On Wednesday Magistrate Judge Paul S. Grewal held a hearing on short notice, allowing counsel to participate by phone, to discuss Samsung's motion to compel production of the complete Apple-HTC settlement agreement. As I reported, Apple's position (which I neither agreed nor disagreed with) was that the motion was "moot" because Apple was willing to produce the agreement but needed to ask HTC, and HTC also agreed, the only exception relating to 33 words setting forth the license fees due under the agreement. The mootness theory was based on Samsung not having shown good cause for access to the royalty rate information.
Later on Wednesday, Judge Grewal entered his order, which allows Samsung's counsel (but not Samsung's internal decision-makers) to see the entire agreement including license fees, while expressing skepticism of Samsung's theory that "the financial terms are probative of arguments Samsung raises in its opposition to Apple’s permanent injunction motion" because "to the degree Apple prevails on the contrary argument,9 the licensing fees with HTC are relevant to the degree of consumer demand for Apple's patented features" and "a royalty is a more suitable alternative to a permanent injunction". So the hearing allowed Samsung to make an argument -- ultimately the outcome-determinative one for the grant of this motion -- specific to the license fee information that it had not made in its motion. This was the last opportunity Samsung's lawyers had to make this argument before the motion would have been dismissed as moot, but they seized it.
HTC's counterargument was that "the potential probative value of the terms is outweighed by the risk to HTC from disclosure of the terms". But Judge Grewal had already required the disclosure of various other third-party license agreements, including their terms, and didn't see that HTC should be afforded more protection of this information. This is the question that I said yesterday the decision would hinge on:
I don't think the license fee is totally irrelevant, even in the injunctive-relief context, but the question is whether it's relevant enough (considering that even the willingness-to-license context as a whole is usually not given huge weight) to force Apple and, especially, HTC to disclose it.
In other words, I said that this is of little relevance, but the court would have to decide whether it's "relevant enough" to require disclosure. This sentence from Judge Grewal's order sums up the court's position:
"Although the court is more than a little skeptical of Samsung's arguments regarding the financial terms, Rule 26 supplies a broad standard of relevance."
Ultimately, the relevance of those fees is for Judge Koh to decide when she rules on the permanent injunction request. But the words "more than a little skeptical" show that this isn't the kind of argument that usually wins the day in a fight over a potential injunction. The sentence I just quoted is like saying "it's questionable that it will make a difference if you get what you want, but the hurdle is so low, we'll give it to you anyway". It's key to bear in mind that the agreement will be made available only to Samsung's outside counsel, a reputable firm in which HTC has previously placed confidence. Samsung's corporate decision-makers won't know the royalty rate as long as the court's protective order is complied with.
Apple and HTC have made available to the general public only about 10% (or less) of the agreement. I obtained a copy and reported on it yesterday. For example, the license agreement would automatically terminate if HTC was bought by another company (such as Samsung, or anyone else).
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