Friday, September 11, 2015

Apple to court: let us collect hundreds of millions of dollars regardless of how weak some patents are

Due to previous press reports on what Apple was going to show at Wednesday's event, there were no surprises for an informed audience, but I actually liked--as an app developer and as a user--what I saw. Before the official announcement of 3D touch I had already discussed with the lead user interface programmer on one of my projects how we were going to make use of 3D touch in that app. In my opinion, many people understimate how the lack of "right-clicks", hovering and similar alternatives has really limited smartphone app UIs for some time.

But Apple wasn't first to come up with this. As The Verge noted, Huawei brought a comparable technology to market first. That is so symptomatic of Apple's problems in patent litigation: Apple is often first to do it right, no doubt about that. But the patent system is about being first, period, and the difference between "first" and "first to do it right" is either not patentable at all or, where it is, it usually doesn't result in a scope of protection that gives a right holder serious leverage in court.

I wouldn't have thought so. I learned it over the years watching those Apple v. Android cases unfold. There came a point at which I had to face this reality, even at the risk of being portrayed as a flip-flopper on some Apple investor discussion board or wherever.

At least it's comforting to know Steve Jobs himself apparently used to think that his patents were nuclear weapons.

Apple may be an even better company under Tim Cook than it was under Steve Jobs. I just can't reconcile with Apple's aspirations to be the greatest company in human history its inexplicable approach to honor and justice in connection with invalid patents. I have no idea whether Steve Jobs would have done the same, but according to his biography, he wanted to sue Android device makers "to right this wrong" (of Google having imitated iOS; "a stolen product" in Steve Jobs's opinion) as opposed to committing a whole new wrong. The latter is, regrettably, what Apple is doing now.

Simply put, Apple wants to cash in to the tune of hundreds of millions of dollars over intellectual property rights some of which shouldn't have been granted in the first place. The one who set out in 2010 to chase thieves would become a large-scale thief himself if this happened, not in a purely legalistic sense, but in ethical terms.

The contrast between the two Apples--the one people all over the world love and the one whose patents just haven't proven to be strong enough--has never been clearer than on Wednesday. Within hours of Apple's San Francisco product event, its lawyers filed the following document, telling the United States District Court for the Northern District of California that Apple wants $540 million from Samsung irrespectively of the fact that two key patents underlying that partial award are invalid in the (latest) opinion of the very patent office that granted them (this post continues below the document):

15-09-09 Apple Opposition to Samsung Motion for Stay by Florian Mueller

In a nutshell, Apple wants a license to steal. I'm not saying that what Apple demands isn't possible under U.S. patent law: unfortunately, it could happen, especially since invalidations resulting from reexamination proceedings don't have retroactive effect with respect to damage awards in previously-concluded cases. But as the saying goes, it takes good people to do nothing in order for bad things to happen. Some people at Apple have unfortunately chosen to keep pushing for something that would be bad. Now the ball is in the court of... the court.

A little over three years ago, within only five days of the 2012 verdict in this case, I already wrote a blog post with the following headline: "The biggest issue with the Apple-Samsung jury verdict: are all those patents really valid as granted?" In that post I already offered the following prediction:

Samsung accurately noted in its post-verdict reaction that at least some of these patents are being reexamined by the patent office, and I think we are definitely going to see some invalidations there.

The invalidations have indeed happened. The '915 patent, which Apple considered its most valuable software patent in the 2012 trial, has been held invalid by the USPTO's Central Reexamination Division, a decision that has been affirmed by a Patent Trial and Appeals Board (PTAB). The reexamination of the D'677 iPhone design patent is at an earlier stage, but it took more than two years for a first Office action to come down, and it appears very solid.

Apple now argues that the '915 rejection isn't formally final because Apple will appeal any rejection decisions further. It wants a rehearing. Should the rehearing be denied or not change the outcome, Apple will appeal the case on to the Federal Circuit.

No matter how right Apple may be on any formal aspects of this, I don't understand why Apple thinks it's a good idea to request a partial final judgment in order to collect money over what appears to be, in part, non-property. Some of the patents Apple holds will, unless things change in the further process, be ultimately found never to have rightfully belonged to Apple in the first place. Apple is not entitled to a payment over such "rights" any more than it would be to the price of an iPhone from someone who never got an iPhone.

The key legal argument with which Apple's filing, shown further above, urges Judge Koh to enter a partial final judgment is that the Federal Circuit, in its mandate to the district court, directed "immediate entry of final judgment on all damages awards not predicated on Apple's trade dress claims." Apple says that the court should therefore reject Samsung's motion for judgment as a matter of law (JMOL) that the '915 patent is invalid as well as a motion for a stay.

Apple obviously wasn't going to become the first patent holder not to oppose JMOL on invalidity. But the alternative request for a stay would not hurt Apple. After the 2012 verdict Samsung already posted a billion-dollar bond (which was adjusted after the retrial). There's no risk--none at all, even if Samsung theoretically went out of business--that Apple wouldn't get paid. Apple will get paid with interest.

Since there is really no need for immediate enforcement of a partial final judgment, I wonder why the Federal Circuit ordered it at all. It benefits Apple, but it just doesn't seem right. I defended the U.S. government's FRAND-based veto of an ITC import ban in 2013 and wrote that allegations of protectionism failed the plausibility test. If U.S. courts simply allowed Apple to cash in on patents that shouldn't have been granted in the first place, instead of letting the USPTO finish its job, the question of protectionism would be on the agenda again, and the answer would be a different one than two years ago in a disparate context.

I also found it a bit strange that Judge Koh recently set a retrial date, given that Samsung's intention to appeal the design patents-related part of the case to the Supreme Court is well known. By contrast, in Oracle v. Google the district court did absolutely nothing on remand from the Federal Circuit in light of Google's Supreme Court petition, much less set a retrial date.


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