We're only two weeks ago from the Apple v. Samsung trial in San Jose. On Friday afternoon, Apple and Samsung filed the boilerplate jury instructions they could agree on, and in the evening, they made a 361-page filing to present those instructions they cannot agree on, along with each party's defense of its own proposals and specific criticism of the other party's proposals. I read the entire filing because it tells a lot about the key issues and the parties' tactics.
Apple asserts three types of intellectual property rights (three technical patents, four design patents, and two trade dresses), while Samsung focuses on six technical patents. It comes as no surprise that Samsung favors defendant-friendly jury instructions (and underlying legal theories) with respect to design patent and trade dress claims since it is only a defendant in that context. The same applies to Apple's FRAND-related counterclaims. But Samsung asserts twice as many technical patents (and three times as many utility patent claims), so if it thought that it's on an equal footing with Apple in terms of technical patents, it wouldn't fight for defendant-friendly interpretations of the law with respect to that category of intellectual property rights. Still, Samsung's proposed jury instructions are pretty much the same ones that a defendant who doesn't bring any infringement counterclaims would favor -- with the exception of a couple of legal theories that are specific to only one of the parties.
Not only are Samsung's proposals very defensive but many of its jury instructions reflect a desire to muddy the water and make things difficult to understand, and very confusing, for the jury. That's consistent with Samsung's proposed 700-question jury questionnaire.
Samsung appears to know quite well that its non-standard-essential patents are too weak to be of concern to Apple (even if Samsung prevailed on any of them, Apple could deal with it), and it's unlikely to win an injunction over its standard-essential ones. All that Samsung wants is to stall, delay and complicate the process. If they could get the outcome of the Apple v. Motorola case in Chicago (no one wins anything), they would take it any day of the week.
Samsung is doing phenomenally well in the smartphone market. According to new reports, it sold 50 million phones last quarter, while Apple sold 30 million. But it lacks strong non-standard-essential patents, and the terms of any cross-license deal that will happen between these two companies at some point are going to reflect that Apple is in a far stronger position. The upcoming trial won't result in Samsung's destruction, but it may yield a very significant breakthrough for Apple, which still has a lot of patent arrows in its quiver, while Samsung is not going to win anything meaningful in the foreseeable future.
Samsung will continue to make public statements that downplay the problems and overstate the opportunities. That's what it's been doing for some time. Last week it actually told an appeals court that its public statements are meant to "reassure the market" and don't mean that Apple's IP enforcement doesn't have any impact.
In the following I'll share various observations on the parties' proposed jury instructions.
Samsung's attempts to "muddy the water" (even in contexts that affect both parties' claims in the same way) are really astonishing. Many of Apple's comments on Samsung's proposals claim that Samsung's proposed instructions are "long and convoluted", "far lengthier than necessary", or "a waste". Samsung also prefers technical terms like "preponderance of the evidence" while Apple suggests easier-to-understand terms such as "more likely than not". Also, Samsung wants an awful lot of detail to be told to the jury upfront (making it unlikely that jurors will remember much) while Apple proposes to address certain issues only when they come up (if at all) for the first time or to simply refer jurors to the binder they will receive (it will contain the questions to answer and lots of related material, such as the court's claim constructions).
It will be interesting to see how Judge Koh reacts. Maybe she won't dignify the parties' proposals with any comments and simply make her own proposal for the jury instructions, which is unlikely to be as lengthy and confusing as Samsung's.
Samsung demands the insertion of "alleged" and similar terminology in many additional instances where claims that Apple has yet to prove are referenced. It's correct that jury instructions must not be skewed in favor of one party. I saw a few contexts in which Samsung had a point when it complained about Apple's proposals, but I saw more contexts in which Samsung wanted to insert words like "alleged" even though model jury instructions from unbiased sources don't consider this necessary. In practical terms, some of those questions will only be addressed by the jury if and after Samsung has been found liable for some infringement.
I agree with Samsung that Apple's proposed instructions talk far more about Apple's FRAND counterclaims than Samsung's related infringement claims. I'm sure Judge Koh will provide for a balanced solution.
A fairly interesting item that relates to all of the issues the jury has to decide is the explanation of the burden of proof and the different standards. Apple thinks it would be a good idea to explain to the jury that even the "clear and convincing evidence" standard (for deeming a patent invalid) is still lower than the "beyond reasonable doubt" standard that most people know from media reports on criminal cases. Samsung, which proposes instructions on most other issues that are far lengthier than Apple's, opposes any reference to the higher standard. This means that Apple is more confident in its ability to prevail on some of its invalidity defenses against Samsung's patents than the other way round.
Apple raises a patent exhaustion defense against some of Samsung's patents (presumably the standard-essential ones), arguing that it's licensed as a third-party beneficiar< of a Samsung patent agreement with Intel. The parties disagree on the initial U.S. sale requirement. Samsung argues that the place where goods physically change hands is key, while Apple cites a Federal Circuit decision according to which "a sale is made at all the locations where the sale's 'essential activities,' including negotiation and performance of the contract for sale or order and payment for the goods, take place".
Apple would like the court to seek an advisory verdict from the jury on waiver and other equitable defenses. Samsung opposes this. While equitable defenses must be decided by a judge, advisory verdicts on factual issues relevant to them are an option. It's hard to predict whether a plaintiff or a defendant benefits from such an advisory verdict. In Oracle v. Google, the jury agreed with Google that Sun Microsystems had made statements that could lead someone to believe that Android didn't need a license, but it also found that Google didn't actually rely on whatever Sun said. I believe the reason for which Samsung doesn't want those equitable issues to be presented to the jury is because it could make Samsung look bad and affect the jury's findings on other items.
A key financial issue is Apple's pursuit of the disgorgement of Samsung's profits from the sale of any products found to infringe Apple's design patents. Disgorgement of profits is a remedy that is available for design patent infringement but not for the infringement of technical patents. In light of this difference, Apple wants separate remedy-related jury instructions for the two types of patents. Samsung would prefer to have everything explained to the jury at once, which would make it more difficult to understand.
Apple also argues that Samsung will have to disgorge all of its profit from the sale of design-patent-infringing products, while Samsung wants an apportionment. Apple says that "apportionment of damages with respect to Apple’s design patent infringement claims is contrary to law" and claims that the exclusion of one Samsung expert's related testimony confirms this position.
With respect to damages in general, Apple wants to "include a final statement that the party claiming damages are entitled to those damages regardless of its general wealth or revenues". Apple has recently seen that even certain judges aren't entirely unsusceptible to the notion that Apple's incredible financial success suggests it isn't harmed by infringement of its intellectual property.
One key damages theory is what a reasonable royalty would have been if the parties had negotiated one before infringement began. In this regard, a key question is the royalty base. While Apple will obviously argue that its asserted intellectual property rights cover elements that make a smartphone a smartphone, Apple is going to oppose any attempt by Samsung to demand a percentage of revenues of the iPhone for its standard-essential patents, given that any cheap feature phone also comes with such basic functionality and that the baseband chips implementing such functionality (which usually come with extensive intellectual property licenses) cost only a small fraction of the entire market value of a smartphone. Apple opposes that royalty base even if Samsung reduced the royalty rate it demands. Samsung, however, will argue that its SEPs cover features that are "the reasons customers buy the whole product".
A similar dispute involves method claims. Apple proposes that "in determining damages for infringement of a patent that claims only a method, the amount of any reasonable royalty must be correlated to the extent the infringing method is actually used by consumers who possess the devices that are capable of being operated in an infringing manner", which Samsung calls "an atypical instruction designed to advance Apple's case". I think Samsung has a point here since Apple's proposal favors user interface patents over patents on technology that users don't see or access in the same way.
Samsung raises a high-priority and reasonable objection to Apple's extensive reliance on the Intellectual Property Organization's model jury instructions:
"Nearly all of Apple's design patent instructions are based on the Intellectual Property Organization's model jury instructions. (http://www.ipo.org/AM/Template.cfm?Section= Home&Template=/CM/ContentDisplay.cfm&ContentID=24722.) This is a biased source for Apple to use for model instructions. The Vice Chair of the Design Rights Committee, which oversaw drafting of the instructions, is Tracy-Gene Durkin, one of Apple's top design patent prosecuting attorneys whose name is in the file history for all four design patents-in-suit, along with numerous other Apple patents. Apple employee Quin Hoellwarth, who oversees design patents at Apple, is also a member of the Design Rights Committee, as is Perry Saidman, who is a design patent prosecuting attorney for Apple and was Apple's attorney when it filed an amicus brief in Egyptian Goddess v. Swisa."
I agree with Samsung that Judge Koh should not view that source of model jury instructions as an impartial one. A group like that one is highly likely to propose extremely plaintiff-friendly jury instructions.
In connection with willfulness (of certain infringements), Apple wants the jury to take into account some of the court's pre-trial decisions, especially (but not only) on Apple's motion for a preliminary injunction, including the Federal Circuit's ruling on Apple's related appeal. Samsung complains about the "extreme prejudice" this would mean, but the fact that certain infringements were identified by judges and nevertheless continued by Samsung does appear to be a reasonably relevant fact.
Samsung wants the jury to understand that "[m]ere attempts to copy a product are not necessarily probative since the copier may vey well be exploiting a particularly desirable feature, rather than seeking to confuse consumers as to the source of the product." I, too, believe that Apple's problem with Samsung' imitation of its products is not that there's any significant number of people who buy a Samsung product because they believe it's an Apple gadget. The fact that Samsung places so much emphasis on this item suggests that some evidence of Samsung having purposely sought to "copy" Apple's products may be presented at trial. There was some dispute recently over whether Samsung withheld such evidence, but so far no hard evidence has entered the public record. That may change at the upcoming trial.
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