Source: http://www.fosspatents.com/2013/07/
Timestamp: 2019-04-20 00:12:22+00:00

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Senator Jim Risch (R.-Idaho), who previously signed two other letters relating to injunctions over FRAND-pledged SEPs.
Three of the four senators were among the signatories of a May 2013 letter to the ITC in the build-up to the Samsung-Apple decision and also with a view to other cases.
The letter to the USTR notes that the senators "took no position on the merits of the cases then, and similarly we take no position on the merits of the case now", but it's a strong statement in and of itself that the senators go on to "urge the USTR to carefully consider" their public interest arguments. The fact that they write a letter to the USTR toward the end of the 60-day Presidential review period is an unmistakable expression of concern and, by extension, supports Apple, which is pushing for a Presidential veto.
Apple is not alone. A recent Wall Street Journal article mentioned AT&T's support (which I also blogged about) as well as that of BSA | The Software Alliance, a group that includes Microsoft, Intel, Oracle and other major tech companies. For the website of Fortune magazine (part of the CNN Money network), Senior Editor Roger Parloff wrote an opinion piece entitled "Obama should overturn an ITC import ban on Apple phones".
The Korea Times correctly summarized the position I took in a CNN.com op-ed almost two months ago, but in the meantime more information on the ITC ruling has become available and I'm now particularly concerned about the ITC's position that it's legitimate for a SEP holder to condition a licensing offer on a license to the other party's non-SEPs. One of the six chiefs of the ITC, Commissioner Dean Pinkert, also expressed concern over this one. For as much as I usually wouldn't want the ITC to be overruled, this case does raise unique and serious issues. The four bipartisan senators address some of the most important issues at a high level in their letter to Ambassador Froman.
There's a fundamental problem here that needs to be solved. And it would also be regrettable if Apple had to suffer under an outlier ruling by a government agency with quasi-judicial authority.
Between 1 AM and 2 AM local time on Sunday, Samsung's counsel in the intellectual property dispute with Apple notified the court of a "final" Office action by the United States Patent and Trademark Office (USPTO) rejecting all claims of Apple's pinch-to-zoom API patent, U.S. Patent No. 7,844,915 on "application programming interfaces for scrolling operations", including its claim 8, which one federal jury found infringed by numerous Android-based Samsung devices about a year ago and with respect to which another jury will have to redetermine damages in November 2013 for a dozen of those products (the retrial is about 13 products, 12 of which were found to infringe this patent).
Samsung claims to have a workaround in place for the '915 patent that makes no difference to end users but steers clears of infringement, which Apple disputes.
Based on Apple's damages claims, the pinch-to-zoom API patent is the most valuable multitouch software patent at issue in the first Apple v. Samsung litigation in the Northern District of California, but most of the damages in that case relate to design patents. Also, I believe that the patents at issue in the second Apple v. Samsung case in San Jose, scheduled to go to trial next spring, are, on average, considerably more valuable than the ones asserted in the first case.
I put "final" in quotes and said "not really final" in the headline because one can easily get confused by the terminology in U.S. patent reexaminations. Most of the time that you hear about "final" in connection with a reexamination, the way to look at it is a famous Churchill quote: "Victory is never final, defeat is never fatal, courage is all that matters." And courage is not in short supply at Apple and Samsung.
In this case, the "final" Office action is merely the second decision in a process that would take years (until mid-2017 or later) unless Apple successfully defends the patent before all appeals have been exhausted. The first Office action concerning this patent came down in December. Thereafter, Apple had its first opportunity to respond, and now, after the "final" Office action, it has another two months to argue that the patent is valid. The asserted claim of another patent-in-suit in the same litigation, claim 19 of the '381 ("rubber-banding" or "overscoll bounce") patent, was had the same procedural status in April only to be affirmed in June. I can't predict whether the same will happen to the asserted claim of the '915 pinch-to-zoom API patent. I wouldn't underestimate the hurdle Apple faces now. The "final" Office action finds claim 8 of the '915 patent anticipated by one prior art reference and obvious over the combination of two others, as you can see in the detailed version of the final Office action, which I uploaded to Scribd.
The "final" Office action does not meet the criteria laid out by Judge Koh in April when she denied Samsung's motion for a stay without prejudice, allowing a new motion only if an asserted claim is found invalid after the USPTO's Central Reexamination Division is done with it (at which point Apple can appeal the decision to the USPTO's Patent Trial and Appeals Board (PTAB), and subsequently to different courts. Judge Koh didn't say that she would necessarily order a stay in that case, but at least she would be willing to consider. The rubber-banding patent would have been Samsung's best shot, but its relevant claim was affirmed. For the pinch-to-zoom API patent time is not on Samsung's side. But Samsung has two other initiatives going to delay the limited damages retrial, one relating to Apple's damages theories and one concerning an alleged narrowing (in the reexamination proceedings) of the scope of the rubber-banding patent. If Judge Koh felt that at least one those motions might have merit but represents a close call, then the fact that the asserted claim of the '915 patent remains under reexamination pressure could play a role in her decision-making. But it's still not too likely that the November retrial will be postponed, even though Samsung definitely leaves no stone unturned in its tireless efforts to prevent Apple from obtaining remedies.
This week the United States Court of Appeals for the Federal Circuit scheduled its hearing on the Apple-Google (Motorola) cross-appeal of Judge Posner's dismissal of a two-way patent infringement action in the Northern District of Illinois in the late spring of 2012. The "Posner appeal" will be heard on September 11, 2013. There's another, less famous but also rather important Apple-Motorola FRAND matter pending before the Federal Circuit: the appeal of Judge Barbara Crabb's November 2012 dismissal (initially with, ultimately without prejudice) of a FRAND contract and antitrust action in the Western District of Wisconsin. The appellate hearing in this case will most likely be held in the spring of 2014. This week Apple just filed its opening brief.
Google's Motorola is appealing Apple's partial summary judgment win in Wisconsin and still believes the dismissal should have been with prejudice. But it doesn't want the Federal Circuit to adjudge this matter in the first place: it believes this appeal should have been brought in the Seventh Circuit (where Judge Posner is an appellate judge; for the Chicaco infringement case he was sitting on a district court by designation). The Federal Circuit declined to agree with Google at this stage, but allows it to raise jurisdictional arguments in the further process.
The "Posner appeal" involves standard-essential patents (SEPs) asserted by Google's Motorola and non-SEPs asserted by Apple. With respect to both categories of patents it's about the standard for remedies in infringement cases: injunctive relief and damages. The "Wisconsin appeal" is not about remedies in an infringement case but about the enforcement of a FRAND pledge under antitrust and contract laws, such as by asking a court to obligate a SEP holder to make an offer on FRAND terms ("specific performance" of contractual obligations). So it's entirely SEP-specific.
The Motorola-Apple dispute, which started in October 2010, has a complex procedural history. Even the "Posner case" at some point passed through the Western District of Wisconsin, but Judge Crabb passed it on to "a kind judge in Chicago who enjoys trying patent cases" -- i.e., Judge Posner. Subsequently, Apple would have liked to see the two cases consolidated in Illinois, but just to be clear, the procedural origin of the Wisconsin FRAND antitrust and contract case is that Apple brought counterclaims to Motorola's ITC complaint, and counterclaims must be immediately removed from ITC investigations to a district court. Apple selected Wisconsin for this purpose. The ITC investigation went nowhere: the U.S. trade agency tossed the remainder of Motorola's complaint (one non-SEP) in April 2013. In August 2012 the ITC had already sided with Apple on three Motorola patents, including a SEP that a judge held Apple (in an April 2012 preliminary ruling) to infringe. Two Google appeals relating to that one ITC investigation are before the Federal Circuit (1, 2).
"Motorola has sued Apple in various forums for infringement of eight SEPs (presumably, its eight strongest SEPs) and is batting 0-for-8 in establishing liability in U.S. actions. Motorola asserted the '223 and '697 patents before the ITC, but the Commission determined that the '223 patent was obvious and that Apple did not infringe either patent. [...] Motorola asserted the '898, '559, '516, '712, '230, and '193 patents in [the "Posner case"]. Motorola withdrew the '516 and the '230 patents from suit. On summary judgment, the district court found the '193 patent invalid and the '712 and '559 patents not infringed, and concluded that Motorola could not prove damages or entitlement to an injunction as to the '898 patent."
The fact that FRAND determinations are typically not based on a full and final adjudication of essentiality/infringement and validity raises very interesting questions for courts setting rates based on such concepts as a hypothetical Georgia-Pacific negotiation (as Judge Robart did in his Microsoft v. Motorola rate-setting opinion in the Western District of Washington, and as Judge Crabb might have done if she hadn't canceled the trial in the decision that gave rise to this appeal here). I'm not going to go into more detail on this complex question here and now, but I do wish to recommend Professor Thomas Cotter's Comparative Patent Remedies blog, which discusses the impact of uncertainty regarding liability on FRAND negotiations and probabilistic rate-setting decisions from time to time.
For the purposes of this blog post here, suffice it to say that Apple's $1 position wasn't nearly as arrogant or whimsical as it might have appeared at the time. It was the price Apple was willing to pay even without Motorola having proven Apple's actual use of a single valid Motorola SEP, just to put this issue behind it. Apple didn't rule out paying more. As its appeal brief explains, its position was and still is that Motorola had and has an obligation to offer a FRAND rate -- while Apple does not have an obligation to accept a court's determination. Even without Apple accepting the determination, the parties would have had additional, valuable guidance in further negotiations. Judge Crabb agreed with Motorola that this would simply allow Apple to use the court's rate-setting decision (and the requested order of the "specific performance" by Motorola, i.e., an offer Motorola would have been required to make so as to comply with its FRAND contract) as a bargaining chip and try to negotiate the rate down from there. Apple's position on this is basically that whatever may happen after an offer, the offer must be made. Up to $1, Apple would have just bought peace regardless of whether Motorola would ever prevail on a single U.S. SEP. Above that rate, Apple "would have had to make the difficult business judgment whether to accept the license or the litigation risk inherent in continuing to challenge the essentiality, validity, and exhaustion of Motorola's patents". Apple doesn't say so, but this "business judgment" obviously relates, in practical terms, to negotiations: Apple might have told Motorola that the court set a rate of $X, and if Motorola accepted 80% of $X, Apple would do a deal, but above that, Apple would continue to litigate. Then Motorola could have said "OK, we'll keep suing you", or it could have said "80% is not enough, but if you give us 85%, we won't keep fighting for the remaining 15%". According to Apple, "that is the choice that Motorola committed to give every business in Apple's position" -- through its FRAND pledge.
I'd like to point out that Judge Robart, contrary to the way some litigants and commenters now portray his position on this, never said that there's an absolute, indispensable requirement for an implementer to commit to accepting a court-determined rate. In his Microsoft v. Motorola case, Microsoft made that commitment, and it was important to Judge Robart when he barred Motorola from enforcing a set of German SEP injunctions against Microsoft. That's different from the Wisconsin case.
Judge Crabb not only canceled the trial because she disliked Apple's position but she also declined to issue declaratory judgments on certain questions such as whether Motorola's 2.25% ($12 per iPhone) demand was consistent with FRAND. Apple also wants to get those DJs now.
The FRAND rate-setting part of the Wisconsin case is closely-related to the FTC consent decree and order in the Google (Motorola) SEP antitrust case, finalized this week. Apple's appeal brief still refers to the FTC's original finding (in January 2013) of anticompetitive conduct by Motorola, which the FTC subsequently dropped in order to make a concession to Google. But the FTC confirmed that Google can still seek injunctions against Apple, as it is doing in its appeals of the Posner and ITC decisions. It just can't enforce injunctions without complying with the consent order, which involves rate-setting. So far, Motorola has been unable to prevail over any of its U.S. SEPs against Apple, and as long as it doesn't, Apple can simply wait. But if Google ever does win a favorable U.S. SEP liability ruling, Apple is going to need a rate-setting decision by a U.S. court (I don't think it's enthusiastic about the prospect of arbitration) -- and the Wisconsin case could already have provided one, had it not been dismissed for what Apple believes are all the wrong reasons.
I've previously stated that I agree with Apple's take that a FRAND promise is comparable to an enforceable options contract: Google's Motorola must give Apple the option to take a license on FRAND terms. But an option is not an obligation, and if Apple convinces the Federal Circuit of this, then this will have important implications for many FRAND cases.
"To hold otherwise is to declare that Apple cannot pursue a blatant antitrust violation because it so far has refused to capitulate to Motorola's anticompetitive threat. [...] Those who are too weak to resist the threat are also the least likely to challenge the anticompetitive conduct. The result would be a perverse 'under-supply of challenges to patent hold ups.'"
We may see more Noerr-Pennington arguments in FRAND disputes. And we may also see more and more private antitrust litigation involving FRAND-pledged SEPs given the weak and very limited action taken so far by U.S. antitrust regulators.
Today the public version of the fourth and final brief in the Oracle v. Google Android/Java copyright appeal became available: Google's reply brief concerning the smaller items with respect to which the district court had found it liable for infringement. These items are so insignificant that Oracle told the district court last year that it wasn't interested in collecting even one cent of damages over those items unless its appeal with respect to the declaring code of 37 Java API packages succeeds. Therefore, Google's reply brief is interesting from a procedural/tactical perspective but not so much in substantive or economic terms.
The most important aspect of this brief is not what it says but the fact that it was filed: briefing is now complete and the United States Court of Appeals for the Federal Circuit will soon schedule a hearing. The Federal Circuit already has three very interesting smartphone IP cases scheduled for August (Microsoft-Google cross appeal of ITC ruling on Microsoft's complaint against Motorola, Apple's appeal of Judge Koh's denial of a permanent injunction against Samsung) and September (Apple-Motorola cross-appeal of Judge Posner's ruling). These other cases are patent cases while Oracle v. Google is exclusively a copyright infringement (and copyrightability) case at this stage. I guess the Oracle v. Google hearing will take place in the fourth quarter.
As a cross-appellant it's in a better position to cause delay at various stages of the process.
Smaller issues that the appeals court needs to address take attention and hearing time that Oracle would probably like to see spent on the tuly important matters.
"Instead of providing compelling answers to those questions, Oracle's cross- appeal brief reprises some of the most troubling aspects of Oracle's main appeal from the adverse judgment on its SSO [structure, sequence and organization] claim. As in its main appeal, Oracle brushes aside the controlling Ninth Circuit case law [...]"
I have the greatest respect for how Google defends itself against infringement allegations not only in this case but also in many others. I'm still not sure it was the right choice for Google to appeal the unfavorable parts of the district court's ruling. The eight decompiled Java files, with respect to whith District Judge Alsup overruled the jury, are clearly copyrightable and not de minimis, and copying was admitted. Relatively speaking, the nine-line rangeCheck function is a better case for a challenge, but this is so insignificant that, if I were in Google's position, I wouldn't want to bother what is probably the busiest appeals court in the entire United States with something like that.
By taking an extreme on those eight decompiled Java files, Google risks appearing as just the anti-IP organization (at least anti-third-party-IP) that it is according to Oracle's reply brief. In my commentary on Oracle's reply brief I said that Google "would have [had] to be reasonably specific as to what kinds, elements and aspects of software fall within the scope of copyrightability if the appeals court affirmed the district court's ruling", but it failed to clarify this, while it's much clearer where Oracle draws the line between copyrightable and non-copyrightable program code. By trying to deprive even those eight Java source files of protection Google really positions itself as a company promoting no-holds-barred IP infringement, and I'm not sure this was the right choice. It certainly would have been poor judgment in a political debate, where you build a majority by taking centrist positions. An appeals court is different from, say, Congress, but policy considerations will play a major role in the adjudication of this appeal.
A former U.S. copyright chief, Ralph Oman, said in his amicus brief that the district court's ruling "eviscerates" copyright protection for software. If Google succeeded in the reversal of any item with respect to which the district court had sided with Oracle, then the verb "to eviscerate" would have to be replaced with "to abolish". At the hearing Google may have to explain to the Federal Circuit how its positions can be supported without abolishing software copyright.
Today the Federal Trade Commission (FTC) announced the finalization of the consent order settling the Google (Motorola Mobility) antitrust case with respect to FRAND-pledged standard-essential patents (SEPs). As the announcement says, the U.S. antitrust agency made merely "technical modifications" in response to public comments received after publication of the original version published in early January 2013 (initial commentary on announcement, explanation of deal structure, comparison with FTC-Bosch settlement).
"The Commission has decided to remove the count from the complaint alleging that Google has engaged in unfair or deceptive acts or practices. Removing this count does not indicate a Commission view on the application of its unfair acts or practices authority in other matters alleging harm to competition or the competitive process."
The fact that the original version of the order said so nevertheless means something.
It's a done deal now, so I'm going to focus on what this means for pending and future FRAND SEP litigation involving Google (Motorola Mobility) or other SEP holders.
Simultaneously with the final order, the FTC published a letter it sent to public commenters explaining the modifications made and the rationale behind them. Generally, the text of the order itself is going to have more weight than additional explanations provided by the FTC. In May, Google told the United States Court of Appeals for the Federal Circuit that "[t]he FTC consent decree does not prevent Motorola from seeking an injunction [against Apple]" (which the FTC letter published today actually confirms) and said that "[t]o the extent the Commission's statement [the one at the time of the original announcement] suggests otherwise, it was incorrect and cannot alter the terms of the actual consent decree". And the FTC confirms this in footnote 11, saying that "[a]n Order is interpreted by its terms alone, and those terms are not modified by ancillary documents or statements made by the Commission or Commission staff". Nevertheless, the FTC's open letter to public commenters will be leveraged by parties to disputes as they seek to persuade courts of law of particular interpretations of the final FTC-Google agreement and debate SEP-related policies in different contexts.
In its letter, the FTC stresses the case-speficc nature of the settlement ("The Order was negotiated in response to the specific facts of this case."). In March a relatively litigious SEP holder, InterDigital, already said that this settlement "is not a basis to adjudicate subsequent cases". But this is not a binary question of 0% or 100%. The question is how much weight the FTC-Google deal will have relative to case law and other persuasive authority. It's going to "compete" for weight with rulings by federal courts, decisions by other governmental agencies (DoJ, ITC), policy papers, other write-ups, and even with decisions by courts and regulators in other jurisdictions such as the European Union. I don't think anyone can predict how influential the FTC-Google deal as a whole will be in, say, a year from now. It's not even clear how much weight a particular court will give it tomorrow.
A key concern about the FTC-Google deal related to the "defensive use" exception, and the mutual pursuit of ITC import bans over FRAND-pledged SEPs by Ericsson and Samsung shows that this is not in the interest of consumers. The FTC defends its decision not to fix this problem, the letter says that "its inclusion in the Order does not indicate a particular view about defensive-use exceptions generally".
"Contrary to suggestions by commenters, the provision is not triggered by all injunction actions against an Android OEM based on alleged infringement of an SEP. Rather, the provision only allows Google to seek an injunction in response to an action for infringement against an Android OEM if the SEP holder seeks an injunction and alleges that software or another product supplied by Google to the OEM infringes the relevant SEPs."
I would agree that the above should be the result of a reasonable interpretation of that clause. The problem I see here is the legal uncertainty this creates, and that footnote (even if given a maximum of weight) won't prevent Google or others from claiming that the requirements for "defensive use" are met. Just yesterday I reported (again) on a claim of standard-essentiality that HTC brought to dodge a Nokia patent. HTC just made the claim (which, by the way, involved the Google Cloud Messaging protocol) and triggered an arbitration proceeding, but ultimately it didn't even want the arbitration proceeding to go forward. Also, the question of whether a particular component of a product found or alleged to infringe implements a given patent comes up all the time in connection with patent exhaustion defenses, and plaintiffs and defendants alike sometimes take positions on exhaustion that are less than reasonable. The FTC's letter makes reasonable interpretations somewhat more likely -- but that's the extent of it.
"It is important to highlight that the Order, including the arbitration provision, does not negate or alter traditional burdens of proof, or deprive implementers of their rights to seek judicial review, challenge infringement, or raise defenses such as validity, exhaustion, and essentiality."
These rights of implementers/defendants are also key to the ongoing EU antitrust investigations of Motorola Mobility's use of FRAND-pledged SEPs against Apple and Microsoft.
The FTC also supports the principle that a party must have the right to appeal a rate-setting decision without the threat of an injunction in order to "ensure the fairness of the FRAND Determination Action".
There are definitely some things that I like a lot about the FTC's letter. I just disagree on where to "strike a balance between Google's rights and interests as a patent holder, and the rights and interests of implementers". That balance must be struck for sure. I just don't think that, in order to strike that balance, one must allow SEP-based injunctions in situations in which Google can simply sue for damages and post-judgment royalties. In his Apple v. Motorola ruling, Judge Posner addressed this question, and I agree with him.
Two weeks ago Samsung filed a motion for a new trial concerning its liability for infringement of the '381 rubber-banding patent or, in the alternative, a partial final judgment with respect to that patent in order to appeal the decision right away to the Federal Circuit. Either way, the limited damages retrial scheduled for November would have to be postponed, which is what Samsung is also pursuing through another motion it brought earlier this month, alleging a failure by Apple to comply with court orders, which Apple calls an attempt to "delay and derail" the limited damages retrial.
I have also uploaded to Scribd the declaration attached to Apple's brief.
According to Apple, Samsung's motion can be denied simply on the basis that "[t]he evidence to which Samsung points--Apple's statements during reexamination of the '381 patent--did not exist until May 2013, some nine months after trial", while new trials based on "newly discovered evidence" can be grnated only if they "have been in exist[e]nce at the time of trial" (July/August 2012).
Another requirement is that such newly-discovered evidence must not have been "discoverable through the exercise of reasonable diligence", but Apple says it has taken consistent positions with respect to the relevant piece of prior art ("Lira") throughout the case. So Apple believes Samsung can't claim now that this is new in any way.
Apple also says Samsung's non-infringement arguments are wrong. This is a context in which the aforementioned declaration adds a lot of detail. However, Apple makes a distinction between implementations of rubber-banding that "benefit the most from that invention" (by avoiding a situation in which the end user instinctively believes the touch screen is not responsive) and others. I agree, but Samsung may have more of a case (apart from procedural arguments) with respect to some aspects of the implementations that provide lesser benefits. And in a very strict sense that could also have implications for the determination of damages.
Apple also denies that the statements it made during reexamination can be characterized the way Samsung characterized them. In my post on Samsung's motion I had also expressed some doubts in this regard.
Apple says "[t]his case is within striking distance of a true final judgment" and wants to "proceed with the trial".
While Apple has multiple lines of defense and reasonably proposes to go forward with the limited retrial and then take everything to the appeals court, there's certainly a risk here for Apple that Judge Koh might seize this opportunity to delay the damages retrial, hoping that it may never have to happen if the parties settle before the rubber-banding issues is adjudged by the appeals court. I doubt that Judge Koh would hold a new rubber-banding liability trial, but it wouldn't require much effort on the court's part to issue a final judgment on that patent. But Apple's opposition brief argues that such a partial ruling would not be appealable, at least not under the case law Samsung cites to. (And I generally don't believe that a mere delay brings these two parties closer to a settlement -- they need real guidance).
I still think Samsung's motion was absolutely legit, but it will be hard for Samsung to overcome Apple's various lines of defense against it.

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