Retrial jury awards Apple $533 million in design patent and $5 million in utility patent damages from Samsung

A cartoon showing Homer Simpson using an iPhone may indeed have had an impact on a high-profile smartphone patent dispute as the screen design patent it relates to apparently accounts for approximately half a billion dollars in design patent damages. After three days and a half of deliberation, the re-retrial jury in the first Apple v. Samsung case in the Northern District of California awarded Apple a total of approximately $538.6 million in damages from Samsung (related to some old phones--mostly the first two generations of the Galaxy S), $533.3 million of which relate to design patents and $5.3 million to utility (i.e., technical) patents. Here's the verdict form (this post continues below the document):

18-05-24 Apple v. Samsung Jury Verdict by Florian Mueller on Scribd

The amount is similar to what Apple won in previous trials. The August 2012 billion-dollar verdict included trade dress (later thrown out by the Federal Circuit) and a third utility patent (the '915 pinch-to-zoom API patent, which has been held invalid in the meantime, though theoretically it could still be revived). A retrial over some products was materially consistent with the original verdict. And so is, after years of appellate and post-appellate proceedings and despite the extremely important clarification of the law that Samsung had obtained from the Supreme Court, the latest verdict.

The jury had asked two questions, and both questions showed they were really struggling with determining the relevant article of manufacture (AoM). If the jury had determined that the design patents in question covered only certain components (casing and screen), the amount would have been in the tens--not hundreds--of millions of dollars, but given that Apple was seeking more than $1 billion, the jury would probably have been inclined (in that hypothetical scenario) to award substantially more than the amount Samsung described as reasonable (less than $30 million). At the same time, given that juries often come down somewhere in the middle, a billion-dollar award was a possibility, but far less probable than the combination of agreeing with Apple on the AoM but with Samsung on most or all of its deductions.

One juror explained to Law360's Dorothy Atkins how the jury arrived at the conclusion that the design patent damages award had to be based on the entire smartphone, not on components (this post continues below the two tweets):

For the 305 patent they found the Aom was the entire phone and the d677 patent covered parts. She says she was the sole juror disagreeing with the others today and yesterday.

— Dorothy M. Atkins (@doratki) May 24, 2018

Juror says she didn't think about the financials or about punishing Samsung and they all agreed pretty quickly that the d'305 covered the whole phone bc can't see the design without the phone.

— Dorothy M. Atkins (@doratki) May 24, 2018

Throughout the years, including this month, I've repeatedly expressed concern over software patents styled as screen design patents. The amount wasn't shocking because, again, it was consistent with previous verdicts, even though I, as a juror, would have arrived at a different AoM determination and, therefore, a lower amount. In my opinion, the law should be changed to allow apportionment because an AoM-based figure is quite often going to be the wrong one, especially in a case like this where there was a huge discrepancy between the economics of the two approaches to the AoM. But with the current statute, the question was just whether Apple would be undercompensated or hugely overcompensated, and the latter is what that jury verdict comes down to. But the shocking and somewhat unexpected part is the fact that a screen design patent was ultimately considered decisive is what I'm concerned about. That will encourage patent trolls to obtain and assert more screen design patents.

According to media reports, Apple reiterated how much value it attaches to design, and Samsung is now going to consider its options. Those options are post-trial motions and, possibly, another appeal.

While the focus in recent years was on the AoM question and proper interpretation of 35 U.S.C. § 289, I have already expressed on prior occasions that I'd have liked to see more of a focus on the question of whether screen layouts should be patentable.

I read on Twitter that Apple and Samsung may actually settle the case now, which would be good. Better late (more than seven years after the filing of the initial complaint) than never. Let's see what happens now. And regardless of what happens here, it's high time that more people woke up and understood the threat that screen layout design patents--which can cover subject matter that wouldn't pass the patentability criteria (including, but not limited to, patent-eligibility) for utility patents--pose. Apple v. Samsung is an extraordinary case in various ways. My concern is about a huge number of other cases in which such patents might be asserted.

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Will Homer Simpson sway the Apple v. Samsung design patent damages retrial jury?

It would have been preferable to give the Apple v. Samsung design patent damages re-retrial jury in San Jose (Northern District of California) a chance to render a verdict before the weekend. In that case, jurors might have put an end to this disruption of their lives. But the way things worked out, they're now going to think about what position to take on Monday morning when official deliberations begin. In the meantime, they're not allowed to talk to anyone about the case or to take a look at any media reports (whether some jurors do so anyway is another question, but they're not supposed to).

As in the previous trials in this case, and as I mentioned a few days ago, Apple's lawyers portrayed Samsung as an intentional infringer, an unrepentant copyist, with Samsung being barred from presenting some evidence that could have shed a different kind of light on that question.

The holdings that (i) Samsung infringed those three design patents (a long time ago) and (ii) that those patents are valid are "law of the case" and the re-retrial jury must presume both to be the case. It is worth noting, however, that courts in other jurisdictions looked at international equivalents of those intellectual property rights (and at devices from the same generation of Android-based Samsung products) and reached rather different conclusions. But things are the way they are for the purposes of this U.S. case, so the focus is just on damages, and the single most important question in this regard is what "article of manufacture" a disgorgement of Samsung's profits should be based on: the entire device (which was considered a foregone conclusion in previous trials, but the Supreme Court and, previously, the United States Department of Justice disagreed with Judge Koh, the United States Court of Appeals for the Federal Circuit, and Judge Lucy H. Koh) or one or more components?

In that context, the most surprising tweet from the courtroom (thanks to Mike Swift, Joshua Sisco and Stephen Shankland for some excellent coverage!) indicated that Apple's lead counsel, Bill Lee, could live with a $370 million verdict:

Before the break, Apple's Lee in his Wagner cross tried to give the jury other damages options between Samsung's $28M and Apple's $1.067B - $370M if jury concludes the AOM is the full phone, but adopts Samsung's cost deductions. #appsung

— Mike Swift (@Swiftstories) May 18, 2018

Given that Apple's own damages demand is almost three times as high, the above observation suggests more than a crack in the shell. As I followed the trial on Twitter, I felt that Samsung's lawyers and experts drove some very important points home, though Apple also made some good points, considering that Apple's position is a very extreme one in this case. Is Apple now happy with getting a little bit less for those design patents than before? Or is it simply waving a white flag because it's afraid the jury might arrive at a much lower figure? W won't ever know.

If stakeholders could file amicus curiae briefs with this jury, Apple would really be in trouble and even the $370 million "compromise" proposal would be ambitious. Hardly anyone wanted to support Apple's "entire device" position in filings with the Supreme Court. Most of those who supported Apple said they just wanted to ensure that a disgorgement of infringer's profits under 35 U.S.C. § 289 would continue to be available in other cases (such as with respect to running shoes).

The world outside that San Jose courtroom overwhelmingly prefers a component-based damages determination. This InsideSources article on the problems that an excessive damages amount in the Apple v. Samsung case could cause tech and non-tech companies alike is a good example. But jurors won't have the benefit of such information on the wider ramifications of what they're required to decide.

The tech sector at large (with a few exceptions merely proving the rule) is also concerned about patents on screen designs. The D'305 patent covers a screen layout. That one is a software patent styled as a design patent because it wouldn't meet the patentability (including, but not limited to, patent-eligibility) standards for utility (i.e., technical) patents. While I can imagine Samsung saw the most immediate threat in this case in the original "it must be a complete device" standard for the determination of the relevant article of manufacture, it was very unfortunate that Samsung didn't additionally ask the Supreme Court to hold such subject matter ineligible for design patents. Now Samsung's lawyers say that a screen is the proper article of manufacture for a software user interface patent. That would mitigate the damage to Samsung, but it doesn't alleviate my concern, as an app developer, over patents like D'305 in the slightest.

Apple has some of the best lawyers in the world, and they dug up something that might have impressed the jury (this post continues below the YouTube video):

That video shows Homer Simpson with an iPhone, and what makes the iPhone particularly identifiable is the app menu matrix everyone knows. Actually, most non-iPhone devices have such a matrix as well. They still do, despite Apple's lawsuits against Samsung, Motorola, and HTC (the three leading Android device makers earlier this decade, i.e., when Apple's patent assertions against Google's ecosystem began). In other words, this is iconic and hard to protect at the same time. And the reason it's hard to protect is because it's just a very logical screen layout.

Should Apple get many hundreds of millions of dollars, or theoretically even a billion dollars, then Homer Simpson--or, in the real world, Homer's creator, Matt Groening--deserves a commission.

One of the questions that jurors will be asking themselves this weekend is likely whether (again, basing everything on the previous findings of infringement and validity, irrespectively of what courts in other countries concluded) Samsung should face the maximum penalty, a slap on the wrist, or something in between.

For more than one reason, there's no way I could ever have ended up on that jury. If--in a hypothetical alternative reality--I had to make a decision, I wouldn't agree with either party, but I'd sooner award Apple two or three times of what Samsung considers reasonable than half or a third of Apple's demand. The primary reason for this would be that such components are manufactured separately and can be bought as replacement parts--and there are hundreds of thousands of other potentially-patentable elements in a smartphone, not just three design patents.

That's why this is not a question of whether one respects Apple's designs, Apple's investment in design and innovation, or Apple's right to defend the uniqueness of its products. Over the course of almost eight years, this blog has repeatedly stated that Apple couldn't be different and think different if everyone else was allowed to "copy." Even the fact that Apple founder Steve Jobs once said that "good artists copy, great artists steal" and that Apple had "shamelessly" stolen other people's creations doesn't mean too much in this context.

The problem is just that, no matter whether a screen layout covered by a design patent appeared in a Simpsons episode, the kinds of products at issue in this Northern California case contain many technical components--hundreds of thousands of at least potentially patentable concepts--and so many visual designs (for instance, many other screen layouts than just the app matrix) that a damages award over a very few patents just shouldn't be excessive. Otherwise everything else in such a phone would be implicitly devalued, and that would neither be fair not would it be in the interest of consumers who expect an electronic device not only to look good but also to be fully functional.

When it's not about design patents, Apple itself is a proponent of the "smallest salable patent-practicing unit" (SSPPU) rule (damages or royalties should be determined based on the smallest component that is deemed to infringe or practice a patent) as opposed to complete products. I've supported Apple's related thinking in disputes with Google/Motorola, Ericsson, Qualcomm, and... Samsung. After all those years, I'm not going to be inconsistent. That's why I hope the jury will do precisely what Apple advocates when the shoe is on the other foot, and focus on the smallest salable patent-practicing unit(s).

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77 former government officials and professors remind Assistant AG Delrahim of long-standing U.S. policy on standard-essential patents

Given the importance of this subject, I'll now republish an open letter that 77 former government officials and professors (of law, economics, and business) have sent Assistant Attorney General Makan Delrahim in order to remind him of long-standing and consistent U.S. policies on standard-essential patents (SEP) under both Republican and Democratic administrations. Mr. Delrahim's outlier positions are disconcerting indeed. Access to standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms is not a "left or right" question.

I'm not aware of any other patent blogger who would have declared himself a support of Donald Trump as early or as unequivocally as I did (January 2016), and there are several policy areas in which I really like it when the Trump Administration does away with Obama policies that I consider misguided and some of which clearly failed (especially in the foreign-policy context). However, if it ain't broke, don't fix it! When it comes to SEPs, consistency and continuity with prior administrations (including, but not limited to, the Obama Administration) are the best way forward. The alternative would have the opposite effect of making America great again: SEP abuse poses a serious threat to many of America's (and the rest of the world's) most innovative companies. That's why I wish to express my support (as someone who wouldn't have been eligible to sign it) for the open letter by providing a link to its PDF version and, for your convenience, its full text below.

The order of the impressive list of signatories: first, the author of the letter (Professor Carrier); then, former high-ranking government officials; then, former mid-level government officials; finally, academics without former government positions.

-------------

May 17, 2018

BY OVERNIGHT MAIL AND E-MAIL

Assistant Attorney General Makan Delrahim
U.S. Department of Justice
Antitrust Division
950 Pennsylvania Ave., NW
Washington, DC 20530

Re: Speeches on Patents and Holdup

Dear Assistant Attorney General Delrahim:

We, 77 former government enforcement officials and professors of law, economics, and business, write to express concern with recent speeches[1] you have made that we do not believe are consistent with the broad bipartisan legal and economic consensus that has existed for over a decade regarding standard setting. We would like to raise eight issues in particular.

First, the anticompetitive harms from patent holdup have been consistently acknowledged by officials in Republican and Democratic administrations. The unanimously adopted 2007 joint agency Report, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition, explained the difference between a patentee's power ex ante (when "multiple technologies may compete to be incorporated into the standard") and ex post (when "the chosen technology may lack effective substitutes precisely because the SSO chose it as the standard"). This disparity can allow the patentee to "extract higher royalties or other licensing terms that reflect the absence of competitive alternatives." Id. at 35-36. The FTC also unanimously endorsed the 2011 Report, The Evolving IP Marketplace, which highlighted how "an entire industry" could be "susceptible" to the "particularly acute" concern of holdup, which can result in "higher prices" and "discourage standard setting activities and collaboration, which can delay innovation." Id. at 234.[2] And the National Research Council of the National Academies concluded in its Report on Patent Challenges for Standard-Setting in the Global Economy that "a FRAND commitment limits a licensor's ability to seek injunctive relief." Id. at 9.

Second, the holdup problem has been recognized by courts and standard setting organizations hemselves.[3] As one court stated, patent holdup is not a theoretical concern, but instead "is a substantial problem that [F]RAND [fair, reasonable, and nondiscriminatory licensing] is designed to prevent." In re Innovatio IP Ventures, 2013 WL 5593609, at *9 (N.D. Ill. Oct. 3, 2013).[4] As former FTC Commissioner Terrell McSweeney recently pointed out, courts in two cases awarded patentees only 1/150 and 1/500 of the royalties the patentholder sought. Commissioner Terrell McSweeny, Holding the Line on Patent Holdup: Why Antitrust Enforcement Matters, Mar. 21, 2018. The fact that SSOs— those with the most knowledge of the issues—adopt FRAND policies is itself telling proof that holdup is a problem; otherwise, why would they adopt contractual practices to prevent holdup?[5] In addition to higher royalties, expenditures can escalate as holdup increases the costs to SSOs and to those who oppose FRAND clarification. Timothy J. Muris, Bipartisan Patent Reform and Competition Policy, American Enterprise Institute Report 9 (2017).[6]

Third, we agree that “"he hold-up and hold-out problems are not symmetric." Nov. 10, 2017 speech. But we believe that it is holdup that presents the more serious antitrust concern. As an initial matter, the risks faced by innovators are consistent with the "speculative investments" always made by technology and product developers; in contrast, implementers are vulnerable to paying supra-competitive royalties based on the entire value of the product, not on the value of the patented technology. A. Douglas Melamed & Carl Shapiro, How Antitrust Law Can Make FRAND Commitments More Effective, at 7-8, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3075970, 127 YALE L.J. __ (forthcoming 2018). While we agree that coordinated action can implicate antitrust, these concerns are not presented in licensing disputes at the core of holdout. The potential for holdout exists on both sides of contracts, occurring "when one side refuses to perform in good faith or negotiate reasonably." Muris, at 9. In contrast, the holdup problem and accompanying lock-in value exist only on one side of the exchange.

Fourth, patentees that obtain or maintain monopoly power as a result of breaching a FRAND commitment present a standard monopolization case. E.g., Broadcom v. Qualcomm, 501 F.3d 297, 314 (3d Cir. 2007); Microsoft Mobile v. Interdigital, 2016 WL 1464545, at *2 (D. Del. Apr. 13, 2016).[7] FRAND breaches could satisfy the section 2 elements of exclusionary conduct by demonstrating an exclusion of competitors (the exclusion of rival competitive technologies not chosen by the SSO) that results in competitive injury (price increases and innovation harms from the breach) and acquisition or maintenance of monopoly power (obtained through the breach). Moreover, the conduct here is not protected under the "absolutist position" that Noerr-Pennington "immunizes every concerted effort that is genuinely intended to influence governmental action," as this would allow parties to violate the antitrust laws, for example by being "free to enter into horizontal price agreements." Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 503 (1988). Instead, a breach of a FRAND promise is "distinguish[able] from Noerr and its progeny" because it is "the type of commercial activity that has traditionally had its validity determined by the antitrust laws themselves." Id. at 505; see also FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 424-25 (1990).

Fifth, while we agree that patents are important for innovation and that injunctive relief often is appropriate, we do not agree that patents provide an unqualified "property right to exclude" that is accompanied by an injunction and a conclusion that "unilateral patent hold-up" is "per se legal." Mar. 16 speech. Hornbook law does not give property owners absolute rights to exclude. There are at least 50 doctrines (such as adverse possession, easements, eminent domain, nuisance, and zoning) that limit property owners' rights. Michael A. Carrier, Cabining Intellectual Property Through a Property Paradigm, 54 DUKE L.J. 1 (2004). Landowners, for example, cannot exclude others from entering their land to save lives or property or to avoid some other serious harm.[8] Relatedly, in upholding the inter partes review process for administratively reconsidering patents, the Supreme Court recently held that "[p]atents convey only a specific form of property right—a public franchise." Oil States Energy Servs. v. Greene's Energy Group, 2018 WL 1914662, at *8 (U.S. Apr. 24, 2018).

Sixth, the position that patent infringement necessarily results in an injunction is, for good reason, no longer the law. More than a decade ago, the Supreme Court ruled unequivocally that courts must decide whether to grant injunctions "consistent with traditional principles of equity, in patent disputes no less than in other cases." eBay v. MercExchange, 547 U.S. 388, 394 (2006); see also 35 U.S.C. § 283 (patent statute provides that courts "may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable"). In fact, the Federal Circuit, not historically associated with insufficient protection of patent rights, has made clear that the eBay framework "provides ample strength and flexibility for addressing the unique aspect of FRAND committed patents and industry standards in general." Apple v. Motorola, 757 F.3d 1286, 1332 (Fed. Cir. 2015). Because there could be thousands of patents in a product today, it is not appropriate uniformly to apply standards from the 18th century.

Seventh, pointing to exclusive rights granted to patentees as a type of natural property right ignores the uncontroversial utilitarian framework for the patent grant. The Supreme Court has long made clear the primacy of the utilitarian justification. E.g., Graham v. John Deere, 383 U.S. 1, 9 (1966). Exclusive rights exist not to bestow upon patentees a moral right to a reward but to promote the best interests of society. That is why patents, like other forms of intellectual property, are subject to doctrines (like novelty, nonobviousness, the written-description and enablement disclosure requirements, and a limited 20-year term) that ensure that protections for market competition balance patents' incentive effects. Relatedly, it tells only half the story to focus on the incentives relevant to the initial invention while ignoring follow-on innovation, which is just as important and may be undermined significantly when patent owners abuse their FRAND obligations.[9] Suggesting (without offering evidence) that any diminished return to patent holders reduces innovation and welfare "is inconsistent with both sound economic analysis and patent law," as "FRAND commitments that reduce excessive royalties further the policies of both the antitrust laws and the patent laws." Melamed & Shapiro, at 9. And it is also inconsistent with the Supreme Court's recent clear reminder (in a 7-2 ruling written by Justice Thomas) that patents "involv[e] public rights." Oil States, 2018 WL 1914662, at *6.

Eighth, we do not believe that holding patentees to their promise to license on FRAND terms "amount[s] to a troubling de facto compulsory licensing scheme." Mar. 16 speech. Compulsory licensing occurs when the government forces a patentee to license against its wishes. In contrast, here the holder of a standard essential patent voluntarily chooses to license on a FRAND basis, receiving in exchange the SSO's "seal of approval" and the potential for significantly increased volume that comes with that seal, which is well worth the FRAND promise. Unlike other patents, holders of standard essential patents are protected from competition and guaranteed to collect royalties.

We applaud the energy of your leadership of the Division and support the regular reexamination of key antitrust issues. But we do not believe that the case has been made for departing from the bipartisan consensus set out in this letter. Thank you for your consideration of these views.

Sincerely,

Professor Michael A. Carrier[*]
Rutgers Law School

Professor Timothy J. Muris
Antonin Scalia Law School
Former Chairman, Federal Trade Commission

Professor of the Practice of Law A. Douglas Melamed
Stanford Law School
Former Acting Assistant Attorney General, Antitrust Division, U.S. Department of Justice

Emeritus Professor of Economics Richard J. Gilbert
University of California, Berkeley
Former Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice

Professor Fiona Scott Morton
Yale University School of Management
Former Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice

Emeritus Professor of Economics Janusz A. Ordover
New York University
Former Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice

Professor Daniel Rubinfeld
New York University School of Law
Professor of Law and Professor of Economics Emeritus, University of California, Berkeley
Former Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice

Professor Jonathan B. Baker
American University Washington College of Law
Former Director, Bureau of Economics, Federal Trade Commission

David Balto
Former Policy Director, Bureau of Competition, Federal Trade Commission

Professor Stephen Calkins
Wayne State University Law School
Former General Counsel, Federal Trade Commission

Professor Colleen Chien
Santa Clara University School of Law
Former Senior Advisor to Chief Technology Officer (CTO) of United States, IP and Innovation, White House Office of Science and Technology Policy

Professor Andrew I. Gavil
Howard University School of Law
Former Director, Office of Policy Planning, Federal Trade Commission

Professor Marina Lao
Seton Hall University School of Law
Former Director, Office of Policy Planning, Federal Trade Commission

Professor Harry First
New York University School of Law
Former Antitrust Bureau Chief, New York Attorney General's Office

Jay Himes
Former Antitrust Bureau Chief, New York Attorney General's Office

Kevin J. O’Connor
Former Antitrust Chief, Wisconsin Attorney General’s Office
Former Chair, Multistate Antitrust Task Force, NAAG

Professor John Allison
McCombs Graduate School of Business
University of Texas at Austin

Professor Margo A. Bagley
Emory University School of Law

Professor Ann Bartow
University of New Hampshire School of Law

Professor Joseph Bauer
Notre Dame Law School

Professor Jeremy W. Bock
The University of Memphis, Cecil C. Humphreys School of Law

Professor Dan L. Burk
School of Law, University of California – Irvine

Professor Darren Bush
University of Houston Law Center

Professor Michael Carroll
American University Washington College of Law

Emeritus Professor Peter Carstensen
University of Wisconsin Law School

Professor Bernard Chao
University of Denver Sturm College of Law

Professor Andrew Chin
UNC School of Law

Professor Ralph D. Clifford
University of Massachusetts School of Law

Professor Jorge L. Contreras
S.J. Quinney College of Law, University of Utah

Professor Christopher A. Cotropia
University of Richmond School of Law

Professor Joshua Davis
University of San Francisco School of Law

Professor Stacey L. Dogan
Boston University School of Law

Professor Roger Allan Ford
University of New Hampshire School of Law

Professor of Economics and Technology Management H. E. Frech III
University of California, Santa Barbara

Professor Jim Gibson
University of Richmond School of Law

Professor Emeritus Thomas L. Greaney
Saint Louis University School of Law
Visiting Professor, University of California Hastings College of Law

Professor of Economics Emerita Bronwyn H. Hall
University of California, Berkeley

Professor Jeffrey L. Harrison
College of Law, University of Florida

Professor Yaniv Heled
Georgia State University College of Law

Professor Cynthia Ho
Loyola University Chicago School of Law

Professor Tim Holbrook
Emory University School of Law

Professor Michael J. Hutter
Albany Law School

Professor Marie-Christine Janssens
KU Leuven Centre for IT & IP Law

Professor Eileen M. Kane
Penn State Law

Professor Ariel Katz
Faculty of Law, University of Toronto

Professor John B. Kirkwood
Seattle University School of Law

Professor Amy Landers
Drexel University, Thomas R. Kline School of Law

Professor Mark A. Lemley
Stanford Law School

Professor Christopher Leslie
School of Law, University of California – Irvine

Professor Doug Lichtman
UCLA School of Law

Professor Yvette Joy Liebesman
Saint Louis University School of Law

Professor Daryl Lim
The John Marshall Law School

Professor Lee Ann W. Lockridge
Louisiana State University Law Center

Professor Brian J. Love
Santa Clara University School of Law

Professor Phil Malone
Stanford Law School

Professor Jonathan Masur
University of Chicago Law School

Adjunct Emeritus Professor Stephen E. Maurer
Goldman School of Public Policy, University of California, Berkeley

Professor Mark P. McKenna
Notre Dame Law School

Professor Michael J. Meurer
Boston University School of Law

Professor Joseph Scott Miller
University of Georgia School of Law

Professor Ira Steven Nathenson
St. Thomas University School of Law

Professor Emeritus of Economics Roger G. Noll
Stanford University

Professor Srividhya Ragavan
Texas A&M University School of Law

Professor Matthew Sag
Loyola University Chicago School of Law

Professor Christopher Sagers
Cleveland State University School of Law

Professor Sharon K. Sandeen
Mitchell Hamline School of Law

Professor Catherine Sandoval
Santa Clara University School of Law

Professor Joshua D. Sarnoff
DePaul University College of Law

Professor Kurt M. Saunders
California State University, Northridge

Professor Steven Semeraro
Thomas Jefferson Law School

Professor Lea Bishop Shaver
Indiana University School of Law

Professor Aram Sinnreich
American University, School of Communication

Professor Avishalom Tor
Notre Dame Law School

University of Haifa Faculty of Law

Professor Liza Vertinsky
Emory Law School

Professor Spencer Weber Waller
Loyola University Chicago School of Law

Daniel J. Weitzner
Principal Research Scientist, MIT Computer Science and Artificial Intelligence Laboratory
Founding Director, MIT Internet Policy Research Initiative

Professor Abraham L. Wickelgren
University of Texas School of Law

---FOOTNOTES ---

1 The Long Run: Maximizing Innovation Incentives Through Advocacy and Enforcement, Apr. 10, 2018; The "New Madison" Approach to Antitrust and Intellectual Property Law, Mar. 16, 2018; Good Times, Bad Times, Trust Will Take Us Far: Competition Enforcement and the Relationship Between Washington and Brussels, Feb. 21, 2018; Assistant Attorney General Makan Delrahim Delivers Remarks at the USC Gould School of Law's Center for Transnational Law and Business Conference, Nov. 10, 2017.

2 As you recognized in your March 16, 2018 speech, the decision to include a patent in a standard "gives the patent holder some bargaining power" and "would require the patent holder to live up to commitments as they would have bargained for it."

3 The studies cited to show the absence of holdup do not consider the counterfactual scenario: that prices could have fallen faster and output/diversity risen faster absent holdup. After all, few would argue that the Sherman Act was not necessary because, during the decade prior to enactment, "U.S. output of salt, petroleum, steel, and coal all increased significantly, and prices of steel, sugar, and lead all dropped significantly." Jorge L. Contreras, Much Ado About Hold-Up, at 22, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3123245.

4 See also Microsoft v. Motorola, 2013 WL 5373179, at *7 (W.D. Wash. Sept. 24, 2013) (rejecting argument that "hold up does not exist in the real world" and finding that such an argument "does not trump the evidence presented by Microsoft that hold up took place in this case").

5 As Richard Epstein has recognized, "[t]he intellectual history of rate regulation beg[an] with the writings of Sir Matthew Hale in the late seventeenth century," and the "[F]RAND formula" is "the best, indeed the only, approach" for "mimic[king] the performance of competitive markets" while not "undercutting their operation," which is needed since a "monopolist knows that he can extract at least some concessions from higher demanders precisely because they have nowhere else to go." Richard A. Epstein, The History of Public Utility Rate Regulation in the United States Supreme Court: Of Reasonable and Nondiscriminatory Rates, 38 J. SUP. CT. HIST. 345, 346, 348, 366 (2013).

6 It also bears mention that one cannot conclude that the "winning technology" is inherently "better than its rivals" without considering the FRAND commitment that can be critical to the standard-selection decision and can avoid an industry being locked into a non-FRAND-restricted technology. MICHAEL A. CARRIER, INNOVATION FOR THE 21ST CENTURY: HARNESSING THE POWER OF INTELLECTUAL PROPERTY AND ANTITRUST LAW 328-29 (2009); Byeongwoo Kang & Rudi Bekkers, Just-in-Time Inventions and the Development of Standards: How Firms Use Opportunistic Strategies to Obtain Standard-Essential Patents (SEPs), Aug. 28, 2013, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2284024.

7 Relatedly, seeking an injunction against a licensee willing to pay a FRAND rate—such as where LSI sought an exclusion order in the U.S. International Trade Commission before proposing a FRAND license to Realtek, Realtek Semiconductor v. LSI, 946 F. Supp. 2d 998, 1007-08 (N.D. Cal. 2013)—can constitute monopolization. Challenging behavior like this is not "hubris" (Mar. 16 speech); it is an appropriate application of antitrust.

8 Analogously, specific performance, which has the same effect in contract law as injunctions do in patent law, is only available in limited, extraordinary, circumstances. See 12 Corbin on Contracts §§ 63.1, 63.20 (rev. ed. 2012).

9 A standards organization's rule restricting the owner of a standard essential patent that makes a FRAND commitment from seeking injunctions against willing licensees is an appropriate attempt to enforce the FRAND commitment, not a return to the "DOJ's enforcement policies in the 1970s" (Mar. 16 speech) that have rightly been criticized for punishing numerous forms of procompetitive or competitively neutral licensing conduct.

* The letter presents the views of the individual signers. Institutions are listed for identification purposes only.

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Qualcomm says Apple canceled recent patent and antitrust settlement meeting on short notice

While Apple is seeking north of $1 billion in damages from Samsung in the ongoing jury re-retrial in the Northern District of California, its earth-spanning dispute with Qualcomm continued today in the Munich I Regional Court with a first hearing (the primary objective of which is roughly comparable to that of a Markman hearing in a U.S. patent infringement case). Qualcomm alleges that the iPhone 7 and 7 Plus infringe its EP1199750 on a "post[-]passivation interconnection scheme on top of [an] IC chip."

I'll start with the most interesting piece of information I gleaned there. A Qualcomm employee--presumably an in-house lawyer, but I don't know his name and title--responded to Presiding Judge Dr. Zigann's question about the state of settlement discussions. According to Qualcomm, the parties had scheduled a meeting that would have taken place recently, but Apple canceled on short notice, and no new meeting has been agreed upon yet.

No information on the reasons for which Apple canceled was provided. Maybe there was a scheduling conflict. The parties' positions may also be too far apart at this stage for any such meeting to be productive. Time may tell. Apple usually does settle whenever possible. The long-running Samsung case is an exception for whatever reason (it's hard to see, without inside-baseball type of knowledge that I lack, why they can't just all sit down, perform a realistic probablistic analysis together, and agree on a payment based on a weighted average of different scenarios).

Other than what I just mentioned, today's hearing was not as informative as the two Qualcomm v. Apple hearings I attended in Munich in Februar and earlier this month. That's because the court was unable to take a preliminary position on the infringement allegations for two reasons:

• Contrary to the Munich court's local patent rules, Qualcomm's complaint did not proffer a claim construction for the most critical claim limitation, "passivation layer." That term is so critical because there is no way that the patent can be infringed unless a certain interconnection between circuits takes place on top of that passivation layer.

  Qualcomm's lead consel in the German Apple cases, Quinn Emanuel's Dr. Marcus Grosch, seemed rather contrite after hearing the court's related criticism. Judge Dr. Zigann ordered him to lay out his proposed claim construction at the outset of the hearing. While he stated the material the passivation layer is composed of in the preferred embodiment specified by the patent document, the court needs more clarity regarding the extent to which such a passivation layer needs to shield other components from water and ions.

• Not only in this context did Dr. Grosch refer to the knowledge that a person of ordinary skill in the art (the parties did not disagree on what kinds of skills such as POSITA should have) has, as opposed to specific definitions that one could find in the patent document itself. Quite understandably, the three-judge panel cannot answer the related technical questions without help from an expert. Unlike in the U.S., where both parties hire expert witnesses and the court or a jury have to decide whom to trust and courts very rarely appoint their own experts, German courts must rely on a court-appointed expert unless the case can be adjudicated based on undisputed facts as well as facts that the court can easily establish itself.

The actual trial was scheduled for October 4. Meanwhile, either party will submit one more pleading. Apple, represented by Freshfields Bruckhaus Deringer's Prince Wolrad of Waldeck and Pyrmont (litigator) and Samson & Partner's Dr. Oswald Niederkofler (patent attorney), firmly denies the infringement accusations. Among other things, Apple argues that what is alleged to constitute a passivation lawyer in the A10 chip is only about one-eigth as thick as the layers described in the patent. And even if a potential or actual infringement was identified, the case might be stayed pending a nullity action brought before the Federal Patent Court by Apple and Intel. One remark by Judge Dr. Zigann suggested that Qualcomm would have to carefully avoid a claim construction so broad that the patent would be likely to be invalidated. However, the court did not comment on its assessment of the merits of Apple's nullity complaint. Validity is very rarely discussed at a first hearing in Munich. Come October, Apple and Intel's joint challenge to the patent will be front and center unless there is a finding of non-infringement, which no one can predict at this stage.

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Copying allegations could--but shouldn't--decide the Apple v. Samsung retrial on design patent damages

There we go again. For the fourth time in six years (minus a few months), Apple and Samsung will square off again, starting today, in the San Jose building of the United States District Court for the Northern District of California. It's the third trial in the first Apple v. Samsung case (the related complaint was filed in April 2011) and the fourth in total (if we add the 2014 trial in the second case, filed in 2012).

Via Twitter I provided the parties with a link to the Guinness Book of Records website. This might be a new record: four trials between the same two parties in one federal district court within less than six years.

In some ways, it's déjà vu all over again, or Groundhog Day, as Korean-American Judge Lucy H. Koh calls it. But not in all ways. Samsung scored a major victory in the Supreme Court in 2016 on what should be considered the appropriate article of manufacture for determining design patent damages in the form of a disgorgement of unapportioned infringer's profits under 35 U.S.C. § 289. Apple had been awarded huge amounts at two previous trials, based on a standard overthrown by the highest court in the land. Now it will be up to a jury whether the ultimate outcome will, or will not, be reflective of Samsung's SCOTUS victory.

There's the legal part, which is a test that the U.S. government laid out in an amicus curiae brief filed with the Supreme Court. That one is suboptimal, and people far more qualified than me to discuss design patent law find it wanting. There are various restrictions on the parties, especially on Samsung, as to what kind of evidence and testimony they're allowed to present and what kinds of argument they're allowed to raise. And what may ultimately decide is psychology: whether the jury will, or will not, buy Apple's portrayal of Samsung as a copyist.

It's impossible to go into full detail here on all these questions, but let's take a quick look at a few of them. My loyal readers know that I like both Apple and Samsung much better when they're defending themselves against patent infringement allegations and overreaching remedies than when they're playing the offensive part.

Over the years I've had a handful of different iPhones and Samsung Galaxy phones. It's true that the earliest Galaxy products looked much more similar to the iPhone than later ones do. That's why this re-retrial is about old products. A blast from the past.

Apple will argue that Samsung's phones had a rather different look prior to the iPhone launch than subsequently to it (and will point to that old "crisis of design" email):

On the left side one can see that those older phones usually had physical keyboards. While it's true that early Galaxy S phones looked more iPhone-like, what had happened in between was that Android came out, Samsung adopted it, and physical keyboards were history. But in none of those trials did Samsung get the chance to make its strongest defensive point--nor it will it get it this week. Even before the iPhone, Samsung's designers had created some touchscreen phone designs that had various visual elements that are now considered "iPhone-like":

Even if--just for the sake of the argument--one agreed with Apple that Samsung was a copyist, had a major benefit from it (relative to other Android device makers such as Motorola and HTC, not vis-à-vis Apple), and should pay the price, that still doesn't mean that a draconian remedy--disgorgement of entire profits--is a fair and just outcome.

Fairness would require new legislation. § 289 would have to be amended in order to allow apportionment. Then we could have a rational conversation about the extent to which a particular device maker's success depends on certain designs or, more accurately, certain design elements. But Congress hasn't touched that statute in ages, so the law of the land is what it is for the purposes of this trial. Faced with the choice between a devastating AoM definition that will encourage abusive litigation by others and a scenario in which Apple would get less than it deserves, but still an amount far closer to a reasonable apportionment than the "nuclear option," let's hope that jurors will mitigate the damage.

Judge Koh could have adopted a different test (set of criteria) for determining the article of manufacture. The Department of Justice is part of the executive branch of government; its positions are neither law (unless Congress likes and adopts its ideas) nor precedent.

Professor Sarah Burstein, who studied design and the law, wrote a very interesting paper last fall, published by the Harvard Journal of Law & Technology, about the "Article of Manufacture" question and proposed going back to the original definition, which excluded machines. No machine would mean "no smartphone."

Carl Cecere, an appellate attorney, authored an article for law.com. He, too, considers the adopted test a threat to patent holders and their competitors alike. Like Professor Burstein, Mr. Cecere is concerned about lay jurors having to make a determination without sufficient guidance.

Furthermore, I'd like to point to articles on law360.com and IPWatchdog.com.

But the San Jose jury will have to hand down a verdict under the chosen test. It's free to do pretty much anything. Unfortunately, it won't have as much help as it could have been given:

• With respect to the second AoM factor (relative prominence of design), the word "relative" would be given more meaning by highlighting other features and components not affected by the design. There's a whole lot of technology in those phones, and one would totally devalue it by finding that the entire device is the AoM for design patent damages purposes.

• As for the third factor (whether the design is conceptually distinct from the product as a whole), the Department of Justice had said that "[i]f the product contains other components that embody conceptually distinct innovations, it may be appropriate to conclude that a component is the relevant article." This is just an example of how much more specific the instructions to the jury could have been.

• Finally, a Samsung expert, Mr. Wagner, conducted a survey in order to show that design is only one of various factors influencing smartphone purchasing decisions. But the court did not allow him to employ that particular methodology.

Jury trials are unpredictable. Apart from how much the jury's thinking may be influenced by the "copying" allegations that Samsung can't fully counter because it's not allowed to present its independent pre-iPhone designs, a lot will depend on how much weight the jury will give to the fourth factor: whether one can purchase a separate component that embodies a design. In this regard, Samsung will be able to show some evidence such as replacement parts offered on Amazon.com.

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Huawei files 9th Circuit appeal against Samsung's antisuit injunction -- with the Federal Circuit

30 days after Samsung obtained an antisuit injunction against Huawei's enforcement of two standard-essential patent (SEP) injunctions granted by a Chinese court, Huawei filed an appeal and notified the United States District Court for the Northern District of California accordingly:

The above screenshot is from an automated notification email to those following the case, which is one of half a dozen cases on my N.D. Cal. watchlist. The text is the digital equivalent of a Freudian slip: it says "NOTICE OF APPEAL to the 9th Circuit Court of Appeals" (emphasis added)

Huawei's lawyers noticed this and, one hour and 15 minutes later, refiled the same document with a different description: "NOTICE OF APPEAL to the Federal Circuit"

Procedurally, this is an appeal to the Federal Circuit, based on the rule that any case involving at least one patent infringement claim must be appealed to the Federal Circuit, which, however, applies the law of the regional circuit in question if an issue is not about patent law in a strict sense (infringement, validity etc.). So in this case, the Federal Circuit will act as if it were the Ninth Circuit--or at least it will try to.

In my previous commentary on this antisuit injunction and the motion process leading to it I, just like Huawei's lawyers, mistakenly referred to how the Ninth Circuit would rule on it later, without stating more accurately that the Federal Circuit would have to wear the Ninth Circuit's hat.

The rule that the Federal Circuit rules on contract, copyright or whatever other law if a case involves at least one patent claim is applied very broadly. In Oracle v. Google, the patent infringement claims didn't get anywhere: Oracle didn't prevail on them at the first trial and focus exclusively on copyright (with tremendous success) thereafter. What the Federal Circuit applies equally broadly is the concept of ruling on non-patent legal questions under regional circuit rules. In fact, I'm aware of at least one case in which the Federal Circuit even applied a local rule, i.e., a procedural rule, in a similar context.

Huawei's notice clarifies that a motion asking Judge William H. Orrick to alter or amend the injunction decision remains pending with the district court regardless of this Ninth Circuit appeal to the Federal Circuit.

That motion focuses on two issues, and those are going to be the two pillars of Huawei's appeal:

• Huawei argues that the U.S. case wasn't actually the earlier-filed one (by just the calendar date, but still) relative to the Chinese actions. Huawei says the U.S. case became dispositive of the injunctive-relief question in the Chinese case only after Samsung brought its counterclaims. Judge Orrick was obviously aware of the procedural history when he made his decision last month.

• Judge Orrick has also disagreed with Huawei on its second appellate argument. It's about the Ninth Circuit's statement in a Microsoft v. Motorola opinion that the Gallo test for antisuit injunctions matters in this specific context, while Huawei says Samsung has to satisfy both the Supreme Court's Winter preliminary-injunction factors and the Gallo test for antisuit injunctions. Again, this is not new. It would be surprising if Judge Orrick changed mind on a legal question he's already resolved--and the Federal Circuit will, in this case, apply Ninth Circuit law, too, though Huawei will foreseeably urge it to do the opposite.

As Huawei's corrected filing shows, the "circuitry" of the procedures involved is tricky, but let's not lose sight on the overarching policy issue. The key policy issue is injunctive relief over standard-essential patents while the underlying contract and/or antitrust issues are being resolved. The Ninth Circuit has been very clear on this in Microsoft v. Motorola (even twice as it ruled on a preliminary injunction and, later, on a final judgment under which then-Google's Motorola was held to owe Microsoft damages). The Federal Circuit will decide Huawei v. Samsung in light of, and in deference to, Microsoft v. Motorola. As for the policy issue of SEP injunctions, the Federal Circuit largely agreed with Judge Posner in an Apple-Motorola case.

It would be extremely surprising if Judge Orrick altered his decision, given that he knew what he was doing when he took his first decision, and that he had heard and/or read the same arguments before. As for the Federal Circuit ruling on this case, Huawei would obviously prefer the Federal Circuit to make its own law, but here it will be an Acting Ninth Circuit. While anything can happen, Ninth Circuit precedent favors Samsung. Even if one agreed with the second pillar of Huawei's position, I can't see why even the traditional Winter preliminary-injunction wouldn't weigh in favor of the injunction that was granted.

As for political/diplomatic implications (also called "international comity"), it's actually a positive thing for Samsung in this case that it's not a U.S. company. In some other cases, such as Apple v. Samsung, it would benefit from it, but in this dispute with Huawei and in times of "trade war," it's a good thing that this is a dispute between foreign companies--and let's not forget that the Northern District of California was Huawei's venue choice when it brought its cross-jurisdictional complaints.

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Google is preparing to petition the Federal Circuit to revisit Oracle's Android-Java copyright victory

While I'm not going to reiterate my positions on copyrightability and "fair use" in connection with Oracle v. Google (I fully stand by what I've written before and which the Federal Circuit has vindicated, but don't see a point in repeating what I've been saying for so many years), it does sometimes surprise me that there is so little interest in the proceedings. The latest example is that I haven't seen any media coverage of the fact that Google is preparing a petition for a rehearing en banc (a full-court review) of Oracle's recent appellate victory (this post continues below the image):

The regular deadline would have been in late April. In early April, Google asked for more time: until May 29, 2018. Oracle didn't oppose, and the Federal Circuit granted the petition.

An expert I talked to last month doubted that the Federal Circuit would take much interest in a matter of Ninth Circuit law. The Federal Circuit doesn't usually hear copyright cases, and here, even the Federal Circuit would only be bound to what it said in its Oracle v. Google "fair use" decision the next time a copyright matter, because of some patent claims being involved, is appealed from a district court within the Ninth Circuit. The circuit judges are more interested in the evolution of patent law (and other fields that must be--and aren't just coincidentally--appealed to the Federal Circuit).

Last time around, when the key legal question was copyrightability, Google even skipped this step and went straight to the Supreme Court (in vain). The fact that it's trying an en banc petition this time doesn't necessarily mean it's much more hopeful about its chances. Google may simply consider it safer to exhaust its options at this stage before trying another petition for writ of certiorari (request for Supreme Court review). It's like telling the Supreme Court: "We really tried everything to avoid having to file a second cert petition in the same case, but unfortunately we have to."

While I believe the Federal Circuit got both copyrightability and "fair use" perfectly right (for the reasons I stated in years past, over and over), I'd love the Supreme Court to accept to look at the matter--and, ultimately, to affirm. As an app developer I believe that would be a positive thing for the industry at large, with a few exceptions that merely prove the rule. An en banc review by the Federal Circuit--no matter the outcome--wouldn't be useful at all.

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Apple and Samsung disagree on how to avoid jury confusion regarding the article of manufacture

We're just days away from yet another Apple v. Samsung trial in the Northern District of California. IT's a re-retrial over damages, following a trial, a retrial, Samsung's successful appeal to the Supreme Court and various other procedural steps on the way back to where we are. By the way, the dispute started more than seven years ago (mid-April 2011).

Judge Koh's final jury instructions will inform the jury of the relevant factors for the article-of-manufacture determination. If the jury determines the relevant AoM is an entire smartphone, Apple gets a huge damages award. If the jury concludes the casing/screen is more reasonable, then the amount will be less extreme amount, but still a chunk of money.

This is what Judge Koh's tentative final jury instructions would say about the relevant factors and how to consider them:

"The scope of the design claimed in Apple's patent, including the drawing and written description;

2. The relative prominence of the design within the product as a whole;

3. Whether the design is conceptually distinct from the product as a whole; and

4. The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.

In weighing these factors, your objective should be to identify the articles of manufacture that most fairly can be said to embody Samsung's appropriation of Apple's patented designs."

The jury will be free to attach to each of these factors whatever weight it deems reasonable. Based on what jurors told the media after multifactorial "weighting exercises," some juries spent a lot of time evaluating each factor and even more time thinking about how much weight each of them should have, while other juries focused on what they felt would be a reasonable result.

In a pretrial order, Judge Lucy Koh ordered the parties to "develop a joint proposed limiting instruction related to the use of the phrase 'article of manufacture' in the claim constructions and patents" and to "specify when they would like the limiting instruction to be given." Apple will not be allowed to tell the jury that the design patent claims-in-suit resolve the article-of-manufacture question because of a determination by a patent examiner who decided to issue a patent. But Apple will obviously seek to convince the jury to attach tremendous weight to the claims. The message from Apple's lawyers is going to be the next best thing to "the name of the game is the claim." Therefore, Samsung proposes--in response to Judge Koh's order--the following limiting instruction:

"Neither the Court nor the Patent and Trademark Office has determined the relevant articles of manufacture in this case. The words in the design patents and in the Court’s claim constructions do not determine the relevant articles of manufacture. That is a question for you to decide."

Apple's lawyers disagree, particularly on the second sentence:

"It is extremely prejudicial to Apple and improperly suggests to the jury that the words in the design patents and the Court's claim constructions are not relevant to identifying the articles of manufacture."

Samsung's first footnote stresses that its proposed instruction "does not say that the words in the patents and constructions are 'not relevant.' It says only that those words are not determinative." (emphasis in original)

Apple's objection makes clear that Apple is not just concerned about the jury potentially misinterpreting "determinative," but about the jury potentially giving less weight to the claim language than Apple would like.

"Determinative" is not part of everyday language, but it isn't too uncommon either. Reasonably educated people should figure out what it does mean and what it doesn't. Numerous other passages of the preliminary and final jury instructions contain words that jurors may misunderstand in similar ways as Apple fears.

The parties couldn't agree, so Judge Koh will have to decide. Technically, "not determinative" is simply accurate. In colloquial language, one could add a few words like "in their own right," though one could also argue that any additional words could create confusion, too.

Generally speaking, Judge Koh's proposed preliminary and final jury instructions combined don't really tell the jury much about how to make the article-of-manufacture determination. For an example, the amicus curiae brief filed by the Obama Administration with the Supreme Court contains additional helpful guidance that Judge Koh could, but apparently won't, provide to the jury.

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Through actions and words, Qualcomm recognizes deficiencies of patents asserted against iOS search

Today's Qualcomm v. Apple hearing in Munich (see my previous post on Apple and Intel's invalidation efforts and my tweet on the postponement of the hearing by 4.5 hours on short notice) started with a surprising move by Qualcomm: a withdrawal of several asserted claims. (Last month Qualcomm also withdrew several asserted claims from its first ITC complaint against Apple.)

Qualcomm's German lead counsel, Quinn Emanuel's Dr. Marcus Grosch, handed out the related motion to dismiss and explained that Qualcomm's intent was to narrow the (in)validity issues in the case, the obvious objective being to avoid a stay of the infringement case (or of the enforcement of a potential injunction) pending resolution of any Apple-Intel nullity actions or the opposition (to a recently-granted EPO patent) I blogged about earlier today.

The Munich I Regional Court has defined some local rules for patent infringement cases that are unique: as opposed to a single trial, an early first hearing is held. Usually it is so early that the parties have just filed, or announced an intent to file, their validity challenges in other fora (mostly the Federal Patent Court, sometimes the EPO, rarely with the German Patent and Trademark Office). Therefore, validity discussions are reserved for the second hearing, which is then--unless further court sessions turn out to be necessary--a trial followed by a ruling. But today's hearing was unusual in this regard. I had never before seen a first hearing in Munich at which validity would have been mentioned and alluded to. Not only did Qualcomm point to it as the rationale for its withdrawal of certain claims it believed to be jeopardized by a prior art reference from Korea but Judge Dr. Zigann also referred to validity in two contexts:

• When Apple's lead counsel in today's hearing, Freshfields Bruckhaus Deringer's Prince Wolrad of Waldeck and Pyrmont, said an identified vagueness of the patents-in-suit shouldn't disadvantage Apple, Judge Dr. Zigann alerted him to the fact that a breadth of scope running counter to Apple's interests in the infringement context may actually serve it very well on the invalidation front.

  As for vagueness: in a related context, Qualcomm's lead counsel acknowledge a "shortcoming of a definition" in the patent document. That kind of concession is rarely heard in court, but was inevitable in this context. The patent specification (not counting claims and figures) has only about 10 pages and indeed contains various unclear terms and expressions.

• Judge Dr. Zigann indicated that, after looking at the prior art references cited by Apple and Intel, a stay pending resolution of the parallel challenges to the validity of the patents-in-suit is quite a possibility. And toward the end, he told Qualcomm directly: "Your withdrawal of claims shows that you know you have to do something to avoid a stay."

It obviously wasn't possible for the court to form an immediate opinion on the impact of Qualcomm's surprise dismissal of some claims. Under procedural rules, Apple's counsel could have asked for more time to formally respond, but consented to the motion to dismiss those claims (while reserving the right to seek a partial reimbursement of litigation expenses) and, when asked whether Apple would dispute the remaining infringement allegations without requiring time for further thought, Prince of Waldeck jokingly said: "We can overcome any related inhibitions."

The infringement allegations that Qualcomm dropped related to speed dial (where you can assign a speed-dial number to a contact). What Qualcomm is still claiming is that Apple's iOS devices--formally it's going against Spotlight, but Qualcomm's counsel said that Siri, as incorporated into iOS 11, is also infringing--violate those patents by finding a name, based on entry of a number or letter, and offering different communication channels.

As a former anti-software-patent campaigner it always frustrates me when courts and parties, despite the exclusion of software patents under the European Patent Convention, discuss infringement theories relating to the "user experience" and user-interface software--which is what today's infringement analysis was essentially about.

Things could still change between now and the final ruling, which will come down after a trial scheduled for September 20, but the most likely scenario is that Qualcomm will prevail on infringement, yet the case will be stayed because the validity of the asserted patent claims is too doubtful. In that case, Apple's equitable and antitrust defenses may become moot anyway, which is why the court may never reach them.

I can relate to the court's skepticism of some of Apple's non-infringement theories--with one exception: Citing the Federal Court of Justice's Rangierkatze ("shunting trolley") decision, Judge Dr. Zigann argued that Qualcomm's patents are infringed even if an inefficient way in which some end users presumably organize their phone directory (having a separate entry per each contact number of messenger or email account of a contact) is a prerequisite for achieving the result covered by the asserted patent(s). The Shunting Trolley decision just says that even an uncommon way in which an apparatus is used (and this case here is about apparatus claims) can give rise to an infringement finding because the fact that an apparatus may be used differently in most cases does not serve as a defense to infringement. That's a logical and important principle, but for my taste, looking at it in technical and policy terms, it's highly problematic to deem a search patent infringed if a certain search result and presentation thereof (in this case, it's also about icons) is brought about by a user's way to organize a directory, not a result of automation.

I don't read Shunting Trolley as saying that manual steps can simply substitute for automation when a patent is all about an apparatus that automates a process. If a user operates a device in an unusual way, that's one thing; but letting the user do the job that technology is supposed to do is irreconcilable with the concept of automation. An essential step--for example, the key inventive step of a patent--must not be performed manually. If one thinks it through, it would mean that a patent on a machinery cutting paper in certain ways would be deemed infringed by a less advanced machine, or even a simple knife, if the effect can be achieved by folding the paper accordingly before cutting along a certain line. Or, getting back to search, any search patent would then be infringed by any mobile device if a user could bring up Google and produce a certain type of result (I'm not sure whether that could be said for today's patents-in-suit, but it's possible, given that Google, when accessed from mobile devices, provides an icon for calling a phone number).

Apple's counsel argued that the patent claims say the device must be "configured to" present certain types of search results (and only those results) in a certain format, thus Apple's non-infringement theory isn't foreclosed by Shunting Trolley.

They have more qualified people than me to devise their strategy, but if anybody asked me how to state the issues for an appeals court after an infringement finding based on Shunting Trolley in this particular case, I would argue

1. that an essential step, especially the primary inventive step, of a technology patent must be performed automatically, not manually, also including manual preparation that, in connection with the claimed technology, brings about a certain result, and that such an automation requirement is distinct from the Shunting Trolley concept that even rare forms of use can infringe;

2. that, at a minimum, the proposed rule must apply to automated steps that an apparatus claim requires a device to be "configured to" perform (as opposed to broader terms than "configured to," such as the mere potential capability of achieving a result); and

3. that the patent claims at issue involve a search filter --i.e., "only" (the word appears in the asserted claims) certain results (and not others) should be shown --, and if filtering is essential to the inventive step, then the mere fact that the narrower set of results found in a patent claim is a true subset of the totality of results listed by the search technology does not constitute an infringement unless there is evidence that the related filter is actually applied in the process of identifying the results (this is then about the inner workings of the search technology, not just about what comes out at the end).

Judge Dr. Zigann noted that the Federal Court of Justice is patentee-friendly. Others say so, too, and it's plausible. It may very well be that today's United States Court of Appeals for the Federal Circuit is more balanced than the Federal Court of Justice of Germany. But there are serious issues when a patent involves search filters and is all about automation, yet an infringement is identified where a claimed filter doesn't appear to be in play and a result depends on users organizing their data in a way that comes down to them doing the index-building or iteration that a database or search engine should perform.

Obviously, if an infringing product utilized a patented filter and additionally collected search results in other ways, such as by combining the results of multiple filters or by adding results from an unfiltered search to the results of a filtered search, then using the filter means that the related claim limitation is practiced in the process, even though the result doesn't suggest it because the result of filtering gets mixed with other results. But if no filtering ever occurs, the limitation just isn't practiced.

While Shunting Trolley says that even the "coincidental" achievement of a result can constitute an infringement, the performance of an essential function by a user as a substitute to an automatic function is no longer "coincidental." If a user organizes data in such a way that filtering happens, then the user performs a key part of what the patented invention is meant to do. The Shunting Trolley logic, the way I read it, is that even if coincidental circumstances trigger a patented process (in that case, a mechanical one), the fact that the patented process may occur under such circumstances constitutes an infringement. The concept of a filter ("only") and the notion of coincidence just don't mix in my view. A filter requires an iteration or an index; coincidence doesn't perform the task of filtering even if the result may look in some cases like what a filter would have delivered. Just think of physical filters and it's clear a physical filter isn't infringed because someone enters something pre-filtered at the top.

All of this may never play a role if the patents-in-suit go down the tubes of invalidation. However, there are four patents-in-suit, asserted against different Apple entities in two different lawsuits per patent (one suit per patent targeting Apple Inc., the other one two European Apple companies), and while Apple and Intel may have pretty good chances of defeating all four patents, there is that remaining risk of maybe one claim from one patent surviving--and then an infringement finding would hurt.

The next Qualcomm v. Apple hearing in Munich will be held in two weeks. I don't know yet what the patent-in-suit in that case, or group of cases, is about.

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Apple and Intel jointly seeking invalidation of Qualcomm patent asserted against iOS Spotlight search

In the previous post I mentioned today's Qualcomm v. Apple hearing (Munich I Regional Court). Just before going to the courthouse I checked on the EPO register and found something interesting: one of the four patents-in-suit was just granted last year, and a result, it was still possible for Apple and Intel to file a timely notice of opposition with the European Patent Office:

Apple filed its notice of opposition on March 2, 2018; Intel followed three days later, raising the same substantive issues. Both Apple and Intel are represented by Samson &Partner. On Qualcomm's behalf, Quinn Emanuel's Dr. Marcus Grosch is trying to defend the patent against those requests for revocation.

The other three patents-in-suit are from the same family. But they were granted before, making nullity actions in the Federal Patent Court the only option for invalidation. It would be extremely surprising if Apple hadn't filed nullity complaints, and if Apple and Intel are brothers-in-arms in the EPO, that is likely also the case in the Federal Patent Court. I'm tempted to file a request with the Federal Patent Court for access to the case files, as I did in other cases (including one in which I had to overcome Samsung's opposition to my petition).

At a February hearing in another Munich Qualcomm v. Apple case, it was mentioned that some additional infringement claims had been added in the form of an amended complaint. One of the public attachments to Apple and Intel's opposition filings is an excerpt (the first two pages and the last page) from the related amendment, and indeed, the case number is that of one of the two cases heard in February.

Dr. Grosch mentioned the word "spotlights" at the Febraury hearing. At first I thought this was going to be about photo editing, given that Qualcomm is asserting a related patent in a U.S. case. However, having looked at the patents-in-suit and also the opposition filing with the EPO, a connection with digital imaging can be ruled out. I asked a member of my app development team, who then told me that Spotlight is known to him as a search feature (for local documents) on the Mac. The Wikipedia article I just linked to explains that the same technology was added to iOS at some point. The scope of the patents-in-suit is more about mobile than desktops. Maybe Qualcomm is also going after macOS, but there can be no doubt that mobile devices (iPhone, maybe also iPad) are being accused. The opposition filing cites prior art that is all about personal digital assistants and other mobile communications devices.

If I understood this correctly from what I read on the Internet, a typical Spotlight feature that iPhone users would know is the completion of a phone number: you start typing, and if you've previously dialed a number starting with the same digits, it's offered as an autocomplete option. Those Qualcomm patents aren't exactly search patents, but they relate to the combination of some user interface where different options are presented and the selection of and switching between communications channels.

The claims appear extremely broad to me--like the worst Nokia patents-in-suit I've seen, but those Nokia patents at least tended to be much older.

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