At close of business on Tuesday, Judge Lucy Koh, the federal judge presiding over two Apple v. Samsung lawsuits in the Northern District of California, entered four more of her long-awaited post-trial orders. The short version is that
she reversed the finding that Samsung's acts of patent infringement were willful (because Samsung had reasons to believe that what it was doing was legal) and overruled the jury with respect to a patent exhaustion question (which has no effect because the related patent was not deemed infringed by Apple), but otherwise upheld the jury's liability findings against Samsung, denying further modifications as well as a new trial;
as a result of finding no objective willfulness she denied Apple any damages enhancements for willful infringement (which could have resulted in a tripling of parts of the award); she also denied enhancements of trade dress damages on other grounds;
with the exception of declaring two Samsung patent claims (which the jury didn't find infringed anyway) invalid, she declined to overrule the jury in Apple's favor or to order a new trial on issues on which Apple didn't prevail last summer; and
she also ruled against Samsung's claims that one of Apple's multitouch software patents and four of its design patents were indefinite (which is one invalidity theory).
Let me put the Tuesday orders into context before elaborating on them. The jury rendered its verdict on August 24, 2012, and both parties filed a variety of motions to achieve improvements in their favor. A hearing on those motions, as well as on motions relating to remedies, was held on December 6, 2012. On December 17, 2012, Judge Koh adjudged two particularly important post-trial issues: she denied Apple a permanent injunction (a decision that Apple appealed that same week), and threw out Samsung's long-shot demand for a new trial because of alleged jury misconduct. Due to the complexity of this case and the overall caseload of the court it's not surprising that it took a while before any further decision came down, and with Tuesday's rulings we're still not done. The court still has to rule on Samsung's request for adjustments to the damages award (Samsung wants it tossed or reduced). Due to the denial of a permanent injunction, Apple will presumably move at some point for an award of ongoing royalties for future use of its patents by Samsung -- the denial of an injunction does not mean that Samsung is entitled to a freebie. And it's a given that either party will ultimately appeal (from the final district court ruling, to which we're now a lot closer) any unfavorable parts.
I previously assumed that Judge Koh was going to make only limited adjustments to the jury verdict. This prediction has so far been validated.
Now let's look at the Tuesday rulings on an item-by-item basis.
Ruling on Samsung's motion for judgment as a matter of law
The most important part of this JMOL ruling is that Judge Koh, unlike the jury, did not find a willful patent infringement by Samsung. In order to prevail on this one, Apple needed to prove both objective and subjective willfulness. "Objective" and "subjective" relate to the likelihood that its actions constituted infringement of a valid patent. The likelihood is objectively high if someone knowing the patents and all other relevant facts (including all of the prior art that could be used to invalidate them) would think that there is an infringement; it's subjectively high if the infringer actually knew these facts or if they were so obvious that he should have known. This is all just about patents, not Apple's trade dress claims, which the JMOL ruling addressed separately. The jury had found that Samsung's infringement was subjectively willful for three multitouch software patents and two design patents (in other words, Samsung knowingly and willingly copied Apple's designs and technology), but on this basis Apple still needed to prove an objectively high likelihood, which is for the judge (not the jury) to decide. The jury's findings of subjective willfulness were not addressed because the court found that there was no objective willfulness (so technically the jury wasn't overruled because its findings were only about subjective willfulness, but the result was reversed nevertheless). The order says that "[i]f Samsung had an objectively reasonable defense to infringement, its infringement cannot be said to be objectively willful". The order then looks at each of the five patents the jury found willfully infringed, and finds an objectively reasonable defense in each case:
Rubber-banding ('381) patent: Judge Koh concluded that Samsung reasonably relied on its invalidity defense. The order mentions the USPTO's first Office action tentatively rejecting all claims of this patent only in a footnote that points out how unreliable first Office actions are, but it may nevertheless have influenced Judge Koh's thinking. In a preliminary injunction decision in December 2011 she had not found this patent likely to be invalid.
Tap-to-zoom-and-navigate ('163) patent: even though Judge Koh near-simultaneously denied Samsung's motion to find the asserted claims of this patent indefinite, she felt that this was a close question of law and Samsung was acting reasonably in its reliance on having an invalidity defense to this patent. In other words, the judge didn't find that Samsung was right on this, but it wasn't light years away from being right.
Pinch-to-zoom API ('915) patent: here again, Samsung had an invalidity theory (against the asserted claim 8) that failed so far (the jury didn't buy it and Judge Koh declined to overrule the jury in this regard), but the theory was good enough that Samsung could have relied on it when deciding to infringe the patent. Like the rubber-banding ('381) patent, this one has also been tentatively rejected by the patent office, a fact that Judge Koh mentions only in a footnote that references another footnote according to which such first Office actions are unreliable.
Design patents (D'677 and D'305): Judge Koh believes that infringement was a close question, so Samsung's infringement wasn't objectively willful. Apple would have had to show that Samsung's defenses were unreasonable, which is a higher standard than just being ultimately unsuccessful. Whether Judge Koh's requirements in this respect were too exacting is likely going to be a key issue on appeal.
Samsung achieved a partial improvement only in a formal sense with respect to its '516 patent, but not enough to win a liability finding (at least not prior to an appeal). The jury's finding of non-infringement was upheld, but its finding of exhaustion of the asserted claims (claims 15 and 16) of the '516 patent was tossed. Apple's patent exhaustion theory here was (in a simplified form) that Intel had a license to Samsung's patents and Apple's products implement the patented invention only by incorporating Intel baseband chips. Judge Koh agrees with the jury that Intel was licensed. She also concluded that "the authorized sales to Apple occurred in the United States", which is another requirement. But she saw a contradiction in the jury's finding of exhaustion and non-infringement, given that exhaustion would require Intel's baseband chips to substantially embody the patented invention: if Apple used Intel chips in the accused products (Apple's more recent products come with Qualcomm chips) and if those implement the patent, then Apple's products incorporating those Intel chips, by definition, also implement it. So there can only be a finding of exhaustion if there is also one of infringement. Again, this has no consequences: the non-infringement finding stands, and if it was overturned on appeal, then the question of exhaustion would have to be analyzed again.
According to Judge Koh, the jury reasonably found Apple's two phone design patents (D'087 and D'677) and its user interface design patent (D'305) to be valid and infringed. The jury finding was not against the clear weight of the evidence, the order says. I would agree with respect to the phone design patents. I do believe that the question of whether user interfaces -- as opposed to designs of physical objects -- can be claimed by design patents (which is what the D'305 start screen design patent is all about) could be a rather interesting one on appeal.
It's worth noting that Apple succeeded in salvaging the D'677 patent through a terminal disclaimer it filed with the patent office and notified to the court in November 2012. The terminal disclaimer limits the term of this patent so as to avoid double patenting.
The registered iPhone trade dress and unregistered iPhone 3G trade dress were found protectable and diluted. Judge Koh found that there is substantial evidence in the record to support the jury's findings.
In connection with Apple's multitouch software patents, which were found valid and infringed (and which findings Judge Koh decided to uphold), the most interesting issue is that there was indeed an inconsistency in the jury verdict because the '915 patent was found infringed by multiple Samsung devices running Android 2.2.1 or 2.2.2, but not by the Galaxy Ace (Android 2.2.1), Intercept (2.2.2) and Replenish (2.2.2, too). Samsung argued that at least there should be a new trial as a result of such inconsistency. But under Ninth Circuit law, verdicts are vacated on grounds of inconsistency only if they cannot be "reconciled on any reasonable theory consistent with the evidence". One distinction that is made in this context is the one between two legal conclusions that cannot logically coexist and a "mere inconsistent view of facts". Here, Judge Koh concluded that there is an inconsistency, but it can and must stand.
The jury held not only two Samsung U.S. subsidiaries but also Samsung Electronics Corporation, a Korean entity, liable for direct infringement. The Korean parent company was also found liable for inducing infringement by its U.S. subsidiaries. Samsung wanted these findings overturned, but Judge Koh upheld the jury's findings, which makes sense: those U.S. subsidiaries are obviously controlled by the Korean company. They are formally separate legal entities, but for all practical intents and purposes they are just like local offices of the Korean organization, and actually refer to the Korean company as their "headquarters".
The jury verdict was a disappointment for Samsung not only because Apple prevailed on most of its claims but also because Samsung's infringement claims against Apple failed in their entirety. After the JMOL rulings (and before the appeal), Samsung still doesn't hold any offensive win against Apple (with respect to this case) in its hands. In fact, things got even worse for Samsung because Apple proved the asserted claims of its '941 patent invalid. Judge Koh declined to find any infringements with respect to the other four Samsung patents-in-suit.
The court also disagreed with Samsung's assertion that the trial was manifestly unfair. Samsung had argued that it was prejudiced by
the trial time limitation,
by Apple's references (permitted by the court) to witnesses Samsung did not call (suggesting that they weren't called because they had nothing useful to Samsung to say),
by court orders barring its witnesses from making certain arguments and not barring Apple's witnesses from making other arguments,
by a requirement to lay foundation for documents while Apple allegedly didn't have to meet such a requirement in some contexts,
by being barred from playing advertisements, which Apple was allowed to do, and
by not being allowed to use depositions to cross-examine Apple's witnesses while Apple was allowed to do so.
All of this relates to decisions the court made at or before trial, and it's unsurprising that the court still stands by its orders. The JMOL ruling notes that Samsung would have had the option to put its own infringement claims against Apple on a separate track, and that Samsung had to simply manage its allotted time.
Ruling on Apple's motion for judgment as a matter of law
The only item on which Judge Koh overruled the jury in Apple's favor is the question of whether the asserted claims (claims 10 and 15) of Samsung's U.S. Patent No. 7,675,941 on a "method and apparatus for transmitting/receiving packet data using pre-defined length indicator in a mobile communication system" are invalid. The jury didn't find any of Apple or Samsung's patent claims invalid, and a few days after the jury verdict came down I described this as the single biggest issue with the verdict, given that a solid majority of all patent claims granted by patent offices ultimately turn out not to be valid as granted (some are entirely invalid while others survive only after being narrowed through amendments). It would be a statistical anomaly for all Apple and Samsung patents-in-suit to be valid as granted. Even though the hurdle is very high for a court to overrule a factual finding by a jury, Judge Koh has now concluded that U.S. Patent No. 6,819,658 on a "method and apparatus for segmentation, reassembly and inverse multiplexing of packets and ATM cells over satellite/wireless networks" anticipated (i.e., renders non-novel and thus invalid) the asserted claims of Samsung's '941 patent. Samsung argued that there were some differences between the two patents, but according to Judge Koh, "Apple has established anticipation by clear and convincing evidence".
All other items of Apple's JMOL motion, discussed in more detail below, were denied.
The jury found that Apple's unregistered iPad/iPad 2 trade dress was not protectable and not famous, and on that basis never addressed the questions of dilution and infringement. Judge Koh determined that the jury's related finding was not unreasonable, and just like the jury, she didn't reach the questions of infringement and dilution.
An item on which I once thought Apple had a relatively good chance of prevailing was the iPad design patent (U.S. Design Patent No. D504,889, given that Apple had won a preliminary injunction over that one. Apple wanted the court to find it infringed by the Galaxy Tab 10.1. But Judge Koh noted that the jury was not bound by the preliminary injunction decision and that certain evidence was considered by the jury that was not available at the preliminary injunction stage, including among other things Apple's concession that the original iPad did not implement this design patent.
The judge also denied all other request by Apple for additional liability findings, including among other things an inducement theory.
The other four Samsung patents-in-suit (than the invalidated '941 patent) were not ruled invalid.
Apple brought certain FRAND contract and antitrust counterclaims against Samsung, and the jury ruled against them. Judge Koh did not overrule the jury on those. It's important to consider that even if such counterclaims fail, as they did here (prior to an appeal, at least), FRAND defenses can still succeed. In another post-trial decision (which came down in mid-December) Judge Koh declined to rule on Apple's FRAND defenses because there is no need to address them as long as no standard-essential patent-in-suit is found both valid and infringed. Even after Tuesday's ruling on Samsung's JMOL motion there is no SEP-based liability finding, so the FRAND defenses won't come into play unless and until an appeals court lets Samsung prevail on at least one SEP claim.
Ruling on Samsung's motion to invalidate four Apple patents for indefiniteness
Indefiniteness is an invalidity theory, but it's one for the court, not the jury, to decide, which is why Samsung's related motion attacking four Apple patents (the asserted claim of one software patent, and four design patents) is technically a separate motion from its JMOL ("overrule the jury") motion.
For the four design patents Samsung claimed to be indefinite (D'677, D'087, D'305, D'889) it faced a very high hurdle. It needed to show that a skilled designer would not be able to understand, from looking at the drawings in the patent documents, what kind of design was covered. Samsung failed to meet this high hurdle. Even Samsung's own expert witnesses gave testimony that allowed the court to infer that they had understood the scope of those design patents quite well (for example, if someone says a patent is obvious, he must understand the patent in the first place). There may have been some issues with dotted lines that appeared in one drawing but not another, or with only one of several drawings in one of the design patents having color, but none of this was enough to prove those design patents indefinite.
For the tap-to-zoom-and-navigate ('163) patent, indefiniteness was a closer question. The term that Samsung claimed to be indefinite (meaning that it's not amenable to construction and insolubly ambiguous) is "substantially centered". Without "substantially", the word "centered" would be mathematically precise. But "substantially" is a word of degree. Five pixels to the right of a center location on a screen that is 400 pixels wide is still "substantially centered" in most people's opinion, but how about 20 or 30 pixels? Where must the line be drawn? Samsung raised a legitimate question, but the answer is that a lack of precision does not necessarily render a patent invalid. Even one of Samsung's own witnesses talked about items being "substantially centered" on the screens of certain Samsung devices, suggesting that he was able to apply the term to a particular screen layout.
Ruling on Apple's motions for damages enhancements
In a post-trial motion Apple had asked for the damages award to be increased on different grounds. On the basis of the jury's findings of willful patent infringement, Apple wanted parts of the award to be tripled. It also wanted enhancements for trade dress infringement and dilution. And it asked for supplemental damages relating to the period between the trial and the final ruling. The question of supplemental damages still has to be decided by the court. The requested enhancements for willful patent infringement and for trade dress infringement and dilution have, however, been denied in their entirety.
The part on enhancements for willful patent infringement was simplified by Judge Koh's finding that Samsung's patent infringement was not objectively willful.
The legal basis for enhancements of trade dress damages is the Lanham Act (U.S. trademark law). Judge Koh's order notes that "[t]his type of enhancement is intended only to compensate a plaintiff for additional losses not compensated by the existing award, not to punish a defendant". Simply put, Judge Koh saw no indication that the jury did not consider all of the damages Apple suffered when it determined, on a per-product basis, its damages award. Apple wanted a reasonably straightforward jury questionnaire with total damages per product as opposed to a complex matrix of damages per product and per intellectual property right. While the jury questionnaire still ended up being huge (roughly 700 questions), Apple's wish for reasonably simple damages awards was granted, but as a result, Apple was unable after the trial to disaggregate the jury awards in order to show to the court that the part attributable to trade dress infringement was insufficient to compensate Apple for any losses.
[Update] AppleInsider has uploaded all four orders summarized in this post (link #1, link #2). [/Update]
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