Source: http://www.groklaw.net/articlebasic.php?story=20130403113705663
Timestamp: 2019-04-20 23:12:20+00:00

Document:
Judge Lucy Koh has ruled on the Apple and Samsung motions, and the only thing finally decided so far is that Apple loses on its desire for an early case management conference on April 3. She has taken Samsung's motion for a partial final order and a stay pending appeal under advisement, and she'll rule on it without needing oral argument. But she'd like more briefing on two issues. There will be a conference on April 29, because if in the end she decides to go forward with a trial, they need to work out a schedule. She might go forward with a trial immediately, or she might not. It depends on the briefs she gets next.
The two issues that she has asked the parties to brief more fully are that she'd like Apple to respond to Samsung’s contention that a new trial on damages alone violates the Seventh Amendment. And she'd like Samsung to respond to Apple’s contention that "immediate appeal of this Court’s Order Re: Damages filed on March 1, 2013 is not viable". The biggie is the Seventh Amendment issue, simply because while judges have a lot of discretion, what they can't properly do ever is violate the Constitutional rights of a party. So if Samsung can convince her this is what an immediate trial is going to do, she will have no choice. Samsung's position is that there were errors in the jury instructions, and so having a trial on damages requires also reconsidering liability because “proof of injury” goes to both issues. But Apple gets to speak on the matter, so we will have to wait and see what happens, and the fact that she's asked the parties to attend the April 29th conference and come up with a trial schedule tells me that she is at least tentatively leaning Apple's way at the moment.
There are other filings, as is the parties' wont, and one is Apple letting the court know that the final office action by the USPTO isn't really "final" final. It can appeal the USPTO's decision that invalidated claim 19 of the Apple '381 patent, the bounce back patent, even when it really is final. But frankly, I take this as more a Michael Jacobs PR document for the public than a legal one for the judge, in that the judge already knows how USPTO reexaminations procedures work. She knows what a final office action means, and so she also already knows what a final office action usually indicates about the most likely end result, although in patent litigation, your odds at any given point are usually about 50-50, and that's one problem with patent law. No doubt there will be lots of appeals, since Apple, and Samsung too, just can't seem to get enough of litigation and motions, motions, motions, because it's so much fun.
Hmm. Not so much these days for Apple, huh? The trouble with declaring that you intend thermonuclear destruction of a competitor is, they get to hit you back. And the fact that Apple now has to try to undo the USPTO's devastating decision means that Apple indeed is not currently holding the winning hand with any certainty, despite any brave assertions that it will bounce back on the bounce back patent. On the other hand, the same is true for Apple's "win" at the jury trial. It's getting whittled back and whittled back, and it's surely true that it ain't over 'til it's over in patent litigation, and that means after the final appeal is over. That's why investing in litigation is for fools, in my view. You can't predict the outcome, unless one of the parties is the SCO Group, if you know what I mean. And I can't help but notice that the '381 patent is mentioned in some materials [PDF] that Apple files in support of its response to Samsung's motion for reconsideration regarding opening statement slides, whatever that's about. So the beat goes on. Neither side will ever stand down voluntarily, and they'll keep on filing motions and fighting and fighting and fighting until something makes them stop by ringing the final bell.
One thing the parties do agree on wholeheartedly is that they'd like the judge to quit ordering their private information unsealed, so there's more about that, with Apple putting in a declaration in support of Samsung.
(1) The Court DENIES Apple’s Administrative Motion Seeking an April 3 Case Management Conference, ECF No. 2283.
(2) The Court GRANTS Apple’s Unopposed Motion for Leave to File One-Page Reply Supporting Its Administrative Motion Seeking an April 3 Case Management Conference, ECF No. 2287.
(3) Subject to the briefing schedule set forth below, the Court GRANTS Apple’s Motion for Leave to File Motion for Reconsideration of Order Granting New Damages Trial on Galaxy SII AT&T and Infuse 4G, ECF No. 2289.
(4) Regarding the Stipulation Regarding Samsung’s Motion for Entry of Partial Judgment Pursuant to Rule 54(b) and For Stay Pending Appeal, ECF No. 2282, the Court adopts the Stipulation’s briefing schedule, but denies the parties’ request for a hearing. The Court takes Samsung’s Motion for Entry of Partial Judgment Pursuant to Rule 54(b) and For Stay Pending Appeal, ECF No. 2281, under submission.
The Court sets a Case Management Conference for Monday, April 29, 2013, at 2 p.m. On April 22, 2013, the parties shall file a Joint Case Management Conference Statement, not to exceed 10 pages. In the Joint Case Management Conference Statement, the parties shall propose a schedule for discovery, a pretrial conference, and trial in the event the Court schedules a new trial. Lead trial counsel must meet and confer before the parties file the Joint Case Management Statement.
(1) On April 9, 2013, Apple shall file a response, not to exceed six pages, to Samsung’s contention that a new trial on damages alone violates the Seventh Amendment. See Samsung Opposition to Apple’s Motion Seeking an April 3 Case Management Conference, ECF No. 2286 at 5-10. On April 16, 2013, Samsung may file a reply, not to exceed five pages.
(2) On April 9, 2013, Samsung shall file a response, not to exceed five pages, to Apple’s contention that immediate appeal of this Court’s Order Re: Damages filed on March 1, 2013 is not viable. See Apple’s Motion Seeking an April 3 Case Management Conference, ECF No. 2283, at 2. On April 16, 2013, Apple may file a reply, not to exceed four pages.
(3) On April 9, 2013, both parties shall file a statement, not to exceed four pages per party, regarding when their US PTO reexaminations of the opposing party’s patents will conclude and what effect the concluded reexaminations will have on any new trial or appeal. On April 16, both parties may file a response, not to exceed two pages per party.
On March 29, 2013, the USPTO issued what it terms a Final Office Action on the Ex Parte Reexamination of U.S. Patent. No. 7,469,381. On April 1, Samsung submitted a Statement of Recent Decision attaching a copy of that Office Action. (ECF No. 2291.) Samsung states that the Office Action “finally” rejects multiple claims of the ’381 patent, but the suggestion that the reexamination is finished and the USPTO has rendered a dispositive decision is incorrect.
Moreover, once the ex parte reexamination proceeding is concluded, Apple is entitled to several appeal options. A patent owner is entitled to appeal to the Patent Trial and Appeal Board (PTAB). See 35 U.S.C. § 306. Even if appeal to the PTAB is unsuccessful, Apple may seek judicial review in the United States Court of Appeals for the Federal Circuit or the United States 20	District Court for the District of Columbia. See 35 U.S.C. §§ 141, 145.	In short, reexamination of the ’381 patent is far from conclusion.
Claim 19 of the '381 patent isn't dead. It's just mostly dead.
Here are the USPTO's Patent Rules, and here's the section on appealing to the Board. And here's the USPTO's Manual on Patent Examining Procedure on reexaminations, and notice that it says this: "It is intended that the second Office action in the reexamination proceeding following the decision ordering reexamination will ** generally be made final." That doesn't mean there's no hope for Apple to whittle this ruling back or even overturn it, but for sure Apple is now playing defense and not offense, and it's uphill sledding now.
Before a new trial can proceed, the parties will first need to submit briefing regarding the scope of any new trial. In its portion of the draft joint statement previously submitted to Samsung, Apple itself acknowledged that “[t]he liability and damages issues for all of these claims are thus so intertwined that they should be heard in a single appeal.” Declaration of Robert J. Becher, Ex. A, at 4. That certain liability and damages are “so intertwined” means that those liability and damages issues must be heard by a single jury as a matter of Constitutional law. The Seventh Amendment’s Reexamination Clause prohibits a second jury from revisiting the findings of the first: a jury can be instructed to apply an earlier verdict, but where the first jury’s findings are not clearly stated, and the second jury would have to either guess at what the first jury found or reexamine the same factual issues to do its job (potentially reaching inconsistent conclusions), a broadened retrial is required. This is the case here as to the claims of infringement of the D’677, D’305 and ‘381 patents that underlie in substantial part the damages issues to be retried.
Under the Seventh Amendment’s Reexamination Clause, a partial new trial “may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice.” Gasoline Products Co. v. Champlin Ref. Co., 283 U.S. 494, 500 (1931); see Hasbrouck v. Texaco, Inc., 663 F.2d 930, 933 (9th Cir. 1981). In Gasoline Products, the Supreme Court reversed a lower court order limiting a new trial to damages and remanded for a new trial on liability as well because “the question of damages on the counterclaim is so interwoven with that of liability that the former cannot be submitted to the jury independently of the latter without confusion and uncertainty which would amount to a denial of a fair trial.” Gasoline Products, 283 U.S. at 500. In Hasbrouck, the Ninth Circuit concluded that errors in damages jury instructions required not only a new trial on damages, but also a new trial on liability because “proof of injury” went to both issues, and this “overlap between proof of injury for liability purposes and for damage calculation purposes” meant those issues had to be tried together.1	663 F.2d at 934.
Precisely such overlap exists here. The Court has ordered a damages retrial as to 14 products based in part on the jury’s findings that those products infringed the D’677, D’305, and/or ‘381 patents. As to these claims, the jury’s general verdicts of infringement do not reveal what scope of infringement was found. As to the ‘381 patent, the jury could have found that one, two or three separate applications of Samsung’s phones infringed, and as to the design patents the jury could have found that Samsung’s phones fully or only partially infringed Apple’s claimed designs. The answers to those questions dictate the scope of infringement that must be known by the damages jury to assess either lost profits or a reasonable royalty, both of which Apple sought at the last trial and will presumably seek again. PX25A1.4-5. Because the first jury made unknown and unknowable determinations at to the scope of Samsung’s infringement and the second jury must know these answers to decide damages, a single jury must decide both damages and infringement as to these patents and products.
Damages and Infringement for the ‘381 Patent Are Interwoven. The Galaxy SII (AT&T) and the Exhibit 4G were both found to infringe the ‘381 patent, as were 11 other products which are subject to the Court’s new trial order (all but the Transform). But as to these two accused products, the Court and the parties do not and cannot know what infringement was actually found by the first jury. Apple argued that three separate applications on the Galaxy SII (AT&T)—the Web Browser, Gallery and Contacts applications—and two on the Exhibit 4G—the Web Browser and Gallery applications—independently infringed this patent. RT 1728:3-1751:18; 4118:1-8. While Samsung proposed a verdict form that would have required the jury to specify which application(s), if any, were found to be infringing, Dkt. 1825-2 at 3-5, the verdict form given to the jury includes no such specificity. Dkt. 1890; RT 3848:6-3849:4. The first jury thus could have found that one, two, or all three of these applications infringe—and there is no way to know what findings the jury actually made.
But any award of lost profits or reasonable royalty damages—measures of damages that the second jury might opt for even though the first jury relied principally on infringer’s profits— depends upon that determination. To obtain lost profits, “a patent owner must prove a causal relation between the infringement and its loss of profits,” BIC Leisure Prods., Inc. v. Windsurfing Int’l, Inc., 1 F.3d 1214, 1218 (Fed. Cir. 1993), meaning that the jury must first define the scope of infringement in order to assess this causal connection. The Court expressly instructed the first jury that, to award lost profits, “you must determine which profits derive from the patented invention that Samsung sells, and not from other features of the infringing products,” Dkt. 1903, Inst. No. 36, and the jury clearly must know which feature(s) of the accused products infringe in order to assess the extent to which Samsung’s profits derived from its use of the patented invention.2	The same is true with respect to a reasonable royalty award. To obtain such a remedy, “the patentee . . . must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features,” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011), and the Court’s jury instructions expressly required the jury to consider the extent of infringement in assessing a royalty. Dkt. No. 1903, Inst. 41 (Factor 11: “The extent to which the infringer has made use of the invention and any evidence probative of the value of that use”; Factor 13: “The portion of the realizable profits that should be credited to the invention as distinguished from nonpatented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer.”). The first jury decided the extent of infringement—one, two or three applications on Samsung’s phones—but it is impossible to know what it found in that regard. Because the new jury would have to reexamine those (unknown) findings to award damages, which is Constitutionally impermissible, a single jury must decide both damages and infringement as to this patent and these products.
Damages and Infringement for the D’677 and D’305 Patents Are Interwoven. Two of the 14 products subject to the Court’s new trial order were found to infringe the D’677 patent (the Galaxy S II (AT&T) and the Infuse 4G), and seven were found to infringe the D’305 patent (the Captivate, Continuum, Droid Charge, Epic 4G, Gem, Indulge, and the Infuse 4G). Here as well, the jury’s findings of infringement—that Samsung’s phones infringed Apple’s asserted patented designs—do not disclose what scope of infringement was found or how much use the accused products made of Apple’s alleged designs. Here as well, a new jury could award damages only by reexamining the unknown findings of the first jury, which it is not permitted to do.
1.	The extent of Samsung’s use of Apple’s designs. A new jury necessarily will be called upon to decide the extent of Samsung’s use of Apple’s claimed designs to award damages. Case law requires an analysis of the extent to which an infringer’s use of the patented invention drives demand for the accused products. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010). As this Court similarly instructed, to award lost profits, the jury “must determine which profits derive from the patented invention that Samsung sells, and not from other features of the infringing products”. Dkt. 1903, Inst. No. 36; see also id., Inst. No. 55 (lost profits instruction for design patents incorporating Instruction No. 36). The Georgia-Pacific factors applicable to Apple’s reasonable royalty request also require the jury to consider “[t]he extent to which the infringer has made use of the invention and any evidence probative of the value of that use.” Dkt. 1903, Inst. No. 41 (Factor 11). That is why Apple’s late damages expert made clear at trial that he relied upon purported evidence of how Samsung “used Apple’s Intellectual Property” in reaching his conclusions. RT 2081:7-14 (Musika); Dkt. 927-05 (Musika Opening Report), at 40, ¶ 124 & p. 85, ¶ 254. But while the new jury necessarily must know the extent of Samsung’s use of Apple’s designs to award damages, the prior jury’s findings on that issue are unknown. All we know is that the first jury found sufficient similarities for there to be infringement under the Court’s instructions, but those instructions did not require that Samsung’s products be replicas of Apple’s designs or use those designs fully to infringe. Dkt. 1903, Inst. 46. Because a range of different designs could have been deemed infringing under the Court’s instructions, the first jury’s general verdicts of infringement cannot tell any new damages jury how much of Apple’s designs any accused product uses. And because this factual question must be answered by the damages jury and cannot be discerned from the first jury’s verdicts, these intertwined infringement and damages issues should be retried to a single jury.
2.	The novelty of the patented designs. Novelty is another issue that is material to infringement and damages as to Apple’s asserted design patents. Lost profits requires consideration of whether there were “non-infringing substitutes for each of the infringing products,” which turns on the uniqueness of the patented design itself. Dkt. 1903, Inst. No. 37; see also id., Inst. No. 55 (lost profits instruction for design patents incorporating Instruction No. 37). The Georgia-Pacific reasonable royalty factors expressly require the jury to consider how unique and novel Apple’s asserted patents are. Dkt. 1903, Inst. No. 41 (Factor 9: “The utility and advantages of the patented property over the old modes or devices, if any, that had been used for working out similar results”; Factor 10: “The nature of the patented invention, the character of the commercial embodiment of it as owned and produced by the licensor, and the benefits to those who have used the invention.”); see also id., Inst. No. 56 (reasonable royalty instruction for design patents incorporating Instruction No. 41). Novelty also goes directly to infringement issues. The parties litigated the novelty of Apple’s designs at trial both through comparisons to prior art and by debating whether Apple’s claimed design attributes were generic. RT 1110:23-1121:4, 1175:1-4 (Bressler) (Apple’s expert admitting prior art disclosed many similar features to D’677 patent, referencing DX511, DX727, DX728 and JX1093); RT 1438:13-19; 1440:7-12; 1452:17-25; 1455:2-1456:8; 1475:25-1476:7 (Kare) (Apple’s expert admitting color green for go, clock image, phone symbol, and use of colorful matrix of icons to communicate device functions are not unique to D’305 patent). The jury’s general verdicts of infringement do not reveal its findings as to how novel and unique Apple’s designs are or are not, and thus the Seventh Amendment requires that this question, in the context of both infringement and damages, be answered by a single jury.
1 Ninth Circuit law governs this issue. See Minks v. Polaris Indus., Inc., 546 F.3d 1364, 1369- 75 (Fed. Cir. 2008) (regional circuit law applied in analyzing Reexamination Clause issue). Other Circuits apply the Seventh Amendment similarly. See, e.g. Haynes Trane Serv. Agency, Inc. v. Am. Standard, Inc., 573 F.3d 947, 966-67 (10th Cir. 2009) (new trial on damages had to also include liability issues because the general verdict did not identify the specific forms of fraud on which the first jury found liability and a “new jury could not calculate [counterclaimant’s] damages without resolving the specifics of that liability”).
2 Similarly, Apple is required to show “that there were no non-infringing substitutes for each of the infringing products, or, if there were, the number of the sales of each product made by [Samsung] that Apple would have made despite the availability of other non-infringing substitutes,” in order to obtain lost profits. Dkt. 1903, Inst. No. 37. For the jury to assess whether there were non-infringing substitutes, it must know the feature(s) of the accused product that infringe in the first place.

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