In September 2011, Oracle CEO Larry Ellison and Google CEO Larry Page met for court-ordered "mediation" talks. While I don't doubt the good intentions of the CEOs and other participants in those meetings, it's a fact that more than 27 months later, their Android-Java copyright dispute is still ongoing. The trial court erroneously sided with Google in 2012, but it's pretty clear now that the United States Court of Appeals for the Federal Circuit will reverse and remand.
In Apple v. Samsung, the same court -- the United States District Court for the Northern District of California -- didn't formally order the parties to show up for talks, but that's because the presiding judge in this case, Judge Lucy Koh, doesn't have Judge William Alsup's heavy-handed case management style. But based on what I read in her orders (just this week she referenced the court's efforts to bring the parties to the table) and in journalists' hearing reports, she created a situation in which both parties had to be constructive so as not to alienate her. In the Oracle-Google case, not showing up for those talks would have been an act of contempt of court; in Apple-Samsung, it would have been the same thing just without formal sanctions. And no one wants to alienate the presiding judge, much less when another trial is scheduled to begin on March 31. So Apple and Samsung will hold meetings in front of a mediator they agreed upon, and the parties' delegations will be headed by their CEOs and additionally consist of three or four in-house counsel per party (no outside counsel).
The hard and soft powers of a court have one important limit, however: while courts can order or urge parties (including their CEOs) to participate in such talks, they cannot force them to settle on any particular set of terms. If companies can agree on mutually acceptable terms, they can and will do so without pressure from a court. And the CEOs of these companies meet and talk all the time anyway. That doesn't mean to say that no settlement meeting between them would ever be fruitful: at some point even this dispute will without a doubt be settled. It's just that bringing them to the table is the easy part. In international diplomacy it certainly means something if high-level politicians from countries that don't talk directly, or not at a high level, agree to meet. President Barack Obama's handshake with Cuba's President Raul Castro at the Nelson Mandela memorial service, no matter how accidental, was unusual and could mean something. Apple and Samsung have business relationships in many areas and share some strategic interests even in the fields in which they compete. Getting them to shake hands and sit down means nothing per se. (But again, at some point they will agree.)
It's obvious that the court would like to avoid the effort of another major trial. These parties just had a limited damages retrial late last year. It would be the third Apple-Samsung trial in less than two years. While smaller companies would probably be very interested in avoiding the cost of another trial, legal fees are not a strategic issue in this case. Even publicity doesn't matter because Samsung has had to face allegations of "copying" before and is nevertheless doing extremely well. The parties' analysis will be centered around an impact assessment of what the outcome of that second trial (including post-trial injunction motions) could be.
After the recent Federal Circuit ruling in Apple's favor, Apple's access to injunctive relief is way better than it appeared after the original denial of its injunction request following the first Samsung trial. Still there is a "causal nexus" requirement to meet, and even in a dispute between these companies, injunctions won't automatically follow from infringement findings in the U.S. the way they do in Germany. I guess Samsung and its lawyers are going to look at the patents Apple is asserting at the upcoming trial. Those are potentially more impactful than the design and user interface stuff asserted at the 2012 trial (where I believe Apple was more interested in winning something than in dealing a decisive blow to Samsung at that stage). But if Samsung's engineers and lawyers have a viable workaround strategy in place just in the event that Apple prevails and obtains an injunction, then Samsung has only a limited incentive to settle. I don't know what Samsung's workaround plans are (some workarounds may, in fact, already have been implemented), and even if I knew those plans, I still wouldn't know how strongly Samsung believes in their viability in legal and commercial terms. This is the most important question relevant to the prospects of a pre-trial settlement.
A few years ago, companies of this profile generally settled their disputes out of court ahead of a trial. There was much more fear that the impact of a lost patent trial (and post-trial injunctions) could be devastating. By now many industry players -- even including late entrants such as HTC, which has evolved into an experienced and sophisticated litigant -- are much less scared by a patent infringement suit than they used to be. They know that most patents in this industry are actually invalid as granted, and the patent claims that are ultimately found valid are generally much less powerful while the broader ones rarely survive. In most disputes it still makes sense for parties to agree on licensing -- but more and more companies choose litigation over licensing until the latter is really cheap (and "cheap" is not just a question of money in a dispute like Apple-Samsung but very much a question of non-monetary terms such as "anti-cloning" provisions).
If they don't settle and have to hold a second trial, then my prediction of the most likely outcome is that Apple will again win something, Samsung will again lose something, but the real impact will only be clear after an injunction issues and the viability of Samsung's workarounds is addressed in one or more contempt proceedings. In other words, it may take time to find out to what extent Apple has the upper hand.
Here's the notice Apple and Samsung's counsel filed with the court to announce this pre-trial mediation effort:
14-01-08 Apple-Samsung Proposal Re Pre-March 2014 Settlement Discussions by Florian Mueller
If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.
Share with other professionals via LinkedIn:
