Source: http://www.fosspatents.com/2013/11/
Timestamp: 2019-04-19 08:15:46+00:00

Document:
On Wednesday (December 4, 2013), the Washington, DC-based United States Court of Appeals for the Federal Circuit will hold the long-awaited Oracle v. Google appellate hearing. Two major (and overlapping) ecosystems -- the Java and Android communities -- and all other software developers (large and small, open source and closed source) need clarity on the question of whether Google's unlicensed use of many thousands of lines of declaring code of the Java APIs in its Android mobile operating system is or is not above board in a legal sense. The appellate hearing is an important juncture and could prove to be a turning point. I'll listen to the official recording, which will become available a few hours after the hearing, and share my observations. But no matter what the decision (which will come down a few months after the hearing) may ultimately be, the legal process won't end at that point, unless the parties settle.
With a view to next week's appellate hearing I thought I'd put together this Q&A document that I hope will help those following the case very closely (including those who will attend the appellate hearing) as well as those who haven't looked at this matter recently but would like to get a recap of the high-level issues and the procedural situation in this landmark dispute. At this point I won't go into detail on the case and the applicable case law, which I'll discuss instead in my post-hearing report.
You can click on any of the Q&A bullet points below to jump to a detailed version.
Q: What was the outcome in district court with respect to copyrights?
A: Google was found to infringe dozens of Java APIs, eight test files, and the rangeCheck function. The jury was hung on fair use concerning the Java APIs, and the judge held that the copied API code was not protected by copyright anyway.
Q: Whatever happened to Oracle's patent assertions against Google?
A: The district judge obligated Oracle to withdraw most of its patents. Two of the seven asserted patents were taken to trial and not found infringed. Oracle is not pursuing those claims on appeal. Theoretically, patent assertions by Oracle against the Android ecosystem are still possible.
Q: What is the scope of Google's cross-appeal and how relevant is it?
A: Google seeks to overturn the district court ruling with respect to some small amounts of program code that don't matter to Oracle, which promised not to seek damages over them unless it also prevails on the "biggie" (declaring Java API code). Google's cross-appeal is purely tactical, not strategic.
Q: What are the broader implications of this case and the positions taken by amici curiae?
A: Oracle is defending the copyrightability of the most creative category of program code while Google claims that non-copyrightability of such material is necessary to ensure interoperability. Many amicus curiae briefs have been filed, with Oracle having far more support from industry and support for Google having been drummed up by activists and Google-funded lobbyists for the most part.
Q: If Oracle prevails, what will be the remedies and when and how will they be determined?
A: Oracle is seeking an injunction and damages (in that order). It has asked the Federal Circuit to enter judgment on liability, in which case the district court's job would be limited to the determination of remedies.
Q: If Oracle prevails, what will it demand from Google and what procedural and strategic options will Google have?
A: Google will have to make Android Java-compatible and comply with the Java rules. Google can request a rehearing, file a petition for writ of certiorari with the Supreme Court, and if the case is remanded to the district court, Google will primarily try to avoid an injunction.
Q: If Oracle's appeal doesn't succeed, what options will it have?
A: Just like Google, Oracle could request a rehearing and file a petition for writ of certiorari with the Supreme Court.
Q: Why has this copyright case been appealed to the Federal Circuit, not the Ninth Circuit, and what standard of appellate review will be applied to the key issues?
A: Oracle's original complaint included patent infringement claims, and the parties agree that the Federal Circuit has appellate jurisdiction, but it will apply Ninth Circuit law. The district court ruling will be afforded little deference on matters of first impression.
Q: Who will argue for Oracle and Google?
A: Google's lead counsel is Robert van Nest, who also represented it in district court. Joshua Rosenkranz, who focuses completely on appellate proceedings and has already defeated Google in the Federal Circuit on Apple's behalf, will present argument for Oracle.
1. Q: What are the parties' business objectives in this dispute?
Between the district court judgment and the appellate hearing, the two companies' CEOs blamed each other for the unresolved situation. In May, Google CEO Larry Page said that a positive relationship wasn't possible because "money is more important to them than any kind of collaboration". Oracle didn't respond to that allegation, but in August, Oracle CEO Larry Ellison reminded Google of its "Don't Be Evil" meme and said that "what they did [using Java in Android without a license] was absolutely evil". Mr. Ellison also called out Mr. Page on his personal responsibility.
Google elected the second option, and by now Oracle has lost most of its Java business opportunity on mobile devices as a result of that. Java-based mobile platforms such as Blackberry and Nokia's Series 60 phones were extremely popular. Today, Android owns more than 80% of the worldwide smartphone market.
There are no signs of Oracle intending to cause harm to Android. It just wants Google to be a good citizen of the Java community. But Google wants to make its own rules. It's not just about whether Google would be willing to pay royalties (which it's not prepared to). For Google it's also about unrestricted autonomy. It wants to do with Java (and to Java) whatever it pleases. This, to Oracle, is fragmentation, which already had Sun worried back in 2007, shortly after Android was launched. It's of greater concern to Oracle what Google does with and to Java than whether and what it pays for using it.
2. Q: Does this litigation involve Google's rights to use certain Java code under an open source license?
3. Q: How do the parties' business models and intellectual property strategies with respect to software platforms compare?
If things had worked out differently between these two companies and they had developed Android together (or if they had co-developed Java, but it goes back to before Google was even founded), there wouldn't be a fundamental disagreement over what's desirable or undesirable with respect to a jointly-owned platform. However, Oracle has a tradition of respecting other companies' intellectual property rights (I can't remember any major IP infringement action against Oracle itself, obviously excluding what some acquisition target may have done prior to a takeover), while Google faces IP infringement allegations by major companies and organizations all the time. Google has double standards whether its own IP or that of others is concerned (see my contribution to The Hill's Congress blog, "Sue when you're winning"). Also, Google's Android is known to the Federal Circuit as a product violating various third-party rights.
4. Q: What was the outcome in district court with respect to copyrights?
Oracle originally asserted seven patents (addressed in the next section) and certain copyrights. In last year's trial, the jury rendered a partial verdict and was overruled by District Judge Alsup in only one respect, resulting in an additional finding of infringement (relating to eight Java test files).
This is the "biggie", and Oracle's exclusive focus on appeal. By comparison, the rest of the copyright part of this case was always unimportant (see also the section on Google's cross-appeal). Oracle presumably raised other infringement issues only to show to the court and the jury the scope and scale of Google's copying. In terms of what an Oracle win means or could mean, anything other than the declaring API code item is simply negligible (I'll address it in this section only for the sake of completeness).
The parties agreed that this was for the court, not the jury, to decide. It would have been the most systematic sequence of events for the district court to firstly resolve the copyrightability question because a holding of non-copyrightability (which indeed came down, but only after the jury trial) would have obviated the need for the jury to even look at the issues surrounding the declaring Java API code. The same ruling prior to trial would have narrowed the case substantially for the jury. But District Judge William Alsup apparently knew all along that this was going to be a difficult question, and one on which the appeals court might overrule him. And the jury was going to have to render a verdict on some other (smaller) items anyway. So Judge Alsup decided to let the jury render on infringement verdict anyway, just so there wouldn't have to be a new trial on infringement in the event of a reversal and remand by the appeals court. As an additional benefit, he also got to listen to all of the testimony and argument at the trial before ruling on copyrightability.
The jury found that Google had "infringed the overall structure, sequence and organization of copyrighted works" in terms of "the compilable code for the 37 Java API packages in question taken as a group". The judge instructed the jury to assume that this material is copyrightable (and not to think about whether it really is, which is not the job of a jury).
This holding, however, relates to infringement in a narrow sense (copying) and isn't relevant unless (i) the district judge's holding of non-copyrightability is reversed and (ii) the question of "fair use" -- presently unresolved -- is resolved in Oracle's favor either by judicial decision or a verdict by a new jury complementing the first jury verdict.
Even infringement of copyrightable material doesn't matter if the copyist has a "fair use" defense. This is an equitable question of fact, requiring the decision-maker to weigh four different factors. Equitable decisions are up to a judge. Determinations of fact are made by a jury. The "fair use" question is generally amenable to judgment as a matter of law. But Judge Alsup declined to find that Google had a "fair use" defense and also declined to find that it had none. He deferred to the jury, which he instructed in a way that I thought was prejudicial to Oracle because, for example, it suggested that the hurdle for transformative use (one of the fair use factors) was rather low. The jury -- except for its foreman, who told the media afterwards that he wanted to throw out Google's fair use defense -- got confused and couldn't agree.
One of the issues in this appeal is a procedural question related to "fair use". In the event that the appeals court reverses the copyrightability finding but doesn't resolve the "fair use" defense one way or another, the case would go back to the district court, which would then find the "fair use" question in the number one position of its to-do list. Oracle's position is that the appeals court should resolve fair use and enter a finding of liability, in which case the district court would only have to order remedies; but in the scenario I just described (copyrightability reversed, fair use left open) a second jury should look at "fair use", while Google would then like to be able to re-argue the question of infringement, claiming that a jury must look at infringement in order to be able to determine "fair use". Similarly (and unsuccessfully), Samsung had argued that the jury in the recent limited damages retrial should have redetermined infringement and patent validity issues rather than just award damages to Apple for a set of products it was told had been found to infringe valid patents.
Google's equitable defenses (estoppel etc.) were decided by the judge, but he did ask the jury render an advisory verdict on a couple of related questions. The jury verdict was mixed and, on the bottom line, negative for Google in this regard. While the jury found that "Sun and/or Oracle engaged in conduct Sun and/or Oracle knew or should have known would reasonably lead Google to believe that it would not need a license to use the structure, sequence, an organization of the copyrighted compilable code", it did not find that Google had proven that "it in fact reasonably relied on such conduct by Sun and/or Oracle in deciding to use the structure, sequence, and organization of the copyrighted compilable code without obtaining a license". A chain is as strong as its weakest link. Google would have had to convince the court on both of these questions (and some more that the jury was not asked), not just on one of them. In the post-trial judgment, Judge Alsup threw out Google's equitable defenses. We can simply forget about Google's equitable defenses for the further process. Google didn't even raise these on appeal. The testimony by former Sun CEO Jonathan Schwartz (the CEO under whose tenure Sun nearly went out of business and ultimately lost its independence) served to confuse the jury on "fair use", but fell short of what Google would have needed to succeed on an equitable defense. The relevance of that testimony was, by the way, grossly overestimated by some reporters.
The jury identified no infringement (and consequently didn't have to look into "fair use" on this particular item). The judge didn't overrule the jury, and Oracle isn't pursuing this item on appeal.
Three other items with respect to which the only defense was "de minimis"
The jury was also asked to determine whether three items that Google had conceded to use in Android were "de minimis", i.e., too small to be of legal relevance. The jury found that the nine-line rangeCheck method in the TimSort.java and ComparableTimSort.java source files was not too small to matter, but found in favor of Google's "de minimis" defense wih respect to the "source code in seven 'Impl.java' files and the one 'ACL' file" (i.e., eight Java test files) and the "English-language comments in CodeSourceTest.java and CollectionCertStoreParametersTests.java". The court upheld the jury's related findings except that the eight decompiled Java test files (undoubtedly much larger than the rangeCheck function, which shows just how confused and inconsistent that jury was) were found to be more than "de minimis". Six of those eight files had been shown by this blog before they were even referenced in any (publicly-accessible) court filing.
In a commercial and strategic sense, these files don't really matter, as I explained further above. Google nevertheless brought a cross-appeal in order to have those findings reversed. I'll address that one in a separate section.
5. Whatever happened to Oracle's patent assertions against Google?
Oracle's withdrawal with prejudice of five patents and abandonment of two other patents on appeal relates to Google, not to other parties, and even with respect to Google only to the patents-in-suit. Should any of those patents be confirmed at the end of reexamination (including appeals), Oracle would not be able to sue Google over them, but it could (and I have no idea whether it would want to do that) still sue Android device makers (even before the end of reexamination). It could also sue Google over other patents. I'm not going to speculate on the likelihood. I just wanted to point out that Oracle's preclusion with respect to patent assertions against Android isn't unlimited.
6. Q: What is the scope of Google's cross-appeal and how relevant is it?
Google's appeal relates to minor items -- so minor that Oracle told the court last year it wasn't going to demand even one cent of damages for them unless it also prevails on the thousands of lines of declaring Java API code used by Google in Android. If both parties succeeded with their appeals, Oracle would be happy and Google wouldn't have any benefit from its cross-appeal. Google probably thought that a cross-appeal was an opportunity to get more time and space for its anti-copyright arguments, and would delay the process (at least at the briefing stage). There's a certain logic in this because the district court ruling is, unless one totally buys Google's "interoperability" argument, inconsistent in the sense that a nine-line function (rangeCheck) was deemed protected by copyright (as were eight Java test files) while more than 7,000 lines of declaring Java API code were not. But Google now has to take a radically anti-IP position -- arguing that everything at issue in this case at this stage is for the taking -- before an IP-friendly appeals court.
7. Q: What are the broader implications of this case and the positions taken by amici curiae?
Even though the parties' positions couldn't be further apart, they do agree that the stakes are high.
Oracle and its supporters warn that affirmance of Judge Alsup's holding of non-copyrightability would, as a former U.S. copyright chief wrote in his submission to the appeals court, "largely eviscerate copyright protection for some of the most creative aspects of computer software" and chill innovation. But Google and its allies also raise a huge issue: interoperability. They say that program code relevant to compatibility between programs must always be unprotected.
In case of doubt, I for my part come down on the side of the authors. And in this case I don't even have doubt, frankly. I don't think Google's proposal of non-copyrightability is appropriate from a policy point of view, I don't consider it supported by case law, and in any event, I don't think Google can even rely on an interoperability argument given that Android fragments Java and that Android apps don't run on Oracle's Java platform, which Google's own witnesses confirmed in this case. In May an Oracle spokeswoman issued the following comment on certain pro-Google submissions to the appeals court: "I guess everyone is having collective amnesia about the uncontroverted testimony that Android is not compatible with Java."
The common-sense approach to restrictions of someone's rights (here, copyright protection for creatives) in order to protect someone else's rights (here, the right of developers to write software that is compatible with someone else's software) is to impose only such restrictions that are truly necessary to achieve the desired effect, and proportionate. Anything else would be overreaching and do unnecessary damage, tantamount to throwing out the baby with the bath water.
If you want to safeguard interoperability, U.S. copyright law (unlike patent law, by the way) has a tool at your disposal: fair use. Interoperability-related program code can be copyrighted, but certain forms of use (for example, development of an application for an operating system, using the APIs of the OS) would certainly be fair and, therefore, legal.
Not only is the "fair use" stage the right choice because it's a more proportionate approach than the wholesale denial of copyrightability but it's also the more logical one. Google argues in this case that the Android developers were restricted in their creativity when creating the Android APIs because they wanted to keep them (only selectively, anyway) consistent with the Java APIs. But the proper point in time at which to determine whether someone authored something sufficiently creative to warrant copyright protection is the moment when the related code was authored, not something that happens years, possibly many years, after the fact in some other place. I honestly considered it absurd for Google to argue that those APIs may have lost their copyright protection just like Aspirin lost trademark protection over time.
The choice of Java's developers wasn't restricted too much (if at all) when they wrote Java; and even Google's developers would have been free to develop their own APIs or license someone else's.
If a court looks at interoperability at the "fair use" stage, it can look at exactly what someone does with and to an earlier creator's code. Some use (such as my example of someone writing an app for Android) will be deemed fair; some other use may be unfair. Google, however, wants to have the whole question (of interoperability vs. intellectual property) resolved in its favor by nipping intellectual property in the bud, at the copyrightability stage. It presumably knows that it has a very weak "fair use" case considering the damage Android has done to Java.
In light of these positions and implications, it comes as no surprise that the leaders of the technology industry stand united behind Oracle. To the extent that Google has any support from other tech companies and industry groups, those are always Google-aligned (including Google-funded lobbyists) and known for an anti-IP stance.
I quoted from former U.S. copyright chief Ralph Oman's amicus brief. Google doesn't have any support from a former high-level IP official.
Both parties have support from professors. Google has a larger number of professors in its camp, but it obviously focused on academics since it couldn't get much support from industry players. Many of the law professors supporting Google on this copyright case also signed a letter to Congress advocating far-reaching patent reforms (which Google also promotes).
8. Q: If Oracle prevails, what will be the remedies and when and how will they be determined?
If the Federal Circuit agreed with Oracle to the full extent, it would enter a judgment on liability by reversing the district court's holding of non-copyrightability and by holding that Oracle was and is entitled to judgment as a matter of law (i.e., no need for another jury) on "fair use". The case would then be remanded to the district court for a decision on remedies. It would also be remanded if Oracle prevailed on copyrightability but not on fair use. In that case, the district court would have to hold a retrial on fair use (which Google argues would have to involve a new infringement determination), and depending on its outcome, there would be remedies.
Oracle is primarily interested in an injunction. Damages could also be significant, but compared to an injunction they wouldn't be overly important even in a best-case scenario for Oracle. Only an injunction will enable Oracle to "bring Android back into the Java fold", which is its stated goal.
The equitable decision on injunctive relief would be made by the district court. It could be appealed.
Both parties requested a jury trial, so damages will have to be determined by a jury. The big item would then be the Java APIs. Additionally, Oracle would also point the jury to any other (smaller) infringements identified (which findings Google is trying to get reversed on appeal), not because this would make a huge commercial difference but because a plurality of infringements is more likely to convince a jury that substantial damages are warranted.
9. Q: If Oracle prevails, what will it demand from Google and what procedural and strategic options will Google have?
Assuming that the Federal Circuit sides with Oracle (at least on copyrightability, and possibly on "fair use" as well), Google will have to think hard about whether to settle or to continue to fight. In a situation in which Oracle has leverage, I believe a settlement would be about far more than just money: Google would have to bring Android into compliance with the Java standard within the foreseeable future.
Even with a Federal Circuit opinion in Oracle's favor, Google's procedural options would not be exhausted yet. Google could petition for a panel rehearing and possibly a rehearing en banc (full-court review). It could try to appeal the Federal Circuit decision to the Supreme Court by filing a petition for writ of certiorari. And if it can't prevent a remand on terms favorable to Oracle, Google can still continue the fight in district court. Fair use may remain to be resolved. Even with fair use resolved in Oracle's favor, Google can try to avoid an injunction (though the harm that Android has caused and continues to cause to Java is so obvious that I believe an injunction would normally issue) and to dissuade a jury from awarding a substantial amount of damages. The parties' focus in the remand proceedings would definitely be on the question of injunctive -- not monetary -- relief.
10. Q: If Oracle's appeal doesn't succeed, what options will it have?
Even with a Federal Circuit opinion in Google's favor, Oracle's procedural options would not be exhausted yet. Oracle could petition for a panel rehearing and possibly a rehearing en banc (full-court review). It could try to appeal the Federal Circuit decision to the Supreme Court by filing a petition for writ of certiorari.
As I mentioned in the section on patents, Oracle would not be precluded from asserting Java patents against Android device makers. I don't have an opinion on whether that is likely to happen. Procedural options are options regardless of probability.
11. Q: Why has this copyright case been appealed to the Federal Circuit, not the Ninth Circuit, and what standard of appellate review will be applied to the key issues?
Oracle's original complaint included patent infringement claims, and the parties agree that the Federal Circuit has appellate jurisdiction, but it will apply Ninth Circuit law. The district court ruling will be afforded little deference on matters of first impression.
Appellate jurisdiction is sometimes disputed between parties. For example, Google is trying to move Apple's appeal of a FRAND determination action out of the Federal Circuit to the Seventh Circuit, while arguing that the Federal Circuit has jurisdiction over its appeal of a Microsoft FRAND case despite previously having appealed a decision in that litigation to the Ninth Circuit. But there is no disagreement on the choice of appellate forum in this Oracle v. Google case.
Under the special circumstances of this case, the Federal Circuit will apply Ninth Circuit law. But the Federal Circuit also has its own body of case law on copyright, and some fundamental issues have been decided by the Supreme Court.
The district judge basically described his copyrightability decision as one that involves matters of first impression, which means that the appeals court will probably afford the lower court limited deference in this context. In my opinion, the district court ruling on copyrightability was simply a departure from established copyrightability principles.
12. Q: Who will argue for Oracle and Google?
The Wednesday hearing will be a clash of titans not only with respect to the parties but also their attorneys. Both are proven winners with an amazing track record. Oracle's counsel has the home team advantage.
Keker & van Nest's Robert van Nest is a trial lawyer with a long history of landmark successes. His stellar performance on Google's behalf in last year's Android-Java trial has received a lot of recognition, and the file cabinet he brought along to show to the jury is now part of California legal history. That said, he was probably lucky with a jury that, except for the foreman, didn't figure out the issues and had to be overruled by the judge on one item (eight Java test files) because it made a decision that no reasonable jury (that's the legal standard) could possibly have reached.
Orrick Herringon Sutcliffe's Joshua Rosenkranz frequently appears before the Federal Circuit and other appeals courts. Dubbed the "Defibrillator" for his ability to revive cases that appeared to be practically lost after a district court ruling, he has already brought Apple's ITC complaint against Google (its Motorola subsidiary, to be precise) back to life, and based on how a recent hearing went, he's also on the winning track in the "Posner appeal" (same parties), which will likely give Apple the opportunity to assert the famous "Steve Jobs patent" against Google's Motorola in the Northern District of Illinois. Mr. Rosenkranz and his team authored a fascinating opening brief that likened Google's unlicensed use of Java in Android to a fictitious author's (named "Ann Droid") plagiarism of Harry Potter.
I wasn't going to do any other post this week than a preview on next week's Oracle v. Google Android-Java appellate hearing (and something very brief on an Apple v. Samsung order), but I just found out about a development important enough to interrupt my week off for a moment. The Competition Commission of India, the country's antitrust authority, has launched formal investigations of Ericsson's royalty demands relating to FRAND-pledged standard-essential patents (SEPs) further to a complaint filed by Micromax, a major local Android device maker. Back in March I had already reported on the Ericsson v. Micromax dispute in India.
"The royalty rates being charged by [Ericsson] had no linkage to patented product, contrary to what is expected from a patent owner holding licences on FRAND terms. [Ericsson] seemed to be acting contrary to the FRAND terms by imposing royalties linked with cost of product of user for its patents. Refusal of OP to share commercial terms of FRAND licences with licensees similarly placed to [Micromax], fortified the accusations of [Micromax], regarding discriminatory commercial terms imposed by the OP. For the use of GSM chip in a phone costing Rs. 100, royalty would be Rs. 1.25 but if this GSM chip is used in a phone of Rs. 1000, royalty would be Rs. 12.5. Thus increase in the royalty for patent holder is without any contribution to the product of the licensee. Higher cost of a smartphone is due to various other softwares/technical facilities and applications provided by the manufacturer/licensee for which he had to pay royalties/charges to other patent holders/patent developers. Charging of two different license fees per unit phone for use of the same technology prima facie is discriminatory and also reflects excessive pricing vis-a-vis high cost phones."
It was time that an antitrust enforcement agency took a SEP holder to task over the issue of the appropriate royalty base.
The CCI's position is consistent with that of Judge Holderman in the Northern District of Illinois in an Innovatio WiFi patent case.
Ericsson is an increasingly aggressive enforcer of wireless SEPs (WiFi as well as cellular). Samsung also claims that Ericsson's demand are above FRAND levels, and Ericsson alleges that Samsung's demands are supra-FRAND. In February I reported on a Mannheim Ericsson v. Acer trial over WiFi SEPs.
Antitrust regulators have previously launched formal investigations of Samsung and Motorola Mobility's assertions of SEPs against Apple and (only by Google's Motorola) Microsoft. Most of these investigations are still ongoing.
Bad news for Samsung, again. Approximately eight hours after the $290 million jury verdict concluding the Apple v. Samsung limited damages retrial in the Northern District of California, the Mannheim Regional Court just announced a decision in a German Samsung v. Apple case (September trial report) over a (declared) 3G standard-essential patent (SEP), EP1679803 on a "method for configuring gain factors for uplink service in radio telecommunication system". Judge Andreas Voss ("Voß" in German) and the panel he presides over stayed this litigation pending a parallel nullity (invalidation) action before the Federal Patent Court of Germany. The court has identified an infringement but doubts that the patent is valid. Furthermore, standing has not necessarily been established, but if the patent is declared invalid, this question won't have to be resolved definitively anyway.
At this stage Samsung was suing only for damages, not pursuing an injunction. It wanted to finally win a German case over one of its SEPs against Apple, but for the time being its SEP assertions in Germany have a 100% dropout rate, a fact that stands in stark contrast to its huge royalty demands.
Samsung's SEP assertions against Apple have raised concerns by antitrust agencies on three continents. In December 2012, Samsung withdrew its European SEP-based injunction requests against Apple in an (unsuccessful) attempt to dissuade the European Commission from issuing a Statement of Objections (SO), a preliminary antitrust ruling. It continued to sue Apple over SEPs for damages (and did not withdraw injunction requests over non-SEPs). Samsung brought three German SEP assertions against Apple in April 2011 (all three were dismissed because Samsung failed to prove an infringement) and two more in December 2011, including today's case. The other December 2011 case was already stayed in January 2013 over doubts concerning the validity of the patent-in-suit.
Last month the European Commission announced a market test of settlement terms proposed by Samsung that I consider absolutely insufficient. Today's outcome shows once again that SEP holders must be required to prove an alleged infringer's actual use of valid patents in a court of law. Allowing them to force an implementer of a standard into an opaque arbitration proceeding is terrible policy that I hope the European Commission won't adopt. Arbitration gravitates toward a "middle ground", which is appropriate in certain contexts but would reward SEP holders for overdeclaration and harm competition and innovation. The middle between a reasonable royalty of a very few tenths of a percent and 2.4% is still tantamount to holdup. Courts of law are more willing than arbitrators to hand down sharp rulings reflective of the merits.
On a personal note, I am going to take the remainder of this month off. I will, however, do a preview post on the forthcoming Oracle v. Google appellate hearing and will also blog in the event of major unforeseen news. The first week of December will be eventful in several ongoing patent disputes. I expect interesting news on a daily basis during that week. Thereafter, the publishing rhythm of this blog may change significantly.
A federal jury in the Northern District of California has just awarded Apple $290,456,793 ($290 million) in damages with respect to 13 patent-infringing Samsung products, replacing a $410 million portion of last year's $1.049 billion award and resulting in a total damages award of $929 million ($639 million + $290 million). The $290 million replacement amount is 76% of Apple's damages claim in the retrial ($380 million) and 71% of the corresponding portion of last year's award. the new total damages figure of $929 million, which could still (but is unlikely to) be adjusted by Judge Lucy Koh before rendering a final and appealable judgment, is almost 90% of last year's amount.
Samsung had challenged last year's jury award but obviously intended to get more out of a retrial than a 10% discount. From Samsung's perspective, the amount has gone from slightly more than a billion dollars to not much less than a billion dollars -- almost a rounding error for companies of Apple and Samsung's size and certainly not the "slashing" that various media reports suggested when Judge Koh merely vacated a part of the original award. In an important respect, Samsung is actually in worse shape now than before. The appeals court will see that two different juries, independently of each other, agreed with Apple that Samsung's infringement caused substantial damages. It's much harder to argue to an appeals court that two juries in a row were unreasonable than to say the same about a single jury.
From a strategic point of view, Apple actually scored an even more important victory over Samsung on Monday with an appeals court ruling that the district court had erred in denying Apple a permanent injunction against infringing Samsung products, giving Apple a new opportunity to obtain an injunction on remand to the district court.
As the above table shows, the damages award increased for seven -- and decreased for six -- of the 13 retrial products.
For further detail on the limited damages retrial I'd like to refer you to my detailed Q&A.
"For Apple, this case has always been about more than patents and money. It has been about innovation and the hard work that goes into inventing products that people love. While it's impossible to put a price tag on those values, we are grateful to the jury for showing Samsung that copying has a cost."
"We are disappointed by today's decision, which is based in large part on a patent that the U.S. Patent and Trademark Office has recently deemed invalid. While we move forward with our post-trial motions and appeals, we will continue to innovate with groundbreaking technologies and great products that are loved by our many customers all around the world."
The first sentence of Samsung's statement is a bit misleading, but since even its filings with the court distort the state of the procededings in the same context, it's no surprise that it misrepresents the facts to the media as well. It's misleading to say that the USPTO "has [...] deemed [the '915 pinch-to-zoom API patent] invalid" because the USPTO proceedings are still ongoing and could still be ongoing for a couple of years. Even the first stage of reexamination isn't over: a final decision by the Central Reexamination Division (which Apple can then appeal within the USPTO to the Patent Trial and Appeal Board, and subsequently to the Federal Circuit) won't come down for another month or so. The patent is undoubtedly under pressure in reexamination, but "has recently deemed invalid" sounds far more final than the USPTO's preliminary communications are.
Also, Samsung's claim that the award "is based in large part" on the '915 patent disregards that the verdict form states damages only on a per-product (and not a per-patent) basis. Maybe Samsung will again be able to reverse-engineer a jury verdict.
On the second day of jury deliberations in the Apple v. Samsung limited damages retrial, Samsung has just notified the United States District Court for the Northern District of California that it "will file an emergency motion to stay today". This motion to put the entire case on hold will be based on a decision by the Central Reexamination Division of the United States Patent and Trademark Office (USPTO) to reject all claims of U.S. Patent No. 7,844,915 on "application programming interfaces for scrolling operations", which is the pinch-to-zoom API patent Apple is asserting in the first California case against Samsung (to be precise, it's asserting claim 8). This is the only multi-touch patent with respect to which Apple may be awarded lost profits by the retrial jury. It was also the most valuable one of the multi-touch patents-in-suit in the first trial.
The court held the limited damages retrial in order to hand down a final judgment (which the parties could appeal to the Federal Circuit) afterwards. After the verdict, which could come down any moment at the time of writing this post, the parties could bring post-trial motions, but a final judgment could have come down within a couple of months of the retrial. Should the court grant the motion to stay that Samsung said it would file today, there would not be a final judgment and, therefore, no possibility for an appeal.
Samsung yesterday tried to have the retrial declared a mistrial, but Judge Koh, herself of Korean descent, could not find anything racist or otherwise offensive in what Apple's lead counsel in this retrial said in his closing argument. It's obvious that Samsung is trying whatever it can to get the California case delayed and derailed. It tried long before the retrial was held; and now that the retrial is almost finished, it's trying the same thing on a new basis.
In today's notice, Samsung mentions that Judge Koh indicated at an April 29, 2013 hearing that she would "likely stay any proceedings" "if the Examiner does not reopen the prosecution [of the '381 rubber-banding patent] and Apple is forced to file a notice of appeal". The asserted claim of the '381 patent was later reconfirmed. In the case management order she entered on the same day, she said the same about the '915 pinch-to-zoom API patent. But what Judge Koh said in April does not necessarily apply o the current situation. Judge Koh apparently felt that a retrial was not worth holding in that scenario. But the retrial is now basically done, and the district court could enter a final judgment, which the parties could then appeal -- unless the case is stayed. Samsung originally wanted an appeal instead of a retrial; now it wants a stay instead of an appeal. I doubt that Judge Koh will stay the case.
Between the April case management order and the start of this retrial, Samsung repeatedly updated the court on the reexamination proceeding. If the USPTO decision Samsung presented to the court today had come down two weeks earlier, the retrial might have been canceled.
In April, Apple already explained that its multi-touch patents won't be invalidated by the USPTO until mid-2017 at the earliest if Apple exhausts all appeals (as it fully intends to unless the patent is confirmed earlier). Apple also said that even if the final outcome of such reexamination was invalidation, it would still be entitled to damages for the period before. What Samsung would need in order to avoid damages for past infringement is a finding by the appeals court that the appeals court erred in not overruling the jury in favor of Samsung with respect to its invalidity defense concerning the '915 patent. The legal standard for an invalidity defense in federal court is "clear and convincing evidence", while the standard in reexamination is lower ("preponderance of the evidence").
Apple can appeal the Central Reexamination Division's rejection of the '915 patent to the USPTO's Patent Trial and Appeal Board (PTAB; formerly Board of Patent Appeals and Interferences, BPAI). If the PTAB affirms the rejection, Apple can appeal the matter to the Federal Circuit (to which it also appealed, for example, the rejection of its broadest "data tapping" patent claims). Theoretically, the Supreme Court could also become involved, though this is unlikely. In any event, Apple can keep the patent alive for several more years. It would make a lot of sense for the district court to render a final judgment and let the parties appeal it to the Federal Circuit now, rather than in 2017 or later.
The USPTO decision may help Samsung to avoid a permanent injunction over the '915 patent. This week the Federal Circuit decided to reverse parts of Judge Koh's decision to deny Apple a permanent injunction, and to remand for further proceedings. For a permanent injunction, the basis is a final ruling, not a likelihood assessment (which is key in a preliminary injunction decision). But Judge Koh might now be hesitant to order an injunction over the '915 patent. She could, however, order an injunction and stay only the injunction with respect to the '915 patent.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.