On Thursday, Samsung rested its case in its multifaceted trial against Apple in San Jose, California. Both firms have now called their witnesses and will proceed to the rebuttal phase, with jury deliberations expected to start on August 21. There has been no shortage of drama; leaked information (including closely guarded sales figures); acrimony, even from the increasingly impatient judge Lucy Koh; and hundreds of claims and counter-claims, even with each side limited to a total of 25 hours of testimony. There are many websites doing a great job of tracking every insult hurled and damages claim inflated, so we won’t repeat all that. But the trial is important, not just for its direct result ‘ likely a long string of appeals and compromises ‘ but for the attention it has focused on the issues besetting handset IPR, in an age when the smartphone is more about user experience than wireless technologies.
The main issues at stake, beyond whether Samsung copied Apple’s iconic devices or either firm infringed patents, do have implications for the whole industry. In particular, the various handset lawsuits have thrown into sharp relief the thorny dilemmas around Frand (fair reasonable and non-discriminatory) licensing of standards-essential patents; they have highlighted the conflicts between rising amounts of IPR and royalties in devices and the need to make these affordable to all; they have aroused debate over fundamental IPR policies like the validity of design patents; and they have left a sour taste in the mouth when an arms race in IPR, often even harnessing ‘trolls’, is using up as much time and resource as innovating for the consumer.
These broader issues affect the whole sector and are prompting regulatory rethinks in various countries and in international standards bodies. They also mean that Google, which ‘ apart from the rather different Oracle trial ‘ has mainly stayed in the shadows, is intimately involved in the process. This is not just a question of Google’s Android partners ‘ which include its own subsidiary Motorola now ‘ being able to compete strongly with Apple (and Microsoft). It is about maintaining the semi-myth that Android is based on free, open technology without a patents burden. Without keeping some of that dream intact, Android loses a lot of its power, especially in the mass market.
So Google has been active behind the scenes, donating patents to HTC for one of its Apple battles, lending advice and strategic support to Samsung and other OEMs. Last month, Google asked the US International Trade Commission to intervene on HTC’s behalf in its case against Nokia, for instance, and many of the litigants are using Google’s favorite IPR law firm, Quinn Emanuel. One of its attorneys, Charles Verhoeven, is a lead lawyer for Samsung, and is also representing HTC and Motorola.
But Google prefers to stay away from direct confrontation with Apple, unless cases affect the core Android experience. The Oracle claims did that, but Samsung and Apple are mainly focused on essential 3GPP patents on the one hand, and user experience IPR on the other. Of course, gaining Motorola’s huge pile of assets, including many which are essential to mobile standards, will change the balance, but for now, the search giant merely seems to be brandishing that portfolio as a threat, and deciding whether to take more aggressive action in future ‘ perhaps if Apple starts to win more victories against Android.
The other firm which has managed to stay out of the Android litigation mess is Amazon, which has not suffered attacks from Apple as yet despite launching the disruptive Kindle Fire. However, that may be about to change. Google reaped the penalties of not taking mobile IPR ownership seriously enough when it found itself disadvantaged in the balance of power and was forced into buying its own patent stores, notably with Motorola. Now Amazon may be trying to avoid the same mistake, advertising for an intellectual property specialist.
The firm has hired a headhunter to find ‘an acquisition and investment leader’ to “identify and evaluate strategic IP acquisition and licensing opportunities,” according to a job description seen by Reuters. This went on to say the executive would procure IPR as part of efforts “to support and protect our expansion’.
It is not clear whether Amazon is mainly concerned to defend itself against possible attacks from Apple or others, or at least have some bargaining chips, or whether it aims to go on the offensive with IPR. The former seems more likely, as Amazon increasingly moves into the markets at the heart of the current patent wars ‘ mobile devices, user interfaces and multimedia services.
Amazon is a major IPR holder in its original heartland of ecommerce and online shopping, and has hired three patent experts this year already, two from RealNetworks and one from patent aggregator Intellectual Ventures.
Back in San Jose, Judge Koh is still not losing hope of a negotiated settlement. This week, she once again called on the companies’ CEOs to hold a meeting ‘ though previous, court-ordered talks broke down. She told the two firms’ lawyers on Tuesday: “If you can have your CEOs have one last conversation, I’d appreciate it, and has also called on the companies to narrow their claims further. ‘If you all want to keep over-reaching, it’s up to you. But I think it would be better to streamline this case,’ said Koh, who in May said it would be ‘cruel and unusual punishment’ for the jury to have to hear all the complaints Apple and Samsung wanted to bring.
If the process does go all the way to jury verdict, Koh wants a statement by August 18 on whether ‘there has been some successful horse trading’ to streamline and simplify claims. Koh has repeatedly sought to narrow down the huge numbers of accusations and witnesses involved. Koh at one point was shouting at Apple’s lawyers for trying to insert too many last minute witnesses. “I am not going to be running around trying to get 75 pages of briefings for people who are not going to be testifying,” she told lawyer Bill Lee. “Unless you’re smoking crack, you know these witnesses aren’t going to be called when you have less than four hours.’ She said she remained ‘pathologically optimistic’ about a truce being negotiated.
However, there has been no response to her pleas so far, so the trial has entered its rebuttal phase after Samsung concluded its case much as the iPhone maker had a few days earlier, with a statement of damages claimed ‘ in this case up to $421.8m.
One of the Korean firm’s damages experts, David Teece of the University of California at Berkeley, calculated a midrange figure of $349m based on a royalty rate of 2.4% and the infringement of two Samsung patents. However, Apple attorney Joe Mueller told Teece that, although there was a 2011 letter from the Korean firm proposing the 2.4% rate to license any of 86 patents, ‘you have no evidence that Samsung has ever asked any other company for such a rate’.
Apple witnesses had already spoken of its own royalty claims, citing a licensing proposal, made by the US firm in 2010, which would have charged Samsung $30 a handset and $40 a tablet. Apple’s final witness, an accountant, testified that Samsung would owe about $2.5bn in damages, based on sales of 22.7m allegedly infringing handsets and tablets, for revenue of $8.16bn. Apple is demanding damages and also for a preliminary injunction against the Galaxy Tab 10.1 to be made permanent, and extended to over 20 other devices. But Judge Lucy Koh has excluded three of those devices from infringement claims already on the grounds they were not manufactured to be sold exclusively in the US. They are the Galaxy S i9000, the Galaxy Ace and the Galaxy S II i9100.
When Samsung kicked off its testimony, it was focusing on claims that Apple’s patents were either invalid or that many of the innovations it claims were previously created by other firms or inventors. The Galaxy maker called one witness who claimed Apple saw a prototype tablet more than a decade before the iPad was released in 2010. Roger Fidler, head of the University of Missouri’s digital publishing program, testified by video that he worked on a tablet design in 1981 and ‘Apple personnel were exposed to my tablet ideas and prototypes’ during the mid-1990s, when the vendor collaborated with Knight-Ridder’s information design laboratory in Colorado.
He is the latest in a string of Samsung witnesses seeking to undermine Apple’s claims that its rival copied the iPad’s concept and design, arguing that most of the patents at issue are covered by prior art. Others included two computer scientists who demonstrated technologies, predating the iPhone by years, using similar techniques to Apple’s ‘rubberbanding’, which stops users falling off web pages. Benjamin Bederson, a professor at the University of Maryland, talked about his ‘Launch Tile’ invention, released in 2004, which included a ‘snapback’ feature similar to the iPhone’s. This was shown in a video of the HP iPaq 1900 pocket computer. And Adam Bogue also talked about a ‘snapback’ feature which he included in his 2001 Diamond Touch, a table of projected images which could be manipulated by fingers.
The Korean firm is also trying to persuade the jury to find Apple’s patents, which mainly related to user interface, invalid, as well as pursuing its own IPR infringement claims.
Much of the debate in the later stages shifted to royalties, and the issue of ‘Frand’ (fair reasonable and non-discriminatory) licensing. Apple picked up a theme which is also being investigated by EU authorities ‘ whether Samsung is pursuing Frand policies. The iPhone maker had said its rival had ‘never sought or received’ the 2.4% royalty ‘from any licensee, and indeed cannot even explain where that number came from …. Samsung’s royalty demands are multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios.’
Samsung claims it offers a ‘fair and reasonable’ royalty rate on its patents to ‘virtually every major player in the mobile phone industry,’ including Apple, and that its current offer is ‘consistent with the royalty rates other companies charge for use of their standards-essential patents. But Apple ‘simply rejected Samsung’s opening offer, refused to negotiate further and to this day has not paid Samsung a dime for Apple’s use of Samsung’s standards-essential technology.’
At the end of last week Apple was wrapping up its own case, and called various experts to support its claims that Samsung had copied its designs and confused consumers. One was Karan Singh, professor of computer science at the University of Toronto, who testified that Samsung infringes a key patent on scrolling and zooming in 24 of its products.
‘I concluded 24 Samsung products infringe claim 8 of the ‘915 patent,’ said Singh, who examined code Samsung provided for four of its phones. He claims offending models include the Galaxy S II, Ace, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Fascinate, Gem, Indulge, Infuse 4G, Galaxy Tab 7.0 and 10.1.
The ‘915 patent covers using a single finger to scroll, or two fingers to zoom into content with a reverse-pinch gesture. Samsung products also infringe Apple’s ‘163 patent that covers using a double tap to zoom into and center content, Singh said.
Another Apple witness was Ravin Balakrishnan, a computer science professor and user interface expert from the same university. He said as many as 21 Samsung devices infringe Apple patent 7,469,381. The ‘381 patent covers bounce back when users scroll beyond the edge of content such as a web page.
A verdict may come as quickly as the end of the month though it will certainly not be the end of the battle ‘ or those raging between the two firms worldwide. However, a bad outcome for Samsung may draw Google more directly into the fight, leveraging its Motorola patents. Given how intimate Google and Apple used to be, and the skeletons in closets they must be mutually aware of, that trial could make San Jose look like a child’s sports day.