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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Looney Coons meets resistance to ill-conceived STRONGER Patents bill that would increase patent troll litigation, harm high-tech innovators

Over at IPWatchdog they have a summary of this week's Senate Judiciary Committee hearing (video recording) on the STRONGER Patents Act, a bill primarily (but not exclusively) put forward and promoted by Senator Chris Coons (D-Del.). They place a little more emphasis on quotes from those supporting the bill, but they do acknowledge a "sharp split on injunctive relief, IPR [PTAB inter partes reviews] fixes."

The bill's name stands for "Support Technology & Research for Our Nation's Growth and Economic Resilience," but there's nothing positive to say about its content other than recognizing the creativity that went into the derivation of this marketing-friendly acronym and the fact that there is widespread consensus one should end USPTO fee diversion. While the tertiary item on "assisting small businesses in the U.S. patent system" sounds good, it's useless and amounts to diversionary tactics.

Like many--if not most--legislative proposals, "STRONGER" is a misnomer, and those opposing the pillars of that reactionary and harmful proposal stressed that stronger enforceability of patents doesn't mean a stronger innovation economy. As the Electronic Frontier Foundation accurately stated, that bill "would make bad patents stronger than ever." In a Washington Examiner op-ed, the R Street Institute's Charles Duan proposes that "Congress should look for solutions that enhance not the strength of patents, but the strength of patent correctness."

At its core, "STRONGER" is an

• anti-America Invents Act,

• anti-Supreme Court,

• anti-Federal Circuit,

• anti-PTAB,

• anti-eBay v. MercExchange

basket of pernicious idiocies and boon for litigators, companies with products involving only one or a very few patented inventions, and above all, patent trolls. "MONGER" would be a more suitable name, in the sense of a warmonger (in this case, litigation, not literal war). The modified acronym could be resolved like this:

"Monetization Of Non-judiciously Granted Exclusionary Rights"

In a follow-up post I'll talk about the substantive points the witnesses (three in favor, three against) made at the hearing and in submissions (the record is open for a few more days). Before I get there, I'd like to discuss the two key players in the Senate Judiciary Committee, Chairman Sen. Thom Tillis (R-N.C.) and, especially, the zealot behind the bill, Sen. Coons.

Should anybody ever have believed that quick passage was an option for the MONGER bill, those hopes should have been dashed by Sen. Tillis's efforts to distance himself from (at least) the proposed overruling of the eBay v. MercExchange standard for injunctive relief as well as the "one bite at the apple" approach to petitions for PTAB inter partes post-grant reviews.

It's regrettable that Sen. Tillis joined Looney Coons (I'll explain the reasons for that pejorative nickname toward the end of this post) in writing a letter to USPTO Director Andrei Iancu--a letter that the recipient had likely requested, if not explicitly, then at least implicitly--ahead of the PTAB rule changes I've previously criticized. But Sen. Tillis appears to have second thoughts, or at least wants to see how things evolve before taking the next steps and perpetuating and/or exacerbating anything.

Sen. Tillis has an IT background. Whether his previous role as a "partner" (with respect to the consulting business that used to belong to PricewaterhouseCoopers) with IBM makes him particularly receptive to Big Blue's pro-monetization patent policy ideas is another question, but at least this background contrasts nicely with Looney Coons's (according to Wikipedia) sole real-economy job experience as in-house counsel at W.L. Gore & Associates, the company known for Gore-Tex and other materials, a business in which you have pretty much a one-to-one relationship between patents and products.

Looney Coons has a very, very special relationship with the Gore-Tex company, as this archived Delaware Online article, which I found through a keywiki.org page summarizing information about Coons that Wikipedia presumably prefers to remain silent about, reveals:

"Soon after those tough times, Coons' mother, Sally, married again, this time to Robert Gore, the wealthy chairman of Newark-based fabrics-maker W.L. Gore & Associates. Coons was 14 at the time."

At W.L. Gore, Coons was responsible for ethics training, federal government relations, e-commerce legal work and for general commercial contracting. To be fair, as a Yale graduate (though it's unclear to what extent he owed his admission to his wealthy stepfather's connections) who clerked for a Third Circuit judge Coons could have had job opportunities outside the family business, but that's where he spent the only eight years of his real-economy professional life, with a political focus (albeit a non-exclusive one).

W.L. Gore was among the top contributors to Coons's 2010 Senate bid, which was the critical one: a special election to fill then-VPOTUS Joe Biden's seat. Conventional wisdom would have said that the Democratic primaries were the real challenge as Delaware has elected only Democratic senators since 1994, and has also been firmly blue for about as long. However, as the great Rush Limbaugh noted then, Obama presumably wouldn't have gone to Delaware to campaign for Coons if Republican candidate Christine O'Donnell hadn't had a prayer. Democratic leaders might have been more concerned than they admitted that an article in which Coons described himself as a bearded Marxist (I'll link to it and discuss it further below) posed a serious risk in the general election.

Other major donors included Skadden Arps and the second-largest Delaware law firm, Young Conaway. Law firms obviously stand to gain from more patent litigation. The latter has also been Coons's top donor in the second half of this decade, just like lawyers and law firms (with Paul Weiss and K&L Gates, both also known for patent lawsuits, among the top 5) were by far and away the top "industry" supporting him. Then there was Amgen, a biotech company, a type of business that in terms of the patents-to-products ratio is similarly situated as the Gore-Tex company. Pharma is the top three industry supporting him. Lobbyists are fifth on the list.

Prior to this post, I had mentioned Coons only once: back in July 2012. But I had noticed on different occasions that the then-freshman senator took very extreme pro-patentee positions. He appeared to be highly motivated (by whatever or whomever) to promote a pro-troll agenda, but others were more influential at the time. He's now approaching the end of his second term (the first full term), and has positioned himself as the stalwart of making patents stronger at the expense of companies that create highly multifunctional products.

Delaware's nickname is The First State, but it's also a tiny state, though a great place for registering companies. Compared to the size of the local economy, patent litigation is a significant business there. Last year, IP Watchdog reported that "patent litigation shifts towards Delaware." It's like the East Coast equivalent of the Eastern District of Texas, and Coons presumably seeks to incentivize patent litigation because the local economy of a dwarf state like his significantly benefits from travel by patent litigators and more jobs at local litigation firms. The state is so small that its district court could fund a substantial part of its operations just by collecting pro hac vice fees from lawyers coming there from other districts to assert or defend against patents.

Coons is still what they would call a backbencher in the UK, so while I follow U.S. politics very closely (far more closely than the politics of any other country), one doesn't hear about him too often. On the few occasions his positions on non-patent policy items made news, I typically disagreed with him, but I've researched his voting records and statements and, contrary to his youthful sin of calling himself a bearded Marxist, he actually tries very hard to position himself as a centrist on some issues, though he's most accurately labeled a "liberal populist" (according to OnTheIssues.org). Interestingly, he's now facing an attack from the far left with a view to next year's Democratic primaries as he gets blamed for not having opposed certain judges nominated by the Trump Administration. Those ultraliberals aren't satisfied with his efforts to delay and derail the Gorsuch and Kavanaugh nominations (which he tried very hard), and even his assertion that Justice Gorsuch occupied a "stolen seat" isn't sufficient for their taste. They wanted him to be radically opposed to anybody President Trump would nominate. While I don't agree with those guys, from a patent policy point of view I wish them luck.

One huge problem in the patent policy context (though I hope the MONGER bill is still going to die) is that Coons has a style and certain views that give him great access to Republican colleagues. He does reach out across the aisle, though his anti-wall collusion with McCain means nothing, as the Arizona senator even betrayed his own electorate on Obamacare because he had only one goal in his final years: to oppose President Trump, who had offended him not only by what he said (by the way, McCain was ranked 894th out of 899--or fifth from the bottom in a group of almost 1,000 people--when he graduated from the Naval Academy) but even more so by winning with a politically-incorrect campaigning style that McCain mistakenly rejected when he had the chance. But many other Republicans respect Coons for his leadership role in a Capitol Hill prayer group. There are indications that he's well-liked by a number of Republicans, not all of whom are RINOs, and fellow Democrats probably don't view him as an exceedingly electable rival for higher office.

So they let him advance a patent policy agenda that amounts to pandering to the law firms among his donors, the family business W.L. Gore, similarly-situated patent holders, lobbyists, and to promoting his thumbnail state's economic interest in patent litigation, especially since it's not easy for Delaware-registered companies to get a troll case moved out of that district.

His centrist reach-out-across-the-aisle initiatives largely appear to be like the joint anti-wall effort with McCain: people who don't understand the issues may be misled to believe that they're a compromise, when in reality they don't solve the problem they purport to tackle. The MONGER bill is very much like that, and hopefully other Democrats, but especially the Republican Senate majority, won't be fooled. Again, Senator Tillis's reservations are excellent news for innovation and economic growth.

Coons's rhetoric at the hearing came down to platitudes like Miles's Law ("where you stand depends on where you sit") and the desire to appear as an open-minded moderator of different views, but a leopard can't change its spots and Looney Coons is the best friends patent trolls have had in the United States Senate in years.

No matter how level-headed he may pretend to be, the terrible nature of his patent policy proposals in and of itself justifies calling him Looney Coons. A 1985 article that he wrote for The Amherst Student raises serious concerns over his reasonableness and, generally, his judgment: Chris Coons: The Making Of A Bearded Marxist" (in order to distance himself from that self-attached label, he now stresses he's a fiscal conservative, and the record in his county actually does support that claim)

It's about how his African experience made him switch allegiance from the GOP to the Democratic Party. While my Trumpian views are well-documented, there are Democrats whom I consider reasonable and with whom I agree on some issues--even with Bernie, who every once in a while raises a valid point or at least asks questions that nobody else asks though they warrant further thought. So the problem is not that Coons found himself in agreement with Democrats on more important issues than with Republicans.

Looney Coons wrote that he "spent the spring of [his] junior year in Africa on the St. Lawrence Kenya Study Program" even though his "friends, family and professors all advised against it." He simply felt an urge to "see the Third World for [himself] to get some perspective," and in Kenya he "saw [...] poverty and oppression more naked than any in America, and [he] studied under a bright and eloquent Marxist professor at the University of Nairobi." While he wrote that he was still "thankful for [America's, and I guess also the Gore-Tex family's) wealth and freedom," he "questioned Amherst, and America." It sounds like he somehow felt guilty for his better fortune, which would be stupid but looks like a plausible explanation.

The question here is judgment. He's just one of countless people from the Northern Hemisphere who feel attracted to impoverished countries, be it in Africa (even my otorhinolaryngologist spent some time at an Ethiopian hospital) or Hispanoamerica. But while I respect people's choice to do that, and know that some of them may nevertheless become successful entrepreneurs I'd be happy to do business with or great lawyers I'd be happy to hire in a non-ideological context, I don't want people like that to hold political office because there's a very high risk that they'll then impose such irrational choices on everyone else.

That kind of decision just doesn't make sense if one preserves a healthy degree of selfishness--which is why everyone told Coons not to go there. If you want to see a different part of the world, there's plenty of safer, healthier and more prosperous choices than a place like Kenya. Presumably the facts were similar at the time Coons went there: at this stage, more than 140 (!) countries in the world have a higher per-capita GDP than Kenya (according to Wikipedia), and 115 (!) countries are safer. Why would an American student, from an ultra-high-net-worth family, possibly go there instead of, say, Oxford (as Bill Clinton did), or maybe France, Japan, China. And if he wanted to be indoctrinated with Marxist propaganda, Moscow at the time would have been one of the safest cities in the world.

It was an irrational choice because he irresponsibly prioritized one goal over other valid considerations. A social justice warrior who at some point decided to be too good for his own good. If it's only about his own good, let him do that. If he had never returned, we'd never have heard about it. But a decision like that is, in my opinion, a symptom of a partial derangement. Human beings aren't computers, and it's not rational to be 100% rational; we don't operate exclusively on the basis of economic considerations and game theory. But it is irrational to take huge risks for no good reason. Without the slightest need. And it's also crazy to see problems in a far-away part of the world and to feel bad about having a better life.

Looney Coons wants weak patents--patents that the USPTO grants after an average of only approximately 20 hours of net examination time, large parts of which have nothing to do with prior art searches--to survive even challenges that have merit. And not just to survive, but to succeed in court or, with injunctions being very likely if he got his way, to be used by trolls and their lawyers to extort companies that make real products. Whether he does this for W.L. Gore, some pharma companies, the litigation firms and lobbyists among his top donors, for the local Delaware economy, or simply because he's irrationally obsessed with an idea of "STRONGER" patents that makes as little sense as his decision to go to Kenya and to blame America for Africa's problems, he doesn't deserve any support. The MONGER stuff should never even go to a vote. We'll talk about the dangerous substance of that proposal next time.

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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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After recent San Diego jury verdict, Apple and Qualcomm disagree on scope and procedural basis of judgment

Apart from PR, the mid-March verdict that a San Diego jury rendered in Qualcomm's favor over three patents isn't overly useful to Qualcomm in its own right as the damages award of §31 million is insignificant compared to what's really at stake between the patent-leveraging chipmaker and Apple (with the big showdown scheduled for April 15). It's just a companion case over a complaint mirroring a request for a U.S. import ban that went nowhere in the ITC--though Qualcomm can, of course, appeal the ITC decision to the Federal Circuit and is taking the unusual previous step to ask the U.S. trade agency to reconsider its patent invalidity finding.

On March 26, Judge Dana M. Sabraw of the United States District Court for the Southern District of California requested briefing on whether a Rule 54(b) judgment--final (thus appealable), but with respect to a subset of the claims in the case--should be entered or not. Apple's motion for judgment as a matter of law (JMOL) is pending anyway, but the court could rule on it in the short term so as to conclude the part involving Qualcomm's offensive claims at the earliest opportunity, or it could await the outcome of the second trial (scheduled for mid July), where Apple's offensive counterclaims (i.e., Apple alleging that Qualcomm infringes some of its patents) will be put before another jury.

Neither party favors Rule 54(b), but for disparate reasons. Qualcomm's position is that the court should sever Apple's offensive claims and enter a final judgment. In terms of appealability and enforceability, I can't see what different it would make, so I believe Qualcomm just feels the court has more discretion to sever the remainder of the case (as it already decided to bifurcate the case). For Qualcomm, Rule 54(b) is at least the second-best choice, while Apple proposes to wait until its own offensive claims have been tried.

The statute requires a determination by the court "that there is no just reason for delay," and Ninth Circuit case law requires a "pressing reason" for a Rule 54(b) judgment.

Even though Apple may have brought its offensive claims relatively late (about six months after Qualcomm's original complaint), I think Apple was disadvantaged by bifurcation. The whole Apple-Qualcomm dispute was never about Apple seeking money from Qualcomm, but the other way round. Therefore, Apple's offensive counterclaims were actually a defensive measure: I'm convinced they just wanted to have a more symmetrical situation in front of the jury. It's not just that the trial would have been more balanced in terms of Apple also accusing Qualcomm of some infringements, but Qualcomm's lawyers would have had to make some of the same defensive arguments that Apple had to make. Also, Apple could have played the game that Samsung played in the 2014 trial of the second Apple v. Samsung case in the Northern District of California, where Samsung sought a relatively modest amount of damages, which may very well have influenced the jury's perspective (indeed, the jury's damages award ended up being only about 5% of what Apple was seeking).

I can think of only one high-profile case where a party with a defensive motivation didn't benefit from its offensive counterclaims: the first Apple v. Samsung trial in the Northern District of California. In that case, Apple asserted a mix of some non-technical, purely visual intellectual property rights (design patents, trade dress) and software patents covering visual, even iconic features, while Samsung counterclaimed over rather technical (partly standard-essential) patents that are harder for a jury to figure out (and was rather aggressive on damages). But in that Qualcomm v. Apple case in San Diego, both parties' patents-in-suit would have been similarly technical in nature, so there would have been a very high degree of symmetry.

With respect to Apple and Qualcomm's disagreement on what type of judgment should come down now and on what basis, it's unsurprising that Qualcomm wants a San Diego judgment on those three patent assertions at the earliest opportunity, given that two of those three assertions overlap with two of the three patents at issue in the ITC case (in either case, Qualcomm asserted the same six, but withdrew three per case, with two in each case overlapping). The overlap between the San Diego case and the ITC investigation, however, is not mentioned at all in Qualcomm's filing, and Apple refers to it in only a footnote:

"In the parallel ITC investigation, the ITC issued a Final Determination finding the single asserted claim of the '490 patent invalid. Qualcomm has publicly stated that it 'will seek reconsideration by [the] Commission in view of the jury verdict' here, which it claims is 'inconsistent.' ALJ Rules in Favor of Qualcomm in Patent Infringement Case Against Apple at the U.S. International Trade Commission, Mar. 26, 2019, available at https://www.qualcomm.com/news/releases/2019/03/26/alj-rules-favor-qualcomm-patent-infringement-case-against-apple-us. Of course, there is no inconsistency between the Commission's invalidity determination and the jury's verdict, which did not even consider validity for the '490 patent. Even so, adhering to the normal policy of entering judgment in this case only after all claims are resolved may help deter Qualcomm from attempting to leverage a partial final judgment to improperly attack the ITC's Final Determination."

But the ITC-San Diego overlap is a fairly important part of what this is about. San Diego is just a PR thing and potential consolation prize for Qualcomm (and it remains to be seen what will happen at the JMOL stage). The ITC exclusion order (U.S. import ban) is what Qualcomm really wanted, and the motion for reconsideration will most likely be denied by the ITC, so Qualcomm needs a successful appeal to the Federal Circuit.

Time is not on Qualcomm's side in another regard: Apple has been quite successful petitioning the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO) for the institution of inter partes reviews of various Qualcomm patents-in-suit. That fact is also why I believe Apple elected not to pursue its invalidity arguments (other than inventorship in connection with the '949 patent) in San Diego at some point: "[M]idway through trial, Apple announced that it had elected not to pursue any art-based invalidity defenses." Juries rarely invalidate patents, so Apple presumably determined it made more sense to have the PTAB rule on (in)validity. That will take time, but the longer things take (including a potential delay resulting from a final judgment having to wait until after the trial of Apple's offensive counterclaims), the more likely Apple is to get some favorable PTAB decisions that will bolster its appeal.

Toward the end of its Rule 54(b) briefing, Apple points to testimony by Qualcomm's own damages expert that may make it quite easy for Judge Sabraw to just hold off on any judgment here: "Both large profitable companies. Really high credit ratings, good balance sheets. Nobody needs cash, right."

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Qualcomm wants ITC to reconsider patent invalidity finding because jury decided otherwise after Apple "abandoned" invalidity defense

This is one of the rare cases where company press releases after a judicial decision contain relevant information beyond someone claiming victory, denying defeat, or whatever other form of spin doctoring. After Qualcomm lost its first ITC case against Apple yesterday because the sole remaining patent-in-suit was deemed invalid, Qualcomm issued a press release vowing to seek reconsideration of the ITC determination:

"The Commission's decision is inconsistent with the recent unanimous jury verdict finding infringement of the same patent after Apple abandoned its invalidity defense at the end of trial. We will seek reconsideration by the Commission in view of the jury verdict."

I wrote yesterday that the outcome in the ITC over the same six patents asserted (Qualcomm withdrew three patents in the ITC and in district court before trial, though one patent withdrawn in the ITC stayed in the San Diego case and vice versa) makes the jury verdict lose credibility. Qualcomm turns it around and says the ITC decision is "inconsistent" with the San Diego verdict.

So let's compare the two theories. I must admit I wasn't aware of Apple having "abandoned" the related invalidity defense at the end of the San Diego trial (which I didn't attend), and we'll see whether or not Apple agrees that it did. All things considered, I think anyone who wants to disagree with Qualcomm or me or even both of us at the same time would have a point.

One thing is certain based on the jury verdict form: the San Diego jury didn't render a verdict on quality.

The biggest issues I have with Qualcomm's perspective are these:

• A layperson jury is definitely not better-placed to decide patent cases correctly than the professionals at the ITC who deal with these things on a daily basis and are legally trained. It is particularly well known that juries rarely ever invalidate patents, and that may be the reason why Apple didn't focus on that invalidity defense in San Diego (also, I see no indication that the motion for judgment as a matter of law--on infringement--was withdrawn in whole or in part).

• The '490 patent is likely invalid in the opinion of the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO), which instituted five inter partes reviews against this patent in January further to petitions filed by Apple. The legal standard is likelihood of success (wth respect to at least one claim, but since five different petitions were brought against the patent, each petition is pretty granular).

Also, there's really nothing that Qualcomm stands to gain from "reconsideration" by the ITC in practical terms. It's just about vindication and probably meant to be a signal to the appeals court (the Federal Circuit) that Qualcomm hasn't given up. But practically, it will now take some time for the ITC to decide on whether or not to reconsider, and even if the ITC did, it would then take time to make a decision. Apple already has a workaround for the '490 patent in place. If the ITC had decided that Qualcomm was entitled to an import ban (based on the merits, which the ITC didn't see, and on not being against the public interest, a question that the ALJ answered with "no" and the Commission didn't even reach), the only practical question here would have been the length of a grace period so Apple could have sought a determination of non-infringement by devices with newer iOS versions. The more time passes, the less sense it makes to even think and talk about outdated iOS versions. Those older versions are not entering the U.S. market anymore, and presumably stopped entering it months ago. So in practical/commercial terms, it's a waste of time--it's ultimately just about the "principle" of proving infringement. Even the San Diego patent infringement damages award is insignificant relative to the overall dispute between the parties.

That said, I can understand that Qualcomm is disappointed because the ALJ had sided with it on the '490 patent, the ITC staff was also on its side (it defended the ALJ's decision against Apple's petition for review), the outcome was more favorable in the San Diego jury trial, and then the Commission (the six people at the top of the U.S. trade agency) deemed the patent invalid. But in that regard, the Commission ruling is simply consistent with the likely outcome of the inter partes review (otherwise the PTAB wouldn't have instituted those five IPRs in January), and the PTAB is actually the most competent forum on patent validity in the United States.

Should the fact that the PTAB instituted some IPRs against the '490 patent have played a persuasive role here (I would think so!), then that doesn't bode well for Qualcomm's second ITC case against Apple, where a judge ruled yesterday that Apple was deemed to infringe a valid patent, though the ITC staff disagreed on infringement and the PTAB considers the patent likely invalid. I, for my part, very much doubt that the other ITC case would ever result in an import ban. The final Commission decision in that one is scheduled for July 26.

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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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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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