Widely unnoticed by the public, a fight between Apple and Samsung in two venues -- the United States Court of Appeals for the Federal Circuit and the United States District Court for the Northern District of California -- over the proper way forward for their first U.S. federal litigation is ecalating. The procedural situation has been complicated by Judge Koh's decisions to deny a permanent injunction (in December 2012) and to vacate damages (earlier this month) with respect to 14 of 28 Samsung products a jury in August found to infringe some of Apple's intellectual property rights.
With every filing, the parties' positions on the course of action are further apart. Apple wants the appeals court to look at the injunction question as quickly as possible, and also wants a new damages trial in California in the very near term. Samsung wants the proceedings in California stayed and seeks to delay the appellate proceedings by merging additional issues into them (as opposed to firstly resolving Apple's appeal of the denial of a permanent injunction). Moreover, Samsung invokes the Seventh Amendment and claims that a new jury can't just determine new damages for the aforementioned 14 products based on the fact that another jury already identified infringements, but that any such trial must also involve a retrial of the question of liability (i.e., whether any valid intellectual property rights were infringed at all).
An unmistakable symptom of complexity is the fact that Samsung asks Judge Koh for permission to exceed the court's page limit when responding tomorrow to Apple's request for an April 3 case management conference (and near-term damages trial). (Samsung near-simultaneously brought its own motion requesting a final partial judgment under Rule 54(b) and a stay.)
In its motion for leave to exceed the page limit Samsung argues that it is entitled under the Constitution to a whole new liability trial with respect to the 14 products with respect to which the court vacated damages:
"[I]f the Court declines to enter the partial final judgment and stay that Samsung has requested, and instead sets the case for immediate new trial [as Apple requested], the Seventh Amendment would require that the new jury retry certain liability issues along with the damages issues that are subject to the Court's new trial order. See, e.g., Gasoline Products Co. v. Champlin Ref. Co., 283 U.S. 494, 500-501 (1931) (a 'partial new trial…may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice. Here the question of damages on the counterclaim is so interwoven with that of liability that the former cannot be submitted to the jury independently of the latter without confusion and uncertainty, which would amount to a denial of a fair trial.') (citations omitted); Hasbrouck v. Texaco, Inc., 663 F.2d 930, 934 (9th Cir. 1981) (requiring retrial of liability with damages in light of 'the overlap between proof of injury for liability purposes and for damage calculation purposes')."
It's the normal course of business that a party which (almost entirely) lost a trial in one respect (here, Samsung was found to infringe most of Apple's asserted intellectual property rights, including all of its user interface software patents) seeks to broaden the scope of a retrial, while the prevailing party wants to keep the scope of the retrial as narrow as possible. The courts also prefer narrow trials but must respect both parties' constitutional rights. The question of the scope of a retrial was also discussed last year in Oracle v. Google: Oracle wanted the "fair use" question, on which a jury couldn't agree (which doesn't mean that anybody prevailed on this), to be addressed separately (either by the court or, if necessary, by a new jury) from the question of copyright infringement. In that case the question was, for the time being, mooted by the court's decision that whatever the jury had found infringed wasn't copyrightable in the first place (a question that is on appeal). But before the court decided on copyrightability, Google argued that "fair use" couldn't be resolved separately from infringement. Similarly, Samsung now wants a new chance to convince a new jury that there was no infringement in the first place, and since Apple's win was almost complete last summer, it would be hard for Apple to get a more favorable outcome, and a new jury would be more likely (just relatively speaking, and not because of the merits of the case, but because of the statistical implications of the procedural situation) to render a verdict that would be less unfavorable to Samsung.
If the court agreed with Samsung on the need to retry liability and the impossibility to retry only certain damages, it would be more inclined than otherwise to grant Samsung's requested stay pending resolution of the appeal of what's been decided so far -- unless the court agrees with Apple that the partial final judgment Samsung requests wouldn't really be appealable (due to the appeal-from-final-judgment rule), in which case the district court needs to complete its task before any appeal -- other than the one on injunctive relief (there's a special rule for that) and the sideshow regarding sealing orders -- can go forward. If Samsung could appeal the liability findings relating to the other 14 products (with respect to which the damages were affirmed), including some of the jury instructions that resulted in those findings, then there would be considerable overlap between the issues relevant to both sets of 14 products each.
We're not yet done with the interdependencies. Apple wants to make progress with damages, but the number one priority is injunctive relief, and Samsung is now also trying to slow down the appeal of the denial of a permanent injunction. Apple had even filed its opening brief well ahead of schedule. I believe Apple could live with further delays on the damages side if it could at least make headway with its injunction-related appeal.
In another filing made late on Wednesday, Samsung asked the Federal Circuit for a 30-day extension of time to respond to Apple's opening brief regarding injunctive relief. Samsung's answer is currently due March 28, 2013, and if its request was granted (Samsung's brief says that Apple will oppose this), it would be due April 29, 2013. [Update] The next morning (March 21) the appeals court (erroneously) granted the extension, even before Apple would have had the chance to file an opposition brief. The order granting the extension referred to an "unopposed" motion, which was surprising because Samsung told the court that Apple opposes and intends to file a response. But a few hours later the order was removed because it had been filed in error, and Apple later filed its opposition brief, explaining that it usually doesn't oppose such requests as a matter of professional courtesy but pointing out the harm it is suffering from continued infringement. [/Update] The one-month delay is not the worst-case scenario from Apple's perspective. Samsung's motion also mentions that if Judge Koh grants its request for a partial final judgment, Samsung will immediately appeal that one, and it will then ask that its appeal of the liability and damages findings with respect to 14 products (the ones with respect to which the damages award was upheld) be consolidated with Apple's appeal of the denial of a permanent injunction, which would basically reset the clock and slow down the schedule substantially (because the appellate proceedings would involve a wider range of issues). Here's the key passage from Samsung's filing with the appeals court:
"Should the district court enter the partial final judgment that Samsung has requested, Samsung would promptly file a notice of appeal and seek to have that appeal (which would address both liability and damages issues), consolidated with the instant appeal (which solely addresses injunctive relief). [...] Because consolidation of the present appeal with appeal(s) from a partial final judgment would allow this Court to review together issues of liability, damages, and injunctive relief arising in this case, Samsung respectfully submits that an extension of time to file its response brief in this appeal will serve the interests of judicial economy. A consolidated appeal will be more efficient than piecemeal appeals, and it would make little sense for this Court to consider the propriety of the district court's denial of injunctive relief prior to its consideration of liability issues on which any remedy depends."
If Judge Koh denies a final partial judgment, Samsung can't bring a liability and damages appeal, and as a result it won't be able to inflate and slow-roll the injunction appeal. In that scenario the most it can hope for is that its request for a 30-day extension is granted. But if Judge Koh does enable Samsung to bring an appeal of a Rule 54(b) judgment, Samsung can play the game it has outlined in the passage quoted above.
This comes as no surprise at all to Apple, which already said in another filing with the Federal Circuit earlier this year that it knew Samsung was going to seek such consolidation.
From a policy point of view I believe that it would make sense to address the question of injunctive relief on a separate and fast track. The Federal Circuit panel that ruled on the Galaxy Nexus case has created a situation in which there is considerable uncertainty surrounding the availability of sales bans on multifunctional products found to infringe one or more patents. This is not just an issue between Apple and Samsung (a dispute in which the parties' interests are obvious) but also relevant to numerous other patent cases presently pending in district court. Other jurisdictions are much more efficient than the U.S. not only at resolving patent infringement cases but also at ordering meaningful remedies. For example, if Apple had obtained in a German court the liability findings it won in California in August, it would have been enforcing a sales ban since September (it takes a few weeks to make a deposit or post a bond, and to subsequently demand a defendant's compliance with an injunction), and the whole worldwide dispute between Apple and Samsung might have been settled already with Samsung agreeing to an anti-cloning provision. In the U.S., almost seven months have passed since the jury verdict, and Apple still doesn't have an injunction or at least an immediately enforceable, complete damages award (let alone an award of ongoing royalties for continued infringement).
I repeat that I said this from a policy point of view. The courts now have to resolve legal questions. The key legal issues are whether Samsung's requested partial final judgment would be appealable and (especially if the answer to the first question is yes) whether a retrial on certain damages would also have to include the underlying liability issues.
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