In Oracle case, Google has gone from fighting API copyright to attacking all software copyright

In some regards, including key topics of patent reform, Google may be the best friend among large U.S. tech companies that software developers can find. Those of you who've been following this blog over these past four years may have noted a steady increase in support for Google's positions in connection with patent policy and patent disputes (though some areas of disagreement, such as FRAND, remain) and even copyright (Google Books). But with respect to software copyright, I'm starting to doubt whether I'll ever agree with Google in my lifetime because things have just gotten a whole lot worse.

The off-base reasoning that Google had persuaded Judge Alsup to adopt in the Oracle case prompted a former U.S. copyright chief, Ralph Oman, to issue a warning that this line of thought "largely eviscerates copyright protection for some of the most creative aspects of computer software." After the United States Court of Appeals for the Federal Circuit exposed the district court ruling as grossly erroneous, Google has apparently altered course and is trying a new trick in its continuing defense against Oracle's copyright infringement claim. While I understand that a party's argument has to be ever more strategic as a case goes higher, there's no written or unwritten requirement to become more radical. Unfortunately, what Google is trying to achieve has gone from "largely eviscerat[ing] copyright protection for some of the most creative aspects of computer software" (emphasis mine) to totally eliminating copyright protection for all computer software. I've been doing this for long enough to know that many people will find it hard to believe this portrayal of Google's approach (in fact, if I read something like this on another site, I'd also want to know why). That's why I needed to think about it a little more after my initial reaction to Google's cert petition. But it's actually not hard to explain now.

The question to begin with is this:

How would Google's proposed question for the Supreme Court have to be answered in order for Google to achieve its desired reversal of fortune?

Let's look at that proposed question again:

"Whether copyright protection extends to all elements of an original work of computer software, including a system or method of operation, that an author could have written in more than one way."

In my initial reaction I already highlighted that the word "written" omits the fact that only expressive material is protected, and not everything that is written is expressive. Since copyright was not initially invented for the purpose of protecting software (nor were patents, but they were at least meant to protect applied science from the outset), there's a dichotomy: copyright protects the expressive aspects of program code, but not its functionality. Still, copyright has served software developers very well (for decades already) in all cases in which outright copying occurred. It would most likely also work well in cases in which, for example, someone translates program code from one programming language to another. What it's not designed for is to prevent independent implementations (including intentional imitations as well as inadvertent ones) of someone else's problem-solving strategies. That's what patents are for. That's why I have filed patent applications for three inventions this year as opposed to just relying on copyright.

Oracle v. Google is a case of outright copying. Google never claimed that it came up with 7,000 lines of API declaring code from Java independently. It admits that it took the stuff, and argues that whatever it took was for the taking.

This gets us to the fundamental reason for which Google's objectives in the Oracle case (unlike Google's policy in certain other areas) run counter to the interests of software developers large and small. In order to get away with what it's done and wants to continue to do (instead of reaching a commercial agreement with Oracle, Sun's acquirer and thus the rightful owner of the material at issue), Google has only one choice: it must convince the courts that even outright copying of substantial amounts of program code is permitted by copyright law. If this sounds paradoxical, that's because it is.

Google is, now more than ever, trying to move the line between copyrightable expression and non-copyrightable functionality so far into and even beyond the range of highly-creative, expressive code that copyright no longer applies.

It's just that I don't want to sound alarmist. Otherwise I would (and based on Google's proposition I could) say that Google is advocating the death of software copyright and, as a result, the death of commercial software except for areas in which trade secret and trademark protection may be sufficient. The reason I don't want to say so is simply that I don't believe Google will make much headway, if any. That said, if someone tried to kill me by throwing a few small cotton balls at me, I wouldn't be afraid but I'd still be shocked at the intent.

As Boston-based tech and IP lawyer Lee Gesmer mentioned (in the only opinion on Google's Supreme Court petition I've read or heard so far), "the Supreme Court accepts review of approximately 1% of cases appealed to it." There are reasons to assume that this case has a better chance than 1% of being heard. In any event, the question Google raised is one that Oracle's lead counsel on appeal, Orrick's Joshua Rosenkranz, was eager to address at the Federal Circuit hearing last December, where he began his oral argument in the following way:

"Your Honors, in this copyright case, where extraordinary creativity is conceded, the central question is whether the creative computer code loses all copyright protection under Section 102(b) just because it also serves a function."

He didn't get to continue because a circuit judge immediately changed the focus--Mr. Rosenkranz would just have preached to the converted on this one. Without (ever) knowing how this oral argument would have continued without the quick interruption, it's obvious that Oracle's counsel wouldn't have raised this question as the very first one if he had not been confident of his ability to win the case on this basis.

Let's get back to the question I outlined further above: How would Google's question for the Supreme Court have to be answered in order for Google to fend off Oracle's claim? And what would be the further consequences of a Google win for everyone including a little app developer like me?

"Whether copyright protection extends to all elements of an original work of computer software, including a system or method of operation, that an author could have written in more than one way."

Besides blurring the distinction between what's written and what's expressive, this question implies two things, either one of which and especially the combination of which is an all-out attack on software copyright:

1. The "including" part has a clear answer in statutory law: according to Section 102(b), copyright protection does not extend to a system or method of operation. Raising this question would be of use to Google only if the Supreme Court concluded that the Federal Circuit afforded copyright protection against the statute. The suggested "No" answer to this part would, however, require the question Oracle's counsel outlined at the beginning of his Federal Circuit argument to be answered as follows: "Yes, even extraordinarily creative computer program code loses all copyright protection just because it also serves a function."

   The dichotomy between expressive and functional aspects of program code would go away. The 7,000 lines of highly-creative declaring code would not be protected just because they also serve a function.

   Now that I've thought about it a little more, I see a dangerous radicalization of Google's position in this line of thought. Previously, Google made a misguided (but initially-successful) attempt to advocate an interoperability exception to copyrightability (which was also wrong because Android isn't Java-compatible). Now it is no longer limiting its argument to program code that plays a role in interoperability. It's now suggesting that by affording copyright protection to 7,000 lines of highly-creative code, the Federal Circuit gave Oracle copyright (against the statute) over technical functionality.

2. The "more than one way" part is equally problematic. While the answer is easy (the creativity hurdle is very low under U.S. copyright law), "more than one way" may be an appropriate description with respect to isolated lines of the 7,000-line material at issue, and even then only with respect to the simplest ones of those lines. My favorite amicus brief submitted to the Federal Circuit in connection with this case explained the creative choices in API design very well. It gave an example of how even a circle-drawing function could be designed in multiple ways. But if we assume, as an example and only for the sake of the argument, that there is an average of only three (way too low for many of the 7,000 lines!) alternative ways to express the underlying ideas of each of the 7,000 lines, there would be 3 to the power of 7,000 alternative ways. I entered that number into a spreadsheet and the number was way out of range. (Even if Google had taken only 70 -- 1% of 7,000 -- lines of declaring API code with three alternatives per line, the number of possible combinations would be a number with more than 30 zeroes.) And this formula doesn't even include the possibility of having different functions assigned to different classes.

   If the Supreme Court, in order to agree with Google, held that Sun Microsystems' engineers didn't actually have a sufficient number of alternative ways to express the ideas underlying those 7,000 lines of Java API code, no software would be copyrightable anymore.

Google is now way past the point at which any advocacy group can back its positions in the name of software developers large and small. Even those software developers who would like API-related code not to be copyrightable should reject Google's latest approach because, in the alternative, they would attempt commercial suicide only to help one big company in a dispute with another major player.

I would also encourage my fellow software developers to think about what Google's attempt to make all software code non-copyrightable if it's functional means for the protection of object code. This case here is about source code. If Oracle lost in a case in which source code is copied, none of us could prevail in a case in which object code is stolen. For example, the guys who stole the Flappy Bird object code and just replaced the image of the bird would be legally above board.

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Google's Supreme Court petition in Oracle case suggests sudden departure from previous strategy

Yesterday it became discoverable that Google had, as expected, filed its petition for writ of certiorari (request for the Supreme Court of the United States) in Oracle's Android-Java copyright case on Monday. Meanwhile the document has also come to light (this post continues below the document):

14-10-06 Google petition for writ of certiorari in Oracle (c) case.pdf by Florian Mueller

I'll discuss these issues in more detail when Oracle's response is known, but I did want to share a few observations.

Notably absent from the table of authorities (pages 8-11 of the PDF document) are the Sega and Sony Ninth Circuit decisions. Google had argued--successfully before the district court, unsuccessfully before the appeals court--that those cases established an interoperability exception to the scope of copyrightability in the Ninth Circuit. The Federal Circuit clarified that they did not, and that they were fair use rather than copyrightability cases. That's what I had been saying for a long time. Maybe Sega and Sony will still come up in Google's argument, but the cert petition suggests (for other reasons as well) a departure from Google's strategy in the first two rounds. It appears (again, this is not definitive yet) that Google's Supreme Court appeals team, led by King & Spalding's Daryl Joseffer, has jettisoned the Judge-Alsup-is-the-way-and-the-light kind of logic in favor of a new focus that is, at least at first sight, almost tantamount to a Judge-Alsup-was-right-for-the-wrong-reasons argument.

I had previously noted that one apparent weakness of Google's argument in Round 2 was the lack of a proposed alternative basis for arriving at its desired result. Otherwise I'd be (even) more surprised now. But many (if not all) of Google's allies in this context will presumably be unhappy about this modified strategy.

Now, at least in the cert petition, it's all about statutory interpretation--the relationship between 17 U.S.C. § 102(a) and § 102(b). In this post, published between the Federal Circuit hearing and the opinion, I described this as follows:

In a nutshell, §102 a giveth (defines what is copyrightable) and §102 b taketh away (defines what copyright does not extend to), but not in the sense of a straightforward subtraction: it's more like §102 a defining what types of works are copyrightable and §102 b ensuring that enforcement doesn't reach further beyond. For example, you get a copyright on a cookbook under §102 a, but §102 b ensures that you can't use that copyright and sue everyone who cooks a meal according to your book. For software, it means creative code (including declaring code) is copyrightable, but you can't assert broad patent-like monopoly rights later over methods of operation.

Google's counsel misrepresented Oracle's position on copyrightability by saying that "the basic structure of the copyright statute is you have (a) and (b), and they're proceeding as though (b) doesn't even exist -- they're saying 'if it's creative under (a), boom, you're home.'" Circuit Judge O'Malley contradicted immediately and firmly: "I don't think that's what they're saying at all. No. They're just saying that a method of operation [which copyright does not extend to] should be looked at at a more abstract level." She got this so right: contrary to Google's counsel's representations, Oracle does not want to use copyright to monopolize abstract concepts such as the idea of having a function that determines the greater of two numbers -- Oracle just claims copyright in a body of work that involves in this case many thousands of lines of highly creative declaring code, which is concrete and not abstract. It's about specific expression, not about high-level concepts and algorithms.

The question Google would like the Supreme Court to look at is now detached from Ninth Circuit case law:

"Whether copyright protection extends to all elements of an original work of computer software, including a system or method of operation, that an author could have written in more than one way."

Here, even more clearly than with respect to Sega and Sony, Google throws Judge Alsup's reasoning under the bus and abandons a cornerstone of its own original theory. For years Google argued that the flexibility to write code in more than one way had to be determined based on limitations to the freedom of Google's Android developers after they made the choice to build something Java-like. Oracle consistently argued that this was the wrong point in time to focus on. What mattered was that Sun Microsystems, when it created Java, could have designed those APIs differently. Google's question for the Supreme Court tacitly recognizes that Oracle was right all along on this one.

There's nothing wrong with Google, better late than never, accepting a certain reality. That's actually very positive. There's only one word in this question that I think is misleading: "written" (before "in more than one way"). The Federal Circuit referred to "multiple ways to express [an] underlying idea" (emphasis mine), and creative expression is a key concept. Not everything that is written is expressive.

Apart from this terminology issue, I consider this proposed question a smart choice. It makes far more sense than suggestions that there is an interoperability exception to copyrightability (though certain passages of the petition, by referring to compatibility, are very much like Google's argument in the first two rounds).

There's this saying that a fool can ask a question a wise man can't answer. Here, it's pretty much the opposite: it's a question asked by smart people but the answer is a no-brainer. Yes, the threshold for copyrightability is very low under U.S. law. This case won't change that fact.

In order to get the Supreme Court interested, Google talks a lot about an allegedly deep and well-recognized circuit split on § 102 interpretation in connection with the functional aspects of computer software. I won't deny that there are differences (and yes, the Supreme Court was divided over the Lotus case on a menu structure), but the Android-Java case has nothing to do with a line-drawing problem. This one is far, far above the differences between circuits that Google talks about (and partly seems to overstate). This is not about a simple menu structure with a few dozen commands in a two-dimensional or tree structure. It's not about a compilation of previously-existing data. This is not about a very small amount of original, creative, expressive material. Instead, this is about 7,000 lines of (concededly) highly-creative declaring code. Google can't point to any example in which a court of appeals (or even a district court, prior to Judge Alsup's reversed ruling) held anything like that non-copyrightable. I could easily see the need for the Supreme Court to resolve a conflict between circuits if, for example, the Ninth Circuit had not held something like this copyrightable while one or more other circuits had. But that is not the case.

In the circuit-split context, Sega and Sony actually do come up, but without being explicitly mentioned:

"If the Federal Circuit's view of Ninth Circuit precedent is correct, that circuit is in conflict with other circuits on all of those important points of law. If the Federal Circuit's understanding of Ninth Circuit law is wrong, the Ninth Circuit is still in conflict with the courts on the other sides of the circuit splits."

I agree with the second sentence (except that I think the Federal Circuit is right). An interoperability exception to copyrightability would indeed make the Ninth Circuit a complete outlier. But the first sentence misses the point: the Federal Circuit simply interpreted Ninth Circuit precedent as not saying what Google claimed it said. That's different from interpreting Ninth Circuit law in a way that constitutes a conflict between circuits.

Google's Supreme Court lawyers are now trying to win a war someone else lost (a movie quote). They try not to repeat the mistakes of the past, but there is one argument that would have been more likely to work in the Federal Circuit than it is to help Google now: the claim that holding 7,000 lines of highly-creative declaring code copyrightable blurs the line between patent and copyright law. The Federal Circuit has exclusive appellate jurisdiction over patent law, not over copyright law, and as a result hears way more patent than copyright cases. If this claim of a patents-copyright conflict didn't get traction there, it's even less likely to get traction with the Supreme Court justices. In any event, it's wrong because those intellectual property rights protect different aspects of software, but a piece of software can, of course, be protected by copyright (for the expressive part) and patents (for technical inventions) at the same time. Someone who copies 7,000 lines of highly-creative declaring code may infringe copyright and patents at the same time--that's why it's much safer not to do so without a license.

I've saved the worst for last -- the ultimate #facepalm in Twitter lingo:

"If the Federal Circuit's holding had been the law at the inception of the Internet age, early computer companies could have blocked vast amounts of technological development by claiming 95-year copyright monopolies over the basic building blocks of computer design and programming. By the time Google and countless other innovators even came onto the scene, others could have locked up the field for longer than most people will live."

I don't even have to go into details of Google's examples, such as the QWERTY keyboard layout, which is just so far from 7,000 lines of declaring API code. The above suggestion that innovation in information technology could have been prevented by incumbents just because expressive program code is copyrightable is really absurd. It's reminiscent of--but even more inaccurate than--what Bill Gates said in 1991 about software patents in a Microsoft-internal memo:

"If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension or other crucial technique."

By now Bill Gates has distanced himself completely from this statement. Even just a few years later, Microsoft had already become a very active patent filer, and a little over a decade later it was lobbying for software patents (in Europe), but despite owning tens of thousands of operating system patents it has been unable to prevent Google's Android from becoming not only the world's leading mobile operating system but also the leading operating system across all types of connected devices.

The problems with those theories include that they don't take into account the limitations of intellectual property rights that can be worked around and they ignore the potential effects of compulsory-licensing obligations under antitrust law (Microsoft experienced this in its big EU competition case). This kind of theory didn't work out for patents, but there are two reasons for which there is less of a need for concern when it comes to copyright: software copyright has a considerably narrower scope than software patents, and copyright law has a "fair use" defense, for which there is nothing comparable under patent law at least in the U.S. and Europe (FRAND is different; it's an antitrust concept).

If Google loses the copyrightability battle and the case goes back to the district court for a retrial on "fair use", some of its current argument that it absolutely needed to design Android so as to attract Java programmers to the platform can be held against it when it comes to damages and injunctive relief. Google was negotiating a Java license. It decided to go ahead without one. That's the problem it has now. If copyright law doesn't support this behavior, it does what it's supposed to do. Nothing more and nothing less.

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Rockstar attack on Android to be adjudicated in Northern California, not East Texas: Fed. Cir.

Google and several major Android device makers (such as Samsung, HTC, LG, ZTE, and ASUS) scored a procedural win today in the United States Court of Appeals for the Federal Circuit against a patent assertion entity jointly owned by Apple, Microsoft, Erisson, BlackBerry, and Sony. The appeals court handed down a decision in favor of Google's request for a writ of mandamus and instructed Judge Gilstrap in the United States Eastern District of Texas, whose unwillingness to move patent infringement cases out of his district is long-standing and well-document, to stay the proceedings in his court pending a declaratory judgment action in the Northern District of California that will practically dispose of all of the key issues, if not all of the issues, in the Texas case.

Statistically, defendants fare better in the Northern District of California with respect to pretrial decisions. In addition, jurors in that district are, on average, more tech-savvy than anywhere else in the country.

The order granting Google's petition was authored by Circuit Judge Kathleen O'Malley, the same judge who also wrote the opinion in the Oracle v. Google Android-Java copyright case. On Monday, Google appealed the appeals court's ruling on that one to the Supreme Court (which will in the first step have to decide whether to hear the case at all, which is not a given because the SCOTUS is too busy to hear all high-profile cases presented to it).

Nobody doubted that there was substantial overlap between the California and Texas cases. If one court had accepted to move its case out of its district, the risk of potentially conflicting decisions would have been eliminated. In April, the Chief Judge of the Northern District of California held that Rockstar's scare-and-run tactics against Android advanced Apple's strategic interests (though I give Apple the benefit of the doubt with respect to Rockstar's decision to bring widespread litigation over the former Nortel patents jointly acquired by its current shareholders and a former partner, EMC). The California case continued for that reason as well as for others. For Judge Gilstrap in Texas, it would have been out of character to transfer or stay the case he was presiding over, so the only way to resolve the conflict was for the appeals court to speak out on it.

Judge O'Malley is, at the philosophical level, one of the more right holder-friendly judges of the Federal Circuit--clearly more patentee-friendly than Chief Judge Sharon Prost, for example. She also tends to favor a broader scope of patent-eligible subject matter than some of her colleagues. But let there be no doubt about the balanced approach underlying her opinions in the Oracle case (where she agreed with Oracle on copyrightability but stopped short on resolving fair use as a matter of law) and now in this Google matter. I like both of those opinions--twice as many as Google is happy about.

Rockstar's arguments clearly didn't impress Judge O'Malley. One example is that Rockstar had added Google as a defendant to the Samsung case in Texas. The official reason was Google's involvement with the Galaxy Nexus. More than anything else, however, it was a transparent response to Google's previous declaratory judgment complaint in California. Rockstar wanted to get the benefit of the earlier-filed case. Judge O'Malley and her two colleagues on the panel weren't persuaded by this. They ultimately concluded that Judge Gilstrap had abused his discretion in denying a stay of the Rockstar actions in Texas.

The Federal Circuit found that Rockstar is basically run out of Canada, with only a minimal presence in Plano, Texas. By contrast, Google is undoubtedly run out of Northern California and has most of its Android records there. This reduces the burden on witnesses. Judge O'Malley and her colleagues focused on avoiding a waste of resources and chose a "flexible approach, including staying proceedings if the other suit is closely related that substantial savings of litigation resources can be expected."

One part of the decision that is particularly likely to be cited going forward disagrees with the Texas holding that this case was far outside the customer-suit exception (a rule that is rarely invoked so far and may be strengthened if some serious U.S. patent reform ultimately happens, which is more likely than ever should the Republican Party take control of the Senate) because of the fact that Android device makers are allowed to modify and customize the Android platform to a certain extent. The Federal Circuit has now found that the infringement allegations against the different Android device makers are more or less identical, showing that whatever flexibility they might have had regarding the Android platform didn't change the fact patterns to be adjudicated now.

Judge Gilstrap's decision was in no small part based on an all-or-nothing logic: consolidate everything in Texas or consolidate everything in California. The Federal Circuit now says it's more flexible, and in this case more appropriate, to just stay the Texas case in order to let the court in California resolve the issues pending there. In practical terms, this is very close to the effect of consolidation in California. Should none of the asserted patent claims be held both valid and infringed at the same time, Texas won't have anything left to do. Such an outcome is not at all impossible. Two of Rockstar's shareholders are among the five large organizations whose patent assertions against other major players I recently analyzed. Based on partly final and partly intermediate results, only about 9% of those 222 patent assertions (most of them against Android devices) had merit.

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After successful Oracle appeal, Google asks Supreme Court to hear Android-Java copyright case

In late July I discovered that Google had requested, and been granted, an extension of time for filing its petition for writ of certiorari (request to hear a case) with the Supreme Court of the United States. The new deadline was October 6, i.e., this week's Monday. Today (Wednesday) the fact that Google indeed brought its "cert" petition has become verifiable on the official website of the top U.S. court (click on the image to enlarge):

The filing itself is not yet available on the Internet (except perhaps through certain subscription services). Oracle has a month to respond (unless it is also granted an extension).

I'll try to obtain a copy of the submission and will comment on it then. Presumably Google is trying to sell to the Supreme Court the same old (but flawed) story about how the Ninth Circuit allegedly (not in my opinion though) established an interoperability exception from copyrightability. Judge Alsup in the Northern District of California bought that argument. The three members of the Federal Circuit panel, with Circuit Judge O'Malley writing the opinion, disagreed.

After Oracle's Federal Circuit victory I wrote up a refresher Q&A. At the time I thought Google was going to ask for a full-bench review, but instead it decided to proceed directly to the Supreme Court.

This is a high-profile case; it's far more interesting from a strategic point of view than hundreds of smartphone patent assertions by major players (including Oracle, which asserted patents early on but since its appeal has focused exclusively on copyrighted material).

The Supreme Court can't hear every high-profile case that someone wants it to review. I don't think this one needs to be heard at all: U.S. copyright law is perfectly clear (there is a low threshold for copyrightability and in this case, enormous creativity was conceded by Google's own counsel and witnesses), and Ninth Circuit law is clear as long as one interprets it reasonably. It's a safe guess, however, that Google will try to mobilize all sorts of advocacy groups, as it did before, and they will all say that the sky is falling on software developers and no one will dare implement APIs anymore (when, in reality, the Federal Circuit ruling strikes a very good balance, relegating interoperability considerations to the "fair use" analysis or, theoretically, FRAND/compulsory licensing questions instead of throwing out the baby with the bath water by saying that anything that can have functional relevance in an interoperability context isn't protected in the first place or, which is preposterous, could lose its copyright protection later on). With or without good arguments, there will be some noise about this "cert" petition in the weeks and months ahead; hopefully not just noise but also some signal.

If the Supreme Court declines to restate the obvious, or if it elects to hear the case and affirms the well-reasoned Federal Circuit opinion, the case will go right back to the district court for a new trial on "fair use", a Google defense on which the 2012 jury was hung (which various commentators misinterpreted as a win for Google when in reality it just meant that the question remained to be resolved).

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Apple fighting Samsung in two U.S. courts in parallel in quest of prospective patent remedies

The low percentage of smartphone patent infringement assertions that ultimately prove meritorious is an industry-wide problem as my recent analysis of 222 assertions brought by Apple, Microsoft, Motorola, Nokia and Samsung in the U.S., Germany and the UK showed. Apple has an additional problem more so than anyone else: even in cases in which it has, so far, established liability, it has repeatedly been denied injunctive relief. This also happened to Samsung when the Obama Administration vetoed an ITC import ban, but only in that one U.S. case (and over standard-essential patents in a couple of other countries).

Samsung's lead counsel in the recent trial, John Quinn, added insult to injury from Apple's perspective when he said that this patent enforcement effort against Android had become "Apple's Vietnam" and highlighted Apple's failure to win a sales ban. Later, Apple finally gave up its pursuit of a sales ban in the first California case and dropped a cross-appeal. A few months after the trial in the second case, history repeated itself and, in late August, Judge Koh decided that this year's trial win didn't entitle Apple to injunctive relief for failure to establish irreparable harm caused by any infringements identified.

Almost three years and a half after it first sued Samsung, and a couple of months after agreeing on a withdrawal of all pending Samsung actions outside the U.S., Apple is still acting, with respect to U.S. patent remedies, like there's no tomorrow. It's pursuing a postjudgment royalties motion in district court, theoretically seeking $6.46 per device infringing three patents, while also pursuing an appeal to the Federal Circuit of the late-August injunction denial.

I regret to say so, but the way Apple is now pushing for mutually exclusive remedies -- you get a sales ban or you get ongoing royalties, but you'll never get both at the same time -- in two U.S. courts (the Federal Circuit Judge Koh's district court) in parallel comes across as desperate. I can't help but suspect that Apple feels utterly insecure about the non-final liability win from the spring trial. The logical thing to do now would be to get a final judgment in California, have the appeals court in Washington D.C. look at it, and seek a reversal of the injunction denial on that basis; alternatively, ongoing royalties could still be sought thereafter. At least there would be clarity about liability. The patents underlying Apple's trial win have some serious validity issues, and one can also disagree on some of the infringement theories. Apple is now trying to get as much leverage out of a less than solid trial win at the very earliest opportunity, which looks desperate.

It's always been a problem (not only for Apple but also for some other litigants, such as Microsoft and Oracle) that the courts don't move as fast as the mobile devices market does. Various tactics have been tried to accelerate the process. Preliminary injunction requests have turned out to be long shots (whatever Apple won got overturned) in the U.S. and in Germany. The ITC has a forceful remedy and is usually faster than district courts but is more difficult to persuade on the liability side than layperson juries (and remands have slowed down some of the cases considerably). But it's not just that the legal process is slow. The root cause of Apple's patent remedies problem is that it patents, to the extent they turn out valid and infringed at all, cover too small parts of the overall feature set of today's smartphones and tablet computers to give it huge leverage.

For as much as I understand Apple's frustration, I just doubt that judges will consider it a wise allocation of court and party resources to seek rulings on two mutually exclusive remedy requests in parallel when neither kind of decision should be made at this stage of the proceedings, i.e., where there is reasonable doubt that the district court's liability findings in Apple's favor will all stand.

In recent days there have been some more filings related to Apple's parallel pursuit of mutually exclusive remedies. Last week, Apple filed the opening brief in its Federal Circuit appeal of the injunction denial, and it did so five weeks (!) ahead of the filing deadline (this post continues below the document):

14-10-03 Apple's opening brief in injunction-related appeal.pdf by Florian Mueller

Maybe Mr. Quinn's "Vietnam" comment created an even greater sense of urgency on Apple's (and its lawyers') part to win a U.S. sales ban. There's a long list of lawyers on that brief and I'm sure they were able to do great work even under massive time constraints. Theoretically, the entitlement to injunctive relief can be clarified before the liability-related appeal, but this approach almost puts the cart before the horse.

Apple is now obviously trying hard to argue that everything's different from the cases in which it was previously denied injunctive relief. It basically says its patent claims are stronger than in the past, its evidence of a causal nexus between alleged infringements and alleged irreparable harm was better, and it places more emphasis than ever on the availability of workarounds -- an aspect that I felt Apple didn't stress enough in at least one previous injunction appeal. But the truth is that Apple picked relatively narrow claims for this year's trial (so narrow that its current products don't even implement all of the asserted claims), and that structurally Apple's "causal nexus" evidence faces the same issues as before.

With most major tech companies having to defend themselves against patent assertions many times (including Apple itself), it's admittedly not easy for Apple to garner support from similar companies for a pro-injunction initiative. Companies that increasingly rely on patent monetization (rather than building real products) are Apple's best shot. Nokia is such an example. Another one of those types of companies is Ericsson, which was just granted an extension to file an amicus curiae brief. Officially, Ericsson will support "neither party," but make no mistake, it will support Apple's strategic interests here, either entirely or almost entirely.

Meanwhile, Samsung asks Judge Koh for permission to file a sur-reply to Apple's reply in support of its postjudgment royalties motion. Samsung says Apple raised new issues in its reply that it needs to respond to (this post continues below the document):

14-10-06 Samsung's proposed sur-reply re. ongoing royalties.pdf by Florian Mueller

It will be very interesting to see how Judge Koh deals with Apple's postjudgment royalties motion. One of Samsung's arguments is that Apple isn't entitled to postjudgment royalties anymore because Judge Koh limited the number of post-trial motions and Apple would have had to requests this remedy before (rather than just seek damages, which relate to past infringement). An outright denial would be really bad for Apple. Of all the possibilities the one that seems relatively most likely is that the postjudgment royalties matter will be stayed pending an appeal of a final ruling on the merits.

A possible explanation for Apple's try-everything-at-once approach could be that Apple and Samsung may be in final settlement negotiations to put the U.S. part of the dispute to rest as well, and Apple may just want to build as much pressure as it can at this stage, given that its position isn't too strong anyway. But this isn't necessarily what this is about. It could also be that no settlement will happen until all appeals have been exhausted. In that case, things would take so long that the five weeks Apple saved by filing its opening brief way ahead of schedule wouldn't make much of a difference in the greater scheme of things.

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Samsung paid Microsoft over $1 billion in Android patent royalties in 12-month period: court filing

When Microsoft filed its contract lawsuit against Samsung over Android patent royalties more than two months ago, I predicted that it "[wouldn't] be able to get everything sealed." And yesterday two key pieces of information about the Microsoft-Samsung patent license agreement came to light as Microsoft filed its amended complaint in public (you can find the document at the end of this post):

• The 2011 deal covers seven fiscal years (July 1 - June 30). The last fiscal year it covers will end on June 30, 2018.

• "For Fiscal Year 2 of the License Agreement [July 1, 2012 - June 30, 2013], Samsung reported to Microsoft [...] that Samsung owed over $1 billion in royalties under the Agreement. Microsoft agreed[.]"

  Paragraph 45 of the complaint states the precise number: $1,041,642,161.25 (and interest of $6,991,844.64 that Microsoft claims to be entitled to but Samsung hasn't paid)

So far, Samsung has not yet responded to Microsoft's position on what bearing Microsoft's acquisition of Nokia's mobile devices business has on this contract. Microsoft recalls, as no one would deny, that "[b]oth Microsoft and Samsung, which are highly sophisticated businesses, were represented by skilled counsel throughout the process of negotiating, draft, and executing the License Agreement." And these parties, according to the complaint, agreed to the following clause:

3.2 New Subsidiary License. If a Subsidiary or business unit/division is acquired by a Party after the Effective Date, the Subsidiary or business unit/division shall be deemed a Grantee under Section 3.1 and the License granted under Section 3.1 shall extend to such Subsidiary of business unit/division, but effective only as of the of the acquisition.

Microsoft concedes, however, that "[t]he License Agreement als contains an anti-assignment provision in Section 7.7 [...]," but says "the Nokia Acquisition is precisely the kind of transaction that is explicitly permitted." The dispute also appears to (at least potentially) involve a parallel Collaboration Agreement relating to Samsung's Windows-based devices.

I have a very conservative pacta sunt servanda approach, so I would never downplay the importance of what's at stake in that regard. However, rather than get bogged down in all sorts of contract law details, let's focus on the overarching strategic issues.

There's a non-party to this deal that is still at the center of the dispute: Google. About ten years ago, then-Microsoft CEO Steve Ballmer allegedly (according to a court filing) said this:

"F...ing Eric Schmidt is a f...ing p...y. I'm going to f...ing bury that guy, I have done it before, and I will do it again. I'm going to f...ing kill Google."

As of today, they're both doing well, and if anyone was now going to "bury" the other, Google would be far more likely to do it to Microsoft than the other way round ("far more likely" is an understatement). From a consumer point of view I regret that Google is still superdominant in the search engine business, but I have only myself to blame because every time I install a Windows computer, the first thing I do after the installation process is to set Google as my standard search engine for all browsers, even though I've never been disappointed with the results that Bing delivered on the few occasions on which I used it. (At least I know Google invests more money in very ambitious research projects that can make the world a better place than its rivals, probably more than all of its rivals combined.) Anyway, Google's core business is safe. Meanwhile, Google is actually becoming the new Microsoft in terms of the dominant operating system maker of the future -- just look at this chart:

(You can find more such statistics at Statista)

Google is making fast market share gains at Microsoft's expense, in a field of technology in which Microsoft filed tens of thousands of patents over the last 20 years (becauses it invested tens of billions of dollars in operating system R&D). I would have thought that Microsoft owned a patent thicket that would constitute a lethal entrance barrier even if a new entrant managed to get traction among app developers. I was wrong. I've admitted it before, especially in my October 1 blog post, in which I showed that only about 9% of 222 smartphone patent assertions (by Apple, Microsoft, Motorola, Nokia and Samsung combined, in the U.S., Germany, and the UK) had merit based on final or interim results:

Microsoft has, to put it diplomatically, not outperformed the others so far:

To be fair, Microsoft would also have a 9% "hit rate" in the above chart if a patent with respect to which the Federal Circuit reversed the final ITC ruling had not expired and if, despite some remaining issues on remand, Microsoft had prevailed. But if we look at it in terms of Microsoft patents that are presently (after four years of litigation) enforceable against Android devices, there's only one, and it covers the scheduling of meetings from a mobile device. I always try hard to apply the same standard to all companies (regardless of past or ongoing business relationships), and just like I wrote in the spring that the only feature of which Apple proved ownership in its first 49 months of Android litigation was rubberbanding, it's also a fact that Microsoft's Android patent enforcement is now in its 49th month and the aforementioned scheduling feature is the only one of which Microsoft has proved ownership in court so far. I repeat, so far: it remains to be seen what happens in the years ahead should Microsoft and Motorola not settle before some appeals are resolved and some infringement assertions are finally taken to trial in the Western District of Washington.

The impact of Apple and Microsoft's IP enforcement efforts was and is obviously not limited to the patents they successfully enforce in court. The fact that they do enforce from time to time (though they both haven't filed any new claims against Android devices in years) presumably does have an effect on other companies' decisions. It is very likely that certain features on which Apple and Microsoft hold patents were never incorporated into Android for fear of enforcement. But is Android lacking something today that I as a consumer would miss? No.

In my previous post I also showed the difference between Apple's exclusionary approach on the one hand and Microsoft's licensing focus on the other hand. Microsoft has announced a total of 27 Android/Chrome-related license deals and brought infringement lawsuits against only two device makers, while Apple has started three disputes and extended a license to only one Android device maker (HTC). The following chart shows the difference (click on the image to enlarge):

Unless Microsoft turns its litigation against Motorola around, one can't help but conclude that Microsoft's dealmaking capabilities are stronger than its claims that Android infringes many of its patents. Assuming for the sake of the argument that Microsoft is right and Samsung wants to get out of the existing license agreement, this certainly wouldn't be the case if Microsoft had proven against Motorola (and Barnes & Noble, though not much happened there before a strategic partnership also put the patent dispute to rest) that Android does indeed infringe on valid Microsoft patent claims to a huge extent. (By "huge extent" I obviously mean more than a meeting scheduler feature that I never used, at least not on any mobile device.)

License agreements and FRAND licensing commitments are, besides smart litigation tactics, also the reason for which Motorola hasn't been able to enforce any patent against Microsoft for even one second. It was a contract lawsuit in the Western District of Washington in which a temporary-restraining-order-turned-preliminary-injunction came down and prevented Motorola from enforcing two German H.264 (video codec) injunctions against Microsoft. I guess part of the reason for which Microsoft brought the present contract case against Samsung was so it could seek an "anti-suit injunction" again if Samsung started to enforce any of its patents against the former Nokia devices. Also, it was a contract-based defense (related to ActiveSync) that got Motorola's German synchronization patent case stayed (though Motorola was able to enforce the same patent against the email service of Apple's iCloud for 19 months).

Between Microsoft and Samsung, the amount of money that is at stake (I had no idea before how much it was, though I figured it wasn't chump change) makes a settlement very difficult on the one hand and a very logical outcome on the other hand. If Microsoft prevails on a pacta sunt servanda basis, Samsung will owe it many billions over the years, though this would certainly not contribute to Samsung's enthusiasm as a Windows device maker (think of the operating system market share chart). If, however, the license agreement does not apply anymore, Samsung may decide to simply fend off any Microsoft patent assertions against Android in court and pay Microsoft as much in Android patent royalties going forward as Motorola has paid over the last four years: nothing. (Or it would assert wireless patents against Microsoft's acquired Nokia devices and offset a large part of the royalty revenue stream.) The extreme outcomes are unlikely. A renegotiated license agreement is my best guess.

Finally, here's the amended complaint:

14-10-03 Amended Microsoft v. Samsung complaint.pdf by Florian Mueller

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Analysis of 222 smartphone patent assertions: more than 90% go nowhere, rest lacks impact

Four years ago to the day, Microsoft sued Motorola over Android. A few days later, Motorola sued Apple. Disputes between Oracle and Google, Apple and HTC, as well as Nokia and Apple were already ongoing. In early October 2010 I decided to focus on smartphone patent disputes (as a blogger and as a consultant). I saw some key IP issues that had to be resolved, and I thought it would take about a year and a half for most of these to be sorted out. A year and a half is roughly the time an ITC investigation used to take.

48 months later, Motorola still hasn't taken an Android patent license from Microsoft, though more than two dozen other companies have. After more than 40 months of litigation, Samsung still hasn't paid Apple a cent. Nor has Motorola, which agreed on a ceasefire with Apple, but not on a license deal. And Oracle v. Google ceased to be a patent dispute about two years ago when Oracle decided to rely exclusively on copyright, which worked out so well that Google is now on the losing track and will presumably file a last-resort petition with the Supreme Court next week.

The fact that things are taking so long is, all by itself, a clear indication of the very limited leverage that major litigants have so far been able to get from their patent assertions. These are not the longest-running patent disputes in history. Not even in the smartphone space, where German patent licensing firm IPCom has been suing Nokia and HTC, to no avail so far, since 2007. But "big player v. big player" disputes in this industry are clearly taking longer now than they used to. There was a time when settlements occurred either before trial or at least before a decision. Now there is a trend toward exhausting all appeals. The following chart shows the duration (number of months on the X axis) of eight disputes (with separate bars for the U.S. and ex-U.S. parts of Apple v. Samsung); the two at the bottom are still ongoing with no end in sight (click on the image to enlarge):

When some of these patent infringement assertions were brought, most of which targeted Android, I expected some serious impact. But Android's market share continued to rise and is, according to the very latest data, now at about 85% (click on the image to enlarge):

"World Wide Smartphone Sales Share" by Smartmo - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

The number of patent assertions against Android was awe-inspiring. I visualized some of them with my signature battlemaps. While everyone gets sued by the trolls, Android was a unique lawsuit magnet with respect to assertions by very large players. And for the first couple of years, Android's rivals, despite a number of failed assertions, achieved some good results in court. But most of those temporary wins didn't last, and the ones that lasted didn't prove strategically impactful.

Of course, just like there has been some fundamental change since certain interim decisions came down in 2012, there can again be key developments in disputes that haven't been settled. Still, the time has come to take stock based on what the final or most recent decisions in those cases have been and on what the state of affairs was when various disputes were settled.

Based on where things stand now, more than 90% of 222 smartphone patent infringement assertions by major players against other large organizations have gone nowhere, with 109 assertions (49%) having failed (so far) and 93 assertions (42%) having been dropped outside the context of a comprehensive settlement or having suffered a comparably negative fate:

Out of the 9% of cases (20 of the 222 assertions) in which liability was established (and not reversed so far, or not before a settlement), only 10 -- 4.5% -- resulted in lasting injunctive relief. And that number would most likely be closer to 3% if, for example, the patents underlying Nokia's German injunctions against HTC had come to judgment in the Federal Patent Court. What's more important than alternative scenarios is that none of the injunctions against the Android operating system itself (including its key apps) had enough impact to force someone into a settlement.

The 222 smartphone patent infringement assertions I've analyzed were brought by (in alphabetical order) Apple (against HTC, Motorola, Nokia, and Samsung), Microsoft (against Barnes & Noble and Motorola), Motorola (proactively against Apple and reactively against Microsoft), Nokia (against Apple, HTC, and ViewSonic), and Samsung (reactively against Apple). I focused only on three key jurisdictions: U.S., Germany, UK. Those are large markets in which I was able to research the cases, and in which substantial numbers of assertions had been brought. Otherwise the numbers of assertions would have been too low in certain jurisdictions to form even a remotely representative sample. This, by the way, "sandbagged" Samsung's results in my analysis because it prevailed on two SEPs in South Korea and on one in the Netherlands. However, Samsung had the best validity results of all the major litigants whose smartphone patents got challenged: it salvaged (albeit in a narrowed form) two patents in the Federal Patent Court of Germany -- i.e., as many as Apple, Microsoft and Motorola combined, though only three of its patents were adjudged there. Just wanted to mention this for the sake of accuracy.

I could have included patent assertions by HTC (which countersued Apple in the U.S. and Germany, and Nokia in Germany) and Oracle (which, as I explained further above, is now relying exclusively on copyright in its dispute with Google). None of them went anywhere. But I wanted to focus on companies that brought large numbers of smartphone patent infringement assertions.

Here's a complete list of all 222 assertions I have analyzed (this post continues below the document):

Outcomes of U.S. German UK Infringement Assertions by Florian Mueller

If you scroll down there, just focus on the color-coded columns. The first one is liability (a valid patent was infringed), the second one is injunctive relief. The green (successful assertion) cells are few and far between, on the right side even more so than on the left side.

I wanted to use only three colors for the different outcomes, so I had to assign one color or another to certain "gray area" outcomes. For example, if a German court stayed a case based on the assumption that the asserted patent was highly likely to be invalid (the usual hurdle in that jurisdiction), I treated it as a loss even if the Federal Patent Court ruling had not come down yet, but if the hurdle was lower (in some exceptional cases and with respect to utility models), I treated it as a "dropped" case, just to keep things simple. The following document lays out the rationale behind the colors and provides detailed commentary on each of the disputes (this post continues below the document):

Further Remarks Re. Outcomes of Infringement Assertions by Florian Mueller

Of course, one could have made a different selection and/or applied different criteria, and would then have arrived at slightly different results. And the timing of settlements made some plaintiffs look better (for example, Nokia did benefit from this factor because of the relatively early stage of its German HTC cases) than others (for example, Apple likely would have "won something" on remand against Motorola at the ITC). In Apple's case, the analysis could be even more negative. For example, while it settled with HTC before any infringement ruling came down in its Munich cases, the patents were subsequently invalidated, but I decided to omit those cases from my list.

I will reference this post in various posts over the coming months in which I'll discuss some potential conclusions -- political and commercial ones -- in detail. For now I'll just touch on a few of these and indicate roughly how I view all of this.

• This here is an industry-wide and not a company-specific issue. However, the major litigants had different objectives, and that's why these results have different effects on them. Samsung and (at least after being acquired by Google) Motorola just wanted patent peace, so they are fine. Nokia is now mostly a licensing firm and has proven again and again that it can force others into license deals, but its demands will have to be reasonable or others will take their chances in court. Apple and Microsoft have diametrically opposed approaches. Microsoft has announced a total of 27 Android/Chrome-related license deals and brought infringement lawsuits against only two device makers, while Apple has started three disputes and extended a license to only one Android device maker (HTC). The following chart shows the difference (click on the image to enlarge):

  

• Poor enforcement results suggest that zero-zero cross-license agreements between large players make more sense than huge balancing payments.

• These results support the argument for meaningful patent litigation reform in the U.S. (fee shifting and better defenses against weak patents, for example).

• The fact that too many patents that get asserted don't withstand a validity challenge is by far the biggest issue. An early draft of a study by two Munich-based academics, Professor Joachim Henkel and Ph.D. candidate Hans Zischka, says it all in its headline: "Why most patents are invalid -- Extent, reasons, and potential remedies of patent validity" Highly recommended reading. One of the key findings is this: "For Germany, thus, more than 75% of all active patents are latently invalid, either fully or partially."

  In the smartphone patent space that number is actually much closer to 100% than to 75%. I created the following two charts based on an analysis (uploaded to Scribd) of decisions reached in fora in which there is a preponderance-of-the-evidence standard as opposed to a strong presumption of validity (click on an image to enlarge; this post continues below the charts):

  
  

• My biggest concern in Europe is that, unless its rules of procedure are improved over previous drafts, there will be too many cases in which the Unified Patent Court will allow the Europe-wide enforcement of injunctions over patents that should never have been granted at all or never with a very broad scope. The smartphone patent disputes show that the bifurcation gap -- the problem of an injunction being enforceable before a patent is invalidated by another court -- is an extremely serious issue. I have uploaded to Scribd a list of six smartphone patent cases in which there were extended periods (between 13 and 23 months) between an injunction and a Federal Patent Court ruling that invalidated or narrowed the patent-in-suit. By contrast, there was not even one case in the ones I analyzed in which a German regional court stayed an infringement case and the patent was affirmed in its granted form or in a reasonably broad form.

• Finally, I want to clarify that this analysis is not meant to reflect negatively in any way on the judges or lawyers involved. Of course, some of the defensive victories are very meaningful, and in other blog posts I have mentioned who represented the different parties. For example, the attorneys at law and patent attorneys who enabled Samsung to fend off of all of Apple's German patent assertions and vice versa, or those who represented Motorola against Microsoft, or ViewSonic (under visible budget constraints, but with focus and dedication) and HTC against Nokia, undoubtedly did great work. But counsel for plaintiff were absolutely brilliant in many of these cases, regardless of results. For my own app development company's three PCT patent filings (all of them made in recent months) I've worked with a firm that was mostly active on the offensive side because I don't attribute their results in the Federal Patent Court to the quality of their work.

So much for now. I'll talk about the issues outlined above, and others, in the months and years to come. There are some important issues to deal with. I hope this analysis contributes useful data points and observations to the debate.

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