Showing posts with label Retrials. Show all posts
Showing posts with label Retrials. Show all posts

Tuesday, September 9, 2014

Judge declines to overrule California jury in Apple's favor or grant retrial in 2nd Samsung case

Apple's patent infringement lawsuits against Android device makers continue to be anything but thermonuclear after a decision that came down late on Monday by local California time. A federal judge in the Northern District of California has just thrown out Apple's motion for judgment as a matter of law (JMOL) or a retrial in the second California case between Apple and Samsung, except for a negligible and inconsequential item that Samsung had not even argued at the spring trial and a finding that one day Apple will get supplemental damages for a limited period of time the jury couldn't consider and only concerning a couple of products (but no tripling for willfulness or anything like that). This practically complete denial is not an unexpected outcome given the rather high legal hurdle for JMOL motions, and Apple's top brass is presumably even less interested in this on the eve of the iPhone 6 launch (by the way, that's going to be the first iPhone I buy, not because I expect it to become my primary phone after all these years of using Android, but because I need to look at it as an app developer and appreciate the larger screen).

Apple's JMOL/retrial motion was an unmistakable sign of disappointment over the early-May jury verdict that resulted in only about 5% of the damages award Apple was seeking (the key indicator of disappointment is not the JMOL part per se, but the request for a retrial) and, at this point, its last chance for short-term leverage over Samsung after last month's withdrawal of all ex-U.S. lawsuits pending between the two and denial of a sales ban.

This is the public redacted version of the ruling (this post will continue below the document with further commentary as well as a report on the latest filing in Samsung's appeal of the final ruling in the first California Apple v. Samsung case):

14-09-08 Order on Apple's JMOL Motion in 2nd Samsung Case by Florian Mueller

Now that it's clear Apple won't get any improvement from the district court (it will obviously keep trying this at the Federal Circuit), the next milestone will be Judge Lucy Koh's ruling on Samsung's JMOL motion. Samsung faces the same high hurdle but is still more likely to achieve some sort of improvement than Apple was. For example, one of Apple's patent claims-in-suit has meanwhile been rejected by the United States Patent and Trademark Office, and another patent-in-suit is from the same patent family whose European member has unanimously been deemed invalid by ten judges. I believe there's a 60%-70% probability that at least one of Apple's liability wins (all three of which are questionable for different reasons) will be overruled by Judge Koh, and a 30%-40% chance of the verdict being upheld. The recent denial of Samsung's "Alice motion" was just a sideshow. The most important issues remain to be resolved.

After deciding on Samsung's JMOL motion, which could happen any day now, we'll see a cross-appeal to the Federal Circuit. Apple was in such a hurry that it immediately appealed the denial of a sales ban, but as I wrote on Thursday (when I reported on Apple's motion for postjudgment royalties of $6.46 per device that infringes the three patents underlying the liability findings), all the appeals relating to the second California Apple v. Samsung case are going to be consolidated. I have no more doubt about that given that the JMOL ruling on Apple's motion has already come down and that the ruling on Samsung's motion won't take very long. In the coming months, Judge Koh will have to rule on the aforementioned motion for monetary compensation as a substitute for an injunction. Apple's desire for this kind of remedy is understandable, but Judge Koh explained in her JMOL decision that she likes to resolve those kinds of issues after the appeal for reasons of judicial economy:

"Because the parties have indicated that an appeal is anticipated, proceeding without the Federal Circuit's guidance may cause unnecessary expenditures of time and resources should the Circuit reverse any part of the jury's verdict on liability. The Court thus finds it appropriate to delay the consideration of evidence of actual postverdict sales and calculation of supplemental damages until after the completion of the appeal in this case. The Court made this same determination in the first case."

Apple will presumably argue that it absolutely urgently needs an award of postjudgment royalties, but I doubt that Judge Koh will find this a good use of her time.

There is one part of Judge Koh's reasoning that reflects far more negatively on Apple's "thermonuclear war" against alleged "copycats" than the outcome of the JMOL process itself. What almost adds insult to injury is that Judge Koh exposes Apple's copycat claims by saying that "Apple's evidence was weak at best" with respect to its (past) practice of the asserted claims. After opening argument at the spring trial Judge Koh already denied an Apple motion for curative instructions relating to (among other things) its practice of the asserted claims (Apple wasn't allowed to present argument at the trial with respect to non-asserted claims of the same patents, which I thought was very strict). Then Apple wanted to place the emphasis on its alleged past practice of certain claims. Even for what Judge Koh describes as "three unasserted extra claims," the order says "Apple's claim is unavailing because this Court gave Apple the choice not once, but twice, to rebut by presenting evidence at trial that Apple practices the extra claims, but Apple declined the Court’s offer both times." And the order notes that "Apple's choice to assert the asserted claims as opposed to the unasserted claims was a strategic decision beneficial to Apple," for example, because there were pretty strong invalidity arguments against the unasserted claims.

Not only Samsung but also Google, whose software was at the heart of Apple's infringement contentions and "copycat" smear campaign, will be pleased with the JMOL order.

Samsung filed reply brief in support of its appeal of the final judgment in the first California Apple v. Samsung case -- hearing likely to take place in the fourth quarter

Since Apple's patents-in-suit have not proven strong enough to yield serious strategic leverage, all that's left to be sorted out between Apple and Samsung is a payment for past infringement. Apple withdrew its cross-appeal, so the only party still fighting for an improvement is Samsung. And Samsung's number one priority is to get the $929 million verdict in the first case (that's the number after a portion of the original verdict was replaced with a new amount by means of a retrial) reduced. That damages award was mostly about design patents and trade dress, not about technical patents. Samsung has support from 27 law professors and a tech industry group. Apple is defending that jury verdict all the way and has support from 54 design professionals and a group of mostly no-tech and low-tech companies, a fact that in and of itself buttresses Samsung's (and Samsung's supporters') argument that a disgorgement of unapportioned infringer's profits over a design patent is not appropriate for today's multifunctional high-tech products such as smartphones.

On Friday, Samsung filed its reply brief, then corrected it, and the final redacted version became available yesterday. There's nothing new in it. The next interesting step is going to be the appellate hearing, though I think there's a reasonable chance of a complete settlement in the meantime. While it's not new per se, I wanted to draw attention to something that Samsung's reply brief highlighted again. Samsung actually had evidence in the first California case (but was not allowed to present it to the jury, which is part of the reason why Samsung wants the ruling in the first case overturned) that it had designs with rounded corners and other iPhone-like elements in the works back in 2006, before the original iPhone was shown:

I acknowledge that I underestimated the significance of this evidence in 2012. In retrospect I think it was unfair that Apple had the right to smear Samsung, in court and in the media, for shameless copying when the truth is that Samsung had come up with such designs totally independently. When the Federal Circuit judges see this, they may feel that a new trial in the first case is warranted, or at least it may show to them that the ruling in the first case way overcompensates Apple for its design "innovations."

Finally, here's the full text of the public version of Samsung's reply brief:

14-09-05 Samsung Reply Brief in Appeal of Ruling in First Apple Case by Florian Mueller

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Saturday, May 24, 2014

Apple requests retrial of Samsung patent case, demonstrates dissatisfaction with jury verdict

After the original version of the Apple v. Samsung II jury verdict that came down on May 2 (and had to be amended on May 5), Apple's PR department had issued a premature statement that basically described the verdict as a win for Apple, though the result was a rather mixed one. Litigants can engage in spin-doctoring all the want, but what's usually more telling is what procedural steps they take after a decision. Do they want to leave a decision intact, or do they seek to have it overturned at all costs?

After the 2012 trial in the first Apple v. Samsung case, Apple was seeking some gradual improvements but more than anything else sought to defend the verdict, while Samsung wanted the jury to be overruled or, in the alternative, a retrial. A limited damages retrial resulted from Samsung's post-trial motions, but the parameters weren't really favorable to Samsung, so the retrial didn't change nearly as much as Samsung had hoped.

This time around, it's the opposite. Just like Apple in the first case, Samsung is still trying to obtain some improvements (due to sealing it's unclear what exactly it has requested), while Apple can't hide its dissatisfaction with this month's verdict: in addition to seeking additional liability findings in its favor from Judge Koh, a tripling of the largest part of the damages award, and a permanent injunction (in the previous post I just discussed that initiative), Apple has also moved, late on Friday by local time, for a complete damages retrial (this post continues below the document):

14-05-23 Apple Motion for JMOL and Retrial by Florian Mueller

In connection with Apple's pursuit of a higher damages figure, be it by tripling and/or a retrial, it's worth noting that Apple's damages claim relating to the '647 "quick links" patent was more than 20 times what Apple itself demanded from Motorola Mobility in a parallel case for the same patent, on a per-device basis. For reasons I explained in my previous post, the '647 claim construction from the "Posner case" was accepted by Apple last week when it brought a motion for a remand of a reexamination procedure jointly with the United States Patent and Trademark Office. Under that claim construction, the patent isn't nearly as valuable as Apple is claiming in the California Samsung case.

The part that proves Apple's disappointment with the outcome of the recent trial is where it argues that "Samsung's improper and prejudicial statements to the jury warrant a new trial on infringement for the '414 and '959 patents (in the event that the Court does not grant JMOL of infringement), a new trial on willfulness for all patents other than the '721 patent (and also other than the '647 patent if the Court grants JMOL of willfulness for that patent), and a new trial on damages for all five of Apple's asserted patents" (emphasis added).

Samsung could also make an argument that it was prejudiced. There was a controversial propaganda video that Judge Koh showed to the jury, though there would been a non-prejudicial alternative. The $2.2 billion damages claim was absolutely ridiculous, yet Judge Koh allowed Apple to present it to the jury, while not permitting Samsung to discuss with the jury the real-world evidence that the terms of Apple's license agreements with companies like HTC and Nokia (or Apple's 60-cents-per-unit damages claim from Motorola over the '647 patent) are. The jury basically had to arrive at its damages figure in a parallel universe in which everything was painted in a light way too favorable for Apple, not in the harsh light of reality, in which Apple's patents are far less valuable than the company claims. The jury wasn't told about the status of the reexamination of the '172 autocomplete patent and was generally misled about (in)validity issues.

But Apple thinks it could get a better damages award next time, and is pushing hard for a new trial.

As for Apple's argument that it was prejudiced, the points Apple makes aren't all wrong. It's just that they aren't extremely strong (while the hurdle for a new trial is reasonably high) and, on balance, if anyone was prejudiced, it was Samsung, not Apple, for the reasons I outlined before.

  • During the trial I already agreed with Apple that Judge Koh should have allowed it to make certain arguments with respect to its alleged non-practice of the patents-in-suit. However, to some extent this is a problem of "you make your bed and you lie in it": Apple made some procedural concessions relating to case narrowing only to go to trial as quickly as possible. This had a limiting effect: Apple then couldn't point to other claims from the asserted patents than the five claims-in-suit.

  • Apple argues that Samsung's "references to the possibility of a permanent injunction" were prejudicial because "the jury could have decided to reduce the damages it awarded to Apple or, even worse, the jury could have found no liability on certain patents as a way to reduce the impact of any injunction". I thought it was reasonable for Apple to request a curative instruction from the court, and the judge was very strict by not granting one. However, it's not likely that the jury's damages award was influenced by this in any way.

  • Apple furthermore believes Samsung should not have been allowed to tell the jury about the fact that the Federal Circuit had reversed a preliminary injunction over the Galaxy Nexus because this "unfairly suggested to the jury that an appeals court sided with Samsung and against Apple on an issue that was relevant in the current trial, when in fact the Federal Circuit's decision had no relevance to the issues that were before the jury". However, it was part of Apple's trial strategy to argue that Samsung had removed the universal search feature and then put it back because of customers complaining. The parties also had an argument over related user comments on a website. It is, however, an obviously important fact that Samsung put the feature back because the preliminary injunction was lifted.

Judge Koh is hardly going to order a new trial for those reasons. She may make some minor adjustments to the verdict, and then she'll let the parties appeal the unfavorable parts of the ruling to the Federal Circuit. Thereafter, there may be a retrial -- but in the meantime the parties will probably settle because this litigation has become a waste of resources.

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Friday, March 7, 2014

That was quick: Samsung appeals final judgment in first Apple v. Samsung patent case

On Thursday evening local California time, Samsung filed a notice of appeal to the Federal Circuit of the final judgment that had been handed down less than 20 hours before. By proceeding so quickly, Samsung demonstrates a strong belief that something is fundamentally wrong with the outcome of that California case. And presumably it won't take long before Apple will also appeal the unfavorable parts of that ruling, possibly including Thursday's denial of its renewed motion for a permanent injunction (in that post I also mentioned that Judge Koh certified the ruling).

The August 2012 billion-dollar jury verdict can be appealed only now because a limited damages retrial (concerning 13 of the 28 accused devices) had to be held last November (resulting in a final total damages figure of $929 million), and after a partly (but, as we know now, not sufficiently) successful appeal by Apple of the December 2012 denial of an injunction, Judge Lucy Koh had to take another look at this equitable remedy.

Samsung was unhappy about the verdict for several reasons. None of its offensive counterclaims against Apple succeeded, while Apple prevailed on almost all liability issues. And the jury, as one or more of its members later told the press, didn't really care to evaluate Samsung's invalidity contentions -- after the first few prior art references it got tired of the process and decided to simply rule in Apple's favor.

A few days after the verdict I identified the fact that not a single patent-in-suit was found invalid as the biggest issue with the verdict. While Apple's rubber-banding patent survived (most of its claims didn't, but the claim asserted in this case was affirmed in June 2013), the Central Reexamination Division of the United States Patent and Trademark Office rejected all claims of the '915 pinch-to-zoom API patent, Apple's most valuable multi-touch software patent in this case, last year and Apple had to file an appeal to the USPTO's Patent Trial and Appeals Board (a fact I discussed in this late-December post on Apple's renewed motion for a permanent injunction).

It's a safe guess that the validity of the '915 patent will be a key issue on appeal. Should the Federal Circuit share the USPTO's current perspective that the patent should never have been granted in the first place, then there will have to be another retrial.

Yes. Another retrial. It would be the third trial in this case. And it would involve more than 20 products. That's because the court had adopted Apple's proposal to keep the verdict form simple (over Samsung's objections) and have the jury determined damages only on a per-product basis, but not in the form of a product/patent matrix. As a result, it's now impossible to tell precisely what portion of the damages award (but certainly not an insignificant one) the jury awarded for infringement of the '915 patent. If the patent is found invalid (which is now reasonably likely to happen), the jury verdict is worthless with respect to more than 20 products. And the only way to set a new damages figure would be another jury trial. That's the way it works.

For the rubber-banding patent, invalidation is unlikely, but Samsung claims that Apple narrowed its scope through representations it made in reexamination (something Samsung also says about the '915 patent, but if that one was invalidated, any narrowing statements wouldn't matter anyway). So the infringement of that one could also be a key issue on appeal.

Besides infringement and validity issues and possibly (though not necessarily) some damages-related argument, we may also see some argument over jury instructions. The jury instructions were a very contentious issue in this case. Parties always disagree on them to some extent, but in this case there were some very fundamental issues. Modification of the jury instructions would also require a large-scale retrial...

Almost three years after Apple filed this first California lawsuit, the fact of the matter is that it does not have any remedies in its hands. Neither has Samsung paid even a cent of the damages award (since it isn't truly final, and quite frankly, it's unlikely that the final outcome will be identical to the current $929 million figure) nor is an injunction in force, after two failed attempts to obtain one. This appeal is going to be adjudicated sometime next year; then there may very well be another trial (I think this is fairly likely to happen); and then there could even be another appeal. That's the reality of patent litigation.

The fact that Apple still cannot enforce any remedy of any kind against Samsung in the United States -- again, after almost three years of litigation -- is a huge success for the law firm of Quinn Emanuel, which has so far delivered precisely what benefits its client the most: QE has shielded Samsung from any actual business impact of this first California lawsuit. Meanwhile, Samsung's market share has grown, and it's now the global market leader. The fact that QE persuaded Judge Koh to once again deny a permanent injunction, even though the partly-successful appeal made it a rather likely outcome, can hardly be overestimated.

But this is just one of numerous Apple-Samsung lawsuits pending worldwide, and not even the only one in the Northern District of California. The next Apple v. Samsung trial, over different patents and mostly different products, will start on the 31st. When Apple prepared its remedies-related evidence in that case, it didn't have the benefit of certain guidance from the Federal Circuit and from Judge Koh regarding the "causal nexus" requirement for injunctive relief. This is speculative, but it could be that the evidence in that second California litigation is not strong enough to prove a causal nexus between any infringements the jury may identify and the alleged irreparable harm. The requirements are exacting. There's no such thing anymore as a presumption that a patentee is entitled to an injunction (despite the fact that intellectual property was envisioned by the Founding Fathers to be an exclusionary right). Not even in a case in which the number one and the number two in the market are suing each other.

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Tuesday, December 17, 2013

Samsung wants a retrial of the November retrial in its first U.S. patent litigation with Apple

Last month a federal jury in the Northern District of California awarded Apple $290 million in damages for Samsung's infringement of 13 of the 28 products accused in this first litigation between these parties, replacing a vacated $410 million portion of the August 2012 §1.05 billion verdict. When Samsung asked for a retrial, it obviously hoped to get more out of it than roughly a 10% discount, but the total of the affirmed damages from the first trial and the retrial award is still almost $930 million.

The retrial was a necessity for formal reasons after the court disagreed with the notice dates Apple presented to the 2012 jury. In my detailed Q&A, published a few days before the retrial commenced, I said that neither of the parties nor the court really wanted a retrial under these circumstances. And at the time I already discussed the theoretical possibility of one or more further retrials. As expected, Samsung is still unhappy and formally requests either a judgment as a matter of law (JMOL) in its favor or a new trial or a massive adjustment of the damages award (this post continues below the document):

13-12-14 Samsung's Corrected Motion for Judgment as a Matter of Law by Florian Mueller

Asking for an adjustment on a JMOL basis is common practice. Apple is doing the same in its motion (asking the court to hold that Apple's $379 million retrial damages claim was the only result a jury could have reasonably arrived at), but it's not asking for yet another trial (this post continues below the document):

13-12-13 Apple's Motion for Judgment as a Matter of Law by Florian Mueller

Apple's motion is considerably shorter than Samsung's not only because Apple focuses on JMOL but also because Apple conservatively applies the page limit for post-trial briefs to the total of this JMOL motion and the renewed motion for a permanent injunction that it will bring once the United States Court of Appeals for the Federal Circuit remands the injunction question to Judge Lucy Koh's court in California. Last month Apple prevailed with respect to its software patents-in-suit, but the Federal Circuit has not yet issued its mandate. Apple says this could happen as early as December 26, but I think it will take a couple more months due to an expected Samsung petition for a rehearing and it's not unimaginable that Samsung might even try to appeal this issue to the Supreme Court.

Samsung is extremely unlikely to persuade Judge Koh to order a retrial of the retrial and presumably brought this motion only to preserve its record for the appeal. Judge Koh really wants to reach the point of a final judgment so as to enable the parties to appeal the unfavorable parts (obviously, Samsung has more of a need to appeal than Apple, but Apple also can seek some improvements) to the Federal Circuit. If the Federal Circuit finds any jury instruction prejudicial or reverses any underlying liability finding, or disagrees with other relevant parts of the district court judgment, then there will be a third trial in this case (absent a settlement). Given that there are so many legal questions in this case and a multiplicity of issues either party can raise on appeal, a third trial is not entirely unrealistic. But for practical reasons it doesn't make sense to delay the inevitable cross-appeal, given that even a retrial at this stage would still involve the risk of a need for a retrial on remand.

Samsung's arguments for a retrial of the retrial have two truly interesting aspects and one that is idiotic. The stupid point Samsung makes can be addressed quickly. It claims, as it did at trial, that Apple's lead counsel, Morrison & Foerster's Harold McElhinny, appealed to "racial bias" against Asians. But he didn't use any pejorative terms of the kind you can hear at the beginning of Full Metal Jacket or say anything other that really has to do with race. At most one can say that he appealed to patriotism, but even that would be at least an exaggeration given that he just explained how domestic companies go out of business if they can't defend their intellectual property against foreign copyists. I just don't understand why Samsung made the decision to press this non-point instead of focusing on its more reasonable arguments.

Samsung's lawyers did it again and figured out how the jury arrived at its numbers. Last year they reverse-engineered almost the entire original jury verdict. This time around they can explain the jury's methodology for each of the products at issue in the retrial:

  • Six devices were found to infringe only software (not design) patents. On those, the jury awarded precisely what Apple claimed in lost profits and reasonable royalties (this was obviously easy to figure).

  • The other serven devices were found to infringe both software and design patents. On those, the jury awarded the same 100% of Apple's claimed lost profits and reasonably royalties plus the exact average of the parties' calculations of total infringer's profits (61.4% of Apple's expert's number because even Samsung didn't argue that there were no profits).

Samsung argues that the jury failed to do its job of actually deducting costs from the claimed profits and that such "compromise" verdicts are contrary to law (provided that the jury's methodology can be reverse-engineered). If there's any way Judge Koh can uphold the jury award nevertheless, I guess she will, just to make sure that the case gets appealed now rather than later.

The other interesting argument for a retrial of the retrial is Samsung's allegation that Apple violated the Entire Market Value Rule and generally misled the jury by comparing its damages claim (as well as the minuscule amount Samsung conceded it owed Apple) to Samsung's total revenues generated with the accused products in the U.S. during the relevant period of time ($3.5 billion) as well as the total number of accused devices sold (10.8 million units) despite the fact that, for example, not all of those products infringe design patents (which entitle a patentee to a disgorgement of infringer's profits). Samsung points to the January 2011 Federal Circuit decision in Uniloc v. Microsoft, which involved the grant of a new trial because of the patentee's use of an inadequate damages theory. I guess what Apple did in the Samsung retrial was not tantamount to using an inadequate theory (given that the numbers presented by its experts were based on court-approved theories), but this kind of argument yet makes more sense than the racial bias story.

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Tuesday, November 26, 2013

Judge denies Samsung motion to stay Apple's patent case, will hand down final judgment

As I mentioned in my previous post, this is largely (though not completely) a week off for me. That's why I'll keep this very short. While the retrial jury, which ultimately awarded Apple $290 million in damages replacing a $410 million of the original verdict (resulting now in total damages, subject to appeal, of $929 million), was deliberating, Samsung brought an emergecy motion to stay the whole case pending reexamination of Apple's '915 pinch-to-zoom API patent. Its lawyers untruthfully said that Apple's only procedural option left (in order to salvage the patent) was a notice of appeal, but Apple pointed in its response to what the actual USPTO communication said, which was the opposite, and said Samsung's stalling strategy had "crossed the bounds of reason".

Late on Monday, Judge Koh agreed with Apple and denied Samsung's motion. She, too, explains the other options (than an appeal) left for Apple to influence the outcome of the reexamination. She considers it the most efficient way forward to hand down a final district court judgment and have Samsung appeal the district court ruling, including the validity of the '915 patent. Should the Federal Circuit overrule the district court on any of the underlying liability findings (from the first trial), a complete retrial involving all products (at least all products originally found to infringe a patent with respect to which the Federal Circuit reverses the liability finding) will be necessary, Judge Koh's order explains. Here's the order:

13-11-25 Order Denying Samsung Motion to Stay Apple Case by Florian Mueller

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Thursday, November 21, 2013

Retrial jury awards Apple $290 million, total damages in case against Samsung: $929 million

A federal jury in the Northern District of California has just awarded Apple $290,456,793 ($290 million) in damages with respect to 13 patent-infringing Samsung products, replacing a $410 million portion of last year's $1.049 billion award and resulting in a total damages award of $929 million ($639 million + $290 million). The $290 million replacement amount is 76% of Apple's damages claim in the retrial ($380 million) and 71% of the corresponding portion of last year's award. the new total damages figure of $929 million, which could still (but is unlikely to) be adjusted by Judge Lucy Koh before rendering a final and appealable judgment, is almost 90% of last year's amount.

Samsung had challenged last year's jury award but obviously intended to get more out of a retrial than a 10% discount. From Samsung's perspective, the amount has gone from slightly more than a billion dollars to not much less than a billion dollars -- almost a rounding error for companies of Apple and Samsung's size and certainly not the "slashing" that various media reports suggested when Judge Koh merely vacated a part of the original award. In an important respect, Samsung is actually in worse shape now than before. The appeals court will see that two different juries, independently of each other, agreed with Apple that Samsung's infringement caused substantial damages. It's much harder to argue to an appeals court that two juries in a row were unreasonable than to say the same about a single jury.

From a strategic point of view, Apple actually scored an even more important victory over Samsung on Monday with an appeals court ruling that the district court had erred in denying Apple a permanent injunction against infringing Samsung products, giving Apple a new opportunity to obtain an injunction on remand to the district court.

Here's the verdict form (this post continues below the document):

13-11-21 Apple v. Samsung Limited Damages Retrial Jury Verdict by Florian Mueller

Here's a comparison of this year's and last year's per-product awards for the 13 products at issue in the retrial:

ProductOriginal awardRetrial awardChange
Droid Charge$50,672,869$60,706,020+20%
Epic 4G$130,180,894$37,928,694-71%
Exhibit 4G$1,081,820$2,044,683+89%
Galaxy Prevail$57,867,383$22,143,335-62%
Galaxy Tab$1,966,691$9,544,026+385%
Infuse 4G$44,792,974$99,943,987+123%
Nexus S 4G$1,828,297$10,559,907+478%

As the above table shows, the damages award increased for seven -- and decreased for six -- of the 13 retrial products.

For further detail on the limited damages retrial I'd like to refer you to my detailed Q&A.

Apple has issued the following statement on the verdict:

"For Apple, this case has always been about more than patents and money. It has been about innovation and the hard work that goes into inventing products that people love. While it's impossible to put a price tag on those values, we are grateful to the jury for showing Samsung that copying has a cost."

Samsung provided the following statement to the media:

"We are disappointed by today's decision, which is based in large part on a patent that the U.S. Patent and Trademark Office has recently deemed invalid. While we move forward with our post-trial motions and appeals, we will continue to innovate with groundbreaking technologies and great products that are loved by our many customers all around the world."

The first sentence of Samsung's statement is a bit misleading, but since even its filings with the court distort the state of the procededings in the same context, it's no surprise that it misrepresents the facts to the media as well. It's misleading to say that the USPTO "has [...] deemed [the '915 pinch-to-zoom API patent] invalid" because the USPTO proceedings are still ongoing and could still be ongoing for a couple of years. Even the first stage of reexamination isn't over: a final decision by the Central Reexamination Division (which Apple can then appeal within the USPTO to the Patent Trial and Appeal Board, and subsequently to the Federal Circuit) won't come down for another month or so. The patent is undoubtedly under pressure in reexamination, but "has recently deemed invalid" sounds far more final than the USPTO's preliminary communications are.

Also, Samsung's claim that the award "is based in large part" on the '915 patent disregards that the verdict form states damages only on a per-product (and not a per-patent) basis. Maybe Samsung will again be able to reverse-engineer a jury verdict.

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Apple says Samsung's stalling strategy 'has crossed the bounds of reason', reexamination isn't over

After two days of jury deliberations, Apple and Samsung are still waiting for the verdict that will conclude their limited damages retrial in the Northern District of California. On Day 2 (Wednesday), Samsung brought an emergency motion to stay the case pending reexamination of Apple's pinch-to-zoom API '915 patent. Later that day Judge Koh discussed this matter with counsel and told Apple to respond within a day. Apple filed its opposition brief later the same day (this post continues below the document):

13-11-20 Apple Opposition to Samsung Emergency Motion for Stay by Florian Mueller

Long before the Wednesday emergency motion, Apple had complained about Samsung's attempts to "delay and derail" the retrial. But Samsung's stalling tactics have reached a new low in Apple's opinion:

"Samsung’s strategy to delay entry of final judgment in this case has crossed the bounds of reason: Samsung seeks to halt the damages retrial in the midst of jury deliberations."

It's really hard to see why the court shouldn't simply let the jury conclude its deliberations and render a verdict. On that basis, Judge Koh can certify a final judgment, which the parties (Samsung more so than Apple) can appeal to the Federal Circuit.

Apple's motion stresses that "[t]he reexamination proceedings on Apple's '915 patent are not final" (emphasis in original). There still is time for Apple to respond to the July 26 final Office Action and persuade the examiner to withdraw the rejection". Apple points to a passage in the USPTO communication that mentions the possibility of "other appropriate action [than an appeal] [that may be] taken to overcome all of the outstanding rejection(s)". But Samsung's motion argued that "[t]he Advisory Action is the Examiner's final word on the invalidity of the '915 patent", and its notice of the USPTO decision had said "[a]t this point, Apple's only option is to file a Notice of Appeal".

Especially the claim that a notice of appeal is now the only option was absolutely wrong. This is not merely a tactically-motivated misrepresentation of the fact, such as blowing things out of proportion. At this stage it's simply a lie to say that Apple's sole remaining option is a notice of appeal. Again, here's the relevant part of the USPTO communication Samsung filed with the court yesterday (red underlining added; click on the image to enlarge):

When Judge Koh outlined the criteria for a stay (in the context of a stay that would have been ordered before the retrial even started), the absolute requirement was that Apple would be left with no other option but a notice of appeal. Based on the examiner's communication to Apple, it's rather likely that an appeal will be necessary in the end, but the notice also said that the response period is extended to five months since the late-July "final" Office action. In other words, it will take about another month to find out whether Apple really needs to file an appeal.

Samsung's lawyers have a growing credibility problem, also in light of the "Patentgate" scandal. Lawyers have the right and even the obligation to portray the facts in the light most favorable to their clients' interests, but what Samsung has done here was not just an attempt to mislead: they said something that is absolutely not true. (It's likely to be true in about a month from now, but as we speak, it's not true at all.)

I didn't double-check whether Samsung's lawyers told the truth about the status of the proceedings. I usually do try to verify such claims, but when I read the claim that "Apple's only option is to file a Notice of Appeal", I assumed that if Samsung's lawyers say "only option" they really mean "only option". What do they hope to accomplish by saying "only option" when other options still exist for another month? They must have known that Apple was going to clarify this. Are they just afraid of the forthcoming damages verdict and desperately looking for ways to discredit the verdict in public before it is even rendered?

For more than two years I had the greatest respect for the work Samsung's lawyers were doing on this case. They have a weak case, but I thought they were doing a great job and giving Apple a run for the money under the circumstances. Even last year's jury verdict didn't change that opinion of mine. Some other commentators thought Samsung's lawyers made tactical mistakes; I disagreed. In the aftermath of the trial, the "rounded corners" propaganda had to be debunked, but it was just a PR stunt, not nearly as bad as an untruthful representation to a court (there can be sanctions for lying to a court under Rule 11, but not for a misleading press release). Then the "Patentgate" affair came to light last month. I was thoroughly disappointed, and I felt some of their defensive arguments were a stretch to say the least. But after yesterday's untruths concerning the status of the reexamination proceedings, I now know that they can no longer be trusted even on binary facts such as whether a party has only one option left.

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Wednesday, November 20, 2013

While jury is deliberating, Samsung brings emergency motion to stay Apple's patent case

[Update] Shortly after the notice this blog post reported on initially, Samsung brought the actual motion, published toward the end of this post. [/Update]

On the second day of jury deliberations in the Apple v. Samsung limited damages retrial, Samsung has just notified the United States District Court for the Northern District of California that it "will file an emergency motion to stay today". This motion to put the entire case on hold will be based on a decision by the Central Reexamination Division of the United States Patent and Trademark Office (USPTO) to reject all claims of U.S. Patent No. 7,844,915 on "application programming interfaces for scrolling operations", which is the pinch-to-zoom API patent Apple is asserting in the first California case against Samsung (to be precise, it's asserting claim 8). This is the only multi-touch patent with respect to which Apple may be awarded lost profits by the retrial jury. It was also the most valuable one of the multi-touch patents-in-suit in the first trial.

The court held the limited damages retrial in order to hand down a final judgment (which the parties could appeal to the Federal Circuit) afterwards. After the verdict, which could come down any moment at the time of writing this post, the parties could bring post-trial motions, but a final judgment could have come down within a couple of months of the retrial. Should the court grant the motion to stay that Samsung said it would file today, there would not be a final judgment and, therefore, no possibility for an appeal.

Samsung yesterday tried to have the retrial declared a mistrial, but Judge Koh, herself of Korean descent, could not find anything racist or otherwise offensive in what Apple's lead counsel in this retrial said in his closing argument. It's obvious that Samsung is trying whatever it can to get the California case delayed and derailed. It tried long before the retrial was held; and now that the retrial is almost finished, it's trying the same thing on a new basis.

In today's notice, Samsung mentions that Judge Koh indicated at an April 29, 2013 hearing that she would "likely stay any proceedings" "if the Examiner does not reopen the prosecution [of the '381 rubber-banding patent] and Apple is forced to file a notice of appeal". The asserted claim of the '381 patent was later reconfirmed. In the case management order she entered on the same day, she said the same about the '915 pinch-to-zoom API patent. But what Judge Koh said in April does not necessarily apply o the current situation. Judge Koh apparently felt that a retrial was not worth holding in that scenario. But the retrial is now basically done, and the district court could enter a final judgment, which the parties could then appeal -- unless the case is stayed. Samsung originally wanted an appeal instead of a retrial; now it wants a stay instead of an appeal. I doubt that Judge Koh will stay the case.

Between the April case management order and the start of this retrial, Samsung repeatedly updated the court on the reexamination proceeding. If the USPTO decision Samsung presented to the court today had come down two weeks earlier, the retrial might have been canceled.

In April, Apple already explained that its multi-touch patents won't be invalidated by the USPTO until mid-2017 at the earliest if Apple exhausts all appeals (as it fully intends to unless the patent is confirmed earlier). Apple also said that even if the final outcome of such reexamination was invalidation, it would still be entitled to damages for the period before. What Samsung would need in order to avoid damages for past infringement is a finding by the appeals court that the appeals court erred in not overruling the jury in favor of Samsung with respect to its invalidity defense concerning the '915 patent. The legal standard for an invalidity defense in federal court is "clear and convincing evidence", while the standard in reexamination is lower ("preponderance of the evidence").

Apple can appeal the Central Reexamination Division's rejection of the '915 patent to the USPTO's Patent Trial and Appeal Board (PTAB; formerly Board of Patent Appeals and Interferences, BPAI). If the PTAB affirms the rejection, Apple can appeal the matter to the Federal Circuit (to which it also appealed, for example, the rejection of its broadest "data tapping" patent claims). Theoretically, the Supreme Court could also become involved, though this is unlikely. In any event, Apple can keep the patent alive for several more years. It would make a lot of sense for the district court to render a final judgment and let the parties appeal it to the Federal Circuit now, rather than in 2017 or later.

The USPTO decision may help Samsung to avoid a permanent injunction over the '915 patent. This week the Federal Circuit decided to reverse parts of Judge Koh's decision to deny Apple a permanent injunction, and to remand for further proceedings. For a permanent injunction, the basis is a final ruling, not a likelihood assessment (which is key in a preliminary injunction decision). But Judge Koh might now be hesitant to order an injunction over the '915 patent. She could, however, order an injunction and stay only the injunction with respect to the '915 patent.

This is Samsung's notice:

13-11-20 Samsung Statement of Recent Decision Re. '915 Patent by Florian Mueller

And this is the USPTO communication (Exhibit A to Samsung's notice):

13-11-20 Samsung Statement of Recent Decision Re. '915 Patent by Florian Mueller

[Update] Samsung's motion:

13-11-20 Samsung Emergency Renewed Motion for Stay by Florian Mueller


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Saturday, November 16, 2013

Lost profits ineligible as damages theory for several Apple patents in Samsung retrial

Shortly after the start of the Apple v. Samsung limited damages retrial in the Northern District of California I concluded from various reports that "modesty and humility reign". The court "only" allowed Apple to present a damages claim of $380 million to the jury, slightly short of the corresponding portion of last year's award ($410 million), and Samsung is pretending contrition in an effort to propitiate the jury.

Apple's claim became publicly known only when the trial started. Before trial, it was just known that Samsung complained about Apple seeking "vastly greater" damages, allegedly "hundreds of millions" more than the year before. It was also discoverable that Samsung's pretrial motions had succeeded in part to constrain Apple's ability to seek damages. The quantitative impact was unclear, however.

Late on Friday, Judge Koh entered a motion on certain motions for judgment as a matter of law, and that order, in conjunction with a couple of previous decisions, suggests to me that the most important legal question on which Samsung prevailed (subject to an appeal) is about the underlying, hypothetical assumption of when Samsung would have begun to avoid infringement of the infringed patents: when actual infringement began or when it received notice of Apple's infringement claims. For example, the designaround period for the relevant design patents is considered to be one month. The question is when that month would begin.

The district court agreed with Samsung that Apple's claim of lost profits due to Samsung's infringement must be based on the assumption that Samsung's designaround efforts would have started when infringement began, not when Apple notified it of its infringement claims. On this basis, Apple can seek lost profits only with respect to the '915 pinch-to-zoom API patent, but not with respect to four other patents (two design patents, the rubber-banding '381 patent, and the tap-to-zoom-and-navigate '163 patent) that Samsung would have hypothetically worked around even before it had notice, i.e., before the relevant damages period.

I agree with Apple that this is not a logical choice, and it will be interesting to see what happens on appeal. Judge Koh believes that the case law is on Samsung's side, and I'll talk about the two relevant cases, Panduit and Grain Processing, in a moment. But it really is illogical. Why would someone work around a patent without actually seeing a need for it?

A real-world example shows how absurd this is. Which driver would accelerate way beyond a speed limit and then hit the brakes with full force for no reason? But if a driver is speeding and suddenly sees the flashing red light of a traffic enforcement camera (it's happened to me a few times, I admit), then the instinctive reaction is to hit the brakes, though it's too late anyway if your car (and not someone driving ahead of you) triggered it.

A 1978 Sixth Circuit case, Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., established the test for a lost profits damages model (reformatted):

  1. demand for the patented product,

  2. absence of acceptable noninfringing substitutes,

  3. [the patent holder's] manufacturing and marketing capability to exploit the demand, and

  4. the amount of the profit [the patent holder] would have made.

Panduit factor two is the issue here: the absence of workarounds/designarounds. The legal question is now how to reconcile this factor with the requirement of notice for a damages period to begin. Judge Koh's JMOL order describes the Federal Circuit's 1999 opinion in Grain Processing Corp. v. American Maize-Products Co. as "the starting point for the parties' dispute over whether a lost profits damages analysis must take into account the actions an infringer could have taken to design around the infringed patents starting at the point of first infringement (as opposed to the date of first notice, or any other date)".

Apple argues not only on the basis of logic but also interprets Grain Processing as saying that the designaround start date is a question of fact, i.e., for the jury to decide. And after the court barred Apple's damages expert from using different designaround start dates, Apple still wanted to tell the jury about its lost profits (in the form of lawyer argument, not an expert report), but the court granted an emergency motion by Samsung to preclude Apple from doing so.

There's no question that Grain Processing moved the goal posts in a way that now benefits Samsung, but the question is: to what extent? The key lesson from Grain Processing is (based not just on my reading of the opinion but also what various commentators say) that lost profits depended on a "but for inquiry" (what would the situation in the marketplace have been "but for" the infringement identified) and that this inquiry involves not only products that were actually sold at the time, but also hypothetical -- but available -- workarounds. What happened in the real world is measured against a counterfactual world.

Judge Koh says certain wordings in Grain Processing ("had [the infringer] not infringed", "absent the infringing product", or "with infringement factored out of the picture") imply that "reconstructing the hypothetical market requires one to factor out infringement entirely". This is followed by a passage on which I disagree with Judge Koh:

"In order to do this [factoring out infringement entirely] when considering whether an infringer would have been able to design around the patentee's intellectual property, one would have to start the inquiry as of the date of first infringement. While the facts of any given case might ultimately lead to the conclusion that the infringer would not have been able to begin to design around the patent starting on the date of first infringement, one would need to begin the analysis at the date of first infringement to avoid arbitrarily ignoring actions the infringer could have taken in lieu of infringing."

The problem I have with this is that the relevant wordings in Grain Processing -- as Judge Koh describes it, the need to take into account "actions the infringer could have taken in lieu of infringing" -- mean, if viewed in isolation, that an infringer chose a noninfringing alternative from the get-go. That would be even more infringer-friendly than Judge Koh's approach. I'm not saying that this is is necessarily the right conclusion. But it would be a more logical one that the assumption that someone goes ahead and infringes, only to make a U-turn during the same second that infringement begins. Why would Samsung have started to work on designarounds when actually shipping infringing products? Why not start right after releasing the infringing program code to manufacturing? To me, this is more arbitrary than it is logical.

I can see scenarios in which it makes sense not to allow for damages claims based on a lost profits model. For example, there's an infinite number of encryption algorithms out there. If a particular encryption technique is patented and infringed, but equally good or even superior alternatives were available, then I agree that the owner of the patented technique didn't really lose profits: the infringer, probably inadvertently, used the patented technique, but didn't have to. Even then I can't see why someone would implement a patented encryption algorithm, release a product, and the very moment that the product ships alter course and replace that implementation with a non-infringing one. I would like to see Apple raise this issue on appeal.

Apple complied with the pretrial orders not to present (neither through lawyer argument nor in the form of expert testimony) lost profits as a damages theory for the relevant patents (again, the key exception is the '915 patent). In yesterday's JMOL order, Judge Koh ruled that no reasonable jury can award Apple any lost profits with respect to those patents. But that decision was merely a formality. Things will really get interesting after the final judgment by the district court.

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Thursday, November 14, 2013

Modesty and humility reign at Apple v. Samsung damages retrial in Northern California

This morning I updated my Q&A on the ongoing Apple v. Samsung limited damages retrial in the Northern District of California to reflect the long-awaited information on what damages figure Judge Lucy Koh allowed Apple to present to the jury. The answer is $380 million, slightly below the $410 million portion of last year's jury verdict that was vacated and is now being redetermined.

Shortly before the trial began, Judge Koh also barred Apple from presenting additional damages theories to the jury. Apple had argued that any restrictions would apply only to its damages expert Julie Davis's testimony, not to whatever Apple's lawyers may say. Samsung had previously succeeded on some pretrial motions. It's clear now that Samsung's efforts to limit Apple's damages claim have been very successful.

Theoretically, the new jury could still award a greater damages figure than last year's jury did with respect to the same 13 products. But it's not likely that the jury will go beyond Apple's claim.

The jury is also very unlikely to award Apple less than the $52 million even Samsung concedes it owes Apple. Samsung's lead counsel, Quinn Emanuel's Bill Price, reportedly also praised Steve Jobs and indicated to the jury that Samsung is kind of sorry.

There's also some of the usual trial rhetoric, with Samsung arguing that "you can't patent sexy" and Apple telling jurors the story of how the developers of the original iPhone knew they were "betting the company" on that project. Still, under the unique circumstances of this limited damages retrial this is not the kind of all-out, high-profile war of words and numbers that one would usually expect when the two largest mobile device makers in the world clash in a courtroom.

From the angle of litigation tactics, Samsung's strategy of pretending contrition -- also seen to a lesser degree in the Patentgate context -- makes sense. It might persuade the jury to be lenient. But Samsung's tactical and conditional confessions of infringing Apple's rights won't stay in the courtroom: they have been reported widely and could be quoted out of context.

While the retrial is technically only about a subset of the accused products, another win by Apple (and I would consider anything amounting to about $200 million or higher a win for Apple) would also make it harder for Samsung to argue on appeal that the first jury's award was unreasonable. You can have one unreasonable jury (such as the Oracle v. Google jury last year, except for its foreman, who may have been smarter than the rest of the jury combined), but it's not easy to argue that two juries in a row were unreasonable. It's possible, but the likelihood is much lower than in the case of only one jury.

Practically, this retrial is now about whether Apple will get a total damages award (affirmed plus redetermined amounts) of slightly more or somewhat less than $1 billion. If the jury agrees with Apple 100%, the award stays above the billion-dollar mark. But if the total award was, for example, $900 million, it would still be roughly a billion dollars. Even if the retrial jury agreed with Samsung, the total award would be close to $700 million.

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