Nokia files amicus brief supporting Apple's pursuit of a permanent injunction against Samsung

Nokia supports Apple's efforts to ensure that U.S. patent holders have access to injunctive relief even if a defendant can argue that the accused products potentially implement (or infringe) vast numbers of patents. Just like Apple, Nokia also appears to be very concerned that U.S. case law on patent injunctions, particularly in the Apple v. Samsung dispute, has recently been leading to a "compulsory-licensing system wherein patent holders are forced to license patented technology to competing firms, which could in turn harm incentives to innovate". Apple is appealing Judge Koh's mid-December denial of a permanent injunction against multiple Samsung products over half a dozen intellectual property rights (mostly patents) a jury found Samsung to have infringed.

In mid-February Apple filed its opening brief with the United States Court of Appeals for the Federal Circuit approximately two weeks ahead of the deadline under the applicable appellate rules. This surprised Nokia, which was planning all along to submit an amicus brief but thought Apple was going to file its brief on the deadline. Briefs in support of appellant must be filed within seven days of the appellant's opening brief, so Apple's sense of urgency messed up Nokia's schedule. Nokia asked the Federal Circuit for an extension to file its own brief, which it was granted.

As I recently explained in connection with Oracle v. Google, amicus curiae briefs are usually just about issues, not about interests to harm particular competitors. Nokia competes with both Apple and Samsung. It settled a patent dispute with Apple in June 2011. As I am closely following Nokia's ongoing patent assertions against Android device makers HTC and ViewSonic, in which Nokia is making steady progress in German courts (it recently also sold a patent license to the BlackBerry company), I believe Samsung still needs a license to many non-standard-essential Nokia patents. Nokia's SEPs are broadly licensed, so I presume Samsung has a license to those, but its non-SEPs are not. But again, this here is just about the issue, not about a war of ecosystems. Nokia is ultimately interested in enforcing its own intellectual property rights, and at some point further down the road, after the current settlement expires, it may have to assert some patents against Apple again (and vice versa).

Nokia filed its amicus brief yesterday. For now the brief is sealed, but Nokia's simultaneous motion for leave (it was granted an extension but for formal reasons it still needs to ask for permission to submit an amicus brief) is not, and it clearly states the broad lines of Nokia's position. I will now quote in full the two sections of the motion for leave that outline Nokia's position -- the rest is just procedural detail and boilerplate. When the actual amicus brief becomes available, I will publish and comment on it.

STATEMENT OF INTEREST

Nokia Corporation ("Nokia") is one of the largest manufacturers of wireless telecommunications equipment in the world.

Nokia employs approximately 38,000 people worldwide. Nokia has cumulatively invested over $50 billion in research and development relating to mobile communications. As a result of this substantial commitment to technological progress, Nokia currently owns more than 10,000 patent families.

Nokia has recently been involved in numerous U.S. patent lawsuits, as both a plaintiff and defendant. Nokia is thus both a significant patent owner that might seek an injunction to protect its patent rights, and a manufacturer in an industry in which patent owners routinely issue threats of injunctions for patent infringement.

Nokia's interest in this case is to advocate for patent laws that (i) protect patent rights as a means for promoting the constitutional goal of developing technology for public benefit; and (ii) foster and encourage innovation by allowing patent holders to obtain permanent injunctions against infringing competitors in appropriate circumstances. Nokia therefore supports the Appellant’s request for reversal of the District Court’s denial of a permanent injunction based on application of the wrong legal standard. Nokia takes no position on any of the other substantive issues on appeal in this matter.

DESIRABILITY OF AMICUS BRIEF

The district court's ruling that in order to obtain a permanent injunction against an infringing competitor, a patent holder must also establish a "causal nexus" between the patented feature and the source of demand for the infringing product could cause wide-ranging damage to the United States patent protection landscape. By creating such a rule, the district court has diverged from the precedent of this court and could severely restrict, if not outright eliminate in some circumstances, the ability of a patent holder to obtain injunctive relief.

Amici urge this court to reverse the district court’s order denying permanent injunctive relief, because the new “causal nexus” requirement set forth therein sets a dangerous precedent. This Court has previously determined that while the Supreme Court’s decision in eBay v. MercExchange, L.L.C., 547 U.S. 388, 393 (2006) eliminated any presumption that the holder of an infringed patent is automatically entitled to a permanent injunction, that decision was in no way intended to eliminate the availability of injunctive relief altogether. See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011). The "causal nexus" requirement as applied by the district court here, making the evidentiary standard for obtaining a permanent injunction so burdensome and strict that it may rarely, if ever, be met, will essentially lead to a compulsory-licensing system wherein patent holders are forced to license patented technology to competing firms, which could in turn harm incentives to innovate.

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Appeals court outlines how Apple may get the Nexus precedent overruled to win an injunction

The "causal nexus" requirement for injunctive relief -- limiting sales bans to cases in which a patent holder can prove that a particular patented feature drives consumer demand -- was key to the reversal of a preliminary injunction Apple had won against Samsung's Galaxy Nexus smartphone and, which is far more important, resulted in the denial of a permanent injunction against multiple Samsung Android products in December. After the United States Court of Appeals for the Federal Circuit decided last week to deny Apple's motion for a rehearing en banc (full-bench review) of the Nexus ruling, some commentators suggested that this was the end of Apple's push for sales bans against Samsung and, looking beyond that dispute, all makers of Android-based, patent-infringing devices. For the next few months that's probably right, but later this year, or maybe early next year, there could be a reversal of fortunes, and the Federal Circuit outlined one possible avenue this morning in an order on another Apple motion.

In mid-January Apple had asked for an (exceptionally rare) initial hearing en banc, i.e., the full court's as opposed to only a three-judge panel's attention to its appeal of the aforementioned denial of a permanent multi-product injunction. Apple proposed, as one (albeit not the only) procedural option, to hold a combined rehearing on the Nexus preliminary injunction case and initial hearing on the multi-product permanent injunction case. After last week's denial of a full-bench rehearing, today's denial of an (even more unusual) initial full-bench hearing on the multi-product case came as no surprise to me. But I do believe that the following obiter dictum deserves attention and consideration:

"The appeal will be heard by a panel [i.e., a subset of the full bench]; a party may argue to the panel the need to overrule precedent, or other basis for hearing en banc; and the panel, if so convinced, will request a poll on rehearing en banc."

This is a first-class invitation -- sort of an "invitation from the president" -- to Apple to re-raise, at a later stage, the fundamental issues relating to the "causal nexus" requirement. I'd be thoroughly surprised if Apple declined this invitation.

Let me describe the next steps outlined by the Federal Circuit's order:

1. The court will follow its standard procedures and have the case handled by a (three-judge) panel in the first place. Again, no surprise there in light of last week's denial of a different but related motion. The panel will hold a hearing, but that hearing need not be the final one.

2. Apple can submit in the build-up to the hearing, and at the hearing, that a full-bench hearing is needed either because of precedent that should be overruled or for other reasons. Apple could even have it both ways and argue on the one hand that it can be granted a multi-product permanent injunction even if preliminary injunction precedent is not overruled (because the issues are distinguishable) and on the other hand that a full-court hearing is needed in case the panel doesn't agree with Apple's theory that at the level of the Federal Circuit the "causal nexus" is an issue only for preliminary but not permanent injunctions.

3. If the panel resolves the multi-product permanent injunction case in Apple's favor without overruling precedent, Apple's request for a full-bench hearing will be moot to the extent that it is based on a need to overrule precedent (the request would not be moot with respect to other grounds, such as an argument stressing the importance of the matter). Actually, in the scenario that the panel sides with Apple, Samsung would definitely be the party pushing for a rehearing en banc. But if the panel feels that precedent such as the Nexus case limits its wiggle room too much to rule in Apple's favor, it may ask the other judges to join in the effort to adjudge this matter. In that case, a vote would be held on whether to do this, and a second hearing -- then in front of all Federal Circuit judges -- might take place.

4. This outlined course of action eliminates the need for the full court to decide at this very early stage whether to hear the matter (and to depart from its standard procedures). But the panel that will hold the hearing is going to have all of the information to exercise its discretion as a gatekeeper and, potentially, recommend to the full court to grant a second hearing.

I don't want to suggest here that the appeals court's outline of a possible roadmap to a full-bench hearing was needed in order for Apple to be able to file a petition with the panel to request a full-bench hearing. I guess it wasn't formally necessary. If this mattered, I would do my best to look into it in detail (despite currently being on a train to Mannheim for a couple of Nokia v. HTC patent trials). But the key thing here is that based on this order the door is wide open for Apple to bring such a request and the panel is going to be considerably more likely than otherwise to support Apple.

The "causal nexus" requirement -- especially in the extreme form in which Judge Koh applied in December -- is far from enshrined or sacrosanct. Whether or not you saw anyone claim that Samsung listed several "causal nexus" decisions in its opposition to Apple's petition for a rehearing, let me tell you that not even one of the "causal nexus" cases Samsung cited was a patent case (which Samsung's own motion made clear by summarizing briefly the nature of each cited case). And even Magistrate Judge Paul S. Grewal, who assists Judge Koh in the two Apple v. Samsung cases in the Northern District of California, is unconvinced of the "causal nexus" really being a hard and fast requirement for permanent injunctive relief. As law.com reported, Judge Grewal was presiding over a different case, Brocade v. A10, in which he entered a permanent injunction and "noted a 'curious absence of references to the causal nexus standard' in recent Federal Circuit rulings."

Apple's opportunity to challenge this doctrine is not even limited to the latest Apple v. Samsung appeal. The criteria for the availability of injunctive relief over patents covering smaller parts of multifunctional technology products are also going to be a key issue in the Federal Circuit's review of Judge Posner's ruling. That appeal was filed half a year earlier than the appeal of the denial of a permanent multi-product injunction against Samsung. Judge Posner's ruling had two distinct parts: one relating to FRAND-pledged standard-essential patents (Motorola's patents-in-suit) and one relating to non-SEPs (Apple's patents-in-suit). For SEPs the causal nexus is clear: "it only takes one bullet to kill". There are competition reasons for which injunctive relief must be denied over Motorola's SEPs. But Judge Posner based his denial of injunctive relief to Apple, over its non-SEPs, on various reasons, at least one of which is, without using the same terminology, also a "causal nexus" reasoning.

The "causal nexus" requirement in its current extreme form may be history about a year from now, or it may be here to stay. For now there can be no doubt that it is in flux -- especially not in light of today's Federal Circuit order. That's why further developments in the relevant appeals continue to be worth watching, though there are always going to be some who unconditionally support the patentee-hostile status quo.

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Apple files response to Samsung's opposition to injunction appeal rehearing

Ten days ago I reported and commented on Samsung's opposition to Apple's request for a rehearing en banc (full-bench review) of a Federal Circuit decision reversing a preliminary injunction against the Galaxy Nexus smartphone. The important N/nexus here is not the Nexus phone, which has limited market relevance at this stage, but the causal nexus requirement for injunctive relief. For alleged lack of a feature-specific causal nexus (a controversial requirement to show that certain patented features drive demand for multifunctional products), Apple was also denied a permanent injunction against a host of Samsung products despite a multiplicity of jury findings of willful infringement. Apple's latest procedural proposal to the Court of Appeals for the Federal Circuit is to hold a rare initial full-bench hearing on the multi-product permament injunction case and to combine this with a full-bench rehearing on the Galaxy Nexus preliminary injunction case.

In Apple's filings as well as legal literature (such as the Patently-O blog, my preferred online reference for developments in U.S. patent law), the Apple v. Samsung injunction appeals that have been adjudicated by Federal Circuit panels are referred to as Apple I (Galaxy Tab 10.1 case) and Apple II (Galaxy Nexus case). The multi-product permanent injunction appeal is likely going to go down in history as Apple III.

Today counsel for Apple filed a motion for leave to file a reply brief in support of a rehearing en banc on the Nexus case (Apple II), responding to the Samsung filing I mentioned at the start of this post. If the Federal Circuit grants the motion for leave, Apple's six-page brief, which was filed along with the motion, will become part of the record. Such motions for leave to file replies (or sur-replies) are often adjudged simultaneously with the original motion. I'll comment on Apple's brief now even though it's possible that it won't be admitted into the record.

Apple's reply brief addresses some of the fundamental questions and repeats, in different words, some of the key arguments. A particularly strong claim is that the panel decision on the Nexus appeal "endorses, without congressional authorization, a compulsory licensing regime for the smartphone, computer, and tablet industries". In my opinion, those who want a compulsory licensing regime, such as Samsung (and Google), should be forthright about their intentions and objectives because they can't credibly deny that a compulsory licensing regime would indeed be the practical consequence of the "causal nexus" requirement, at least in the form in which that one is currently stated and applied.

At the legal level, Apple's latest submission is primarily about whether or not there are now conflicting Federal Circuit decisions on injunctive relief, with Apple I and Apple II being the only cases in which there is a causal nexus requirement. Furthermore, a key question on which Apple and Samsung disagree is whether the causal nexus requirement can be reconciled with the Supreme Court's eBay v. MercExchange decision, which laid out four factors for injunctive relief.

Apple's strongest argument for conflicting Federal Circuit decisions is the Federal Circuit's December 19, 2012 panel opinion on Presidio Components, Inc. v. Am. Technical Cermaics Corp.. This decision is mentioned in Apple's request for an initial full-bench hearing on Apple III (and I mentioned that fact in my post on that petition), but it was handed down approximately three weeks after Apple's petition for a rehearing en banc in Apple II. Today's filing criticizes the fact that Samsung's opposition brief, filed this month, mentioned all sorts of other cases but made no reference whatsoever to Presidio. I agree with Apple that the only plausible explanation is that Samsung didn't want to mention a decision that runs counter to the Apple II panel decision. Presidio is a ruling that reinforces a patentee's entitlement to injunctive relief and does not mention or even obliquely reference the causal nexus requirement.

The most fundamental disagreement between Apple and Samsung relates to whether the causal nexus requirement or, alternatively, Apple's proposal to drop or modify the causal nexus requirement can be reconciled with eBay. Apple says in today's submission that Apple I and Apple II "cannot be reconciled with eBay Inc. v. MercExchange, L.L.C.. Apple notes that eBay "forbids an injunction standard that all but eliminates injunctions in 'a broad swath of cases'", and I would agree that smartphone and tablet computer patent infringement cases are a huge category -- and the same requirement would affect countless other multifunctional product categories, so yes, I think we are talking about a "broad swath of cases" in which injunctive relief would become unavailable. Samsung is trying to leverage the other aspect of eBay, which is that an injunction should not be granted pretty much automatically as a result of infringement. That's why Samsung's opposition brief describes Apple's position as saying "that patent exclusivity, like trespass to real property, warrants injunctive relief for infringement as a matter of course". And Samsung's opposition brief noted that after eBay there can be no presumption of irreparable harm.

I would agree with Samsung to the extent that whatever happens now in Apple II and Apple III could theoretically make the pendulum swing in the other direction and result in too low a standard for injunctive relief, but I don't think that Apple is, at least at this stage, proposing such an extreme outcome. Samsung's argument must be considered, but at this point Apple has the stronger point when it essentially tells the appeals court that Apple II (and Judge Koh's denial of a permanent injunction) set a hurdle that is far higher than a reasonable reading of eBay would suggest. I think it will be hard for Samsung to prevent Apple from achieving at least some adjustment this year, but it's important that Samsung continue to ensure that such adjustment won't be overreaching. For example, Samsung is reasonably concerned about another recent decision (after Apple II) by the Federal Circuit could be interpreted in overly injunction-friendly ways: Edwards Lifesciences AG v. CoreValve, Inc. Apple quotes from Edwards Lifesciences that "[a]bsent adverse equitable considerations, the winner of a judgment of validity and infringement may normally expect to regain the exclusivity that was lost", and "may normally expect" appears very favorable to patent holders. From a public interest point of view both companies are doing the industry at large a service here, helping the Federal Circuit to consider all of the relevant considerations.

Now I'll quote a passage from Apple's latest brief that shows what it is really concerned about from a business point of view -- that Samsung may deem infringement a highly profitable commercial strategy if Apple can only seek damages and not realistically win U.S. injunctions:

"This means that copycat competitors like Samsung can allow innovators like Apple to spend huge amounts of time and money developing new features, incorporate them into their own devices, and then defeat any injunction by arguing that the lower price of the device enabled by the patent infringement itself led consumers to purchase the device for 'price' or 'better value' rather than the patented functionality. Competitors such as Samsung are willing to pay patent damages because the downstream sales they will make from stolen customers make this strategy profitable. See Presidio, 2012 WL 6602786, at *8 (noting potential for 'a calculating infringer' to gain windfalls by obtaining licenses at discount prices)."

The U.S. really has a patent enforcement problem. I don't like everything that I see happen here in Germany, where there are no equitable considerations and injunctions are a standard remedy, but the high standard for injunctive relief combined with the time-consuming and costly process in U.S. patent litigation makes it very hard for legitimate right holders to enforce their patents.

Finally, my favorite part of Apple's brief is that it stresses the option of a workaround:

"Samsung has no answer to the point that a more narrowly tailored injunction-- such as requiring Samsung to remove the infringing features from the Galaxy Nexus smartphone, the use of a sunset period, or even the district court's evaluation of the balance of the hardships--would safeguard against any risk of windfall without need for the novel and dangerous 'causal nexus' requirement. To be sure, Apple initially secured a complete ban on Galaxy Nexus sales (Opp. 12 n.8), but Samsung does not deny that it could have attempted to remove the infringing features and then applied for a modification of the injunction. Where, as here, the traditional equitable factors all point in favor of an injunction, the onus for justifying alternative relief should be on the wrongdoer, not the victim."

I've been criticizing for some time the entire-product-gets-banned perspective that Apple and some of its rivals have taken in various contexts. Many media reports also suggest that products will be removed from shelves when all that needs to be done is to remove or re-implement a particular feature. It makes no sense to have a feature-specific causal nexus requirement but to evaluate the hardship on the defendant from a full-product angle. I believe that the debate over injunctive relief will be much more fruitful on a feature-by-feature than a product-by-product basis. I also think Apple's proposal that the infringer should have the burden of proof for monetary compensation being a preferable alternative to an injunction is worth considering in scenarios in which a workaround is a viable option, if the right balance is struck.

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Samsung vehemently opposes Apple's request for a rehearing of U.S. appeals court's Nexus ruling

Apple is fighting a strategic battle at the United States Court of Appeals for the Federal Circuit. It's about nothing less than the question of whether Apple or other industry players will have a realistic chance to win U.S. utility patent injunctions (other than ITC import bans, which follow different rules) against multifunctional smartphones and tablet computers. The importance of this basic question can hardly be overstated:

• If the answer is that sales bans remain practically unavailable (unless there's a massive design patent infringement), patent holders like Apple will have to focus on other jurisdictions (such as Germany) and will have to content themselves with past damages and ongoing royalties in U.S. federal court, which will eventually give them significant leverage, but it will take a lot of time and money to get there. Apple argues that the "costs to innovation will be profound" in this scenario.

• If the appeals court alters course and ensures that utility patent injunctions against multi-feature products remain reasonably available, Apple may later this year have the leverage it needs to get Samsung to make an anti-cloning commitment such as the one made by HTC. The Galaxy Nexus case itself won't have that effect directly, but a modified Federal Circuit opinion would pave the way for a successful appeal of Judge Koh's recent, unprecedented denial of an injunction against two dozen Samsung products over half a dozen intellectual property rights.

The stakes could hardly be higher.

A few days ago, Reuters' Dan Levine reported on this (the only general-interest media report on this topic that I've seen to date) and said that Apple faces "long odds" in the eyes of certain experts. With the greatest respect for the people Reuters quoted and relied on, I disagree. It's a significant challenge, but it's not a long shot at this stage, considering that the Federal Circuit ordered Samsung to respond to Apple's petition and that if the question raised here isn't fundamental enough to warrant a rehearing, nothing else will.

There are actually three kinds of odds that must be properly distinguished:

1. I would agree that the odds are somewhat long against the ultimate outcome of this process being an injunction against the (now somewhat obsolete) Galaxy Nexus phone. That's because Apple would need to overcome more than one hurdle to get that particular injunction back. There's the causal nexus issue (the question of whether the specific infringements, as opposed to multifunctional products with infringing and non-infringing features, cause irreparable harm), but also a claim construction issue. For the claim construction part let me refer you to Patently-O's excellent explanation. And even if Apple made headway on causal nexus and claim construction, it's possible that the Federal Circuit finds that it simply asked for too broad an injunction, and that a more narrowly-tailored request would have succeeded.

2. The odds are considerably less long against Apple achieving some improvement on the causal nexus issue alone. In that case, the Galaxy Nexus injunction wouldn't come back, but Apple's appeal of last month's denial of an injunction over half a dozen intellectual property rights would get an unbelievable boost. And I believe Apple would be 99% happy in this scenario.

3. The first question, in a chronological sense, that needs to be answered now is whether a rehearing en banc will be granted. Such full-bench reviews are rare. I mentioned before that they grant maybe one or two a year. But under the specific circumstances here, I believe Apple now has a 50% chance, if not greater. I'll explain this now in more detail.

The standard for a rehearing en banc is that Apple must show a conflict between a particular panel decision with Federal Circuit precedent or an issue of exceptional importance. As for the conflict, I see stronger indications of this being the case for the aforementioned claim construction issue than the injunctive-relief standard. But in my view there can be no doubt about the exceptional, ongoing importance of the "causal nexus" matter. Let me quote Patently-O's Professor Dennis Crouch:

"Taken as a pair, Apple I [the appeal of the Galaxy Tab preliminary injunction] and Apple II [the appeal of the Galaxy Nexus preliminary injunction] are important because they further reduce the chances that the owner of a component patent will obtain injunctive relief. Before eBay, irreparabl[e] harm was hardly a consideration. Since eBay [v. MercExchange], the irreparable harm factor has largely focused on whether the patentee has a product or potential product being harmed by ongoing infringement. Now, the question will move to the next level of granularity in a way that will be difficult for patentees to prove."

Samsung's brief, which was filed late on Friday (the deadline was extended as per a request by Samsung, which Apple didn't oppose), obviously tries to deny any conflicts with previous decisions and to downplay the importance of this matter, as it must. Its brief makes a number of valid arguments on the issue itself, but I don't really think the filing makes a compelling case for not taking a closer look at the issue.

Here's one aspect of the rehearing-or-not analysis on which I tend to agree with Samsung. Apple argued in its petition that the causal nexus requirement is effectively a new, fifth eBay factor. That's Apple's strategy for claiming that there's a conflict with Federal Circuit precedent, but I'm also inclined to think that the causal nexus is just, as Dennis Crouch said in the paragraph quoted above, "the next level of granularity".

Samsung argues that "[i]njunctions have long been denied for lack of causal nexus between alleged illegality and injury outside the patent area" (emphasis mine). In this context, Samsung points to two Ninth Circuit and three district court decisions from other circuits. But the fact that Samsung can't point to Federal Circuit precedent, or at least some district court patent cases, supports Apple's claim of this being novel. A new development it is for sure -- maybe a conflict with same-court precedent as Apple says, but even if not, it's at least a new and important issue that warrants review.

In its petition Apple pointed to certain cases in which injunctions were granted, including, among others, the i4i v. Microsoft case. In this regard I agree with Samsung to some degree, but ultimately come down on Apple's side as far as the need for a rehearing is concerned. Samsung's pleading explains very well why the cases adduced by Apple are distinguishable from a smartphone or tablet computer case. In all of those cases there certainly was (even if the "causal nexus" issue wasn't addressed per se) a much closer relationship between the patents held infringed and the alleged irreparable harm. One of the relates to a medical device that Samsung claims was "effectively coextensive" with the patent-in-suit, and Samsung's related arguments are plausible. Nevertheless it is an issue of exceptional importance to the entire U.S. patent system whether injunctive relief is or is not realistically available (meaning that the requirements for proof aren't so exacting that no one can reasonably meet them) in connection with products of this kind. As a matter of fact, this product category of multifunctional, mobile computing devices has given rise to more high-profile patent lawsuits than any other in recent history.

Samsung obviously argues that one could still win an injunction if it's more narrowly-tailored than the one Apple sought (and this again is a point on which Samsung may be right) and presents different kinds of evidence. On the latter part I have my doubts. It really looks to me like the current requirements represent an insurmountable hurdle, even for a company with Apple's sophistication and resources.

If the Galaxy Nexus appellate opinion is not modified, the U.S. patent enforcement system (apart from the ITC, which is different in various ways and not really a substitute for the federal courts) will basically abdicate with respect to this industry. The result will be that a Silicon Valley icon like Apple will have to turn to the courts in Dusseldorf, Mannheim, Munich, The Hague, Paris, or maybe also London, Sydney, Milan and Madrid, to prevent its closest competitor from copying some of its patented features.

There simply is no single utility patent that can be seen as driving demand for an entire smartphone or tablet computer. It's always a combination of numerous features. Samsung does not cite an example of a patent that it would recognize to be a driver of demand. If Samsung was forced to come up with one, it would likely name some of its own patents (it's one of the largest patent filers in the world, but the impact of its scattershot litigation against Apple, outside of Korea, has been next to nil) and would never concede this with respect to an Apple patent. But again, there simply isn't "the iPhone patent" or "the iPad patent". And no U.S. federal court would have allowed Apple to assert a couple hundred patents in the same action and put them all before a jury. So the question is what the courts will do, and whether they will impose sales bans, if a smaller number of patents (which is not that small in the Apple v. Samsung case that went to trial in the summer) is found infringed.

In its brief, Samsung argues that Apple was able to win an injunction against the Galaxy Tab 10.1, but it only did so over one of several patents deemed infringed, and that one was a design patent. There obviously aren't tens or hundreds of thousands of design patents that read on a single product. But there are massive numbers of utility patents that such devices can infringe, and the Federal Circuit has apparently begun to ask itself whether it needs to alter the course. I have a hunch that the rehearing will take place, and that there will be some improvement for Apple, though likely not enough to get the Galaxy Nexus banned, which doesn't really matter commercially compared to the implications for the appeal of last month's denial of a permanent injunction. There are some good points in Samsung's pleading, but all in all I think it's not very dissuasive with respect to the enormous importance of the issue.

As a side note, Samsung's brief also quotes from an Apple filing in an Eastman Kodak case (by now, Apple owns some former Kodak patents and co-owns others) in which Apple argued against injunctive relief and made a causation-related argument. Each party to a dispute makes the opposite argument when the shoe is on the other foot. I don't expect this to bear much weight.

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Why Paul Allen doesn't want to be a troll

ZDNet blogger Ed Bott has already made the case that Microsoft co-founder Paul Allen and his Interval Licensing company don't meet the definition of a "troll".

They sue a number of large players over some patents, but there's some history there that sets them apart from other licensing (or "non-practicing") entities. Among 11 defendants, the lawsuit targets Google (as well as its YouTube subsidiary), and Google once gave credit to Interval Research (the company whose patents are now being enforced) on its About page (shown toward the bottom of this screenshot).

This indicates that Interval did indeed contribute to Internet innovation.

A matter of business models

I for my part prefer the business model of companies putting out actual products and don't like the notion of software innovation being largely a matter of patent filings.

However, Google's founders applied for the PageRank patent very early on through Stanford University, where they developed their technology prior to founding their company, and owe their success in no small part to that kind of exclusivity (which Google still maintains by not licensing its most important patents to any competitor). So if Google favors this kind of business model and knowingly and willingly cooperated with Paul Allen's company on that basis, it may now have to eat its own dogfood.

Of course, there are some other companies who may never have had a working relationship with Interval but get sued anyway, such as Facebook. But I haven't seen any company on the list of defendants (Apple, Google + YouTube, eBay, Facebook, Yahoo, Netflix, AOL, Office Depot, OfficeMax, and Staples) who would ever have spoken out against software patents.

Contrary to opposing software patents, Google essentially supported the patentability of software in its Bilski brief, Apple goes after HTC very aggressively, Yahoo is known to be pro-patent and eBay co-financed lobbyists who advocated software patents in the EU and against whom I fought with the NoSoftwarePatents campaign at the time.

So they now have to respect the rules they themselves favor.

Recognition

Based on what a spokesman for Paul Allen has said (quoted by Ed Bott), I believe that this is a matter of recognition for contributions to innovation.

In the world of business, being paid for a contribution -- in this case, for patents -- is the sincerest form of recognition. Unfortunately, it seems that a lawsuit was necessary to (maybe) get there.

Given Paul Allen's biography, a categorization as a "troll" just wouldn't make sense. If other world-class entrepreneurs such as Larry Ellison, Steve Jobs, Larry Page or Sergey Brin founded a research company and later tried to commercialize their patents, they couldn't be called "trolls" either.

To me a troll is someone who never contributes in any serious way to innovation and simply leverages the patent system (which has serious problems, let there be no doubt about it) for his purposes. Entrepreneurs who have actually proven -- in Paul Allen's case multiple times -- that they can build real businesses aren't trolls.

Similarly, if a company like Yahoo registers some web domains for future use, that can hardly be considered an act of "domain grabbing" except under the most egregious of circumstances.

By contrast, NTP, the company that received $612 million from the BlackBerry company in 2006, was set up by lawyers. No programmers, no entrepreneurs. Just legal experts who identified and seized a business opportunity by obtaining a monopoly on some key functionality and litigating. They're still doing it, now suing Apple, Google, HTC, LG, Microsoft and Motorola.

Legal implications: entitlement to injunctive relief

In addition to image and psychological considerations, the question of "troll or not" has a very important legal aspect: in the US, "trolls" usually don't get injunctions anymore.

The possibility of obtaining an injunction -- a court order that forces an "infringer" to stop offering infringing services or products -- is powerful leverage in the hands of a patent holder. I explained in this earlier posting that injunctions are the most dreadful use of software patents and without that threat the BlackBerry company would probably not have felt forced to cough up $612 million back in 2006.

Only a few months after the BlackBerry blackout was averted at the 11th hour, the US Supreme Court decided on a different patent matter: eBay vs. MercExchange.

In that context, the key question put before the SCOTUS was under which circumstances a patent holder can obtain an injunction against an infringer and under which those patent holders have to content themselves with monetary indemnification (but can't disrupt the infringer's business).

That is a very US-specific kind of legal question. In Germany, for instance, no one even asks that question because §9 of the German "Patentgesetz" (patent act) makes an injunction an absolute right that any patent holder can demand. But the relevant part of the US Patent Act (35 U. S. C. §283.2) allows injunctions only "in accordance with the principles of equity" (the latter meaning "justice" or "fairness" in this context). So there can be an argument over whether an injunction is appropriate or overreaching in a particular scenario, all things considered.

The eBay vs. MercExchange ruling and what it means for Paul Allen's Interval Licensing company

Before the Supreme Court looked at the case, there had been two conflicting decisions by prior instances. Despite finding that eBay infringed MercExchange's patents (which were considered valid), MercExchange was denied an injunction by the first instance, a district court which argued that MercExchange was willing to license those patents (in other words, only after some license fees) and, very importantly, was not "practicing the patents" commercially. The latter was certainly an allusion to the term "non-practicing entities" (or some say "non-producing", but here we're talking about Internet services, not products per se), a euphemism in many cases for "trolls".

That was one extreme. The second instance, the Court of Appeals for the Federal Circuit (CAFC), took a diametrically opposed position. The CAFC believed that injunctions are the norm and refusal to grant them is a rare exception. In particular, the CAFC said that injunctions would be denied only under "exceptional circumstances [and] in rare instances [...] to protect the public interest." MercExchange would not have been exceptional only for being a non-practicing entity.

The Supreme Court then took a unanimous decision disagreeing with both lower instances. The first instance had established a broad rule that the SCOTUS considered to be too hard on patent holders, while the second instance favored the rights of patentees too much (that case wasn't the first, only or last time where it did so).

Some misunderstood the SCOTUS decision as supporting pretty much the first instance (trolls can't get injunctions). But in reality, the SCOTUS outlined a more complex legal test than either of the lower instances and favors a significant degree of flexibility:

After reaffirming a sophisticated four-factor test that a patent holder must pass to obtain an injunction (irreparable harm, money not being enough, patent holder unjustly suffering more from not getting an injunction than the infringer would under an injunction, no disservice to public interest), the SCOTUS also explained that "some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test [...]"

So it would be incorrect to claim that the SCOTUS wanted to deny all non-practicing entities the right to obtain injunctions against infringers. The ruling certainly raised the bar for non-practicing entities very considerably. Until that decision, a lot of judges in the US really thought that an injunction was pretty much a foregone conclusion (provided that there was an infringement of presumably valid patents).

But make no mistake: the SCOTUS also wanted to support the patent-centric business model I described further above.

In its lawsuit, Interval Licensing asked for an injunction but for the event that it can't get one just requested financial compensation. That's different from Apple and Oracle, who in their suits against (respectively) HTC and Google shoot for injunctions all the way. Apple and Oracle will have no problem with the "four-factor test". With Interval Licensing, it's not certain but just looking at the screenshot where Google gives Interval Research credit, this might be a case in which even a non-practicing entity could be entitled to an injunction, depending on a lot of things I don't know yet (such as the nature of its past contract with Google, and many other circumstances).

Whether it gets to the point where an injunction might be granted will depend on how quickly Paul Allen's company can settle with the 11 defendants. Since there are so many of them, it's possible that one or more of them will decide to see this case through, and then we may get clarification in a few years as to whether this plaintiff is treated by the courts more like a "troll" or more like a legitimate inventor.

Ed Bott was the first one to say this isn't a troll. A court -- possibly even the SCOTUS -- may have the last word on this.

If you are interested in international equivalents to the patents at the heart of this lawsuit, please read the previous posting.

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