ITC throws out Barnes & Noble's antitrust claims against Microsoft ahead of trial: no signs of wrongdoing

Barnes & Noble's primary line of defense against Microsoft's allegations of patent infringement by the bookseller's Android-based devices has collapsed in its entirety. An Administrative Law Judge at the ITC today granted a Microsoft motion to dismiss, even ahead of the evidentiary trial that will start next Monday (February 6), Barnes & Noble's "patent misuse" defense against Microsoft.

The detailed order is not publicly available, but the headline of the following docket entry leaves no doubt at all about the outcome (click on the image to enlarge):

Here's the headline again:

Initial Determination Granting Microsoft's Motion for Summary Determination of Respondents' First Affirmative Defense of Patent Misuse

"Initial Determination" is the term for a decision by an Administrative Law Judge. It can be reviewed by the Commission, the six-member decision-making body at the top of the ITC, but I haven't recently seen an ITC review of any ALJ order comparable to this one (findings of violations are a different story). The ALJs are really the masters of this stage of the investigation.

Prior to the ALJ, the ITC staff -- or more precisely, the Office of Unfair Import Investigations (OUII), which participates in many investigations as a third party representing the public interest -- already supported Microsoft's motion all the way. The OUII basically concluded that even if all of what Barnes & Noble said about Microsoft's use of patents against Android was accurate, it would fall far short of the legal requirements for a patent misuse defense. For example, Barnes & Noble claimed that Microsoft asked for excessively high patent license fees, but the OUII quoted passages from U.S. law (statutory as well as case law) that clearly said that patent law doesn't require a patent holder to grant a license on any terms. I quoted from the OUII document here. (FRAND-pledged standards-essential patents are a different kind of issue because they raise issues under competition law, starting with the standard-setting process itself.)

Today's decision is important in multiple ways (the order of the items below is not meant to indicate any prioritization):

1. Barnes & Noble bet heavily on its patent misuse defense. It stressed this one by making it its First Affirmative Defense, and it invested heavily. It even brought former Microsoft antitrust foe David Boies on board. Based on today's order, Mr. Boies is very unlikely to get to complete any unfinished business he may have with Microsoft. More importantly, it's hard to see how Barnes & Noble can gain serious leverage against Microsoft. It doesn't have any such thing as a significant patent portfolio that it could use. Playing the "antitrust" card was its only chance to bring any counterclaims at all.

2. Barnes & Noble also complained to the United States Department of Justice, an antitrust regulator, about Microsoft's patent assertions against Android. Like the DoJ, the ITC is a U.S. government agency. If Barnes & Noble failed to meet the ITC's requirements for a valid legal theory and for evidentiary support, it's also unlikely to impress competition enforcers. At this stage, Barnes & Noble was allowed to conduct wide-ranging discovery of Microsoft. Even Microsoft CEO Steve Ballmer had to testify at some point (though he wouldn't have had to appear personally at next week's trial anyway). If Barnes & Noble can't state a claim that the ITC considers credible after a large-scale fishing expedition, it just doesn't seem to have a case at all.

3. As a result, Microsoft's intellectual strategy has, essentially, received a stamp of approval by a government agency. While Barnes & Noble claimed that Microsoft was seeking to eliminate Android as a competitive threat and brought all sorts of conspiracy theories, it's a fact that Microsoft has successfully concluded patent license agreements covering more than 70% of all Android devices sold in the U.S. market, a level of acceptance that wouldn't be possible if Microsoft's terms were as unreasonable as Barnes & Noble alleged. The commercial success of Microsoft's Android patent licensing program and the wholesale dismissal of Barnes & Noble's accusations are a meaningful combination. By contrast, Barnes & Noble's claims now look like bogus borne out of desperation and possibly other emotions.

4. I believe Barnes & Noble probably knew that its First Affirmative Defense was, at best, a long shot, but it may have hoped that Microsoft would settle on sweet terms just to avoid the harassment and the risk of issues coming up at a (partly) public ITC hearing -- issues that might not have much legal relevance anyway but that could be embarrassing. Following today's order, none of the evidence that Barnes & Noble's lawyers obtained in recent months will be presented at the trial starting next week. Also, Barnes & Noble's quest for further information, such as an attempt to force Nokia, through an international process, to disclose additional material and make its CEO Stephen Elop available for a deposition, has now come to an abrupt end.

5. There was a time when Microsoft had serious antitrust worries in the U.S. and in Europe, but like other companies that experienced similar situations, it got over the learning curve. It didn't back down out of scare when Barnes & Noble screamed "antitrust!" but kept pursuing its claims and executing its licensing-centric intellectual property strategy.

6. It's an interesting coincidence that Microsoft's Android patent licensing program gets cleared by an ITC judge on the same day on which the European Commission announced a formal investigation of Samsung's suspected abuse of FRAND-pledged standards-essential patents against Apple.

I also have a few opinions and observations to share. Back in April 2011, when Barnes & Noble first tried to play the patent misuse and "antitrust" card, I already expressed my doubts. Some of the claims, such as the allegation of Microsoft having claimed to "control" Android, were hard to understand, and some of the numbers (market shares etc.) flew in the face of what I know about the smartphone market. I was not only skeptical but also, in one particular way, concerned. My concern was that Barnes & Noble's "defense" was actually an assault on the very concept of patent licensing. In my view, licensing on commercially reasonable terms is a good thing. If Microsoft really wanted to destroy Android (which is what Barnes & Noble pretty much alleged to be the objective), it would seek injunctions against Barnes & Noble's and other vendors' Android-based devices instead of selling licenses to more than 70% of the market.

Simply put, as much as I understand that Barnes & Noble wants to defend itself vigorously, the tactics it chose to employ could have discouraged patent holders in general (not thinking of any particular company) from cooperative, licensing-oriented IP strategies.

Procedural history of this motion

Microsoft initially brought this motion on June 6, 2011, arguing that "Barnes & Noble's First Affirmative Defense [of patent misuse, including antitrust allegations] is deficient as a matter of both substantive law and applicable pleading requirements".

On June 15, 2011, the OUII (ITC staff) supported Microsoft's motions (as I mentioned above).

Nevertheless, the ALJ didn't want to grant the order prior to discovery. I don't know the exact date on which it was denied because it's not in the public record, but based on other documents in the public record that reference it, it must have come down in late September 2011 or in early October 2011.

While Microsoft's original intention may very well have been to have Barnes & Noble's "patent misuse" allegations stricken as early as possible (even prior to discovery, which is always somewhat burdensome on companies), the fact that the ALJ thew out Barnes & Noble's accusations at this stage means that even an extensive discovery process didn't establish a case for wrongdoing on Microsoft's part.

The trial starting on Monday is now going to be focused on patent validity, infringement and domestic industry questions. In order to allow an efficient trial, Microsoft recently dropped many of its originally-asserted patent claims from the investigation.

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EU launches full-blown investigation of Samsung's suspected abuse of FRAND-pledged patents -- Motorola must watch out

The European Commission just announced that it has "opened a formal investigation to assess whether Samsung Electronics has abusively, and in contravention of a commitment it gave to the European Telecommunications Standards Institute (ETSI), used certain of its standard essential patent rights to distort competition in European mobile device markets, in breach of EU antitrust rules".

It goes without saying that Samsung is innocent until proven guilty of abuse. But the launch of a full-blown investigation after a few months of preliminary investigations is an important step. This means European competition enforcers have received information, in response to questionnaires (sent to Apple, which may have informally complained, and Samsung) that warrant a more formal effort. As the Commission's press release states, "[t]he opening of proceedings means that the Commission will examine the case as a matter of priority".

Please bear with me for a big-time "See I Told Ya So". Back in November I clarified on this blog, and in correspondence and interviews with major news agencies (several of whom quoted me), that the EU's concerns appeared to relate to Samsung's, not Apple's, conduct. Both companies received questionnaires, but the Commission said that its concerns related to patents essential to wireless telecommunications standards, and Apple has never sued anyone over a patent of that kind. In fact, Apple never participated in such a standard-setting process as far as I know. [Update] By the previous sentence I meant to say that Apple never participated in the definition of a standard like GSM or 3G/UMTS. Apple has contributed to codec standards, but since it's part of the MPEG LA pool, anyone can receive a license to those patents without having to negotiate with Apple itself. [/Update]

In principle, antitrust agencies could also try to go after Apple, but in that case, the theory would have to be a different one than FRAND-pledged standards-essential patents.

So far, Samsung's attempts to enforce a minimum of 13 different allegedly 3G-essential patents against Apple haven't been successful. In Germany, Samsung has already lost its first two lawsuits over such patents. Previously, a Dutch court dismissed a Samsung motion for an injunction because it held Samsung to have failed to honor a FRAND licensing commitment. Bids for preliminary injunctions against the iPhone 4S failed in France and Italy.

But the European Commission can't wait until Samsung finally wins a ruling based on such a patent and enforces it, potentially causing irreparable harm.

Even though Samsung is at this stage the only company to be investigated over this issue, other suspected abusers could face similar inquiries anytime. And everyone else who may intend to seek or enforce injunctions based on FRAND-pledged standards-essential patents in Europe will now have to proceed with extra caution. In particular, Motorola Mobility has already won (but, to the best of my knowledge, not yet sought to enforce) an injunction against Apple in Germany. Motorola's conduct is also relevant to the ongoing competition review of its proposed acquisition by Google. As I wrote last week, there's a risk of Google putting its muscle behind widespread FRAND abuse post-acquisition. Google has not spoken out on the issue of whether it's acceptable to seek (or enforce) injunctions based on standards-essential patents, though other large players including (but not limited to) Cisco, IBM, HP and RIM are clearly concerned about any such abuse of FRAND-pledged patents.

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German appeals court upholds Galaxy Tab 10.1 injunction -- but on different legal basis than Apple's design right

This morning, the Düsseldorf Higher Regional Court (an appeals court) announced that it has upheld a preliminary injunction against the Samsung Galaxy Tab 10.1 and has confirmed that the smaller Galaxy Tab 8.9 falls within the scope of that injunction. But this doesn't mean that Samsung lost all the way: the appeals court based its decision on a violation of German unfair competition law (Gesetz gegen den unlauteren Wettbewerb, UWG), while the lower court's ruling was based on a finding of a violation of a Community design, the European equivalent of a U.S. design patent.

The preliminary injunction was originally ordered in early August 2011 and, following a hearing by the same court, upheld in early September 2011. Subsequently, Samsung appealed the case to the Düsseldorf Higher Regional Court.

Today's ruling validates Apple's decision to bring claims against the Galaxy Tab 10.1. Apple's actions may have been aggressive, but they weren't unreasonably overreaching. At the very least, there can be a genuine dispute over this issue. But the strength of Apple's Community design is increasingly questionable. Just last week, a Dutch appeals court narrowed the scope of that design-related right and did not find Samsung in infringement. I didn't see a reference to unfair competition law in the Dutch ruling. Apple brought such claims only in Germany, a jurisdiction in which unfair competition law is almost a "catch-all" kind of law that is applicable to a wide variety of commercial issues.

Let's put today's decision into perspective:

1. Apple can't replicate the German decision in other countries since German unfair competition law is pretty unique. A win based on an EU-wide design right would have been strategically more valuable to Apple. Even though Samsung formally lost its appeal because the preliminary injunction remains in force, it succeeded in defeating Apple's design right.

2. A couple of months ago, Samsung launched a modified version of the Galaxy Tab 10.1, named 10.1N, in Germany. In late November 2011, Apple requested a preliminary injunction against the 10.1N. For now, the 10.1N is still on sale. The Düsseldorf Regional Court held a hearing the week before Christmas and will announce a decision on February 9, 2012. The fact that Apple won today doesn't necessarily mean that it will succeed against the 10.1N. If Samsung is allowed to continue to sell the 10.1N, the commercial relevance of today's appellate decision is next to nil.

3. While today's decision was made by an appeals court, we are still talking about fast-track proceedings triggered by a request for a preliminary injunction (and an appeal against one). All those decisions are preliminary, and what matters most is the full-blown main proceeding in which Apple's design-related claims against a total of 15 Samsung products are at issue. It's too early to tell what the outcome of that case will be.

4. In my opinion, the strategic value of those design-related lawsuits is relatively low. Preliminary injunctions based on such claims can have a temporary disruptive effect, but the world-spanning dispute between Apple and Samsung primarily hinges on the outcome of the parties' technical patent infringement claims against each other. The first two patent infringement lawsuits Samsung brought against Apple in Germany have been dismissed. Decisions on Apple's related claims will come down in the coming months.

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Legendary judge hands Apple key patent interpretation victory against Android

Since I was in Mannheim during large parts of Thursday and Friday, I'm a few days late in noticing that Apple scored a strategically important legal victory on Wednesday that could have enormous impact on Apple's patent assertions against Android. The order I mean came down in litigation between Apple and Motorola, but the issue is also relevant to Apple's spat with HTC and could play a very important role in Apple's dispute with Samsung as well as its dealings with any other Android device makers in the future.

In a federal litigation with Motorola in the Northern District of Illinois, an extremely influential, high-ranking U.S. judge agreed with Apple's interpretation of the most important term, "realtime API", in its '263 patent. Under this interpretation, Android most likely infringes on the patent, and a workaround appears difficult to say the least. I published the original infringement claim chart from Apple's complaint against HTC and Apple's allegation, based on this patent, that Andy Rubin got the inspiration for Android while working at Apple (which might enable Apple at some point to have Google found liable for willful infringement).

Last summer, an Administrative Law Judge (ALJ) at the ITC already held HTC's Android-based devices to infringe that patent, but the Commission, the six-member decision-making body at the top of the ITC, reversed his related finding of a violation and limited Apple's victory to a technically narrower patent covering what I call "data tapping". While the ITC was conducting its review, I already agreed with the ALJ (and, by extension, with Apple) that the approach suggested by the ITC staff (and ultimately adopted by the Commission) was "formalistic wordplay" that simply made no technical sense to me. I was not surprised to find that Apple appealed the ITC ruling, and expressed my belief that Apple's appeal may very well succeed. With the order that came down in Chicago on Wednesday, Apple's chances have further increased.

Here's the final part of that order (click to enlarge):

The interpretation ordered above is the one Apple proposed. In my opinion, a jury is very likely to find Android to infringe the patent based on that construction but much less likely to deem the patent invalid (unless someone comes up with better invalidity contentions than HTC did, presumably with help from Google).

The Apple v. Motorola litigation in Chicago is going to be the next occasion on which this patent is asserted against Android at trial (probably in the summer). With Google hoping to close its acquisition of Motorola Mobility in the near term, that dispute is going to be very important in and of itself. But the high profile of the judge who entered and signed the above order lends it importance beyond that particular dispute.

You can read about United States Circuit Judge Richard A. Posner on Wikipedia. According to the Journal of Legal Studies, he was the most-cited legal scholar in United States in the 20th century. From 1993 to 2000 he was the Chief Judge of the United States Court of Appeal for the Seventh Circuit and still sits on that court, and in addition, he serves on the Chicago-based district court "by designation", which is why he presides over Apple's lawsuit against Motorola.

While patent appeals go to the Court of Appeals for the Federal Circuit (CAFC), Judge Posner is technically a peer of the CAFC judges who will rule on Apple's appeal against the ITC and HTC. He's primarily known for his work on legal economics, not for patent law, but he's a living legend of U.S. law and his understanding of the '263 patent will clearly bear more psychological weight with the CAFC than the final ITC ruling (or the position of the ITC's Office of Unfair Import Investigations). Apple convinced an ALJ at the ITC and convinced a legendary, high-ranking judge. If the CAFC also agrees to interpret the '263 patent in a technically logical way, Android may face a major problem.

[Update] This post was factually correct but has led to misunderstandings that I'd like to address now. The order by Judge Posner was entered in litigation between Apple and Motorola in the Northern District of Illinois. While Judge Posner is an appellate judge, he is sitting, for this case, on the bench of a district court, which is a first-instance (as opposed to an appeals) court. The fact that he is a circuit (i.e., appellate) judge is nevertheless important: it means he's a high-ranking judge. The relevance of all this to Apple's dispute with HTC is that the same patent was also asserted against HTC in Apple's first Android-related ITC complaint ever, and Apple is appealing the related ITC ruling, which was negative on this patent. Apple's appeal of the ITC ruling is before the CAFC (Federal Circuit), while Judge Posner's circuit is the Seventh Circuit. In the next step, Judge Posner's order increases Apple's chances of winning a (district court) ruling against Motorola based on this patent. But in addition, it also increases Apple's chances of the CAFC overruling the ITC on this one (where HTC, not MMI, is the defendant). [/Update]

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Samsung loses second German 3G patent lawsuit against Apple

One week after dismissing Samsung's first German patent infringement lawsuit against Apple, the Mannheim Regional Court also rejected Samsung's second complaint.

Either complaint related to the 3G/UMTS wireless telecommunications standard.

I attended the pronouncement of the ruling (at 9 AM local time). Judge Andreas Voss did not state any particular reasons for the decision. As I explained in the post linked to above, different reasons are conceivable. The outcome of Samsung's first two German actions against Apple may be based on reasons specific to the validity and/or infringement of those patents, in which case Samsung could still prevail over any or all of three other 3G/UMTS patents it is asserting against Apple in Mannheim. Samsung is furthermore suing Apple over two non-standards-related patents, including a patent on a method to enter smileys on a mobile device.

At the mid-November hearings. it looked like Samsung was reasonably likely to prevail on at least one of the two patents. The case that was adjudicated today looked more promising to Samsung than the one dismissed last week.

For Samsung, this outcome must be disappointing. But the Korean electronics giant is known for its fighting spirit and unlikely to back down. It remains to be seen whether Samsung will appeal any of these rulings to the Karlsruhe Higher Regional Court. Presumably, Samsung will have to analyze the reasoning behind this decision in order to decide on a possible appeal.

Apple's and Samsung's claims against each other continue to have a very high drop-out rate in different jurisdictions. Since both companies are doing very well (with Apple being not just highly but even unbelievably profitable), they can afford to keep going, and at this point neither litigant has the leverage to force its rival into a settlement.

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Judge ups the ante for Oracle with respect to two patents asserted against Google

Against Google's objections, Judge William Alsup of the United States District Court for the Northern District of California gave Oracle a third chance to present a damages report, and Oracle accepted his proposal, which may (unless any new obstacles come up) pave the way for a mid-April trial date. The judge has meanwhile acknowledged Oracle's willingness to bear the costs associated with this incremental effort.

But he also had bad news for Oracle with respect to two of the six patents Oracle is asserting at this stage of the litigation (out of the original seven), in the form of a non-final supplemental claim construction order. It's non-final in the sense that the court reserves the right to modify it if any evidence shows up closer to trial that warrants second thoughts. "Counsel, however, may not ask for modification", writes the judge, knowing that Oracle would otherwise keep fighting for more favorable interpretations of one key term for each of the two patents the order relates to.

These are the two new claim constructions:

• U.S. Patent No. 6,192,476 relates to a dynamic security method for determining access privileges. Oracle and Google couldn't agree on the meaning of the term "computer-readable medium" in the context of this patent. They had disagreements over that term and closely-related terms in connection with six patents, but since the interpretation of a phrase depends on the specifics of a given patent, the judge determined that "individualized attention to the intrinsic evidence of each patent" would be needed. Yesterday's order interprets the term only with respect to the '476 patent.

  Google has, for the time being, succeeded in persuading the judge that the term should be interpreted broadly so as to include signals over physical and wireless networks. If a defendant in a patent case advocates a broad claim construction, the agenda is, as it is in this case, invalidation: for a broad patent it's easier to find prior art, or to argue obviousness over prior art. Oracle, by contrast, wanted the term to be construed as "a storage device for use by a computer".

  It's now going to be quite difficult for Oracle to convince the jury that the '476 patent should be presumed valid. As I stated in my recent update on the ongoing reexaminations, the USPTO has issued a "final" (though still appealable) Office action declaring the only asserted claim (claim 14) invalid. The jury will be informed of that (appealable) decision. And if Judge Alsup adheres to the claim construction he ordered yesterday, the jury will be even more inclined to hold the patent invalid.

• U.S. Patent No. 6,910,205 relates to increasing
  execution speed by replacing bytecode with instructions to access faster native code. With respect to this one, Google's strategy is to argue that it doesn't infringe, so it seeks a narrow interpretation. And it succeeded on this one, too: Judge Alsup agreed that "at runtime" must be confined to the execution of the virtual machine instructions, while Oracle wanted any execution of the virtual machine (including initialization) to be covered. The judge adopted a construction that is materially consistent with Google's proposal except for a difference that appears to be merely editorial.

  The '205 patent, like most of Oracle's patents-in-suit, is also under major reexamination pressure. A first Office action by the USPTO held the asserted claims invalid. A final (though appealable) Office action might still come down in time for the trial.

Last year the judge had already construed five terms from some of the patents-in-suit. At that time, Oracle won by 4-1. I discussed the first claim construction order in September when I looked at the state of Google's affirmative defenses at the time. On the second one, it's 2-0 for Google. That's 4-3 in total, with a number of additional constructions to be decided on. And again, yesterday's order need not be the final outcome, so a 2-0 victory for Google could, for example, still become a 1-1 draw.

When it comes to claim construction, defendants mostly try to narrow the scope of patents so as to avoid a finding of infringement. In the cases I watch, that's what they try about 4 out of 5 times, while they seek to broaden a claim only about 20% of the time. When a defendant seeks a narrow construction, it's sometimes a "Plan B" to argue that if his proposed narrow interpretation was rejected, the plaintiff's broader interpretation would raise validity issues.

But Google's defense against Oracle is different. Google has clearly placed more emphasis on invalidation than any other defendant in a comparable case that I've seen so far. And based on where things stand today, Google has made remarkable if not phenomenal headway with this part of its defense. Of course, fortunes can change and it's possible that at a later stage Oracle will resurrect some of its patent claims, but BPAI (Board of Patent Appeals and Interferences) appeals, followed by potential CAFC (Court of Appeals for the Federal Circuit) appeals, take time, and Oracle needs and wants -- and is now very likely to get -- a near-term trial.

Oracle knows that it's not going to be easy to prevail on its patent infringement claims. That's why its near-term hopes are mostly based on its copyright infringement allegations. However, the judge rejected Oracle's proposal to put the patent infringement claims on the back burner. He wants the case as a whole resolved swiftly and efficiently. Oracle is now, presumably, scrambling to put together a new damages report in order to stay on schedule.

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Samsung allowed to show Apple-Qualcomm contracts, letters and limited source code to foreign courts

About two weeks ago, Samsung petitioned the United States District Court for the Southern District of Calfornia to grant access to certain contracts and correspondence between Apple and Qualcomm in order to show those documents to foreign courts. You can find further detail on this request and its potential significance in the blog post I just linked to.

For an update, the court yesterday granted Samsung's motion. Before the court decision became known, a Samsung official stressed, in a conversation with the Korea Times, the importance of this discovery request.

On January 20, 2012, Samsung had amended the motion, and its proposed order, which the court ultimately signed, stated that Apple didn't oppose the motion.

The amended motion included, in addition to a request for certain business documents, a request for "a specific portion of the source code related to ETSI 3GPP Technical Specification (section 9.2.2.5 and 9.2.2.8 of TS 25.322 V6.9.0) and used in Qualcomm's chipsets that were incorporated into the iPhone 4S", claiming that "[t]his source code is critical for Samsung to prove its infringement claim against Apple in the Apple/Samsung Litigation". Patent exhaustion can indeed depend on technical details.

The court order notes that Qualcomm could still bring a motion to quash this discovery request. It didn't do so in connection with Apple's request for access to the Qualcomm-Samsung patent cross-licensing agreement, but Samsung's request is different in some ways, so it can't be ruled out that Qualcomm might oppose this discovery order in whole or in part. The court believes that there are no signs of this being a "fishing expedition" or "intended to be a vehicle for harassment". Otherwise, I believe, Apple would have raised an objection.

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Google authorized Motorola to seek an injunction against the iPhone 4S and iCloud

These days, you can probably hear a pin drop if Apple and Google are in the same room. Tensions are rising high as a direct legal clash increasingly appears to be inevitable. The latest hostility is a new lawsuit filed yesterday by Motorola Mobility, with green light from Google, in the Southern District of Florida, seeking an injunction against the iPhone 4S and the iCloud over a package of six patents previously asserted against older Apple products in the same court.

Google must have authorized this action because this complaint formally represents a new lawsuit (since it was too late to inject supplemental infringement contentions into the first Florida action) and Section 5.01(j) of the Google-Motorola merger agreement does not allow MMI to "assert any Intellectual Property Right in any new Action" without Google's consent (either under the agreement or in a separate document, which is what presumably happened in this case).

All six Motorola patents-in-suit are asserted against the iPhone 4S. All but two (the '987 and the '737 patents) are also asserted against the iCloud.

Here's a list of the patents:

• U.S. Patent No. 5,710,987 on a "receiver having concealed external antenna"

• U.S. Patent No. 5,754,119 on a "multiple pager status synchronization system and method"; Motorola is asserting the European equivalent of this patent against Apple in Mannheim, with a decision (that will likely be favorable for Motorola) scheduled for Friday of next week (February 3, 2012)

• U.S. Patent No. 5,958,006 on a "method and apparatus for communicating summarized data"

• U.S. Patent No. 6,101,531 on a "system for communicating user-selected criteria filter prepared at wireless client to communication server for filtering data transferred from host to said wireless client"

• U.S. Patent No. 6,008,737 on an "apparatus for controlling utilization of software added to a portable communication device"

• U.S. Patent No. 6,377,161 on a "method and apparatus in a wireless messaging system for facilitating an exchange of address information"

As I mentioned before, Motorola would have preferred to add the iPhone 4S and the iCloud to the list of technologies accused in an action that started in late 2010. However, that litigation is already far along, with a trial scheduled for this summer, and the judge rejected Motorola's supplemental infringement contentions as untimely but said that MMI would be free to accuse those technologies in a separate lawsuit.

It's unclear at this stage how long it will take for this second Florida lawsuit to go to trial. The Southern District of Florida moves relatively fast. The fact pattern will be largely consistent with that of the first Florida action, but there will be some differences. Also, with reexaminations of some of the patents-in-suit ongoing, there could be new information from the patent office that might affect the outcome. But the court will be able to recycle some of the work it did for the first action, such as on claim construction (unless any new evidence relevant to claim construction is presented in the course of this new litigation).

Since the product release cycles of tech companies are much shorter than the average time to trial of U.S. patent infringement lawsuits or ITC complaints, it's the normal course of business that companies look for ways to use previously-asserted patents against new products.

Another example is that Apple, at a recent Mannheim hearing, presented supplemental infringement contentions relating to the Samsung Galaxy Nexus smartphone, the official lead device for Android 4.0 (aka Ice Cream Sandwich). Today I saw that the Korea Herald quotes an unnamed Samsung spokesperson as saying that the Nexus was not on the list of accused products. In this case, I am absolutely convinced that I am right and the Korea Herald's source doesn't have up-to-date information. I attended the hearing and Apple's lead counsel in that action, Dr. Frank-Erich Hufnagel of Freshfields Bruckhaus Deringer, presented contentions and said that they are "new" and relate to "the Nexus" (he mentioned the same at least twice). In an Apple v. Samsung infringement lawsuit, what would "the Nexus" mean, if we talk about "new" contentions, if not the Samsung Galaxy Nexus? Certainly not an HTC phone. Samsung is a large organization and Apple's new contentions may not yet have been received and processed accordingly, but just to be clear, I don't make these things up. There were various other spectators at the hearing, not just me.

Getting back to this new Motorola lawsuit, it's certainly not the same kind of aggressive escalation as a lawsuit over a new set of patents would have been, but this shows that Motorola continues to fight hard.

The fact that Google signs off on an additional lawsuit at this stage -- as opposed to waiting for its purchase of MMI to close -- also says something. Two days ago I blogged about the possibility of Google ratcheting up patent enforcement after the closing of its proposed acquisition of Motorola Mobility.

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Apple appeals ITC decision on complaint against HTC to Federal Circuit, seeks to expand import ban

On December 19, 2011, the ITC handed down its lenient final ruling on Apple's first complaint against HTC, holding the Taiwanese company's Android devices to infringe only one of Apple's asserted patents and providing for generous transitional periods during which HTC can still ship infringing devices. Apple wouldn't be Apple if it contented itself with an outcome that represents significant progress but is clearly suboptimal, especially since it falls short of the initial determination made by an Administrative Law Judge.

The ITC is a quasi-judicial government agency. Its decisions can be appealed to the Court of Appeals for the Federal Circuit (CAFC), and that's what Apple has done, as reflected by the following header of a court order:

In fact, Apple lodged this appeal back on December 29, 2011, but it's not always easy to find out about CAFC proceedings. I just ran a few searches on Google News and couldn't find any previous report on this appeal. Today I became aware of it because Apple mentioned this appeal yesterday in a filing with the United States District Court for the Northern District of Illinois. In that court, Apple is asserting the '263 "realtime API" patent (for more information on its significance, let me refer you to the infringement claim chart and a blog post on Apple's claim that Android chief Andy Rubin got the inspiration for Android while working at Apple, where his then-bosses made this particular invention) against Motorola. Apple told the Chicago-based court that an Administrative Law Judge agreed with Apple's construction of the term "realtime application programming interface" (and, as a result, held HTC to infringe it) but the Commission, the six-member decision-making body at the top of the ITC, "reversed the ALJ's construction". Motorola argued that the Commission decision should be taken into account by the district court, but Apple states that "[t]he Commission's decision is on appeal to the Federal Circuit and has no preclusive effect in this [District] Court".

Therefore, it's clear that Apple's appeal of the ITC ruling at least aims to broaden the scope of the import ban by including the '263 patent. If Apple succeeded, this would greatly increase the business impact of the import ban.

Apple's appellate brief isn't publicly available yet. Therefore, it's not known whether Apple appeals any other parts of the ITC ruling beyond the finding of no violation with respect to the '263 "realtime API" patent. It is, howver, rather likely that Apple's appeal also relates to one or more of the following issues:

• Apple's contingent petition for review asked the ITC, for the event that it decided (as it did) to review the initial determination, to find HTC in infringement of two other patents:

  • U.S. Patent No. 5,481,721 on a "method for providing automatic and dynamic translation of object oriented programming language-based message passing into operation system message passing using proxy objects"

  • U.S. Patent No. 6,275,983 on an "object-oriented operating system"

  The Commission looked into issues concerning those two patents, but deemed the '721 patent invalid and not infringed, and concluded that the '983 patent was neither infringed nor practiced by Apple according to the ITC's claim construction (and under Apple's own claim construction, the Commission said the patent would still not be infringed, but it would be invalid).

  Apple may hope that the CAFC will let it prevail on one or both of those patents as well.

• Every import ban proposed by the ITC is subject to a Presidential Review, which takes 60 days, but the ITC gave HTC two extra months to modify its products so as to steer clear of infringement. This means that the formal ban only takes effect in April 2012, more than two years after Apple's original complaint.

  As I noted, the fact that HTC immediately announced a workaround (which simply came down to removing the feature) and downplayed the importance of the related feature suggests that the ITC ruling was exceedingly lenient. Apple may be appealing that question as well. Even though this appeal won't be resolved in time to shorten that transitional period, Apple might have a strategic interest in this issue with a view to its other ITC complaints that are still being investigated or that it may bring in the future.

• The ITC furthermore decided not to issue a cease-and-desist order. The purpose of a cease-and-desist is to stop companies from selling infringing devices that they imported before the ban took effect. Without a cease-and-desist, companies can import huge quantities of products shortly before the import ban and thereby delay the business impact of an ITC ruling. This, again, will be too late for HTC's devices, but could be a strategic issue with a view to Apple's continuing enforcement of intellectual property rights.

Whatever the scope of Apple's appeal against the ITC may be, I believe Apple has realistic chances of winning a better outcome, but this will take time before the CAFC hands down its decision on this appeal.

Some of the other recent and upcoming smartphone-related ITC decisions may also be appealed. The drop-out rate of patents asserted in ITC complaints is astoundingly high, and I wouldn't be surprised if the Federal Circuit found that the ITC erred in favor of respondents in a few cases.

Apple is no stranger to the Federal Circuit. Also in December, Apple filed an appeal against the denial of a preliminary injunction against Samsung by the United States District Court for the Northern District of California. Appeals against decisions on preliminary injunction motions are usually adjudicated more swiftly than those against ITC rulings.

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Overview of Microsoft's and Motorola's petitions for review of preliminary ITC ruling

Both Microsoft and Motorola have asked the ITC to review an initial determination (made in December 2011) that held MMI to infringe one of Microsoft's seven patents asserted at that stage of the investigation:

• I discussed Microsoft's petition in a recent post. Microsoft would like the ITC to take a closer look at what it describes as "Motorola's wide-scale infringement of Microsoft patents", hoping to prevail on up to five additional patents. By not requesting a review of the initial determination with respect to the '910 patent, Microsoft has effectively dropped that patent from the investigation (but can stil assert it elsewhere).

• Meanwhile, a public redacted version of Motorola's petition for review has also become available. Motorola would like the Commission, the six-member decision-making body at the top of the ITC, to reverse the finding of a violation. MMI does not challenge the finding of an infringement of the '566 patent (according to the initial determination, it never defended itself against the infringement contentions) but it claims that the patent is invalid and that there isn't a domestic industry for it.

  Additionally, Motorola made contingent requests, bringing invalidity contentions with respect to each patent and asking the ITC to take those into account in each case in which a finding of no violation will be reviewed.

I have put together a table that shows the different findings (validity, infringement, domestic industry) of the initial determination for each patent and states, in brackets, the stock ticker symbol of the party that requested a review relating to any given finding:

Patent	Deemed Valid	Deemed Infringed	Domestic Industry
'566	Yes [MMI]	Yes	Yes [MMI]
'054	Yes [MMI]	No [MSFT]	No [MSFT]
'352	No [both]	No [MSFT]	No [MSFT]
'133	Yes [MMI]	No [MSFT]	Yes
'910	No [MMI]	No	Yes
'376	Yes [MMI]	No [MSFT]	No [MSFT]
'762	Yes [MMI]	No [MSFT]	No [MSFT]

In most of the cases in which there is a petition, Microsoft asks for a No to be turned into a Yes, and Motorola for a Yes to be turned into a No. There are, however, two special cases:

• With respect to the '352 patent, Microsoft asks for a review and Motorola made a contingent petition to make an additional infringement contention succeed. It only takes one reason for the patent to be invalid, but Motorola wants to increase its chances of the patent still being held invalid even if the basis on which the initial determination deemed the patent invalid was overturned.

• Motorola did the same with respect to the '910 patent. However, since Microsoft dropped the '910 patent by not asking for a review of any issues concerning that patent, Motorola's contingent petition relating to the validity of that patent is moot.

The Commission will soon decide on a review of the initial determination. It could also decide to adopt the initial determination as the final decision, but in light of what I've seen in other recent investigations and the many issues that both parties have raised, it's far more likely that a review will take place.

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Oracle accepts judge's proposal, will submit new damages report -- mid-April trial still possible

On Friday (January 20, 2012), I reported on Judge William Alsup's proposed course of action in the Oracle v. Google litigation and offered the following prediction:

My guess is that Oracle will accept this offer because other than costs, which are going to be sizable in absolute numbers but small compared to what's at stake, there's no colorable drawback that Judge Alsup's proposal has over Oracle's own proposals.

Today Oracle has indeed accepted the deal. By doing so, Oracle has once again demonstrated that damages are not its number one priority. Otherwise Oracle would have had to keep fighting for its previous damages claims. Instead, Oracle puts its money where its mouth is and agrees to pick up the costs arising from the presentation of a third damages report. I explained the "deal terms" in the aforementioned blog post, so I don't have to go into detail again here.

Oracle had urged the court to take this case to trial at the earliest opportunity. It stressed Android's commercial success and the threat it poses to Java. Oracle even offered to put its patent infringement claims on the back burner in exchange for a near-term copyright trial. The judge rejected that proposal but the deal he offered, and which Oracle accepted, is a win for Oracle. It's clearly Oracle's best shot at a swift resolution of this matter, and it doesn't even have to indefinitely postpone the resolution of its patent infringement claims.

Theoretically, Oracle's third damages report could still arrive at a similar number as the second one ($2.7 billion, slightly up from the original $2.6 billion claim). The most important difference between the third damages report and the previous ones will be a fine-grained apportionment of damages to the different intellectual property rights (even down to the level of different claims of the same patent) at issue.

But even if Oracle's third damages report arrived at a lower amount, any such reduction would be much less important than the prospect of a near-term trial. Also, the relevance of the parties' own damages calculations is rather limited if the jury mostly relies on the opinion of a court-appointed independent expert.

For now I wouldn't book a flight to San Francisco in mid-April for this trial. There is still a considerable risk of further delay. In particular, Google might try to slow-roll the process since the judge indicated that the trial would have to be postponed to the last four months of the year if mid-April doesn't work out. But Oracle has demonstrated its willingness to do its part. One doesn't have to agree with Oracle on all of the issues (I agree with them on some and disagree on others) to recognize that its words and its actions are consistent.

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Dutch appeals court says Galaxy Tab 10.1 doesn't infringe Apple's design right

Apple's enforcement of design-related rights against Samsung's Galaxy Tab range of tablet computers has suffered yet another setback, with the Gerechthof 's-Gravenhage (an appeals court in The Hague, Netherlands) ruling against Apple's appeal of a lower court's decision back in August 2011 that denied Apple a preliminary injunction against the Galaxy Tab 10.1 in the Netherlands. (Back then, Apple won a preliminary injunction in the Netherlands based on a photo gallery scrolling patent, but its claims related to the Galaxy Tab 10.1 were thrown out. Today's ruling addresses only the design part.)

Today's decision is available on the Internet (in Dutch).

As I'll explain below, the rationale underlying this decision is very similar to the approach taken by Judge Lucy Koh of the United States District Court for the Northern District of California, who denied Apple a preliminary injunction for (among other things) an iPad-related design patent that is the U.S. equivalent of the Community design asserted in Europe. Apple is appealing Judge Koh's decision.

The Dutch appeals ruling comes down one week before a ruling by the Düsseldorf Higher Regional Court, a German appeals court that might lift a preliminary injunction granted to Apple by a lower court in the same city in early August 2011. Furthermore, the Düsseldorf Regional Court will rule in early February on an Apple motion for a preliminary injunction against the Galaxy Tab 10.1N, a product version with a modified, potentially non-infringing design.

Last week, Apple filed two new design lawsuits targeting a total of 15 Samsung products in Germany. As I explained then, the two companies need the courts in various jurisdictions to clarify where Apple's exclusive scope of protection ends and Samsung's freedom to compete begins. There's no mathematical formula based on which they could simply agree that Samsung's products are allowed to have a degree of similarity of up to (for example) 70%. Instead, they need guidance from judges.

These are the key findings underlying today's Dutch decision:

• Apple's asserted design-related right, Community design 000181607-0001, was not held invalid since none of the prior art presented by Samsung features all of the key characteristics of Apple's design.

• However, the existence of at least two pieces of prior art for each of the asserted key design elements led the Dutch appeals court to determine that the valid scope of Apple's asserted design-related right is narrow. Based on that narrowed scope, the asserted right was not deemed infringed.

  By contrast, the Düsseldorf Regional Court had described, at a hearing and in its detailed written decision, the scope of protection as "medium-range or broad". The Dutch decision had to address the finding of the Düsseldorf court due to EU rules. Courts in one EU member state can reach different conclusions than those in another on the same matter of EU law, but they must at least explain why they beg to differ. Here, the Dutch appeals court says that it took into account some additional prior art that was not considered by the Düsseldorf court. In my opinion, the Düsseldorf Regional Court had actually failed entirely to narrow the scope of the asserted design right based on existing prior art.

  In the United States, Judge Koh also narrowed the scope of Apple's design rights based on prior art. Like her Dutch colleagues, she also concluded that the asserted design right was not necessarily invalid but narrowed its scope in light of prior art.

• In the Dutch appeals proceeding, Apple also sought a preliminary injunction against the Galaxy Tab 10.1V, an older and thicker version of the tablet. It appears that the 10.1V is no longer marketed. The Dutch appeals court didn't find that Apple satisfied the sense-of-urgency requirement, without which there is no basis for a preliminary injunction.

The Dutch decision took into consideration the following pieces of prior art:

• U.S. Patent Application No. 2004/0041504 A1 ("Ozolins")

• the Knight Ridder tablet

• the HP Compaq TC1000

• Canadian Design Patent 89,155

• Japanese design no. 887 388

• Japanese design no. 1142127

The Dutch ruling notes that only two of those pieces of prior art were considered by the Düsseldorf Regional Court (the HP Compaq TC1000 and the Knight Ridder tablet). Next week we will know whether the Düsseldorf Higher Regional Court takes any additional pieces of prior art into consideration.

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Will Google break or save the Internet?

Balancing intellectual property enforcement with the objective of uninterrupted availability of the Internet -- in other words, drawing the line between freedom and anarchy, or lawlessness and openness -- is one of the most important regulatory challenges of our times. That's why the proposed Stop Online Piracy Act (SOPA) is such a hot topic. Even though Google's anti-SOPA call to action, entitled "Don't censor the web", is somewhat alarmist, I'm sympathetic to the concerns of the "Stop SOPA" movement.

But there is another threat to the Internet from an unreasonable form of IP enforcement that I wanted to discuss. I'm talking about the disruptive impact of injunctions based on standards-essential patents. Everyone knows that the Internet runs on standards. Google, the outspoken critic of SOPA, has been conspicuously silent on that issue. Worse than that, through its proposed $12.5 billion acquisition of Motorola Mobility, Google will gain the means to break the Internet: the deal includes patents on key Internet standards such as IEEE 802.11 (the leading WiFi, or WLAN, standard) and AVC/H.264 (the format in which, according to data reported by GigaOM, four out of five videos are encoded).

The holders of standard-essential patents are entitled to reasonable compensation (unless they elect to contribute to royalty-free standards). The issue facing the information and community technology industry and, more generally, the Internet is that some companies try to use such patents as strategic weapons in various jurisdictions. In order to do so, they seek not only fair compensation but injunctive relief: court orders banning products or requiring that certain services be discontinued.

In the following sections, I'll discuss Motorola Mobility's well-documented track record of seeking injunctions based on allegedly standards-essential patents, the ways in which Google's envisioned acquisition of MMI will exacerbate this problem, and widespread concern in the industry over such injunctions, which contrasts with Google's aforementioned silence.

I am writing this post on the eve of a series of hearings that will take place at the Mannheim Regional Court tomorrow, further to complaints brought by MMI against Microsoft in Germany. I am going to report on those hearings tomorrow.

Motorola Mobility is seeking injunctions based on standards-related patents in the US and the EU

While Samsung's assertions of FRAND-pledged standards-essential patents against Apple have already triggered a preliminary investigation by the European Commission and received a lot of attention, Motorola Mobility's enforcement of FRAND-pledges patents almost gone unnoticed even though it is similarly aggressive.

Both Apple and Microsoft brought lawsuits against Motorola in the United States alleging a breach of FRAND licensing commitments in response to MMI's assertions of standards-related patents. Those two companies are also being sued by Motorola over such patents in Europe.

The first one of the current wave of smartphone patent lawsuits to be adjudicated anywhere in the world (not counting preliminary injunction decisions involving Apple and Samsung) was a lawsuit Motorola started against Apple in Germany over a FRAND patent. Motorola's German counsel devised a clever legal strategy for arguing in favor of injunctive relief despite Apple's willingness to take a FRAND license and pay FRAND-based damages for any past infringement. As smart and successful as that strategy may have been, injunctions based on allegedly standards-essential patents raise serious issues.

Germany may not be the only EU member state in which this is happening. Earlier this month, a lawsuit filed by Microsoft against Motorola in London became known. This could be a response to lawsuits started (or threatened) by Motorola in the same jurisdiction.

In a January 3, 2012 brief filed with the United States District Court for the Western District of Washington (opposing a Microsoft motion for partial summary judgment concerning standards-essential patents and injunctive relief), Motorola said that it's not aware of "any legal authority that stands for the proposition that RAND assurances preclude a patentee from obtaining an injunction". Instead, Motorola advocates that standards-related licensing obligations be considered alongside a variety of other factors, and one of the circumstances Motorola believes may justify injunctions based on standards-essential patents is "the fact that an infringer competes with the patentee". MMI elaborates on that idea and expresses the following view:

"[...] Microsoft and Motorola are competitors, and H.264-related technology is relevant to their competition. As such, denying Motorola its fundamental 'right to exclude' Microsoft from infringing Motorola's patents would cause irreparable harm [that cannot be compensated with monetary damages]."

The above passage essentially says that it's fair game to use an essential Internet standard such as H.264 as a strategic nuclear weapon -- no matter what collateral damage the Internet at large may suffer. In my view, it would be inconsistent for Google to oppose SOPA but engage in this kind of conduct, with all of the potentially harmful consequences it can have.

Shutting down H.264 videos on popular websites or disrupting WLAN access to the Internet, which is very key in many places (especially, but not only, for performance reasons), would have dramatic effects on the user experience of millions, if not billions, of Internet users. Imagine what would happen if other holders of standards-essential patents got away with this behavior.

Why Google's envisioned acquisition of Motorola Mobility will most likely exacerbate the problem

There are at least three reasons for which I believe Google will use Motorola Mobility's FRAND-pledged standards-related patents even more aggressively than an independent MMI would:

1. Resources: Last week, Google reported that it had, as of the turn of the year, "cash, cash equivalents, and short-term marketable securities [worth] $44.6 billion". With such cash reserves, Google can take the risk of enforcing rulings even if successful appeals resulted in substantial liability (such as in Germany). With this amount of money in the bank, the specter of future fines by antitrust regulators is also much less scary than to the average company.

2. Ambition: If MMI remained an independent entity, its objective would basically be to achieve favorable settlements with Apple and Microsoft. By contrast, Google has declared its intent to use MMI's patents for the much broader objective of discouraging intellectual property enforcement against any company in the Android ecosystem. Some Android companies, such as HTC, have publicly indicated that they rely on Google's related promises. The more demanding a party to a legal dispute is, the more aggressively is has to act. Based on what Google has vowed to do post-acquisition, "Googlorola" will be much more demanding, and consequently more aggressive, than MMI on its own would have been.

3. Strategy: the way I see it, MMI would have been willing to accept some collateral damage on Internet-related standards just to achieve, as I said before, the objective of more favorable settlements with Apple and Microsoft. But Google's strategic goals would make a certain degree of disruption part of the plan. Collateral damage would become a fully intended consequence in connection with H.264, a video standard that Google would like to supplant with its own WebM (VP8) codec in its tireless quest for total Internet domination. Simply put, Google hates H.264. It just has to provide YouTube videos in that format (in addition to the format of its choice) to maximize the reach of its service.

   Google advocates the inclusion of its WebM (VP8) format in the official HTML 5 standard, claiming that it's "unencumbered" by patent rights. However, 12 companies submitted to MPEG LA (a patent pool firm) patents that they believe read on VP8. Unless all of those are wrong, it's rather likely that VP8 will ultimately be a royalty-bearing video codec as well.

   Google would presumably love to kill two birds with one stone by aggressively targeting the market-leading H.264 codec as part of its overall Android-related litigation strategy.

The means and the motives couldn't be much clearer. There's even a fourth -- and no less frightening -- scenario I'd like to discuss. For Google's Android-related business model, it's key to force device makers to comply with certain rules that are designed to lock end users into Google's search engine and other advertising-financed services. Google already uses intellectual property rights (specifically, its trademark rights as well as its copyright in some closed-source components such has the Android Market client) as leverage that has led most device makers to accept Google's set of rules. With standards-essential patents, Google could wield another big stick to force non-compliant device makers, such as Amazon, to take a commercial Android license from Google rather than use the Android code under open source licenses.

Industry leaders and academics agree on the harmful effects of standards-related injunctions -- why doesn't Google speak out?

I have received material concerning the worldwide use of FRAND-pledged standards-essential patents from various companies, law firms, and individuals who take an interest in the related issues. For example, two large, unaffiliated companies pointed me to a recent Federal Trade Commission request for comment on standard-setting issues (project number P11-1204). I have looked at many of the submissions, including a joint response of Cisco, HP, IBM and RIM. Those four companies are major patent holders themselves, but in their filing they express their belief that "giving a RAND commitment should mean that a patentee gives up the right to enjoin or exclude the use, manufacture, sale, or importation of products that implement the standard for which the patentee claims to own essential patents". That's exactly the opposite of the Motorola Mobility position I quoted further above.

While Motorola tries to weasel its way out of its FRAND licensing obligations by presenting all sorts of reasons for which those shouldn't ultimately be enforceable, major industry players like the companies I mentioned advocate a maximum degree of legal certainty for those implementing a standard.

Here's an interesting passage from Broadcom's submission to the FTC:

"The inability to seek an injunction under a RAND regime is a substantive part of RAND, however, not merely a question of what remedy might be available once a negotiation breaks down. From the perspective of the potential adopter of the standard, a portion of the consideration received is the right to negotiate a license without fear of being blocked from using the standard altogether."

Ericsson argues that "[t]he whole purpose of the (F)RAND commitment is that standard adoption should not be blocked (unless a user is unreasonably refusing to take a necessary license)", and Verizon proposes "an elegant solution: using equitable considerations to deny injunctive relief to prevent patent hold-up of collaboratively set standards".

Professor Mark Lemley, a true thought leader in patent law and policy, is generally against any excessive grant of injunctive relief on the grounds of patent infringement. With a view to standards-essential patents, he wrote (in a 2002 article for the California Law Review, entitled "Intellectual Property Rights and Standard-Setting Organizations") that a patent holder who participated in a standard-setting process and is "bound by an SSO [Standard-Setting Organization] IP rule [...] has only a contractual claim for a royalty, not a cause of action for patent infringement that might result in an injunction, treble damages, and attorneys' fees", a difference he describes as "dramatic".

There's clearly a lot of support among industry leaders and academics for denying injunctions based on FRAND-pledged standards-related patents, or at least for setting a very high bar. Only a minority of companies, including Qualcomm (whose conduct was investigated by antitrust regulators), would like to be able to exploit such patents aggressively.

It's time for Google to come clean on this issue and explain what it's going to do with Motorola Mobility's standards-related patents following the consummation of the proposed transaction. Is Google going to act in accordance with what the likes of Cisco and IBM propose as a responsible use of standards-essential patents, or is it going to pursue its strategic objectives to the detriment of the Internet at large?

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Judge refuses to separate patent claims from Oracle-Google case but trial could start in mid-April

Judge William Alsup, the federal judge presiding over Oracle's intellectual property infringement lawsuit against Google, just entered an order that envisions, if all goes according to plan, the trial in this case to begin in mid-April without a need for Oracle to put its patent infringement claims on the back burner.

Oracle had surprisingly offered to focus its case, for the near term, on its copyright infringement claims so as to enable a trial to take place within a matter of months. Google, which previously pushed rather hard for a stay of Oracle's patent claims, considered Oracle's ideas to be off-topic.

Judge Alsup rejected Oracle's proposal as a "piecemeal approach" and a "luxury" the court's scarce resources don't allow. But what he proposes -- subject to Oracle accepting the terms definitively by Tuesday ("please file either a clear 'yes' or a clear 'no.'") -- is in some ways (but not in all respects) even more favorable to Oracle's interest in a near-term trial than Oracle's own proposals.

Oracle's third proposal was to take both the copyright and patent infringement claims to trial this spring, and this appears to be a possibility now. But Oracle wanted to buy this acceleration by waiving its right to present a third damages report after the two previous ones were rejected in part. Judge Alsup, however, wants to resolve the damages issue sooner rather than later and presumably believes that Oracle is going to present a new damages report as soon as humanly possible.

The judge makes it clear at the beginning of today's order that this case merely got delayed because he had also been "assigned to the massive MS-13 gang prosecution, which has resulted in four lengthy trials". Other than that resource conflict, he believes the case can go ahead quickly provided that the damages issue is resolved (and, which he doesn't mention because he doesn't have to, provided that Google's petition to the Federal Circuit is adjudicated soon, which Oracle believes will happen by March).

I think Oracle still did the right thing by making its proposal for a streamlining of the case. If nothing else, it at least showed to the judge that Oracle is very serious about its pressing need for this case to be resolved soon. If Oracle hadn't demonstrated this with an action that spoke louder than words (by action I mean its formal offer to have the patent infringement claims stayed or dismissed without prejudice, and its offer to waive its right to revise its damages report), I'm not sure Judge Alsup would have offered the same way forward.

Google argued strongly against the possibility of Oracle being allowed a third try to present a damages report that would be acceptable in its entirety. Google's two primary arguments boiled down to a possible delay, which Oracle described as "no principled objection" given Google's history of trying to delay the case. In its most recent pleading, Oracle wrote that "Google's strategy is delay". The judge knows about that. The other argument, which the judge is fairly sympathetic to, comes down to costs. Having yet another damages report proposed, with a need for additional analysis, depositions and possibly another motion to throw out parts of it, can result in incremental costs that Google would have to bear only because Oracle didn't, in the judge's opinion, comply with the instructions Judge Alsup provided with a view to the second damages report. The judge therefore wants Oracle to commit to pick up all of the related costs, including Google's legal fees attributable to this additional effort.

The judge also reserves the right, regardless of the acceptability of a possible third damages report, to preclude Oracle's damages expert from testifying to the jury, simply based on his "track record of rejected methodologies". The decision on this will be made after the two liability trials (phase 1 on patents, phase 2 on copyright) and before the damages trial (phase 3). At that stage, Oracle won't be allowed to replace its damages expert, Dr. Cockburn.

My guess is that Oracle will accept this offer because other than costs, which are going to be sizable in absolute numbers but small compared to what's at stake, there's no colorable drawback that Judge Alsup's proposal has over Oracle's own proposals. Oracle might be concerned about Google possibly seeking to delay the process surrounding the third damages report, but if Google did that, the judge would probably take measures to defend and uphold his envisioned schedule.

Oracle could also reject this offer. In that case, Oracle will be allowed to present to the jury only those parts of its second damages report that the judge approved. It might hope that dropping the damages part is the best way to streamline the case and get a near-term trial.

Today's order indicates that if everything goes according to plan, a mid-April trial is possible, but otherwise it might be postponed until the last four months of the year.

Like I said further above, I think it helped Oracle to demonstrate a genuine commitment to speed and focus. I still find it hard to believe that this case will finally go to trial in about three months. Whenever the trial appeared to be near, it turned out to be much further away than it seemed. At any rate, with today's order, Judge Alsup sent out a clear message that he would like to find a way to resolve this case -- all parts of it, not just the copyright claims -- in the not too distant future.

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