Even though I'm just a little blogger, it's a bit daring to offer such a prediction based on the briefing record, especially since antisuit (here, actually just anti-enforcement) injunctions don't come down every day. But for the reasons explained in my previous posts, above all Ninth Circuit case law, Huawei won't be able to complain.
It was hard to find out about what exactly Judge Orrick said, but as far as I'e been able to research, it comes down to the following key points:
He appears to apply the Gallo antisuit injunction factors as a substitute for, not (as Huawei argued) a complement to, the general preliminary injunction factors.
For one of the Gallo factors, the Unterweser factors are determinative: at least one of the three must be satisfied.
The key statement by Judge Orrick in this context was that "U.S. courts hold that owners of declared essential patents that have made commitment to SSO's should be precluded from getting injunctive relief." He'll check whether an exception applies, but that will be his task and he probably won't let Huawei do a preemptive end run around a future U.S. court ruling.
It's correct that SEP injunctions run counter to U.S. (and not just U.S.) policy. The Chinese outlier rulings may very well be overturned at the next higher level. As for the situation in the U.S., I can't think of anything more telling than the fact that Qualcomm, once a big SEP injunction advocate, decided to base all of its injunction requests against Apple (in the U.S. and abroad) on non-SEPs.
While the Gallo/Unterweser analysis may very well result in an antisuit injunction, Judge Orrick would like both parties to work out a deal and think again about their litigation strategies. When he said so, Samsung's counsel (Quinn Emanuel's Charles Verhoeven) tried to deflect the part relating to his client, pointing out that Samsung was just defending itself against cases brought by Huawei. But balanced as he appears to be, Judge Orrick noted that a defendant, too, has a strategy.
So far I can't see anything particularly obstructive in Samsung's defense against Huawei's cases. Other litigants, such as Apple, would take largely the same positions and steps. Whose fault it is that negotiations haven't resulted in a deal (Samsung argues in court that it's because Huawei hasn't moved, and Huawei portrays Samsung as an unrepentant infringer) is impossible to know from the outside. Even the San Francisco judge can't know for sure.
If and when the antisuit injunction comes down, there'll probably a lot more media attention to it. I don't understand anyway why there's so little coverage of a cross-jurisdictional patent spat between the world's two leading Android device makers...
It's been almost seven years since I reported on an India-based company putting a long list of companies on notice with respect to a patent application that it credibly alleges relate to Twitter/Facebook-style feeds:
I haven't seen any infringement litigation since then, but the last company on the list above, Twitter, faces the risk of losing its own core patent family--and, if not saved by Alice, the risk of owing damages/royalties--because of an earlier priority date of Yogesh Rathod's patent application (18 July 2006 - PCT/IN2006/000260) vs. Twitter's "Dorsey et al." patent (23 July 2007):
On March 25, 2013, a submission of prior art under 37 CFR1.501 was made with respect to Twitter's United States Patent No. 8,401,009 on a "device independent message distribution platform." The submission pointed to Yogesh Rathod's patent and was not a reexamination request, but is somewhat close to one.
On February 25, 2016, Mr. Rathod filed a suggestion for an interference with respect to Twitter's broader U.S. Patent No. 9,088,532 (a divisional of the '009 patent). His attorneys explained why their client's patent application has priority over the one underlying that Twitter patent.
The latest and most significant development so far bears today's date: the United States Patent & Trademark Office agreed to reexamine Twitter's (broader) '532 patent based on prior art including, most notably, the Rathod patent application (this post continues below the document):
A finding that one or more substantial new questions for patentability have been raised is obviously still a far cry from holding Twitter's broader '532 patent invalid, and even if the broader '532 patent died, the narrower '009 patent might survive. But it is significant progress for Yogesh Rathod.
Mr. Rathod is trying to get the very same claims as Twitter's core patent claims granted, but based on what credibly appears to be an earlier priority date.
It could be that an Indian patentee ends up owning what was considered a core Twitter patent. But he's not quite there yet. His U.S. Patent Application No. 15/053,889 is facing an Alice (§101) rejection by the examiner, which he is appealing (the appeal was filed in late November). Most recently, the examiner sought to defend his rejection in his mid-February answer to the appeal brief.
Twitter's older and narrower patent was granted at a pre-Alice time; but the broader one was granted in 2015. The USPTO is clearly applying double standards so far, holding the same claims abstract in one case after not holding them abstract in another. That's not good.
I doubt that Twitter stands much to gain from its own patents. Twitter's business is based on network effects and a strong brand. Twitter's primary challenges relate to growth (both user base and revenues), and patents are not going to be the answer.
So the best that Twitter can hope for is that the patent application with an older priority date than its own will continue to be rejected on Alice grounds. What might otherwise happen is that an Indian inventor would own some key patent claims that Twitter temporarily owned, and sue Twitter (and others) for infringement over that one.
The company that used to be called Research In Motion is now named BlackBerry. It has always had the wrong kind of name at the given time: Research In Motion would be a typical name for a patent troll (second-best to "Innovations in Motion", more often than not with a demonym such as "American" placed in front) as those organizations try to position themselves as innovative, research-centric businesses with a view to jury trials when in reality they usually aren't. But it had that name when it was making those BlackBerry devices. Now that it has the name of the product, it's no longer making phones and becoming ever more of a patent troll. Admittedly, if I could go back in time, this blog here would have a different name, too: I didn't initially envision it to become so focused on smartphone patent and competition issues, whether or not they involve open-source software ("FOSS" stands for "Free and Open Source Software"). This blog may undergo a name change later this year or next.
BlackBerry has filed a patent infringement complaint against Facebook and its Instagram and WhatsApp subsidiaries (this post continues below the document):
For the patents-in-suit, let me refer you to Ars Technica's article. I agree with Timothy B. Lee that the patents are extremely broad. In fact, they're so abstract and generic that many or even all of the might die an Alice death before the case even goes to trial.
I have an observation to share that other commentators don't seem to have focused on so far. The "jurisdiction and venue" section (paragraphs 25 to 36) is unusually long. In many other patent complaints it spans only a very few--and especially short--paragraphs. Here, it's almost epic.
Without a scintilla of doubt, the reason for BlackBerry's preemptive defense of its venue choice--the Central District of California (that's Greater L.A.), while Facebook is headquartered in the Northern District--is last year's Supreme Court recent decision in TC Heartland vs. Kraft Foods, which reinstated an earlier ruling (thereby overruling many years of Federal Circuit precedent) according to which "[a]s applied to domestic corporations, 'reside[nce]' in §1400(b) refers only to the State of incorporation" despite potentially broader definitions of "residency" in §1391. TC Heartland was viewed as a blow to the Eastern District of Texas, where patent trolls usually prefer to sue: it's easier now for defendants to get cases transferred out ot that district.
BlackBerry's lawyers from Quinn Emanuel--a great firm though it has very much positionied itself as an anti-Apple firm (representing not only legitimate Android device makers but also antitrust violators and trolls against Apple) and apparently now also as an anti-Facebook firm (it already represented Yahoo against Facebook)--go to unusual lengths to justify the venue choice. Paragraph 34 of the complaint points to a 35,000 sq. ft. L.A. office as a "regular and established place of business" (though Facebook's new Northern California headquarters will have 1.75 million sq. ft.), and footnote 4 says there are at least 17 LinkedIn profiles of "people in this District that are dually employed by both Facebook and one of WhatsApp or Instagram." The complaint also points to "network effects" between Facebook's various services in order to establish as close a connection as possible between that L.A. Facebook office the two Facebook subsidaries accused of infringement.
BlackBerry also lists an Orange Country address for an in-house counsel, but it's actually a Canadian company and traditionally had most of its U.S. employees in Texas, though this may have changed.
It's all too obvious that BlackBerry doesn't want the case to be transferred to the Northern District of California. It appears to be realistic that it won't be a cakewalk to keep it in Southern California, but at least it wants to try. So it tries to satisfy the second part of §1400b:
"(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."
It doesn't appear that Facebook filed a declaratory judgment action in the Northern District of California before BlackBerry brought its offensive assertions. But Facebook will still try to get the case transferred to San Jose, and that's where the question of whether Instagram and WhatsApp have a "regular and established place of business" in L.A. or whether it's just Facebook (the parent company)--and whether the parent company's presence is sufficient and whether there are dually-employeed people etc.-- will come up. I'm sure that any relevant witnesses on the Facebook/Instagram/WhatsApp side will be based in Northern California.
Why is BlackBerry afraid of Northern California? Obviously, for the troll that the company increasingly is, the Eastern District of Texas would have been an obvious choice. But presumably BlackBerry didn't want to try such a long shot in light of TC Heartland. I can think of three reasons for which BlackBerry would like to stay out of the Northern District:
Juries in that district tend to be rather tech-savvy. They might be underwhelmed by BlackBerry's abstract patents (unless those are held invalid under Alice as a matter of law) and be more inclined to identify overlaps between those "inventions" and the prior art.
Relative to its economic and societal stature, Facebook has relatively few employees, but still enough that Northern California jurors may know Facebook employees.
Paul Grewal. The former U.S. Magistrate Judge from the Northern District of California (whose opinions were always extremely well-written, not just in my opinion but that of other litigation watchers, too) became Facebook's deputy general counsel in charge of litigation. He's also quoted in Facebook's response, according to which the social network company intends to fight back (I very much hope so: please, Facebook, don't feed the troll even if you can cheaply get rid of the case!). BlackBerry may be afraid of Mr. Grewal still having a unique relationship with some of the judges in that district.
Just one other observation. BlackBerry is seeking an injunction. RIM (as it was called at the time) faced the prospect of an injunction in 2005 when it was being sued by a patent troll named NTP, and had to cough up hundreds of millions of dollars. The following year, the Supreme Court's famous eBay v. MercExchange ruling on patent injunctions came down. Under eBay, irreparable harm is key, and whatever little of an operating business (security software) BlackBerry has left is not really in a competitive relationship with Facebook, Instagram, and WhatsApp. Also, remedies will only have to be discussed if and when BlackBerry prevails on the merits, and that's a big "if."
Procedural sophistication is a virtue, especially in cross-jurisdictional litigation. But in the event Judge William H. Orrick grants Samsung the antisuit (technically, just temporary anti-enforcement) injunction it is seeking against Huawei in the Northern District of California (in order to prevent the enforcement of a couple of Chinese patent injunctions), the world-class Chinese Android device maker and experienced patent litigant has no one to blame but itself--for excessive procedural gamesmanship of the kind that is all too obvious to (federal) judges. Should Judge Orrick find Huawei's attics "vexatious and oppressive," one of the three Unterweser antisuit injunction factors (a set of factors from the Fifth Circuit that the Ninth Circuit also applies) would be met, and someone who brings claims only to seek an immediate stay of some of them does appear to be suing for the sake of suing.
Huawei could have sued Samsung in only one country: China or the United States. It could also have brought perfectly non-overlapping complaints in any number of jurisdictions. Instead, Huawei sued in San Francisco one day (only to immediately seek a stay of some of its claims there), in Shenzhen the next day, and while requesting a global FRAND determination from the U.S. court it was going for the jugular--for injunctions in the country in which Samsung manufactures its smartphones--in China, meanwhile winning injunctions over two standard-essential patents (SEPs).
There are some valid points in Huawei's opposition brief (filed on February 20), but on the most critical questions it has nothing to offer but strawmen (this post continues below the document):
Where I agree with Huawei is that the positions Samsung took on injunctive relief over SEPs in connection with an ITC import ban it was seeking and nearly (if not for a presidential veto) obtained against Apple were just the opposite of what Samsung has been saying since. However, for almost five years Samsung has been reasonably consistent, even supportive of advocacy groups and industry alliances that promote reasonable restrictions on access to injunctive relief over SEPs. Any inconsistency of the kind Huawei points to is, at best, a psychological issue--not a substantive or procedural one.
Huawei argues that Samsung is contradicting its own positions because it's seeking an antisuit injunction, for which it is required that the U.S. action be dispositive of the relevant issue(s) in the foreign litigation, while not agreeing that the U.S. court could set a global portfolio FRAND rate. At first sight, that may call into question the merits of Samsung's antisuit injunction. But Huawei had to grossly overstate the scope of the relevant issue (that's the most important one of the "strawmen") in order to portray Samsung as inconsistent. It's only a question of breadth. In its reply brief, Samsung stresses that it never argued that the California case would be dispositive of the entire Chinese actions--it's just about FRAND compliance and its implications for the entitlement to injunctive relief, and Samsung isn't against the U.S. court determining access to injunctive relief (this post continues below the document):
With respect to the legal standard, the most fundamental disagreement is whether Samsung must meet the general factors for preliminary injunctions in addition to antisuit-specific factors or whether the standard for antisuit injunctions stands on its own without having to additionally meet the general preliminary injunction factors. Samsung refers to a Ninth Circuit opinion from 2006, Gallo v. Andina, which was also cited in Microsoft v. Motorola, the closest case to Huawei v. Samsung: the propriety of an injunction is, therefore, determined based on the parties and issues being identical, on the first (U.S.) action being dispositive of the other (the foreign one), and whether at least one Unterweser factor applies. Ultimately, the impact on comity must be "tolerable." But that's it according to Microsoft v. Motorola.
Obviously, Samsung argues that if it had to prevail on the general preliminary injunction factors, it would do so handily, but it really looks like that's not even going to be reached.
Samsung's reply brief doesn't go into detail on this, but as probably the only non-party person to have watched the German Motorola v. Microsoft proceedings in person while following the U.S. Microsoft v. Motorola case via PACER, I found an oddity in Huawei's efforts to distinguish the "Robart injunction" from its Samsung case. Huawei claims that "[t]he German [Motorola v. Microsoft] court [i.e., the Mannheim Regional Court] thus issued its injunction without ever evaluating whether Motorola had complied with its FRAND commitment."
When Judge Robart in the Western District of Washington issued the original temporary restraining order (which was converted into a preliminary injunction and upheld by the Ninth Circuit), the German rulings had not even come down yet. So theoretically there could have been anything in them, including an evaluation of Motorola's FRAND compliance.
While it's correct that German contract law doesn't recognize the concept of third-party beneficiaries, the German Orange Book standard (which was relevant at the time, though by now the CJEU ruling in Huawei v. ZTE applies EU-wide), which is based on antitrust law and the Roman concept of "dolo agit qui petit quod statim redditurus est" (translation from Latin: "he who is seeking something he must return immediately is acting in bad faith"), does involve FRAND questions. Huawei is right that under Orange Book the question was not (though now, post-Huawei v. ZTE, it is) whether the patent holder made an offer on FRAND terms--it places the responsibility for making a FRAND offer on the license-seeking implementer of a standard. But the whole "dolo agit" theory I just mentioned requires anticompetitive conduct by the patent holder. The test applied by German courts in the Orange Book context was whether the patent holder could, without violating antitrust rules, refuse a licensing offer from the alleged infringer. That was, contrary to what Huawei claims, an analysis of FRAND compliance. Structurally different from the way U.S. courts look at it (antitrust vs. contract law; failure to accept vs. failure to make an offer) and from the way EU courts look at the issue now, but nevertheless a FRAND compliance determination.
While Samsung used to take different positions five years ago (an eternity in this industry) and is doing what any other defendant would do in its situation (seeking to put obstacles in Huawei's way, such as by firstly requiring an actual liability finding prior to a rate-setting decision, and by requiring country-by-country resolution of liability), Huawei's opposition appears fundamentally weaker to me than Samsung's motion. It wouldn't have been hard for Huawei to avoid a situation in which one can reasonably find its procedural tactics "vexatious and oppressive," and Huawei could have chosen to keep certain issues out of the U.S. case or at least to file the U.S. case after the Chinese ones. It has made its bed and must now lie in it. I believe Samsung's motion will succeed--if not in district court, than in the Ninth Circuit.
Matt Levy, the CCIA's former patent counsel (in which capacity he was really a thought leader with respect to "article of manufacture" as the key determination to be made in connection with an otherwise-unapportioned disgorgement of design patent infringer's profits) and now a consultant;
Charles Duan, formerly with the Public Knowledge Foundation (for which he also authored amicus curiae briefs in connection with Apple v. Samsung and now with R Street; and
A video recording of the event is available on YouTube.
An Apple v. Samsung--far from the first, to put it that way--will be held in three months. The Engine panel discussion was not exactly a trial preview. The perspective was very high-level, including an outlook (by Matt Levy) as to what might happen after the trial. Mr. Levy believes the Federal Circuit will again take an exceedingly patentee-friendly position, and the Supreme Court will have to correct it again.
Nobody on the panel appeared to believe that the 19th-century unapportioned-disgorgement rule in 35 U.S.C. § 289 is appropriate with respect to today's multifaceted technology products. However, the focus of the panel wasn't on advocating new legislation, though the subject did come up. It was more about the high degree of uncertainty surrounding not just the Apple v. Samsung re-retrial but presenting an issue to the industry at large.
All speakers made good points, and a particularly important issue was raised by Mr. Levy: one of the three design patents-in-suit covers a screen layout, which apart from and beyond the question of damages is problematic. Admittedly, I'd have liked that question to be reviewed by the Supreme Court, but the emphasis there was on damages and, above all else, the "article of manufacture" question.
For a recap, these are the four factors that the Department of Justice had proposed to the Supreme Court and that Judge Koh recently adopted:
"[T]he scope of the design claimed in the plaintiff's patent, including the drawing and written description";
"[T]he relative prominence of the design within the product as a whole";
"[W]hether the design is conceptually distinct from the product as a whole"; and
"[T]he physical relationship between the patented design and the rest of the product," including whether "the design pertains to a component that a user or seller can physically separate from the product as a whole," and whether "the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately."
There is so much uncertainty that no one can really predict what the jury will make of the above factors. The outcome could hardly be less predictable.
As I look at those factors, I feel that the first factor favors Samsung (the patents-in-suit cover certain aspects of a phone, not an entire phone) but the other three factors could go either way. The jury will be free to attach different weight to each factor, and Samsung's best chance here is that the jury (which won't have to explain its reasoning in any way) might look at the devastating consequences of an unapportioned disgorgement of infringer's profits (not devastating in Samsung's particular case as it is a huge organization, but in other cases it would be) and just conclude that a decision in Samsung's favor is the lesser evil.
Mr. Duan explained that design patent litigation isn't nearly as widespread as software patent litigation, but depending on what happens in Apple v. Samsung and other design patent damages cases, design patents could give rise to many lawsuits by patent trolls in the not too distant future.
A procedural takeaway is that Qualcomm is now presumably going to file a discovery request in a United States District Court against Qorvo, a chipset maker under 28 U.S.C. § 1782, hoping to obtain information that will help substantiate its infringement allegations in the case heard today.
The underlying reason is that Qualcomm's infringement allegations relate to a Qorvo RF (radio frequency) chip found in the iPhones 7 and the larger iPhone 7 Plus. It appears that Apple's phones--or, more precisely, the Intel chipset in the accused devices, which controls the Qorvo chip--don't even make use of the power-saving feature the patent-in-suit relates to. However, the asserted claims (1-5) are "apparatus" claims. Therefore, unless Apple could make a claim that it would be technically impossible (mere economic counterproductivity wouldn't suffice) to put that feature of the Qorvo chip to use, such as by dismantling or reprogramming the device, an apparatus claim can be infringed based on capability as opposed to actual use of a functionality.
So far, whatever Qualcomm alleges is based on reverse engineering, and in order to obtain further clarity on some of the issues, Presiding Judge Dr. Matthias Zigann proposed that the court appoint an expert with a view to the November 8 trial just in case he'll be needed. For his panel of judges (the 7th "civil chamber" of the Munich I Regional Court) this would be the first case since 2012 in which a court-appointed expert would be needed. In Germany, patent disputes are typically decided based on pleadings and oral argument. Parties can bring experts, but their weight is nowhere near the one they have in U.S. proceedings--it's like just another representation made by the party itself.
The case is a huge chunk of work for the court to resolve not only because of its technical aspects. Apple is represented by about ten lawyers today, most notably including Hoyng Rokh Monegier's Klaus Haft (lead counsel), patent attorney F.R. von Samson, Freshfields Bruckhaus Deringer's Frank-Erich Hufnagel and Wolrad Prince of Waldeck--has raised a huge number of defenses against the onslaught led by Quinn Emanuel's Marcus Grosch and his team. Besides denying infringement, those defenses include, but aren't limited to, an antitrust accusation: Qualcomm, by specifically targeting devices that come with Intel chips, is allegedly trying to force its only major competitor in the baseband chipset market, Intel, out of the market. Apple is already suing Qualcomm on this (and not only this) basis in the United Kingdom, and asks the German court to stay its proceedings (unless the complaint would be rejected on other grounds) pending resolution of the UK case. Judge Dr. Zigann noted that a UK ruling would, under applicable EU rules, have to be taken into consideration by the Munich court, but wouldn't be binding on it.
Apple is also leveraging Qualcomm's EU antitrust worries. Depending on what the European Commission's detailed decision (which is undergoing redactions) says, Apple might proposed that the court ask the Commission certain questions in writings. A referral of certain issues to the Court of Justice of the EU is another one of Apple's proposals.
Judge Dr. Zigann noted that this was the first time in his court for a defendant to raise an antitrust defense against a non-standard-essential patent, but didn't reach that issue in detail today.
Qualcomm must tread carefully now because of the thicket of patent and non-patent defenses raised by Apple. While Qualcomm itself argues that Apple contradicted itself by making allegedly contradictory representations in its non-infringement and antitrust defenses, Apple can simply try multiple and (if Qualcomm is right) contradictory defenses: if one defense succeeds (an "OR" in Boolean logic), Apple is off the hook. By contrast, Qualcomm must overcome all of Apple's defenses (a Boolean "AND"), so if its argument in one area contradicts its positions in another, it's game over. I got the impression during the three-hour hearing that Qualcomm faces a significant risk of contradiction in the following three respects:
At some point, Judge Dr. Zigann described the inventive step in extremely simple terms. Qualcomm's lead counsel obviously tried to agree with the court along "You're right, your honor" lines, but tried to thread the needle so the invention wouldn't be oversimplified such as simply using one power source in two ways. When I heard the judge's summary, I thought to myself: if that is it, then this patent is at a high risk of invalidation. It's so young (it was actually published only after Qualcomm filed the complaint) that it could still be revoked by the European Patent Office, and a validity decision might come down in early 2019 (which decision the infringement court would then be inclined to awake, as Judge Dr. Zigann indicated).
Qualcomm is asserting independent claim 1 and dependent claims 2-5. It could still prevail even after the patent is narrowed, but at some point it would either fail to win or, before that one, a victory would be less meaningful because a workaround might be easy.
If Apple's non-infringement contentions contradict its antitrust defenses (as Qualcomm alleges), Qualcomm, too, might be at risk of contradicting itself--and, as I just explained, Apple just needs one defense to succeed while Qualcomm is forced to overcome every single one of them.
Qualcomm is suing Apple over EP2954737 on a "power tracker for multiple transmit signals sent simultaneously" in Mannheim. That case will go to trial on June 5 (other Mainnheim trials are scheduled for September and October, and apparently Qualcomm has meanwhile also asserted additional patents in Munich, as Judge Dr. Zigann noted amendments to the original complaint that were, as is standard procedure in Germany, separated from the original case).
Apple argues that Qualcomm is estopped from asserting the Munich patent because the infringement theory is based on the very same act as the one in Munich. To be clear, this doesn't mean that only because certain iPhones are at issue in both cases, Qualcomm would have had to assert both patents together. On Apple's behalf, Dr. Hufnagel insisted that one patent cannot be infringed without infringing the other.
While Judge Dr. Zigann appeared very skeptical of this estoppel theory (at the outset of the hearing as well as after Apple's insistence), he was interested in factoring the Mannheim ruling, as it might bring useful substantive clarification, into the schedule of his own case. Qualcomm's lead counsel, Dr. Grosch, exuded a great deal of confidence when saying that "an injunction" would come down, "probably in September due to the summer holiday season, but maybe already in August."
I've watched Dr. Hufnagel, the attorney who argued estoppel for Apple, at many trials and tend to place more faith in him when he expresses a strong belief in a theory. In fact, the moment he impressed me the most was when he conceded, in a Samsung v. Apple case in Mannheim, that the court could decide an infringement question either way, while most lawyers always claim that only their position is a reasonable one to take. Despite Judge Dr. Zigann's current, merely preliminary skepticism, I wouldn't be too surprised if the Munich court viewed the estoppel theory more favorably after a Mannheim decision. It could be that Qualcomm wouldn't care too much if the Munich case failed after prevailing in Mannheim: it wants leverage, and it wants it sooner rather than later. I wouldn't put it past Qualcomm that it decided to sail close to the estoppel wind in order to get two bites at Apple. And the risk for Qualcomm is that the Mannheim court might reject the complaint, but provide a rationale that would lead the Munich court to throw out the other case based on estoppel.
Judge Lucy Koh of the United States District Court for the Northern District of California has granted an Apple motion for relief from a non-dispositive order by Magistrate Judge Nathaniel Cousins, who imposed sanctions on Apple for failure to timely provide documents sought by Qualcomm in its defense against the Federal Trade Commission's antitrust lawsuit. Here's Judge Koh's order (this post continues below the document):
The matter is remanded to Magistrate Judge Cousins because Judge Koh found it legally erroneous that he based his sanctions order on Apple on a procedural rule that applies to parties, while Apple is technically a non-party to the FTC-Qualcomm case. As Judge Koh notes, Apple has its own antitrust litigation against Qualcomm pending, but that's a different case (even in a different district, though that's not a requirement for Apple to be a non-party to FTC v. Qualcomm).
Apple could still be sanctioned, but in order to do so, Magistrate Judge Cousins would have to come up with a legal theory that applies to non-parties. He could now just find that there is no legal basis to treat a non-party so harshly, in which case Apple's appeal to Judge Koh would have succeeded (though Qualcomm might still pursue sanctions in that case, but with a greatly diminished likelihood of success). There's a good chance that things will end that way. In the event Magistrate Judge Cousins bases a new sanctions order on a different statute, the amount of sanctions would likely be lower, and in any event, Apple could take this matter back to Judge Koh, who after finding legal error didn't have to reach the propriety and amount of the sanctions imposed--and, more likely than not, won't have to anymore.
Apple is indeed a party to other Qualcomm cases. For example, the Munich I Regional Court will hold a Qualcomm v. Apple patent infringement hearing--not yet a trial, but a discussion of key outcome-determinative issues--in a few hours. Presiding Judge Dr. Matthias Zigann, one of Germany's leading patent judges, will hear the parties' arguments, with Qualcomm claiming that Apple's iPhones using Intel chips (at least that's what Qualcomm's public statements and its litigation strategy for the United States International Trade Commission indicate) infringe European Patent EP2724461 on a low-voltage power-efficient envelope tracker. This is just one of various cases pending in Germany. The Mannheim Regional Court informed me of hearings scheduled for June, September, and October, over three different European patents--and it's unclear whether today's patent-in-suit is the only one Qualcomm is asserting in Munich (Qualcomm originally announced one Mannheim lawsuit and now I'm aware of three).
So far, Huawei v. Samsung hasn't been given much attention (not even on this blog), though it definitely is a major dispute when the two largest Android device makers--or, from another perspective, the largest Korean company and the leading Chinese mobile device maker--are suing each other in the Northern District of California over standard-essential patents and, especially, the related FRAND (fair, reasonable and non-discriminatory) licensing issues. The year before last I subscribed to automated notifications and couldn't find anything exciting there until I spotted this in my inbox:
"Samsung's Motion to Enjoin Huawei from Enforcing the Injunction Issued by the Intermediate People's Court of Shenzhen"
An antisuit--or, more precisely, anti-enforcement--injunction relating to the enforcement of a foreign standard-essential patent injunction is not unheard of, much less in the Ninth Circuit. Indeed, Samsung's motion against Huawei is, by and large, a sequel: Microsoft v. Motorola Reloaded. The only noteworthy difference is that this involves two Asian companies, not a negotiation between two U.S. companies as in the Microsoft case.
The irony of fate here is that either of the two firms that represented Microsoft (Sidley) and Motorola (Quinn Emanuel) now has the shoe on the other foot. It happens all the time that firms have to take different positions in different cases, but a role reversal like this rarely occurs. Quinn Emanuel, which unsuccessfully opposed the "Robart injunction" almost six years ago, has now brought that kind of motion on Samsung's behalf, while Sidley, which had a spectacular success in the patent litigation arena when it barred Motorola from taking some key Microsoft products (most notably Windows and the XBox) off the German market, is now--on Huawei's behalf--on the opposing side. Thanks to my independence as an app developer who quit consulting in 2014, I can and will take positions on the current case that are simply consistent with the ones I had back in 2012.
Here's Samsung's motion (this post continues below the document):
In the build-up to Judge William Orrick's decision, there'll be more opportunities to discuss the legal theories and case-specific facts, especially after Huawei's opposition brief. But I'd like to highlight a few interesting aspects already:
Huawei itself made the first filing in the Northern District of California, and it included infringement as well as FRAND rate-setting issues, though Huawei sought an immediate stay of the former, which looked a bit like procedural gamesmanship. Samsung responded with FRAND and patent infringement/validity claims. By contrast, in Microsoft v. Motorola it was Microsoft (the SEP defendant) who won the race to the courthouse and brought a FRAND case in the Western District of Washington prior to any SEP infringement claim by Motorola in any jurisdiction whatsoever.
The fact that Huawei itself--the enforcing party--wanted the U.S. court to make a FRAND determination is a strong argument for saying it should now let the U.S. court do its job and not seek decisive leverage in China before. Otherwise the FRAND issues in the U.S. will be--in a problematic sense--"mooted" by a settlement at the threat of a Chinese injunction, which (as Samsung's motion points out) would even affect the U.S. market because of Samsung manufacturing devices for the whole world in China. Those two differences from Microsoft v. Motorola--that the enforcer himself brought the FRAND case and that the U.S. market will be affected by a foreign injunction--appear more important to me, at least for the time being, than the fact that this is not a U.S.-U.S. dispute like Microsoft v. Motorola.
It surprises me that, according to a sworn declaration attached to Samsung's motion, Huawei filed its Chinese cases the day after the U.S. filing. Due to the time difference, the filings may have been more or less simultaneous, but calendar dates can play a role, and seeking an antisuit injunction in an earlier-filed case is more likely to succeed than in a later-filed one.
Footnote 8 of the motion clarifies that Samsung's motion is distinguishable from last year's denial of an antisuit injunction sought by Qualcomm against Apple in the Southern District of California. Clearly, Samsung's motion against Huawei is the closest thing so far to Microsoft v. Motorola, while Qualcomm's motion was all about precluding Apple from pursuing antitrust cases (not from enforcing patent injunctions) in multiple jurisdictions. Qualcomm's motion was broader, and the nature of the issues and other factor were totally different.
Samsung accuses Huawei of "making trivial concessions over the parties' long history of negotiations" and then filing various cases, including the ones that led to two Chinese SEP injunctions. Based on what I read on the Comparative Patent Remedies blog, Huawei alleges that Samsung was slow-rolling the negotiations. Since I have no idea what exactly happened, it could be that there is truth in either party's historic account. Whether someone is constructive in negotiations is a question of both substance and timing. The hurdle for claiming that someone is an "unwilling licensee" must be reasonably high, however, and at this juncture, Samsung clearly meets that definition by the standards of all jurisdictions except the Chinese district in which Huawei won its injunctions. Samsung appears to be fine with the U.S. district court resolving the FRAND issues. That makes it a willing licensee, unless and until it refuses to take a license even after such a determination and a liability finding. If Samsung did that, then even Judge Posner, the FRANDliest judge I could think of, would potentially deem a patent injunction warranted. But there is no indication right now that this would ever be an issue in this dispute.
How will Huawei respond to that motion? Is Sidley going to downplay the importance of Microsoft v. Motorola? Without totally understating or outright misrepresenting what the appeals court had decided back then, I can't see how the two cases could be distinguished to Huawei's benefit. That's why my current prediction (subject to change if important new facts are put on the table or major new decisions come down) is that Judge Orrick will grant Samsung's motion and that Huawei will try but fail to get Judge Orrick reversed by the Ninth Circuit. Maybe this will go all the way up to the Supreme Court then.
The most interesting question would be whether Qualcomm had to substantially lower its fees and prices in order to get this deal done with Samsung. I can't imagine that Samsung wouldn't have used its leverage from Qualcomm's overall situation, including Broadcom's hostile takeover bid. This is probably a pretty good deal for Samsung. However, Qualcomm presumably wanted to avoid doing a deal on terms that would undermine its credibility with a view to rate-setting decisions that courts in different jurisdictions will have to make. Apparently there was a set of deal terms that both parties considered beneficial, and it allows both of them to focus on other issues.
What else does this new agreement mean for the pending lawsuits and ongoing antitrust proceedings?
Samsung is Korea's largest corporation (accounting for roughly 20% of GDP), but not its only one. Presumably the KFTC will continue to defend its decision in court, and other companies (such as LG) may still be very interested in the process. However, South Korea is now a less relevant "theater" in the worldwide Qualcomm antitrust war. Qualcomm is still in trouble in the U.S., the EU, and Taiwan. And it remains to be seen what will happen in China if it's true that Huawei was the device maker that halted its royalty payments.
In a nutshell, Qualcomm has one enemy less, but still a huge pile of problems--and still no major ally in court or in the antitrust arena.
In connection with the FTC's antitrust lawsuit against Qualcomm, Magistrate Judge Nathaniel Cousins of the United States District Court for the Northern District of California crafted a "Christmas present" for Apple that the iPhone maker would probably have liked to return to the shop immediately: a sanctions order ($25K per day starting December 16) and a December 29 deadline for the production of documents. Bloomberg reported (as did other media, while this blog didn't due to its focus on IP and antitrust issues). The Bloomberg article I just linked to quotes an Apple spokesman as saying that Apple was going to appeal the ruling and that Apple had already produced "millions of documents for this case" and would deliver "millions more."
On Wednesday evening, Lawyers for Civil Justice--an organization representing the interests of corporate counsel (with companies like Microsoft, Shell, ExxonMobil, Eli Lilly, StateFarm, Ford, Merck, Pfizer, Glaxo SmithKline and FedEx sitting on the board) to avoid unreasonably burdensome procedures--asked the court for permission to file the following amicus brief that effectively supports Apple (this post continues below the document):
The most interesting number in the brief is that at some point Apple had--and maybe has as we speak--500 (five hundred!) lawyers assigned to the document-sifting effort.
The most interesting fact in the accompanying request for permission to file the above brief is that Qualcomm did not consent to its filing. That is unusual, but in my eyes it makes the LCJ brief all the more relevant.
The brief notes that Qualcomm is seeking similar sanctions against other non-parties that have been told to produce documents in connection with FTC v. Qualcomm.
When I was reading the LCJ brief, I was thinking to myself that former Magistrate Judge Paul Grewal, who previously worked on Judge Koh's cases until he was hired away by Facebook, used to be very strict and demanding but appeared more measured when it came to setting sanctions.