FOSS Patents

The Oberlandesgericht Düsseldorf (Dusseldorf Higher Regional Court) just announced its decision on two appeals of decisions by the Landgericht (District Court) based in the same German city.

Oliver Voss, an editor of Wirtschaftswoche (a leading German business weekly), announced the outcome on Twitter:

1. The appeals court upheld the lower court's denial of a preliminary injunction against the Galaxy Tab 10.1N, a modified version of the 10.1-inch tablet that Samsung's designers and lawyers jointly created in order to steer clear of violationg of Apple's asserted rights.

   The appeals court had previously affirmed a preliminary injunction against the original Galaxy Tab 10.1, identifying a violation not on the basis of Apple's asserted Community design (the EU equivalent of a U.S. design patent) but under German unfair competition law. As a result, the geographic scope of the decision was limited to Germany.

2. Apple succeeded on another count. It won a preliminary injunction against the Galaxy Tab 7.7 on an EU-wide basis. It was previously already able to enforce the Galaxy Tab 10.1 decision against the Galaxy Tab 7.7, which has the same design but a smaller form factor (under German law, this is called a "kerngleicher Verstoß", or "violation sharing the same core"). But with the appeals court's decision, it can now also prevent Samsung's Korean parent company (and, as a result, its different international subsidiaries) from selling the Galaxy Tab 7.7 anywhere else in the EU. Today's decision formally excludes Germany, but that's for the reason I explained.

   The lower court had originally entered an EU-wide preliminary injunction against the Galaxy Tab 10.1 affecting not only Samsung's German subsidiary but also its Korean parent company and, as a result, the Samsung group as a whole. It then modified that order so as to apply only to the German subsidiary, holding that Apple had not proven that the Korean parent company has an "establishment" in Germany. The appeals court, however, disagreed and found (already in the Galaxy Tab 10.1 decision) that Samsung's German subsidiary is effectively an establishment of the Korean parent company, even though it formally claims to be an independent legal entity.

Today's decision is still a ruling made on the fast track. It is, by definition, a preliminary decision. The final decision has not even been made by the lower court yet, and it will also be possible to appeal that one. In the full-blown main proceeding, Apple is targeting a total of five Samsung tablets (and in a separate case, ten Samsung smartphones). While the outcome of the main proceeding is likely going to be consistent with the appeals court's fast-track ruling, it's legally possible that the court changes mind.

Today's decision provides, on a preliminary basis, valuable clarification to both parties. Apple and Samsung have a better idea now of how similar to Apple's tablet computers Samsung's Galaxy devices may look without infringing in the opinion of German courts.

But today's decision won't have much of a bearing on the U.S. trial scheduled to start on Monday (July 30), though Apple may file a request for judicial notice with Judge Koh, the effect of which would be merely psychological.

In the United States, Samsung will also have to decide, after the upcoming trial, which changes to the design of its Galaxy Tab line are necessary in order to avoid further infringement. The Galaxy Tab 10.1N could serve as a starting point for any designaround effort.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Since Friday evening there has been a lot of discussion on the Internet about an AllThingsD article entitled "Google Says Some Apple Inventions Are So Great They Ought to Be Shared". The article and the two letters (one from Google to the United States Senate Judiciary Committee, and a rebuttal letter from Apple) it refers to are definitely worth reading.

Google is well aware of widespread concern over the import bans and other injunctions that Google subsidiary Motorola Mobility, Samsung and other players are seeking based on standard-essential patents (SEPs). For the concerns that have been expressed, let me refer you to four recent blog posts:

• Members of Congress write to ITC to express concern about potential Xbox ban

• Six senators oppose exclusion orders over standard-essential patents

• At Senate hearing, FTC and DoJ argue that import bans over FRAND patents must be an exception

• Congressional hearing highlights concern over ITC import bans sought by trolls and FRAND abusers

In an effort to excuse its own conduct, Google's letter argues that some or all of the issues raised in connection with SEPs also apply to what Google calls "commercially essential" patents. While Google's letter doesn't say specifically that a patent like Apple's "overscroll bounce" and other multi-touch patents would be included, the term "commercially essential" is broad and vague enough to potentially include such technologies. Google talks about "interoperability" in this context, but "interoperability" is also a term "à géometrie variable": different stakeholders use it for different purposes. A very broad definition of interoperability would include user interface concepts.

The key point Google tried to stress in its letter to the Senate can be paraphrased like this: "look, standard-essentiality is not a binary question, there are many different shades of gray."

But the distinction between SEPs and non-SEPs is binary when the question is whether or not injunctive relief should be available for a category of patents. While I agree that non-SEPs vary greatly in strength, ranging from patents that can be worked around with a negligible investment to patents that are essential to interoperability with market-leading products, it still makes sense to categorically oppose injunctive relief over SEPs (since those who made a promise to license their patents on FRAND terms must honor it, as Judge Posner also decided) and to look at "essentiality" issues of other patents only on a case-by-case basis. Very few non-SEPs raise antitrust issues -- but all SEPs do, since the standard-setting process itself is exclusionary in an anticompetitive sense (let's not forget that standard-setting consortia are typically cartels of major industry players) unless FRAND commitments are made and honored.

By pointing to the fact that not all non-SEPs are free from competition issues (actually, there could also be antitrust issues in connection with Google's search engine patents such as the one on PageRank), Google cannot explain away the fact that all SEPs pose a major threat if companies obtain injunctions based on them. The two categories of patents must not be lumped together.

The letter Google sent to the Senate Judiciary Committee's leadership is not the only recent document in which it sought to blur the distinction between SEPs and non-SEPs. Last Friday, a Google filing with the ITC became discoverable. It's Google's response to the questions the ITC asked in connection with its review of a preliminary finding that Apple infringes a 3G-essential patent held by wholly-owned Google subsidiary Motorola Mobility.

One of the ITC's questions relates to switching costs:

"Question 4: With regard to the '697 and '223 patents, are there substantial costs and delays associated with switching away from the standardized technology in question?"

Here's the first paragraph of Google's reply:

"While there may exist costs or delays associated with switching away from Motorola's standardized technology, the same is true of switching away from any patented technology. Indeed, many patents are de facto standards where a patent owner, often a market leader at the time, encourages industry-wide adoption of its technology in contexts raising interoperability concerns. The economic analysis is the same to that described by the FTC with regard to patents made essential by a formal standards setting process. This is why the facts of each case should be analyzed."

That paragraph contains two major factual inaccuracies and one wrong conclusion:

1. It's not just that "costs or delays" could be associated with switching away from standards like 3G or IEEE 802.11 (WiFi, or WLAN) -- it's simply a total non-option for a single company like Apple. A lot of existing network infrastructure would have to be replaced. The costs are absolutely prohibitive, and it would take many years.

2. It's not true that "many" patents relate to de facto standards created by a single major player. There are some such patents, but they are few and far between.

3. The final sentence demands that "the facts of each case should be analyzed". But with SEPs -- and especially with a FRAND promise in place -- some of the analysis that Google proposes isn't necessary. It's clear that monetary compensation is all that a FRAND patent holder can expect. Only because injunctions may be inappropriate in some non-SEP cases, they aren't necessarily appropriate in some SEP cases where the implementer is identifiable, can be sued in federal court, and doesn't refuse to pay a court-determined royalty rate. The problem in this case is only that Motorola has been making excessive demands for years.

Other passages of Google's (Motorola's) filing with the ITC also compare cases involving non-SEPs to cases involving SEPs as if no bright-line distinction could be made. Here's one example:

"Indeed, in Investigation No. 710, also directed to smartphones, the Commission rejected arguments -- including those made by Google Inc, now Motorola's parent company -- concerning the public interest for these products, and the Commission issued an exclusion order against HTC. The Commission should be consistent in this regard, and find that Apple's products do not represent the sort of overriding public interest that avoids the statutory remedy. Indeed, unlike the products at issue in Investigation 710, Apple's products are not based on open source operating system that anyone can access, and so the public impact is lesser in Apple's case."

The import ban against HTC is based on Apple's non-standard-essential "data tapping" patent. In the headline of my blog post on that decision, I said that it was a "ruling of narrow technical scope". HTC's CEO said a day or two later that the patent covered a little-used feature that HTC could remove. The ITC is now investigating an enforcement complaint that Apple brought because it believed that HTC's new products still infringe that patent. The ITC denied emergency action (i.e., an immediate import ban against HTC's new devices) because there's a genuine dispute over whether or not HTC still infringes. All of this shows that Apple's patent does not have the power to shut HTC out of the U.S. market -- but Motorola's 3G-essential patent that an ITC judge held infringed would affect all of the accused products (which do not include the iPhone 4S and iPad 4G because Motorola, for purely tactical reasons, wanted to steer clear of patent exhaustion issues relating to a license agreement it has with Qualcomm).

Google's attempts to conflate the issues even include design patents. In its ITC filing, Google also says this:

"Apple itself routinely seeks injunctions against its competitors, such as Samsung recently. See Apple, Inc. v. Samsung Electronics Co., Case No. 5:11-cv-01846, Order of June 26, 2012, D.I. 1135 ('Although Samsung has a right to compete, it does not have a right to compete unfairly, by flooding the market with infringing products. As explained by the Federal Circuit, '[a]lthough the public interest inquiry is not necessarily or always bound to the likelihood of success o[n] the merits . . . absent any other relevant concerns . . . the public is best served by enforcing patents that are likely valid and infringed.' Abbot Labs. v. Andrx Pharm., Inc., 452 F.3d 1331, 1348 (Fed. Cir. 2006). . . . As a patent holder, Apple has a valid right to exclude others from practicing Apple's invention. In order to protect that right, and promote 'the encouragement of investment-based risk,' the public interest weighs in favor of Apple.'); Apple, Inc. v. Samsung Electronics Co., Case No. 5:12-cv-00630, Order of June 29, 2012, D.I. 221 at 99 (same). Apple's arguments in those cases – that remedies for patent infringement are necessary to protect the patent system – hold true when applied to Apple."

By adopting (in the final sentence) Apple's arguments for its own purposes against Apple, Google basically throws Samsung under the bus. But the fundamental problem with the quote from the Apple-Samsung case is that it's a quote from the order of a preliminary injunction against the Galaxy Tab 10.1 because of Samsung's identified infringement of a design patent. With non-standard-essential technical patents, Google can argue that some of them (though its use of "many" blows things out of proportion) raise competition issues. With design patents, that's never the case, by definition: elements that are dictated by functional requirements cannot be claimed by design patents.

Comparing Motorola's enforcement of wireless-essential patents against Apple to Apple's own enforcement of a narrow "data tapping" patent against HTC didn't make sense, but comparing the enforcement of wireless-essential patents to an injunction over a design patent is completely absurd. In fact, Motorola's own Xoom tablet, which a German court just cleared of violation of one of Apple's design-related rights, proves that it's definitely possible to design tablet computers without infringing on Apple's design-related rights. Samsung wanted its products to look very much like Apple's, and courts in different jurisdictions made different decisions on whether this constituted an infringement of Apple's rights. To the extent that injunctions came down, Samsung has no one to blame but itself. Apple's assertion of design-related rights is not by any stretch of the imagination comparable to Motorola's pursuit of injunctions based on wireless-essential patents.

If Google wanted to make an intellectually-honest case against Apple's or anyone else's enforcement of non-SEPs, the first step would have to be that it immediately ceases its pursuit and enforcement of injunctions in the United States, Germany and possibly other jurisdictions over FRAND-pledged SEPs. In a second step, Google could then credibly raise competition issues involving non-SEPs to the extent that there are real issues (and not just imaginary or hypothetical ones). But Google doesn't want to solve these problems step by step. Google apparently thinks that the bigger the problem is (because of its own lawsuits) or the bigger it makes the problem appear to decision-makers (through its letters and filings), the more likely it will be to get a resolution that favors its Android-related business interests.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

Apple and Samsung have previously dropped a number of claims against each other in the federal lawsuit that will go to trial in California next week. Also, Judge Koh contributed to the winnowing process by tossing out one Samsung patent on summary judgment. The parties just filed another case narrowing statement, presumably the last one before the trial that is scheduled to start in a week from today.

Apple's concession is that it "proposes to dismiss without prejudice all claims against the Acclaim, Nexus S, and Sidekick devices", thereby reducing the number of patents the jury has to look at. Apple furthermore "will not contend at trial that the ThinkFree Office application supports its claims of infringement of the '381 [rubber-banding] patent".

Samsung drops the two claims of U.S. Patent No. 6,928,604 on a "turbo encoding/decoding device and method for processing frame data according to QoS" that it was asserting. Earlier this year, the Mannheim Regional Court held that Apple did not infringe that declared-essential patent. Samsung has apparently concluded that it wasn't too likely to get a better outcome in San Jose.

At next week's trial, Apple is going to assert three technical patents, four design patents and two trade dresses, while Samsung is countersuing over five technical patents (two claims each from two of those patents, and one claim each from the other three patents), including a couple of standard-essential ones that raise antitrust issues.

On a related note, today was the first day of a multi-month trial in Australia involving the same two litigants. Bloomberg reports that Federal Court Justice Annabelle Bennett called Samsung's claims over 3G-essential patents "ridiculous" and didn't understand why they sued in court instead of a mediation effort to set royalty rates.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

On Friday, the ITC threw out Eastman Kodak's patent complaint against Apple and RIM. Kodak has meanwhile vowed to appeal that decision to the United States Court of Appeals for the Federal Circuit.

Today, the Federal Circuit ruled against Apple's ITC countersuit against Kodak by affirming an ITC ruling form a year ago that didn't hold Kodak to violate two Apple patents (U.S. Patent No. 6,031,964 on a "system and method for using a unified memory architecture to implement a digital camera device" and RE38,911 on "modular digital image processing via an image processing chain with modifiable parameter controls").

Today's Federal Circuit ruling doesn't hurt Apple too much, for two reasons:

1. By now, Kodak is almost a patent troll: as a failed business, it primarily wants to monetize its own patents to the detriment of companies that build successful products. As a result, any findings that Kodak's own products infringed or continue to infringe third-party patents won't affect Kodak's pursuit of patent litigation to the extent that it would work against a company that primarily wants to make and sell products.

2. The two Apple patents at issue in this ITC investigation are digital camera patents that Apple used against Kodak but hasn't asserted against Android device makers as far as I can see. Therefore, the decision doesn't affect litigation pending against other companies.

It's generally harder to get an ITC decision reversed than to successfully appeal a district court decision. As a government agency, the ITC enjoys a fair amount of deference in connection with its findings, and a huge amount as far as the interpretation of Section 337, the statute governing the ITC, is concerned. But the ITC isn't unassailable. A significant number of decisions that the ITC made on some high-profile smartphone patent cases may be overruled on appeal. A large number of issues decided by the ITC in cases involving players like Apple, HTC, Microsoft and Motorola have been appealed, but decisions on those appeals will most likely come down in 2013 (only Apple's appeal of the decision on its complaint against HTC might be adjudicated before the end of this year).

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

On Friday, Judge Lucy Koh, the federal judge who will preside over the Apple v. Samsung trial that begins in about a week, entered a minute order as a follow-up to a case management conference held on the previous day. The fact that she excluded any evidence related to Walter Isaacson's Steve Jobs biography (quotes on "thermonuclear war" against Android) was already reported by journalists who attended the hearing. The minute order summarizes, among other things, all of Judge Koh's decisions on the parties' motions in limine (motions to exclude arguments/testimony). I previously mentioned the motions in limine and said I was going to talk about them more specifically following the full briefing process and the related decisions.

While Apple scored clear wins in some other pretrial contexts (claim construction, summary judgment, expert reports), both parties scored a similar number of wins, losses and "granted in part, denied in part" results. It's possible that the exclusion of Steve Jobs's vow to destroy Android was not only the issue of most media appeal but also the single most important issue to be resolved through a motion in limine (because of its potential impact on the jury's perspective), but I don't know for sure.

Decisions on Apple's motions in limine

1. Samsung will be allowed to present and discuss an iPad prototype known as "Model 035" in connection with Apple's D'889 design patent underlying the preliminary ban of the Galaxy Tab 10.1. Apple will certainly downplay the relevance of that design model to the scope of the D'889 patent. The jury should decide on whether the Galaxy Tab 10.1 the D'889 patent as granted, not whether it's similar to a ten-year-old design model. But if the jury is unsure of an infringement of the D'889 patent as granted, Model 035 might tilt the scales in Samsung's favor.

2. Samsung wanted to show some Apple and Samsung design patents that don't constitute prior art to any of the asserted design patents. Samsung's objective was to narrow the scope of the actually-asserted rights. Judge Koh agrees with Apple and doesn't allow this.

3. Apple largely prevailed on the exclusion of alleged prior art: Samsung may not introduce devices called the KR30-0452985, Sharp Softbank, KU990Viewty, LG KS20, LG Chocolate, and F300, nor certain internal documents. But it will be allowed to show the LG KE 750 Prada, an older phone that bears quite some resemblance with the iPhone. It's possible that the LG Prada is far more useful to Samsung (in its defense against Apple's iPhone-related design patents) than those other devices.

4. Samsung will be allowed, against Apple's objection, to show partial views such as a single two-dimensional view of designs (as well as testimony that involves the use of such views).

5. In connection with willfulness, defendants frequently argue that they relied on legal advice that their products were above board and, therefore, didn't just go ahead and recklessly infringe. So does Samsung, but it didn't allow any related discovery. Judge Koh agrees with Apple and excluded this evidence.

6. Apple prevailed on a motion to exclude evidence regarding decisions by other courts or the ITC on any Apple or Samsung patents. Samsung prevailed on a similar motion of complementary scope.

7. Apple's motion in limine no. 7 related to Steve Jobs's biography. I addressed this one further above. At the hearing, Judge Koh made clear that this trial isn't really about Steve Jobs. This is typical of her very facts-focused approach to these issues.

8. Apple's motion in limine regarding the parties' corporate behavior or financial circumstances has been denied, and Samsung is allowed to "reference the number of hours worked by individuals who manufactured Apple products, as this evidence is relevant to Apple’s capability to meet demand", but what's very good for Apple, "Samsung may not make reference to alleged working condition abuses" (Foxconn).

9. Apple doesn't get to bar Samsung from "offering profits calculations based on a tax agreement with the IRS". This may help Samsung to understate its profits for the purpose of a disgorgement or in connection with other damages theories.

10. In my previous post on the motions in limine, I discussed the story of the Fingerworks acquisition. I thought Apple was right that a deal involving different patents (even a different type of patent: touchscreen hardware patents, unlike the software patents at issue in this case) doesn't provide any remotely reliable indication as to the value of Apple's patents-in-suit. Judge Koh granted Apple's related motion.

Decisions on Samsung's motions in limine

1. Samsung's first motion in limine (a motion to exclude evidence that is not specific to the intellectual property rights-in-suit) has been granted in part and denied in part. Judge Koh granted it "with respect to evidence related to Apple Brand, and evidence that Samsung shared confidential business information", and "[e]vidence related to Steve Jobs will generally be excluded unless it is specifically relevant to the IP rights at issue in the case, although the Court will make that determination on a case-by-case basis". While Apple won't be able to turn this trial into a popularity contest, it still gets to refer to "evidence of media coverage of Apple products and evidence of copying of Apple’s designs".

2. Samsung attacked some "consumer confusion surveys". Apple will be allowed to use such evidence because it "show[s] that Samsung was on notice of potential consumer confusion, which is relevant to knowledge, intent, and willfulness for Apple's trade dress and design infringement claims", and because consumer confusion is relevant to Apple's trade dress claims (infringement and dilution). But Apple's use of a study related to the Galaxy Tab 7.0, which is no longer at issue in this case, is restricted in part.

3. Samsung wanted to exclude references to some of its products with respect to Apple's claims that they infringe certain intellectual property rights-in-suit. Judge Koh granted this motion in part, barring Apple from asserting its software patents against the Epic 4G Touch, Skyrocket, Gravity Smart, and Galaxy S Showcase i500 devices, but some Galaxy S2 devices will still be targeted with certain intellectual property rights. On Monday, the parties will have to update their proposed jury verdict forms accordingly, and the new versions will be reflective of this decision.

4. Samsung has won a decision to "exclude reference to findings or rulings in other proceedings not involving the patents at issue in this case". This one complements the court's ruling in favor of Apple's motion to exclude decisions relating to any Apple or Samsung patent.

5. Samsung was quite concerned about prejudice that might have resulted from Apple making reference to its preliminary injunction wins. Judge Koh agrees with Samsung that the jury should not be confused since it will be "the final arbiter of the factual questions in this case". Also, Apple won't be allowed to make reference to most of the decisions on evidentiary issues, including certain sanctions that were ordered against Samsung, with the sole exception that "evidence of Samsung's failures to disclose accurate financial data in discovery is admissible".

6. Judge Koh denied a Samsung motion to "exclude generalizations" regarding how the accused Samsung products operate. Due to a heavily-redacted original motion, it's not clear to me what was meant.

7. Against Samsung's objection, Apple will be allowed to show "resized or altered photos of [S]amsung products in side-by-side product comparisons". This issue got quite some media attention last year. While I didn't think that Apple really wanted to manipulate the evidence, I think it was reasonable to ask that such side-by-side product comparisons not be allowed at this trial. If Samsung loses on any of the design patent claims, I'm sure it will tell the appeals court that it was prejudiced by such evidence.

8. Judge Koh denied a Samsung motion to "exclude any evidence of pre-filing notice other than identified in Apple's interrogatory response and provisionally exclude Mr. Musika's opinions on pre-filing damages unless and until Apple makes a prima facie showing of entitlement to such damages". Mr. Musika is an Apple damages expert, and the issue here is that Samsung doesn't want to be liable for damages before Apple put it on notice of any alleged infringement.

9. Apple will be free to present "evidence of Samsung's overall revenues, profits, wealth and value and evidence or argument that Samsung has paid lower taxes than it should have", but it won't be allowed to argue that an agreement with the government amounts to tax evasion.

10. Apple won't be allowed to claim that it's presently licensed to the allegedly standard-essential patents-in-suit, but Apple had already clarified prior to this decision that it wasn't going to make this claim anymore. I also addressed this in my previous post on the motions in limine (final paragraph).

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

When Judge Posner dismissed an Apple v. Motorola Mobility patent infringement lawsuit in Chicago about a month ago, I analyzed his decision in detail and agreed with him in many ways, though I also predicted that the parties would appeal -- which they did yesterday -- and warned that the Federal Circuit, which is quite patent-holder-friendly, might reverse parts of it. Actually, given the large number of claims at issue in that action and the fact that the Federal Circuit reverses at last part of an appealed ruling in more than 40% of all cases, it would be a statistical anomaly if each and every one of Judge Posner's decisions was affirmed.

I believe the FRAND part of the decision is much more robust, thus more likely to be affirmed, than the part relating to Apple's claims. Not only is it extremely well-reasoned but Judge Posner is much more of an expert in antitrust law than in patent law. He volunteered to preside over this case because he "enjoys" patent cases, and was sitting on a trial court "by designation", but as an appellate judge he never gets patent cases because they are all appealed to the Federal Circuit in Washington DC.

Apple and Google subsidiary Motorola Mobility have both decided to appeal every single decision that Judge Posner made that wasn't in their favor. They leave no stone unturned.

Apple appeals (what follows is a direct quote):

1. those portions of the Court's summary judgment and claim construction orders that were adverse to Apple (including without limitation Dkt. Nos. 176, 526, 556, 671, 691, 706, 724, 751, 767, 826 and 1005);

2. those portions of the Court's evidentiary orders (including without limitation Dkt. Nos. 960 and 980) that were adverse to Apple in excluding certain evidence Apple intended to offer;

3. those portions of the Court's May 22, 2012 Opinion and Order adverse to Apple in which the Court struck Apple's damages expert and underlying damages theories (Dkt. No. 956); and

4. those portions of the Court's June 22, 2012 Opinion and Order adverse to Apple granting summary judgment against Apple as it relates to (1) Apple’s damages theories and (2) Apple’s entitlement to an injunction with respect to the Apple patents (Dkt. No. 1038).

Google/Motorola appeals (again, this is a direct quote):

1. those portions of the Court's summary judgment and claim construction orders that were adverse to Motorola (including without limitation Order of May 20, 2012 not appearing on the docket and Dkt. Nos. 176, 526, 556, 671, 691, 751, 747, 767, 826, 1005, 1038);

2. those portions of the Court's evidentiary orders (including without limitation Dkt. Nos. 771, 747, 803, 830, 900, 958, 956, 980) that were adverse to Motorola in excluding certain evidence Motorola intended to offer or in precluding Motorola from supplementing its expert reports or record evidence;

3. the Court's order denying Motorola's motion to dismiss or transfer this case (including without limitation Dkt. Nos. 66);

4. those portions of the Court's May 22, 2012 Opinion and Order adverse to Motorola in which the Court struck Motorola's damages expert and underlying damages theories (Dkt. No. 956); and

5. those portions of the Court's June 22, 2012 Opinion and Order adverse to Motorola granting summary judgment against Motorola as it relates to (1) Motorola's damages theories and (2) Motorola's entitlement to an injunction with respect to the Motorola patents (Dkt. No. 1038).

In terms of possible effects of the appeal, both parties claim that they are entitled to judgment as a matter of law in their favor, but the issues they raise could also result in a new trial on some or all of the issues.

One possible outcome -- and it's not too unlikely -- would be for the Federal Circuit to determine that the parties should have been given more than one bite at the apple as far as their damages claims are concerned. Judge Posner's criticism of the parties' damages reports was well-reasoned as far as I can see, but he could have given the parties the benefit of his guidance as opposed to basically saying, "you had your chance to do it right and failed, tough luck for you". By contrast, Judge Alsup (who was not a particularly plaintiff-friendly judge) gave Oracle two chances for a do-over of its damages claims against Google. And while a complaint is a different type of filing than a damages report, I think Judge Sabraw in the Southern District of California did the right thing by telling Apple how to fix its Qualcomm-related patent exhaustion complaint against Motorola. It's in the interest of justice that parties get guidance from the court to state their claims, unless it can be ruled out that there is any merit to those claims (which was not the case in the Chicago action, where Judge Posner based his dismissal of Apple's claims only on "failure of proof", not on a definitive absence of merit).

The problem with Judge Posner's approach is that on the one hand he only gives one chance to make a plausible damages claim and on the other hand he won't grant an injunction unless that damages report provides a point of reference for the claim that monetary compensation is inadequate to make a right holder whole. If a patent holder makes a very conservative estimate, he can reduce the risk of his claims being thrown out, but he won't be too likely to obtain an injunction, which is the primary goal between such large players as Apple and Google (that's why they sue so much in Germany, where injunctions are readily available), though they obviously wouldn't leave money on the table. But if the patent holder writes up a damages report that could support the case for an injunction, there's a high risk of a dismissal. This puts patent holders in a very difficult position at the time of developing their damages claims, especially when the country's first and foremost expert on the intersection of law and economics, and an outspoken skeptic of information and communications technology patents, will be the reviewer.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn:

There a major imponderabilities in patent litigation. Companies that face the threat of an injunction or its ITC equivalent, an exclusion order (i.e., import ban) have tough choices to make. As a general trend, defendants now tend to stand their ground for much longer. For a long time, the vast majority of patent lawsuits in the United States got settled ahead of trial. Now there are more companies than ever that defend themselves not only against nuisance lawsuits (litigation brought by trolls that have weak cases and will settle for less than the cost of a proper defense) but also against serious attacks by large and well-known businesses.

Late on Friday, the ITC announced its determination to dismiss Eastman Kodak's digital camera patent action against Apple and BlackBerry maker Research In Motion. The trade agency's top-level decisions makers agreed with the Administrative Law Judge (ALJ) in charge of the investigation that the accused RIM products and the iPhone 3G (an import ban on which would have had very limited impact on Apple's business at this stage) infringe claim 15 of U.S. Patent No. 6,292,218 on an "electronic camera for initiating capture of still images while previewing motion images", but they also agreed with the ALJ that this patent claim was invalid. Another ALJ had found that patent invalid before, but his decision was remanded and, after his resignation, assigned to another ALJ. The finding of invalidity has now been affirmed "on modified grounds".

The Kodak bankruptcy estate could appeal this decision to the Federal Circuit, and that may very well happen. But Apple is now in a strong position. So far it has only incurred legal fees, and if the Kodak bankruptcy estate wanted to settle now, Apple would probably pay only a very limited amount in order to avoid litigation over other patents and the uncertainties that come with an appeal.

It's a safe assumption that Apple's total bill for its "Kodak moment" is going to be a small fraction of the 550ドル million that its major rival in today's smartphone market, Samsung, coughed up for a patent license from Kodak in early 2010. But in all fairness, Samsung came under pressure that Apple never experienced in its dispute with Kodak.

On December 17, 2009, an ALJ made an initial determination that found Samsung to infringe two Kodak patents, the '218 patent that has now (but not back then) been held invalid and another one, U.S. Patent No. 5,493,335. Samsung's co-defendant was another Korean company, LG. And LG was so scared of the initial determination that it settled, for 414ドル million dollars, on the eve of that preliminary ruling. Two days after the ID, Samsung agreed to negotiate again, and a few weeks later, in January, the companies announced the conclusion of a royalty-bearing license agreement. This article, which was published much later, states the figure paid by LG as well as the 550ドル million that Samsung ended up paying.

Not only are companies now more willing to let cases go to trial but they're also ever less ready to back down because of initial determinations by ALJs. After an initial determination, there's a Commission review, and even the final ITC decision can be appealed to the Federal Circuit.

Kodak has claimed all along that it invented digital photography and therefore thinks it's entitled to substantial payments. I don't want to disparage or belittle what this once-great company did. It's sad enough how his business has gone down the tubes. But as far as that '218 patent is concerned, I can only say: good riddance!

If Apple, RIM, Samsung, LG and others had actually infringed some real technological creation by Kodak, such as some highly complex technology at the heart of the sensors that make cameras work, then I would accept, in principle, the notion that someone has to pay for it. But the '218 patent has nothing whatsoever to do with serious, hard-core technology.

For a point of reference, here's the wording of the relevant claim (claim 15), along with comments from me in brackets -- but if you have a hard time understanding it at first because of all the technical terminology, just skip to my explanation:

An electronic still camera for initiating capture of a still image while previewing motion images on a display, comprising:

• (a) an image sensor having a two-dimensional array of photosites covered by a mosaic pattern of color filters including at least three different colors for capturing images of a scene, each captured image having a first number of color pixel values provided in a first color pattern; [this is just one of the characteristics, so the patent doesn't cover all image sensors of this kind]

• (b) a motion processor for generating from the captured images, a second number of color pixel values provided in a second color pattern having at least three different colors and representative of a series of motion images to be previewed, the second number of color pixel values being less than the first number of color pixel values, and the second color pattern being different from the first color pattern;

• (c) a color display for presenting at least some of the motion images of the series of motion images corresponding to the captured images of the scene, the color display having an arrangement of color display pixels including at least three different colors in a pattern different from the first color pattern;

• (d) a capture button for initiating capture of a still image while previewing the motion images presented on the color display; [all photo cameras have a capture button...]

• (e) a still processor for generating a third number of color pixel values including at least three different colors representative of a captured still image; and

• (f) a digital memory for storing the processed captured still image. [obviously any computer memory, such as the one found in smartphones, can store a "processed captured still image"]

While that patent claim mentions a lot of real technology, especially sensors, none of that was novel at the time Kodak filed for this patent. All of this was simply prior art that Kodak combined in a novel way. So what's the benefit of this particular combination?

The basic idea is that on the one hand you can have a low-resolution preview on a screen of a small device (be it a dedicated digital camera or a multifunctional smartphone), which is a "motion" preview because it is constantly refreshed as you move the device, and on the other hand you can then press a button and capture a high-resolution still image. That's it. The "invention" is that you take existing sensors, an existing capture button, an existing screen, and you show on the screen, in a low resolution, what you can capture in a high resolution. And you store it in memory, which is also none of Kodak's inventions.

But unless you have some legalistic reason for arguing non-infringement (for example, one of Apple's defenses had to do with the mechanism of actually capturing, arguing that newer iPhones didn't really capture the image only when the button is pressed but already had the higher-resolution version available in memory anyway), there wouldn't be a practical way to steer clear of infringement. The image that the user will ultimately get is always going to have a far higher resolution than the preview screen -- at least for all of the foreseeable future and certainly well beyond the expiration date of this patent (December 2014).

Distilled to its essence, this patent really made no contribution whatsoever to imaging technology. If this is the best patent that Kodak has (I doubt it, but it's what Kodak's lawyers apparently thought after the favorable initial determination in 2009), its creditors shouldn't expect it to extract much value out of its patent portfolio.

Now that I've criticized a patent that was asserted against Apple, I also want to mention that on Friday, the day of that ITC decision, I also criticized the inventive height (in technological terms) of Apple's "overscroll bounce", or "rubber-banding", patent. But the overscroll bounce patent was a brilliant idea resulting from outside-the-box thinking, even if there isn't any serious technology involved in making it work. Kodak's '218 patent, however, is a combination of pre-existing components that anybody would have combined in the same way since the preview screens of small devices simply don't offer as high a resolutions as the images that today's cameras generate.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Follow @FOSSpatents

Share with other professionals via LinkedIn: