Samsung must let Japanese court rule on discovery request against Apple before U.S. court will assist

Magistrate Judge Paul S. Grewal, who assists Judge Lucy Koh in a couple of Apple v. Samsung lawsuits pending in the Northern District of California, issued a ruling on Wednesday evening denying, for the time being, a request by Samsung to conduct certain discovery of Apple in California in order to use the produced material and obtained information against certain patent infringement claims brought by Apple in Japan. Samsung can bring this request again in the United States, but the California-based court doesn't want to interfere with the Japanese court. If the Japanese court issues a ruling indicating that it would consider this discovery effort useful, it appears that Samsung will be in pretty good shape to finally prevail on its motion. But as long as the Japanese court does not provide any indication that it's interested, Samsung's motion is doomed to fail.

Basically, Samsung hopes that it can prove an Apple patent invalid by showing that the patented invention was obvious over functionality implemented in an early version of the iPhone Apple released in 2007. At the time, U.S. patent law had a grace period (which was abolished by the 2011 America Invents Act), allowing the filing of patent applications up to a year after initial publication, but the rest of the world (at least the jurisdictions I know) followed the first-to-file (not first-to-invent) rule. That's why Samsung would not be able to make this same argument in a U.S. court. But it wants to benefit from the further-reaching discovery that can be conducted under U.S. rules in order to dig up evidence that may prove helpful in Japan. On particular, Samsung desires to obtain the following material:

1. All documents that evidence, reflect or refer to the sale, transfer, lease, or offer for sale of any iPhone to any person or entity prior to June 29, 2007;

2. Physical exemplars of any iPhone that was made available for sale, transfer, lease, or offer for sale to any person or entity prior to June 29, 2007;

3. A physical exemplar of the iPhone that was used in the presentation by Steve Jobs at MacWorld 2007 on January 9, 2007; and

4. A physical exemplar of the iPhone that was used in the video "iPhone guided tour" posted to Apple's website on June 22, 2007.

Apart from the word "all" in the first item, this request appeared reasonably specific to the court. But the court exercised its discretion to deny this request (without prejudice, since the situation can change), with the outcome-determinative factor having been Samsung's failure to prove that the Japanese court is going to be receptive to the discovery requested. Apple did not prove that the Japanese court won't be receptive -- but it's Samsung who wants something here, and Judge Grewal thought it more appropriate to let the Japanese court rule on the corresponding discovery request. Judge Grewal's order "notes that Samsung’s failure to seek discovery earlier in the foreign tribunal suggests that Samsung may be trying to circumvent or shortcut the requirements of the Japanese court". The U.S. court doesn't want to "undermin[e] the Tokyo court's management of this case".

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No U.S. import ban against Samsung for now: Apple's four-patent win to be reviewed

The top-level decision-making body of the United States International Trade Commission (USITC, or ITC) just gave notice of its decision to review all parts of a preliminary ruling by an Administrative Law Judge (ALJ) that held Samsung to infringe four Apple patents and found no violation of two other patents. Apple and Samsung had each filed petitions for a review of the parts of Judge Pender's initial determination that are unfavorable to the respective party. An investigative attorney from the Office of Unfair Import Investigations ("ITC staff") had supported Judge Pender's findings with only one minor exception that he thought could be addressed without conducting a review.

In late December, Judge Pender's recommended remedies became known. He proposed a U.S. import ban, a cease-and-desist order concerning products already imported into the U.S., and a bond of 88% of the value of all mobile phones, 32.5% of the value of all media players, and 37.6% of the value of all tablet computers found to infringe Apple's patents-in-suit during the Presidential review period.

Unlike in most cases in which a review of an ALJ's initial determination is ordered, the Commission is not yet asking the parties for briefing on the issues under review. Before any review questions will be raised, the investigation has now been remanded to the ALJ with specific instructions concerning two of the four Apple patents deemed infringed. After the ALJ makes an initial determination on remand, the Commission will then enter the review stage. This may cause considerable delay, which is not in Apple's interest, but apart from timing considerations, the remand instructions (which were filed separately from the notice I linked to further above) are an opportunity only for Apple (and, consequently, a risk for Samsung). Apple could broaden its preliminary win with respect to two patents:

• U.S. Patent No. RE41,922 on a "method and apparatus for providing translucent images on a computer display":

  While Samsung was found to have infringed multiple claims of this patent (29, 30, 33-35) in certain ways, the text selection feature of the accused Samsung products was not found to infringe claims 34 and 35. The preliminary ruling based this finding on non-infringement of claim 33 by that feature, but there was an infringement finding concerning that claim. The ALJ now has the opportunity to address this inconsistency.

  A reexamination of this patent by the United States Patent and Trademark Office (USPTO) was requested in December.

• U.S. Patent No. 7,912,501 on an "audio I/O headset plug and plug detection circuitry":

  Various Samsung products were found to infringe certain claims of this patent. The ITC staff attorney argued that the SPH-M920, distributed through Sprint and also known as the Samsung Transform, should additionally be found to have infringed claim 3 of this patent. While the staff did not see a need for a review and recommended that the Commission enter such a finding directly, the Commission has opted to give Judge Pender the chance to modify his related finding himself.

Within 30 days Judge Pender will now have to set a target date for his remand ruling. Given the narrow scope of the issues, such a ruling is likely going to come down within a very few months, and presumably without the need for an evidentiary hearing. If the Commission agrees with the modifications, those parts of the decision will become the final decision 60 days after issuance, but there could also be a review, in which case the final decision on these issues comes down four months after the initial ruling. Other parts of the initial determination are certainly going to be reviewed, but it's unclear which ones the Commission is most likely to modify. The whole review process, concerning the parts that have been remanded as well as those that have not been, will begin at a later stage. For now, the ball is back in Judge Pender's court. Since the Commission decided to review the decision in its entirety (even though only some smaller parts of the decision have been remanded), the final outcome could still be anything, but a finding of no violation at all is unlikely.

Today's Commission notice and remand instructions do not address the disputed question of whether Judge Pender had jurisdiction over designaround products presented by Samsung. Based on the initial ruling, Samsung would be able to sell products in the United States that steer clear of infringement of any of the patents Samsung was deemed to have infringed, but the impact of such designarounds on the usability of Samsung's products is unknown. Samsung has sold some products with designaround functionality, but I don't know whether the implementation of such designarounds in its flagship products, such as the Galaxy S III, would adversely affect the market potential of those devices. It will take time to find out.

In a parallel case the Commission is reviewing an initial determination that cleared Apple of the alleged infringement of various Samsung patents.

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Apple files response to Samsung's opposition to injunction appeal rehearing

Ten days ago I reported and commented on Samsung's opposition to Apple's request for a rehearing en banc (full-bench review) of a Federal Circuit decision reversing a preliminary injunction against the Galaxy Nexus smartphone. The important N/nexus here is not the Nexus phone, which has limited market relevance at this stage, but the causal nexus requirement for injunctive relief. For alleged lack of a feature-specific causal nexus (a controversial requirement to show that certain patented features drive demand for multifunctional products), Apple was also denied a permanent injunction against a host of Samsung products despite a multiplicity of jury findings of willful infringement. Apple's latest procedural proposal to the Court of Appeals for the Federal Circuit is to hold a rare initial full-bench hearing on the multi-product permament injunction case and to combine this with a full-bench rehearing on the Galaxy Nexus preliminary injunction case.

In Apple's filings as well as legal literature (such as the Patently-O blog, my preferred online reference for developments in U.S. patent law), the Apple v. Samsung injunction appeals that have been adjudicated by Federal Circuit panels are referred to as Apple I (Galaxy Tab 10.1 case) and Apple II (Galaxy Nexus case). The multi-product permanent injunction appeal is likely going to go down in history as Apple III.

Today counsel for Apple filed a motion for leave to file a reply brief in support of a rehearing en banc on the Nexus case (Apple II), responding to the Samsung filing I mentioned at the start of this post. If the Federal Circuit grants the motion for leave, Apple's six-page brief, which was filed along with the motion, will become part of the record. Such motions for leave to file replies (or sur-replies) are often adjudged simultaneously with the original motion. I'll comment on Apple's brief now even though it's possible that it won't be admitted into the record.

Apple's reply brief addresses some of the fundamental questions and repeats, in different words, some of the key arguments. A particularly strong claim is that the panel decision on the Nexus appeal "endorses, without congressional authorization, a compulsory licensing regime for the smartphone, computer, and tablet industries". In my opinion, those who want a compulsory licensing regime, such as Samsung (and Google), should be forthright about their intentions and objectives because they can't credibly deny that a compulsory licensing regime would indeed be the practical consequence of the "causal nexus" requirement, at least in the form in which that one is currently stated and applied.

At the legal level, Apple's latest submission is primarily about whether or not there are now conflicting Federal Circuit decisions on injunctive relief, with Apple I and Apple II being the only cases in which there is a causal nexus requirement. Furthermore, a key question on which Apple and Samsung disagree is whether the causal nexus requirement can be reconciled with the Supreme Court's eBay v. MercExchange decision, which laid out four factors for injunctive relief.

Apple's strongest argument for conflicting Federal Circuit decisions is the Federal Circuit's December 19, 2012 panel opinion on Presidio Components, Inc. v. Am. Technical Cermaics Corp.. This decision is mentioned in Apple's request for an initial full-bench hearing on Apple III (and I mentioned that fact in my post on that petition), but it was handed down approximately three weeks after Apple's petition for a rehearing en banc in Apple II. Today's filing criticizes the fact that Samsung's opposition brief, filed this month, mentioned all sorts of other cases but made no reference whatsoever to Presidio. I agree with Apple that the only plausible explanation is that Samsung didn't want to mention a decision that runs counter to the Apple II panel decision. Presidio is a ruling that reinforces a patentee's entitlement to injunctive relief and does not mention or even obliquely reference the causal nexus requirement.

The most fundamental disagreement between Apple and Samsung relates to whether the causal nexus requirement or, alternatively, Apple's proposal to drop or modify the causal nexus requirement can be reconciled with eBay. Apple says in today's submission that Apple I and Apple II "cannot be reconciled with eBay Inc. v. MercExchange, L.L.C.. Apple notes that eBay "forbids an injunction standard that all but eliminates injunctions in 'a broad swath of cases'", and I would agree that smartphone and tablet computer patent infringement cases are a huge category -- and the same requirement would affect countless other multifunctional product categories, so yes, I think we are talking about a "broad swath of cases" in which injunctive relief would become unavailable. Samsung is trying to leverage the other aspect of eBay, which is that an injunction should not be granted pretty much automatically as a result of infringement. That's why Samsung's opposition brief describes Apple's position as saying "that patent exclusivity, like trespass to real property, warrants injunctive relief for infringement as a matter of course". And Samsung's opposition brief noted that after eBay there can be no presumption of irreparable harm.

I would agree with Samsung to the extent that whatever happens now in Apple II and Apple III could theoretically make the pendulum swing in the other direction and result in too low a standard for injunctive relief, but I don't think that Apple is, at least at this stage, proposing such an extreme outcome. Samsung's argument must be considered, but at this point Apple has the stronger point when it essentially tells the appeals court that Apple II (and Judge Koh's denial of a permanent injunction) set a hurdle that is far higher than a reasonable reading of eBay would suggest. I think it will be hard for Samsung to prevent Apple from achieving at least some adjustment this year, but it's important that Samsung continue to ensure that such adjustment won't be overreaching. For example, Samsung is reasonably concerned about another recent decision (after Apple II) by the Federal Circuit could be interpreted in overly injunction-friendly ways: Edwards Lifesciences AG v. CoreValve, Inc. Apple quotes from Edwards Lifesciences that "[a]bsent adverse equitable considerations, the winner of a judgment of validity and infringement may normally expect to regain the exclusivity that was lost", and "may normally expect" appears very favorable to patent holders. From a public interest point of view both companies are doing the industry at large a service here, helping the Federal Circuit to consider all of the relevant considerations.

Now I'll quote a passage from Apple's latest brief that shows what it is really concerned about from a business point of view -- that Samsung may deem infringement a highly profitable commercial strategy if Apple can only seek damages and not realistically win U.S. injunctions:

"This means that copycat competitors like Samsung can allow innovators like Apple to spend huge amounts of time and money developing new features, incorporate them into their own devices, and then defeat any injunction by arguing that the lower price of the device enabled by the patent infringement itself led consumers to purchase the device for 'price' or 'better value' rather than the patented functionality. Competitors such as Samsung are willing to pay patent damages because the downstream sales they will make from stolen customers make this strategy profitable. See Presidio, 2012 WL 6602786, at *8 (noting potential for 'a calculating infringer' to gain windfalls by obtaining licenses at discount prices)."

The U.S. really has a patent enforcement problem. I don't like everything that I see happen here in Germany, where there are no equitable considerations and injunctions are a standard remedy, but the high standard for injunctive relief combined with the time-consuming and costly process in U.S. patent litigation makes it very hard for legitimate right holders to enforce their patents.

Finally, my favorite part of Apple's brief is that it stresses the option of a workaround:

"Samsung has no answer to the point that a more narrowly tailored injunction-- such as requiring Samsung to remove the infringing features from the Galaxy Nexus smartphone, the use of a sunset period, or even the district court's evaluation of the balance of the hardships--would safeguard against any risk of windfall without need for the novel and dangerous 'causal nexus' requirement. To be sure, Apple initially secured a complete ban on Galaxy Nexus sales (Opp. 12 n.8), but Samsung does not deny that it could have attempted to remove the infringing features and then applied for a modification of the injunction. Where, as here, the traditional equitable factors all point in favor of an injunction, the onus for justifying alternative relief should be on the wrongdoer, not the victim."

I've been criticizing for some time the entire-product-gets-banned perspective that Apple and some of its rivals have taken in various contexts. Many media reports also suggest that products will be removed from shelves when all that needs to be done is to remove or re-implement a particular feature. It makes no sense to have a feature-specific causal nexus requirement but to evaluate the hardship on the defendant from a full-product angle. I believe that the debate over injunctive relief will be much more fruitful on a feature-by-feature than a product-by-product basis. I also think Apple's proposal that the infringer should have the burden of proof for monetary compensation being a preferable alternative to an injunction is worth considering in scenarios in which a workaround is a viable option, if the right balance is struck.

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Ericsson-Samsung situation puts fundamental flaw of FTC-Google deal on display

Last week I wrote about the "defensive use" provision in the proposed FTC-Google patent antitrust deal having been identified as the primary area of concern. In the meantime I have seen some filings by Ericsson and Samsung with the United States International Trade Commission (USITC, or just ITC) that underline the urgent need for the FTC to recognize the most pressing problem with its envisioned Google (Motorola Mobility) standard-essential patent agreement.

It's the normal course of business that concerns are raised by different stakeholders and observers during the 30-day public comment period following a proposal for an antitrust settlement. The exceptional situation here is that the proposed deal structure has already demonstrably failed during that period. If it worked, Samsung and Ericsson would now be leveraging it against each other's SEP-based requests for sales and import bans, but they can't, mostly because of the "defensive use" provision.

The tit-for-tat between Ericsson and Samsung, partly over SEPs and partly over non-SEPs on both sides, reinforces my belief that the pursuit and enforcement of injunctive relief (such as in the form of ITC-ordered import bans) must not be legitimated by a quid pro quo reasoning. The FTC itself stressed in the overall Google settlement context that its task is to protect consumers, not competitors, but it reduces that mission statement to absurdity by allowing SEP abuse if it provides a party with more retaliatory power and potentially results in mutually assured destruction. The way to avoid consumer harm is to prevent bans, not to allow them for the purpose of (seemingly) equal fighting chances for competitors. Disallowing bans altogether already does the job of ensuring equal fighting chances, but it does not prioritize this objective over the interests of consumers.

Ericsson and Samsung each claim to have complied with FRAND, and that the other has not. Both are seeking U.S. import bans: Ericsson against (among other things) the market-leading smartphones (and leading alternatives to Apple's iPad in the tablet computer market), and Samsung, in retaliation, against some of the cellular base stations that carriers operating and expanding 4G networks desperately need. Under the FTC-Google deal logic, they could now both go ahead and win and enforce such bans because either one can claim that this is "defensive use" and only done for the purpose of equal fire power. If they both succeeded, U.S. consumers would no longer be able to buy smartphones from the market leader and tablet computers from the number one challenger to the incumbent (which might lead Apple to raise its prices), and those waiting for 4G coverage in their area would have to wait even longer, or might see coverage removed from their location to another as a result of shortage of supply, and 4G subscription fees might increase if Ericsson's competitors raise their prices and carriers pass those increases on to consumers.

It gets even worse: the accused products include components from other companies that hold SEPs. For example, many of Samsung's accused devices run Google's Android, which would potentially enable Google, under the envisioned FTC deal, to assert Motorola Mobility's SEPs against Ericsson, arguing that Ericsson's assertions of declared or alleged SEPs somehow affect/target Google's software or services distributed by Samsung (the proposed deal does not require Ericsson to sue Google directly because SEP enforcement against third-party products including Google's software or services would be sufficient to trigger the "defensive use" provision). Likewise, some of Ericsson's suppliers might then feel free to seek sales bans against Samsung's over their SEPs. How "defensive" is that?

I strongly encourage anyone interested in the FTC-Google deal to download some of Ericsson and Samsung's filings. I'll quote certain passages now, in chronological order. I'm just quoting and don't have an opinion at this stage on who's right here, though Samsung's track record, because of the dispute with Apple that triggered still-ongoing antitrust investigations on three continents and resulted in a preliminary ruling by the European Commission, is definitely worse than Ericsson's in this regard, for the time being. All that matters it that both allege SEP abuse and seek injunctions, which could have the effects described above. Another concern (than "defensive use") relating to the FTC-Google deal is also worth keeping in mind: each party claims to be a willing licensee (and licensor) while it says the other is not. Let's start with a November 27, 2012 complaint filed by Ericsson in the Eastern District of Texas (case no. 6:12-cv-00894), raising FRAND contract issues (you can skip right to the last paragraph quoted, paragraph 10, to get the summary):

"7. Ericsson has extended multiple offers to Samsung to renew the license on FRAND terms during the past two years of negotiations between the parties. These negotiations have been unsuccessful for the simple reason that Samsung refuses to pay the FRAND rate paid by its competitors for Ericsson's standard-essential patents. Instead, Samsung demands Ericsson renew its license at a rate that is a small fraction of the rate other similarly situated companies pay Ericsson. Samsung's refusal to pay a FRAND rate gives it an unfair competitive advantage over its competitors who have licensed Ericsson's patents.

8. Samsung has a history of manipulating its position on the amount of a FRAND rate depending on whether it finds itself as the licensor or licensee in a particular negotiation. The most recent example occurred when Samsung asserted its own patents, which it alleged were standard-essential against Apple. At the trial of that matter in the United States District Court for the Northern District of California, Samsung asserted all companies implementing a standard in its products must seek out and accept a license on FRAND terms. Yet, when the tables are turned and Samsung finds itself in the position of being the prospective licensee, it now refuses to license Ericsson's standard-essential portfolio at FRAND rates.

9. [...] Despite Ericsson's best efforts to negotiate a license, including many alternative FRAND royalty structures and frameworks that Ericsson offered to Samsung, Samsung refuses to renew its license or to cease infringing.

10. Even more egregiously, Samsung has refused to provide Ericsson a license to its allegedly standard-essential patents on FRAND terms. Upon information and belief, Samsung refuses to license Ericsson under any declared standard-essential patents that it owns in an effort to compel Ericsson to license its patent portfolio at a small fraction of the rates that its competitors pay. This position violates Samsung's FRAND commitment."

So Ericsson's saying that Samsung doesn't want to pay what Ericsson believes it's entitled to because the market at large allegedly accepted its rates, and in order to avoid paying what it should in Ericsson's opinion, Samsung makes its own SEPs unreasonably expensive, hoping that ultimately the differential it will have to pay in recognition of Ericsson's stronger cellular portfolio will be minimal.

Ericsson is also saying that infringement by such an unwilling licensee must come to an end, in an attempt to justify its prayer for injunctive relief in federal court and its request for an ITC-ordered U.S. import ban.

On December 14, 2012, Samsung filed a pre-institution public interest statement aiming ideally to dissuade the ITC from even investigating Ericsson's complaint (that part did not work out) or at least to persuade it to keep the door wide open to the denial of an import ban on public interest grounds (that part is still possible). Since Samsung is presently trying to win a U.S. import ban (as well as injunctions in federal court) against Apple over SEPs, it obviously didn't put FRAND concerns front and center, but it's remarkable enough that it mentioned them at all:

"Finally, consumers and competitive conditions in the U.S. economy would be adversely affected by an exclusion order in this instance because the record will demonstrate that Ericsson has failed to discharge its FRAND obligations for the purportedly standards essential patents asserted in its complaint."

A week later, Samsung brought its own ITC complaint, partly based on 4G SEPs, against Ericsson. Ericsson, like Samsung, would also prefer for the complaint not to be investigated (I'm pretty sure that an investigation will start in a matter of days now) or at least for the related public interest concerns to bear maximum weight. But since Ericsson just started to enforce SEPs, it obviously can't take a pro-FRAND position of the kind that Apple and Microsoft, who made unequivocal commitments not to do this, have recently taken. Still, even Ericsson argues in a public interest statement filed on January 10, 2013 that U.S. consumers are hurt by FRAND SEP abuse:

"D. The requested remedial relief would have a significant impact on United States customers.

Samsung is a member of ETSI, and has agreed to abide by ETSI rules and bylaws, including offering patent licenses to its standards-essential patents on fair, reasonable, and nondiscriminatory (FRAND) terms. However, despite repeated requests from Ericsson and after years of negotiations, Samsung is seeking remedial relief without offering Ericsson a license on fair, reasonable, and non-discriminatory terms in breach of its obligations. In this situation, issuance of the proposed remedial order will magnify the effect of Samsung's breach of its contractual commitments by limiting U.S. network operators' choice for base station equipment and restricting the performance and growth of cellular networks for cellular subscribers in the United States."

Four days later, Samsung replied:

"II. Samsung has fully complied with its obligations to license its patents under FRAND terms and thus relief under Section 337 is available.

Ericsson's allegations regarding Samsung's failure to comply with its FRAND obligations are without basis. Ericsson, not Samsung, broke off license negotiations in favor of filing multiple patent infringement actions seeking injunctive relief for patents alleged to be essential for standards. Ericsson here seeks to use litigation to coerce unfair license terms on Samsung, far in excess of the terms of the prior two licenses between the parties and inconsistent with Ericsson's own FRAND obligations.

Samsung has at all times been in full compliance with its obligations to the relevant standards bodies, including good faith license negotiations with Ericsson. By contrast, Ericsson has not complied with its FRAND obligations, choosing litigation over negotiation. Under these circumstances, even if one or more of Samsung's patents is found essential to any industry standard implemented in the accused products, Samsung's request for an exclusion order would nevertheless be entirely appropriate and consistent with Commission precedent."

What looks like childish bickering ("he did that!" -- "no, I didn't, HE did!") is a dead serious fight between professionals over billions of dollars (maybe on an annual basis, but at least in the aggregate of several years). My curiosity as to who is right may be satisfied if litigation brings the facts to light before the parties settle, which I'm sure they will at some point, most likely before a final ruling. But if I were a U.S. consumer, I would want them to resolve their dispute through FRAND rate-setting actions in federal court, and I would not want them to seek SEP-based bans of each other's products (and to provide a third party, such as Google in this case, with an excuse to pursue SEP-based bans).

The ITC doesn't have to apply the FTC-Google deal to its analysis of the Ericsson-Samsung situation, but as a matter of law it must take the FTC's input into account. Ericsson and Samsung don't have to honor the terms of a Google agreement in a formal sense, but what if there's further escalation between these two parties and, potentially, third parties who sell them components? In that case, the FTC may want to take action, but unless it drops the "defensive use" provision from the Google deal, it will be unable to go after Ericsson and/or Samsung without overtly applying double standards, allowing Google as a U.S. company with domestic political clout to engage in conduct that foreign (here, Swedish and Korean) companies would be barred from.

Not only the FTC but even Google itself should understand that the "defensive use" clause is a recipe for disaster.

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Google not allowed to take belated deposition of MPEG LA official in Microsoft FRAND case

The grant-back provision in a license agreement between Google and patent pool administrator MPEG LA could effectively determine the license fees Microsoft will have to pay for certain Motorola patent families that have been declared essential to the H.264 video codec standard. On New Year's Eve, Judge James L. Robart, the federal judge presiding over a Microsoft v. Motorola FRAND contract lawsuit in the Western District of Washington, scheduled a hearing on this question for January 28 and ordered the parties to submit briefing on January 23. Besides the MPEG LA license agreement the hearing will also address a summary judgment motion that could result in the invalidation of three H.264-related Google patents (which are being asserted through offensive counterclaims).

An administrative hearing related to this matter took place yesterday (Friday, January 18, 2013) after Microsoft and Google disagreed on an evidentiary issue. Microsoft told the court that it (in the court's words) "intends to submit a declaration from an individual at MPEG LA regarding MPEG LA's understanding of the MPEG LA-Google license agreement". Google then wanted to take a deposition of the MPEG LA official, but for practical reasons such deposition wouldn't take place before the briefing deadline on Wednesday.

After the Friday hearing Judge Robart told Google in an order that its request to take a deposition of an MPEG LA official is too late. The United States District Court for the Western District of Washington will neither postpone its FRAND rate-setting decision (following a first trial held in November 2012 and paving the way for a second one on a breach-of-contract question) nor deprive Microsoft of the opportunity to address statements made at any relevant depositions in its January 23 briefing (and, as a result, deprive itself of the benefit of reading both sides' related briefing). Judge Robart notes that "the MPEG LA declarant is in no way a surprise witness" (Google could have figured that "MPEG LA would have an opinion as to the interpretation of its own agreement with Google"), and Motorola already contacted MPEG LA after the December 31 order that scheduled the January 28 hearing: "Motorola thus could have noticed and taken the deposition of MPEG LA regarding MPEG LA's understanding of the Goo[gl]e-MPEG LA license agreement at any time since the court's minute order, but chose not to do so".

Given that Google's litigation department is extraordinarily sophisticated and that Google contacted MPEG LA shortly after the New Year's Eve order, I can't help but suspect that the belated request for a deposition is an act of gamesmanship rather than a result of an oversight. Google was probably hoping that it could either delay the resolution of this case or impair Microsoft's ability to brief the court before the January 28 hearing.

The implications of the Google-MPEG LA license agreement are still very relevant, but at this stage this is only about rate-setting and no longer about sales or import bans. In late November Judge Robart granted a Microsoft motion for summary judgment against Google's prayers for injunctive relief over standard-essential patents. And in early January Google withdrew two H.264 declared-essential patents from its ITC complaint over the Xbox gaming console in the aftermath of reaching an agreement with the antitrust enforcers at the FTC. But there is still a huge discrepancy between the parties' positions on royalties, with Google more recently taking the position that the annual royalty cap should be in the range between $100 million and $125 million, while the royalties it can demand under the MPEG LA reciprocity clause would amount to no more than a six-digit figure per year.

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ITC delays resolution of Samsung v. Apple case by another month -- new target date: March 7

Late on Thursday, the United States International Trade Commision (USITC, or just ITC) gave notice of a scheduling decision concerning the investigation of Samsung's complaint against Apple. A previous (not the first) extension of the target date was ordered about three weeks ago, pushing it back from January 14 to February 6 and mentioning "numerous submissions" concerning the FRAND issues raised by the standard-essential ones among Samsung's patents-in-suit. The Thursday notice now postpones the target date to March 7, 2013, i.e., by four weeks plus one day, and does not state or hint at any particular reason.

I believe what mostly complicates this case for the ITC is an interesting combination of antitrust actions in the Unitd States and the European Union. On the one hand, there's the FTC-Google settlement, which occurred shortly after the ITC's previous extension of the target date. It's not binding precedent, but it does bear some weight as the ITC is generally required under the law to take its sister agency's input into consideration. The logic of the proposed FTC-Google deal is that injunctive relief must be denied against "willing licensees". Here are some links on this subject: explanation of mechanics, comparison of FTC-Google and FTC-Bosch settlements, defensive use exception as primary concern (not an Apple-Samsung issue, at least for now). In December Apple notified the ITC of the European Commission's Statement of Objections (SO) against Samsung. The SO is a preliminary antitrust ruling, following almost a year of in-depth investigations. Samsung wants the ITC to ignore Apple's notice of the SO, while Apple says that Samsung should now withdraw its ITC complaint (with respect to SEPs) just like it withdrew its European SEP-based injunction requests last month. The details of the European Commission's SO are not public, but the EU's official written statements show that Apple was deemed to be a willing licensee -- which combined with the logic of the FTC-Google deal should put the SEP-based parts of Samsung's ITC complaint to rest.

Samsung had brought the related complaint in late June 2011. The investigation was instituted a month later.

Apple had filed its ITC complaint against Samsung in early July, a little over a week after Samsung's complaint. Last week the ITC also delayed the resolution of that investigation, with the target date for the final ruling having been set to March 27. Apple's complaint does not raise any FRAND issues. I have yet to see an Apple complaint over standard-essential patents (SEPs) in any forum.

SEPs are involved in Ericsson and Samsung's complaints against each other, and the recently-instituted investigation of Ericsson's complaint is now at the stage of making some initial scheduling decisions. In particular, the Administrative Law Judge has to set a target date for the investigation. He has already -- but only tentatively -- scheduled an evidentiary hearing (i.e., a trial) for August 13-20, 2013. That is a fairly ambitious schedule: as the ITC staff (the Office of Unfair Import Investigations) notices in a submission, this "would result in an approximately 14 month target date". By contrast, Samsung proposes a 20-month schedule. The ITC staff comes down right in the middle and believes that this case involving over 100 claims from 11 different patents should have a 17-month target date.

The ITC is in a matter of days going to vote on whether to investigate Samsung's countercomplaint against Ericsson, and I'm sure that it will institute an investigation. In this context, Apple made a submission that accused Samsung of "now expanding its [FRAND-related] misconduct" from 3G (UMTS) to 4G (LTE) patents. Apple's letter notes that general concerns over injunctive relief based on SEPs also relate to Ericsson's assertions of such patents.

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ViewSonic (which Nokia is suing in the US and Germany) exits the European smartphone market

Germany's most widely-read IT news site, Heise online, reported a few hours ago (here's the article, in German) that ViewSonic, a hardware company headquartered in California that (among other things) builds Android-based wireless devices, has decided to leave the European smartphone market. According to the Heise article, ViewSonic's PR department clarified that three Android-based smartphones shown at the 2012 Mobile World Congress in Barcelona won't be launched in Europe. The report cites a spokeswoman for ViewSonic who said that a "change of strategy" has occurred, and ViewSonic plans to focus in Europe on projectors, monitors, audiovisual information systems and cloud-based products.

The Android device market is clearly overcrowded. Only Samsung is making serious money in the short term. Some consolidation is going to be inevitable, and some device makers may increasingly look for other platforms.

ViewSonic's decision has tactical implications for its patent dispute with Nokia. In May 2012 Nokia sued HTC, ViewSonic and RIM over a number of patents. RIM has meanwhile agreed to pay Nokia for its intellectual property, while HTC and ViewSonic are still defending themselves in the United States and Germany. In the U.S., Nokia has an ITC complaint as well as a couple of federal lawsuits (in Delaware) pending against HTC, but it's suing ViewSonic only in Delaware, where the earliest realistic trial date based on current schedules is more than two years away. In Germany, Nokia may very well win some decisions against ViewSonic this year, but if ViewSonic no longer sells any Android-based gadgets in this country, the leverage Nokia can get in practical terms is limited to damages for past infringement. Injunctions would affect ViewSonic only if it changed mind again at some point and decided to re-enter the European smartphone market.

ViewSonic already defended itself against Nokia's patent assertion at a couple of first hearings held by the Munich I Regional Court (in Munich, second hearings are trials), such as one in November over a text message-related patent, which has a May 2013 trial date. If damages for past infringement are the only strategic issue for ViewSonic in the German market, and considering that ViewSonic's sales in Germany have never been huge, the stakes are minimal and ViewSonic may determine that the cost of defending itself in multiple German patent actions is unjustifiably high, unless it receives stealth funding from Google. I'm not saying that this is the case, but if ViewSonic continues to spend millions and millions of euros defending itself against Nokia's German cases, then the "cui bono?" question of why it's doing so if it has actually given up the market must be asked. If ViewSonic simply surrendered in Germany (except for a dispute over the amount of past damages), it would weaken the position of other Android device makers who may defend themselves against the same Nokia patents in the future, not in a strict legal sense but in a psychological one.

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