Source: http://www.fosspatents.com/2018/06/
Timestamp: 2019-04-20 00:16:57+00:00

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While Justice Anthony Kennedy has decided to retire from the Supreme Court after 30 years, his concurrence in eBay v. MercExchange, which stressed the unreasonableness of injunctive relief over a minor feature of a multifunctional product, will be a lasting legacy for which the tech sector (apart from patent trolls and companies that used to make or are still making devices, but largely or entirely relying on patent licensing revenue) will be forever grateful.
With this voice of reason in connection with patent enforcement leaving the Supreme Court, and with someone like Assistant Attorney General Makan Delrahim mislabeling as "the United States' policy" an unFRANDly agenda hostile to innovators focused on making actual products, the product-making, truly innovative majority of America's technology industry should make an effort to ensure that Justice Kennedy's successor will have a very balanced approach to patent enforcement. Where the rumored candidates stand on patent policy is usually unknown: you'd only have a clue if they had previously served on the United States Court of Appeals for the Federal Circuit, or maybe if they had demonstrated a certain approach to patent cases at the trial stage (Judge Rodney Gilstrap--obviously not a candidate--is undoubtedly unbalanced). But that's rarely the case. For an example, no one really knew where Justice Gorsuch would stand, but he's a judge whom I would always trust that he'll go to extreme lengths to interpret the law correctly and reasonably (and to explain his reasoning in an intelligible way).
At this stage, there is a high-potential candidate we should rally behind: Senator Mike Lee (R-Utah).
He's on the President's shortlist of about two dozen potential nominees. Senator Ted Cruz (R-Tex.), himself often considered a potential Supreme Court nominee and probably one of the smartest jurists ever to hold elective office, vouches for his colleague's judicial conservatism. As does Mark Levin. Or the Hoover Institution's Adam White. And Senator Lee would gladly accept.
There are, however, two obstacles, apart from the fact that there are many other impressive people on the list of potential nominees. They aren't insurmountable, but they are significant. One is that Senator Mike Lee is not a sitting judge, unlike other recent nominees. The other issue is that he called on then-candidate Trump to withdraw before the general election when the "p***y-grabbing" recording came up. I must admit that even I, as a longstanding Trump supporter (even on this blog I voiced support for him in early 2016), was very concerned at the time that the recording would cost him too many female votes. Fortunately, he won anyway, and more and more people believe that he may go down in history as one of the most impactful presidents ever. But in that situation so close to the election, Senator Lee was skeptical, for understandable reasons.
I'm reasonably optimistic that President Trump will let bygones be bygones, and that he's not too much bound to this conventional thinking that only a sitting judge should be nominated. He's the first president never to have held political office or to have been a general.
Silicon Valley, and Microsoft and Amazon up north, and many other tech innovators across the United States, should support Senator Lee. The Supreme Court will continue to hear many patent cases in the coming years and beyond. Sooner or later, a FRAND case will reach the Supreme Court, given all that is going on with the controversy surrounding Qualcomm's business practices (most recently, an extremely interesting motion for an anti-enforcement injunction brought by consumers) or the patent dispute between the world's two leading Android device makers (Samsung v. Huawei), and numerous other issues and disputes. If Apple and then-Google's Motorola hadn't settled, even Judge Posner's historic FRAND decision could have gone all the way up to the top U.S. court.
There also is some potential for legal questions involving the United States International Trade Commission (USITC) and its sole remedy (equivalent to injunctive relief) reaching the Supreme Court in the not too distant future.
A hypothetical Justice Mike Lee would understand how to strike a reasonable balance between the interests of right holders and those of innovators who don't intend to infringe but simply implement industry standards or independently create products. He's knowledgeable on antitrust as well, and patent and antitrust matters overlap ever more often.
Please support him if you can.
Yesterday, Judge Lucy H. Koh had the pleasure to terminate the long-running Apple v. Samsung dispute by granting an order of dismissal based on a settlement. Some of the time she'd otherwise have spent on the adjudication of post-trial motions can now be dedicated to this extremely interesting and important motion for a preliminary anti-enforcement injunction.
There's a precedent in the Northern District of California. By that I don't even mean my favorite antisuit injunction process in recent months (Samsung's anti-enforcement injunction against a couple of Chinese standard-essential patent (SEP) injunctions obtained by Huawei. I mean something much older, and I blogged about it at the time and hailed it as a "landmark decision": about five years ago, Judge Ronald Whyte (whom Judge Koh succeeded when he became a senior judge), enjoined two WiFi (IEEE 802.11) SEP holders named LSI and Agere from enforcing a potential ITC exclusion order against RealTek Semiconductor.
Qualcomm's conduct has already been held to be anticompetitive. So far, Judge Koh also appears to have been rather skeptical of the legality of some of Qualcomm's business practices.
Qualcomm isn't merely seeking leverage to impose high royalties. That's part of the plan, obviously, but what makes Qualcomm's two ITC complaints against Apple particularly problematic is that Qualcomm wants an import ban against iPhones that come with a baseband chip from Intel--the only company that presently poses a significant competitive threat to Qualcomm's cellular baseband chips.
Qualcomm's position is that it doesn't want all iPhones banned since this would raise issues in the ITC's public interest analysis (impact of an import ban on the economy at large, and on society). But Qualcomm's anti-Intel focus hasn't solved the public-interest problem at all: it has merely traded one set of issues for another. It's hard to tell which one is worse. The court may very well find that the focus on Intel--i.e., the use of patents in order to defend a monopoly--is an unusually clear antitrust violation. Monopolies aren't necessarily illegal; but some monopolization tactics are.
"Other modem chip suppliers are unlikely to enter the market in Intel's place if Qualcomm can selectively target devices using a non-Qualcomm modem chip for exclusion. Both the potential modem chip vendor and its customers make significant (joint) investments when deciding to work together on a modem chip project, and thus both face substantial risks. For example, “Intel has invested billions of dollars to develop next generation advanced modems and technologies to improve the performance and functionality of modern smartphones and cellular communications [...]"
"Given the delicate and high-stakes business decisions in play, the Court should not feel obligated to wait and see if the ITC actually issues the order Qualcomm has requested. The market is already very difficult to penetrate due to Qualcomm’s anti-competitive practices, and the mere uncertainty faced by Intel and Apple because of Qualcomm's ITC action itself compromises the possibility of free and open competition."
Federal judges--including, but not limited to, Judge Whyte--are well aware of how certain patent holders turn to the ITC in an attempt to make an end-run around the eBay v. MercExchange standard for patent injunctions. Normally, the federal courts don't pay much attention to what's going on at the ITC. Also, there was an InterDigital case in Delaware where the district court declined to fast-track a FRAND determination just because the defendants sought to pre-empt an ITC order. But RealTek was a case where a federal court determined it just had to thwart an anticompetitive plan by certain plaintiffs that involved the ITC.
There are two ITC investigations of Qualcomm complaints against Apple. In the first one, where only three of the six originally asserted patents are still in play, a hearing was held a couple of weeks ago. The ITC staff, which does not formally make decisions but whose input bears considerable weight with the ITC's Administrative Law Judges (and with the Commission itself), believes Apple's iPhones infringe one of the asserted patents. So there is a clear and reasonably present danger of a U.S. import ban. It's hard to predict what position the Commission (the final decision-makers at the ITC) will take on the competition-related public-interest concerns here.
Meanwhile, Qualcomm will oppose the motion, and most likely there will also be some amicus curiae briefs (just like last year--in that case, because of a Qualcomm motion to dismiss the FTC's case). For now, it's intriguing enough that consumers, in their role as class plaintiffs, have taken this initiative. But these consumers deserve broadbased support from industry!
I'm torn between saying "Good riddance!" or, quite the opposite and in Spanish, "Fue bonito mientras duró." ("It was nice while it was ongoing.") This dispute raised some important issues and contributed to the evolution of patent case law, but the part related to design patents was going in circles. Apparently the parties thought so as well, at this point. At long last.
This megadispute gave rise to some of the highest-quality legal work (on both sides) one could have had the privilege to read. Apple's original complaint told a coherent and compelling story of the alleged infringement of a multiplicity and wide variety of intellectual property rights. No one should write a multi-IPR complaint without at least reading that complaint once, for the purpose of inspiration.
The complaint and the answer to the complaint laid out the fundamental question underlying the dispute: Was Samsung competing lawfully--or had it gone too far? Or, conversely, was Apple taking action against theft or simply trying to eradicate competition the thermonuclear way?
There was and there is no general answer, except that the impact obviously ended up being far from nuclear. One has to look at one patent (or other intellectual property right) at a time, and jurisdiction by jurisdiction.
Samsung managed to fend off many accusations, in multiple jurisdictions. It countersued, mostly over standard-essential patents (SEPs), and in that context I criticized it far more harshly than in connection with the alleged or adjudicated infringement of design or software patents. Fortunately, Samsung is now a proponent of reasonableness in SEP licensing and enforcement. Case in point, it signed an open letter to U.S. Assistant Attorney General Delrahim earlier this year--alongside a few industry bodies and dozens of companies, including... Apple!
Apple has clearly proven that it's prepared to enforce its intellectual property rights. Vigorously. Persistently. Patiently. And Samsung has shown that it's a formidable defendant.
Let's not underestimate the effect this will have had on other parties. Who knows whom else Apple might have had to sue over design patents if it had not demonstrated in its dispute with Samsung how it responds to (alleged) design patent infringement? Who knows who else might have picked a fight with Samsung if Samsung hadn't mounted such a strong and tireless defense as in the Apple case?
Normally, those companies strike license deals, and when they wind up in court, they typically settle reasonably early. Somehow, it took them a lot longer in this case. And now either one of them has a dispute going that looks like it could become the next long-running one: Apple with Qualcomm, and Samsung with Huawei.
This is a follow-up to last month's post on an open letter that 77 former government officials and professors (of law, economics, and business) sent Assistant Attorney General Makan Delrahim in order to remind him of long-standing and consistent U.S. policies on standard-essential patents (SEP) under both Republican and Democratic administrations. I've meanwhile become aware of the AAG's reply, which does not provide any indication that he's on the side of innovation and fair competition.
To his response, Mr. Delrahim attached a letter dated February 13, 2018 from about a dozen academics and former government officials that support the statements he makes, which he describes as "the United States' policies" (we'll talk about that further below). With the greatest respect for those individuals, they do not collectively counterbalance the 77 signatories of the letter that criticized Mr. Delrahim's statements. That's not just a matter of numbers: for an example, there is no former FTC chairman among them.
Also, before the academics' February letter, there was a very impressive industry letter to AAG Delrahim in January, signed by industry bodies such as CCIA, the Fair Standards Alliance, the Software & Information Industry Association (SIAA), and ACT | The App Association, but also by major tech companies such as Apple, Intel, Microsoft, Samsung, HP, Dell, and Cisco. It's very hard to understand why neither of those letters appears to have given AAG Delrahim pause. Does he seriously think he can make his contribution to #MAGA by acting against the likes of Apple, Intel, HP, and Microsoft--and trade organizations that have such companies as Google among their membership?
The 77 signatories wrote him in their own names, not on behalf of clients. Just like I could cite examples of signatories of the other (anti-FRAND) letter who have attorney-client relationships with certain organizations, that may very well also apply to some of the 77 FRAND defenders. However, the FRAND cause really does get a lot of support from competent people who simply understand the devastating impact on innovation and competition that standard-essential patents (SEP) abuse has. The cause is so strong and important that many thought leaders are glad to defend it without anyone paying them for it.
In general, one of the things I like about President Trump and his administration is that they speak out without too much constraint from traditional, conventional etiquette (including, but not limited to, political correctness). It's important to be open and direct. However, in AAG Delrahim's case I'm afraid that his thinking (that anyone who disagrees with him likely does it because he's retained by someone) makes it even harder to help him understand the real issues. He appears to genuinely believe that holdout (companies not paying license fees they owe) is a bigger problem than holdup (SEPs being used as "one bullet to kill"). That's unsupported by any evidence. It would obviously be inappropriate, regardless of his gratuitous reference to the signatories' "clients," to suspect some kind of conspiracy between him and the enemies of FRAND access to industry standards, but according to Wikipedia, Qualcomm is one of his former clients.
What's way more important than present or past, disclosed or undisclosed, existing or imaginary attorney-client relationships is what the law says. Further above I mentioned that he refers to his outlier positions as "the United States' policies." With the greatest respect for the Department of Justice and its officials (though the DoJ has, to the best of my knowledge, never been under even a fraction of this much fire from the White House), "the United States' policies" on antitrust were never made by the DoJ's related division. There's also the Federal Trade Commission (FTC), but above all, let's not forget about the judges.
An article (PDF) written by two Washington, DC-based antitrust lawyers, Orrick Herrington Sutcliffe's John "Jay" Jurata, Jr. and Emily Luken, for the Global Competition Review explains that Mr. Delrahim's positions "lack legal support" and are simply "out of sync with a large and growing body of US case law" on such issues as injunctive relief and FRAND royalty rates. As a tech litigation watcher I couldn't agree more.
The fact that Samsung und Huawei are the world's two leading Android device makers always lent some significance to their patent infringement dispute, but it wasn't really too interesting to watch until the motion process that culminated in Samsung's antisuit injunction, preventing Huawei from enforcing a couple of Chinese patent injunctions for the time being.
Huawei has since been trying to get rid of that decision, which prevents it from getting huge leverage in China in the shortest term. It asked Judge William H. Orrick of the United States District Court for the Northern District of California to revisit his decision, and it filed a Ninth Circuit appeal with the Federal Circuit. The latter then told Huawei: you can't keep two courts busy in parallel with the same matter, so please wait for your California-based judge, then we'll see.
"The analysis of these factors largely tracks that of the district court in Microsoft Corp. v. Motorola, Inc., [...](Microsoft I). Samsung faces irreparable harm in closing its manufacturing plant and ceasing the sale of infringing devices in China. See id. at 1102 ('Microsoft has provided this court with convincing evidence that it will lose market share, which will be difficult to regain, and suffer harm to its business reputation.'). The balance of equities tips in Samsung's favor because it would be placed in an untenable bargaining position, which would have lasting effects, whereas Huawei is only being enjoined for approximately six months. See id. at 1103 ('It would seem clear that a negotiation where one party (Microsoft) must either come to an agreement or cease its sales throughout the country of Germany fundamentally places that party at a disadvantage.'); id. ('By issuance of an anti-suit injunction, this court is in no way stating that Motorola will not at some later date receive injunctive relief, but only that it must wait until this court has had the opportunity to adjudicate that issue.'). And the public interest lies in this court adjudicating the propriety of injunctive relief for the parties' standard essential patents (SEPs). See id. ('The court finds that the public interest is served by issuing an anti-suit injunction and permitting Microsoft to continue its business operations without interruption until this court has had the opportunity to adjudicate the injunctive relief issue before it.'); see also Order at 15–17 (analyzing the Unte[r]weser factor of whether foreign litigation would frustrate a policy of this forum). The overlap between the Unte[r]weser factors and the Winter factors further bolsters the conclusion that the full Winter analysis is unnecessary when applying the Gallo test. See Gallo, 446 F.3d at 991 ('Gallo need only demonstrate that the factors specific to an anti-suit injunction weigh in favor of granting the injunction.')."
This ups the ante for Huawei before the Federal Circuit.
In other Huawei v. Samsung news, Samsung brought a motion for judgment on the pleadings about two weeks ago, seeking the dismissal of Huawei's FRAND rate-setting claim. Huawei has meanwhile opposed it, arguing that Samsung's consent isn't necessary since Samsung (just like Huawei) agreed to reciprocity in its FRAND declaration to ETSI (the relevant standard-setting organization), so Huawei is entitled to a license to Samsung's patents, but the terms of such a license must also involve a cross-license. I'll talk about that motion process in more detail later, but for now it's worth noting that, according to Huawei, "[the] parties have discussed the possibility of stipulating to the dismissal of Huawei's rate-setting claim without prejudice." Huawei promises to "promptly inform the Court" should such agreement still be reached. So maybe Judge Orrick won't even have to rule on that motion.
By filing its case against Samsung in the Northern District of California technically on the calendar day (though it may have been more or less the same hour) prior to its Chinese patent infringement filings, Samsung's successful anti-enforcement injunction was brought in an earlier-filed (or at least simultaneously-filed) U.S. case.
Huawei then tried two things, again near-simultaneously, to overturn the antisuit injunction: a motion to alter the decision as well as an appeal to the Federal Circuit. The Federal Circuit didn't like this and had a simple message to Huawei: let Judge Orrick in San Francisco rule on your motion, and if you don't like the outcome, you can ask us for help, but not before.
Samsung challenged multiple claims of two of Huawei's patents-in-suit. The USPTO decided to institute reexamination with respect to some of them, but it had to issue a supplemental order in the wake of SAS and look--nolens volens--at all challenged claims, though it encouraged Samsung to drop its challenge to the ones with respect to which the USPTO was originally unconvinced.
Huawei had actually focused, for the purposes of infringement litigation, on the claims the USPTO viewed more favorably, but the SAS decision changed everything.
As I wrote in my commentary on SAS, this isn't good for the efficiency of the PTAB inter-partes review (IPR) process, but the conservative Supreme Court majority was right that the way the law was worded didn't leave room for any other decision, short of legislating from the bench, which most justices declined to engage in.
Judge William H. Orrick of the United States District Court for the Northern District of California still didn't necessarily have to stay the related infringement claims. He had previously stayed a Samsung infringement claim at Huawei's request, but in that case, the USPTO instituted reexamination of the relevant patent claim because it held that Huawei had shown a reasonable likelihood of invalidation. Not so here.
Nevertheless, Samsung obtained its stay. All things (including the state of proceeding) considered, Judge Orrick felt that it made sense, and that the focus of this case was on FRAND licensing issues. Also, either party will have to narrow its case to five patent claims for the trial, and Huawei still has plenty of claims in play.
It's an interesting example of the procedural impact that the SAS ruling can have on patent infringement lawsuits.

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