Yesterday the first two decisions after the December 6 Apple v. Samsung hearing were handed down, and I’m sure the decisions have left each party unhappy for different reasons.
Judge Koh’s decision hinged on the lack of a “causal nexus” between the infringement and the harm suffered by Apple. In the case of smartphones, which utilize literally thousands of patented technologies, Apple must demonstrate that it lost sales directly due to the 6 infringed patents in order to obtain an injunction:
First and most importantly, Apple has not been able to link the harms it has suffered to Samsung’s infringement of any of Apple’s six utility and design patents that the jury found infringed by Samsung products in this case. The fact that Apple may have lost customers and downstream sales to Samsung is not enough to justify an injunction. Apple must have lost these sales because Samsung infringed Apple’s patents. Apple has simply not been able to make this showing. Though this is a case where the “plaintiff practices its invention and is a direct market competitor,” [citation omitted] it is not a case where the
patented inventions are central to the infringing product. Without the required causal nexus, the parties’ status as direct competitors simply does not justify an injunction.
The large number of patented technologies that make up a smartphone compared with the small number of infringed patents owned by Apple was significant to Judge Koh:
The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple’s patents. Though Apple does have some interest in retaining certain features as exclusive to Apple, it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions. Especially given the lack of causal nexus, the fact that none of the patented features is core to the functionality of the accused products makes an injunction particularly inappropriate here.
Judge Koh also noted that Apple’s previous agreements to license its patented technologies (including with HTC as well as negotiations with Samsung) demonstrates that Apple’s patented technologies are not priceless, which weighs against an injunction.
There is no doubt that this decision does not sit well with Apple. While many of the Samsung devices that are the subject of this lawsuit are no longer on the market and are certainly not driving Samsung’s current sales, I’m sure Apple does not want to allow this kind of reasoning to stand because it will make it more difficult for Apple to obtain injunctions against Samsung or other competitors in the future. For this reason, I’d say an appeal is a near certainty.
I see both sides of the coin here. On the one hand, user experience is an important factor in smartphone sales, and there are many elements that users don’t even realize exist that combine to make a better user experience. Features like the way pages scroll and the visual effect you see when an app opens and closes go unnoticed by many, but does that mean that these features can be stolen from their inventors with the consequence of only monetary damages from a company rolling in money simply because it is impossible to pinpoint those features as driving sales? This will, Apple will argue, give a license to steal any feature that doesn’t make up the core functionality of a smartphone.
On the other hand, there can be half a million patented technologies in a single smartphone, and if sales were allowed to be halted due to just a few infringed patents there would be even more patent litigation and it would slow down technological innovation – the very thing patent law is in place to foster – because smartphone manufacturers would fear that the inclusion of a technology that comes too close to a patented technology could have a disastrous effect on their business (as sales bans in the fast-moving smartphone world basically render the banned device worthless).
At the end of the day, Samsung turned itself into a smartphone powerhouse and the billion dollar jury verdict (if upheld) was really worth it to get its foot in the door. It seems unjust when said like that, but Apple isn’t exactly a sympathetic party either.
Worth noting is that Judge Koh’s decision denying the injunction did not speak to the jury findings, though reading between the lines it is almost a sure thing she will not completely throw away the jury verdict after issuing this decision.
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After the verdict was reached, Samsung moved to throw away the verdict based on an alleged bias of the jury foreman and on that same foreman bringing extraneous evidence into jury deliberations. In short, Samsung alleged that the foreman, Velvin Hogan, intentionally omitted a lawsuit involving him and Seagate Technology, his former employer, when asked about prior lawsuits. Seagate was his former employer and had given Mr. Hogan a loan which Mr. Hogan did not repay after being terminated, and when Seagate sued Mr. Hogan, Mr. Hogan filed for bankruptcy The significance of this is that Samsung now is the largest shareholder of Seagate with a 10% share. Samsung also claimed that Mr. Hogan’s post-verdict interviews demonstrated a desire to be on the jury (which Samsung claimed coupled with his Seagate omission proved bias) and also demonstrated that he gave the jury improper instructions based on his own understanding of patent law as opposed to what they were told by the court.
Judge Koh found that Samsung failed to exercise reasonable diligence in researching Mr. Hogan and thus lost its right to challenge his impartiality. Judge Koh opined that Samsung knew of the bankruptcy proceeding and knew of Mr. Hogan’s past employment with Seagate, and if it had timely requested the bankruptcy file, as it did after the verdict, or questioned Mr. Hogan on his relationship with Seagate, it would have discovered the prior lawsuit. Since Samsung did not properly research Mr. Hogan prior to the trial, it cannot claim impartiality after the trial.
Judge Koh also held that Mr. Hogan’s statements in post-verdict press interviews are inadmissible under Rule 606(b), which prohibits a juror from being able to impeach is or her verdict. The judge found that while jurors may not bring their personal knowledge of the parties or the specific issues presented into deliberations, they can bring in their general knowledge and life experience, which is what Mr. Hogan did. In denying Samsung’s request even for an evidentiary hearing to further address these issues, Judge Koh found that Samsung did not properly show that the verdict would have been different had the alleged misconduct not occurred.
Worth noting is how much deference Judge Koh gave to Mr. Hogan’s statements that he is unbiased and fair.
I am not surprised that Judge Koh did not toss the verdict based on Mr. Hogan’s interviews, as courts are very reluctant to second-guess a jury’s thought process. I am slightly surprised that Judge Koh did not seem more bothered that Mr. Hogan failed to disclose his Seagate litigation. She is 100% correct in saying that Samsung should have done more research into Mr. Hogan’s past, but that doesn’t completely negate the fact that Mr. Hogan omitted elements of his past in voir dire. Any party can (and should) do independent research into prospective jurors to find out potential biases, but requiring Samsung to do so makes the voir dire process designed to elicit those biases seem hollow. I also find it to be a circular argument to respond to Samsung’s claims that Mr. Hogan is essentially a liar with Mr. Hogan’s statements that he will be honest. But I do understand how gutsy it would have been of Judge Koh to toss the verdict and order a retrial, which would cost hundreds of thousands of dollars to the parties, not to mention possibly billions of dollars if a different verdict is reached, and her reluctance to do so. I also understand not wanting a party to get away with turning a blind eye to a potential bias and then raising it when the verdict doesn’t go the way they want, so I really can’t say I disagree with Judge Koh’s reasoning. I do think Judge Koh should be more mad at Mr. Hogan, but I guess, unlike me, a judge has to pick a side and I don’t blame her for picking the side she did.
The real thing I take away from her decision is that civilians like Mr. Hogan and the other jurors, whose reasoning in the jury room will clearly not be questioned, should not be responsible for applying extremely complex patent law principles. Patents are highly technical documents, and attorneys drafting them are required to have technical backgrounds. Patent examiners who determine whether to grant a patent are also required to have technical backgrounds. Engineers who invent the software that is the subject of this lawsuit all have technical backgrounds. Ditto for other kinds of inventors. So why, after all that work performed by experts, do we leave evaluating whether a patent is valid and infringed upon to civilians, many of whom have little to no technical expertise whatsoever, and then require such a high standard in reversing their decisions? It seems like a weak link in the process that has great consequences and could be avoided. I’m all for a jury in determining whether a murder suspect’s alibi is convincing or whether parties intended to form a contract, but with patent law it seems like these important decisions would be left up to trained individuals.