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Thursday, 31 January 2013

New entries in the US Apple v Samsung dictionary: D (definite) is in, W (willful) is out

Four IP judgments in one day? Awesome!
"On August 24, 2012, after a thirteen day trial and approximately three full days of deliberation, a jury in this patent case reached a verdict..."

A casual reader could mistake this sentence for the introduction to an interesting novel, but IP attorneys will certainly remember that these words spell another chapter of the Apple v Samsung saga, on which Merpel reported here. The jury, in the trial unfolding at the Northern District of California, found that certain Samsung devices infringed Apple's utility patent (US Patent No. 7,469,381 relating to "list scrolling and document translation, scaling and rotation on a touch-screen display", US Patent No. 7,844,915 relating to an "application for programming interfaces for scrolling operations" and US Patent No. 7,864,163 relating to a "method for displaying at least a portion of a structured electronic document") and design patents (US Patent Nos. D504,889, D593,087, D618,677 and D604,305), awarding $1.05 billion in damages. It also found that Apple had not infringed any of Samsung's patents. Both parties filed motions for judgment as a matter of law (and/or new trial) on several of the jury's findings, including the patents' validity and infringement, the willfulness of Samsung's infringing conduct and the award of damages enhancements. Two days ago, Judge Koh delivered four Orders (which can be found here and here) which address these motions.

D as definiteness: Samsung's claims of invalidity under 35 U.S.C. § 112 are rejected

The first Order dealt with Samsung's motion concerning the invalidity of Apple's design patents and one claim of utility patent '163 due to indefiniteness. "The purpose of this definiteness requirement", noted the court, is "to ensure that the claims delineate the scope of the invention using language that adequately notifies the public of the patentee’s right to exclude" (Datamize LLC v. Plumtree Software, Inc.). Indefiniteness as a ground for invalidity targets claims which are not "amenable to construction" or "insolubly ambiguous".

In relation to the utility patent, Judge Koh examined the notion of "substantially centered", found in claim 50. She made ample reference to previous case law, which accepts the use of "words of approximation, such as 'generally' and 'substantially', [as] descriptive terms commonly used in patent claims to avoid a strict numerical boundary to the specified parameter" (Anchor Wall Systems, Inc. v. Rockwood Retaining Walls, Inc.). Although she explained that "a court need not, and indeed may not, construe such terms to give them greater precision, absent a standard for imposing a more precise construction in the specification", she rejected the equivalence between lack of precision and lack of construability. Accordingly, the court held that the term "substantially centered" was not indefinite, as further demonstrated by the testimony of the parties' experts.

The examination of the four design patents moved from similar considerations, as "indefiniteness requires a determination whether those skilled in the art would understand what is claimed" (Young v. Lumenis, Inc.). The court observed that little precedent exists on the matter and argued that the evaluation of the indefiniteness of design patents is closely linked to the test for infringement. If the latter tries to establish whether "an ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design" (Crocs, Inc. v. Int'l Trade Com'n), it is necessary to verify whether such person could tell what is claimed by the design patent.

Assessing the arguments raised by Samsung, Judge Koh made several interesting point, which the IPKat summarizes below:
  • "[T]here is no per se rule that inconsistent use of dotted [and broken] lines [and shading] renders a patent invalid", as indefiniteness arises only if a claim is not amenable to construction. The court stated that claim construction implies construing the use of drafting techniques (Egyptian Goddess, Inc. v. Swisa, Inc.) and that, once issued, the patent enjoys a strong presumption of validity.
  • The fact that a patent depicts "a design in different orientations merely shows that the particular orientation – landscape or portrait, head-on or perspective – is not part of what is claimed". It does not allow one to infer that a feature invisible in one of the figures, due to the drawing's orientation or rotation, is not part of the design [Laws of Physics 1 - Samsung 0, whispers Merpel].
  • The existence of multiple embodiments of the same design patent does not imply its indefiniteness [the court does not rule out this possibility, but suggests that the claimant should provide strong proof of the irreconcilable differences of the embodiments, in order to overcome the patent's presumption of validity]. 
  • A design patent should be evaluated on the basis of the overall impression that it produces, which is the visual standard for comparison. Accordingly, if the relative position of an element in relation to the surface (below, on or on top) cannot be positively identified, no issue arises "as long as any of those could produce interchangeable visual effects that would appear substantially the same to the ordinary observer". If this is not the case, this situation merely shows that different embodiments of the same design patent are possible.
The court underlined the importance of distinguishing between drafting inconsistencies and actual ambiguity, as the first may be overcome when it is possible to construe the drafting techniques. It found that "all of Samsung’s alleged sources of indefiniteness concern how the design is represented, rather than the nature of the design itself" and that "[t]hese ambiguities are not fatal to patents that this Court must view with a strong presumption of validity". Thus, it rejected Samsung's claims, confirming the validity of Apple's design patents.

W as (un-)willful: the Court finds that Samsung's infringement was not willful

Judgment as a matter of law? Not for us!
In its second Order, the court examined Samsung's motions for a new trial and for judgment as a matter of law on a series of issues, which included Samsung's willfulness in relation to the acts of patent infringement, under Federal Rule of Civil Procedure 50 and 59. A district court may grant judgment as a matter of law, Judge Koh said, "when the evidence permits only one reasonable conclusion and the conclusion is contrary to that reached by the jury" (Ostad v. Oregon Health Scis. Univ.): the party, therefore, must show that the verdict is not supported by "substantial evidence". If the verdict is contrary to the clear weight of evidence, instead, a court may grant a new trial, if necessary to prevent a miscarriage of justice.

This brave Kat ventured through the 40-page long judgment, to catch a glimpse of all the six claims analyzed in the Order. The following is a recap of what caught his attention:

(a) Validity and infringement of Apple's design patents
Judge Koh rejected Samsung's claims that no reasonable jury could have found Apple's design patents valid and infringed. She held that the jury had been properly instructed on the elements to be assessed and the standards to be applied. Concerning the evaluation of functional elements, the court clarified that it was neither necessary nor beneficial to provide an element-by-element construction to the jury:
"[t]he cases do not suggest that this type of claim construction is appropriate when instructing a jury", as it "could divert the jury's attention from the design as a whole". 
Further, it concluded that Samsung had failed to provide evidence that the overall design portrayed by the patents was primarily functional. The scrutiny of obviousness, conducted to evaluate "whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved", through a two-step process (Titan Tire Corp. v. Case New Holland, Inc.), did not support Samsung's assertions.

(b) Protectability and dilution of Apple’s Registered iPhone Trade Dress and Unregistered iPhone 3G Trade Dress
The court reviewed Samsung's arguments concerning functionality and applied the Disc Golf Ass’n, Inc. v. Champion Discs, Inc. test. It also evaluated secondary meaning ("the purchasing public associates the trade dress with a particular source") and fame, which allow the party, if other elements coexist (use in commerce, after the trade dress became famous, and likelihood of blurring - see Jade Toys, Inc. v. Mattel, Inc., 518 F.3d) to show dilution ("the whittling away of the value of a trademark when it’s used to identify different products", Mattel, Inc. v. MCA Records, Inc.). Samsung's motions were again denied, as the jury's findings were not against the clear weight of evidence.

(c) Validity and infringement of Apple's utility patents
Samsung's claims contesting the jury's findings were rejected. Judge Koh conceded that, in relation to one of the patents, the jury's verdict contained inconsistencies, but refused to grant a new trial, noting that courts should set aside a verdict only when absolutely necessary. The question, in fact, "is whether the verdict can be reconciled on any reasonable theory consistent with the evidence" (Ward v. City of San Jose): the court clarified that "[o]nly verdicts that entail two legal conclusions that cannot logically coexist, such as an award of damages and a finding of no liability, rather than a mere inconsistent view of facts, warrant the Court’s intervention".

(d) Willfulness
This is perhaps the most interesting point of Judge Koh's Order. The court recalled that the evaluation of willfulness, in relation to patent infringement, requires a two-prong analysis: "[t]he objective inquiry is a question for the Court, and the subjective inquiry is a question for the jury" (Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc.). Since the jury had found that Samsung’s infringement was subjectively willful for five of the seven patents, Judge Koh moved to analyze whether there Samsung had an objectively reasonable defense to infringement of Apple's patents. Her findings supported Samsung's motion for judgment as a matter of law. Thus, she declared that Samsung's infringement of the utility (for reliance on invalidity defenses on various grounds) and design (relying on reasonable non-infringement defenses) patents was not willful.

(e) The liability of Samsung Electronics Corporation (SEC)
Samsung argued that SEC, the Korean parent company, had not committed patent infringement in the United States, as it had merely sold the accused devices to the US subsidiaries Samsung Telecommunications America (STA) and Samsung Electronics America (SEA). Rejecting the argument, the court found that "SEC ships the phones directly into the United States, albeit having first transferred title to STA and SEA", an arrangement which could determine liability in light of Litecubes, LLC v. N. Light Prods. Evidence that SEC exerted a high degree of control over SEA and STA activities in the US further supported the court's conclusion.

(f) Samsung's affirmative cases
Judge Koh examined and denied Samsung's motions related to the infringement of some of its patents by Apple's devices. The most interesting question involved the jury's findings of exhaustion and non-infringement, in relation to Samsung's patent '516. The court observed that "[w]ithout infringement or evidence of infringing use, there can be no exhaustion": accordingly, it declared Samsung's patent non exhausted (but still not infringed, in light of the jury's finding).

(g) The trial was not manifestly unfair
The court found that "the trial was fairly conducted, with uniform time limits and rules of evidence applied to both sides". A new trial, then, would be contrary to the interests of justice.

The other two Orders: damages enhancements and Apple's motion for judgment as a matter of law

With its third Order, Judge Koh denied Apple's motion for damages enhancements under the Patent Act, 35 U.S.C. § 284, and the Lanham Act, 15 US.C. § 1117(a). As § 284 requires a finding of willful infringement, its applicability was ruled out. Judge Koh, instead, addressed the relationship of § 1117(a), which aims at compensating the party for additional losses not included in the jury's award, with § 289 of the Patent Act, finding that the latter provision (a party “shall not twice recover the profit made from the infringement") did not preclude the applicability of the former.

The court noted that "all six products that the jury found to dilute trade dress were also found to infringe design patents" but the jury correctly "returned a single damages number that also incorporates design patent infringement damages". It also held that Apple had not given proof of any additional damages which warranted the application of the Lanham Act enhancements, which "are designed to compensate plaintiffs for losses, not to disgorge ill-gotten gains". Accordingly, it rejected Apple's motion.

Finally, Judge Koh considered Apple's motion for judgment as a matter of law on some of the jury’s findings and on other issues that the jury did not reach. The motion was granted only in relation to the invalidity of claims 10 and 15 of Samsung's US Patent No. 7,675,941, as Apple presented clear and convincing elements to establish anticipation. Apple also argued that Samsung breached the European Telecommunications Standards Institute’s (“ETSI’s”) Intellectual Property Rights (“IPR”) Policy, a claim rejected by the jury. The court refused to overturn the jury's verdict on the issue, noting that Apple had not provided sufficient evidence of a causal link between the alleged breach and harm.

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