News reports have indicated that at least one of Apple’s patents which were the subject of the $1 billion jury verdict in California in August are in trouble with the U.S. patent office.
Here is one reference: U.S. Office Rejects 2nd Apple Patent
And another: Key Apple patent used against Samsung under fire
Any suggestion that Apple’s patent has been conclusively invalidated by the U.S. Patent Office is not correct. The proceedings at the U.S. patent office are not yet over. However, this raises a very interesting situation which may create a dilemma for the trial judge.
On Dec. 6, 2012 Judge Koh heard representations from the parties as to whether to confirm the August jury verdict. A verdict by a jury is not a judgment. It has to be affirmed by the judge presiding in the court. Apple asked for injunctions to issue against Samsung based upon the patents upheld by the jury, as well as damages as awarded plus further penalties. Samsung asked for the jury’s verdict to be set aside for misconduct by reason of the presence of an individual on the jury, foreman Velvin Hogan, who may have exercised undue influence in the jury deliberations. Multiple patents were involved against 26 Samsung products of which only three are still being marketed by Samsung. Not part of the case is Samsung’s Galaxy Nexus, which is being addressed in separate proceedings.
In a decision issued on Dec. 17, Judge Koh rejected Samsung’s arguments for retrial. The judge also rejected Apple’s request for injunctions that would force Samsung to cease making sales of infringing phones and tablets into the U.S. market.
Court ruling on injunctions
Under a 2006 U.S. Supreme Court decision, injunctions no longer automatically issue in successful patent cases. The court can evaluate whether there is a need for an injunction to prevent irreparable harm that cannot be compensated by the payment of money for damages. In this case, Judge Koh ruled that Apple did not establish the infringed patents were the driving basis for Samsung’s sales of infringing products. Without a causal nexus, the court ruled that she could not conclude that Apple would suffer irreparable harm if denied the right to an injunction. Effectively, she ruled that the patented features were not central to the sale of the products and accordingly that no injunction should issue: “It would not be in the public interest to deprive consumers of phones that infringe limited non-core features.”
Apple appealed this decision on Dec. 20, 2012 to the U.S. Court of Appeals for the Federal Circuit.
Meanwhile, Apple’s request for a final judgment confirming the amount of damages that Samsung must pay along with enhanced damages remains outstanding for a ruling by the court.
Effect of patent validity on damages
Turning to the validity of one of the Apple patents in suit, we now have an initiative at the U.S. Patent Office in re-examination proceedings that casts a shadow over at least one of the asserted Apple patents. The subject patent, U.S. 7,844,915, is the one that allows a touch screen to distinguish between a single-touch intended to scroll the image and a two-finger pinching gesture intended to enlarge and/or shrink the image appearing on the screen.
Re-examination proceedings at the U.S. Patent Office can be initiated either by a patent owner or by a member of the public by filing relevant prior art that puts the legitimacy of the patent claims in doubt. In this case, Samsung initiated the proceeding (application 90/012,332 accessible through here) on May 30, 2012. However, it is still an ex parte proceeding between Apple and the examiner at the Patent Office. In this case, using materials supplied by Samsung, the examiner issued an initial “office action” on Dec. 19 stating that all of the claims in the pending issued U.S. patent are vulnerable to being canceled. Apple still has an opportunity to submit arguments to the contrary. Apple also has the ability to amend the claims so that at least some of them are valid.
Such re-examination proceedings before the examiner are not likely to conclude for another six months or more. Meanwhile, Judge Koh still has a number of decisions to make about what to do about the August jury verdict. What remains is whether to issue a judgment declaring that Samsung is liable to pay damages for infringements that have occurred in the past and whether an additional punitive amount should be added.
At least a portion of the prospective judgment for $1 billion, probably some tens of million dollars associated with the specific patent claims, is at stake. Findings of patent validity and liability for infringement based on this patent have already been rendered by the jury. If such a judgment had already been issued and paid in full, then Samsung could not get their money back just because the patent claims are subsequently canceled or invalidated. Money paid under a mistake in law, e.g. under the assumption that the patent was valid, does not have to be repaid. But if we are in a hiatus, between a judgment for the payment of money that has been rendered but without any payment or collection procedures having been completed, then what happens? Can the collection proceedings go forward?
This is exactly what is likely to happen in California if Judge Koh issues in the near term a final judgment for damages based upon infringement of the subject patent. The judgment would be outstanding and Apple could commence collection proceedings. Meanwhile, Apple may fail to establish the validity of the patent at the U.S. Patent Office under which Samsung will be liable to pay damages.
Samsung will of course appeal. But the enforcement of a judgment is not necessarily suspended during an appeal. How will all of this turn out?
I could speculate further, but all we can do is wait and see how it unfolds. We have a real-life experiment running here on exactly this issue.
David French is the principal and CEO of Second Counsel Services, which provides guidance for companies that wish to improve their management of Intellectual Property. For more information visit www.SecondCounsel.com.