FOSS Patents

Samsung loses second German 3G patent lawsuit against Apple

2012-01-27T09:28:00.000+01:00

One week after dismissing Samsung's first German patent infringement lawsuit against Apple, the Mannheim Regional Court also rejected Samsung's second complaint.

Either complaint related to the 3G/UMTS wireless telecommunications standard.

I attended the pronouncement of the ruling (at 9 AM local time). Judge Andreas Voss did not state any particular reasons for the decision. As I explained in the post linked to above, different reasons are conceivable. The outcome of Samsung's first two German actions against Apple may be based on reasons specific to the validity and/or infringement of those patents, in which case Samsung could still prevail over any or all of three other 3G/UMTS patents it is asserting against Apple in Mannheim. Samsung is furthermore suing Apple over two non-standards-related patents, including a patent on a method to enter smileys on a mobile device.

At the mid-November hearings. it looked like Samsung was reasonably likely to prevail on at least one of the two patents. The case that was adjudicated today looked more promising to Samsung than the one dismissed last week.

For Samsung, this outcome must be disappointing. But the Korean electronics giant is known for its fighting spirit and unlikely to back down. It remains to be seen whether Samsung will appeal any of these rulings to the Karlsruhe Higher Regional Court. Presumably, Samsung will have to analyze the reasoning behind this decision in order to decide on a possible appeal.

Apple's and Samsung's claims against each other continue to have a very high drop-out rate in different jurisdictions. Since both companies are doing very well (with Apple being not just highly but even unbelievably profitable), they can afford to keep going, and at this point neither litigant has the leverage to force its rival into a settlement.

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+.

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Judge ups the ante for Oracle with respect to two patents asserted against Google

2012-01-26T09:06:00.000+01:00

Against Google's objections, Judge William Alsup of the United States District Court for the Northern District of California gave Oracle a third chance to present a damages report, and Oracle accepted his proposal, which may (unless any new obstacles come up) pave the way for a mid-April trial date. The judge has meanwhile acknowledged Oracle's willingness to bear the costs associated with this incremental effort.

But he also had bad news for Oracle with respect to two of the six patents Oracle is asserting at this stage of the litigation (out of the original seven), in the form of a non-final supplemental claim construction order. It's non-final in the sense that the court reserves the right to modify it if any evidence shows up closer to trial that warrants second thoughts. "Counsel, however, may not ask for modification", writes the judge, knowing that Oracle would otherwise keep fighting for more favorable interpretations of one key term for each of the two patents the order relates to.

These are the two new claim constructions:

U.S. Patent No. 6,192,476 relates to a dynamic security method for determining access privileges. Oracle and Google couldn't agree on the meaning of the term "computer-readable medium" in the context of this patent. They had disagreements over that term and closely-related terms in connection with six patents, but since the interpretation of a phrase depends on the specifics of a given patent, the judge determined that "individualized attention to the intrinsic evidence of each patent" would be needed. Yesterday's order interprets the term only with respect to the '476 patent.
Google has, for the time being, succeeded in persuading the judge that the term should be interpreted broadly so as to include signals over physical and wireless networks. If a defendant in a patent case advocates a broad claim construction, the agenda is, as it is in this case, invalidation: for a broad patent it's easier to find prior art, or to argue obviousness over prior art. Oracle, by contrast, wanted the term to be construed as "a storage device for use by a computer".
It's now going to be quite difficult for Oracle to convince the jury that the '476 patent should be presumed valid. As I stated in my recent update on the ongoing reexaminations, the USPTO has issued a "final" (though still appealable) Office action declaring the only asserted claim (claim 14) invalid. The jury will be informed of that (appealable) decision. And if Judge Alsup adheres to the claim construction he ordered yesterday, the jury will be even more inclined to hold the patent invalid.
U.S. Patent No. 6,910,205 relates to increasing
execution speed by replacing bytecode with instructions to access faster native code. With respect to this one, Google's strategy is to argue that it doesn't infringe, so it seeks a narrow interpretation. And it succeeded on this one, too: Judge Alsup agreed that "at runtime" must be confined to the execution of the virtual machine instructions, while Oracle wanted any execution of the virtual machine (including initialization) to be covered. The judge adopted a construction that is materially consistent with Google's proposal except for a difference that appears to be merely editorial.
The '205 patent, like most of Oracle's patents-in-suit, is also under major reexamination pressure. A first Office action by the USPTO held the asserted claims invalid. A final (though appealable) Office action might still come down in time for the trial.

Last year the judge had already construed five terms from some of the patents-in-suit. At that time, Oracle won by 4-1. I discussed the first claim construction order in September when I looked at the state of Google's affirmative defenses at the time. On the second one, it's 2-0 for Google. That's 4-3 in total, with a number of additional constructions to be decided on. And again, yesterday's order need not be the final outcome, so a 2-0 victory for Google could, for example, still become a 1-1 draw.

When it comes to claim construction, defendants mostly try to narrow the scope of patents so as to avoid a finding of infringement. In the cases I watch, that's what they try about 4 out of 5 times, while they seek to broaden a claim only about 20% of the time. When a defendant seeks a narrow construction, it's sometimes a "Plan B" to argue that if his proposed narrow interpretation was rejected, the plaintiff's broader interpretation would raise validity issues.

But Google's defense against Oracle is different. Google has clearly placed more emphasis on invalidation than any other defendant in a comparable case that I've seen so far. And based on where things stand today, Google has made remarkable if not phenomenal headway with this part of its defense. Of course, fortunes can change and it's possible that at a later stage Oracle will resurrect some of its patent claims, but BPAI (Board of Patent Appeals and Interferences) appeals, followed by potential CAFC (Court of Appeals for the Federal Circuit) appeals, take time, and Oracle needs and wants -- and is now very likely to get -- a near-term trial.

Oracle knows that it's not going to be easy to prevail on its patent infringement claims. That's why its near-term hopes are mostly based on its copyright infringement allegations. However, the judge rejected Oracle's proposal to put the patent infringement claims on the back burner. He wants the case as a whole resolved swiftly and efficiently. Oracle is now, presumably, scrambling to put together a new damages report in order to stay on schedule.

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Samsung allowed to show Apple-Qualcomm contracts, letters and limited source code to foreign courts

2012-01-25T20:00:00.003+01:00

About two weeks ago, Samsung petitioned the United States District Court for the Southern District of Calfornia to grant access to certain contracts and correspondence between Apple and Qualcomm in order to show those documents to foreign courts. You can find further detail on this request and its potential significance in the blog post I just linked to.

For an update, the court yesterday granted Samsung's motion. Before the court decision became known, a Samsung official stressed, in a conversation with the Korea Times, the importance of this discovery request.

On January 20, 2012, Samsung had amended the motion, and its proposed order, which the court ultimately signed, stated that Apple didn't oppose the motion.

The amended motion included, in addition to a request for certain business documents, a request for "a specific portion of the source code related to ETSI 3GPP Technical Specification (section 9.2.2.5 and 9.2.2.8 of TS 25.322 V6.9.0) and used in Qualcomm's chipsets that were incorporated into the iPhone 4S", claiming that "[t]his source code is critical for Samsung to prove its infringement claim against Apple in the Apple/Samsung Litigation". Patent exhaustion can indeed depend on technical details.

The court order notes that Qualcomm could still bring a motion to quash this discovery request. It didn't do so in connection with Apple's request for access to the Qualcomm-Samsung patent cross-licensing agreement, but Samsung's request is different in some ways, so it can't be ruled out that Qualcomm might oppose this discovery order in whole or in part. The court believes that there are no signs of this being a "fishing expedition" or "intended to be a vehicle for harassment". Otherwise, I believe, Apple would have raised an objection.

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Google authorized Motorola to seek an injunction against the iPhone 4S and iCloud

2012-01-25T18:24:00.001+01:00

These days, you can probably hear a pin drop if Apple and Google are in the same room. Tensions are rising high as a direct legal clash increasingly appears to be inevitable. The latest hostility is a new lawsuit filed yesterday by Motorola Mobility, with green light from Google, in the Southern District of Florida, seeking an injunction against the iPhone 4S and the iCloud over a package of six patents previously asserted against older Apple products in the same court.

Google must have authorized this action because this complaint formally represents a new lawsuit (since it was too late to inject supplemental infringement contentions into the first Florida action) and Section 5.01(j) of the Google-Motorola merger agreement does not allow MMI to "assert any Intellectual Property Right in any new Action" without Google's consent (either under the agreement or in a separate document, which is what presumably happened in this case).

All six Motorola patents-in-suit are asserted against the iPhone 4S. All but two (the '987 and the '737 patents) are also asserted against the iCloud.

Here's a list of the patents:

U.S. Patent No. 5,710,987 on a "receiver having concealed external antenna"
U.S. Patent No. 5,754,119 on a "multiple pager status synchronization system and method"; Motorola is asserting the European equivalent of this patent against Apple in Mannheim, with a decision (that will likely be favorable for Motorola) scheduled for Friday of next week (February 3, 2012)
U.S. Patent No. 5,958,006 on a "method and apparatus for communicating summarized data"
U.S. Patent No. 6,101,531 on a "system for communicating user-selected criteria filter prepared at wireless client to communication server for filtering data transferred from host to said wireless client"
U.S. Patent No. 6,008,737 on an "apparatus for controlling utilization of software added to a portable communication device"
U.S. Patent No. 6,377,161 on a "method and apparatus in a wireless messaging system for facilitating an exchange of address information"

As I mentioned before, Motorola would have preferred to add the iPhone 4S and the iCloud to the list of technologies accused in an action that started in late 2010. However, that litigation is already far along, with a trial scheduled for this summer, and the judge rejected Motorola's supplemental infringement contentions as untimely but said that MMI would be free to accuse those technologies in a separate lawsuit.

It's unclear at this stage how long it will take for this second Florida lawsuit to go to trial. The Southern District of Florida moves relatively fast. The fact pattern will be largely consistent with that of the first Florida action, but there will be some differences. Also, with reexaminations of some of the patents-in-suit ongoing, there could be new information from the patent office that might affect the outcome. But the court will be able to recycle some of the work it did for the first action, such as on claim construction (unless any new evidence relevant to claim construction is presented in the course of this new litigation).

Since the product release cycles of tech companies are much shorter than the average time to trial of U.S. patent infringement lawsuits or ITC complaints, it's the normal course of business that companies look for ways to use previously-asserted patents against new products.

Another example is that Apple, at a recent Mannheim hearing, presented supplemental infringement contentions relating to the Samsung Galaxy Nexus smartphone, the official lead device for Android 4.0 (aka Ice Cream Sandwich). Today I saw that the Korea Herald quotes an unnamed Samsung spokesperson as saying that the Nexus was not on the list of accused products. In this case, I am absolutely convinced that I am right and the Korea Herald's source doesn't have up-to-date information. I attended the hearing and Apple's lead counsel in that action, Dr. Frank-Erich Hufnagel of Freshfields Bruckhaus Deringer, presented contentions and said that they are "new" and relate to "the Nexus" (he mentioned the same at least twice). In an Apple v. Samsung infringement lawsuit, what would "the Nexus" mean, if we talk about "new" contentions, if not the Samsung Galaxy Nexus? Certainly not an HTC phone. Samsung is a large organization and Apple's new contentions may not yet have been received and processed accordingly, but just to be clear, I don't make these things up. There were various other spectators at the hearing, not just me.

Getting back to this new Motorola lawsuit, it's certainly not the same kind of aggressive escalation as a lawsuit over a new set of patents would have been, but this shows that Motorola continues to fight hard.

The fact that Google signs off on an additional lawsuit at this stage -- as opposed to waiting for its purchase of MMI to close -- also says something. Two days ago I blogged about the possibility of Google ratcheting up patent enforcement after the closing of its proposed acquisition of Motorola Mobility.

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Apple appeals ITC decision on complaint against HTC to Federal Circuit, seeks to expand import ban

2012-01-25T14:26:00.000+01:00

On December 19, 2011, the ITC handed down its lenient final ruling on Apple's first complaint against HTC, holding the Taiwanese company's Android devices to infringe only one of Apple's asserted patents and providing for generous transitional periods during which HTC can still ship infringing devices. Apple wouldn't be Apple if it contented itself with an outcome that represents significant progress but is clearly suboptimal, especially since it falls short of the initial determination made by an Administrative Law Judge.

The ITC is a quasi-judicial government agency. Its decisions can be appealed to the Court of Appeals for the Federal Circuit (CAFC), and that's what Apple has done, as reflected by the following header of a court order:

In fact, Apple lodged this appeal back on December 29, 2011, but it's not always easy to find out about CAFC proceedings. I just ran a few searches on Google News and couldn't find any previous report on this appeal. Today I became aware of it because Apple mentioned this appeal yesterday in a filing with the United States District Court for the Northern District of Illinois. In that court, Apple is asserting the '263 "realtime API" patent (for more information on its significance, let me refer you to the infringement claim chart and a blog post on Apple's claim that Android chief Andy Rubin got the inspiration for Android while working at Apple, where his then-bosses made this particular invention) against Motorola. Apple told the Chicago-based court that an Administrative Law Judge agreed with Apple's construction of the term "realtime application programming interface" (and, as a result, held HTC to infringe it) but the Commission, the six-member decision-making body at the top of the ITC, "reversed the ALJ's construction". Motorola argued that the Commission decision should be taken into account by the district court, but Apple states that "[t]he Commission's decision is on appeal to the Federal Circuit and has no preclusive effect in this [District] Court".

Therefore, it's clear that Apple's appeal of the ITC ruling at least aims to broaden the scope of the import ban by including the '263 patent. If Apple succeeded, this would greatly increase the business impact of the import ban.

Apple's appellate brief isn't publicly available yet. Therefore, it's not known whether Apple appeals any other parts of the ITC ruling beyond the finding of no violation with respect to the '263 "realtime API" patent. It is, howver, rather likely that Apple's appeal also relates to one or more of the following issues:

Apple's contingent petition for review asked the ITC, for the event that it decided (as it did) to review the initial determination, to find HTC in infringement of two other patents:
- U.S. Patent No. 5,481,721 on a "method for providing automatic and dynamic translation of object oriented programming language-based message passing into operation system message passing using proxy objects"
- U.S. Patent No. 6,275,983 on an "object-oriented operating system"
The Commission looked into issues concerning those two patents, but deemed the '721 patent invalid and not infringed, and concluded that the '983 patent was neither infringed nor practiced by Apple according to the ITC's claim construction (and under Apple's own claim construction, the Commission said the patent would still not be infringed, but it would be invalid).
Apple may hope that the CAFC will let it prevail on one or both of those patents as well.
Every import ban proposed by the ITC is subject to a Presidential Review, which takes 60 days, but the ITC gave HTC two extra months to modify its products so as to steer clear of infringement. This means that the formal ban only takes effect in April 2012, more than two years after Apple's original complaint.
As I noted, the fact that HTC immediately announced a workaround (which simply came down to removing the feature) and downplayed the importance of the related feature suggests that the ITC ruling was exceedingly lenient. Apple may be appealing that question as well. Even though this appeal won't be resolved in time to shorten that transitional period, Apple might have a strategic interest in this issue with a view to its other ITC complaints that are still being investigated or that it may bring in the future.
The ITC furthermore decided not to issue a cease-and-desist order. The purpose of a cease-and-desist is to stop companies from selling infringing devices that they imported before the ban took effect. Without a cease-and-desist, companies can import huge quantities of products shortly before the import ban and thereby delay the business impact of an ITC ruling. This, again, will be too late for HTC's devices, but could be a strategic issue with a view to Apple's continuing enforcement of intellectual property rights.

Whatever the scope of Apple's appeal against the ITC may be, I believe Apple has realistic chances of winning a better outcome, but this will take time before the CAFC hands down its decision on this appeal.

Some of the other recent and upcoming smartphone-related ITC decisions may also be appealed. The drop-out rate of patents asserted in ITC complaints is astoundingly high, and I wouldn't be surprised if the Federal Circuit found that the ITC erred in favor of respondents in a few cases.

Apple is no stranger to the Federal Circuit. Also in December, Apple filed an appeal against the denial of a preliminary injunction against Samsung by the United States District Court for the Northern District of California. Appeals against decisions on preliminary injunction motions are usually adjudicated more swiftly than those against ITC rulings.

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Overview of Microsoft's and Motorola's petitions for review of preliminary ITC ruling

2012-01-25T12:21:00.000+01:00

Both Microsoft and Motorola have asked the ITC to review an initial determination (made in December 2011) that held MMI to infringe one of Microsoft's seven patents asserted at that stage of the investigation:

I discussed Microsoft's petition in a recent post. Microsoft would like the ITC to take a closer look at what it describes as "Motorola's wide-scale infringement of Microsoft patents", hoping to prevail on up to five additional patents. By not requesting a review of the initial determination with respect to the '910 patent, Microsoft has effectively dropped that patent from the investigation (but can stil assert it elsewhere).
Meanwhile, a public redacted version of Motorola's petition for review has also become available. Motorola would like the Commission, the six-member decision-making body at the top of the ITC, to reverse the finding of a violation. MMI does not challenge the finding of an infringement of the '566 patent (according to the initial determination, it never defended itself against the infringement contentions) but it claims that the patent is invalid and that there isn't a domestic industry for it.
Additionally, Motorola made contingent requests, bringing invalidity contentions with respect to each patent and asking the ITC to take those into account in each case in which a finding of no violation will be reviewed.

I have put together a table that shows the different findings (validity, infringement, domestic industry) of the initial determination for each patent and states, in brackets, the stock ticker symbol of the party that requested a review relating to any given finding:

Patent	Deemed Valid	Deemed Infringed	Domestic Industry
'566	Yes [MMI]	Yes	Yes [MMI]
'054	Yes [MMI]	No [MSFT]	No [MSFT]
'352	No [both]	No [MSFT]	No [MSFT]
'133	Yes [MMI]	No [MSFT]	Yes
'910	No [MMI]	No	Yes
'376	Yes [MMI]	No [MSFT]	No [MSFT]
'762	Yes [MMI]	No [MSFT]	No [MSFT]

In most of the cases in which there is a petition, Microsoft asks for a No to be turned into a Yes, and Motorola for a Yes to be turned into a No. There are, however, two special cases:

With respect to the '352 patent, Microsoft asks for a review and Motorola made a contingent petition to make an additional infringement contention succeed. It only takes one reason for the patent to be invalid, but Motorola wants to increase its chances of the patent still being held invalid even if the basis on which the initial determination deemed the patent invalid was overturned.
Motorola did the same with respect to the '910 patent. However, since Microsoft dropped the '910 patent by not asking for a review of any issues concerning that patent, Motorola's contingent petition relating to the validity of that patent is moot.

The Commission will soon decide on a review of the initial determination. It could also decide to adopt the initial determination as the final decision, but in light of what I've seen in other recent investigations and the many issues that both parties have raised, it's far more likely that a review will take place.

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Oracle accepts judge's proposal, will submit new damages report -- mid-April trial still possible

2012-01-24T21:43:00.001+01:00

On Friday (January 20, 2012), I reported on Judge William Alsup's proposed course of action in the Oracle v. Google litigation and offered the following prediction:

My guess is that Oracle will accept this offer because other than costs, which are going to be sizable in absolute numbers but small compared to what's at stake, there's no colorable drawback that Judge Alsup's proposal has over Oracle's own proposals.

Today Oracle has indeed accepted the deal. By doing so, Oracle has once again demonstrated that damages are not its number one priority. Otherwise Oracle would have had to keep fighting for its previous damages claims. Instead, Oracle puts its money where its mouth is and agrees to pick up the costs arising from the presentation of a third damages report. I explained the "deal terms" in the aforementioned blog post, so I don't have to go into detail again here.

Oracle had urged the court to take this case to trial at the earliest opportunity. It stressed Android's commercial success and the threat it poses to Java. Oracle even offered to put its patent infringement claims on the back burner in exchange for a near-term copyright trial. The judge rejected that proposal but the deal he offered, and which Oracle accepted, is a win for Oracle. It's clearly Oracle's best shot at a swift resolution of this matter, and it doesn't even have to indefinitely postpone the resolution of its patent infringement claims.

Theoretically, Oracle's third damages report could still arrive at a similar number as the second one ($2.7 billion, slightly up from the original $2.6 billion claim). The most important difference between the third damages report and the previous ones will be a fine-grained apportionment of damages to the different intellectual property rights (even down to the level of different claims of the same patent) at issue.

But even if Oracle's third damages report arrived at a lower amount, any such reduction would be much less important than the prospect of a near-term trial. Also, the relevance of the parties' own damages calculations is rather limited if the jury mostly relies on the opinion of a court-appointed independent expert.

For now I wouldn't book a flight to San Francisco in mid-April for this trial. There is still a considerable risk of further delay. In particular, Google might try to slow-roll the process since the judge indicated that the trial would have to be postponed to the last four months of the year if mid-April doesn't work out. But Oracle has demonstrated its willingness to do its part. One doesn't have to agree with Oracle on all of the issues (I agree with them on some and disagree on others) to recognize that its words and its actions are consistent.

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Dutch appeals court says Galaxy Tab 10.1 doesn't infringe Apple's design right

2012-01-24T13:18:00.003+01:00

Apple's enforcement of design-related rights against Samsung's Galaxy Tab range of tablet computers has suffered yet another setback, with the Gerechthof 's-Gravenhage (an appeals court in The Hague, Netherlands) ruling against Apple's appeal of a lower court's decision back in August 2011 that denied Apple a preliminary injunction against the Galaxy Tab 10.1 in the Netherlands. (Back then, Apple won a preliminary injunction in the Netherlands based on a photo gallery scrolling patent, but its claims related to the Galaxy Tab 10.1 were thrown out. Today's ruling addresses only the design part.)

Today's decision is available on the Internet (in Dutch).

As I'll explain below, the rationale underlying this decision is very similar to the approach taken by Judge Lucy Koh of the United States District Court for the Northern District of California, who denied Apple a preliminary injunction for (among other things) an iPad-related design patent that is the U.S. equivalent of the Community design asserted in Europe. Apple is appealing Judge Koh's decision.

The Dutch appeals ruling comes down one week before a ruling by the Düsseldorf Higher Regional Court, a German appeals court that might lift a preliminary injunction granted to Apple by a lower court in the same city in early August 2011. Furthermore, the Düsseldorf Regional Court will rule in early February on an Apple motion for a preliminary injunction against the Galaxy Tab 10.1N, a product version with a modified, potentially non-infringing design.

Last week, Apple filed two new design lawsuits targeting a total of 15 Samsung products in Germany. As I explained then, the two companies need the courts in various jurisdictions to clarify where Apple's exclusive scope of protection ends and Samsung's freedom to compete begins. There's no mathematical formula based on which they could simply agree that Samsung's products are allowed to have a degree of similarity of up to (for example) 70%. Instead, they need guidance from judges.

These are the key findings underlying today's Dutch decision:

Apple's asserted design-related right, Community design 000181607-0001, was not held invalid since none of the prior art presented by Samsung features all of the key characteristics of Apple's design.
However, the existence of at least two pieces of prior art for each of the asserted key design elements led the Dutch appeals court to determine that the valid scope of Apple's asserted design-related right is narrow. Based on that narrowed scope, the asserted right was not deemed infringed.
By contrast, the Düsseldorf Regional Court had described, at a hearing and in its detailed written decision, the scope of protection as "medium-range or broad". The Dutch decision had to address the finding of the Düsseldorf court due to EU rules. Courts in one EU member state can reach different conclusions than those in another on the same matter of EU law, but they must at least explain why they beg to differ. Here, the Dutch appeals court says that it took into account some additional prior art that was not considered by the Düsseldorf court. In my opinion, the Düsseldorf Regional Court had actually failed entirely to narrow the scope of the asserted design right based on existing prior art.
In the United States, Judge Koh also narrowed the scope of Apple's design rights based on prior art. Like her Dutch colleagues, she also concluded that the asserted design right was not necessarily invalid but narrowed its scope in light of prior art.
In the Dutch appeals proceeding, Apple also sought a preliminary injunction against the Galaxy Tab 10.1V, an older and thicker version of the tablet. It appears that the 10.1V is no longer marketed. The Dutch appeals court didn't find that Apple satisfied the sense-of-urgency requirement, without which there is no basis for a preliminary injunction.

The Dutch decision took into consideration the following pieces of prior art:

U.S. Patent Application No. 2004/0041504 A1 ("Ozolins")
the Knight Ridder tablet
the HP Compaq TC1000
Canadian Design Patent 89,155
Japanese design no. 887 388
Japanese design no. 1142127

The Dutch ruling notes that only two of those pieces of prior art were considered by the Düsseldorf Regional Court (the HP Compaq TC1000 and the Knight Ridder tablet). Next week we will know whether the Düsseldorf Higher Regional Court takes any additional pieces of prior art into consideration.

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Will Google break or save the Internet?

2012-01-23T17:51:00.007+01:00

Balancing intellectual property enforcement with the objective of uninterrupted availability of the Internet -- in other words, drawing the line between freedom and anarchy, or lawlessness and openness -- is one of the most important regulatory challenges of our times. That's why the proposed Stop Online Piracy Act (SOPA) is such a hot topic. Even though Google's anti-SOPA call to action, entitled "Don't censor the web", is somewhat alarmist, I'm sympathetic to the concerns of the "Stop SOPA" movement.

But there is another threat to the Internet from an unreasonable form of IP enforcement that I wanted to discuss. I'm talking about the disruptive impact of injunctions based on standards-essential patents. Everyone knows that the Internet runs on standards. Google, the outspoken critic of SOPA, has been conspicuously silent on that issue. Worse than that, through its proposed $12.5 billion acquisition of Motorola Mobility, Google will gain the means to break the Internet: the deal includes patents on key Internet standards such as IEEE 802.11 (the leading WiFi, or WLAN, standard) and AVC/H.264 (the format in which, according to data reported by GigaOM, four out of five videos are encoded).

The holders of standard-essential patents are entitled to reasonable compensation (unless they elect to contribute to royalty-free standards). The issue facing the information and community technology industry and, more generally, the Internet is that some companies try to use such patents as strategic weapons in various jurisdictions. In order to do so, they seek not only fair compensation but injunctive relief: court orders banning products or requiring that certain services be discontinued.

In the following sections, I'll discuss Motorola Mobility's well-documented track record of seeking injunctions based on allegedly standards-essential patents, the ways in which Google's envisioned acquisition of MMI will exacerbate this problem, and widespread concern in the industry over such injunctions, which contrasts with Google's aforementioned silence.

I am writing this post on the eve of a series of hearings that will take place at the Mannheim Regional Court tomorrow, further to complaints brought by MMI against Microsoft in Germany. I am going to report on those hearings tomorrow.

Motorola Mobility is seeking injunctions based on standards-related patents in the US and the EU

While Samsung's assertions of FRAND-pledged standards-essential patents against Apple have already triggered a preliminary investigation by the European Commission and received a lot of attention, Motorola Mobility's enforcement of FRAND-pledges patents almost gone unnoticed even though it is similarly aggressive.

Both Apple and Microsoft brought lawsuits against Motorola in the United States alleging a breach of FRAND licensing commitments in response to MMI's assertions of standards-related patents. Those two companies are also being sued by Motorola over such patents in Europe.

The first one of the current wave of smartphone patent lawsuits to be adjudicated anywhere in the world (not counting preliminary injunction decisions involving Apple and Samsung) was a lawsuit Motorola started against Apple in Germany over a FRAND patent. Motorola's German counsel devised a clever legal strategy for arguing in favor of injunctive relief despite Apple's willingness to take a FRAND license and pay FRAND-based damages for any past infringement. As smart and successful as that strategy may have been, injunctions based on allegedly standards-essential patents raise serious issues.

Germany may not be the only EU member state in which this is happening. Earlier this month, a lawsuit filed by Microsoft against Motorola in London became known. This could be a response to lawsuits started (or threatened) by Motorola in the same jurisdiction.

In a January 3, 2012 brief filed with the United States District Court for the Western District of Washington (opposing a Microsoft motion for partial summary judgment concerning standards-essential patents and injunctive relief), Motorola said that it's not aware of "any legal authority that stands for the proposition that RAND assurances preclude a patentee from obtaining an injunction". Instead, Motorola advocates that standards-related licensing obligations be considered alongside a variety of other factors, and one of the circumstances Motorola believes may justify injunctions based on standards-essential patents is "the fact that an infringer competes with the patentee". MMI elaborates on that idea and expresses the following view:

"[...] Microsoft and Motorola are competitors, and H.264-related technology is relevant to their competition. As such, denying Motorola its fundamental 'right to exclude' Microsoft from infringing Motorola's patents would cause irreparable harm [that cannot be compensated with monetary damages]."

The above passage essentially says that it's fair game to use an essential Internet standard such as H.264 as a strategic nuclear weapon -- no matter what collateral damage the Internet at large may suffer. In my view, it would be inconsistent for Google to oppose SOPA but engage in this kind of conduct, with all of the potentially harmful consequences it can have.

Shutting down H.264 videos on popular websites or disrupting WLAN access to the Internet, which is very key in many places (especially, but not only, for performance reasons), would have dramatic effects on the user experience of millions, if not billions, of Internet users. Imagine what would happen if other holders of standards-essential patents got away with this behavior.

Why Google's envisioned acquisition of Motorola Mobility will most likely exacerbate the problem

There are at least three reasons for which I believe Google will use Motorola Mobility's FRAND-pledged standards-related patents even more aggressively than an independent MMI would:

Resources: Last week, Google reported that it had, as of the turn of the year, "cash, cash equivalents, and short-term marketable securities [worth] $44.6 billion". With such cash reserves, Google can take the risk of enforcing rulings even if successful appeals resulted in substantial liability (such as in Germany). With this amount of money in the bank, the specter of future fines by antitrust regulators is also much less scary than to the average company.
Ambition: If MMI remained an independent entity, its objective would basically be to achieve favorable settlements with Apple and Microsoft. By contrast, Google has declared its intent to use MMI's patents for the much broader objective of discouraging intellectual property enforcement against any company in the Android ecosystem. Some Android companies, such as HTC, have publicly indicated that they rely on Google's related promises. The more demanding a party to a legal dispute is, the more aggressively is has to act. Based on what Google has vowed to do post-acquisition, "Googlorola" will be much more demanding, and consequently more aggressive, than MMI on its own would have been.
Strategy: the way I see it, MMI would have been willing to accept some collateral damage on Internet-related standards just to achieve, as I said before, the objective of more favorable settlements with Apple and Microsoft. But Google's strategic goals would make a certain degree of disruption part of the plan. Collateral damage would become a fully intended consequence in connection with H.264, a video standard that Google would like to supplant with its own WebM (VP8) codec in its tireless quest for total Internet domination. Simply put, Google hates H.264. It just has to provide YouTube videos in that format (in addition to the format of its choice) to maximize the reach of its service.
Google advocates the inclusion of its WebM (VP8) format in the official HTML 5 standard, claiming that it's "unencumbered" by patent rights. However, 12 companies submitted to MPEG LA (a patent pool firm) patents that they believe read on VP8. Unless all of those are wrong, it's rather likely that VP8 will ultimately be a royalty-bearing video codec as well.
Google would presumably love to kill two birds with one stone by aggressively targeting the market-leading H.264 codec as part of its overall Android-related litigation strategy.

The means and the motives couldn't be much clearer. There's even a fourth -- and no less frightening -- scenario I'd like to discuss. For Google's Android-related business model, it's key to force device makers to comply with certain rules that are designed to lock end users into Google's search engine and other advertising-financed services. Google already uses intellectual property rights (specifically, its trademark rights as well as its copyright in some closed-source components such has the Android Market client) as leverage that has led most device makers to accept Google's set of rules. With standards-essential patents, Google could wield another big stick to force non-compliant device makers, such as Amazon, to take a commercial Android license from Google rather than use the Android code under open source licenses.

Industry leaders and academics agree on the harmful effects of standards-related injunctions -- why doesn't Google speak out?

I have received material concerning the worldwide use of FRAND-pledged standards-essential patents from various companies, law firms, and individuals who take an interest in the related issues. For example, two large, unaffiliated companies pointed me to a recent Federal Trade Commission request for comment on standard-setting issues (project number P11-1204). I have looked at many of the submissions, including a joint response of Cisco, HP, IBM and RIM. Those four companies are major patent holders themselves, but in their filing they express their belief that "giving a RAND commitment should mean that a patentee gives up the right to enjoin or exclude the use, manufacture, sale, or importation of products that implement the standard for which the patentee claims to own essential patents". That's exactly the opposite of the Motorola Mobility position I quoted further above.

While Motorola tries to weasel its way out of its FRAND licensing obligations by presenting all sorts of reasons for which those shouldn't ultimately be enforceable, major industry players like the companies I mentioned advocate a maximum degree of legal certainty for those implementing a standard.

Here's an interesting passage from Broadcom's submission to the FTC:

"The inability to seek an injunction under a RAND regime is a substantive part of RAND, however, not merely a question of what remedy might be available once a negotiation breaks down. From the perspective of the potential adopter of the standard, a portion of the consideration received is the right to negotiate a license without fear of being blocked from using the standard altogether."

Ericsson argues that "[t]he whole purpose of the (F)RAND commitment is that standard adoption should not be blocked (unless a user is unreasonably refusing to take a necessary license)", and Verizon proposes "an elegant solution: using equitable considerations to deny injunctive relief to prevent patent hold-up of collaboratively set standards".

Professor Mark Lemley, a true thought leader in patent law and policy, is generally against any excessive grant of injunctive relief on the grounds of patent infringement. With a view to standards-essential patents, he wrote (in a 2002 article for the California Law Review, entitled "Intellectual Property Rights and Standard-Setting Organizations") that a patent holder who participated in a standard-setting process and is "bound by an SSO [Standard-Setting Organization] IP rule [...] has only a contractual claim for a royalty, not a cause of action for patent infringement that might result in an injunction, treble damages, and attorneys' fees", a difference he describes as "dramatic".

There's clearly a lot of support among industry leaders and academics for denying injunctions based on FRAND-pledged standards-related patents, or at least for setting a very high bar. Only a minority of companies, including Qualcomm (whose conduct was investigated by antitrust regulators), would like to be able to exploit such patents aggressively.

It's time for Google to come clean on this issue and explain what it's going to do with Motorola Mobility's standards-related patents following the consummation of the proposed transaction. Is Google going to act in accordance with what the likes of Cisco and IBM propose as a responsible use of standards-essential patents, or is it going to pursue its strategic objectives to the detriment of the Internet at large?

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Judge refuses to separate patent claims from Oracle-Google case but trial could start in mid-April

2012-01-20T17:29:00.000+01:00

Judge William Alsup, the federal judge presiding over Oracle's intellectual property infringement lawsuit against Google, just entered an order that envisions, if all goes according to plan, the trial in this case to begin in mid-April without a need for Oracle to put its patent infringement claims on the back burner.

Oracle had surprisingly offered to focus its case, for the near term, on its copyright infringement claims so as to enable a trial to take place within a matter of months. Google, which previously pushed rather hard for a stay of Oracle's patent claims, considered Oracle's ideas to be off-topic.

Judge Alsup rejected Oracle's proposal as a "piecemeal approach" and a "luxury" the court's scarce resources don't allow. But what he proposes -- subject to Oracle accepting the terms definitively by Tuesday ("please file either a clear 'yes' or a clear 'no.'") -- is in some ways (but not in all respects) even more favorable to Oracle's interest in a near-term trial than Oracle's own proposals.

Oracle's third proposal was to take both the copyright and patent infringement claims to trial this spring, and this appears to be a possibility now. But Oracle wanted to buy this acceleration by waiving its right to present a third damages report after the two previous ones were rejected in part. Judge Alsup, however, wants to resolve the damages issue sooner rather than later and presumably believes that Oracle is going to present a new damages report as soon as humanly possible.

The judge makes it clear at the beginning of today's order that this case merely got delayed because he had also been "assigned to the massive MS-13 gang prosecution, which has resulted in four lengthy trials". Other than that resource conflict, he believes the case can go ahead quickly provided that the damages issue is resolved (and, which he doesn't mention because he doesn't have to, provided that Google's petition to the Federal Circuit is adjudicated soon, which Oracle believes will happen by March).

I think Oracle still did the right thing by making its proposal for a streamlining of the case. If nothing else, it at least showed to the judge that Oracle is very serious about its pressing need for this case to be resolved soon. If Oracle hadn't demonstrated this with an action that spoke louder than words (by action I mean its formal offer to have the patent infringement claims stayed or dismissed without prejudice, and its offer to waive its right to revise its damages report), I'm not sure Judge Alsup would have offered the same way forward.

Google argued strongly against the possibility of Oracle being allowed a third try to present a damages report that would be acceptable in its entirety. Google's two primary arguments boiled down to a possible delay, which Oracle described as "no principled objection" given Google's history of trying to delay the case. In its most recent pleading, Oracle wrote that "Google's strategy is delay". The judge knows about that. The other argument, which the judge is fairly sympathetic to, comes down to costs. Having yet another damages report proposed, with a need for additional analysis, depositions and possibly another motion to throw out parts of it, can result in incremental costs that Google would have to bear only because Oracle didn't, in the judge's opinion, comply with the instructions Judge Alsup provided with a view to the second damages report. The judge therefore wants Oracle to commit to pick up all of the related costs, including Google's legal fees attributable to this additional effort.

The judge also reserves the right, regardless of the acceptability of a possible third damages report, to preclude Oracle's damages expert from testifying to the jury, simply based on his "track record of rejected methodologies". The decision on this will be made after the two liability trials (phase 1 on patents, phase 2 on copyright) and before the damages trial (phase 3). At that stage, Oracle won't be allowed to replace its damages expert, Dr. Cockburn.

My guess is that Oracle will accept this offer because other than costs, which are going to be sizable in absolute numbers but small compared to what's at stake, there's no colorable drawback that Judge Alsup's proposal has over Oracle's own proposals. Oracle might be concerned about Google possibly seeking to delay the process surrounding the third damages report, but if Google did that, the judge would probably take measures to defend and uphold his envisioned schedule.

Oracle could also reject this offer. In that case, Oracle will be allowed to present to the jury only those parts of its second damages report that the judge approved. It might hope that dropping the damages part is the best way to streamline the case and get a near-term trial.

Today's order indicates that if everything goes according to plan, a mid-April trial is possible, but otherwise it might be postponed until the last four months of the year.

Like I said further above, I think it helped Oracle to demonstrate a genuine commitment to speed and focus. I still find it hard to believe that this case will finally go to trial in about three months. Whenever the trial appeared to be near, it turned out to be much further away than it seemed. At any rate, with today's order, Judge Alsup sent out a clear message that he would like to find a way to resolve this case -- all parts of it, not just the copyright claims -- in the not too distant future.

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Apple says Galaxy Nexus infringes slide-to-unlock utility model in Germany

2012-01-20T15:52:00.006+01:00

A few hours after pronouncing a ruling on one of Samsung's numerous lawsuits against Apple, the Mannheim Regional Court held a hearing on one of Apple's many infringement lawsuits against Samsung.

Today's hearing relate to a Gebrauchsmuster ("utility model"), which is an intellectual property right that could be vaguely described as a fast-track patent that comes with various limitations. Companies are free to file for patents and utility models on the same invention (or on closely related inventions), and that's what Apple did with its ever-more-famous slide-to-unlock image invention. Stemming from the same original application, two manifestations of this intellectual property right exist in parallel in the German market: a patent (EP1964022 as well as a German utility model (DE212006000081).

By now I have watched three German court hearings related to the slide-to-unlock invention. In mid-December, the Mannheim court heard Apple's slide-to-unlock patent lawsuit against Samsung. In its original complaint, Apple asserted both the patent and the utility model, but the court deemed it appropriate to sever the utility model-related claims from the patent case given the complexity and unique characteristics of both sets of issues. The slide-to-unlock patent is also being asserted against Motorola in a Munich-based court. At the Munich hearing, I believe some reference to the utility model was made, but it's unclear whether it was part of the same case or also at issue in a separate proceeding there -- or whether it was only mentioned in connection with validity issues common to both. Unlike in U.S. court proceedings, complaints and similar documents aren't publicly available over here.

Two fundamental differences between utility models and patents played a key role at today's hearing:

Since utility models are registered without an examination process comparable to the examination of patent applications, there is no presumption of validity. It's a prerequisite for an infringement ruling that the court concludes that the claimed invention was novel and non-obvious at the time of registration. In this case, the court believes a potential decision on validity or invalidity is too close to call, at least before today's oral argument took place. As a result, the court may opt to stay this case pending the resolution (at least at the first instance) of a parallel invalidation proceeding before the Munich-based Federal Patent Court. As courts do in all cases in which a stay is a possibility, Judge Andreas Voss pointed to the benefits of a more efficient use of court resources as well as the avoidance of inconsistent rulings.
The strongest counterargument against a stay is that justice delayed is justice denied. In this case, that argument is particularly strong since Apple registered the asserted utility model in 2006. The maximum term of validity of utility models is 10 years (while patents are valid for up to 20 years). After the resolution of all of the pending issues, the asserted utility model would be on the verge of expiration and, therefore, commercially devalued.
Apple's counsel said that it wasn't possible to assert this utility model against Samsung's products much earlier because they are relatively new. Samsung's counsel replied that some of them are two to three years old. At least in some cases, I have no doubt that Apple's couldn't-sue-sooner claim is correct. The best example is the Galaxy Nexus, with respect to which Apple today filed (with yesterday's date) supplemental infringement contentions.
I haven't previously seen the Galaxy Nexus named explicitly as an accused product in any Apple lawsuit. It doesn't even appear to be targeted by a new design rights lawsuit brought by Apple in Düsseldorf this month. The Galaxy Nexus didn't show up on the list of accused products that Germany's most-read IT news site obtained from a spokesman for the Düsseldorf court. The Galaxy Nexus is an "Android lead device" (for the latest Android version, dubbed Ice Cream Sandwich), which makes it particularly key to Google's strategy.

On March 16, 2012, the Mannheim Regional Court will pronounce some kind of a decision, which could be a ruling (if the court considers the broader claims of that utility model valid, infringement appears to be beyond reasonable doubt), a stay (pending the aforementioned parallel nullity proceedings), or a decision to appoint an independent expert in order to help the judges assess whether the claimed utility model is obvious or non-obvious over certain prior art combinations. Apple would obviously prefer for the court to reach that ocnclusion without further delay, but as a second-best solution it could live with the appointment of a court expert. It just hopes to avoid a stay.

In connection with the disputed validity of that utility, Samsung emphasizes an obscure Swedish device that previously persuaded a Dutch judge to doubt the validity of Apple's slide-to-unlock patent. In the utility model case, the Mannheim Regional Court could decide in Apple's favor without even having to go into technical details on the Neonode device. In order for the widely-unknown device to be eligible as prior art in a utility model case, the standard for availability is higher than for patents. It's not clear whether Samsung can prove that this device counts as prior art in this context.

Rather than going into further detail on the issues surrounding the slide-to-unlock invention, I'll just wait for the court order that will come down on March 16.

In closing I'll tell an anecdote from the beginning of today's hearing. Samsung's counsel moved to stay the case until Apple posts a bond covering its potential liability for court fees and Samsung's legal fees according to the German "loser pays" principle (which in cases like this awards amounts that are typically much less than what a defendant like Samsung actually spends). In my estimate, that amount is on the order of a few hundred thousand euros. That's not a lot of money for these two companies. Such a bond is formally necessary because the plaintiff in this case, Apple Inc., is domiciled outside of the European Union. Apple's counsel objected to this untimely motion, and after a recess of about 15 minutes, the court agreed that it would be sufficient for Apple to post the required bond at a later time. If Samsung's motion had succeeded, it would probably have delayed the case by only a few weeks -- over an amount that no reasonable creditor would have to be worried about if Apple, a company that has far greater cash reserves than anyone else in the industry.

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Mannheim court rejects the first one of Samsung's German lawsuits against Apple

2012-01-20T09:58:00.002+01:00

Judge Andreas Voss of the Mannheim Regional Court just pronounced his ruling on the first one of Samsung's seven patent infringement claims against Apple in Germany. Samsung's complaint over a patent declared essential to the 3G/UMTS wireless telecommunications standard was rejected. Samsung has four other lawsuits going against Apple in Germany, involving six more patents. Apple is suing Samsung over six patents (also in Mannheim), with a hearing on one of Apple's lawsuits to take place today (at noon by local time).

The pronouncement did not include the reasoning. While a number of legal grounds are theoretically possible, doubts about the validity of the asserted patent would have resulted in a stay, not a rejection, due to Germany's bifurcated system under which validity issues are addressed in different fora than infringement lawsuits. There are two reasonably likely possibilities: either Apple's products weren't deemed to infringe on the patent in a technical sense or the court believes Samsung's rights are exhausted and Apple has, by extension, a license. If the reason for the rejection was technical non-infringement, Samsung's other assertions of 3G/UMTS patents in Germany could still succeed. However, if the reason was patent exhaustion, all but one of the four remaining Samsung lawsuits in Germany (one over two patents unrelated to 3G, including a smiley input patent) would likely be thrown out as well. While a finding of patent exhaustion can depend on technical details that vary from patent to patent, and from product to product, I haven't seen any indication that the related functionality is implemented by Apple itself as opposed to the baseband chips Apple incorporates into its products.

Given the Mannheim Regional Court's stance on standards-essential patents, it would be a major surprise if the ruling turned out to be based on FRAND issues.

I hope to be able to obtain some information on the specifics of the ruling, or ideally, a copy of the decision.

Without access to more information, I can't guarantee (though I strongly believe) that today's ruling related to EP1005726 on a "turbo encoding/decoding device and method for processing frame data according to QoS". That one was the first of two patents discussed at a mid-November hearing I watched, and based on my notes, today's ruling was going to adjudicate Samsung's claims concerning that patent. Otherwise this would be about EP1114528 on an "apparatus and method for controlling a demultiplexer and a multiplexer used for rate matching in a mobile communication system". Both patents were declared essential to 3G/UMTS. The patent claim that wasn't adjudicated today will come to judgment in a week from today.

The Mannheim Regional Court's rulings can be appealed to the Karlsruhe Higher Regional Court and, potentially, on to the Federal Court of Justice (which is also based in Karlsruhe).

So far, Apple's and Samsung's claims against each other have had a very high drop-out rate in multiple jurisdictions. That, however, does not appear to dissuade both parties from pursuing their claims. There's too much at stake, and as long as neither party has leverage, there's no pressure to settle. Apple and Samsung are currently the most profitable wireless device makers in the world. Neither legal fees nor the distraction that these lawsuits create pose a serious problem to their business.

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Google doesn't dignify Oracle's proposed priority on copyright with much of a response

2012-01-20T08:26:00.000+01:00

In response to an order by Judge William Alsup, Oracle and Google filed documents on Tuesday to discuss the possibility of Oracle being allowed to make a third attempt to provide a damages report, after the court ordered an overhaul of the original report and again threw out essential parts of the revised one. On this occasion, Oracle made a proposal that is, for anyone who's been watching this case, quite surprising, if not revolutionary: Oracle said that it would rather see the copyright part of the case go to trial at the earliest opportunity than delay things by presenting a third damages calculation. Oracle proposed to put the patent part of the case on the back burner, though it had opposed on several occasions Google's proposals to stay its patent infringement claims pending reexamination of most of the patents-in-suit. But without an accelerated path to trial, Oracle said it would fight hard, including a possible appeal to the Federal Circuit, for its original damages claims.

Yesterday (Thursday, January 19, 2012), Oracle and Google replied to each other's pleading. The original deadline would have been today (Friday), but Judge Alsup told the parties that it would help the court to receive those answers a day earlier.

I'm somewhat disappointed that Google's reply doesn't really say much about Oracle's intriguing proposals. For the most part, Google focuses on why Oracle should not be allowed to present another damages report. Toward the end of the six-page document, Google then says Oracle's case management proposals were "unsolicited" and treats as if they were just a nuisance, a digression into off-topic territory, a waste of time.

It would obviously be difficult for Google to argue against a stay of the patent claims, since Google itself advocated it repeatedly, even very recently. And it wouldn't be necessary to reiterate its support of that idea. But Google could have said on which coniditions it supports Google's proposed path to a near-term trial. For example, I thought Google would argue that if Oracle's second proposal (dismissal of the patent claims) was adopted, it believes those claims should be adopted with, not (as Oracle proposes) without prejudice.

Instead, Google asserts that "the Court did not ask the parties for further comment on those issues" (relating to the trial plan). That statement displays the pettiness and narrow-mindedness of some (fortunately not all) low-grade accountants. The very order Oracle responded to on Tuesday linked to the overall scheduling issueds of the court both the possibility of a third damages report as well as the presentation of the Lindholm email. Judge Alsup has generally been connecting substantive, case management, and scheduling issues for quite some time.

While I've never supported the totality of Oracle's damages theories, my overall impression is that there is a genuine dispute between Oracle and Google, and a reasonable disagreement between Oracle and the judge, concerning the admissibility of certain types of damages claims. Oracle's proposals would make sure that the question of a third report, or of the admissibility of the second one, won't come up anytime soon, if ever. That's the bigger picture and, in my view, a pragmatic, results-oriented approach.

One can blame Oracle for having presented two damages reports that the judge didn't want to accept as filed. But again, there are issues on which I believe reasonable people can disagree. By contrast, Google made five unsuccessful attempts to have the district court throw out the Lindholm email, a sixth failed attempt in the form of a motion in limine (it would have precluded Oracle from using the Lindhom email), and it will very likely be turned down for a seventh time when the Federal Circuit rules on Google's mandamus petition. All of that effort was and is made for an email that every lawyer I talked to clearly viewed as business correspondence, not privileged attorney-client correspondence.

It will be interesting to see how the judge proceeds. I believe he wants an efficient way forward for the case, and the question of whether a solution was solicited or unsolicited may not matter as much to him as it appears to do to Google's lawyers.

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Microsoft asks ITC to take closer look at Motorola's 'wide-scale infringement of Microsoft patents'

2012-01-18T23:09:00.007+01:00

Following a December 20, 2011 initial determination (i.e., preliminary ruling) that Motorola Mobility's Android devices infringe four claims of a Microsoft patent, both parties asked the Commission (the six-member decision-making body at the top of the ITC) to review, rather than adopt, the recommended decision. Motorola would like to do away with the infringement finding, while Microsoft would like to prevail on up to five additional ones of the seven patents the initial determination related to.

The parties filed their petitions for review on January 5, 2012, and replied to each other's petition last Friday (January 13, 2012). Today, a public redacted version of Microsoft's 108-page petition for review and a 13-page summary became available on the ITC document server.

I have read those documents. They reference many other documents that are not publicly available, but despite those access restrictions and even prior to having seen Motorola's response, it's already possible to discuss the issues that have been raised.

While some of the issues are very specific to the technical scope of the asserted patents and differences between the claimed inventions and prior art, it appears to me that Microsoft's petition is partly based on general issues transcending this particular investigation. Some of those issues can come up in ITC investigations relating to any field of technology, and some of them are particularly likely to resurface in other investigations of smartphones and tablet computers. With respect to the ITC's domestic industry requirement, the ID applies certain criteria that would affect all U.S. software companies, large ones and small ones, that might bring ITC complaints in the future. Given what's at stake way beyond this investigation, I would not be surprised if the Commission identified a number of issues that warrant further analysis and require clarification.

In the following sections, I will summarize some of the issues that I, from my personal vantage point, found worth reporting. Some of the issues I don't mention here may nevertheless be key to this particular investigation.

'Wide-scale infringement'

In the introductory section, Microsoft states its conviction that Motorola Mobility's Android devices infringe more patents than the one based on which the initial determination identified a violation. That's obvious to anyone looking at the overall Microsoft-Motorola dispute, which is far larger than this ITC investigation.

The first sentence of Microsoft's petition asserts "MMI's wide-scale infringement of Microsoft patents in its imported Android mobile devices". In the second paragraph, Microsoft recalls its "efforts to simplify the case by limiting its infringement contentions and dropping some originally-asserted patents". Microsoft dropped two of its nine originally-asserted patents prior to the initial determination, and its petition for review effectively drops another one by not asking for a review of any issues relating to that one.

Despite this streamlining, Microsoft concedes that "this is, even by the standards of the Commission, a complicated case" involving "sophisticated computer technology" and "multi-faceted MMI Android devices (which aggregate many features in a single imported device)". The complexity of the case and the alleged "scale of the infringement" resulted in what Microsoft calls "an unquestionably lengthy and complex record". Concerning the scope of the infringement, Microsoft alleges that "[i]nstead of developing its own operating system technology [and making similar investments as Microsoft], MMI has chosen to stand on the shoulders of Microsoft's patented inventions", a behavior also labeled as "wholesale copying".

In light of the foregoing, Microsoft's petition says that "a patent owner should not be penalized for acting broadly against multiple infringing aspects of multiple complex devices". The petition as a whole is full of examples in which the initial determination reflects confusions and errors that Microsoft attributes to the complexity of the case. But Microsoft essentially calls on the ITC to give patent holders a fair chance to enforce their rights:

"Indeed, any other conclusion would mean that the Commission would effectively limit itself to addressing unfair competition only in simple cases involving simple products, one or a few patents, and relatively small domestic investments. But limiting the scope and reach of the Commission's powers to small domestic industries is plainly inconsistent with the Commission's charter, and with the public interest."

In other words, Microsoft says the ITC has a broad mandate, and encourages it not to let large-scale infringers get away with their misconduct. Microsoft then expresses its disappointment over the fact that "the Initial Determination ('ID') has precisely this effect [of narrowing the ITC's mandate]". Microsoft then cites some examples of ways in which it believes the scope and complexity of the investigation provoked legal errors and factual confusion. One of the assertions in this context (just to provide an example) is that "the ID expressly found that the Accused Products operate contrary to the sworn testimony of MMI's designated technical witness".

Like I said, I have access only to some of the documents and other material, and I didn't attend the evidentiary hearing in August 2011, but many elements and aspects of the initial determination indeed struck me as being quite different from the way other Administrative Law Judges at the ITC and federal judges at district courts apply U.S. patent law. To the extent that general principles of claim construction are concerned, the initial determination also appeared to apply some of the chosen constructions much more narrowly than what I monitor in jurisdictions like Germany.

In general, it's a good thing if complainants face a reasonably high hurdle to prove a violation, but if the standard is that even the sworn testimony of the other party's technical witness doesn't do the job, then it becomes virtually impossible to meet regardless of the actual merit of a claim.

Issues surrounding the presentation and weighing of evidence and arguments

The initial determination repeatedly (mostly but not exclusively to Microsoft's detriment) dismissed claims by alleging, in other words, that something had not been pled with sufficient particularity, or not been presented at the right time. Interestingly, Microsoft's petition for review complains that the initial determination is based in part on representations made by Motorola after the evidentiary hearing, even though any evidence would have had to be provided before the hearing and legal argument cannot serve as a substitute for evidence.

The timeliness of contentions and evidence plays a role in many litigations, and frequently in ITC investigations, but the density of those types of issues appears to be extremely high in this case. The standards that the Commission may or may not affirm in its review could have implications for the decisions made with respect to several patents in this investigation, and many patents in other investigations.

Software companies and the domestic industry requirement

In order for the ITC to find a violation of a patent, it must be valid and infringed but there must furthermore be a "domestic industry" for it. The domestic industry requirement is unique to the ITC. There's no such thing at a district court.

The statute governing the ITC (Sec. 337) doesn't require that domestic industry to be a domestic manufacturing industry. There are different ways to satisfy the requirement, and an investment in product development is one possibility. But the initial determination denied the existence of a domestic industry with respect to four patents. To some extent, that's because of narrow claim construction, but the initial determination also arrived at a rather unusual finding with respect to Windows Mobile, suggesting that there wasn't enough evidence of actual devices having a certain kind of functionality.

The software industry is very important to the U.S. economy. That's why the Commission might be interested in looking more closely, as Microsoft requests, at the parts of the initial determination that relate to the existence of a domestic industry if the complainant makes software available to device makers. Microsoft is just one of many companies that license their software to OEMs. There are companies of all sizes, including some very innovative startups, that do business that way. From a policy point of view, the ability of software makers to enforce their intellectual property rights with the ITC's help is a high-priority question. The way I read the (current) statute, the ITC's mandate includes complaints brought by right holders of that profile.

Induced infringement

Even with respect to the one patent the initial determination deemed violated, there's a legal issue that Microsoft's petition addresses. Motorola was not held to induce the infringement of Microsoft's '566 patent (but only to infringe directly). Apparently, the initial determination applied the U.S. Supreme Court's "willful blindness" standard, which Microsoft says is only meant to be "a substitute for proving actual knowledge of the asserted patents", and not applicable here if one assumes that Motorola had knowledge of Microsoft's asserted patents (at least after it received the complaint). The simplest and clearest case of induced infringement is one in which knowledge of the patent is proven. Willful blindness is just an alternative concept to cover cases in which someone would have to know but makes an effort not to know.

Induced infringement results in additional liability, and Microsoft would like to prevail on that count as well.

Cease-and-desist order

The initial determination recommended an import ban but not a cease-and-desist order. The cease-and-desist order would additionally ensure that any infringing devices that were imported prior to the import ban taking effect (but are still, at the relevant time, in a Motorola warehouse) could no longer be sold.

If an import ban is ordered without a simultaneous cease-and-desist order, it may take quite a long time before an infringer has sold off all of the infringing inventory. But more recently, the ITC appears to be hesitant to issue cease-and-desist orders. For example, no cease-and-desist was ordered against HTC though it was found to infringe a valid Apple patent.

The public redacted version of the petition doesn't reveal some of the specifics of Motorola's logistics. Therefore, I don't know if there are differences between Motorola's and HTC's respective operations that suggest a different decision in Motorola's case. It's possible that Motorola keeps far larger quantities of its products in stock than HTC does in the U.S. market.

What's next?

I hope that a public redacted version of Motorola's response to Microsoft's petition will become available shortly. It's a given that Motorola will defend, except with respect to the '566 patent, the initial determination as best as it can. In February we'll find out which issues the Commission decides to review. Depending on the scope of the review, I may then go into some more technical detail. The petition for review contains some interesting technical arguments and explanations, but for the time being I wanted to focus on broad and general issues that were raised and that may also come up, in similar forms, in other ITC investigations that I'm monitoring.

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Oracle says each day's worth of Android activations generates $10 million in annual revenues for Google -- and strengthens Google+

2012-01-17T22:33:00.001+01:00

In the previous blog post, I have just reported on Oracle's bold move to propose to the court that it stay (or dismiss without prejudice) its patent infringement claims against Google in favor of a near-term copyright trial. Oracle's pleading also contains a very interesting portrayal of Google's Android-related business model and the economic value Android represents to Google, which is pertinent to Oracle's argument that its infringement lawsuit must be adjudicated at the earliest opportunity. I decided to separate those business issues from the legal/procedural issues discussed in the previous post.

In the following, I will quote from (and comment on) Oracle's representations of Google's Android-related business opportunity:

"While this case awaits trial, more than 700,000 Android-based devices are activated every day, all fundamentally built around the copyrighted Java APIs and the enhanced performance enabled by Oracle's patents."

The number of daily activations was recently announced by Andy Rubin himself. Google wouldn't agree on the second part of the sentence, but there's no denying that Java is a key element of Android's success, given that most Android apps are written in that language.

"Each day's worth of activations likely generates approximately $10 million in annual mobile advertising revenue for Google."

Oracle doesn't provide any particular source for this estimate. It's based on the assumption of annual advertising revenues of $14 per Android user. This litigation has allowed Oracle to conduct some discovery of Google's business model, but Google might deny this per-user revenue level.

The sentence I just quoted refers to a footnote in which Oracle points out that Android is much more to Google, in a strategic sense, than merely a source of mobile advertising revenue. In that footnote, Oracle highlights that Google leverages Android to grow the user base for its Google+ social network, and notes that Android is not as open as Google would have everyone believe:

"This revenue does not even include all the other value Android generates for Google, ranging from Android Market revenue, to other Android-related services, to ensuring that Google will not be locked out of the mobile business, to lucrative relationships with manufacturers of myriad devices on which Android can and does run, to the inordinately valuable access Android provides to customers for its new social network service, Google+. Indeed, Android has enabled Google to wield such power with regard to search and other services that its Android distribution and licensing practices -- far from the 'open' practices Google has proclaimed it lives by -- are under investigation by competition law agencies in the United States, Europe and elsewhere."

The reference to antitrust investigations isn't off-topic in connection with Oracle's IP infringement lawsuit. In fact, the court agreed with Oracle that it would be entitled to damages based on network effects (a concept that's key to many antitrust cases) if it could prove a connection between Google's alleged infringement of Oracle's Java IPRs and an overall strengthening of its search engine and other services.

Getting back from the footnote to the body of the document, Oracle also tosses out this number:

"Analysts have predicted that the number of new Android devices will reach 2.5 million per day within twelve months."

There is no particular citation. I've meanwhile seen one example of an analyst having predicted this volume, and at the end of the year we'll know if he was right, or the extent to which he wasn't.

Oracle obviously doesn't have an antitrust agenda against Google. It simply wants to be paid for the use of Java in Android. But the competition issues that Oracle raises, such as Google's use of Android to strengthen Google+, are relevant way beyond this intellectual property lawsuit. One of the contexts in which these issues must be evaluated is Google's proposed acquisition of Motorola Mobility. Last month the European Commission stopped the clock in its investigation of the proposed transaction, and I'm not yet aware of the process having been resumed.

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In surprise move, Oracle asks court to stay its patent claims in favor of near-term copyright trial

2012-01-17T21:39:00.004+01:00

Oracle just made the most surprising move in its Java lawsuit against Google. In reply to an order by Judge William Alsup, the federal judge presiding over this litigation, concerning the possibility of a new damages report, Oracle asked the court to sever and stay its patent claims for nine months -- and possibly even longer based on the status of the ongoing reexaminations at the end of that nine-month period. Thereby Oracle hopes to enable the court to take its copyright infringement claims to trial on "the first possible date in the winter or spring of 2012".

Oracle is willing to waive, for the copyright part of the case (but not for a future part relating to the patent infringement claims), its potential right to submit a new (third) damages report. However, Oracle insists on its right to present the Lindholm email, a key piece of evidence, to the jury. The judge had suggested that Oracle could accelerate things by waiving that right, but it won't. The question of the admissibility of the Lindholm email is currently before the Federal Circuit. Oracle believes a decision by the Court of Appeals for the Federal Circuit will come down "by March", judging by the speed at which other petitions for writ of mandamus have been adjudicated very recently. Oracle proposes that the United States District Court for the Northern District of California set a trial date at any rate since it can always postpone it in the event the Federal Circuit needs more time to decide on Google's petition.

If the court doesn't accept Oracle's preferred proposal, it encourages the judge to "dismiss the patent claims without prejudice and set a date certain for the trial of copyright liability and copyright damages for spring 2012, followed by a hearing on Oracle's request for a copyright injunction if Oracle prevails on liability". This is another clear sign that what was initially perceived as a patent infringement case with a secondary copyright component is now, in Oracle's eyes, increasingly a copyright case, at least for the short term.

Should the court neither stay nor dismiss (without prejudice) the patent claims, "Oracle requests that the Court set a winter or spring 2012 trial date on both the copyright and patent claims", and in that case, Oracle would waive its right to present a new damages report. Its expert would present to the jury only those parts that the court considered acceptable.

Oracle's priorities are clear: more than anything else, it wants an injunction. I have said all along that damages in this case could amount to billions of dollars, but the strategic value of an injunction far exceeds that of even the most aggressive damages award. Oracle wants that injunction as soon as possible, and it is willing to bet, in the near term, on the copyright part of its case.

Whether the patent claims get stayed (which the judge could do at any rate, just in light of the fact that the validity of most of Oracle's patents-in-suit has been called into question by the ongoing reexaminations) or dismissed without prejudice, they would go to trial long after the copyright infringement claims. In the event of a dismissal without prejudice, Oracle would have to start a whole new lawsuit to assert those claims again. It's possible that Oracle would select partly different patents in that case.

Oracle's proposal -- or set of prioritized proposals, to be precise -- is a bold move. For a long time, Oracle has opposed a stay of the patent claims, while Google consistently advocated it. Without a doubt, the enormous headway that Google's reexamination requests have made has created a situation in which Oracle believes its copyright infringement claims provide, at least in the near term, a better chance of winning an injunction.

But just like Google's reexamination requests have created doubts about Oracle's patent infringement claims, Google is also responsible for the fact that Oracle is so optimistic about its copyright case. In September, Judge Alsup threw out (for the largest part) a Google motion for summary judgment that was meant to do away with the copyright part of the case. While the judge made it clear that his denial of summary judgment wasn't automatically a finding that Oracle would prevail with its copyright claims, some of the reasons he provided clearly showed that Google would face a considerable hurdle if it wanted to convince a jury that Oracle's API-related files shouldn't be protected by copyright.

At a recent hearing, Judge Alsup expressed hopes that a copyright trial might be enough to resolve this dispute, whichever way it might go. The proposal Oracle submitted today would achieve just that, and it would do so with an even greater probability than the schedule envisioned by the judge.

It's hard to know what the judge will do. He has a tendency to surprise everyone, to a greater extent than Oracle, in fact. I think there's a real possibility that he may accept one of Oracle's first two proposals and stay or dismiss the patent infringement claims. If I were in his shoes, I would seize this opportunity to dismiss the patent infringement claims without prejudice.

Should the judge reject all of Oracle's proposals, the following sentence in Oracle's letter makes it clear that there would be a second petition to the Federal Circuit:

"Oracle believes the Court has taken an unduly strict and improperly narrow approach to the analysis of damages in this case, and reserves its right to appeal the Court’s Daubert and in limine orders."

Oracle is still ready to fight hard for its rights. But it's willing to make far-reaching concessions that streamline the case, in exchange for a very near-term copyright trial.

Oracle's response to the court also contains interesting passages on Google's Android business model. I will quote and discuss those passages in a subsequent blog post.

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Apple attacks 15 Samsung products with new German design lawsuits: will they ever settle this part of their dispute?

2012-01-17T17:14:00.004+01:00

A spokesman for the Düsseldorf Regional Court confirmed to Bloomberg and German news agency dpa that Apple brought two new design lawsuits against Samsung in Germany: one accusing ten Samsung smartphones (including the Galaxy S II) and another one accusing five Samsung tablet computers.

Unlike last year, Apple apparently didn't ask for preliminary injunctions. At least some of the accused products have been on the market for too long to satisfy the sense-of-urgency requirement anyway. The two cases will go to trial in late August and, respectively, late September 2012, reports dpa.

Update: These are the two smartphone-related design rights Apple is asserting

I have found out which smartphone-related Community designs (EU-wide design rights) Apple is asserting in the complaint targeting 10 Samsung handsets. The Registered Community Design numbers are 000748280-0006 and 000888920-0018. Both were filed in the names of about a dozen inventors including (in both cases) Steve Jobs and Jony Ive. On August 9, 2011, Samsung filed nullity actions seeking to have both Community designs invalidated.

Community design no. 00748280-006 (click to enlarge):

Community design no. 000888920-0018 (click to enlarge):

Escalation and the possible end game

About a month ago, Samsung also chose to escalate the German part of the worldwide IP war that is raging between the companies in ten different countries on four continents. Samsung brought additional infringement claims relating to four patents, two of which are standards-related. One of the two patents that are not standards-related protects a method for entering emoticons (smileys) on a mobile device. By the latest count, Samsung is sserting seven technical patents against Apple in Mannheim, where Apple is suing Samsung over six technical patents, in addition to the Düsseldorf actions involving design-related rights.

I believe it will be much harder for the two litigants to settle their disagreements over product design than the ones over technical inventions. For technical patents, the end game could be a cross-license agreement, which would hardly be a simple royalty-for-unrestricted-patent-use kind of deal but more likely a complex arrangement with Samsung paying Apple for the use of some patents, Apple potentially having to pay for some Samsung patents, and, most importantly, Apple reserving some patents exclusively for itself and imposing field-of-use restrictions on the ways in which Samsung will be allowed to implement some other patents. But for those design rights issues, it may not be possible to structure a mutually acceptable settlement. The two companies may just need the courts to clarify the boundaries of Apple's exclusive design-related rights.

I find it hard to imagine how Apple and Samsung can strike an agreement that defines, in a reliable way that courts can apply consistently in the event of a dispute, which characteristics Samsung's products are allowed to have in the future and what Samsung needs to do to make its products more distinguishable from Apple's offerings.

If Samsung promised not to build flat rectangular devices with rounded corners, and not to use the colors black and white, Apple might be fine, but such a wide-ranging exclusion would go way beyond what the courts are going to expect Samsung to do. In two weeks, the Düsseldorf Higher Regional Court will pronounce a decision on Samsung's appeal against the preliminary injunction that banned the original Galaxy Tab 10.1 in Germany, and whether the preliminary injunction is affirmed or lifted, this ruling by an appeals court will certainly clarify the scope of Apple's asserted design right and, more or less directly, indicate what Samsung needs to do to steer clear of infringement. A few days later, the Düsseldorf Regional Court will decide on Apple's request for a preliminary injunction against the (slightly modified) Galaxy Tab 10.1N. If the 10.1N is considered non-infringing (which is reasonably likely to happen), that will be another indication of where Apple's exclusive rights end and Samsung's freedom to compete begins. Of course, Apple will have the same right to have any legal questions clarified by appeals courts.

One of the problems with those design rights is that these products evolve quickly and it's hard to predict what kind of design characteristics are going to be essential in, say, five years. Moving targets also complicate a settlement. Even if the parties philosophically wanted to work this out, they might just not be able to stipulate in an agreement what Samsung will and will not be allowed to do further down the road.

In light of that, Apple's new German lawsuits aren't necessarily a bad thing even for Samsung. Ultimately, the two companies may just need to take the time to present their different views to the courts, including one or even two appeals, in order to see where the judges draw the line. That, in turn, will provide both of them -- and everyone else in their industry -- with guidance.

Design rights issues relating to smartphones and tablet computers also need to take into consideration the technical parameters under which those products are designed and used. Past court rulings on design rights issues in connection with other types of products (even pre-iPhone mobile phones) are of limited use. The courts have to clarify which characteristics are dictated by technical needs (for example, no one should be allowed to have a monopoly on the idea of "flat" devices) and which ones are not.

Legal precedent doesn't have the same role in the German legal system as in Anglo-Saxon Common Law, except for "Leitsätze" ("guidelines") established by the Bundesgerichtshof (Federal Court of Justice). Nevertheless, decisions by appeals courts bear significant weight (especially but not only within the same circuit). In a few years, both Apple and Samsung will be a lot wiser as far as the scope of those smartphone and tablet design rights is concerned. Preliminary injunction motions aren't really useful in that regard, but regular, full-blown litigations, including appeals, can provide such clarification.

In light of the foregoing, I wouldn't characterize Apple's new German design rights lawsuits as hostilities. This is a commercial disagreement, and it needs to be resolved. I like the fact that Apple's new litigation strategy in Germany will lead to useful and necessary clarification, rather than temporary (but strategically useless) disruption.

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Preliminary ITC ruling doesn't hold Motorola to infringe three Apple patents (including a strategically important one)

2012-01-13T23:10:00.070+01:00

If a trade agency at which mobile patent complaints have generally had limited success so far hands a preliminary ruling on Friday the 13th, a complainant doesn't even have to be superstitious -- but merely look at the track record -- to expect that the outcome will be negative.

Today, the ITC published a notice by an Administrative Law Judge according to which Motorola Mobility is, on this preliminary basis, not considered to infringe any valid claim of three Apple patents. MMI is, rightfully and understandably, "pleased with today's favorable outcome".

This initial determination is subject to review by the Commission, the six-member decision-making body at the top of the ITC. It's a given that Apple will file a petition for review, and the final decision, which could still be somewhat different, will be due on May 14, 2012.

Apple's ITC complaint against Motorola, filed in October 2010, was its "smallest" one to date in terms of relating to only three patents. By comparison, Apple asserted nine against Nokia, ten in its first complaint against HTC, five in its second complaint against HTC, and seven (five technical and two design-related) patents against Samsung.

One possible reason for this is that Motorola won the race to the courthouse in October 2010, by a few weeks. At that time, it was clear that the two companies were heading for a clash, but Motorola's internal and external lawyers were better prepared or worked faster (or both). It's possible that Apple was then scrambling to put together its own ITC complaint. Maybe Apple thought it had more time to bring an action, and with more time, it might have asserted more patents.

Whatever the reason for picking only three patents might have been, I believe two of those are less important than the third. The less important ones are U.S. Patent No. 5,379,430 on an "object-oriented system locator system" (yes, "system" appears twice in the title) and U.S. Patent No. 7,812,828 on an "ellipse fitting for multi-touch surfaces". The '828 patent is one of many patents Apple is asserting against Samsung in the United States, but it isn't nearly as essential to Apple's litigation strategy as another patent at issue in this preliminary ITC ruling and in use against Samsung in Apple's federal lawsuit in California: U.S. Patent No. 7,663,607 on a "multipoint touchscreen". The '607 patent is the broadest touchscreen-related hardware patent Apple has, and if the courts interpreted it as broadly as Apple would like them to, it would be extremely hard to work around.

The "multipoint touchscreen" patent also has international equivalents that Apple would very much like to enforce. For example, it's one of the two patents based on which an Australian court granted a preliminary injunction that was lifted because the judge set the bar too low for a preliminary injunction (especially in terms of the required likelihood of success). The main proceeding of the Australian dispute is now continuing. Preliminary injunction requests are adjudicated in fast-track proceedings and, as their name indicates, they aren't final.

Even though this ITC ruling is only preliminary, it can adversely affect Apple's lawsuits against Samsung in which the multipoint touchscreen patent is being asserted.

Getting back from the wider implications to the dispute between Apple and Motorola, Apple has many more patents in play in other litigations. For example, last month a lawsuit involving 15 Apple patents was transferred to the Northern District of Illinois, where it may go to trial later this year. Before it goes to trial, Apple will presumably narrow the case and drop some of the patents, but there are lawsuits in other districts as well (Western District of Wisconsin, Southern District of Florida, District of Delaware).

Meanwhile, Motorola's own ITC complaint against Apple went to trial last month, and an initial determination is due on April 23, 2012. This month, Motorola dropped (which is common, and even expected, in ITC investigations) one of its patents. It had dropped another one prior to the hearing, so in total it narrowed the case to four patents.

I don't want to speculate about the outcome of Motorola's own complaint, but in general it appears that the ITC is not the forum in which any of the major smartphone disputes will be effectively decided by a single ruling that forces someone into a settlement. Litigants will need to win federal lawsuits, and all of the major Android-related disputes except for Oracle's lawsuit against Google include international litigations, particularly (but not only) in Germany. The outcome of those large disputes is likely going to depend on a combination of rulings in multiple jurisdictions, even though most of the major players probably thought at the outset that the ITC, which has tighter schedules than most United States district courts, was going to be the strategically most important venue.

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Judge says Oracle-Google trial will take two months and hints it could slip into 2013

2012-01-12T17:20:00.002+01:00

Earlier today I reported and commented on Oracle's and Google's feedback to the court on the final pretrial order issued last week. Judge Alsup has already entered an order entitled "further rulings regarding comments on final pretrial order", addressing in part the issues raised by the parties and clarifying some of his positions.

While the original order said the case could go to trial "on or after March 19" (note the words "or after"), today's order says that the court "will not set a trial date" for the time being and reminds the parties (which is, however, only a concern to Oracle, not to Google, which would welcome any further delays) of the fact that "many other trials in other cases have already been set, and continue to be set on a weekly basis, over a period extending into next year". That sentence is a pretty clear warning, between the lines, that this trial could easily slip into next year as some issues relating to Oracle v. Google take time to be resolved while the court's trial schedule fills up quickly.

The judge disagrees with Oracle on the time required for this trial. He says that it "will take two months, not 19 days", speaking "from experience". Judge Alsup notes that "[t]he time limits set are almost double the maximum ever used in any trial in the judge’s 12-plus years on the bench". While Google also assumed that this trial would take two months, the judge also disagrees with the defendant on the need for more time to present evidence to the jury in the patent liability phase. Furthermore, he rejects Google's proposal to videotape post-trial-day testimony of third-party witnesses because "[]he Court's docket will not permit this luxury" and he prefers the jury to see and hear "the witnesses fresh each time", though this may require witnesses whose testimony is needed in two or three trial phases to show up more than once.

Oracle asked for clarification concerning the admissibility of willfulness evidence during the early stages of the trial. But Oracle doesn't get any clarification on this now: the judge says that the admission of any such evidence "will be decided on an item-by-item basis".

Today's order doesn't address Oracle's proposal to decide on a possible injunction once Google has been found liable for any kind of (patent or copyright) infringement. While Judge Alsup could still give thought to that proposal some other time, today's order doesn't bode well for that proposal. What the judge says on willfulness evidence indicates that he plans to go forward with his original plan.

Also, today's order blames Oracle for having produced not only one damages report but also a second one that the court decided to throw out in part, with or without a third chance for Oracle. Judge Alsup says:

"[T]he Court will not set a trial date until Oracle adopts a proper damages methodology, even assuming a third try is allowed (or unless Oracle waives damages beyond those already allowed to go to the jury). For this 'delay,' Oracle has no one to blame but itself, given that twice now it has advanced improper methodologies obviously calculated to reach stratospheric numbers."

I believe Oracle will try to come up with a third damages report that meets the court's requirements, and it will probably present one as soon as possible. In the meantime, it must ask for permission to make a third try, but I understand today's order as indicating that a third try is a possibility.

The judge furthermore offers Oracle a deal that would be prohibitively costly: if Oracle waived its right to present the Lindholm email, Google's related petition to the Federal Circuit for a writ of mandamus would be mooted, and the district court would not have to wait for the resolution of the CAFC case, a dependency that Judge Alsup describes as "[a]nother roadblock to setting a trial date". Given the incredibly useful silver bullet that the Lindholm email represents, it wouldn't make sense for Oracle to agree to such a waiver -- not even if the trial date slipped into 2013, which I mentioned before and which the judge mentions in the same paragraph as the Lindholm issue.

While I understand that the judge blames Oracle for not having complied in full with his guidelines on damages, today's order comes across as being a bit too harsh on Oracle since it is not in any way responsible for Google's long-shot petition to the Federal Circuit, which is part of a wider strategy on Google's part to delay resolution of this case and to benefit from this delay commercially. Obviously, threatening with a delayed trial gives the judge leverage only against Oracle, but even if he has leverage of a certain kind, he should use it fairly. Few people know better than Judge Alsup the numerous efforts Google has made to prevent the Lindholm email from being shown to the jury. It's surprising that he's now prepared to reward Google for its delay tactics and for its persistent efforts to prevent the jury from finding out the truth about Google's full awareness of the need for a Java license.

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Microsoft-LG agreement shows Android (and Chrome) patent licensing is still en vogue

2012-01-12T15:31:00.006+01:00

2012 has had a reasonably busy start on the patent litigation front, but license deals continue to be struck: Microsoft and LG just announced a patent license agreement covering LG's products running Android and Chrome OS.

The terms of the agreement are confidential, but it's safe to assume that this agreement is like the others Microsoft has signed with the industry in regards to royalties, i.e., it will be royalty-bearing.

The announcement indicates that the two companies have "built upon [their] longstanding relationship". Back in 2007, before Android and Chrome OS were relevant, Microsoft and LG already reached a patent license agreement relating to other technologies "including Linux-based embedded devices". Basically, Android is a Linux fork, and Android phones and tablets are, by extension, Linux-based embedded devices, so the new license agreement is in the tradition of the previous one.

Microsoft says more than 70 percent of all Android smartphones sold in the U.S. now have a license to its patent portfolio. Even though litigation is often very spectacular (which is why I blog about it so much), the commercial reality is that patent licensing is still the prevalent way to resolve intellectual property issues. Only a minority of all disputes ever go to court, even though the percentage of cases that require litigation may be, temporarily, a bit higher in the current situation, in which different industries are converging and sorting out who owns what types of innovation.

Prior to LG, Samsung already signed a license deal with Microsoft covering the same Google platforms. Just like LG, Samsung also has a commercial partnership with Microsoft in place. It says something that those two Korean companies prefer to resolve any Android- and Chrome-related IP problems amicably with Microsoft, given that both of them have proven to be great fighters. Samsung is clearly giving Apple a run for the money in ten different countries (see my latest post on that particular dispute, published last night), and less than a year ago, LG achieved the (temporary) seizure of roughly 300,000 PlayStations in the Netherlands over the alleged infringement of Blu-ray-related patents. Both these companies hold large numbers of patents on a worldwide basis. In the Dutch PlayStation complaint, LG claimed to own approximately 90,000 patents, and Samsung owns more than 100,000 (on a worldwide basis in each case, with many inventions being patented in a numnber -- sometimes in dozens -- of jurisdictions). These are companies that definitely understand the patent business and know how to defend themselves in court if they have to or want to -- but with Microsoft, they both reached an agreement at the negotiating table.

Motorola Mobility appears to be the last major Android vendor to refuse to take a license from Microsoft. Others either have a direct license agreement in place or they are licensed because of arrangements between Microsoft and their ODMs (Original Device Manufacturers).

Besides Motorola, Microsoft is also suing Barnes & Noble, but that company isn't quite comparable to the big international players that have taken a license. The first major Android device maker to receive such a license was HTC (almost two years ago).

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Oracle proposes speedy path to injunction or settlement 'to bring Android back into the Java fold' and end 'Google's lawless conduct'

2012-01-12T10:25:00.005+01:00

Late on Wednesday, January 11, 2012, Oracle and Google filed their responses to Judge William Alsup's final pretrial order envisioning a trifurcated (three-part) Android-Java trial to begin "on or after March 19".

As I expected, Google appears quite happy about the court's envisioned trial structure. It previously advocated trifurcation while Oracle objected to it. Google merely expressed concern over the time allotted for the patent liability phase (the second part of the trial). If the judge shared Google's related concern, this could increase his willingness to stay the patent part of the case pending the ongoing reexaminations of most of the patents-in-suit unless Oracle further reduces the number of patent claims it asserts. I previously said that the judge could still stay the patent part of the case after the copyright phase. While the final pretrial order didn't address this possibility, the judge never waived his right to do so.

Oracle formally renewed its objections to trifurcation by referencing a couple of earlier pleadings, but rather than making another (presumably futile) attempt to dissuade the judge from a three-phase trial, it puts forward a constructive suggestion for a slightly modified trifurcated trial, an evolutionary (not revolutionary) proposal that would have two key benefits to Oracle but may well be palatable to the judge. Oracle proposes that the court decide on a possible injunction prior to the third trial phase (damages and related issues). Should there be a break between phase two and phase three, "a new jury would be selected to hear that [damages] phase".

Oracle describes this as merely a "change in sequencing". While this is reasonably consistent with the judge's original proposal, it does have some interesting ramifications. There would be much more settlement pressure on Google if Oracle prevails in any liability phase, and the third trial would be considerably less likely to ever take place. By comparison, the plan envisioned by the final pretrial order would create, or constitute, a major incentive for Google to go the distance (i.e., see this three-part trial all the way through).

The impact of Oracle's proposed plan is not even limited to timing. Oracle's plan would require the jury to "address copyright willfulness in Phase One and patent willfulness in Phase Two". This further strengthens Oracle's argument that evidence relating to willful infringement should be presented to the jury in the liabilities phases of the trial (something that Oracle believes should happen whether or not the court adopts its modified plan).

This would again increase the likelihood of a settlement after the copyright trial. Judge Alsup previously said at a hearing that he was looking for a plan that might resolve the case just on the basis of copyright liability. I surmise he'd rather not have the jury go into intricated technical issues concerning patents and similarly complicated economic questions relating to damages theories. This particular element of Oracle's proposal could have that desired effect regardless of who wins the copyright trial.

Let me explain all of this more specifically in the following paragraphs. This is an important juncture in the Oracle v. Google process, the underlying tactical considerations are more complex than one might think, and the relevance of Oracle's key arguments in this context transcends the context of its proposed evolutionary improvement to the trial plan. I'll firstly summarize and quote from how Oracle stresses its sense of urgency, then discuss how much time and effort this plan could save, and finally also address the question of evidence relating to willfulness. If you are very interested in the potential outcome of Oracle v. Google, reading about these issues and considerations will be time well spent. If your interest is significant but limited, I recommend reading at least the following section on Oracle's urgency because it adds quite some background to the business issues underlying the dispute.

Oracle would like to move the trial up to February

Oracle begins its comments on a possible trial date by restating that it "wants this case to be tried as soon as possible". In this context, Oracle says the following:

"Google is inflicting irreparable harm on Oracle by offering proprietary Java technology, most notably the patents and copyrights in suit, for free within Android, fragmenting the Java platform. Oracle needs to obtain injunctive relief quickly to preserve the Java ecosystem and restore the 'write once, run anywhere' promise that is the core of Java's value."

While the foregoing merely reiterates what Oracle stated on previous occasions, nothing is better able to demonstrate Oracle's sense of urgency than the fact that its latest filing makes a push for an even earlier trial date than "on or after March 19". Even before it outlines Oracle's proposal for a modified three-phase trial, Oracle's response to the final pretrial order notes that "one of the scheduling conflicts that prevented an earlier trial date has now disappeared": Google's lead trial attorney, Robert van Nest, was previously scheduled to appear at a New York v. Intel Corp. trial in the second half of February, but that one was vacated just before Christmas. Oracle's counsel is flexibly available for the next several months (until May 2012). Should the court neither move up the trial nor be able to keep the March 19 schedule, Oracle would like the trial to take place between April 23 and May 30 in order to prevent further delays.

Oracle's argument for a modified sequencing of the three-phase trial starts with slightly over one page of descriptions of the harm Java is suffering due to Google's alleged infringement. Firstly, Oracle points out that "[t]he injunctive phase of this case is critical to Oracle and is the most time-sensitive aspect of the litigation" and recalls that its "goal is to employ its right to injunctive relief to bring Android back into the Java fold and end the fragmentation in the Java platform and Java community that Google's lawless conduct has generated". Oracle said so at the pretrial conference as well as in its pretrial brief.

While business is business and usually about money, I wouldn't dismiss Oracle's community-related argument. It would be both in the company's and the community's interest to reunify Java. It's true that an injunction is key, though it depends on its technical scope. I think Judge Alsup is reasonably sympathetic to the fragmentation argument and appears to see rather strong indications of Google's willful infringement (which doesn't guarantee an injunction but plays a role to Judge Alsup in this regard). An injunction is quite realistic in this case, but the technical scope depends on the jury's liability-related findings. A technically broad and powerful injunction would indeed give Oracle the leverage it needs to accomplish its goal of reunifying Java. An injunction of lesser breadth would probably have the opposite effect: in an attempt to work around it, Google would probably widen the gap between Android's Dalvik virtual machine and the official Java standard. But that possibility doesn't affect the validity of Oracle's argument.

Oracle provides an update on Android's distribution figures, citing Google chairman Eric Schmidt's speech at this week's CES, where he mentioned that 700,000 units of Android devices are now activated per day and said: "Just do a little math with the numbers I just told you, and Android is on a billion-unit plan."

Oracle also elaborates on Android's increasing adoption in areas beyond mobile phones. Tablet computers and TV sets are mentioned as well-known fields, but "[l]ess well-known is
Android’s spread into embedded systems, a traditional strongpoint for Java". Oracle says that its "sales force is seeing increasing evidence that Android is threatening Java in this area", and that this is "Google's objective" (as opposed to an unintended consequence). In this context, Oracle quotes the following passage from an AllThingsD article:

"While Andy Rubin is most focused on getting Android running on as many phones, TVs and tablets as possible, he sees opportunities well beyond that. Already, he notes, the operating system has spread to watches from Motorola and car dashboards from Mercedes. 'Tell me what screen Android shouldn't be on,' Rubin said, speaking to AllThingsD just after he finished his onstage appearance at AsiaD in Hong Kong."

Oracle furthermore cites a Technology Review blog post, tellingly entitled "Google's Android Rampages Beyond Mobile", quoting the following passage:

"Combine all that with other tech announced today that will have Android devices control everything in your home from lighting to irrigation...and it becomes difficult to think of that cute green robot representing a mobile operating system any more. Rather, Android is being pitched as the operating system, for a future brought to you by Google."

Oracle therefore urges the court to move quickly:

"The more Android penetrates into the market, the more significant its forking of Java becomes and the harder it will be to achieve Oracle's desired result. A speedy trial and entry of injunctive relief is thus ever more critical."

And then Oracle proposes to address injunctive relief as early as possible.

Oracle wants the court to switch into the "injunction" gear once Google's liability for infringement has been established

I outlined Oracle's modified plan further above, and the following sentence is key:

"If Oracle prevails in Phase One or Two, the Court would then turn to the question of injunctive relief."

This wording would even make it a possibility that the court orders an injunction based on copyright infringement before the patent liability issue is resolved. Whether the court would do this is another question, but the mere possibility would be a good reason for Google to settle quickly if Oracle wins the copyright liablity trial. Even if the injunction phase was entered only after both liability trials have taken place, Google's ability to draw this process out would be limited as compared to the original plan.

The judge probably doesn't like the part of Oracle's proposal that envisions a new jury to evaluate damages in phase three. But the likelihood of that new jury ever being needed would be greatly reduced by Oracle's proposed plan. If there's a liability finding and an injunction, Google has greater worries than the damages amount. If there's no liability finding, or one that doesn't result in an injunction (or only in one that doesn't solve the fragmentation problem), Oracle cannot achieve its primary objective and would also be much more likely to consider a settlement that would only be about money, without forcing Google to be fully Java-compliant.

In terms of case management economics, the benefits of Oracle's proposal outweigh the issue of a possible new jury for phase three (which would probably not be needed, and even if it were needed, wouldn't present any non-manageable problems).

Oracle wants willfulness evidence to be shown to the jury early on

It comes as no surprise that Oracle wants to present the Lindholm email -- a document that evinces Google's awareness of the need for a Java license -- and similar evidence (such as emails from Andy Rubin going back to the year 2005) to the jury as early as possible. The jury will be quite challenged with lots of technical detail concerning the patents and copyrights at issue, but if its members conclude from some rather straightforward business correspondence that there must be some liability somewhere, Oracle is simply much more likely to prevail on some of the important technical details.

Even prior to outlining its modified trifurcated trial proposal, Oracle says that it "believe[s], but wish[es] to clarify, that under the Court's Order, willfulness evidence may be introduced in Phases One or Two to the extent it establishes an element of liability (e.g., in connection with inducement) or counters a defense that Google has indicated it will introduce at trial". Concerning the second part, Oracle claims that "Google’s willful infringement negates its equitable defenses as a matter of law", citing precedent from New York according to which "[t]he infringer's state of mind can support a finding of egregious conduct, thereby defeating equitable defenses such as laches".

Oracle can't force the judge to provide this clarification now. He may tell Oracle that the admissibility of evidence will be discussed on a case-by-case basis later on. But it would be more efficient for everyone if the judge could indicate beforehand whether willfulness evidence is, in principle, eligible during the first two phases of the trial.

Toward the end of its brief, Oracle points out that what it considers appropriate even under the court's original plan would be a necessity under Oracle's proposal for a modified plan:

"We propose that the jury address copyright willfulness in Phase One and patent willfulness in Phase Two. Because, as noted previously, questions of intent are relevant to issues of liability, we believe this would in any case be a more efficient allocation of decision-making responsibility. But under our alternative proposal, such a reallocation would be necessary so that the damages jury does not have to hear extensive liability evidence in order to render a verdict on willfulness."

Since Judge Alsup previously said that a finding of willful infringement would have "profound imoplications" for the possibility of an injunction and willfulness is a matter of fact that the jury needs to decide, Oracle's idea of entering the injunction phase after a finding of liability wouldn't work without the jury speaking out on whether or not any infringement identified was willful.

Oracle's argument that I just quoted is a different one, however. What Oracle says there is that in the event a second jury is needed for phase three (damages), the second jury would have to hear lots of general (though already adjudicated) liability issues because those questions are intertwined. Under Oracle's proposal, however, the liability jury would establish whether or not there is willful infringement. If there is, then the damages jury just needs to determine a pre-tripling damages amount, and the judge would then triple the amount.

Oracle's desire to raise the willfulness question early on may lead to another push by Google for the right to present to the jury any non-final rejections of patent claims by the USPTO's Central Reexamination Unit. While Judge Alsup decided on a related motion in limine to the effect that only final rejections (final in the sense that the examiner is done, even though appeals to the BPAI or CAFC are still possible) may be presented but first (and other preliminary) Office actions aren't eligible, he kept the door open to requests "to present to the jury some specific item of information from the reexamination of the other patents [patents on which there is only a preliminary Office action]". It's possible that Google will argue, as it did before, that even some of those preliminary findings show that Google may have had valid reasons to deem Oracle's patents-in-suit invalid, and on such a basis Google says it wouldn't be liable for willful infringement. The argument would basically be that a non-final Office action may not have sufficient probative value with respect to whether a patent is indeed valid, the bar is lower if a defendant merely sees to show that it had a reasonable basis on which to consider a patent invalid -- and willful infringement requires someone to deliberately violate a valid patent.

Even if Google managed to inject some of the non-final reexamination stuff into the process because of its potential relevance to the question of willfulness, the upside to Oracle (having willfulness discussed and adjudicated as early as possible) would still outweigh the downside. The first trial phase is about copyright, and patent reexaminations obviously aren't relevant to that one. If Oracle won the copyright part and then headed toward a potential injunction, that might be all it takes for Oracle to achieve its objectives (and for the court to save the time and effort of phases two and three of the trial).

A speedy trial is also in Oracle's interest for the reason that most of its patents are under serious reexamination presusre and there could be further bad news from the USPTO the longer things take. That, however, doesn't diminish the validity of the fragmentation (and Android market penetration) argument.

Conversely, Google would still love to delay the trial, though it gives lip service to a swift resolution of the matter. I mentioned further above Google's complaint about the amount of trial time that it believes would actually be needed for the patent liability phase. Also, Google's recent mandamus petition to the Federal Circuit could result in some delay (usually not much, but one never knows). It appears to be a long shot, as I wrote in November. Matt Macari, an IP attorney who additionally writes for The Verge, noted on Twitter todayit's been "[l]ong established that you can't make a business (not legal advice) doc[ument] privileged by simply cc'ing an attorney". While Matt points out that there's no way to guarantee, he, too, "do[es]n't believe Google can win on this, including at the CAFC", and says this about the legitimacy of Google's tactics:

"At some point, Google is just protesting too much. Incredibly problematic, but highly relevant and admissible."

In the context of this final part of this post -- willfulness evidence -- it is nevertheless important to note that the admissibility of the Lindholm email is still contested, and there's a chance (or I would call it an off-chance) that Google can get it thrown out. In that case, Oracle would still have other ways to prove willfulness, but it would lose a silver bullet of enormous proportions.

In closing, I have a gem for you if you're interested in the neverending Lindholm story. Alison Frankel of Thomson Reuters News & Insight and of the "On The Case" column has managed to obtain, and has gratefully published, Google's petition to the CAFC and Oracle's response. Alison's article explains what kind of fundamental issue Google hopes to be able to raise. Google apparently hopes that the Federal Circuit may feel that Judge Alsup made it too hard for in-house counsel to have privileged correspondence with employees (by requiring clear references to legal strategy in what otherwise appears to be business correspondence). Oracle denies this, and says that even if Judge Alsup was considered to have been too reluctant to grant privilege to correspondence between employees and in-house attorneys, the Lindholm email still wouldn't deserve privilege for no shortage of other reasons. I, too, believe that the whole history of the Lindholm email makes it clear that adding an in-house was merely an afterthought, but I understand that Google hopes the CAFC will take a broader perspective and be more worried about the precedent this case sets than what the obviously correct decision in Oracle v. Google would be. We will see. I continue to believe that the most Google can realistically achieve here is a (limited) delay.

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Samsung wants to show Apple's contracts and correspondence with Qualcomm to courts in 8 countries

2012-01-11T23:37:00.000+01:00

This week, Samsung filed a discovery motion with the United States District Court for the Southern District of California (Qualcomm's home court) and added a "notice of related case" today, reminding the court of the fact that it granted (in October 2011) an Apple motion to obtain documents concerning Samsung's patent license agreement with Qualcomm in order to show such material to courts in other countries. Now Samsung wants to see -- and show to courts in eight countries -- any contracts and correspondence between Apple and Qualcomm related to the supply of Qualcomm baseband chipsets "that were manufactured by Qualcomm and incorporated into the Apple iPhone 4S". In essence, Samsung is telling the court that "what's good for the goose is good for the gander".

Apple has clearly benefited from its Southern California discovery of the Samsung-Qualcomm relationship. Samsung's motion for a preliminary injunction against the iPhone 4S in France failed because a Paris-based court concluded that Samsung's patent rights are exhausted and it couldn't legally terminate its patent license agreement with Qualcomm with respect to Apple. Last week, an Italian court also denied such a motion, and also based its decision in no small part on the Qualcomm agreement. And in December, Samsung backtracked in one of its various Mannheim actions against Apple as far as the iPhone 4S is concerned, though it kept its options open and may attack the iPhone 4S in Germany over the same patent, or other patents, anytime.

Samsung now hopes that access to documents relating to the Apple-Qualcomm relationship will enable it to prove that Apple is not a "Qualcomm Customer" as that term is defined in the Samsung-Qualcomm agreements. Samsung's position is that if Apple does not meet the definition of a "Qualcomm Customer", it is not "entitled to use the chipsets at issue". In Samsung's opinion, Apple can only be considered a "Qualcomm Customer under the 2004 Samsung/Qualcomm license agreement" if Apple has "purchased the chipsets at issue from Qualcomm and integrated them into the devices it sell to the public". Therefore, Samsung wants to find out about "the chain of distribution from Qualcomm to Apple", which it considers as "central issue" in this dispute. The following sentence (from a different part of the motion) outlines the two possible conclusions that may ultimately be drawn from the requested documents:

"Resolution of this issue likely will depend, in large part, on whether Apple purchased the chipsets at issue directly from Qualcomm and integrated them into its consumer devices or, alternatively, whether Apple received consumer devices from an intermediary that received the chipsets from Qualcomm and integrated them into Apple's consumer devices."

If the court grants Samsung's motion, it plans to present the documents to be obtained in three actions in Mannheim, Germany; two in Tokyo, Japan; three in The Hague, Netherlands; one in Seoul, South Korea; two in Paris, France; two in Milan, Italy; one in London, UK; and one in Sydney, Australia.

To me, Samsung's request appears perfectly reasonable unless Apple can show to the court that Samsung's patent rights will be exhausted just because Apple uses Qualcomm chips, irrespectively of whether there are any intermediaries in play between Apple and Qualcomm. If the supply chain doesn't matter at any rate, then there's no point in bothering Qualcomm and giving Samsung's lawyers access to confidential material belonging to other companies.

Patent exhaustion usually isn't affected by intermediaries, but this depends on what Samsung's patent license agreement with Qualcomm says. The French and Italian court decisions make reference to some of its terms, and there are indications that Samsung entered into a covenant not to sue -- as opposed to a straightforward license -- with respect to Qualcomm's customers. It can't be ruled out that the way the covenant not to sue is worded makes a distinction between customers supplied directly by Qualcomm and those who buy Qualcomm baseband chips from or through third parties.

In Italy, Samsung raised this issue but couldn't show to the court that it had a point. It's probably not a coincidence that Samsung makes this discovery request in Southern California the week after the denial of its preliminary injunction motion in Italy. Samsung could still win the main proceedings even in countries in which it lost a bid for a preliminary injunction if it presents game-changing evidence. It's actually surprising that Samsung didn't ask for information on Apple's baseband chip supply chain earlier on, but all of the companies embroiled in the current wireless patent wars -- all of them, without even one exception -- are going over a learning curve.

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Eastman Kodak sues Apple over four and HTC over five digital imaging patents

2012-01-10T22:28:00.001+01:00

Eastman Kodak keeps trying to force Apple into a license agreement relating to its portfolio of approximately 1,000 digital imaging patents. It hasn't achieved a breakthrough in an ongoing ITC investigation (the target date of which was recently extented to September), but today it brought two new lawsuits -- one against Apple, another one against HTC -- in the Western District of New York (Kodak's home court). Here's the header of the complaint against Apple:

The complaint targets the iPad 2, iPhone 3G, iPhone 3GS, iPhone 4, iPhone 4S, and the iPod touch (4th generation). The four patents-in-suit against Apple are:

U.S. Patent No. 7,210,161 on "automatically transmitting images from an electronic camera to a service provider using a network configuration file"
U.S. Patent No. 7,742,084 on a "network configuration file for automatically transmitting images from an electronic still camera"
U.S. Patent No. 7,453,605 on "capturing digital images to be transferred to an e-mail address"
U.S. Patent No. 7,936,391 on a "digital camera with communications interface for selectively transmitting images over a cellular phone network and a wireless LAN network to a destination"

Kodak is asserting those four patents as well as a fifth one against HTC's Android-based devices. This is the fifth patent-in-suit against HTC:

U.S. Patent No. 6,292,218 on an "electronic camera for initiating capture of still images while previewing motion images"; this patent is being asserted against Apple and RIM in the aforementioned ITC investigation

The complaint against HTC lists the following devices: the HTC EVO View 4G, Flyer, Jetstream, Vivid, Amaze 4G, Desire, Evo Design 4G, Hero S, Rezound, Rhyme, Sensation 4G, and the Wildfire S. All of those are Android-based. While the complaint is explicitly "not limited to" those products, it appears, at least for now, that Kodak's lawsuit is not targeting Windows Phone devices such as the HTC Titan.

While Apple and HTC are suing each other, they will probably cooperate with respect to the patents Kodak is asserting against both of them. At the very least they will probably conduct a joint prior art search, and they could also be interested in narrowing the scope of the asserted patents claims so as to avoid liability for infringement.

Kodak has been trying for some time to find a strategic buyer for its digital imaging patents. Today's lawsuits are presumably part of the sales and marketing effort for those patents: Kodak seeks to demonstrate that there are still some interesting assets in its portfolio that can be used to sue major wireless device makers.

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Microsoft streamlines Barnes&Noble case by withdrawing one patent and seven claims from four remaining patents

2012-01-10T21:11:00.001+01:00

Approximately four weeks ahead of the ITC hearing on Microsoft's complaint against Barnes & Noble, the scope of the investigation has been narrowed. Microsoft and Barnes & Noble filed a stipulation yesterday (which entered the public record today) according to which Microsoft withdraws all of the asserted claims from one patent and some of the asserted claims from the four remaining patents. The stipulation expressly states that this is "not an admission as to the merits of any claim" but merely meant to "simplify the Investigation, streamline the hearing, and converse the Parties' and Commission's resources in consideration of the amount of time allotted for the hearing".

The ITC's Administrative Law Judges routinely encourage complainants to narrow their case, and if patent claims get dropped, it typically happens a few weeks ahead of trial, in mid-trial, or shortly thereafter. Last week, Motorola dropped (a few weeks after the hearing) one of its patents-in-suit against Apple.

Here's a table that shows the impact of the stipulation:

Patent Number	Patent Title	Claims Dropped	Claims Remaining
6,339,780	Loading status in a hypermedia browser having a limited available display area	1-6, 9-14, 17-26, 29-42	none
6,891,551	Selection handles in editing electronic documents	7, 9, 11	1-3, 5, 8, 10
6,957,233	Method and apparatus for capturing and rendering annotations for non-modifiable electronic content	21	22
5,889,522	System provided child window controls	1, 2	12
5,778,372	Remote retrieval and display management of electronic document with incorporated images	1	5

This looks like a thorough streamlining to me. At the ITC, which operates under more rigid timelines and page limits than the district courts, less (in terms of fewer patent claims) can be more (in terms of the final outcome).

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Spanish tablet computer maker NT-K brings indictment against Apple for alleged extortion

2012-01-10T20:25:00.000+01:00

In early November 2011 I reported on the acquittal of a small Spanish tablet computer maker, Nuevas Tecnologías y Energías Catalá (doing business as "NT-K"), after Apple had alleged "counterfeiting", and translated the relevant court order. Today, NT-K issued a Spanish-language press release announcing the filing of an indictment against Apple for the alleged act of extortion. NT-K's owners filed those charges with the office of the district attorney (public prosecutor) for the Valencia region.

I have only seen the press release and the front page of the indictment. NT-K plans to publish some of the accompanying documentation on its corporate blog, starting next week.

Back in November I already pointed out that I believe NT-K's Android-based tablet computers didn't represent an act of counterfeiting in the narrow sense of the word: NT-K wasn't building iPad clones. At the most, they may have infringed a Community design, an EU-wide design-related right (comparable to a U.S. design patent), that belongs to Apple. In my view, any dispute over that type of infringement should be resolved under civil law without raising, directly or indirectly, issues under criminal law.

But this goes both ways. I understand that NT-K was offended by having to defend itself in a criminal proceeding that was more or less directly triggered by Apple asking customs authorities for help against an alleged counterfeiter. However, that doesn't make Apple's aggressive enforcement activities a crime. For now I don't see evidentiary support for the claim that Apple sought to "extort" NT-K and possibly other small companies.

I have looked up (on Wikipedia) the definition of extortion according to Spanish criminal law. It comes down to someone with the intent to enrich himself forcing, through violence or intimidation, his victim to commit or desist from an act or transaction to the economic detriment of the victim or a third party. NT-K argues that Apple sought to enrich itself to NT-K's detriment by intimidating NT-K, with the force ot its legal machinery, into the destruction of its products, the discontinuation of their commercialization, a waiver of its legal rights and the surrender of its customer list. In the alternative, Apple was going to -- and did -- shut down NT-K's importation of allegedly infringing products for at least a certain period of time.

While NT-K's representation of the events appears to match the aforementioned definition on the surface, aggressive enforcement of rights -- in this case, intellectual property rights -- is not necessarily a crime. Apple's lawyers threatened with legal action that may have been based on a very far-reaching definition of "counterfeiting" and probably also on the assumption of a very broad scope of the asserted Community design, but so far I don't see any signs of a criminal act. Since Apple's allegations of counterfeiting were dismissed, NT-K can try to recover damages and pursue other legal action, but it appears to me that Apple's conduct was above board. What NT-K has described so far looks to me like a case of bullying and I don't support it, but there was most probably a genuine legal dispute. In such a dispute, each party is allowed to assert its rights, state its views, and threaten with further legal action in the event of continued non-compliance with its requests.

NT-K's press release mentions that its lawyers sent Apple's counsel a letter that "dismantled, item by item, Apple's allegations" of counterfeiting, but subsequently, Apple reported NT-K's tablet to the Spanish customs authorities regardless. While I don't rule out that it might have been more appropriate for Apple in this case to engage in a constructive dialog with NT-K's counsel, it's nothing unusual for a right holder to take the next step if the recipient of a cease-and-desist order or notice of infringement disagrees.

I don't want to speculate about NT-K's intentions here. I believe that NT-K is probably entitled to the recovery of a reasonable amount of damages, but if I were Apple, I wouldn't pay more, or more quickly, just because of an indictment that may be no less overreaching than Apple's original "counterfeiting" claim was.

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Requested ITC review could find Motorola in infringement of up to five more Microsoft patents

2012-01-10T12:03:00.001+01:00

Yesterday (Monday, January 9, 2012), Motorola Mobility asked the ITC for an extension of a deadline for each party's responses to the other party's petition for a review. As I reported last week, both Microsoft and Motorola filed detailed briefs asking the ITC to overrule an Administrative Law Judge (ALJ) who found that Motorola infringed four claims of one of Microsoft's seven patents-in-suit.

Instead of having to comment on Microsoft's petition on or before Friday, January 13, 2012, MMI would like to have until Monday, January 17, 2012. This extension would give Motorola one additional business day and two non-business calendar days (this coming weekend). Microsoft doesn't oppose this request (an extension would also apply to Microsoft's response to Motorola's petition for review), though Motorola surprisingly opposed a similar Microsoft request during the Holiday Season (relating to the deadline for petitions for review).

What's interesting is the basis on which Motorola asks for more time:

"Microsoft's petition raises arguments relating to the ALJ's finding of non-infringement of five patents as well as arguments relating to the ALJ's finding of no domestic industry for four of those patents and his findings relating to invalidity for one of those patents."

Prior to reading Motorola's motion, I had no idea of the scope of Microsoft's petition. I just knew that it was 107 pages long (short of the 113 pages of Motorola's petition), and after I saw Microsoft's request for an extension and, especially, after I read the ALJ's less than well-reasoned initial determination, I expected that they'd take issue with a number of the ALJ's findings. The one sentence I just quoted, however, makes it clear to me how many -- and even which -- patents Microsoft asks the ITC to find Motorola to violate.

In my first analysis of the initial determination, I published a table that sums up the ALJ's findings. For your convenience, I'll just republish that table here, but with an additional column entitled "Review Requested":

Patent	Deemed Valid	Deemed Infringed	Domestic Industry	Review Requested
'566	Yes	Yes	Yes	Yes (by MMI)
'054	Yes	No	No	Yes (by MSFT)
'352	No	No	No	Yes (by MSFT)
'133	Yes	No	Yes	Yes (by MSFT)
'910	No	No	Yes	No
'376	Yes	No	No	Yes (by MSFT)
'762	Yes	No	No	Yes (by MSFT)

Now let me explain the rationale behind the Yes/No values in the new "Review Requested" column. It's a kind of virtual puzzle game with Boolean logic like some of the riddles that I already liked to solve when I was a kid.

For the '566 patent, it's very simple. Since Motorola filed a "petition for review and contingent petition for review" as opposed to merely a "contingent petition for review", it's clear that MMI doesn't want to accept the initial determination as the final outcome and decided to attack the finding of a violation -- and that finding related to four claims of the '566 patent.

For Microsoft, raising issues with respect to any particular patent only makes sense if the ITC's agreement with Microsoft's take on those issues would result in a finding of a violation. In order for a patent to be deemed violated by the ITC, it must be deemed (i) valid and (ii) infringed and there must be (iii) a "domestic industry" for it, a concept that has an economic and a technical prong. The technical prong is about whether the patent is actually practiced (by the patent holder or a licensee) in the United States. Anyway, the bottom line is that Microsoft needs to challenge all "No" findings (in my table) or there's no point in challenging the ALJ's determination with respect to a given patent at all.

The sentence I quoted further above from Motorola's latest motion indicates that Microsoft wants to overturn the ALJ's finding of non-infringement in five cases, finding of no domestic industry for four of those patents, and finding of invalidity for one of those patents. Let's begin with the easiest part: Microsoft wants a positive domestic industry finding with respect to four more patents, and there were exactly four patents for which the ALJ didn't find a domestic industry (the '054, '352, '376 and '762 patents). Asking for a review of the domestic industry finding wouldn't make sense, for the all-three-or-nothing reason I just explained, if Microsoft didn't also challenge the No's in the other columns for those patents. Wherever the ALJ denied the existence of a domestic industry, he also denied infringement by MMI. Therefore, we know four of the five patents on which Microsoft wants to have a finding of non-infringement reversed.

There are two remaining patents that the ALJ didn't consider infringed (though he did hold those practiced by Microsoft): the '133 and '910 patents. We know that Microsoft wants to overturn one of those two findings. To get a more favorable outcome on the '133 patent, Microsoft "only" needs to overturn the finding of non-infringement, but for the '910 patent, Microsoft would additionally need to overturn the finding of invalidity. But according to Motorola, Microsoft challenges only one (of the two) findings of invalidity, and since the '352 patent is definitely challenged (as the domestic industry situation tells us), Microsoft will also (due to the all-three-or-nothing logic I outlined above) fight for this patent in the other columns, including validity. Therefore, there's no validity-related bullet left for the '910 patent.

I found the ALJ's application of the claim language of the '910 patent very narrow (he doesn't accept a partial replacement of data in a database record a "replacement", which in my view is just an implementation detail that's not really essential to this patent), and his invalidity theory (obviousness over a combination of prior art references) isn't completely convincing either. But it appears that Microsoft decided, for the tactical purpose of narrowing the case, to dismiss this patent from the investigation. It can still assert that one in federal litigation.

The five patents (beyond the one the ALJ deemed violated) Microsoft's petition for review relates to

When I reported on the ALJ's preliminary finding of one patent being infringed by Motorola, I published the related infringement claim chart: a document that details why an accused technology makes use of the teachings of an asserted patent. Infringement claim charts are provided as exhibits to ITC complaints. They are in the public record, though few people actually look them up.

I have now also uploaded the infringement claim charts for the five patents Microsoft's petition for review apparently relates to:

infringement claim chart for U.S. Patent No. 5,758,352 on a "common name space for long and short file names"
infringement claim chart for U.S. Patent No. 6,826,762 on a "radio interface layer in a cell phone with a set of APIs having a hardware-independent proxy layer and a hardware-specific driver layer" (in connection with this patent, the ALJ made the utterly absurd statement that he, contrary to probably the entire ICT industry, considers Android "almost the epitome of hardware dependent software")
infringement claim chart for U.S. Patent No. 7,644,376 on a "flexible architecture for notifying applications of state changes"
infringement claim chart for U.S. Patent No. 5,664,133 on a "context sensitive menu system/menu behavior"
infringement claim chart for U.S. Patent No. 6,578,054 on a "method and system for supporting off-line mode of operation and synchronization using resource state information"

The next step is now for the Commission, the six-member decision-making body at the top of the ITC, to decide whether to conduct a review (which is highly likely to happen) and select the issues that will be looked at. This will probably be known in February. If there are many issues, the Commission may (simultaneously with or subsequently to a review notice) choose to extend the target date for the final decision (currently that would be April 20, 2012).

To the extent the Commission doesn't agree with Microsoft and either declines to review the issues or reviews them but affirms any findings of no violation, Microsoft can appeal the Commission decision to the Federal Circuit. Other parties to ITC investigations have previously done that.

These things take time.

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Financial analyst believes patent litigation could raise Apple's share price by $35-$260

2012-01-09T15:32:00.006+01:00

In an article entitled "Why Apple is in no hurry to settle its iPhone patent suits", Fortune's Apple 2.0 blog (part of the CNN.com network) reports on a note issued by Deutsche Bank analyst Chris Whitmore to clients today, listing four possible outcomes of the patent wars between Apple and the Android ecosystem, and their impact on Apple's shareholder value.

Philip Elmer-DeWitt, the author of the article, says that the note mentions a neutral outcome (no winner) and one in which Apple comes out on the losing end as possibilities but actually focuses on two more favorable outcomes:

"a settlement where Apple licenses its intellectual property for about $10 per Android device sold"
"where Android's feature set or ability to distribute is diminished"

The analyst apparently believes outcome 1 would raise Apple's share price by approximately $35 (a terribly erroneous belief in my opinion, as I'll explain further below), while outcome 2 (described as "considerably less likely" in the article) would offer an "enormous" payoff since Apple could capture, for example, "25% of the future anticipated Android market", in which case its share price could grow by roughly $260 per share. Apple's (AAPL) closing price on Friday (January 6, 2012) was $422.

I haven't seen the actual research note, just the article. On that basis, here are my thoughts:

I totally agree with the analyst's suspicion that"Apple is unlikely to settle cheaply" and that shareholders could benefit from being patient. I believe a lot of observers overestimate the hard (legal fees) and soft (distraction of management) costs of the patent wars. All of this is perfectly manageable for those large players, and while the costs may be staggering in absolute amounts, they're little by comparison with what's at stake. Quite tellingly, both Apple and Samsung had stellar financials in 2011, and those two companies also fought harder on the patent litigation front than anyone else. Even for HTC it is paying off so far to hold out, though I believe Apple could already have made far more headway against that rival in the (almost) two years that have gone by since it started the dispute if it weren't for some poor choices made back in 2010.

I furthermore agree that the potential reward for Apple in a scenario in which it can (quoting from the Fortune article) "handicap Android's feature set and/or distribution" is huge, and even the aforementioned $260-per-share effect isn't unrealistic in that event.

But the part on which I disagree strongly (again, having seen only the article, not the actual research note) is the suggestion that a $10-per-device royalty income would add "roughly $35 to Apple's share price". That one would be accurate only under an all-other-things-being-equal assumption, and if that is (as it appears) the assumption, it's fundamentally wrong in light of Android's skyrocketing success. Shareholders relying on that assumption would most probably lose a lot of money.

There is no realistic scenario -- not even a remotely realistic one -- in which Apple can simply tax the Android ecosystem, generating additional income but also keeping market prices and its own margins higher by (in the analyst's example) $10 per device, without losing out on the bottom line.

If Apple had to settle for a mere $10-per-device royalty without any further effect on competitiveness that would result from restrictions on features and/or distribution, investors should give serious consideration (after a full analysis of all of the relevant issues and factors) to shortselling Apple's stock. Why? Because this would open the floodgates to Apple going once again through what it experienced in the 1990s: commoditization.

$10 per device is nowhere near the royalty level that offsets the continuing erosion of Apple's market share, which is already huge in connection with smartphones and will sooner or later be substantial in the tablet computer market, too.

Here's a very simple calculation. Admittedly, it's very simple, but it's not meant to be scientifically precise: its sole purpose is to demonstrate the problem. If we assume, for the stated purpose, that someone buying an Android device -- in a scenario in which Google and its hardware partners can commoditize and cannibalize Apple's business to their hearts' content -- would otherwise (if Apple achieved meaningful differentiation) buy, with a probability of only 20%, an Apple product, then $10 is a very bad deal because just the first sale of a device would currently represent a margin in the hundreds of dollars for Apple, and 20% of, for instance, $200, amounts to $40, and even that number is an understatement. Why is the actual loss to Apple far greater than the $40 figure (20% probability times $200 gross margin)? Because of the follow-on business opportunity. The customer in this example will become an Android user. He won't buy any downloadable products from Apple (apps, iTunes songs etc.) and, even more importantly, will be much less likely to buy an Apple device a year or two later when he buys the next one. So the lifetime loss to Apple of letting a customer become an Android user is many hundreds -- if not thousands -- of dollars, and that lifetime loss has to be multiplied with the likelihood in an alternative scenario in which there is differentiation.

In the Australian dispute between Apple and Samsung, Apple told the court the very thing I just explained: that a sale of a Galaxy Tab 10.1 at this stage has longer-term implications because of each Galaxy Tab customer becoming an Android users and then being much less likely to switch to iOS later. If an end user repeatedly buys Android devices and if Apple kept generating $10 per device for many years, it would get several times $10. But in absolute amounts, the loss of a customer would be even greater than in the example I provided.

The fifth scenario (apparently missing from the research note)

There's a fifth scenario that the analyst apparently didn't consider, and it's more likely than at least two of the scenarios he listed. It could very well be that Apple's patent rights aren't ultimately strong enough to hobble Android in terms of a complete removal of a large number of important features. Maybe the Android ecosystem can remove features that are nice-to-have rather than must-have functionalities, and work around the remaining patents in ways that preserve most or all of the functionality but require a different implementation strategy.

At first sight, some people might wonder what the point in this one would be for Apple. Why fight a patent war without doing huge damage to your competitors? But it's not that simple. This scenario would actually also be valuable to Apple for two reasons:

While a simple feature-by-feature comparison wouldn't make Apple's products appear hands-down superior over Android-based products, they would at least be unique. The user experience would be unique. Some of this would be subtle or even subjective, but it would mean that using an iPhone or an iPad is different. And Think different is a key part of Apple's corporate history and philosophy. Being different is worth fighting for regardless of whether someone else gets weakened or damaged.
Yesterday, a Forbes columnist laid out five reasons for which he believes Windows Phone will succeed, and he touts "the originality of the Windows Phone operating system", thanks to which he believes the platform "may dodge a few patent-war bullets". Between Apple and Android, what's at stake could also be described as "originality".
Through relentless IP enforcement, Apple can discourage blatant, outright copying, and thereby level the playing field. Over the last year I've seen a number of comments by Apple fans on discussion boards who attributed Android's success in no small part to the fact that Google was, so far, able to free-ride on Apple's innovation. By forcing the Android ecosystem to come up with original ideas (including workarounds and designarounds), Apple can raise its rivals' research and development costs and, more importantly, secure more of a "breathing space" between its own innovation and imitators.
That, too, is worth fighting for without having to preclude Android in the long term from providing certain kinds of functionality.

A $10 royalty per device is worth far less to Apple than originality.

Apple may not have managed its litigations too well so far. It may not have drafted some of its patent applications too well either (for example, the slide-to-unlock image patent could have much broader scope now if it had been optimized for strategic purposes). But this just delays its efforts, and as long as all those Android companies can't do serious damage to Apple, it can keep enforcing its rights and pursuing its real vision.

Any analyst evaluating Apple's strategic options in the patent wars must understand that Apple can't simply build a patent licensing business in addition to its operating business without some trade-offs and interdependencies. The operational value of a $10-per-device royalty is a bad deal in the greater scheme of things. Like I said, the moment Apple does such a deal (as opposed to a deal involving a combination of a royalty for some patents and restrictions on the use of other patents) might be a good point in time to shortsell AAPL.

Finally, I'd also like to point out that Apple wouldn't even be able to get a $10 deal today. After almost two years of litigation against Android, it has had some impact (not only in terms of court decisions but also in terms of discouraging the Android ecosystem from copying certain features), but in order to get any deal -- whether a flat royalty deal or a more sophisticated deal involving royalties and restrictions -- it needs much more leverage than it has at this stage. The analyst is right that settlements may take time.

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Chief judge of District of Delaware reproaches Apple for 'disingenuous' argument

2012-01-06T22:36:00.001+01:00

Yesterday (January 5, 2012), Chief Judge Gregory M. Sleet of the United States District Court for the District of Delaware entered a venue transfer order (in a declaratory judgment case brought by Motorola Mobility) that takes Apple to task for making a "disingenuous" argument. The chief judge wants this to serve as a warning to any "other parties" going forward, telling everyone "to refrain from extending their advocacy to arguments that, as was the case here, appear less than forthright".

I'll show you the related passage further below. Let me quickly explain the context:

In early October 2010, Motorola knew that Apple was going to sue it any moment, and brought an ITC complaint as well as a few federal lawsuits as a pre-emptive strike. One of those lawsuits was a declaratory judgment action filed in Delaware, relating to 12 patents Apple previously asserted against HTC in the same district. If you hold a bunch of patents and someone sues you for declaratory judgment that those aren't valid and, even in the event they are valid, not infringed, you can't let that happen. At the very least you'll fight the validity part, but if you think they are also infringed by that company, you then have to assert those patents or else you will lose your ability to do so against that particular entity (with respect to the products named in the declaratory judgment complaint). Apple indeed picked up this gauntlet and, on December 1, 2010, asserted those 12 patents against Motorola, but it did so in the Western District of Wisconsin (not in Delaware, where the DJ action was filed).

In Delaware, Apple brought a motion to dismiss or transfer venue. That happened the next day (December 2, 2010). Apple asked for Motorola's DJ action to be transferred to Wisconsin in order to consolidate it into litigation that included, besides some assertions brought by Motorola, Apple's (subsequent) offensive action over those same patents.

At the time, Motorola opposed Apple's motion, arguing that Apple itself had asserted many of those patents against HTC in Delaware, and some against Nokia in the same district.

For more than a year (!), the Dela-y-ware court didn't rule on a possible transfer. During all of that time, Apple never responded in substance to Motorola's DJ complaint. The case was technically alive, but nothing was going forward for a long time.

In the meantime -- very recently -- the Wisconsin court passed the case including Apple's offensive assertions of those (and three other) patents on to the Northern District of Illinois -- Motorola's home court.

Another thing that recently happened is that Motorola, with Apple's consent, amended its DJ complaint to drop one patent belonging to NeXT. Apple had argued that the Delaware court didn't have personal jurisdiction over NeXT. The amendment was filed in late December 2011.

Yesterday, the Delaware court finally ruled on that old motion to transfer. In a formal sense, it granted Apple's motion -- but it decided that the Northern District of Illinois, and not the Western District of Wisconsin, was the right location, in light of the Wisconsin-to-Illinois transfer I just mentioned. What looks like an Apple victory over Motorola isn't really useful to Apple by now. If the case with Apple's offensive assertions had stayed in Wisconsin, Apple would have liked the Delaware DJ action to go to Wisconsin, but Apple was against a transfer from Wisconsin to Illinois, claiming (among other things) that this wasn't a neutral place given that Motorola is based there.

The Delaware court somehow doesn't like to deal with Apple's lawsuits. The week before Christmas, it stayed all cases brought by Apple against HTC in that district pending an ITC investigation. As a result, HTC has nothing to fear from Apple's patents in all of 2012.

There's no question about the "judicial efficiency" argument here: it would be a waste of court resources to have a declaratory judgment action over a set of patents in one district and an infringement case in another court. But for that reason, the court could have transferred the case much sooner. Anyway, it now finally agreed, but the chief judge reproaches Apple for having argued that Delaware is a "forum non conveniens", i.e., a venue that isn't reasonably acceptable to Apple. Given that Apple brought a number of patent lawsuits in Delaware, back in 2010 but also quite recently, it's an understatement to say that the "inconvenience" argument rings hollow. It's an insult to human intelligence, and the chief judge couldn't help but tell Apple (and anyone else dealing with that court) that this argument "strikes [the court] as disingenuous" and "appear[s] less than forthright" (click on the image to enlarge):

It's possible that Apple never would have chosen Delaware if Nokia hadn't started its litigation against Apple in that place. I believe that Apple later hoped to slow Nokia down by also suing HTC there and trying to consolidate all of that litigation, an initiative that failed. But at any rate, the court noted a clear contradiction between Apple's words and Apple's actions.

While I can understand that the chief judge didn't want to deal with an argument belied by Apple's own actions, the usual approach is always that lawyers use any argument -- they even throw in the kitchen sink -- that could possibly work for their client. This applies to in-house lawyers as well. They're all afraid that by not raising an argument that meets the legal minimum standard (Rule 11), they could make a mistake that's prejudicial to their client. But in this case, the chief judge really thought that this argument was unreasonable to make, even in light of the usual modus operandi I just described.

It's possible that Apple already regrets ever having brought any Android-related litigation in the District of Delaware instead of merely responding to Nokia's Delaware actions there and suing Android device makers elsewhere. By now, Apple may even have reached the point at which it prefers Motorola's home court in Chicago over Delaware...

Maybe Apple's argument about Illinois and its lack of neutrality was no more forthright than the "inconvenience" argument concerning Delaware. The outcome of the Illinois case could be a pretty good one for Apple. They could get a great jury that's totally committed to finding out the truth regardless of where the parties are based. We'll just have to wait and see. One thing is sure, though: those two companies are doing a great job keeping the ITC as well as multiple U.S. district courts busy (and three German regional courts, too).

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Microsoft and Motorola both ask the ITC to overrule an Administrative Law Judge

2012-01-06T18:10:00.000+01:00

It's hard to please everyone, especially in legal disputes, but Administrative Law Judge (ALJ) Theodore Essex has made neither Microsoft nor Motorola Mobility entirely happy with his preliminary finding that the mobile device maker infringes four claims of one of seven patents asserted at this stage.

Both companies have asked the Commission, the six-member decision-making body at the top of the ITC, to "review" -- i.e., overrule at least in part -- the ALJ's initial determination between now and the April 20, 2012 target date for the final decision, which could be an import ban.

Microsoft's and Motorola's petitions aren't publicly available at this stage. Redacted versions will become available after a while (in February, I guess). But the ITC Electronic Document Information System (EDIS) indicates four new filings, all of which were made before close of business yesterday and listed today. Microsoft filed a 107-page "petition for review of the initial determination" and a 12-page summary. Motorola filed a 113-page "petition and contingent petition for review" and a 13-page summary.

This means that both companies want a review instead of an outright adoption of the ALJ's recommended decision. The lengthier title of Motorola's filing ("petition and contingent petition") shows that Motorola raised some issues -- presumably related to the four patent claims it was found to infringe -- on a definitive basis and some others "just in case". The contingent part of Motorola's petition presumably relates to those patents the ALJ did not deem valid and infringed.

The ALJ's initial determination leaves a lot to be desired, not just in terms of the parties' different ideas of what an ideal outcome would be but also in terms of the quality of the reasoning. A week ago I wrote a whole blog post on some of its more obvious shortcomings. Without even going into more technical detail at this stage, I just gave some examples of what's wrong with it, such as the rather surprising (if not outrageous) claim that Android is "almost the epitome of hardware dependent software".

There's certainly room for improvement from Microsoft's point of view. With six patents not having been deemed valid and infringed, a review could lead to infringement findings with respect to one or more additional patents. Microsoft also has to request a review in order to preserve its record with a view to a potential subsequent appeal to the Federal Circuit.

While Motorola was initially quite happy with the fact that the ALJ didn't find a wider-ranging violation, it apparently isn't comfortable with the import ban the ALJ recommended. Also, as I mentioned a few days after the initial determination, Motorola hoped that the initial determination would "provide clarity" concerning the patent deemed infringed and help Motorola "avoid infringement of this patent in the U.S. market". Unfortunately for Motorola, the low quality of the initial determination also affects the part on the infringement finding. That part falls far short of the kind of specificity that would provide Motorola with useful guidance for a workaround. Motorola could only throw out the protected feature (creating scheduler items from a mobile device) altogether.

Microsoft's petition for review isn't surprising. Last week, its lawyers asked the ITC to extend the deadline for such a petition by five business days. Motorola apparently opposed that request. The ITC granted an extension by two days.

I can't imagine that the ITC will adopt the ALJ's recommendation without a thorough review. Not only have both parties asked for it but the ITC will probably also arrive, all by itself, at the conclusion that the ALJ's initial determination is fundamentally flawed in a variety of ways, even to the extent of being contradictory in itself. If the ITC adopted the ALJ's initial determination and if this one was subsequently appealed (which is quite likely in my opinion, without having any knowledge of the parties' intentions), the outcome of an appeals proceeding could be an embarrassment for the ITC as an institution.

Since there are so many issues, I wouldn't be surprised if the ITC determined that it cannot meet its April 20 deadline for a final decision. But for now, the next step is for the ITC to decide whether to conduct a review. I'm pretty sure that this will happen, as it does all the time, but it will have to put together a catalog of review questions (which could be quite long in this case), a process that will probably take several weeks.

We are now entering the most important phase of this investigation.

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Motorola drops emergency call GPS patent from ITC investigation against Apple

2012-01-06T10:24:00.002+01:00

Last month (December 2011), the ITC held a hearing on Motorola's complaint against Apple, filed in October 2010 over six patents. A few weeks prior to the hearing, Motorola Mobility dropped one of those patents (U.S. Patent No. 5,359,317 on a "method and apparatus for selectively storing a portion of a received message in a selective call receiver"). Yesterday, MMI brought an unopposed motion to drop a second patent from the investigation: U.S. Patent No. 7,751,826 on a "system and method for E911 location privacy protection".

The idea underlying the '826 patent is that users may wish to deactivate GPS location tracking for privacy reasons but still want to transmit their location information to emergency responders when they place a 911 (emergency) call. The patent has multiple claims describing different ways to do this. If GPS is generally disabled, it can be enabled temporarily after the emergency sequence "9-1-1" is entered, or there can be a button or other ways of using GPS when it's really needed.

I haven't been able to find any indication in a FRAND lawsuit between the parties (in the Western District of Wisconsin) that Motorola ever declared this patent (or the previously-dropped '317 patent) essential to a telecommunications standard.

Dropping the emergency call-related patent made sense regardless of FRAND issues. If Motorola won an ITC import ban over devices implementing that feature, it's quite possible that the ITC would deny or delay such a ban for public interest considerations. Emergency response issues have already been raised by parties in other mobile patent disputes.

Motorola dropped those two patents without prejudice and is still asserting them in a federal lawsuit (in the Western District of Wisconsin, from where it could be transferred to Chicago at some point).

Generally, narrowing a case is what the ITC wants plaintiffs to do all the time. MMI is now down to four patents in this investigation, the number of patents that Apple asserted against HTC at the end of that process. By focusing on fewer patents, ITC litigants can discuss in more detail the issues surrounding the remaining patents, and there are strict page limits for any related briefs. That is one advantage of a narrow case, and by far not the only one.

An initial determination by an Administrative Law Judge is due on (or before) April 23, 2012.

I have taken another look at some other litigations between Apple and Motorola in the United States. A case involving 15 Apple and 6 Motorola patents was recently transferred from the Western District of Wisconsin to the Northern District of Illinois, where Motorola's portion of the assertions originated. The judge in Chicago, who "enjoys trying patent cases" according to his Wisconsin-based colleague, is pressing on to take this case to trial pretty soon. I saw a couple of recent orders, and there will be some hearings next week, including one at which the judge will discuss possible trial dates with the parties.

Apple raised FRAND defenses against some of Motorola's patents asserted in that case. I saw a letter from a French official who told, in French, the Wisconsin court that a set of discovery requests concerning ETSI (the European Telecommunications Standards Institute, which is based in France) have been received, but they were sent directly by an Apple lawyer to the French authority, though the letter says that the Hague Convention would require such requests to be sent directly from the requesting court (in this case, a U.S. district court) to the central authority of the country asked to enforce the request. I guess Apple will now ask the Chicago-based court and/or the Wisconsin-based court to send such a letter to France.

A lawsuit instigated by Apple in Wisconsin over FRAND issues is, as of now, still scheduled to go to trial in Wisconsin on November 5, 2012. Given that the issues it raises overlap with the case already transferred to Chicago, it remains to be seen how the courts will ultimately organize these cases.

If this looks like a multi-venue mess to you, it is one indeed.

In this section on Apple's tactical mistakes in its litigations with Motorola and Samsung (part of a post that mostly discussed what went wrong in Apple's dispute with HTC), I mentioned that Apple could very probably have avoided this (including the need to fight against Motorola in its home region) if it had acted more swiftly. A document filed by Motorola in October 2010 indicated that Apple had thrown down the gauntlet in the sense of Motorola knowing it had patent infringement actions coming, but lost the race to the courthouse. It's obviously difficult to know exactly how those conversations between the parties went, but Motorola must have had a reason for claiming, at the time, that it had a "reasonable apprehension" of Apple preparing lawsuits against it.

I watch many such disputes and some other parties, such as Oracle (in its dispute with Swiss mobile Java company Myriad) and Nokia (which outsmarted Apple, especially in Germany, where Nokia had a timing advantage with its Mannheim actions over Apple's actions, which were primarily brought in Düsseldorf), are tactically much more sophisticated about when and where to sue than Apple was when its disputes with HTC and Motorola began back in 2010.

In this context of timing and venues and related tactics, let me remind everyone of the fact that the only final (though appealable) ruling in any lawsuit between Apple and Motorola that has come down so far is the one that MMI won in Mannheim about a month ago. Previously, Motorola also won a German default judgment against Apple (which will be reviewed in a month, and will probably, at least in part, be turned into a decision based on the substance of the matter). Should MMI seek enforcement of any such ruling (especially the December ruling, which relates to a standards-essential patent) against Apple, that could be one of the most interesting stories to watch in 2012.

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Incontrovertible evidence: Oracle raised, not slashed, its damages claims against Google

2012-01-05T19:44:00.000+01:00

About four months ago, I said that "[m]edia reports on reduced damages claims [by Oracle against Google] are unfounded". In that blog post, I explained that "[i]f one interprets Google's letter [to the court] correctly, especially in light of all that is known about the previous damages calculation, then there's no reliable indication of a lowering of Oracle's claims. It appears that Oracle just modified its methodology."

None of the reporters I contacted at the time to explain my analysis believed me. Even more recently, I have seen new articles -- and quotes from analysts who talk a lot but never appear to read the relevant court filings -- that made reference to the same old misapprehension of Oracle having "slashed" its claims.

I can now prove in a way everyone will easily understand -- and believe -- that I was right on this one all along. Earlier this week, Oracle and Google refiled various documents from October 2011 (motions in limine and related opposition briefs) because the court thought they were too "scissor-happy" when they originally redacted them. Now look at this passage from a Google motion asking the court to dismiss Oracle's revised damages claims (click on the image to enlarge; emphasis mine):

In case you can't read the image well, here are the passages that I underlined:

"[Oracle's damages expert] has not backed off his bottom-line conclusion that Oracle is entitled to billions of dollars in damages, although he has significantly changed the logic underlying his damages number. [...]" Cockburn suggested that $2.6 billion was the most likely amount of actual damages. [...] Cockburn’s revised report takes a different route, but ends up in almost exactly the same destination--$2.7 billion in damages for Oracle."

If you had believed some other people, they claimed that Oracle went down from about $6 billion to about $1 billion. Both numbers were based on a misreading and misinterpretation of (heavily-redacted) court filings. In the image above you can also see Google mention Oracle's alleged claim that it "had suffered somewhere between $1.4 billion and $6.1 billion in damages", but that was just a range, and if there had ever been one single number on the table, it was the figure Oracle's expert considered most likely -- $2.6 billion. And the idea of Oracle having gone down to $1 billion was based on only one part of the revised claims. By comparing two wrong data points, one needs an unrealistic amount of luck to arrive at an accurate conclusion.

There you have it. If you didn't believe me before, trust Google on this: Oracle's most likely damages figure went from $2.6 billion to $2.7 billion.

If anything, that's an increase. One can also say that the difference isn't much. Well, $100 million is a lot, but we're talking about an increase of only about 4%. Still, someone who goes up by any percentage, however small, doesn't "slash" his claims.

If you want to verify that the above passages are authentic, you can go to PACER.gov and download doc. no. 670 (Google's motion in limine no. 3) from the docket of case 3:10-cv-03561, N.D. Cal., Oracle America, Inc. v. Google Inc..

Interpreting heavily-redacted documents is tough. There's lots of question marks, and those damages computation theories are non-trivial even if all of the numbers are on the table. Ultimately, Oracle can ask for however much it wants: it's still up the court, and in this case a jury, how much it will get. I also pointed out repeatedly that this is primarily about Oracle seeking an injunction against Android unless Google agrees to bring it into full compliance with the Java standard. Still, the misinformation of Oracle having "slashed" its damages claims sounded like it had stopped believing in its case. And that's not true. This is a complex case and not a slam dunk, but a trial date is now, once again, in sight, and pre-trial decisions on the evidence both parties would like to present or exclude were considerably more favorable to Oracle than to Google.

I went to extreme lengths last year to glean data and draw inferences from the limited amount of information on Oracle's damages claims that the parties' heavily-redacted filings revealed. It was hard work, and there are so many question marks and missing pieces that it's ambitious, if not audacious at times. Admittedly, there were a couple of things I didn't (and simply couldn't) interpret correctly due to redactions, and I had to correct parts of my analysis later on, but making this effort regardless enabled me to be the first (back in June) to figure out that Oracle was seeking an amount in the billions of dollars, and I didn't see anyone else contradict the mainstream fallacy of Oracle having "slashed" its claims later in the year.

No one holds a patent on the truth, but I try very hard to pursue it, trying to get as much information out of court filings as possible, no matter for which company my findings may be good or bad news. There's almost always someone out there who's unhappy about what I say, typically depending on who just won the last battle or suffered the most recent blow. It's been that way for a while, and it will be that way this year, and (hopefully) beyond. Earlier today I was really flattered by IAM (Intellectual Asset Management) magazine's decision to name me to its list of the "IP personalities of 2011", stating that "[my] perspective may not always be comfortable, but it can never be dismissed". I'll try to keep it that way, and I'm glad that this week's filing vindicates my previous analysis of the Oracle-Google damages situation.

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Italian court denies Samsung motion for preliminary injunction against iPhone 4S

2012-01-05T17:58:00.004+01:00

ANSA, the leading Italian news agency, just reported that Judge Marina Tavassi of the Tribunale di Milano -- the Milan-based Italian first-instance court for patent cases -- has rejected a Samsung request for a preliminary injunction against the sale of the iPhone 4S in Italy.

Thanks to setteB.IT's Fabio Zambelli for flagging this news to me.

Samsung brought its motion in October 2011. After a first hearing, the court decided that it would hold at least one more hearing prior to making a decision. At the time I said that "Samsung's hopes for iPhone 4S injunctions in France and Italy are alive but fading". By now, Samsung's motions have been denied in both countries. The French decision, which I published in its entirety, came down less than a month ago.

In my first post of this year, I mentioned the ongoing Italian proceedings as potentially generating news this month. It was unclear how long it was going to take, but apparently the court has seen enough to deny the request.

Samsung previously failed with a request for a preliminary injunction in the Netherlands. That one was brought before the French and Italian complaints over the iPhone 4S. Anyway, Samsung's requests for preliminary injunctions against Apple products have so far failed in all three European countries in which they were brought.

Apple's own requests for preliminary injunctions have been slightly more successful so far, but only slightly so -- and Apple may soon owe Samsung significant damages for improperly-granted preliminary injunctions in Germany, Australia and the Netherlands if the courts in those jurisdictions ultimately find that the relevant injunctions shouldn't have been ordered in the first place.

In the most important market, the United States, Apple's bid for a preliminary injunction against four Samsung products failed last month. Apple immediately appealed that denial to the Federal Circuit, which ordered Apple (last week) to correct its appeal. It's unclear what kind of correction was required.

Both Apple and Samsung were trying to rush things in order to score some quick wins of rulings with a profound disruptive impact on each other's business. This didn't work. They're both going to have to focus on regular, full-blown proceedings rather than the fast-track proceedings triggered by requests for preliminary injunctions.

It can be frustrating to see how long litigation -- especially patent litigation -- takes. But that's part of life.

Earlier today I leveled some rather harsh criticsm at Apple's past litigation strategies against the three leading Android device makers. For example, the earliest point in time at which Apple can now win its next decision against HTC will be in March 2013 (and even that one could be postponed). Delays aren't the same as defeats -- but Apple definitely made some mistakes and in a couple of cases was out of luck, such as when a court in Delaware decided two weeks ago to stay all of Apple's federal lawsuits against HTC at once.

All these companies -- including Samsung -- are going over a certain learning curve. But they will all have to keep going because there's so much at stake. And last week a Samsung executive, speaking on condition of anonymity, told the Korea Times that "[t]he patent battle is going south, however, [they] should not drop this as it is more about pride". There's no shortage of reasons to carry on -- but there's also a pressing need to come up with better strategies on the part of some players.

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Thanks to Apple's flawed litigation strategy, HTC has nothing to fear until March 2013 (in the US)

2012-01-05T10:45:00.001+01:00

Litigation is full of imponderabilities and surprises, especially in the United States, where the ITC increasingly appears to be a very difficult forum for smartphone patent holders and district court cases involve layperson juries as triers of deeply technical issues.

But even if litigants can never control their destiny, there are important ways in which smart tactics, combined with the first-mover advantage, can significantly influence the probabilities of different outcomes. And in this respect, Apple made a number of poor choices over the last two years that increasingly produce undesirable effects. In general, it appears that Apple got better. It probably learned from mistakes, and it hired more and better lawyers, both internally and externally. However, some of what went wrong in the past has effects that are irreversible at least in the near term.

When Apple started its patent assertions against Android device makers, there was undoubtedly a lot of emotion involved, at least on Steve Jobs's part. But fending off the fundamental commoditization threat that Android represents is not just a matter of revenge for presumed betrayal and theft: it's an absolute strategic necessity for Apple, which without meaningful product differentiation will be marginalized by Android in all respects. Therefore, it's inexplicable, with the benefit of 20/20 hindsight, how Apple could make major mistakes that would have been avoidable. A company known for its uncompromising attention to detail in all technical and design-related matters simply blundered when it decided when, where and how to sue. As a result, even HTC, the company with the weakest patent portfolio among major Android device makers, has nothing to fear from Apple's patents this year, at least in the United States (other jurisdictions are different, and some of them are much faster). Apple is ceding ground to Android on a daily basis, and its legal efforts take more years to bear fruit than they would have taken with better advice.

I've been watching Apple's lawsuits for quite a while now, and there's a lot I could tell you here about what they should have done differently -- and this is not just the kind of wiser-after-the-fact kind of stuff but things they could and should have researched and understood.

With the ITC import ban Apple won before Christmas, it has scored a first victory against HTC. Forcing Android device makers to modify their products feature by feature is a perfectly valid strategy. But it must be implemented efficiently, in ways that yield results sooner rather than later -- and that's where Apple made its worst mistakes.

In this post I will focus on the HTC situation. 22 months have passed since Apple sued HTC, and major results (in the U.S.) are at least another 14 months off. Instead of getting a series of quick results against HTC that could then be extended to other Android device makers, Apple's disputes with Motorola and Samsung, which started seven months and, respectively, 13 months later, may very well be resolved before there's any major breakthrough against HTC in sight.

Tactical mistakes in disputes with Motorola and Samsung

Apple also made mistakes against Motorola and Samsung. I may talk about those in more detail some other time. Just a few remarks here:

Apple indicated to Motorola that it was going to sue them but lost the race to the courthouse. As a result, Apple had to modify its litigation strategy, which may be part of the reason why its own ITC complaint against Motorola was based on only three patents. More importantly, Apple lost the chance to have all lawsuits consolidated in a venue of its choice. It now has to deal with Motorola in MMI's home court (the Northern District of Illinois), MMI's preferred rocket docket (the Southern District of Florida, where an Apple motion to transfer was flatly denied), and possibly in the Western District of Wisconsin, unless that court also sends its other Apple-Motorola cases to Chicago. Admittedly, Apple was a bit out of luck as far as Illinois is concerned: Motorola's lawsuits were transferred from there to Wisconsin, and then the biggest one of them was sent back to Chicago as a result of a work-sharing agreement between two federal judges. This is rather unusual and beyond control, but if the dispute had had a clear center of gravity in a venue of Apple's choice, it wouldn't have happened.

With respect to Samsung, I've previously criticized Apple's excessive reliance on "soft" design-related rights and its (as well as Samsung's) push for preliminary injunctions in multiple jurisdictions (though I do believe Apple has good reasons to appeal the denial of a preliminary injunction by a US district court to the Federal Circuit). In Germany and Australia, it's increasingly likely that Apple will owe Samsung damages due to improperly-granted preliminary injunctions. While Apple can afford this, it's an embarrassment and courts will be more hesitant than ever to grant Apple preliminary injunctions, at least in those jurisdictions.

Why no companion complaint in March 2010?

When Apple brought its first two complaints against HTC in March 2010, it asserted 10 patents in an ITC complaint and a different set of 10 patents in the District of Delaware. At the time, Apple couldn't know that the ITC is extremely reluctant to hand smartphone patent holders decisive victories -- nor could it anticipate to what astonishing degree the ITC would be swayed by non-legal political arguments.

But for a number of years it's been recommended that plaintiffs -- unless they are tight on cash -- file companion (mirror) complaints asserting in a federal lawsuit the same patents as in an ITC proceeding. This is usually done because the ITC can't order damages. It's also a potential second bite at the apple: even though district courts take note of the ITC discovery results and the ITC's rulings, there's always a possibility of prevailing on patents that one drops during an ITC investigation or on which a district court may decide more favorably even subsequently to a negative ITC decision (especially if ITC-specific issues such as waivers of arguments or the domestic industry requirement play a role).

So in addition to the two complaints it brought in March 2010, Apple should have filed a simultaneous federal lawsuit over the 10 patents from its original ITC complaint against HTC. Apple could still assert any of those patents in a federal lawsuit at this stage, but it could have saved time. This wouldn't have precluded Apple from additionally asserting 10 different patents in federal litigation as well. Companies do that all the time. A few months ago, HTC asserted nine patents it had obtained from Google, using five of them (alongside others) in an ITC complaint as well as a companion federal lawsuit and the other four of them only in a federal lawsuit.

Nokia litigation delayed Apple's ITC case against HTC, but Apple's Delaware lawsuits against HTC didn't slow down Nokia

Why did Apple sue HTC in Delaware at all? There's lots of litigation there because of many U.S. companies being Delaware corporations, but if you hold patents and want to stop someone's infringement soon, there are some more suitable districts. For example, MMI made a smart choice by bringing some litigation in the Southern District of Florida, but even Apple's home court, the United States District Court for the Northern District of California, is significantly faster. Apple started its litigation with Samsung in California, but it should already have done this against HTC. Again, we're not talking about 20/20 hindsight: the median times to trial for patent cases in the various district courts are no secret.

While I'm not 100% sure, I believe I have the answer: Nokia. By the time Apple sued HTC, it had already been embroiled in litigation with its Finnish rival for almost half a year. That litigation had its center of gravity in Delaware (which was Nokia's choice in that case). A short while after suing HTC there, Apple tried (unsucessfully) to have all of its HTC and Nokia lawsuits consolidated -- though Apple (equally unsuccessfully) opposed the partial consolidation of its ITC cases against Nokia and HTC. Why?

At the ITC, all disputes are one-way streets: counterclaims can only be brought as separate complaints. Therefore, Apple didn't want a delay of its ITC assertions against HTC and Nokia, while in Delaware it hoped to also slow down Nokia's lawsuits. Apple was afraid of Nokia and ultimately came down on the losing end of a settlement. In retrospect (and this is 20/20 hindsight in part, though not in full), Apple should have agreed to pay royalties to Nokia much earlier in order to focus on Android.

The tactical approach I just outlined failed. The ITC wanted to make things more efficient for itself and consolidated a part of the previously-launched investigation of Apple's complaint against Nokia into the investigation of its complaint against HTC. This resulted in a couple of months of delay as compared to an investigation in which HTC (including its U.S. subsidiaries) would have been the only defendant. Perhaps even more importantly, Nokia was at that time a much more powerful player than HTC, and it was and still is a greatly more sophisticated one as far as patents are concerned. By asserting partly the same patents against HTC and Nokia, and especially as a result of consolidation, Apple created a situation in which HTC, which at the time was pretty clueless about patents (it's certainly learned a lot as well since then, but it's still nowhere as competent in this area as Nokia), got the benefit of Nokia's prior art research and other help concerning those patents.

The Delaware court found a rather limited overlap between Apple's dispute with Nokia and the one with HTC. Unlike the ITC, it didn't see a major benefit in consolidation due to the fact that Apple asserted partly the same patents against both companies, given that Nokia's Symbian-based phones and HTC's Android-based handsets are different technologies. The overlap was relatively smaller since there was absolutely no overlap between the claims that Nokia and HTC brought, each of them separately, against Apple.

Delaware, Dela-y-ware: all Apple v. HTC litigation put on hold as of December 22, 2011

On December 22, 2011 -- three days after the final ITC decision on Apple's first complaint against HTC -- the United States District Court for the District of Delaware dealt Apple's aspirations against HTC a setback (in terms of timing, not substance) by granting an HTC motion to stay all three Apple v. HTC cases in that district pending the resolution of Apple's second ITC complaint against HTC.

HTC had brought the related motion in August 2011. When I saw it, I thought it was extremely ambitious and aggressive: HTC asked the Delaware court to stay three cases even though only one of those lawsuits involved the patents Apple is asserting at the ITC. There was no question that the federal court was going to stay the case that mirrored an ongoing ITC investigation, and Apple didn't object to that part of the motion to stay. But HTC argued that it would be much more efficient for the court to also stay those other two cases since they are somewhat related (from a technology point of view) to the companion lawsuit and all three of those lawsuits should go to trial at the same time, further down the road.

The court, which probably suffers from case overload these days, somewhat surprisingly granted HTC's motion in full, pointing to the fact that courts enjoy quite some discretion with respect to case management issues. This decision slows down Apple's efforts against HTC in the U.S. to an extent that I believe is clearly prejudicial to Apple. I don't know if Apple will appeal this one to the Federal Circuit, but even if it did and succeeded, things would take time.

In a way it's unfortunate for Apple that the same court that denied Apple's own motion to consolidate the HTC and Nokia cases back in 2010 later granted a sweeping motion for consolidation by HTC. I don't think Apple's litigators could have foreseen this kind of treatment at the outset. But for the reasons I outlined above, going to Delaware was a bad idea in the first place, and when the decision was made, Apple could and should have chosen a more suitable venue, such as California. And like I said before, it was a bad idea (possibly also driven by emotions, such as pride) to fight a two-front war with Nokia and Android.

Apple could still try to sue HTC in a different district now. But with so much litigation between the two companies already having been brought in Delaware, the dispute has an undeniable center of gravity there, and other district courts might (though they need not) transfer any new lawsuits to Dela-y-ware...

Second round of ITC cases: only preliminary decisions in 2012, final ones in 2013

Apple and HTC (including its affiliates S3 Graphics and VIA Technologies) brought a second round of ITC complaints this summer. Here are the key target dates in those investigations:

Apple v. HTC (inv. no. 337-TA-797): trial in August 2012; ALJ's initial determination by November 7, 2012; final decision by March 7, 2013
HTC v. Apple (inv. no. 337-TA-808): trial in August/September 2012; ALJ's initial determination by November 30, 2012; final decision by April 1, 2013
S3 Graphics v. Apple (inv. no. 337-TA-813): trial in November/December 2012; ALJ's initial determination by February 20, 2013; final decision by June 20, 2013
VIA Technologies v. Apple (inv. no. 337-TA-812): trial in July 2012; ALJ's initial determination by November 9, 2012; final decision by March 14, 2013

What should Apple do?

While I have criticized the decisions Apple took back in 2010, I also acknowledged that they appear to have learned from mistakes. This year, Apple has some major new product relaunches coming up, and those new products are certainly the number one priority for the company. If its litigation tactics had been chosen more wisely, those products would benefit from more differentiation as compared to Android than they will under the current circumstances. But what can Apple do at this juncture?

So far, Apple hasn't brought counterclaims in the relatively new Delaware lawsuit in which HTC is asserting patents it acquired from Google. Apple answered HTC's complaint and brought defensive counterclaims (declaratory judgment requests) but it didn't bring infringement counterclaims. Maybe it can still amend its answer to HTC's complaint and bring counterclaims. Otherwise there's a risk for Apple that this Delaware case, though it was the last one to start, could be resolved ahead of Apple's older (but stayed) Delaware lawsuits. Also, by making the case bigger, Apple may create another incentive for the court to stay that one, too.

Like I said before, Apple could still try to bring litigation against HTC in another district than Delaware. If it comes to worst, the case will be transferred to Delaware -- but Apple has little to lose, and it can afford this financially. It could take some of its more recently-granted patents and start a lawsuit in California, for example.

Apple should also step up its efforts against HTC outside the United States. I know there are Apple lawsuits against HTC in two German courts (Mannheim and Munich) and something going on in the UK, and Apple might bring several more. It could also look at some other European jurisdictions (such as France and the Netherlands), and possibly Australia.

And even though Apple is plenty busy managing all the dockets in the three ongoing disputes, it might want to think about the possibility of bringing action against a fourth Android device maker. From a strategic point of view, Amazon would be a highly logical target. It's unlikely to own patents that Apple has to worry about, and the Kindle Fire is doing extremely well at the iPad's expense. Also, Amazon's business model is a fundamental threat to Google's Android monetization strategy, a fact that would certainly make it harder for Amazon and Google to trust each other (though they likely would work out ways to join forces against Apple).

By starting a whole new dispute over partly new and partly old patents, Apple could try to win decisions in a venue of its choice and subsequently assert its winning patents against other Android companies. Given that those Delaware cases against HTC may not be resolved for a long time to come, and considering how difficult it is to win ITC import bans of broad technial scope, a well-thought-out new lawsuit could be a major opportunity for Apple to make headway against Android, which is eating Apple's lunch.

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Oracle-Google jury will be informed of status of (at least) three patent reexaminations

2012-01-04T22:07:00.006+01:00

A couple of hours after a final pre-trial order that envisions Oracle's lawsuit against Google to go trial "on or after March 19, 2012", Judge Alsup ruled on nine of the ten (five per party) motions in limine. He'll address the remaining one, a Google motion on damages, in a separate order.

Three months ago I already reported on some of those motions in limine.

At the end of today's order on nine motions in limine, the judge makes it clear that any denial of a motion to exclude a particular kind of evidence "does not mean that the evidence at issue in the motion is admitted into evidence — it must still be moved into evidence, subject to other possible objections, at trial". Conversely, "a grant of a motion in limine does not exclude the evidence under any and all circumstances; the beneficiary of a grant may open the door to the disputed evidence, for example".

On balance, those decisions are undoubtedly much more helpful to Oracle than to Google, but there's some light and shadow -- and a great deal of remaining uncertainty -- for either party. Two of Google's three most important motions in limine were denied entirely; two less important ones were granted to a certain degree. Only one Oracle motion was denied entirely, while four of them were granted to at least some extent.

Here's a summary of the decisions, in descending order of importance based on my subjective view:

Oracle sought to exclude any evidence relating to any ongoing reexaminations of patents-in-suit by the USPTO until the reexamination process, including appeals, is closed.
Judge Alsup draws the line right between first and final Office actions. He notes that "the initiation of reexamination and the customary first office action prove little". Almost six months ago I also said that first Office actions must not be overrated. But Oracle also wanted to exclude final Office actions, arguing that those can still be appealed to the Board of Patent Appeals and Interferences (BPAI) and on to the Federal Circuit (and potentially, if a sufficiently important question comes up, all the way to the Supreme Court). But Judge Alsup finds that once "the examiners have gone to the end of their process", he doesn't want to "conceal this important information from the jury". He attaches particular importance to the fact that those reexaminations considered prior art that was not known to the patent examiner during the original examination process. Judge Alsup doesn't want the jury to be misled on the presumption of validity of USPTO-granted patents.
This particular decision is clearly more helpful to Google than to Oracle. While Oracle may point out to the jury that all asserted claims of the '520 patent were upheld, Google can show that all asserted claims from the '720 and '476 patents have been rejected thus far.
The parties can also "request permission to present to the jury some specific item of information from the reexamination of the other patents". Given how those other reexaminations have gone so far, this is also much more of an opportunity for Google than for Oracle. However, I doubt that Google can get too much mileage out of this, given that the judge is reasonably skeptical of first Office actions.
Google has failed for the sixth time (and will probably fail for a seventh time with a petition to the Federal Circuit) to withhold the Lindholm email from the jury.
I reported on Google's first five failures to exclude this piece of evidence and commented on its long-shot appeal to the CAFC. For the (in my view, very likely) event that the CAFC denies Google's petition, it brought a motion in limine in the district court case to exclude this piece of evidence as misleading (while all other attempts to exclude it where based on claims that it's privileged and confidential).
Google presented to Judge Alsup a declaration by Tim Lindholm, the author of that important email, denying that he was in the position to analyze whether Android infringe on Oracle's Java-related intellectual property asserted in this particular litigation. But Judge Alsup wasn't swayed and denied the motion. His order cites Mr. Lindholm's background. After joining Google in 2005, he "immediately worked on Android as a 'generalist and interpreter of the engineering/business/legal ecosystem'", helped "negotiate a license for Java", and in Judge Alsup's view a reasonable jury could find that he was "quite knowledgeable about Java and Android technology as separate platforms and any potential crossover between the two platforms". Not only does the judge consider the Lindholm email relevant to the issue of infringement but also the one of damages: "It goes to show that Google had no viable alternatives to Java. It also goes to willfulness because the email was sent after Oracle accused Google of infringement. Since Mr. Lindholm had a deep background in Java and Android technology, the email goes to show that there was an objectively high likelihood that Google's actions constituted infringement of a valid patent."
Assuming that Google's petition to the Federal Circuit fails (as I expect), this means the Lindholm email will give Oracle powerful leverage. It wasn't certain but it's now clear that Judge Alsup is willing to admit the Lindholm email as evidence not only in connection with damages and willfulness (trial phase three) but also in connection with infringement. For a jury, some of the technical issues will be hard to understand, but the Lindholm email is pretty straightforward and strongly suggests to the jury that there is some infringement somewhere.
This here is very positive for Oracle. Depending on how the jury reacts to the Lindholm email, this could far outweigh the negative impact of the jury being told about two patent reexaminations that haven't gone well for Oracle so far.
Another Lindholm-related decision grants, up to a certain point, an Oracle motion to exclude any evidence and argument contrary to statements in the Lindholm email. Judge Alsup still thinks it's reasonable for Google to argue "that it had viable alternatives to the patents-in-suit or Java, that it did not need a license for Java generally and for each patent-in-suit, and that not all statements in the Lindholm email were true". But since Mr. Lindholm refused to speak out on certain questions during his deposition "on grounds of attorney-client privilege and work-product doctrine" (a position that is consistent with Google's attack on the admissibility of the Lindholm email as evidence), he can't testify on those questions to the jury. Those questions relate to
- "what technical alternatives to Java he investigated";
- "who thought the alternatives 'all sucked'";
- "what he meant by technical alternatives"
- "what license terms he had in mind"; and
- "whether any statements of fact or opinion he made in the email were false".
Judge Alsup says that it's in "the interest of fairness" not to let him testify on these matters later. Basically, this decision penalizes Google for presumably having instructed Mr. Lindholm to be the opposite of forthcoming in his deposition. It's no secret that Judge Alsup doesn't buy the "attorney-client privilege" and "attorney-client work product" theories at all.
Judge Alsup also granted, to a certain degree, an Oracle motion to preclude Google from arguing that it relied on legal advice in its decision to develop and release Android. Any reference to this will have to be approved by the court. This further increases Oracle's chances of the jury finding Google to have infringed Oracle's intellectual property willfully because it makes it harder, or even impossible, for Google to claim that it relied on legal advice according to which there weren't any infringement issues.
Google failed with a motion to exclude an Oracle analysis of performance benefits Android allegedly owes to the functionality covered by Oracle's asserted patents. Google had complained that the relevant benchmarks were created by Oracle employees. Judge Alsup nevertheless believes that "[t]he tests used benchmarks that were widely accepted by the industry, including Google, as reliable proxies for real-world performance" and suggests Google should have "design[ed] its own performance tests" in order to have "competing results" on the table.
Apart from the two patents that the jury may consider invalid based on (appealable) reexamination results, I guess those performance tests will bear very significant weight with the jury. They indicate that Google really had a strong technical motivation to implement features Oracle owns, and suggest that the alleged infringement contributed in fairly important ways to Android's success.
Google succeeded in severely restricting Oracle's ability to present evidence obtained from Motorola Mobility: "The jury will be told that the only Motorola device accused of infringement is the Motorola Droid and that other Motorola devices cannot be considered for infringement or damages. Oracle cannot argue that other Motorola devices infringed or that damages should be awarded for other Motorola devices."
The judge closed a potential loophole for Oracle to bring new infringement contentions after the related deadline.
This is of limited value to Google. It has no relevance to the most important issue (a possible permanent injunction) and somewhat limited relevance to the question of damages.
The judge denied an Oracle motion to exclude evidence or argument that third-party OEMs changed infringing components of Android.
While formally denying Oracle's motion and stating that "Oracle must prove direct infringement by OEMs as a predicate for proving indirect infringement by Google" (which is a burden that Oracle would rather avoid), he reminds Google of its claims to be "ignorant on the subject of direct OEM infringement" according to its own discovery responses. Just like in the case of Mr. Lindholm's refusal to answer certain questions earlier on, Google as a whole is now precluded from suddenly claiming to have knowledge it previously denied, except that "Google is not barred, however, from presenting third-party percipient witnesses or third-party documents obtained via trial subpoena from OEMs on the same topic" and it still has the right to "cross examin[e] Oracle's own witnesses that OEMs did use unmodified code".
Google will be allowed to present some arguments concerning Oracle's past actions with third-party application programming interfaces (APIs). Judge Alsup doesn't want Google to go too far back in time and talk about Oracle's use of third-party APIs "long before 2006". Therefore, Eric Schmidt's September 1994 testimony in Congress (he was a Sun executive at the time, and by acquiring Sun, Oracle sort of inherited Sun's API-related practices) isn't admissible as evidence in this litigation. The exclusion also relates to the "American Committee for Interoperable Systems" (an interoperability initiative), "Sun's pre-2006 distribution of Linux APIs" and "Oracle's pre-2006 distribution of the Oracle Database that contained APIs originally developed by IBM". But, fortunately for Google, "testimony and evidence regarding Oracle's and Sun's policies and practices after January 1, 2006, is not excluded even if those same policies and practices began before 2006".
A rational, non-impressionable jury will not attach too much importance to Oracle's and Sun's own practices concerning third-party APIs. It will understand that each of those APIs has its own technical, commercial and legal characteristics, and consider that even if Oracle and/or Sun did something, they didn't change U.S. copyright law through whatever they might have done. Only a jury that is suspicious of Oracle's intentions could be swayed by this kind of evidence.
Google succeeded in part with a motion to exclude portions of a report discussing commercial success ("Goldberg report"): "Before Dr. Goldberg testifies, Oracle must introduce before the jury sufficient evidence from which it could reasonably conclude that the disputed nexus [between the patents at issue and the commercial success of certain products] exists". Commercial success is a secondary argument that can serve as an indication of an invention not having been obvious at its time.
I don't know whether Oracle will be able to satisfy the "nexus" criterion, but at any rate, we're talking about a kind of patent validity argument that is not really the most important one.

These decisions pave the way for an interesting trial. The decisions all appear well-reasoned to me, with one exception: I disagree with the judge on the issue of OEMs modifying code. Given that Google's Android licensing terms (which have to be respected by those who license the little green robot trademark and are allowed to distribute the Android Market client and other closed-source apps) impose restrictions, I believe a court should require Google to prove that an officially-licensed devices doesn't infringe, provided that the accused program code is part of the code segments that cannot be modified by OEMs without violating their license agreement.

The problem I have with the decision taken in this case is that Google gets to have its cake and eat it: it gets formal control over a technology, but it also gets to shirk responsibility for infringement. It gets the benefit of the doubt that truly free and open source software would legitimately enjoy but it doesn't deserve it. I don't know if Oracle will appeal this particular decision, but even if it doesn't, this issue will quite probably come up again in future Android-related lawsuits involving Google. I don't think Judge Alsup's conclusion on this one is fair and reasonable, considering how Google's business model works.

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Oracle's lawsuit against Google to go to trial on or after March 19, 2012

2012-01-04T17:20:00.001+01:00

This morning, Judge William Alsup, the federal judge presiding over Oracle's Java-related infringement lawsuit against Google at the United States District Court for the Northern District of California, entered his final pretrial order.

According to the order, "[t]his case shall go to a JURY TRIAL at 7:30 AM on A DATE ON OR AFTER MARCH 19, 2012, TO BE SELECTED" (click to enlarge):

The case was originally scheduled to go to trial on October 31 (Halloween), 2011, but it was postponed into this year. Oracle recently urged the court to resolve this matter as soon as possible and would have liked the trial to start, ideally from Oracle's perspective, this month. Google indicated that a trial date in the summer was more realistic. By picking a March date, the decision is a little closer to Oracle's preference, but March 19 is not a definitive date yet. That said, it appears less likely that there would be a huge delay beyond March 19, given that pretty much everything has been put in place or is being finalized with a view to this trial.

The trial will be trifurcated (divided up into three parts), a structure that Oracle argued against:

The first part will deal with copyright infringement liability.
The second trial phase will address patent infringement liability.
Today's order does not mention or hint at the possibility of a stay of the patent part of the case pending reexaminations of five of Oracle's patents-in-suit by the United States Patent and Trademark Office. At this stage, not even one of Oracle's patents-in-suit has been definitively invalidated (given that any decisions taken so far have been at the level of the USPTO's reexamination department, not its Board of Patent Appeals and Interferences, let alone the Federal Circuit), though there is considerable pressure on four of them.
Even though today's order doesn't mention a possible stay, Judge Alsup could still order one before the second trial phase begins. At this stage I believe he has realized that the best chance to get the parties to settle is a reasonably firm trial date and, possibly, a ruling on the copyright part of the case. Once the copyright phase is over, the possibility of a stay of the patent liability part may be on the agenda once again.
Phase three will deal with "all remaining issues", particularly with "damages and willfulness".

All three parts of the trial will be put before the same jury of 12 persons to be selected.

Testimony won't be recorded and witnesses won't appear twice. Testimony will be given once and can then be referenced in subsequent trial phases.

After the three trials, Judge Alsup may have to decide (if Google has been found liable for some infringement) on a possible permanent injunction. The order states the following: "Evidence and argument relevant solely to whether a permanent injunction should issue must be saved for a subsequent proceeding, if necessary, after the jury trial."

Oracle and Google have seven calendar days to file any objections to this pretrial order, which "must be specific and cite to legal authority". I believe Google is unlikely to object. Oracle previously argued that it is "prejudiced" by a trifurcated trial, but it remains to be seen whether Oracle will formally object to the order. By doing so, Oracle could preserve its record with a view to a later appeal, but an objection only makes sense if there's a strong legal reason for which this final pretrial order would have to be deemed unfair. Oracle might prefer to accept Judge Alsup's ruling and try to seize this opportunity to have the case resolved in the reasonably near term.

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Jammed schedule in January: mobile patent litigation picks up where it left off in 2011

2012-01-04T11:24:00.001+01:00

Happy New Year!

2011 was the year when wireless patent litigation sported unprecedented growth, though one could already see that trend begin in the fourth quarter of 2010. In 2012 we're almost certainly going to see new heights in terms of the scope and intensity of the major disputes. It's way too early in the year to predict whether we'll also see a trend reversal toward more settlements and less litigations. It would be desirable for various reasons, but these lawsuits take time (especially in the U.S.) and it's quite possible that some of the major litigants won't believe at any point during the year that they have the leverage they need to command a settlement on workable terms. Also, as long as Android keeps gaining market share, Google may not be truly interested in resolving the IP issues on the table. Compared to the strategic value of market share, litigation is cheap (though it certainly isn't in absolute amounts). It depends on the decisiveness of the ITC and the district courts whether continued infringement pays off as a smart business choice.

With all that's going on, it comes as little surprise that there are some deadlines and trials in January:

Tomorrow (January 5, 2012) is the slightly-extended deadline for petitions for review of the initial determination by ALJ Essex on Microsoft's complaint against Motorola. The ALJ found Motorola in infringement of four claims of a Microsoft patent but not of six other patents, partly based on non-substantive reasons such as Microsoft allegedly having tried to circumvent the page limit for pleadings. I'm sure there will be a review of this preliminary ruling, and there's a high probability for a significantly different outcome. An initial determination by an ALJ is just one guy's opinion. Significant modifications occurred in both of the other smartphone-related ITC investigations that have been concluded (Apple v. HTC, S3 Graphics v. Apple), and the review of an initial determination on Kodak's complaint against Apple and RIM was recently extended by nine month.
On Monday (January 9, 2012), the ITC hearing on Motorola's complaint against Microsoft's Xbox gaming console will commence.
On or before Friday, January 13, 2012, ALJ Essex is scheduled to make his initial determination on Apple's ITC complaint against Motorola. It wouldn't surprise me if this deadline got pushed back by a few days (or more).
On Friday, January 20, 2012, the Mannheim Regional Court will pronounce a decision on one of seven Samsung v. Apple cases in Germany. Three hours later, the same court will hold a hearing (which amounts to a trial) on one of six German Apple v. Samsung cases.
On Tuesday, January 24, 2012, the Mannheim Regional Court will hold four consecutive hearings (starting at 2 PM local time) on cases brought by Motorola and its wholly-owned subsidiary General Instrument Corp. against Microsoft.
On Friday, January 27, 2012, the Mannheim Regional Court will pronounce a ruling on another one of seven Samsung v. Apple cases in Germany (at 9 AM).
On Tuesday, January 31, 2012, the Düsseldorf Higher Regional Court plans to pronounce (at 9 AM) its decision on Samsung's appeal against against the preliminary injunction banning the Galaxy Tab 10.1 over a design-related right held by Apple. Samsung is currently selling a modified version of the product, named the Galaxy Tab 10.1N, in the German market. Apple is also trying to ban that one, and a decision is scheduled for early February. If the appeals court lifts the preliminary injunction against the original Galaxy Tab 10.1, it's virtually certain that the 10.1N won't be banned.
These are the deadlines and trial dates I'm aware of. There could also be news relating to other cases and from other jurisdictions. For example, a court in Milan is still looking at a Samsung motion for an Italian preliminary injunction against the iPhone 4S, and Samsung has an appeal going against one or more decisions taken by a Dutch court last year. Also, there could be important progress at the Court of Appeals for the Federal Circuit with respect to appeals brought by Google (in the Oracle Java lawsuit) and Apple (against the denial of a preliminary injunction against Samsung in the U.S.).

The schedule for February will be similarly busy. Highlights include several more decisions and hearings in Germany, an ITC hearing on Microsoft's complaint against Barnes & Noble.

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Preliminary ITC ruling on Microsoft's complaint against Motorola has obvious shortcomings

2011-12-30T23:59:00.008+01:00

On December 20, 2011, Administrative Law Judge Theodore Essex announced his initial determination on Microsoft's ITC complaint against Motorola Mobility, finding the defendant's Android devices in infringement of four claims of a Microsoft patent. Until the ALJ published the redacted version of his detailed ruling (233 pages long) late yesterday, it was unknown how he arrived at this conclusion and why he didn't find a violation in connection with six other patents asserted by Microsoft at that stage.

I already got the feeling that Motorola wasn't comfortable with the defensibility of large parts of the decision when I saw that its lawyers opposed an extension of time for Microsoft to file a petition for review. Denying an extension during the Holiday Season, when pretty much everyone (even bitter rivals like Apple and Samsung, and, respectively, Apple and HTC) can agree on such extensions, is very unusual. Lawyers typically treat each other as colleagues, and try to be reasonably helpful and cooperative. I updated the related post today after I saw that the ITC granted Microsoft an extension by two business days (short of the five days that had been requested).

Having read the ALJ's initial determination, I'm convinced that this one will get a rough ride at the review stage or in the event of a subsequent appeal to the Federal Circuit. I obviously haven't been able to analyze all of the technical detail discussed in the initial determination, but that's not even necessary to see that the document has obvious shortcomings and even contradictions.

Parts of it look like an overworked ALJ mostly wanted to penalize Microsoft for having declined his invitation to narrow the case to a greater extent than it did when it dropped two of the original nine patents. It's anything but well-reasoned. Key parts of the decision are just based on Microsoft not having gone into enough detail on claims that Motorola didn't even contest in the first place. The ALJ disliked the style of one or more of Microsoft's witnesses, but even in a context in which a Motorola fact witness apparently confirmed what Microsoft claimed, he didn't want to attach much weight to that fact. The thing is not even well-written, and there are more typos than I've ever seen in a document of this kind. It's absolutely nothing for the ITC as an institution to be proud of in any way, and it lacks all of the characteristics of documents that hold out well when they are reviewed or appealed.

This is just my personal opinion. I haven't had the chance to discuss this document with anyone else, but I analyze so many documents of this kind that I'm confident that others will agree.

I'll summarize the key findings and then I'll give some examples of the aforementioned striking deficiencies.

The ALJ's conclusions of law

These are the ALJ's conclusions of law (quoted from section VIII of the initial determination):

The Commission has personal jurisdiction over the parties, and subject-matter jurisdiction over the accused products.
The importation or sale requirement of section 337 is satisfied.
The accused products do not literally infringe the asserted claims of the '054 Patent, the '352 Patent, the '133 patent, the '910 Patent, the '376 Patent and the '762 Patent.
The accused products do literally infringe the asserted claims of the '566 Patent.
Respondents do not induce infringement of any of the asserted claims of the asserted patents.
The asserted claims of the '054 Patent, the '566 Patent, the '352 Patent, the '133 Patent, the '910 Patent, the '762 Patent, and the[space missing, one of countless typos in the original text]'376 Patent are not invalid under 35 U.S.C. § 102 for anticipation.
The asserted claims of the '054 Patent and the '566 Patent are not invalid under 35 U.S.C. § 103 for obviousness.
The asserted claims of the '352 Patent and the '910 Patent are invalid under 35 U.S.C. § 103 for obviousness.
The '352 Patent is not invalid for failing to meet the best mode requirement.
The domestic industry requirement for the '566 Patent, the '133 Patent, and the '910 Patent has been satisfied.
The domestic industry requirement for the '054 Patent, the '352 Patent, the '762 patent and the '376 patent has not been satisfied [period missing, another one of countless typos in the original document]
It has been established that a violation exists of section 337 for the '566 Patent.
It has not been established that a violation exists of section 337 for the '054 Patent, the '352 Patent, the '133 patent, the '910 Patent, the '376 Patent and the '762 Patent.

I said there are typos and the above 13 conclusions of law contain two of them. In addition, that quoted passage has an inconsistent punctuation. There are multiple lists of three or more patent numbers. In conclusions 6 and 10, there's a comma before the word "and" that precedes the last item of each list -- but not in conclusions 3, 11, and 13. In the remainder of the document, there are other inconsistencies. Obviously, a determination can be legally and factually accurate regardless of inconsistencies at this level, but courts and quasi-judicial agencies usually try to present their findings in a more polished fashion. Blog posts are a different thing -- they can still be fixed on the fly :-)

I've produced a table that shows the different findings for each patent. In order for a violation of the law governing the ITC to be found, a patent must not only be valid and infringed but there must also be a domestic industry for it. Quite frequently (also in a couple of instances in this investigation), the infringement question and the technical prong of the domestic industry requirement are equally affected by the construction of key terms in the patent claims.

Patent	Deemed Valid	Deemed Infringed	Domestic Industry
'566	Yes	Yes	Yes
'054	Yes	No	No
'352	No	No	No
'133	Yes	No	Yes
'910	No	No	Yes
'376	Yes	No	No
'762	Yes	No	No

It's important to consider that a number of the above findings are based on the ALJ's disappointment over Microsoft having allegedly failed to elaborate in its briefs on questions that Motorola didn't even contest. In other words, some of those "findings" are due to whatever may or may not have gone wrong at the pleading stage, regardless of the actual merits underlying the related issues. I mentioned that before and will discuss it again further below, but I wanted to highlight it here as well since the above table does not at all serve as an indication of what a court of law might conclude. Microsoft asserted the same patents in a district court, and unless the dispute between Microsoft and Motorola is settled before, there will be a federal court ruling on these claims -- and the outcome could be a rather different one.

More on the obvious shortcomings of the initial determination

I'll go into more detail on some of the underlying issues as this process continues. It's pretty certain that there will be a Commission review, and there will be opportunities to go into more detail, possibly also on some of the technical issues. At this stage I just want to give examples of the shortcomings I identified, and which are so striking that I believe this preliminary decision will probably be modified or overturned.

Typos

I highlighted two typos in the 13 conclusions of law further above. The number of typos in that initial determination is really unusual. But not only their number, also their nature in some cases. For example, I found at least two instances in which "then" appeared instead of "than" (footnotes 26 and 39). I also saw various instances of singular-plural mismatch. Furthermore, there are missing or redundant words.

Inconsistencies

Further above I gave an example of inconsistent punctuation. Another example of an inconsistency that is highly unusual in a legal document is that the names "Motorola" and "MMI" (Motorola Mobility's stock ticker symbol) are used in confusing ways, such as this one: "MMI does not address the '352 technical prong in its brief. [...] As with its infringement for the '352 Patent, regardless of Motorola's lack of response, Microsoft must still show [...]" It would make sense to distinguish between Motorola (the name of the company when the investigation started), Motorola Solutions (an entity that was dismissed from the investigation), and Motorola Mobility. But in the sentence I just quoted as well as in numerous other instances, Motorola and MMI are used as synonyms. In a magazine article or blog post, one might want to use two names interchangeably for the sake of variation. But in a proper legal document, the primary objective is to have clear and unambiguous references.

Weighing of evidence

I believe that those reviewing the initial determination, or evaluating it at the stage of an appeal, will have doubts about whether the evidence, including testimony, was weighed the way it should be.

Here's a symptomatic passage:

"The ALJ finds that Dr. Stevenson's cryptic testimony and his evasive manner at hearing, which the ALJ found to be less then [sic] credible, leads the ALJ to give no weight to Dr. Stevenson's testimony on this point. As such, the ALJ finds this argument, which is based on his testimony, to be meritless."

That passage speaks for itself, but in case you didn't notice, the combination of "[t]he ALJ finds that" with "leads the ALJ to" doesn't make much sense.

In the infringement analysis concerning the '054 patent, the judge dismisses Microsoft's argument as "incoherent" and its key witness as "unreliable", but what's really amazing is that he doesn't even give much weight, if any at all, to the fact that a Motorola witness apparently confirmed something that Microsoft claimed. The ALJ argues that the relevant witness was just a fact witness, not an expert witness. In other words, Microsoft's witness is unreliable, and Motorola's witness is incompetent as soon as he agrees with Microsoft. This simply doesn't reflect favorably on the initial determination as a whole.

The need to discuss undisputed claims

In connection with the '566 patent, the ALJ says that "MMI has stated that it will not dispute infringement for the '566 patent" and, without citing any other facts, then finds that there is a preponderance of the evidence for infringement. But in connection with the next patent discussed, the '352 patent, the fact that "Motorola does not address infringement in its briefs" is not sufficient and "Microsoft still must show infringement by a preponderance of the evidence." In various contexts including this one, the ALJ accuses Microsoft of having omitted detailed discussions of certain issues in order to focus on those that were actually controversial:

"This is, quite simply, nothing more than an improper attempt to circumvent the page limitations set by the ALJ for post-hearing briefs."

In the same context, the ALJ stresses that "simply making conclusory statements and citing evidence with no explanation fails to constitute 'a discussion' of the issue in the post-hearing brief as required by the Ground Rules and is insufficient to carry a party's burden of proof". In connection with the '133 patent, he says the same thing in different words:

"While the ALJ may have been able to glean the meaning of the term 'manipulate' by culling through the record to find out exactly what Microsoft meant, this is no different from incorporating arguments by reference or simply citing testimony with no explanation. The ALJ declines to engage in such an exercise since it would eviscerate the need for any post-hearing briefing if the ALJ were required to 'figure out' the parties' argument from the record."

There are strict page limits in ITC proceedings. In an investigation in which a large number of patents are asserted, this limits the space available to the parties to discuss each patent. The ALJ clearly would have preferred Microsoft to narrow the case to a greater extent than dropping only two patents. I gathered that from the way he explained a six-week delay of this initial determination. It appears that this ALJ wants to show to Microsoft and everyone else that asserting many patents in parallel will backfire. The problem is that he bases significant parts of his decision on this instead of making substantive decisions. It remains to be seen whether the top level of the ITC is comfortable with this approach. It may not be.

The ALJ also complained that Microsoft didn't provide enough evidence in connection with the domestic industry requirement:

"The ALJ finds that Microsoft has failed to offer sufficient proof to meet the technical prong of the domestic industry requirement. [...] The ALJ notes that this is not a case of a fundamental unfairness in the law. Microsoft chose to rely on code for which it has no evidence [missing word] was ever implemented to meet its burden to prove the technical prong. This is not to stay that Microsoft was required to actually examine the source code of every device, but there must be some evidence presented as to how the device actually works."

Repetitious citation of Federal Circuit decision

In several instances, the initial determination says that dependent patent claims are not infringed if the independent claims they depend on aren't. In other words, a dependent claim has its own limitations (criteria) but also incorporates all of the limitations of the independent claim it depends on, and infringement requires that all limitations -- including all incorporated ones -- are met.

Each and every time that the ALJ makes that point, he cites a whole paragraph from a Federal Circuit decision. It would have been sufficient, and the more commonly adopted approach, to cite that decision only once -- where it comes up for the first time -- and to reference it briefly in all other instances. That's what other judges normally do. It's also what this same ALJ did in some other contexts (where he does make supra references).

If he suspects parties of circumventing the page limit, this repetitious and redundant quoting of a whole, relatively long paragraph is not a textbook example to follow either.

Some of this criticism may appear superficial. As I explained before, those are just indications -- some of them fairly strong ones -- of the initial determination being flawed in a variety of ways, and there will be some more discussion of substantive issues going forward, including technical stuff. This investigation curently has a target date of April 20, 2012.

As far as substantive issues are concerned, I've saved the best for last:

Android the "epitome of hardware dependent software"?!

Here's a quote that will surprise many people:

"Instead, the Android architecture, with its [REDACTED], is almost the epitome of hardware dependent software."

So he calls an operating system that runs on devices from several dozen manufacturers, and on a diversity of form factors, "almost the epitome of hardware dependent software".

In this particular ITC investigation, the conclusion is in Google's legal interest, but in any other context, Google itself would disagree strongly with any claim that Android is "almost the epitome of hardware dependent software"...

We'll see how this matter evolves. Expect a thorough review.

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High-ranking ITC official wants 'more searching inquiry' of impact of Android product bans

2011-12-30T21:42:00.001+01:00

With a number of judicial decisions involving Android scheduled for next year, the debate over public interest factors relating to injunctions and import bans is not going to stop anytime soon. The latest contribution to it comes from International Trade Commissioner Dean A. Pinkert. At the top of the ITc, there's a six-member decision-making body briefly called "the Commission". It consists of six commissioners. One of them is chairman, another one is vice chair, and Mr. Pinkert is one of the other four members.

Yesterday, Mr. Pinkert filed a public version of his "additional views [...] on remedy and the public interest" in connection with the technically narrow exclusion order against HTC's Android products that the ITC handed on December 19, 2011.

The commissioner's four-page statement starts off stating that he concurs with his colleagues "regarding the remedy that is appropriate in this case", but he wrote separately in order to document inhowfar he differs from his colleagues' reasoning with respect to public interest factors. In his summary, he reiterates that he just "wish[es] to emphasize that the existence of substitutes for the infringing devices does not obviate consideration of the likely impact of exclusion on the range of choice available to consumers in the smartphone marketplace" and notes that "[s]uch impact may warrant more searching inquiry in other investigations".

Since the reasoning of the ITC's decision is not yet available (I believe a redacted version should enter the public record soon, but it hasn't yet), it's difficult to gather from the commissioner's brief statement which parts of the majority opinion he doesn't support.

He agrees with Apple on a number of points and argues that the decision apparently gives HTC enough time for adjustments. I think that's an understatement. In a way, HTC's immediate announcement after the ruling that a workaround is in place and its claim that the feature is rarely used (discussed in this recent post) calls into question that the ITC's decision to delay the impact of its decision by four months (two of which would be available for the presidential review anyway) made sense. By the time the import ban against devices implementing one particular patented feature takes effect, more than two years (!) will have passed since Apple's original complaint. HTC had all the time it needed to prepare for this kind of ruling, and it's now clear that the ITC was overly generous with the transitional period it granted.

In fact, the ITC was so generous, or lenient, in this case that this could be a case of an abuse of discretionary power. If Apple asked the Federal Circuit to review this particular aspect of the decision, HTC's own statements would prove that the ITC tolerated a proven case of patent infringement for a transitional period that was simply not needed. An appeal against the ruling may make sense for Apple with respect to the ITC's finding of no violation of a much broader patent-in-suit, but the delayed effect of the import ban may not appear worthwhile appealing from a practical point of view. I just wanted to point out that the ITC's related approach is more than debatable.

In his "additional views", Commissioner Pinkert notes that some of HTC's public interest arguments were based on the competitive relevance of all Android handsets as opposed to only HTC's own products. I would agree with him that in any future decisions on Android-based devices, the availability of Android-based products from multiple vendors must be considered carefully. Footnote 2 of Commissioner Pinkert's statement notes a "non-exhaustive list of non-HTC 4G Android handsets offered for sale on carriers' websites and websits of their resellers on November 24, 2011". That list is pretty impressive and shows, in my view, that HTC grossly overstated the impact of an import ban against HTC on choice in the market.

It's reasonable to argue, as Commissioner Pinkert does, that "the availability of substitutes does not necessarily mean the consumer's desire for quality and variety can be satisfied in the absence of the infringing devices", especially "in a rapidly changing, technologically driven, market like today's smartphone market".

But valid questions aren't necessarily the most pertinent ones in a given case. In my view, the most important question that the decision on Apple's first complaint against HTC raises is the following one: are any delays of import bans, or denials of cease-and-desist orders, justifiable in cases in which the respondent(s) had plenty of time, counting from the filing of the complaint or possibly even earlier infringement notices, to remove features without which the products concerned can still be sold?

If the ITC hands technically narrow rulings, as it did in this case, it's hard to see why it would be against the public interest to put an end to such infringement that can be easily avoided (and that could have been avoided for quite some time).

The US International Trade Commission will continue to receive invitations from various stakeholders to turn itself into the US Infringement Toleration Commission. It will have to be vigilant, and it will indeed have to conduct "more searching inquiry" in this context.

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Federal Circuit ordered Apple to correct appeal against denial of preliminary injunction against Samsung

2011-12-30T20:04:00.002+01:00

Three weeks ago I reported on Apple having appealed to the Court of Appeals for the Federal Circuit (CAFC) the early December denial of a US-wide preliminary injunction against four Samsung Android products. Here's the header of a related court order (click to enlarge or click here to view the actual document):

It's far more difficult to obtain documents related to Federal Circuit cases than to research litigation in the district courts, but at least I have an update on the procedural status.

On December 13, 2011, Apple brought a motion to expedite the appeals process. Two more briefings (probably a reply by Samsung and another by Apple) and three days later, the CAFC granted Apple's motion. Accordingly, Apple had to file its opening brief on or before December 22, 2011; Samsung had until January 9, 2012 to file its opposition brief; and Apple had until January 16, 2012 for its reply brief and appendix. In that same order, the court noted that this case would be "scheduled on the March oral argument calendar if practicable".

Apple filed an opening brief on December 22, but six days later it filed a notice of correction. But the court formally rejected both the original brief and the corrected brief yesterday (December 29) and set a new January 12, 2012 deadline for Apple's (second) corrected brief.

I haven't seen a new scheduling order, but since the new deadline for Apple's opening brief is three days after the original deadline for Samsung's response to that one, there must be a delay of (presumably) two or three weeks.

It's totally unclear why the CAFC ordered this do-over. I can just see that those filings occurred, and I can see headlines and sometimes summaries. But none of the publicly available information indicates what was wrong with Apple's first corrected brief. I'm sure the court instructed Apple, so the second corrected brief should be fine, in all likelihood.

In principle, CAFC proceedings are public. For example, Apple filed both a confidential and a redacted non-confidential version of its brief with the court (which just doesn't share it with the public for the time being). In recent months I was quite lucky that different sources (sometimes anonymous ones and sometimes known ones that I protect) provided me with court orders and filings, some of which were good for Apple and some of which were not. I'm always grateful for any such information and encourage those directly or indirectly involved with this CAFC process (or with the CAFC process concerning the Lindholm email, a key piece of evidence in Oracle v. Google) to support my research by sharing relevant, non-confidential (but hard-to-obtain) documents with me.

My opinion on Apple's CAFC appeal is the one I outlined in a previous post. In my view, Judge Lucy Koh of the United States District Court for the Northern District of California did a great job narrowing the scope of protection of Apple's design patents. It appears that the German courts are now also starting to think along those lines. At the same time, I was not at all impressed with Judge Koh's analysis of the harm the parties would suffer from an injunction or continued infringement. I think it's likely that the CAFC will overrule some of her related reasoning because it would set the bar for injunctive relief in this kind of industry far too high, almost impossibly high. Her analysis of the equitable factors also showed a lack of understanding of the relevant markets and their dynamics.

This CAFC process could have major impact not only on Apple v. Samsung but on the industry at large. I'll keep following it to the extent that I have access to information.

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In decision on S3 Graphics complaint against Apple, ITC clarifies boundaries of its mandate

2011-12-29T18:44:00.000+01:00

On November 21, 2011, the ITC dismissed S3 Graphics' first complaint against Apple in its entirety, following a Commission review of an initial determination by an Administrative Law Judge (ALJ) who found some of Apple's Macintosh computers to infringe two of S3G's four patents-in-suit. Both parties disagreed with the ALJ: Apple wanted (and ultimately won) a dismissal while S3G, which is in the process of being acquired by HTC, wanted more leverage than the ALJ's initial determination, if affirmed, would have provided.

At the time of the ruling, the reasoning wasn't publicly known. The result, "no violation", could have had any number of reasons. More than a month later (on December 22, 2011), the ITC published a redacted version of its detailed (72-page) decision. I analyzed it in order to provide this summary.

The ITC investigation is over, but the ruling is nevertheless worth looking into. Even though Apple doesn't have to fear an ITC import ban over those patents anytime soon, the dispute between Apple and S3G isn't over. S3G might appeal the ITC's decision to the Federal Circuit, and the same patents are at issue in a federal lawsuit (in the Northern District of California) that is currently suspended for the duration of reexaminations of those patents by the USPTO (including all possible appeals of any non-final reexamination result). And beyond this particular dispute, the ITC seized this opportunity to provide some further clarification on the boundaries of its mandate in connection with products that are imported in a non-infringing form but used in infringing ways after they enter the United States. The related passages of that ruling will likely be cited in a number of future ITC investigations raising similar issues.

In order to keep things focused, I won't go into detail on the many reasons for which the Commission, the six-member decision-making body at the top of the ITC, affirmed those parts of the ALJ's initial determination that worked out in Apple's favor anyway. Basically, the Commission provided some clarifications that are basically corrections of what it considered legal errors on the ALJ's part, but on the bottom line it reached the same conclusions as far as the ALJ decided against S3G. This includes that the Commission also believes Apple has an implied license to the extent is uses NVIDIA chips, and like the ALJ, the Commission found several reasons (any one of which would have been sufficient on its own) for seeing no infringement by the iPhone, iPad and iPod.

I'll focus on why the Commission disagreed with the ALJ's position that some of Apple's Macintosh computers (depending on which graphics chips they contain) should have been banned due to the alleged infringement of claim 11 of the '987 patent and claims 4 and 16 of the '146 patent.

As I expected all along, AMD's claims that it -- not S3G -- is the rightful owner of the patents-in-suit and its demand that the investigation should therefore be terminated did not win the day. The Commission concluded that AMD's motion for an intervention was untimely and unnecessary since Apple was perfectly capable of representing AMD's interests in this respect. Those considerations outweighed the fact that AMD brought claims that, if proven, would have constituted a legitimate interest in the outcome of this matter. Besides AMD asking for the right to intervene, both AMD and Apple asked the ITC to terminate the investigation or to remand it to the ALJ for further examination (and delay). But the Commission determined that "S3G holds title to the asserted patents" and that Apple and AMD "fail to prove by a preponderance of the evidence that AMD owns the patents in question". There's still some federal litigation going on over this matter, and we'll see if anything comes out of it. The ITC has seen all of the evidence and is unconvinced.

The Commission overruled the ALJ with respect to the validity of claim 4 of the '146 patent. The Commission "agree[d] with Apple that the ALJ's findings with respect to anticipation of claim 4 appear to be the result of a mistake" and determined that the Hoffert prior art reference anticipated claim 4 or, alternatively, rendered it obvious. In this context, the Commission furthermore believes that S3G forfeited a seemingly important argument. But the Commission explains that the argument was wrong at any rate. If S3G appeals, it will face a dual hurdle with respect to the validity of this patent claim. It will have to prove the Commission wrong on the issue itself as well as on the question of whether S3G preserved its related record.

As far as the other two patent claims the ALJ deemed valid and infringed (claim 11 of the '987 patent and claims 16 of the '146 patent) are concerned, the Commission concluded that the Macintosh computers imported by Apple don't infringe any of those two patent claims at the time of importation. For example, one of those patent claims relates to a data format, and those computers don't contain any graphics stored in that format (or at least S3G didn't prove it) at the time of importation. Subsequently to importing those devices, Apple may infringe certain patent claims as an inevitable consequence of testing those devices, or sell apps that practice the relevant inventions. While those subsequent activities might be seen as a "nexus" between importation and infringement, the Commission clarified that Section 337 (the law governing the ITC's unfair import investigations) was amended in 1988 and clearly relates only to "articles that -- infringe" given U.S. patents.

In this particular case, S3G didn't convince the ITC that Apple's products, in the form in which they are imported, indirectly infringe the asserted patent claims. Without direct infringement occuring somewhere, there can be no indirect infringement further up the supply chain, and S3G wasn't able to prove direct infringement. The ITC was inclined to believe that Apple may very well infringe those patent claims in the United States, but the ITC's mandate is limited to keeping infringing products out of the U.S. market. It's not a broadbased IP enforcement competency of the kind that the federal courts have.

If Apple's testing or, worse than that, its sale of apps (which are not imported in the ITC's unsurprising opinion) through an online store could result in ITC import bans against its devices, that would have been a problematic precedent -- not only for Apple but also for many other device makers. The Commission has set the record straight on this. S3G went too far with its claims. But chances are that, sooner or later, someone else will also try to test or push the boundaries of the ITC's mandate.

Concerning its mandate, the ITC disagreed not only with S3G but also with Apple, which asked the ITC to find that it has no jurisdiction over S3G's complaint. In other words, Apple wanted the ITC to determine that there should never have been an investigation in the first place. In its decision, the Commission stressed that "[it], like the ALJ, find[s] that Apple's argument conflates an analysis of the Commission's jurisdiction with an analysis of whether S3G has met its burden to prove a violation of section 337". In other words, the fact that an infringement pattern doesn't meet the legal requirements for an ITC import ban doesn't mean that a complaint shouldn't be investigated by the ITC until its failure to meet those criteria is established. The Commission said that S3G had pled claims that could have justified an import ban if only they had been accurate. Therefore, there was a need for an investigation, and in this particular case, it was necessary to reach the stage at which it became clear that there's no indirect infringement at the time of importation.

The decision notes that this is a non-issue in most cases: "Although satisfaction of the importation requirement is seldom disputed in section 337 investigations, the present case is an exception." To the same effect, the Commission noted that "the current investigation presents an unusual circumstance in which a respondent's domestic infringement cannot support a violation of section 337".

If S3G's patents aren't invalidated as a result of reexamination, it may have a case against Apple in the Northern District of California. But reexaminations and the related appeals will probably take some more time -- possibly years -- before we find out. Meanwhile, S3G has a second ITC case going against Apple.

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Not even one of Oracle's six patents-in-suit has been definitively invalidated -- but four of them are under pressure

2011-12-28T17:11:00.000+01:00

It's time for another fact check on the state of the Java-related patents Oracle is asserting against Google. Contrary to widespread misbelief, none of the six patents Oracle is still asserting (Oracle voluntarily dropped one of the original seven) has been invalidated on a truly final basis. By "trukly mean" I mean final-final, not just preliminarily final.

Depending on when the case goes to trial, Google could still be ordered to stop infringing any or all of those six patents. And even if the court stayed the case pending the completion of all reexaminations (when I say "completion", I mean the end of the whole process, not just the conclusion of the first part), statistics suggest that Oracle would likely have multiple patents to assert in the end -- probably not all six, but three or four are a reasonably probable number.

In two filings earlier this month, Oracle and Google updated the court on the status of the ongoing reexaminations. Three weeks ago, they summed up the state of affairs at that point, and last week, they reported that the USPTO had issued a "final Office action" (sort of "final", but not "final-final") concerning Oracle's '476 patent.

Google has done a great job on, and made considerably headway with, those reexaminations. It has clearly demonstrated that most of Oracle's asserted patent claims are of disputable validity. I wouldn't be surprised if Oracle at some point determined that it needs to assert some more of its 2,000 or so Java-related patents in a second (separate) complaint, and it's possible that the copyright part of this litigation has gained importance in Oracle's strategy at the expense of its embattled patent claims.

But again, not even one of those patents has been annulled so far.

Here's where things stand:

One patent (U.S. Patent No. 6,061,520) is considered patentable by the USPTO. This one will enjoy an enhanced presumption of validity at trial time.
There's one patent (U.S. Patent No. RE38,104, naming short-time Google employee James Gosling as the inventor) on which the USPTO hasn't commented yet, not even in the form of a first Office action. It's impossible to conclude anything from that fact. In its own report to the court, Google claimed that "[n]one" of the claims of this patent is "[c]urrently [a]llowed", but that's grossly misleading. There's a rather strong presumption of validity of issued patents under U.S. law (which in my view shouldn't be the case because the USPTO issues to many bad patents, but that's the law as the Supreme Court decided this summer). That presumption of validity is not even affected by first Office actions, but the mere fact that reeamination is ongoing, without anything known about the examiner's inclination, is lightyears away from a patent being less than (for the time being) valid.
For two patents (U.S. Patent No. 5,966,702 and U.S. Patent No. 6,910,205), there have been first Office actions rejecting all of the relevant claims, but no final Office actions yet.
For two other patents with respect to which there have been first Office actions (U.S. Patent No. 6,192,476 and U.S. Patent No. 7,426,720), the initial rejections have been confirmed by "final Office actions". However, if the USPTO says that it "closes prosecution", this just means that the examiner's work is done for the time being (it could be resumed later as a result of a decision to remand). It doesn't mean that the patent has actually been invalidated: Oracle can, and most likely will, appeal this decision to another department of the USPTO, the Board of Patent Appeals and Interferences (BPAI). I have seen different recent statistics about the outcome of BPAI appeals in such reexamination proceedings. Rejections by reexaminers are affirmed in a majority of cases, but they are reversed in their entirety in about a third of all cases and sometimes reversed in part, or remanded. Even the BPAI's decisions are appealable (to the Federal Circuit).

Let's assume, for the sake of the argument, that the Gosling patent also stands up pretty well. Then Oracle would have two valid patents and a good chance of reversing the decision, at least with respect to some of the asserted claims, with respect to some claims from one or two of the other four patents.

Oracle's argument for a near-term trial comes down to "justice delayed is justice denied". Google's argument is obviously that it shouldn't be held liable for infringement of patents of uncertain validity.

This is a high-profile litigation, and it certainly doesn't reflect well on the USPTO. It appears that it's rather easy to get a patent granted initially, but it also seems that the USPTO's central reexamination unit may make it too easy for those contesting the validity of an issued patent. One may wonder how much independent analysis is actually performed.

In a very recent filing, Oracle cited several cases in which courts determined that even "final" Office actions are prejudicial to a patent holder if shown to a jury in an infringement case while an appeal is ongoing. We will see what Judge Alsup decides. He can always tell Oracle that resource constraints force the court to stay the case unless Oracle narrows it to a very short list of patent claims, but as I explained on previous occasions, it would be very risky for Oracle to narrow its case too much.

I'm sure Oracle expected serious reexamination pressure when it started this litigation. You can't sue an organization the size of Google without significant blowback, and Google isn't just large and deep-pocketed but also very smart. Oracle didn't asserted seven patents because it thought it would prevail on all seven, but to maximize its chances of prevailing on some of them. At the same time it's possible that Oracle's decision-makers were much more confident of the strength of their patents when they started this than they are now when they look at the status of the ongoing reexaminations. Throughout the industry, it's possible that the value of these kinds of patents has been overrated. The difference between patents that have been issued but never tested and patents that have withstood massive challenges becomes clearer every day.

Given that so many issued patents are of questionable validity, plaintiffs will actually have to assert many more, not fewer, patents going forward. Companies that thought they sufficiently hedged their bets by asserting five or six patents may now find that even if they asserted ten patents, they might be lucky to succeed with only one of them. If they have many patents that read, at least potentially, on an accused technology, they might sue over 12 or 15 (or even more) patents right from the start and then narrow the case along the way, at a point in time when they know what invalidity contentions a defendant has presented.

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Motorola apparently concerned about ITC review of Microsoft decision

2011-12-28T14:37:00.002+01:00

Even during this week, the slowest and calmest one of the year, some judges and lawyers are working on a number of smartphone patent cases. For example, there have been some filings and orders in Oracle v. Google this week. But for the most part, the Holiday Season is also a vacation season and people are spending time with their families.

Procedural rules usually don't declare this last week of the year (except or public holidays) a blackout period for deadlines, but extensions of time are not only common at this time of the year -- from a practical point of view, they are the norm:

On Thursday, the Chairman of the ITC granted Apple and HTC their motion to extend the due dates for responding to the Commission's December 16, 2011 notice of review. In light of the Holiday Season, Apple's and HTC's lawyers agreed that an extension made sense.
On Tuesday, an Adminstrative Law Judge (ALJ) granted an extension to CVE Technology Group, a non-party subpoenaed in the ITC investigation of Samsung's complaint against Apple. Neither party opposed this request.
Also on Tuesday, that same ALJ granted an extension to several consultants to HTC who were subpoenaed by Apple in the investigation of Apple's second ITC complaint against HTC. Again, no one opposed.

All of the extensions mentioned above were requested with reference to the special circumstances of the Holiday Season. All of them were noncontroversial despite the fact that Apple's disputes with HTC and Samsung are bitterly-contested patent wars in which time is of the essence. All of these requests were readily granted by the ITC.

But one smartphone patent litigant stands out as showing no consideration for its colleagues and their families: Motorola Mobility. Look at this (click to enlarge):

I copied that paragraph from a document Microsoft filed yesterday to ask the ITC for an extension by only five business days for filing a petition for review of last week's initial determination finding Motorola in infringement of one of seven Microsoft patents-in-suit. The motion explains that "Microsoft's outside and in-house legal team are largely unavailable at various times during the short period between service of the Initial Determination and the current due date for any petitions for review" and mentions the "intervening Christmas, Hanukkah and New Years holidays". Despite those circumstances, Microsoft wants to have enough time "to adequately digest the many legal and factual findings made by the ALJ and to determine which of these issues should be included in Microsoft's petition".

Motorola's opposition to this request is unusual because lawyers normally treat each other as colleagues even if they represent adversaries. There's a certain, unwritten, code of ethics according to which they fight each other on the issues and will use aggressive rhetoric to the extent that it's necessary, but when it comes to case management matters like this one, they try to be helpful, or at least somewhat cooperative.

By opposing such a request for an extension, Motorola's lawyers disregard their colleagues and, above all, their families.

I have had brief conversations with high-ranking Motorola in-house lawyers before and after some of the recent hearings in German courts. Everyone realizes that the stakes are high in these disputes, but these are definitely not the kind of people I would suspect of disrespecting their colleagues. After all, this here could take years to be resolved, and next time they might be the ones asking for an extension at this time of the year.

The only explanation I have for this is that someone at the highest level of the organization ordered Motorola's legal team to do anything it takes, no matter how inappropriate, to prevent Microsoft from seeking a review of the preliminary ITC ruling. Since Microsoft has seven patents in play, such a review could result in Motorola being found to infringe more than the one patent the ALJ deemed infringed. And even if the Commission, the six-member body at the top of the ITC, didn't overrule the ALJ to that effect, any issues raised at this stage could be appealed to the Federal Circuit. For the ITC as an institution, it wouldn't look good at all if the Court of Appeals for the Federal Circuit (CAFC) identified clear errors in the ITC's reasoning in a way that would run counter to the ITC's mandate. Therefore, should Microsoft have strong legal arguments for a modification of the ALJ's recommendation in its favor, things could get worse for Motorola than they appear right now.

Against that background, I totally understand that Motorola doesn't want Microsoft to have too much time to raise legal issues at this stage. But an affront like this suggests that Motorola isn't comfortable that the ALJ's reasoning is solid enough to withstand serious scrutiny.

I haven't seen the detailed version of the ALJ's initial determination yet. It always takes time before any redacted version enters the public record. I don't even know which of these patents were deemed invalid and which ones not to be infringed, or what role any other defenses may have played (I saw that Motorola at some point brought a motion raising an estoppel-like defense). When the initial determination becomes available, I will certainly take a close look and blog about it. But before I have seen it, I can already see that Motorola is so apprehensive of a possible review (or further appeal) that it has chosen to violate an unwritten code of professional ethics.

[Update] On December 29, 2011, the ITC granted Microsoft an extension, but only by two business days, not five. The deadline for petitions for review is now January 5, 2012. [/Update]

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By keeping an unlawful feature, Google will disadvantage HTC, rile Apple, and alienate the ITC

2011-12-26T09:08:00.003+01:00

One week ago, the ITC ordered an import ban against HTC Android phones implementing a "data tapping" patent. This morning, the Boston Globe's Hiawatha Bray explains the Android patent situation and accurately notes this:

"The result: a series of small, but significant limitations on the functions of Android phones."

Now look at the following paragraph:

"HTC has said it will comply with the ruling by eliminating the feature from its phones. But a Google official, speaking on background, said his company has no immediate plans to drop the feature from its Android software."

To be fair, Google didn't rule out removing the feature further down the road. It just said that it had "no immediate plans". Maybe Google is going to remove it as soon as it's clear that HTC won't appeal the ITC decision to the Court of Appeals Federal Circuit, or in case there is an appeal but the CAFC doesn't stay the import ban. It could take a couple of months to find out. By downplaying the importance of the data tapping feature as "actually quite rarely used", HTC has greatly reduced the likelihood of a stay. To argue successfully for a stay, HTC would want to stress irreparable harm. Be that as it may, I give Google the benefit of the doubt that the ITC import ban may be stayed before it even starts to take effect.

That said, with more and more Android-related patent rulings coming in and coming up all the time (usually against device makers), it's time that Google clarified -- to its device makers, to the Android developer and user community, to the world of finance, and to the general public -- its policy relating to features that a court (or quasi-judicial agency) of competent jurisdiction holds to infringe a valid, enforceable patent.

I believe everyone will agree that Google's related policy must

ensure a level playing field between Android device makers,
guide them around legal pitfalls with potentially very costly consequences, and
vigorously defend the common interests of the Android ecosystem by exhausting all opportunities for appeals, but
as a matter of good citizenship (also known as "corporate social responsibility") respect the law and the institutions tasked with interpreting and enforcing it.
You know, "don't be evil".

There is certainly an international dimension here. A patent can always be enforced with respect to only one jurisdiction at a time. If a court in the Netherlands orders Samsung to modify its photo gallery (as it happened a few months ago), the related feature doesn't have to be modified or removed everywhere else on this planet. In that case, it was only a preliminary injunction anyway (resulting from a fast-track proceeding), but what I just said would apply to a final ruling. Still, if a feature is unlawful in a given jurisdiction, Google must accept responsibility for the situation in that country. And in the particular case of the United States, the country in which Google is based and Android is published, Google has full responsibility.

It's highly problematic if Google continues to publish Android versions including the linkify library (which infringes Apple's "data tapping" patent) regardless of the ITC decision. Here are the most important implications (the order is arbitrary):

If the ban isn't stayed by the Federal Circuit, it will formally affect only HTC's products. Apple would have to sue other Android device makers separately to get to the same patent. It is asserting that patent against Motorola in a federal lawsuit but not yet against Samsung. And besides the big three Android device makers, there are countless others. HTC would have to pay the price for being the first one to be sued by Apple over that patent. If I were a US-based consumer, I would certainly take note of the fact that HTC lacks a feature that I, for my part, use quite frequently (though it doesn't work well for non-US phone numbers).
Google publishes the related Android code under the Apache Software License 2.0. Its Section 8 contains a wholesale disclaimer of liability, but liability is not disclaimed if "required by applicable law (such as deliberate and grossly negligent acts)" (emphasis mine). After the ITC decision (and as evidenced by the statement Google gave to the Boston Globe), there cannot be any reasonable doubt about this being a case of deliberate infringement of a U.S. patent. Therefore, the downstream (device makers and app developers using the related code) could try to hold Google fully liable, arguing that willful patent infringement cannot be disclaimed. If a court found that it can be disclaimed, then Google doesn't have to pay, but it would irresponsibly expose to the risk of patent infringement liability anyone downloading and using or redistributing the infringing Android code, including app developers using the linkify library in their works.
Willful infringement results in triple damages under U.S. patent law. It would make a lot of sense for Apple to sue Google at some point (maybe much later) on that basis over this patent. In any settlement negotiations, that could be another valuable bargaining chip.
Violating Apple's intellectual property even after a formal ruling (by a quasi-judicial agency that makes things much harder for mobile patent holders than most other courts) is another way for Google to raise hackles at Apple. Additionally or alternatively to suing Google over this patent, Apple could also file an ITC complaint over just that one patent against, for example, a dozen Android device makers at the same time.
I think Google should also think about the implications of this for the way it's perceived by the ITC -- the same ITC that Google seeks to lobby for weak remedies.
In a formal sense, an ITC ruling against HTC only relates to HTC, as I explained. But its institutional raison d'être is to prevent market distortions resulting from unfair (in the sense of "infringing") imports from all companies. If the ITC holds a patent valid and infringed by Android but Google keeps publishing software (in the United States, in fact) that results in ever more infringing products being imported, Google effectively torpedoes the work that the ITC is doing.
Google can't shrug off these serious issues merely by pointing to Android's "open source" nature (which is more than debatable as everyone in the industry knows). Open source licenses may not be amenable to the idea of restricting the availability of certain segments of the code to those jurisdicitons in which they haven't been declared unlawful. But most Android device makers enter into license agreements with Google -- otherwise there's no way they would be allowed to use the Android and Google trademarks. Under such licensing arrangements, Google already imposes a variety of restrictions on Android device makers as far as modifications to the Android codebase are concerned. In this context, Google could certainly ensure that, for example, a licensed Android OEM like HTC doesn't have to compete with dozens of other licensed ones who implement an unlawful feature only because they have not yet been formally hit by a ruling.

Google has some explaining to do here. I have repeatedly criticized Google's attitude toward other companies' intellectual property (most recently in quotes I provided to the Christmas Eve edition of The Telegraph), but I want to be constructive. I have outlined the above criteria because I believe that all Android OEMs, app developers and users -- and many other entities and people -- have a right to know what Google is going to do now.

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The ITC is tough terrain for mobile patent plaintiffs -- consistently so far

2011-12-23T16:14:00.003+01:00

This week's ITC decisions involving various of Apple's and Microsoft's patent infringement claims against Android were important, but every time the ITC rules on one of those smartphone patent cases, I am less surprised than before about the high drop-out rate of patent claims. That doesn't mean that those decisions don't matter. It's just that the ITC is ever less likely to become a forum that would singlehandeldy force, through its decisions, the relevant parties to settle their disputes.

As an analyst I have to recognize new trends and digest information, and to adjust my positions accordingly. It's not just that I have to -- I thoroughly enjoy it. Almost 15 months back, I wrote an article on the role of the ITC as an increasingly popular patent enforcement agency, and I have linked to it on a number of occasions ever since. In principle, I still stand by the information in that article, but since then, I've seen a number of smartphone-related ITC positions (recommendations as well as preliminary and final decisions) that show it's a huge gamble for patent holders to take their claims there.

It can be a fast avenue to favorable decisions, and that's really tempting, but at least in connection with smartphones, there's also a high risk of the ITC's actions creating a perception of some patents or patent portfolios being less powerful than they actually are. We'll still hear a lot from and about the ITC in 2012 (complaints, hearings, recommendations and decisions), but I wouldn't be surprised if some major patent holders now adjusted their litigation strategies and deemphasized ITC complaints in favor of actions in United States district courts as well as foreign courts. It's not just that it's hard for anyone to win there: it also takes longer. Apple's complaint against HTC was brought in March 2010 and finally adjudicated 21 months later. During that period, Apple could have completed two full subsequent rounds of litigation in Mannheim and Munich, and would only be a few months away from decisions on a third round. Also, a decision on an Eastman Kodak complaint against Apple and RIM, filed almost two years ago, just got pushed off by nine months. And when the ITC opens new investigations, it recently set 18-month target dates from the beginning, counting from the launch of the investigation (about one month after the complaint) and likely being subject to further delays.

If I were a conspiracy theorist, I could think of a many possible explanations. For example, with the ITC clearly aching under its huge caseload, one might speculate whether it actually hopes plaintiffs-to-be recognize that all their lawsuits slow down the process, hoping that this -- rather than more taxpayers' money for the agency -- will ultimately redress the balance between supply and demand. But let's be deferential to the ITC, which has an important task, and focus on the hard facts here.

One of the hard facts is also that fending off an ITC complaint in whole or in large parts still takes hard work. None of this is meant to diminish the defensive achievements of the respective defendants. Let there be no doubt: HTC and Motorola have reasons to be proud of the work they've done, and happy about the fact that they've contained the damage for the most part -- and for now. Their disputes are far from over, but things could have been much worse for them. That said, at the ITC it's undoubtedly the complainants who face an uphill battle, and the level of expectation of independent observers is rather low now.

Maybe it wouldn't have been easier to win at the ITC in previous years. But the rate of settlements is conspicuously low in connection with smartphone patent disputes, so there are more decisions relative to the number of compaints, and those decisions don't serve to facilitate settlements.

Chronology

Here's a chronology of ITC smartphone decisions and recommendations that came down since my aforementioned October 2010 article -- I decided not to produce a table (patents asserted, enforced, dismissed) because the specifics of each case must be taken into account:

November 2010: the ITC staff, which acts as a third party to some proceedings (for a lack of resources, no longer to all of them), says Nokia isn't liable for infringement of any of five patents asserted by Apple in investigation no. 337-TA-704 (these are the patents that Apple asserted against Nokia but not simultaneously against HTC).
January 2011: in investigation no. 337-TA-703, then-chief ALJ Paul Luckern finds no violation of a key Eastman Kodak patent on digital imaging by Apple and RIM. 13 months earlier, a different ALJ had made an initial determination that held Samsung and LG (which settled at about that time) to infringe that patent.
March 2011: an ALJ makes an initial determination that Apple doesn't infringe any of five Nokia patents asserted in investigation no. 337-TA-701. Nokia had previously dropped two patents voluntarily.
April 2011: in investigation no. 337-TA-710 the ITC staff sees no violation of five Apple patents by Nokia and HTC (Apple had previously dropped five patents voluntarily from that investigation).
July 2011: an ALJ believes Apple infringes two S3 Graphics patents (out of four asserted ones). Those two patents are closely related to each other, which makes it more like a potential win on several claims from the same patent. Shortly thereafter HTC announces the acquisition of S3G. The companies had a major shareholder in common. But it turns out that Apple's core products aren't suspected of infringement, and in November 2011, the ITC concludes a review with the complete dismissal of the complaint.
July 2011: the ALJ in charge of investigation no. 337-TA-710 makes an initial determination that HTC infringes on two of Apple's ten originally asserted patents. But this determination is reviewed, and this week one of those two patents was found infringed and the other was not (or it was considered invalid).
October 2011: an ALJ recommends the dismissal of HTC's first ITC complaint against Apple (four patents in play, one previously dropped by HTC). In December 2011, the Commission announces a review limited to only one of those patents, and even on that one an HTC win does not appear too likely.
December 2011: as I mentioned before, a final ITC ruling (investigation no. 337-TA-710) finds HTC to infringe two claims of one Apple patent, and a day later, an initial determination (investigation no. 337-TA-744) finds four claims of a Microsoft patent to be infringed by Motorola's Android products. The defendants announce workarounds.

I think the situation between Nokia and Apple was an interesting one. Both companies were heading toward a "goalless draw" (though Nokia still had some hopes that a review of the initial determination might improve the outcome). The ITC, which has the job of protecting the domestic industry against unfair competition from imported products, didn't make things easier for the U.S. company than for its Finnish competitor. Both parties' claims got a rough ride.

The ITC can uphold and protect intellectual property in connection with smartphones since those devices are all manufactured outside the United States, even if their makers (like Apple and Motorola) are based in the US. At any rate, the dispute between Apple and Nokia is a good example of the ITC being a consistently difficult forum for all patent holders rather than pursuing a protectionist agenda. It has certain policies and all the time stakeholders try to sway the ITC on non-legal or pseudo-legal political grounds, but it doesn't disadvantage foreign companies. For example, Samsung doesn't have to be afraid of the ITC playing favorites with Apple. That dispute is taking place in ten countries and in the end neither litigation in the U.S. nor in South Korea (Samsung's home country) is likely to decide the overall outcome. That one will likely depend in no small part on jurisdictions like Germany, France and Australia, or any other of the ten countries in which they're suing each other.

In general, I like it when courts or quasi-judicial agencies set a reasonably high bar for patent infringement claims to succeed. On this blog I have repeatedly criticized judicial decisions that set the bar too low. The ITC may set it too high, considering that its primary task is the effective protection of intellectual property. But if we all look back at the ITC's role in a year or so, we may once again see the same consistent pattern that I just discussed -- possibly with adjustments where the merits of certain cases warrant it, but the ITC is probably going to continue to dismiss the vast majority of smartphone patent claims brought before it.

An important and challenging mandate

District courts and similar courts in other countries are in a different position. After they rule, stakeholders can ask for changes to the law, but they can't ask political decision makers to overrule. With the ITC, which is a government agency, there are political challenges, somewhat similar to the ones that antitrust regulators also face all the time.

Any recommendation of an import ban is subject to a Presidential Review. While U.S. presidents frequently delegate this to the U.S. Trade Representative, and even before the first smartphone-related import ban was handed down, leading U.S. carrier Verizon asked President Obama to veto any bans. Verizon knows there are many cases pending in U.S. district courts, and there will be injunctions by such courts at some point, but its political call related only to the ITC. And as I explained, the ITC's decisions don't provide the slightest indication of any such thing as protectionism (if one wanted to accuse them of anything, it would have to be the opposite), but if foreign nations thought their companies are treated unfairly, they would likely complain through diplomatic channels and their impressions could influence their own trade and IP enforcement policies.

In light of that, it's often the safest and easiest bet for the ITC to take skeptical positions on patent claims (though that also had political repercussions in connection with the Kodak case). I guess the ITC really hopes to avoid that it orders an import ban on a patent that might be invalidated shortly thereafter. There isn't going to be much of a public debate over whether the ITC has recently struck the right balance. That's outside of my focus, too. But I do take note of its decisions, and just the ones I listed above involve a number of major players and dozens of patents, and chances are that those complaints would have been considerably more successful in district courts and definitely in certain international courts.

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