skip to main | skip to sidebar

Wednesday, March 30, 2016

Disgorgement of infringer's profits in Apple v. Samsung and Oracle v. Google: apportionment is key

At times I wish I knew everything about the cases I follow that the litigators working on them know, but it's possible that at times they wish they had the liberty to be as consistent in their positions on policy as an independent blogger--more independent than ever since I started the blog--can afford to be.

There's an interesting parallel between Apple v. Samsung (meaning their first case, with respect to which the Supreme Court has granted certiorari) and the Oracle v. Google Android-Java copyright litigation: in both cases, most of the damages at issue are based on the theory of a disgorgement of infringer's profits, and at first sight, the amounts claimed by the right holders appear very high. There are even more similarities. For example, in both cases, the defendants are key Android players. But there are also some important factual differences, not limited to the fact that design patents and copyright are different types of intellectual property.

The Supreme Court will take a look (at a hearing most likely to take place in the fourth quarter) at the question of whether an unapportioned disgorgement of infringer's profits is justified when a highly multifunctional product potentially embodies a number of design patents and a far greater number of technological inventions, as well as innovative elements protected by copyright and trade secrets. As for Oracle v. Google it has now become known that Oracle's damages expert from the well-known IP valuation firm of Ocean Tomo has arrived at a total damages claim of 9ドル.3 billion, consisting of actual damages (in terms of lost Java licensing revenues) of roughly half a billion dollars and 8ドル.8 billion in "profits apportionted to infringed Java copyrights." James Niccolai of the IDG News Service uploaded to Scribd both the relevant excerpt from Oracle's damages report and a Google motion portraying Oracle's damages claim as (in different words) the craziest thing anybody ever asked for in a U.S. court.

The notion of a disgorgement of profits is inherently somewhat Draconian. It has a strong punitive element, besides being meant to serve as a major deterrent. But even legal systems in which there is no such thing as punitive damages, such as the German case law on patent damages, enable right holders to base claims on this concept.

In U.S. copyright law there appears to be no dispute that the infringer's profits to be disgorged cannot be unapportioned, while statutory law on U.S. design patents has been interpreted in different ways. In Apple v. Samsung, both the trial court and the appeals court said the law of the land was that there should be no apportionment, but I still have hopes that the Supreme Court will thread the needle and let reasonableness prevail over utter irrationality. Just for the sake of the argument, let's assume now that apportionment is warranted in both cases, and take things from there.

On the same basis, let's assume that the asserted intellectual property rights are valid and enforceable. In Oracle v. Google, there is no more doubt about it: the appeals court decided so, and the Supreme Court denied cert. In Apple v. Samsung, this assumption is actually exceedingly Apple-friendly given the state of affairs of the D'677 iPhone design patent.

A reasonable apportionment of infringer's profits relating to the visual appearance of a smartphone and the layout of one of numerous screens can't result in a huge amount of money. I have tremendous respect for great designers, but to put this into perspective, a tech product is still predominantly a tech product. In the fashion or furniture industries, I'm sure many companies have been acquired at high prices because the acquirer wanted to own their unique designs (and the brands those designs are associated with). But in this industry, I'm not aware of any case where a software company was bought because it has a nice screen layout or where a phone maker was acquired at a high price because it had great designs. Instead, Google bought Motorola Mobility a few years ago at a price of 12ドル.5 billion to get control of its utility patent portfolio, including its standard-essential patents. Not because of its designs.

In the Android-Java case, the ultimate result must also be a reasonable apportionment, and at first sight, the 8ドル.8 billion figure (just the disgorgement part, not the lost licensing revenues) is staggering. It exceeds what Oracle paid six years ago for Sun Microsystems (7ドル.4 billion, with an enterprise value component of 5ドル.6 billion), which made Java but also owned a hardware business and MySQL, which clearly was a key part of the reason Oracle bought Sun.

But that comparison alone doesn't make the number unreasonable. It could very well be that Java's reasonable market value in 2010 (when Android already existed but wasn't the world's #1 operating system) was close to 2ドル billion but market developments have since made it several times more valuable. I'm not arguing that this is the case, but it's far from an illogical position to take.

It's instructive to look at the strategic situation Google faced when it developed Android. Google's management foresightfully understood that the mobile revolution was going to come and that platform owners could displace Google by creating their own search engines or doing deals with a Google rival such as Microsoft's Bing search division. In order for Android to get traction, Google knew it would need app developers (Google presumably realized this even before Steve Jobs did). Attracting app developers to a new operating system from a company that never made one before was going to be hard enough, but it was going to be downright impossible with a totally new API (application programming interface) no one would have been familiar with initially. Java was already very popular on mobile devices (a fact that Google's filings in the Oracle case generally fail to recognize). Then there were Apple, which had Objective C (Mac software developers already knew it) and wouldn't have considered for a tenth of a second to license it to Google (though Google is now free to adopt Swift on open-source terms), and Microsoft, which certainly wouldn't have been interested in strengthening a new platform at the expense of Windows (which, like Java, also existed on mobile devices before the iPhone and Android).

Java was the obvious choice for Google at the time. It was not just an obvious choice: there really was no viable alternative.

Instead of letting Oracle buy Sun, Google would have had every opportunity to outbid the Ellison company. Everybody in Silicon Vally knew about Sun's dire straits, and maybe Sun's executives or investment bankers even contacted Google when shopping Sun around. Sure, Sun was about more than Java. I actually would have liked Google to own MySQL and think it could have proved reasonably valuable to Google. Google wouldn't have liked the excess baggage of Sun's hardware business, but it could have just divested that part to someone else or even just closed it down. Excess baggage didn't prevent Google from doing the Motorola deal, and that kind of excess baggage even created potential conflicts with its device maker partners. So, in retrospective, Google should have bought Sun to keep Java and MySQL, should have somehow gotten rid of the hardware part, and then this whole Oracle v. Google litigation would never have happened. With the benefit of being wise after the fact, the Sun deal would also have made it unnecessary for Google to buy Motorola Mobility later: Sun had lots of patents that Google could have used to countersue the likes of Apple and Microsoft.

Google didn't do what it could have done, and now the price may be a lot higher. That's the way things work.

How high the price should be is, of course, another question. I'm not saying that a disgorgement of 8ドル.8 billion is the right number: this is just the position Oracle's expert takes. What I do wholeheartedly believe is that this is by far and away the economically biggest copyright infringement case in the history of the world, and that even a 1ドル billion award would be far too small when considering the value Google has extracted from Java. From a perspective of market capitalization, it's possible that Alphabet (Google's corporate parent) would be worth less than half of what it is worth without Android (because its core business might have lost a lot of ground). Google pays Apple 1ドル billion a year for having its search engine on Apple's devices, and that price would be far higher if Apple were the only game in town (or the only one besides Windows).

Oracle's claim is very, very high, but it's not nearly as absurd as Google's lawyers' argument that the infringed program code amounts to a fraction of a percent of the entire Android code base. In the potato business, that kind of ratio would probably be meaningful. Here, it's more like arguing that the human heart only has a mass of 250 to 350 grams and then argue that its value is roughly that of 250 to 350 grams of sand or water.

Google took the essence of Java, built Android on that basis, and yes, a multi-billion dollar disgorgement would appear perfectly reasonable to me.

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:


Monday, March 21, 2016

Supreme Court grants Samsung's petition to review Apple's smartphone design patents case

The Supreme Court of the United States has just published a decision it had already made on Friday (March 18): Samsung's December 2015 petition for writ of certiorari (request for Supreme Court review) in Apple's design patents case has been GRANTED with respect to question 2 (damages). As a result, the Apple v. Samsung damages re-retrial scheduled to begin later this month in the Northern District of California is almost certainly going to be postponed indefinitely, as Apple is seeking unapportioned infringer's profits on all five products still at issue and won't be entitled to that if Samsung prevails in the top U.S. court.

A decision to hear the case is not a decision in any party's favor, but it is substantial headway for Samsung and comes less than a month after the Federal Circuit threw out Apple's entire second California case against Samsung, nixing a 120ドル million jury award and rendering an injunction decision irrelevant. Samsung's outside lawyers in those cases, from Quinn Emanuel, must be very happy.

Cert petitions are usually long shots. But in this case, I was optimistic from the get-go, and I actually prepared this post here before the scheduled publication of the decision because I believed strongly it was going to play out just this way. I was in great company with my bullish perspective on the petition, as two bloggers who are IP lawyers agreed.

It's not surprising that the damages question, which also ignited far more interest among "friends of the court," fared better than the claim construction question, though the latter one was interesting as well.

Samsung received unusually broadbased support for its petition, which definitely buttressed the electronics giant's claims that the issues in the case--damages (disgorgement of unapportioned infringer's profits) and claim construction (functional elements not to be considered in infringement and validity analysis)--are of concern to the high-tech industry and other parts of the economy, and not just to Samsung only because Apple has already collected half a billion dollars in damages on a questionable basis.

Last month, Samsung reinforced its petition with a reply brief that argued the law of the smartphone should not follow reflexively from the law of the spoon. The Supreme Court may or may not agree that Apple was entitled to unapportioned infringer's profits, and it won't evaluate whether Judge Koh should have instructed the jury on the exclusion of functional elements from its analysis of Apple's infringement and Samsung's invalidity claims. Previously, both Judge Koh and the Federal Circuit had agreed with Apple that the law was, in their opinion, so crystal clear on unapportioned disgorgement that there was no room for any other interpretation. Judge Koh and the Federal Circuit also agreed that there was no requirement to instruct the jury on claim construction the way Samsung proposed. Now, the highest court has agreed with Samsung that there is a need for clarification of how to apply a 19th-century law to 21st-century, multifunctional, high-technology products. That is already, in and of itself, a disagreement with the way Judge Koh and the Federal Circuit had dismissed Samsung's arguments.

Whether this will result in the decision Samsung is fighting for remains to be seen. Without a doubt, the justices will understand the absurdity of unapportioned disgorgement, let alone the theoretical possibility of multiple disgorgements if multiple patent holders each win an unapportioned disgorgement. (In a more conservative theory, the second one might no longer receive an unapportioned disgorgement, but every patent holder would get something and one or more might get an unapportioned disgorgement, which also means that more than a company's entire profits from a product would be wiped out.) Then it depends on statutory interpretation. There are ways such as a reasonable definition of "article of manufacture," in which Samsung can prevail. Apple will have to argue that there is no room for interpretation outside of its own position. Sometimes there are situations in which judges see that a law needs a revision to reflect technological (or, in other fields, societal) change, but believe only Congress has the authority to do something about it. That's the conclusion Apple wants the Supreme Court to reach here.

I'll be following the proceedings in detail, and I'll be talking about statutory interpretation as well as policy considerations in the months ahead. For now, I just want to highlight a very few aspects:

  • One reason Apple wanted to avoid this is because one of its iPhone design patents at issue in the case, the D'677 patent, has been held invalid by the Central Reexamination Division of the United States Patent and Trademark Office in an ongoing reexamination. Should this decision to be affirmed, then it will be harder and harder for Apple to collect the amount of damages originally awarded. It will take years until there is a final, non-appealable decision (presumably, Apple will exhaust all appeals unless it prevails before), but significant interim steps can also have an effect on the infringement proceedings.

  • There was no amicus curiae (friend of the court) who filed a letter oin support of Apple's position. Apple received limited support for its position on damages--nowhere near the level of Samsung's support, but some support--in 2014 before the Federal Circuit. Those amici presumably didn't file a letter this time around because it would have been counterproductive: it would only have shown that there is strong interest in this. Now, at the merits stage, they will become active again.

  • I'm sure Samsung can count on at least the support it received for its petition, and that was already very impressive. But it's possible that now, with the Supreme Court having decided to look at this, even more companies will openly take Samsung's side.

I'm very happy that the Supreme Court will now take a look at an interpretation of the law that would theoretically threaten even a company like Facebook (or little guys--for example, "indie" app developers) with the prospect of losing their entire profits over a single design patent infringement. I'm hopeful that something good will come out of this. And it wouldn't even bad for Apple. Once the shoe is on the other foot, Apple, the most profitable company in the history of this industry, will fight the notion of an unapportioned disgorgement as well. It's just hoping to somehow get leverage over Samsung with its design patents, now that its utility (technical) patents have practically failed to have any non-negligible effect.

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:


Wednesday, March 16, 2016

Supreme Court petition 15-777 (Samsung v. Apple) closely watched by IP lawyers, relisted for this Friday

Earlier this month (on Friday, March 4), the Supreme Court of the United States already had Samsung's December 2015 petition for writ of certiorari (request for Supreme Court review) in Apple's design patents case on its agenda. It's nothing unusual for a case to be relisted, and it happened in this case. There was no weekly conference last Friday, so this cert petition will be discussed this week, and we'll know the decision (unless there's another relisting) on Monday morning.

Samsung received unusually broadbased support for its petition, which definitely buttressed the electronics giant's claims that the issues in the case--damages (disgorgement of unapportioned infringer's profits) and claim construction (functional elements not to be considered in infringement and validity analysis)--are of concern to the high-tech industry and other parts of the economy, and not just to Samsung (Apple has already collected half a billion dollars in damages on a questionable basis).

Last month, Samsung reinforced its petition with a reply brief that argued the law of the smartphone should not follow reflexively from the law of the spoon.

It's always been clear that this petition raises some extremely important issues. Apple's lwayers obviously had to try to downplay its certworthiness, but independent observers who have commented on the petition have all deemed it interesting (at least the part on disgorgement of an infringer's entire, unapportioned profits).

The fact that Samsung's petition is certworthy has been confirmed by two recent posts on key IP blogs:

  • The SCOTUSblog's Relist Watch:

    "The big new relist this week is Samsung Electronics Co. v. Apple, 15-777, which we're guessing is being closely watched by the IP crowd."

    That's a verys safe guess. Not sure this can even be described as a guess.

  • Wegner's Writings on the Los Angeles Intellectual Property Law Association's (LAIPLA) blog:

    "The petition has a higher than usual chance for success."

In other Apple-Samsung news, patent analytics firm Lex Machina has published a new report that once again confirms Apple and Samsung are the top targets of patent troll lawsuits. Finally, I agree in principle with Vivek Wadhwa's recent opinion posted on the Crunch Network (Techcrunch). He believes Apple and Samsung should end their dispute, and notes that "patent litigation, such as what Apple resorted to, rarely does the world any good."

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:


Friday, February 26, 2016

In second California case, Apple wanted billions from Samsung, gets nothing but must pay millions

Apple's second California case against Samsung-- filed in 2012, about 10 months after the first Apple v. Samsung complaint--has turned out to be a non-starter. As I predicted in early January based on the official recording of the appellate hearing, the United States Court of Appeals for the Federal Circuit has thrown out the 2014 district court ruling in Apple's favor (which was already a major disappointment for Apple, as Apple got only about 5% of the roughly 2ドル.5 billion it originally wanted).

The Federal Circuit opinion is available here (PDF).

Here's my takeaway:

  • It's a humiliation for Apple. I'm not happy to say so because I actually think very highly of Apple's in-house and outside counsel. But the outcome (which this decision is, though I guess Apple will petition for a rehearing) couldn't have been worse. Apple has lost its offensive case 100%, but Samsung's symbolic win (over one of two counterclaims) has been upheld.

  • As a result, Apple will have to pay Samsung a few million dollars in damages and actually a lot more in litigation costs. The Federal Circuit opinion says "costs to Samsung." That could be tens of millions of dollars in the end, depending on whether Apple will suffer the fate of other litigants who have brought claims without merit. Some of the cost reimbursement will then be passed on to Google, which paid for parts of Samsung's defense.

  • By now, 18 judges in four countries (adding the three members of the Federal Circuit panel to the 15 European judges who ruled on a patent from the same family before) have held that Apple's slide-to-unlock mechanism, however good the idea was from a usability point of view, simply isn't a patentable invention. The only judge among the 19 who ruled on this patent who thought iw as valid: Judge Lucy Koh.

  • Judge Koh can only hope that Republicans (who may be inclined to oppose her nomination, by a lame-duck failed president, in any event) won't take a close look at her track record in the highest-profile litigation she presided over. That track record is not very good. I don't mean to suggest that the Federal Circuit is always right, and in the injunction context the Federal Circuit presented kind of a moving target, but the fact that she, unlike all of her 18 colleagues who looked at slide-to-unlock, deemed it a valid patent is nothing for her to be proud of. (Of course, the Ninth Circuit doesn't hear patent cases.)

  • I also believe she handled the situation concerning the '647 patent the very wrong way. After the Federal Circuit affirmed (right before the 2014 trial) Judge Posner's claim construction, it was crystal clear to me that Apple no longer had a case over that patent. I made it very clear at the time. I never understood why Judge Koh didn't throw out that patent, period.

  • I've said this many times and I'll repeat it here: Apple should finally put an end to this Samsung litigation. The entire "thermonuclear war" on Android was a bad idea. Yes, there was a time when I thought Apple (and others) could win this. At some point, however, I drew the necessary conclusions from what happened (and, even more so, what didn't happen). That "earned" me some conspiracy theories on discussion boards even though I honestly didn't believe in Apple's second California case at the time of the 2014 trial.

  • On March 4, the Supreme Court will discuss Samsung's cert petition regarding design patents, which is support by the IT industry at large, 37 IP law professors, and various advocacy groups.

Apple can do better than this. It's high time this amazing company recognized one of its biggest errors.

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:


Friday, February 19, 2016

Samsung to SCOTUS: 'The law of the smartphone cannot follow reflexively from the law of the spoon.'

The SCOTUSblog has published Samsung's reply brief in support of its petition for writ of certiorari (request for Supreme Court review) in Apple's design patents case. You can find Samsung's filing here.

Two weeks ago, Apple told the top U.S. court that it should not hear the case since it was "legally unexceptional." Apple accurately pointed to the fact that the claim construction-related part of Samsung's petition has far less support than the part concerning damages (disgorgement of unapportioned infringer's profits), but other than that, Apple's opposition filing simply couldn't downplay the importance of the issue in question. Right at the start of its reply brief, Samsung points to the "contrary [to Apple's position] view of nine high-technology companies, thirty-seven intellectual property professors, three groups representing minority and rural communities, two public interest organizations, a high-tech industry organization, and a small company that have filed amicus briefs in support of the petition." Certiorari should not be a campaigning contest, but in this case, with even some of Samsung's fiercest competitors supporting its position, there is no denying that a high quantity, quality and diversity of amici curiae would like the Supreme Court to review the Federal Circuit's decision.

The sentence I quoted in the headline appears at the end of the introductory section, just where Samsung makes the case that after more than 120 years it's time for the Supreme Court to take a look at design patents again.

Samsung's lawyers accuse their colleagues working for Apple of "rhetorical excess" because they "repeatedly incant[ed] broad, vague design concepts" such as "the iPhone's innovative look" rather than properly portray the narrow scope of the three design patents-in-suit. This is a common pattern in Apple v. Samsung, also in connection with software patents. Apple points to how its products revolutionized the market, but that doesn't mean that its patents rock. Much to the contrary, the most valuable software patent from the first Apple v. Samsung case has been held invalid by the USPTO, one key iPhone design patent has been rejected (in a first Office action after two years of consideration), and the Federal Circuit indicated at a recent hearing that Apple's patents at issue in the second California case were no good.

In connection with Apple not addressing the real claim construction issue (the jury instructions on infringement), Samsung's reply brief says: "That is Hamlet without the Prince." In a way, that saying also applies to the fact that Apple's patents-in-suit have such massive validity problems. And not only Apple's patents: the patents others assert against Apple don't appear to be significantly better. Apple and Samsung are the two top utilizers of the USPTO's new post-grant review procedures. It's really unfortunate that Apple advocates bad law, and bad interpretations of the law, instead of pushing for serious patent reform. I agree with Mark Cuban that Apple deserves a standing ovation for fighting the good fight with respect to encryption, but Apple has so far been fighting the opposite of the good fight with respect to patent quality, patent-eligible subject matter, and patent litigation rules (the latter with the exception of the UPC issue in Europe). Mark Cuban is indeed fighting the good fight in that regard.

I just don't understand why Apple takes a position on design patents that pretty much every other company in the industry disagrees with. Those who disagree with Apple can't all be habitual infringers of intellectual property rights.

The final section of Samsung's petition stresses the "enormous national importance" of the petition. This sounds to me like "this should be reviewed, but at the very, very, very least there should be a call for views of the Solicitor General (CVSG)." Or maybe I tend to read too much between the lines.

While I'm in the middle of tea-leaf reading, I'd like to also think about what the passing of Justice Antonin Scalia means for this particular case. This is not about politics (such as the question of whether the current president or his successor should replace him). Suffice it to say that my political positions are closer to his than those of the most liberal justices, and that's why I wouldn't want to suggest that conservative judges would be more likely to defend unreasonable outcomes such as the damages award in this Apple v. Samsung case. Nor do I mean to suggest that a conservative judge couldn't agree with Samsung on this matter: there are arguments and theories (such as the definition of "article of manufacture") that don't require anyone to be a "progressive" in order to side with Samsung, and conservatism and common sense do mix when applied by smart people. That said, a textualist and originalist like Justice Scalia would have been harder for Samsung to convince that the law of the smartphone should not follow from the law of the spoon, if the law of the spoon is technically still the law of the land.

Samsung's petition is on the agenda for the Supreme Court's March 4 conference. On the following Monday (March 7) we will then know what has been decided (or whether the decision has been postponed).

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:


Monday, February 8, 2016

Fair Standards Alliance welcomes [EU Competition Commissioner] Vestager’s comments on patent licensing

This here is a first for this blog: it's the first time I publish a complete press release without any my own commentary of my own. I don't know if and when I'll do so again, so please don't urge me to publish your press releases :-) In this case, the factual information contained in it is worth sharing, and I simply share the organization's perspective on this. I reported on the creation of the Fair Standards Alliance last year.

PRESS RELEASE: Fair Standards Alliance welcomes Vestager's comments on patent licensing

BRUSSELS, 5 February 2016 – The Fair Standards Alliance (FSA) welcomes European Competition Commissioner Margrethe Vestager’s statement that companies that have committed to license their standards-essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms must be kept to that promise.

"We are delighted to see the Commissioner giving such a clear message that companies simply must license patents on the FRAND terms that they have committed to. This is very much in line with our view that something must be done about unfair and unreasonable SEP licensing practices," FSA chairman Robert Pocknell said.

In a speech to the College of Europe's Global Competition Law Centre on 1 February, the Commissioner also said guidelines can "be a more efficient way than cases to provide guidance and legal certainty," adding that formulating appropriate guidelines is much easier on the basis of the resolution of cases, and noting that the Commission's decisions in Motorola and Samsung as well as the European Court of Justice decision in the Huawei case have removed a lot of uncertainty.

The FSA's Pocknell said the Alliance would be pleased to constructively support further efforts to establish fair licensing conditions for SEPs, and will continue offering perspectives and recommendations on these matters.

The Europe-based association believes that unfair and unreasonable SEP licensing practices pose a significant risk to the innovation eco-system. The failure to abide by the FRAND commitment, existing in most standardisation licensing, creates barriers to entry for new market entrants, threatens to stifle the full potential for economic growth across major industry sectors, and ultimately harms consumer choice.

FSA's member companies, who hold more than 160,000 patents and spend more than 32 billion euros per year on R&D and innovation, include: BMW, Cisco, Dell, Fairphone, HP, Intel, ip.acess, Juniper Networks, Lenovo, Micromax, peiker acustic, Sierra Wireless, Telit, ublox and Volkswagen.

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:


Eingestellt von Florian Mueller um 8:39 AM

Thursday, February 4, 2016

Apple to Supreme Court: Samsung litigation 'may be high-profile, [but] it is legally unexceptional'

Apple has just responded to Samsung's mid-December petition for writ of certiorari (request for Supreme Court review) regarding two legal questions concerning design patents and, in the same document, to amicus curiae ("friend of the court") briefs from major industry players, many IP law professors and various public interest advocates, all of whom agree with Samsung that the top U.S. court should take a look at this matter. Apple's lawyers from Wilmer Hale and Morrison & Foerster actually filed their opposition brief about two weeks ahead of a February 16 extended deadline, which is consistent with Apple's position at the end of its opposition brief that Samsung's petition should not "prolong" the #appsung dispute that began almost five years ago (this post continues below the document):

16-02 Apple Brief Opposing Cert Re. Design Patents by Florian Mueller

[フレーム]

Looking at this from the angle of whether the case is worthy of a Supreme Court review (without getting defocused by arguments about the merits), I'm not overwhelmed by Apple's filing, but anything else would have been a major surprise. Honestly, this must have been one of the most difficult challenges ever for Apple's lawyers: to try to downplay the certworthiness of an issue after pretty much the entire ICT industry has made clear that it is profoundly concerned.

The hurdle for Apple to discourage the Supreme Court from taking the case is (although cert petitions are normally long shots) reasonably high here not only because of all the amici who support Samsung but also because the Supreme Court hasn't heard a design patent case in about 122 years. It's so obvious that a lot of things have changed during that period, and the role design patents play in connection with complex technology products really needs to be adjudicated again.

I'm not going to go into too much detail on that filing, but I'll quickly share a few observations:

  • As expected, Apple doesn't deny that the disgorgement of a company's entire profits over a design patent infringement could have major economic implications (and, by extension, a chilling effect on innovation).

  • Apple does, however, deny that there is a problem with design patent trolls:

    "The lack of concrete instances of 'design patent trolls' is unsurprising. Patent trolls may succeed in anticipating technological features and acquiring corresponding utility patents, but it is much harder to anticipate product designs before they are released—particularly given that innovative design companies typically give their products a unique look to differentiate their brand. Even if a troll anticipated what design patents might prove lucrative, it would be highly unusual for a design innovator to sell, assign, or license design rights to a troll. While a company might monetize unused utility patents through sale or license, it will typically keep its design rights to avoid giving away control of its brand."

    Those arguments would make sense in a world in which only narrow design patents are granted. However, in a world in which even single icons and rough screen layouts can be patented, I just cannot agree with Apple.

    Where Apple has a point is that it's not like design patent trolls are already a rampant problem. So far, design patents indeed appeared to have been of much less interest to trolls. However, if the Supreme Court allowed the Federal Circuit decision to stand, design patent assertions by patent trolls (and also by operating companies who use them for purposes that have nothing to do with protecting and controlling their brand) would become a major problem. It appears that the Apple v. Samsung ruling in question has already encouraged one non-practicing entity to threaten operating companies with the specter of total profit disgorgements. I don't have the slightest doubt that more of this is going to happen unless the Supreme Court restores sanity.

  • Apple's brief talks a whole lot about its success story and the company's undeniably transformative impact on the smartphone market. Between the lines, Apple is basically telling the Supreme Court that Samsung is just an infringer who wants to get away with wrongdoings; Apple also tells the court directly that it should ignore Google because it made Android, the operating system powering the devices in question. I don't think Apple will get too much mileage out of that: the amici supporting Samsung's petition are diverse and (most of them) disinterested enough that the Supreme Court can see one doesn't have to be Samsung or, in whatever way, a Samsung partner to take an interest in this matter.

  • While I can understand everything else Apple's lawyers are saying (because they just have to say it), there is one thing that comes up twice in the brief and which really doesn't make any sense to me: Apple says Samsung "appealed numerous issues, [but] did not challenge the validity of Apple's design patents.

    First, it's obvious that an appellant must set priorities, which is hard enough in such a complex case as this one. So if an appellant doesn't raise an issue, it doesn't mean there would have been no merit. Second, one part of Samsung's Supreme Court petition relates to claim construction, and claim construction informs (in)validity determinations. So Samsung is actually challenging validity, but at a strategically chosen level: I've read more than once in literature on appellate strategies in patent cases that claim construction (a matter of law) is far more easily reversed on appeal than factual determinations by a jury. Third, it's actually counterproductive for Apple to make that validity argument, given that its primary iPhone design patent, the D'677 patent, is indeed being challenged before the USPTO (with Samsung being the presumed anonymous petitioner), and the patent office found that one invalid last year. Apple asked the USPTO to modify its first Office action, but to no avail. Apple filed another petition for reconsideration last month. That reexamination is definitely not going well for Apple.

  • Let's go from the weakest part of Apple's petition to the strongest one: Apple points out very clearly that Samsung's support from amici is not as strong for its claim construction question as it is for the disgorgement issue. Apple notes (as I did in my post on the amicus briefs) that the 37 law professors supporting Samsung are the only group of amici to side with Samsung on design patent claim construction. Apple also notes that Oklahoma Associate Professor of Law Sarah Burstein, who had supported Samsung before the Federal Circuit with respect to design patent damages, decided not to sign her colleagues' Supreme Court brief because she fundamentally disagrees on the question of design patent claim construction (as she made clear in this PatentlyO guest post Apple also points the Supreme Court to).

    Those facts do suggest that design patent claim construction is of much less concern to industry than damages, and that Samsung's legal argument on claim construction may be somewhat more controversial than its position on disgorgement of entire profits. However, the number of law professors supporting Samsung has increased (from 27 to 37), and it's not hard to see why companies would be particularly concerned about outsized damages.

  • On the certworthiness of the damages question, I'd like to point to something interesting in Apple's filing but couldn't find such a thing.

  • Appe's argument is merits-centric as opposed to certworthiness-centric. I don't think Apple had much of a choice in that regard. But merits are not really the name of the game at the cert stage, and if the court accepts to hear the case, Apple will already have used some of its merits-related ammunition.

All in all, I would really be surprised if Samsung's petition didn't at least result in a CVSG (call for views of the Solicitor General so the U.S. government will talk to industry and find out how much of a concern there is). Apple's opposition brief has just added to my belief that at least the damages part of Samsung's petition is really very strong.

While I was looking at Apple's filing, I also saw the latest news of a non-practicing entity having been awarded more than 600ドル million in damages from Apple. This is an Eastern District of Texas jury verdict and the number will likely change before all is said and done, but every verdict of this kind increases the likelihood of Apple at some point joining the proponents of serious U.S. patent reform.

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:


Subscribe to: Posts (Atom)
 

AltStyle によって変換されたページ (->オリジナル) /