the previously adjudicated chipset could be decided against Apple if the court relied on its agnostic--by now, most likely counterfactual--infringement finding again. If the standard in a contempt proceeding required Qualcomm to prove an actual infringement, a workaround would most likely not be needed, but the court might favor the same approach once again and adopt Qualcomm's attorneys' fiction. As the saying goes, discretion is the better part of valor.

Yesterday--Wednesday--delivered the next round of bad news for that Qualcomm patent. Technically it's U.S.-only news, but due to major overlaps it also has important implications for an opposition proceeding before the European Patent Office, which will hold an opposition hearing on May 24 (chairman: Manuel Pavón Mayo; 1st examiner: Ali Hijazi; 2nd examiner: Thomas Agerbaek). The U.S. inter partes review no. IPR2018-01154 targeting claims 15-20 of the U.S. envelope tracker patent is most interesting in this regard as the claims and the prior art references are most similar to the issues before the EPO's opposition division.

The Patent Trial and Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO), which had previously instituted two inter partes reviews of the envelope tracker patent, yesterday granted two more petitions, resulting in a total of four IPRs targeting this patent, with each proceeding relating to a different set of claims. The following screenshot shows the status of Intel's four IPR petitions, all four of which have given rise to post-grant reviews by now (click on the image to enlarge; this post continues below the image):

In light of the Supreme Court's SAS ruling, which requires the PTAB to either review all challenged claims or none, the partitioning of Intel's validity attack on the envelope tracker patent makes the four decisions on institution even more meaningful. Otherwise, if a single petition had challenged all claims, the PTAB might have granted a review theoretically because of a single claim being reasonably likely to be invalidated. But since Intel's lawyers (from the Wilmer Hale firm) challenged four sets of claims separately, we now know that the USPTO sees a reasonable likelihood of invalidation for multiple claims, and probably even for all claims.

The petitions were all filed in late June, i.e., after the SAS decision, and Intel presumably sought to avoid a situation in which the PTAB would be scared away by a monolithic petition targeting all claims at once if there had been a strong case for invalidation with respect to maybe just one or two claims. But by now we know it was a non-issue. The patent has a huge validity problem.

Should a constitutional law professor (who happens to be the chairman of the board of directors of an organization that has been supporting Qualcomm for some time now) be right and the ITC actually has to conduct a retrial with respect to Qualcomm's first ITC complaint against Apple, the envelope tracker patent would be relitigated, but the likelihood of the ITC deeming the asserted claims invalid would be higher next time around.

Since there will be news from those IPRs sooner or later, I'd like to help everyone navigate the four IPRs by providing an overview of what prior art references are held against what claims in what proceeding:

IPR2018-01153 (claims 1-9) -- instituted on 01/16/19

Intel's petition (PDF)

Claim 1: obvious over Chu + Choi 2010 + Myers

Claim 2: obvious over Chu + Choi 2010 + Myers

Claim 3: obvious over Chu + Choi 2010 + Myers

Claim 4: obvious over Chu + Choi 2010 + Myers

Claim 5: obvious over Chu + Choi 2010 + Myers

Claim 6: obvious over Chu + Choi 2010 (if necessary, + Myers)

Claim 7: obvious over Chu + Choi 2010 + Myers

Claim 8: obvious over Chu + Choi 2010 (if necessary, + Myers)

Claim 9: obvious over Chu + Choi 2010 + Myers

IPR2018-01240 (claims 10&11) -- instituted on 02/06/19

Intel's petition (PDF)

Claim 10: obvious over Chu + Choi 2010 + Hanington

Claim 11: obvious over Chu + Choi 2010 + Hanington + Myers

IPR2018-01152 (claims 12-14) -- instituted on 01/16/19

Intel's petition (PDF)

Claim 12: anticipated by Chu

Claim 13: obvious over Chu + Choi 2010 (if necessary, + Myers)

Claim 14: anticipated by Chu, or obvious over Chu + Blanken

IPR2018-01154 (claims 15-20) -- instituted on 02/06/19 and most relevant to the European proceeding

Intel's petition (PDF)

Claim 15: anticipated by Kwak

Claim 16: obvious over Kwak

Claim 17: anticipated by Kwak

Claim 18: anticipated by Kwak

Claim 19: obvious over Kwak + Choi 2010

Claim 20: anticipated by Kwak

Before the EPO, Intel attacks the relevant European claims as being anticipated by a prior art reference named Hou, but also argues that they're obvious over Kwak + Kim, or alternatively over Stauth + Tanabe. Further reference is made in Intel's European opposition brief to prior art references named Midya, Lee, Wu, Mathe, Kim, Kang, and Chu.

Finally, here's Intel's European opposition brief (Appled raised the same issues and is represented by the same Samson & Partner patent attorneys):

Intel Opposition to EP27244... by on Scribd

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Patent office and Qualcomm's litigation tactics render prof's fanboy testimony on patents unreliable

Yesterday (Tuesday, January 22) was Day 8 of the FTC v. Qualcomm antitrust trial in San Jose (Northern District of California). The parties don't have much trial time left for testimony on Friday and Monday, and closing arguments have been moved up from next week's Friday to Tuesday. Thereafter, we'll have to wait. As Judge Koh said after the trial session: "Sadly, this opinion's gonna take some time." But that's because she'll presumably deliver something extremely well-reasoned (which doesn't mean that reasonable people might not be able to disagree here or there). The combination of two Apple v. Samsung cases with this landmark antitrust case and numerous other Silicon Valley disputes makes her the world's #1 technology industry judge--and apart from political considerations it's time for her to serve on an appeals court.

The way I see the current state of affairs, Qualcomm really doesn't appear to have any silver bullets. Practically all major players have now testified against Qualcomm (I'll talk more about that on or after Friday since a handful of videotaped Samsung depositions are on the list, though we've already heard testimony from Samsung that supports the FTC). Qualcomm's efforts to impeach industry witnesses have been largely unsuccessful.

Industry consensus hurts Qualcomm in two ways: much of what was said has probative value (even on such questions as whether supra-FRAND royalties were charged), and beyond that, Judge Lucy H. Koh has simply heard from multiple sides now what the issues are. The only company siding with Qualcomm here is Nokia, a company that actually brought the first antitrust complaint over Qualcomm's supra-FRAND patent royalties that I'm aware of. At the time, the EU had a tendency to underenforce (now it is, except with respect to some cases such as Qualcomm, quite the opposite). Meanwhile Nokia's handset business has gone down the tubes, and it's become a patent troll, so it's Qualcomm's natural ally. Nokia's anti-FRAND lobbyist at ETSI and other organizations, Dirk Weiler, claimed not to know whether Nokia was a net licensor. If true, that might make him the only Nokia employee above the level of a receptionist not to know the answer...

The battle of the experts will reach its culmination with Professor Nevo's testimony on Friday, though the FTC's expert economist in this case, Professor Shapiro, has already commented on his methodology and will be able to rebut on Monday.

Qualcomm declared one of its employees, Lorenzo Casaccia (VP of Technical Standards, spending most of his time with 3GPP), an expert on 3GPP. An employee-expert hybrid, but most of what he said was at a technical and practical level, and served to underpin Qualcomm's already pretty successful attack on the approved-contribution counting that one of the FTC's three experts, Michael Lasinski, indirectly relied upon. At times, Mr. Casaccia's testimony sailed close to the hearsay wind, and he claimed to know from people who represented Ericsson and, which he mentioned even more often and more emphatically, Huawei in standard-setting meetings and allegedly told him how their companies had instructed them to inflate the number of approved contributions (the obvious motivation being to increase the percentage of the overall royalties considered reasonable for a standard that a given company would get). Inflation happens by, for instance, splitting up a set of purely editorial/typographical corrections into multiple submissions, none of which has any substance, but every one of which gets counted. I can't verify Mr. Casaccia's allegations, but he said this under oath and it wouldn't surprise me to see an expert known to do a lot of work for Huawei rely on a methodology susceptible to manipulation and favorable to Huawei's financial and strategic interests...

Getting back to non-hybrid experts, I was underwhelmed. In fact, the hybrid employee-expert, with his narrowly-tailored topic, was actually more convincing than the non-hybrids.

One of Qualcomm's experts does nothing else for a living than testifying in litigation: Dr. Tasneem Chipty. Her firm's website says: "Matrix Economics is a boutique consulting firm focused on competition analysis for adversarial proceedings, including antitrust litigation and merger reviews." (emphasis added) There's no doubt she has a lot of experience, but the FTC's Dan Matheson (the order of names on the FTC's filings in this case suggests to me he's #2, after Jennifer Milici) impeached her very effectively. I wouldn't have expected her to struggle so much. When Mr. Matheson asked her about other "thin modem" (meaning baseband chips that are standalone chips as opposed to system-on-a-chip products that do everything including app processing) customers during a certain period, after she had claimed Apple was essentially the only buyer at the time, he pointed to Samsung and its own Exynos chips. The shocking thing was that she wasn't even able to say whether Samsung had used a greater or lower number than 200 million (!) of such chips during the relevant period--and she had to concede she didn't consider this a fact relevant to her analysis.

Dr. Chipty also had to admit she never defined what represents a premium chipset. And with respect to Samsung again, she lumped all of its R&D expenses together, so Mr. Matheson asked her whether she knows Samsung also makes, for instance, washing machines. She was evasive, but lost again.

There was even another major deficiency in Dr. Chipty's testimony that the FTC didn't even raise, but this blog reported on the relevant fact a long time ago: the Korea Fair Trade Commission (KFTC) investigated Qualcomm because it prevented Samsung's Exynos division from selling chips to third-party customers such as Meizu. But Dr. Chipty said Professor Shapiro had allegedly made a mistake by not considering Samsung as a competitor in the "merchant" (= ready to sell to others) modem chip market. But the parallel proceedings in Korea--the country Judge Koh's ancestors immigrated from--show that Qualcomm took measures to avoid such competition.

Professor Shapiro will get to rebut her testimony on Monday. I guess he will do so, but in my opinion he doesn't have to anymore. Dr. Chipty appeared a bit unsure and uncomfortable in the second half of her cross-examination. She clearly underperformed.

Qualcomm also called Professor Ted Snyder, the dean of Yale Management School. His testimony isn't worth talking about in detail here. It can be summed up in only five words: "You can't argue with success." In other words, because Qualcomm succeeded and others did not, he didn't care to look into any of the allegedly anticompetitive patterns of behavior at issue in the case. To explain briefly, he says his analysis was "empirical" and focused on "real-world outcomes" and whether they could be "fully explained" with "industry factors," which he claimed they can, but on cross-examination he had to concede that, for just one example, prices could have come down even faster without the additional presence of anticompetitive conduct.

So Qualcomm fielded a hybrid employee-expert who bashed other patent holders but made many reasonable, factual points; a full-time expert witness who potentially considered a quantity of more than 200 million thin modem chips irrelevant to her analysis of what is "competitive relevant" (exactly what she claimed Professor Shapiro failed to consider); an economist with a pointless "You can't argue with success" angle; and we also heard a dreamer (not in the DACA sense, of course): former Qualcomm employee and now professor Jeff Andrews.

Professor Andrews's tasks was to opine, which he did in the form of a rave review, on 34 handpicked Qualcomm patents in order to make the case that Qualcomm's standard-essential patent portfolio contains some technically very valuable stuff (which, even though his analysis stopped far short of patent valuation, let alone portfolio valuation, implied a justification for high royalties).

He looked and sounded like a Qualcomm fanboy. I remember Samsung's lawyers from the Quinn Emanuel firm criticizing Apple for presenting fanboy-style testimony referring to Steve Jobs as "St. Eve," and that testimony ("slavish adoration of their client") may have been structurally similar to what we got from Professor Andrews yesterday.

I've been working on patent policy for too long (about 15 years by now) to consider 34 handpicked patents representative of a portfolio consisting of tens of thousands standard-essential patents. And even a representative selection (which this one clearly wasn't--it had obviously been put together by Qualcomm for the purpose of buttresing its claim of core innovation, which isn't completely wrong but nowhere near as right as its royalty demands are exorbitant) would, based on litigation statistics, likely consist of mostly invalid and/or non-infringed patents.

Motorola built the first mobile phone. But even Motorola's litigation results were very disappointing. The search for a valid patent that can't be worked around (a truly standard-essential patent can't, but participants in standard-setting overdeclare) is the search for a needle in haystack, or for the Holy Grail.

If Qualcomm believed in its patents, why did it provide a covenant not to sue to Apple over a bunch of them just to avoid an adjudication of Apple's declaratory-judgment claims in the Southern District of California under the Super Sack doctrine? In the San Diego case, the motivation may have been to avoid any decision on the sensitive (for Qualcomm) subject of patent exhaustion. Still, a patent holder doesn't exude confidence by ducking declaratory judgment.

On the #ftcqcom Twitter thread, someone repeatedly posted new institutions of inter partes reviews (IPRs) by the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) relating to Qualcomm patents. Over the course of the last 8 days, PTAB instituted reviews of a total of 19 (nineteen!) {Update] 21 (twenty-one!) [/Update] Qualcomm patents challenged by Apple.

$QCOM #FTCQCOM US Patent Office just instituted 2 more IPR patent challenges (now the total is 21). These two are both on QCOM Pat. 9535490, which is the only patent ALJ Pender found valid and infringed in the first ITC case. See IPR2018-01344, 46.

— Patent Pundit (@PunditPatent) January 23, 2019

Such reviews are instituted only if a substantive question of patentability has been raised. Under the recent SAS decision by the Supreme Court (I didn't like the outcome but expressed my respect for Justice Gorsuch's principled approach), this means that even if only a single claim warranted a review, all challenged claims must be adjudicated.

On Unified Patents' website, one can run a search for PTAB institutions against Qualcomm during the relevant period and access further details. There's presumably no overlap with the 34 patents Professor Andrews looked at, but statistically any set of patents faces these issues when challenged in litigation. Qualcomm can theoretically defend each and every claim on review, but its statistically very unlikely. The dreamer expert talked about 34 patents as if one couldn't doubt their validity and essentiality. If Qualcomm asserted them in litigation, the professor would get a reality check of the most sobering kind. In my observation, about 90% of all wireless patents asserted in litigation fail.

As Judge Posner already explained in Apple v. Motorola, the compensation a SEP holder is entitled to comes down to the incremental value of an invention over the next best alternative at the time of standard-setting. Even if some of Qualcomm's techniques, such as for carrier aggregation (using multiple segments of spectrum), were adopted, the alternative wouldn't have been "nothing," but something else (and there's no indication Professor Andrews discussed this incremental value other than presumably just relying on the patent specification and the prior art it cites).

Through cross-examination, the FTC got Professor Andrews to confirm that he hadn't performed any valuation nor any comparison with other companies' patents. That should be enough to render his testimony irrelevant. But I'm sure Judge Koh, with her extensive patent-related expertise, views a set of 34 non-litigated patents with a healthy dose of skepticism, like anyone with experience in that field would.

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