Gave keynote at settlement party of HTC and Nokia's German lawyers, patent attorneys

It's a well-known fact that (good) lawyers treat each other as colleagues, not adversaries, despite their best efforts to defend their clients' interests vigorously. The relationship between Nokia and HTC's German outside patent litigators and patent attorneys stands out nonetheless. After roughly six years of jointly defending against patent licensing firm IPCom, they are on unusually friendly terms, and this did not change in the slightest as a result of the dispute between Nokia and HTC that lasted almost two years (April 2012 - February 2014) and had its center of gravity, in terms of the number of asserted patents and decisions handed down, in Germany.

This evening, approximately 30 of the 50 attorneys-at-law and patent attorneys involved with the German part of the Nokia-HTC dispute gathered for a drink in a spacious conference room in the Dusseldorf office of Hogan Lovells, at the invitation of HTC's lead outside attorney in Germany, Dr. Martin Chakraborty. I had the pleasure and the honor of making a surprise appearance as a keynote speaker. Dr. Chakraborty had this idea, I accepted the invitation, and we had not told anyone about it beforehand.

Since I had attended most of the German hearings and trials in this dispute over these past two years, I was uniquely positioned to provide an anecdotal recap and share certain observations on the occasion of this unusual celebration. I did this for two reasons. One, I have the greatest respect for both camps' legal work. In absolute numbers, this dispute produced various records with respect to the smartphone IP matters I monitor and even beyond. Offensively and defensively. It was a clash of Titans. Two -- and this was no less important to me personally --, I know that HTC and its lawyers found themselves in disagreement with my commentary more frequently than Nokia did, but I do respect both companies (over the years I've taken increasingly favorable positions on HTC's approach to patent litigation) and appreciated this opportunity to show it.

Now that the dust has settled and a deal has been struck, I sincerely hope that the deal terms (which are entirely unknown to me) will help both parties as they pursue their (now-divergent) business models. They face challenges without a doubt, but they also have opportunities.

It was the first invitation to give a speech outside the Munich area that I accepted in almost three years. (By the way, I have no compensation for my time to disclose in this context.)

In my (relatively short) address I mentioned that one of the intriguing aspects of this spat was the diversity of the patents-in-suit: pretty much everything patentable in the mobile devices industry from A as in "antenna" to U as in "USB" -- only to be reminded that V as in "VP8" (Google's video codec) had also been at issue.

For the sake of a complete record of who was involved with this massive effort I'm now going to list both parties' law firms in alphabetical order (firstly Nokia's since this was also the party that started it).

Nokia's law firms:

• Bird & Bird

• Cohausz & Florack

• Reimann Osterrieth Koehler Haft

• Samson & Partner

HTC's (including S3 Graphics') law firms:

• Braun-Dullaeus Pannen

• Hogan Lovells

• Hoessle

• Maikowski & Ninnemann

• Mueller Hoffmann & Partner

• Preu Bohlig & Partner

• Wildanger Kehrwald Graf v. Schwerin & Partner

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German court tosses HTC subsidiary's lawsuit against Nokia over video compression patent

This morning the Mannheim Regional Court (which will later hold a Samsung v. Apple trial over a 3G standard-essential patent) announced its finding that Nokia phones incorporating Qualcomm's Snapdragon chipset don't infringe a patent asserted by HTC subsidiary S3 Graphics (EP0797181 on "hardware assist for YUV data format conversion to software MPEG decoder"). HTC can and presumably will appeal this ruling to the Karlsruhe Higher Regional Court.

Two weeks ago the Mannheim court had ruled against another lawsuit by HTC (in that case, the parent company itself) targeting Nokia.

For details on the issues in this case let me refer you to my June trial report.

Nokia has already commented on its defensive win:

"Nokia is pleased with the court's decision and believes it is appropriate given the facts of this case.

We believe this decision, which follows the ruling of non-infringement by Nokia of another HTC patent by the same court on September 6, demonstrates the weakness of HTC's assertions against Nokia.

We see HTC's patent infringement allegations as a tactic to distract from HTC's own infringement of Nokia patents. To date, more than 50 Nokia patents have been asserted against HTC in actions in the US, Germany and the UK and an injunction is already in force in Germany against HTC products found to infringe Nokia's power management patent."

This has been a busy week in the Nokia-HTC dispute (which will almost certainly end in a settlement under which HTC will pay royalties, though nobody knows when). On Wednesday Nokia appeared to have the upper hand in a Munich trial over a USB configuration patent it asserts against various HTC devices including the HTC One, and HTC brought a motion asking the ITC to stay the investigation of Nokia's first complaint against HTC, in which a preliminary ruling is scheduled for Monday (September 23). HTC was hoping to settle this deal on very favorable terms by gaining some leverage over Nokia in Germany. That plan doesn't seem to be working out, and in a few months (after the closing of the sale of Nokia's wireless devices business to Microsoft) HTC will have a hard time finding any Nokia products against which to assert patents.

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Qualcomm may have to modify Snapdragon chip for Nokia to work around HTC graphics patent

On Friday the Mannheim Regional Court held a trial on HTC subsidiary S3 Graphics' patent infringement complaint against Nokia over the Qualcomm Snapdragon chip. As counsel for S3G confirmed when Judge Voss ("Voß" in German) asked about the possibility of a settlement, this lawsuit is "part of the wider dispute between HTC and Nokia". Between the U.S., UK and Germany, Nokia is asserting roughly 50 patents against HTC, and HTC (including S3 Graphics) has brought at least five German countersuits.

The longer I've been watching HTC's patent lawsuits, the more impressed I am with its handling of patent disputes. I admit that I underestimated HTC, as many others did, but I've come to recognize its defensive skills beyond stalling (a tactic at which HTC undoubtedly excels). And while S3 Graphics' first ITC complaint against Apple was dismissed in 2011 and a second one wasn't adjudged prior to the parties' settlement, this acquired patent portfolio may prove helpful to HTC in settlement negotiations with Nokia. Based on how the Friday trial went, I think HTC is more likely than not to win a German injunction against Nokia devices incorporating the Qualcomm Snapdragon chip, though the leverage this gives HTC will depend on whether the court agrees with its preferred or merely its alternative infringement theory. In the latter event, I believe leverage will be rather limited because Qualcomm would just have to remove a feature that Nokia doesn't use anyway, and the primary effect of a win for S3G would be that HTC could point to it whenever Nokia says HTC should cease its infringement of Nokia's patents.

The patent-in-suit is EP0797181 on "hardware assist for YUV data format conversion to software MPEG decoder". For information on the analog YUV format and the related YCbCr digital format, which is often referred to by the term YUV as well, let me refer you to Wikipedia (YUV, YCbCr) and provide my own condensed explanation:

While computers generally process and store images in a bitmap format (from left to right, from top to bottom), YUV is a format that separates for each pixel a luminance (brightness, Y) value from two chrominance (color, U and V) values. So you get one matrix of Y values (which would be enough to produce a black-and-white picture), one of U values, and one of V values. It's easy to convert a YUV image into a bitmap, but in connection with high-resolution video with a high frame rate, this transformation can put a drain on the central processing unit. The patent-in-suit covers the idea of assigning this task to a coprocessor. (Whether this idea should entitle someone to a patent is another question, a question that is not unique to this patent or company.)

Even though Nokia's litigators led by Bird & Bird's Boris Kreye (the same team is also defending Nokia against HTC's power management patent in four parallel actions) have developed various credible defenses, S3G (represented by Wildanger's Wolf Graf von Schwerin and Peter-Michael Weisse) appear to have persuaded the court of key parts of their infringement contentions.

I considered two of Nokia's defenses particularly important. One of them was discussed only toward the very end of the trial and relates to the claim element of a "predetermined address range", within which certain "video data addresses" must be. Nokia says that the accused technologies merely transfer information enabling the chip to determine the addresses, but that there's no separate communication or computation of a "predetermined address range". Without seeing the detailed infringement contentions I can't rule out that S3G's claim construction effectively renders the "predetermined address range" limitation meaningless. However. the court did not indicate that this issue might be outcome-determinative.

The more fundamental issue is the one that makes all the difference between S3G's primary and secondary infringement contentions. The specification of the patent, which is supposed to serve as its own dictionary, defines "component YUV format" as a planar format, meaning that there's one contiguous set of data for the Y, U and V values. But Nokia avers that its products only process something that can be described as pseudo-planar: instead of separate U and V planes, there's a single data block containing a pair of U and V values for each pixel. S3G's key argument in this regard is that the claim only requires "at least one second contiguous block of data of a second component" (as opposed to requiring two blocks) to be transmitted, and the only way in which this can make technical sense if there's a single block containing U and V data. But according to Nokia this still doesn't change the meaning of "YUV component data".

I saw some merit in both parties' claims. On the bottom line I would be inclined to agree with Nokia that the specification clearly defines "YUV component data" as a planar format and to attach more importance to this than to the "at least one ... block" argument. It appears to me that a significant part of the transformation the patent covers has occurred, or need not occur, if U and V data are already kept in a single block of paired values.

S3G has an alternative infringement theory for the event that Nokia's "not planar" defense succeeds: this is a hardware patent, and the hardware built into the accused Nokia phones can be configured to process fully planar data as well. There are registers, and the operating system (Windows Phone) could, though it doesn't at this stage, instruct the chip to handle planar data. S3G argues that a hardware patent claim like this is infringed if the capability is provided, even if not utilized in practice. The parties agree that hardware can't run without software. Still, S3G argues that shipping certain hardware functionality constitutes infringement -- and in this case, considering the structure of the claim-in-suit, I tend to agree with S3G.

If the court rules in S3G's favor based on its primary infringement theory (of pseudoplanar data falling within the scope of the claim), S3G's corporate patent, HTC, gets considerably more mileage out of this lawsuit than otherwise. If the court finds Nokia to infringe only to the extent that never-actually-utilized hardware functionality is shipped, it would be a minor tweak for Qualcomm to remove the "planar" option, such as by eliminating the related register or by having the chip ignore it (so as to always require data to be provided in a pseudoplanar format). There would be no performance impact. A special version of the Snapdragon chip for Nokia to use in Germany might affect Qualcomm's manufacturing costs as compared to a one-chip-fits-all scenario, but at the end of the day Qualcomm will want to ensure that its chips don't expose its customers to major IP liability issues if those can be avoided.

In March Nokia won its first German injunction against HTC over a power-saving patent, and HTC also worked around it, presumably by removing certain functionality without a non-infringing replacement delivering the same benefits. Here, the related functionality can always be removed, but if HTC's primary infringement theory succeeds, then there will be some impact on video processing performance. If a patent injunction issues, there will always be a workaround unless the patent-in-suit is a truly standard-essential patent. The key question is then whether the workaround is merely an internal thing or has effects (such as a degradation of battery life or video performance) that end users will notice.

A decision, which may or may not be a final ruling, has been scheduled for September 20, and if S3G wins, it will be interesting to see what Nokia says about a workaround.

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HTC subsidiary claims Qualcomm's Snapdragon infringes one of its video processing patents

In addition to countersuing Nokia in two German venues over a power-saving patent, the Taiwanese wireless device maker is also striking back at its Finnish counterpart through a complaint its subsidiary S3 Graphics filed with the Mannheim Regional Court on July 18, 2012. The case number is 7 O 182/12, indicating that Judge Andreas Voss ("Voß" in German) is presiding over this case.

The patent-in-suit is EP0797181 on "hardware assist for YUV data format conversion to software MPEG decoder". This is the European equivalent of U.S. Patent No. 6,353,440. It was asserted against Apple through an October 14, 2011 amendment to S3 Graphics' second ITC complaint against Apple, which never came to judgment because of a settlement. Since the settlement with Apple, HTC's biggest patent worry is Nokia's ongoing enforcement campaign over more than 30 different patents.

What makes the German S3 Graphics v. Nokia lawsuit particularly interesting is the fact that the infringement allegation is (for the most part or even entirely) related to the video processing functionality of Qualcomm's multifunctional Snapdragon chip (official product website, Wikipedia entry), which is highly popular.

Both Nokia and S3 Graphics ("S3G") filed discovery requests with the United States District Court for the Southern District of California, in whose district Qualcomm is headquartered. S3G filed its request together with its parent company, HTC, whose German lawsuits against Nokia over a power-saving patent also involve Qualcomm chips (as well as Broadcom chips).

The HTC-S3G motion says the following:

"In its suit, S3G claims that certain Nokia smartphones infringe the '181 Patent. In particular, S3G claims that Lumia smartphones sold in Germany by Nokia GmbH infringe the Patent, due, among other things, to their inclusion of Qualcomm Snapdragon chipsets that, when used to process video data in the accused phones, infringe the '181 Patent."

"In general terms, these [discovery] requests seek documents relating to the video data processing functionality of the Qualcomm MSM8960, APQ8055, MSM8255, and MSM7227A chipsets, each of which are present in particular Lumia model smartphones that are accused of infringement. More specifically, the Applicants seek to identify the hardware that is involved in the conversion of video data from one format, the 'Planar YUV Format,' to another format, the 'Pixel Video Format.'"

S3G attached a declaration by its German counsel, Peter-Michael Weisse of the Wildanger firm. which describes the infringement contentions and the role of the Snapdragon chip in them as follows:

"4. The S3G Action concerns S3 Graphics' European Patent No. 0 797 181, entitled 'Hardware assist for YUV data format conversion to software MPEG decoder' ('the 181 Patent'). The invention disclosed in the 181 Patent relates to a display controller involved in the format conversion of video data. The display controller relieves the burden on a host CPU by decoding video data (referred to as YUV data) into displayable format.

[...]

6. In the S3G Action, smartphones in Nokia's Lumia series with Qualcomm Snapdragon chipsets are accused of infringing the 181 Patent because they include display controllers as described in paragraph 4 above. Accordingly, S3 Graphics seeks from Qualcomm technical documents relating to the capability of the display controller in specified Qualcomm Snapdragon chipsets to process video data, and the route (or 'pipeline') by which video data is conveyed in those chipsets. The documents sought are expected to further support S3 Graphics' case that the accused smartphones infringe the 181 Patent."

All claims of the asserted patent relate to display controllers. The claims also involve communication between a claimed display controller and the memory of a device over the data bus.

I'm not yet aware of a trial date in this case, but given the usual time lines of Mannheim patent infringement cases, it will probably be held in a matter of months.

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Apple and HTC agree on mid-December date for ITC trial in new enforcement action

Last week the ITC instituted an enforcement proceeding to investigate Apple's claim that 29 new HTC devices still infringe the '647 "data tapping" patent, but denied temporary emergency relief.

The Commission, the decision-making body at the top of the ITC, assigned the case to Judge Shaw and asked him to set a target date for the investigation. The ITC generally tries to resolve enforcement issues within 12 months of institution of the investigation. Judge Shaw then ordered the parties to jointly propose a schedule.

Apple and HTC agree on all but two target dates. The most important target date on which they agree is the one for the evidentiary hearing (trial): December 19-20, 2012. They are, however, roughly six weeks apart on the target date for Judge Shaw's initial determination (Apple: March 8, 2013; HTC: April 19, 2013) and the final Commission decision (Apple: July 8, 2013; HTC: August 23, 2013). The Office of Unfair Import Investigations (OUII), commonly referred to as "the ITC staff", sides with Apple. Judge Shaw now has to decide. If he sets a target date within 12 months of institution of the investigation, his decision will be final. Otherwise it can be reviewed (and possibly modified) by the Commission.

Considering that this enforcement proceeding has relatively narrow scope and that the '647 patent has previously been held infringed by HTC, it's probably frustrating for Apple to have to wait another year. But I said before that at least some of HTC's arguments against temporary emergency relief -- and in favor of a more elaborate analysis of Apple's infringement allegations -- made sense.

By the way, two English-language Asian newspapers reported today on other developments relating to Apple v. HTC:

• The Taipei Times quotes HTC's vow to continue its patent assertions against Apple despite the setback it suffered this week with the Commission decision to uphold the dismissal of five Google patents from an HTC v. Apple case.

• The China Post quotes another HTC statement, according to which HTC "has received the re-examination certificate of S3's [']146 and [']978 patents, which a U.S. trade panel found in an initial ruling last year to have been infringed upon by Apple's Mac computers". S3 Graphics has meanwhile been acquired by HTC. The ITC decision HTC just mentioned cleared Apple of a violation because the Commission determined that the related claims were not infringed by the imported goods at the time of importation. But that's an ITC-specific issue, and potentially different in district court.

  Infringement issues concerning those two patents would be limited to certain Mac computers and not affect Apple's iOS devices. Anyway, HTC will seize every opportunity to enforce patents of its own against any Apple products or services.

There's no doubt that HTC is defending itself vigorously. It scored a defensive win last week in the UK.

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Apple appeals ITC dismissal of complaint against Motorola to the Federal Circuit

On March 16, I reported on the ITC's final ruling that cleared Motorola Mobility of any violation of three Apple patents at issue in that investigation, and said that "Apple can appeal this decision to the Federal Circuit, and in my view, this [was] very likely to happen". And indeed, it has just happened, as I found out from a joint status report that Apple and Motorola filed in the Western District of Wisconsin, which is one of four U.S. districts in which they're presently suing each other. Here's the relevant passage (click to enlarge or skip to the quote provided below the image):

"ALJ Essex issued a final initial determination (the 'Final ID') on January 13, 2012 finding that no violation of Section 337 of the Tariff Act has occurred [FOSS Patents post]. On March 16, 2012, the ITC determined to review the Final ID in part, and on review, to affirm ALJ Essex’s finding of no violation of Section 337. The Commission issued an opinion affirming ALJ Essex’s finding on March 28, 2012. Apple filed a Petition for Review of the Commission’s decision with the United States Court of Appeals for the Federal Circuit on April 12, 2012."

In December, Apple appealed the unfavorable parts of the ITC's ruling on its first complaint against HTC. HTC also appealed the import ban that was ordered against all HTC Android devices implementing a certain feature ("data tapping"). That import ban will finally take effect this coming Thursday (April 19, 2012), though HTC removed the feature immediately -- a fact that shows that the ITC granted a far longer transitional period than necessary.

HTC also appealed the ITC's dismissal of its first complaint against Apple. Furthermore, HTC affiliate S3 Graphics also appealed the dismissal of its first complaint against Apple. (Both HTC and S3G brought new ITC complaints against Apple last summer, not long after Apple had filed a second one against HTC.)

There will likely be more appeals against ITC rulings in the months ahead.

A couple of Android-related federal court decisions (interim decisions, not final rulings) have also been appealed to the Court of Appeals for the Federal Circuit (CAFC). In early December, Apple appealed to the CAFC a decision by the United States District Court for the Northern District of California to deny a preliminary injunction against four Samsung devices. On April 6, 2012, the CAFC held a hearing at which Apple restated the reasons for which it believes to be entitled to a preliminary injunction. Bloomberg's patent expert Susan Decker attended and reported on that hearing. And in February, the CAFC denied a Google petition to strike an incriminating piece of evidence, known as the "Lindholm email", from the Oracle case. That case is scheduled to go to trial (finally) tomorrow (Monday, April 16, 2012).

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In decision on S3 Graphics complaint against Apple, ITC clarifies boundaries of its mandate

On November 21, 2011, the ITC dismissed S3 Graphics' first complaint against Apple in its entirety, following a Commission review of an initial determination by an Administrative Law Judge (ALJ) who found some of Apple's Macintosh computers to infringe two of S3G's four patents-in-suit. Both parties disagreed with the ALJ: Apple wanted (and ultimately won) a dismissal while S3G, which is in the process of being acquired by HTC, wanted more leverage than the ALJ's initial determination, if affirmed, would have provided.

At the time of the ruling, the reasoning wasn't publicly known. The result, "no violation", could have had any number of reasons. More than a month later (on December 22, 2011), the ITC published a redacted version of its detailed (72-page) decision. I analyzed it in order to provide this summary.

The ITC investigation is over, but the ruling is nevertheless worth looking into. Even though Apple doesn't have to fear an ITC import ban over those patents anytime soon, the dispute between Apple and S3G isn't over. S3G might appeal the ITC's decision to the Federal Circuit, and the same patents are at issue in a federal lawsuit (in the Northern District of California) that is currently suspended for the duration of reexaminations of those patents by the USPTO (including all possible appeals of any non-final reexamination result). And beyond this particular dispute, the ITC seized this opportunity to provide some further clarification on the boundaries of its mandate in connection with products that are imported in a non-infringing form but used in infringing ways after they enter the United States. The related passages of that ruling will likely be cited in a number of future ITC investigations raising similar issues.

In order to keep things focused, I won't go into detail on the many reasons for which the Commission, the six-member decision-making body at the top of the ITC, affirmed those parts of the ALJ's initial determination that worked out in Apple's favor anyway. Basically, the Commission provided some clarifications that are basically corrections of what it considered legal errors on the ALJ's part, but on the bottom line it reached the same conclusions as far as the ALJ decided against S3G. This includes that the Commission also believes Apple has an implied license to the extent is uses NVIDIA chips, and like the ALJ, the Commission found several reasons (any one of which would have been sufficient on its own) for seeing no infringement by the iPhone, iPad and iPod.

I'll focus on why the Commission disagreed with the ALJ's position that some of Apple's Macintosh computers (depending on which graphics chips they contain) should have been banned due to the alleged infringement of claim 11 of the '987 patent and claims 4 and 16 of the '146 patent.

As I expected all along, AMD's claims that it -- not S3G -- is the rightful owner of the patents-in-suit and its demand that the investigation should therefore be terminated did not win the day. The Commission concluded that AMD's motion for an intervention was untimely and unnecessary since Apple was perfectly capable of representing AMD's interests in this respect. Those considerations outweighed the fact that AMD brought claims that, if proven, would have constituted a legitimate interest in the outcome of this matter. Besides AMD asking for the right to intervene, both AMD and Apple asked the ITC to terminate the investigation or to remand it to the ALJ for further examination (and delay). But the Commission determined that "S3G holds title to the asserted patents" and that Apple and AMD "fail to prove by a preponderance of the evidence that AMD owns the patents in question". There's still some federal litigation going on over this matter, and we'll see if anything comes out of it. The ITC has seen all of the evidence and is unconvinced.

The Commission overruled the ALJ with respect to the validity of claim 4 of the '146 patent. The Commission "agree[d] with Apple that the ALJ's findings with respect to anticipation of claim 4 appear to be the result of a mistake" and determined that the Hoffert prior art reference anticipated claim 4 or, alternatively, rendered it obvious. In this context, the Commission furthermore believes that S3G forfeited a seemingly important argument. But the Commission explains that the argument was wrong at any rate. If S3G appeals, it will face a dual hurdle with respect to the validity of this patent claim. It will have to prove the Commission wrong on the issue itself as well as on the question of whether S3G preserved its related record.

As far as the other two patent claims the ALJ deemed valid and infringed (claim 11 of the '987 patent and claims 16 of the '146 patent) are concerned, the Commission concluded that the Macintosh computers imported by Apple don't infringe any of those two patent claims at the time of importation. For example, one of those patent claims relates to a data format, and those computers don't contain any graphics stored in that format (or at least S3G didn't prove it) at the time of importation. Subsequently to importing those devices, Apple may infringe certain patent claims as an inevitable consequence of testing those devices, or sell apps that practice the relevant inventions. While those subsequent activities might be seen as a "nexus" between importation and infringement, the Commission clarified that Section 337 (the law governing the ITC's unfair import investigations) was amended in 1988 and clearly relates only to "articles that -- infringe" given U.S. patents.

In this particular case, S3G didn't convince the ITC that Apple's products, in the form in which they are imported, indirectly infringe the asserted patent claims. Without direct infringement occuring somewhere, there can be no indirect infringement further up the supply chain, and S3G wasn't able to prove direct infringement. The ITC was inclined to believe that Apple may very well infringe those patent claims in the United States, but the ITC's mandate is limited to keeping infringing products out of the U.S. market. It's not a broadbased IP enforcement competency of the kind that the federal courts have.

If Apple's testing or, worse than that, its sale of apps (which are not imported in the ITC's unsurprising opinion) through an online store could result in ITC import bans against its devices, that would have been a problematic precedent -- not only for Apple but also for many other device makers. The Commission has set the record straight on this. S3G went too far with its claims. But chances are that, sooner or later, someone else will also try to test or push the boundaries of the ITC's mandate.

Concerning its mandate, the ITC disagreed not only with S3G but also with Apple, which asked the ITC to find that it has no jurisdiction over S3G's complaint. In other words, Apple wanted the ITC to determine that there should never have been an investigation in the first place. In its decision, the Commission stressed that "[it], like the ALJ, find[s] that Apple's argument conflates an analysis of the Commission's jurisdiction with an analysis of whether S3G has met its burden to prove a violation of section 337". In other words, the fact that an infringement pattern doesn't meet the legal requirements for an ITC import ban doesn't mean that a complaint shouldn't be investigated by the ITC until its failure to meet those criteria is established. The Commission said that S3G had pled claims that could have justified an import ban if only they had been accurate. Therefore, there was a need for an investigation, and in this particular case, it was necessary to reach the stage at which it became clear that there's no indirect infringement at the time of importation.

The decision notes that this is a non-issue in most cases: "Although satisfaction of the importation requirement is seldom disputed in section 337 investigations, the present case is an exception." To the same effect, the Commission noted that "the current investigation presents an unusual circumstance in which a respondent's domestic infringement cannot support a violation of section 337".

If S3G's patents aren't invalidated as a result of reexamination, it may have a case against Apple in the Northern District of California. But reexaminations and the related appeals will probably take some more time -- possibly years -- before we find out. Meanwhile, S3G has a second ITC case going against Apple.

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The ITC is tough terrain for mobile patent plaintiffs -- consistently so far

This week's ITC decisions involving various of Apple's and Microsoft's patent infringement claims against Android were important, but every time the ITC rules on one of those smartphone patent cases, I am less surprised than before about the high drop-out rate of patent claims. That doesn't mean that those decisions don't matter. It's just that the ITC is ever less likely to become a forum that would singlehandeldy force, through its decisions, the relevant parties to settle their disputes.

As an analyst I have to recognize new trends and digest information, and to adjust my positions accordingly. It's not just that I have to -- I thoroughly enjoy it. Almost 15 months back, I wrote an article on the role of the ITC as an increasingly popular patent enforcement agency, and I have linked to it on a number of occasions ever since. In principle, I still stand by the information in that article, but since then, I've seen a number of smartphone-related ITC positions (recommendations as well as preliminary and final decisions) that show it's a huge gamble for patent holders to take their claims there.

It can be a fast avenue to favorable decisions, and that's really tempting, but at least in connection with smartphones, there's also a high risk of the ITC's actions creating a perception of some patents or patent portfolios being less powerful than they actually are. We'll still hear a lot from and about the ITC in 2012 (complaints, hearings, recommendations and decisions), but I wouldn't be surprised if some major patent holders now adjusted their litigation strategies and deemphasized ITC complaints in favor of actions in United States district courts as well as foreign courts. It's not just that it's hard for anyone to win there: it also takes longer. Apple's complaint against HTC was brought in March 2010 and finally adjudicated 21 months later. During that period, Apple could have completed two full subsequent rounds of litigation in Mannheim and Munich, and would only be a few months away from decisions on a third round. Also, a decision on an Eastman Kodak complaint against Apple and RIM, filed almost two years ago, just got pushed off by nine months. And when the ITC opens new investigations, it recently set 18-month target dates from the beginning, counting from the launch of the investigation (about one month after the complaint) and likely being subject to further delays.

If I were a conspiracy theorist, I could think of a many possible explanations. For example, with the ITC clearly aching under its huge caseload, one might speculate whether it actually hopes plaintiffs-to-be recognize that all their lawsuits slow down the process, hoping that this -- rather than more taxpayers' money for the agency -- will ultimately redress the balance between supply and demand. But let's be deferential to the ITC, which has an important task, and focus on the hard facts here.

One of the hard facts is also that fending off an ITC complaint in whole or in large parts still takes hard work. None of this is meant to diminish the defensive achievements of the respective defendants. Let there be no doubt: HTC and Motorola have reasons to be proud of the work they've done, and happy about the fact that they've contained the damage for the most part -- and for now. Their disputes are far from over, but things could have been much worse for them. That said, at the ITC it's undoubtedly the complainants who face an uphill battle, and the level of expectation of independent observers is rather low now.

Maybe it wouldn't have been easier to win at the ITC in previous years. But the rate of settlements is conspicuously low in connection with smartphone patent disputes, so there are more decisions relative to the number of compaints, and those decisions don't serve to facilitate settlements.

Chronology

Here's a chronology of ITC smartphone decisions and recommendations that came down since my aforementioned October 2010 article -- I decided not to produce a table (patents asserted, enforced, dismissed) because the specifics of each case must be taken into account:

1. November 2010: the ITC staff, which acts as a third party to some proceedings (for a lack of resources, no longer to all of them), says Nokia isn't liable for infringement of any of five patents asserted by Apple in investigation no. 337-TA-704 (these are the patents that Apple asserted against Nokia but not simultaneously against HTC).

2. January 2011: in investigation no. 337-TA-703, then-chief ALJ Paul Luckern finds no violation of a key Eastman Kodak patent on digital imaging by Apple and RIM. 13 months earlier, a different ALJ had made an initial determination that held Samsung and LG (which settled at about that time) to infringe that patent.

3. March 2011: an ALJ makes an initial determination that Apple doesn't infringe any of five Nokia patents asserted in investigation no. 337-TA-701. Nokia had previously dropped two patents voluntarily.

4. April 2011: in investigation no. 337-TA-710 the ITC staff sees no violation of five Apple patents by Nokia and HTC (Apple had previously dropped five patents voluntarily from that investigation).

5. July 2011: an ALJ believes Apple infringes two S3 Graphics patents (out of four asserted ones). Those two patents are closely related to each other, which makes it more like a potential win on several claims from the same patent. Shortly thereafter HTC announces the acquisition of S3G. The companies had a major shareholder in common. But it turns out that Apple's core products aren't suspected of infringement, and in November 2011, the ITC concludes a review with the complete dismissal of the complaint.

6. July 2011: the ALJ in charge of investigation no. 337-TA-710 makes an initial determination that HTC infringes on two of Apple's ten originally asserted patents. But this determination is reviewed, and this week one of those two patents was found infringed and the other was not (or it was considered invalid).

7. October 2011: an ALJ recommends the dismissal of HTC's first ITC complaint against Apple (four patents in play, one previously dropped by HTC). In December 2011, the Commission announces a review limited to only one of those patents, and even on that one an HTC win does not appear too likely.

8. December 2011: as I mentioned before, a final ITC ruling (investigation no. 337-TA-710) finds HTC to infringe two claims of one Apple patent, and a day later, an initial determination (investigation no. 337-TA-744) finds four claims of a Microsoft patent to be infringed by Motorola's Android products. The defendants announce workarounds.

I think the situation between Nokia and Apple was an interesting one. Both companies were heading toward a "goalless draw" (though Nokia still had some hopes that a review of the initial determination might improve the outcome). The ITC, which has the job of protecting the domestic industry against unfair competition from imported products, didn't make things easier for the U.S. company than for its Finnish competitor. Both parties' claims got a rough ride.

The ITC can uphold and protect intellectual property in connection with smartphones since those devices are all manufactured outside the United States, even if their makers (like Apple and Motorola) are based in the US. At any rate, the dispute between Apple and Nokia is a good example of the ITC being a consistently difficult forum for all patent holders rather than pursuing a protectionist agenda. It has certain policies and all the time stakeholders try to sway the ITC on non-legal or pseudo-legal political grounds, but it doesn't disadvantage foreign companies. For example, Samsung doesn't have to be afraid of the ITC playing favorites with Apple. That dispute is taking place in ten countries and in the end neither litigation in the U.S. nor in South Korea (Samsung's home country) is likely to decide the overall outcome. That one will likely depend in no small part on jurisdictions like Germany, France and Australia, or any other of the ten countries in which they're suing each other.

In general, I like it when courts or quasi-judicial agencies set a reasonably high bar for patent infringement claims to succeed. On this blog I have repeatedly criticized judicial decisions that set the bar too low. The ITC may set it too high, considering that its primary task is the effective protection of intellectual property. But if we all look back at the ITC's role in a year or so, we may once again see the same consistent pattern that I just discussed -- possibly with adjustments where the merits of certain cases warrant it, but the ITC is probably going to continue to dismiss the vast majority of smartphone patent claims brought before it.

An important and challenging mandate

District courts and similar courts in other countries are in a different position. After they rule, stakeholders can ask for changes to the law, but they can't ask political decision makers to overrule. With the ITC, which is a government agency, there are political challenges, somewhat similar to the ones that antitrust regulators also face all the time.

Any recommendation of an import ban is subject to a Presidential Review. While U.S. presidents frequently delegate this to the U.S. Trade Representative, and even before the first smartphone-related import ban was handed down, leading U.S. carrier Verizon asked President Obama to veto any bans. Verizon knows there are many cases pending in U.S. district courts, and there will be injunctions by such courts at some point, but its political call related only to the ITC. And as I explained, the ITC's decisions don't provide the slightest indication of any such thing as protectionism (if one wanted to accuse them of anything, it would have to be the opposite), but if foreign nations thought their companies are treated unfairly, they would likely complain through diplomatic channels and their impressions could influence their own trade and IP enforcement policies.

In light of that, it's often the safest and easiest bet for the ITC to take skeptical positions on patent claims (though that also had political repercussions in connection with the Kodak case). I guess the ITC really hopes to avoid that it orders an import ban on a patent that might be invalidated shortly thereafter. There isn't going to be much of a public debate over whether the ITC has recently struck the right balance. That's outside of my focus, too. But I do take note of its decisions, and just the ones I listed above involve a number of major players and dozens of patents, and chances are that those complaints would have been considerably more successful in district courts and definitely in certain international courts.

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ITC dismisses S3 Graphics complaint against Apple: no violation

The US International Trade Commission has dismissed S3 Graphics' first complaint against Apple in its entirety.

The official notice states that "no violation [...] has been shown [...] and that the investigation is terminated". Today's notice does not specify for which reason the ITC overruled the Administrative Law Judge and found no violation. This could be based on a finding of invalidity of the asserted patent claims (from four different but somewhat related patents) and/or a finding of non-infringement and/or patent exhaustion (i.e., Apple not infringing because it uses graphics chips that are properly licensed to the asserted patent claims). More information should become available in the near term, but probably not today.

In early September I analyzed the questions raised by the Commission, the six-member body at the top of the ITC, at the outset of its review and concluded that Apple's iOS devices were very unlikely to be found to infringe any valid S3 Graphics patent claim, and I said that things could get better or worse for Apple's Macintosh computers. This is now the best possible outcome for Apple.

It's a setback for HTC, which is in the process of acquiring S3 Graphics and was hoping to gain leverage against Apple. HTC's own first ITC complaint against Apple is rather unlikely to result in a finding of any violation. An Administrative Law Judge made an initial determination of no violation, and the ITC staff (the Office of Unfair Import Investigations) does not appear to oppose the ALJ's position.

The Commission has a target date of December 6, 2011 for its ruling on Apple's first complaint against HTC. An Administrative Law Judge made an initial determination in July, according to which HTC was found to infringe two valid Apple patents.

This summer, Apple brought a second ITC complaint against HTC, and HTC and S3 Graphics brought second complaints against Apple.

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S3 Graphics v. Apple ruling delayed by six days -- and still no decision on preliminary injunction against Samsung

Delays, delays, delays.

Yesterday the ITC had a deadline in the investigation of S3 Graphics' complaint against Apple, but instead of a ruling, the U.S. trade agency and quasi-judicial authority announced that it pushed back the target date for its Commission determination by six days until Monday, November 21, 2011. The Commission is the six-member decision-making body at the top of the ITC. Administrative Law Judges make preliminary decisions, but the Commission has the final say.

What lends the case particular significance is that S3 Graphics is being acquired by HTC, so any headway it makes could give the Taiwanese handset maker leverage, though I tend to doubt that the combined power of HTC and S3 Graphics is going to force Apple into a settlement anytime soon.

In early September I analyzed the issues the Commission appears to take a particular interest in. At that stage, I concluded that Apple's iOS devices (iPhone, iPad, iPod) were, very likely, on the safe side but for Apple's Macintosh computers, the final ITC ruling could be better or worse than the ALJ's initial determination.

HTC's first ITC complaint against Apple increasingly unlikely to go anywhere

The ITC is also investigating HTC's own first ITC complaint against Apple. The initial determination on that one was handed a month ago and found HTC's asserted patent claims valid, but not infringed by Apple. HTC obviously asked for a Commission review, and Apple, equally obviously, filed only a "contingent petition for review", meaning that Apple would prefer for the Commission to adopt the initial determination as the final ruling, but in the event it decides to take a closer look, Apple reserves the right to raise some additional issues in order to up the ante for HTC.

Those petitions aren't in the public record at this stage (redacted versions will become available later), but the headlines are public and show what the parties' want. Based on the public headlines, the ITC staff (the Office of Unfair Import Investigations) didn't ask for a review, a fact that doesn't make things easier for HTC. I wouldn't want to attach too much weight to the OUII (staff) recommendations: the ALJs and the Commission very frequently disagree with the OUII.

But both the ALJ and the OUII are independent, so if they concur that HTC has no case, then that's a certain indication.

I think that Apple and HTC are going to continue to fight for quite some more time. And this includes S3 Graphics as well as, in the opinion of many observers, VIA Technologies, which sued Apple in September over CPU patents. The target date for the final ITC ruling on Apple's first ITC complaint against HTC is December 6, but whatever the outcome may be, I believe the fight will rage on for some more time, and continue to escalate.

Almost five weeks after the hearing, still no decision on Apple's motion for a US-wide preliminary injunction against Samsung

Another important Apple v. Android decision is outstanding in federal court. On October 13, 2011 -- more than a month ago -- the United States District Court for the Northern District of California held a hearing on Apple's motion for a preliminary injunction against four Samsung products. At the hearing, the judge reportedly said she was going to make a decision soon, but apparently not that soon. The hearing took place almost five weeks ago, and I thought there was going to be a decision within a couple of weeks.

I urge everyone not to engage in excessive speculation over what this may or may note indicate for the outcome. There can be any number of reasons, and the delay per se doesn't bode well or ill for any party. That said, there are two hard facts:

1. For Samsung, every day without an injunction is a day that it can continue to sell products to its resellers (carriers and retail channel). At this stage, it's possible that the most important ones of Samsung's U.S. resellers have large quantities of the accused products in their warehouses and will be fine for the remainder of the Christmas Selling Season.

2. But this also means that the delay has, in and of itself, weakened the public interest arguments made by Verizon and T-Mobile against a preliminary injunction. Those carriers argued that this Christmas Selling Season was going to be a very important period for the adoption of 4G services in the United States, and that Samsung's devices would have to be available at this critical juncture.

Back in the summer I thought that if Apple won a preliminary injunction in the U.S. against Samsung, this dispute might reach a tipping point and increase the prospects of a near-term settlement. But having monitored the worldwide escalation of this spat, I don't think so anymore. A US-wide preliminary injunction would definitely hurt Samsung's revenue production in its largest market, but it wouldn't be the end of Samsung's aspirations as a device maker. It could force Samsung to modify the physical appearance of some of its products for the U.S. market, and that would matter a great deal to Apple, but it wouldn't be the end of the world for Samsung. In order to prevail, Apple will need to enforce utility patents (hardware and software patents) in several major markets, and will furthermore have to fend off Samsung's assertions of allegedly standards-essential patents.

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Update on Apple's patent lawsuits with Samsung, Motorola Mobility and S3 Graphics

Apple keeps the courts busy around the globe. There are new developments in Apple's Australian and U.S. lawsuits against Samsung, two of its U.S. lawsuits against Motorola Mobility, and the ITC investigation of HTC subsidiary-to-be S3 Graphics' complaint against Apple. Here are direct links to the different sections of this posting:

1. Samsung proposes settlement ahead of decision on preliminary injunction motion in Australia

2. Verizon defends its proposal to submit an amicus brief

3. Apple also opposes T-Mobile's brief

4. Samsung asks court not to raise page limit for Apple filing and accuses Apple of presenting "doctored" pictures

5. Court denies Apple's motion to stay Motorola lawsuit in Florida but Apple keeps fighting for a stay in Wisconsin

6. AMD subsidiary ATI claims claims it's the rightful owner of the patents S3 Graphics asserted against Apple in its first ITC complaint

Samsung proposes settlement ahead of decision on preliminary injunction motion in Australia

Reports came out of Australia today on a settlement proposal made by Samsung to Apple in Australia. The terms are not known except that Samsung would get to launch the Galaxy Tab 10.1 in Australia next week and there would have to be something in it that Apple considers attractive.

The reports I saw didn't indicate whether such a settlement would mean lasting peace between Apple and Samsung in Australia, or just eliminate the need for the Federal Court of Autralia to decide on Apple's preliminary injunction motion. I strongly suspect the latter. Apple had to focus its preliminary injunction motion on only a few patents, and Samsung has worked around them except for two that are still in dispute. This itnews.com.au report on a hearing that took place yesterday says that the remaining two patents-in-suit included Apple's touchscreen heuristics patent (which Apple also uses in several U.S. lawsuits) and "the manufacturing techniques behind the iPad and iPad 2's touch screen". While Samsung's workarounds presumably resulted in some degradation of the user experience, it seems that Samsung still feels its product will be marketable.

Apple now faces the choice of either accepting Samsung's offer or relying on the two patents at issue. One of the reports on today's settlement offer even refers to only one touchscreen patent, presumably meaning the heuristics patent. With such a narrowed case, Apple might not be able to obtain a preliminary injunction and prefer a settlement, though I suspect a settlement in Australia would still give Apple all options to assert other intellectual property rights going forward.

The Sydney Morning Herald's report on yesterday's hearing quotes a statement that confirms the Australian case does not involve design-related rights, unlike the cases in Germany (where Apple prevailed on that basis), the Netherlands (where the judge granted an injunction based on a software patent but didn't consider a design-related right valid) and the United States (where a hearing on Apple's motion will be held on October 13).

Samsung's preference for license deals is not new. But in the short term, Apple and Samsung will probably be able to agree only on limited parts of their worldwide dispute, such as the Australian preliminary injunction motion.

Verizon defends its proposal to submit an amicus brief

A week ago, Verizon asked the United States District Court for the Northern District of California for permission to submit an amicus curiae ("friend of the court") brief to voice its concerns over the impact the preliminary injunction requested by Apple would have an on the carrier's 4G (LTE) network. Apple objected to the timing of Verizon's initiative.

Yesterday, Verizon replied to Apple's objections. It took "no position on Apple's request for a response" (while Apple preferred for Verizon's motion to be denied, it at least wanted to have until October 6 to reply), which shows that Verizon primarily just wants to be heard by the court, whatever the response deadline may be.

Verizon justifies its belated filing of the proposed brief with the fact that the deadline in federal appellate courts (as opposed to a district court like the one in which this litigation is taking place) is "within 7 days of the principal brief that it supports", but Verizon recalls that "Samsung lodged its preliminary injunction opposition under seal", so "Verizon Wireless has never been able to review Samsung's opposition brief".

That argument rings hollow. While the brief itself was and remains sealed, the schedule for this process, including the deadline for Samsung's opposition filing, became publicly known on July 19, 2011. Samsung made that filing on August 22, and hundreds of pages of exhibits were made public. In those documents, I discovered Samsung's reference to a device in Stanley Kubrick's "2001: A Space Odyssey" movie, a story that received widespread media coverage around the world and especially in the United States. So if Verizon had required a reminder of Samsung having field its opposition brief, it could have found it in numerous U.S. and international media.

It gets even worse. Right after the reference to the sealed opposition brief, Verizon writes this:

"In any event, the schedule of briefing before appellate courts has little applicability to a compressed preliminary injunction briefing schedule."

In other words, Verizon apparently realizes that it won't win the "within 7 days" argument and then says that the schedule in Apple v. Samsung is "compressed" as far as the preliminary injunction is concerned. This is moronic. If there's any reasonable conclusion to be drawn from a "compressed" schedule, it's that there's an even greater -- not lesser -- sense of urgency for "friends of the court" to step forward.

With respect to Apple's argument that it would need time to conduct discovery of Verizon and possibly third parties with respect to Verizon's arguments, Verizon claims that it "relied solely on publicly available information in support of its brief". That is, however, not true. Verizon makes such claims as not being able to replace Samsung's potentially banned products with alternative solutions. Those and other claims are not "solely" based on "publicly available" but would require further discovery in an orderly process.

Verizon's proposed brief is weak, and in defense of its motion for leave it doesn't come up with a convincing justification of its untimely filing. It's now up to the court whether it wants to accept a belated filing and, thereby, reward such behavior that is neither in the interest of efficiency nor in the interest of justice. Courts tend to set a rather low hurdle for amicus briefs. Even in Supreme Court cases it's sometimes amazing to see what kinds of amicus briefs get accepted. But the question is whether the courts want to let "friends of the court" mess up their schedules.

Apple also opposes T-Mobile's brief

On Wednesday, T-Mobile also filed a proposal for an amicus brief in support of Samsung. A day later, Apple also opposed that motion.

Just like T-Mobile basically made the same argument as Verizon, just that T-Mobile didn't exclude the three asserted design patents from the scope of its motion (which wasn't credibly in Verizon's case anyway), Apple also makes largely the same argument -- mostly about timing -- in opposition to T-Mobile's motion, and if the court accepted T-Mobile's motion, Apple asks for the same response deadline as in Verizon's case October 6).

Apple highlights that both Verizon and T-Mobile claim to be "uniquely positioned" to make a 4G-related public interest argument, which is contradictory unless one ignores the fact that the word "unique" is derived from the Latin word for the number one. Here's how Apple points out the inflationary use of "uniquely positioned":

"While T-Mobile claims to be 'uniquely positioned' to argue the harm to the public interest from a preliminary injunction, Verizon, too, claimed to be 'uniquely positioned to describe how the requested injunction may harm U.S. customers, wireless carriers, and businesses.'

Apple notes that Verizon, unlike T-Mobile, didn't request to participate in the hearing. But I guess Verizon might also make such a request if its amicus brief is accepted. Anyway, Apple doesn't want additional participants in the October 13 preliminary injunction hearing "[i]n view of the many issues likely to be discussed at the hearing".

Samsung asks court not to raise page limit for Apple filing and accuses Apple of presenting "doctored" pictures

Yesterday, Apple asked the United States District Court for the Northern District of California for permission to file a 30-page reply to Samsung's opposition to Apple's preliminary injunction motion -- twice as much as the usual page limit for such a pleading, according to local rules set by the court.

Samsung would apparently have agreed to this "in exchange for [Apple] making its new declarants available for deposition next week", but Apple, according to its own filing, "objected to the linkage of the issues". Samsung would also have been fine with 10 additional pages, without asking for anything in return. It seems that 25 pages weren't enough, and Apple tries to get permission for 5 more.

I found an interesting passage in Samsung's opposition to a 30-page limit:

"Apple further bases its motion on the fact that its briefs have included various images, which take up extra space. This is irrelevant. Apple was not required to add pictures to its moving papers; it did so voluntarily because it thought this would work to its advantage. It is not as if Samsung does not have to respond to pictures as it does to text. In fact, as Samsung has already shown -- as have independent media outlets -- the pictures Apple used in its preliminary injunction motion were doctored to make the dimensions of Samsung's products match those of Apple's products, even though the products are obviously not the same size when viewed in person. [...] More disturbingly, Apple has not only shrunk the images of Samsung’s products to match its own, it has even changed the proportions of those products, making them fatter if needed to match the relative width of Appl'’s products. See http://newyork.ibtimes.com/articles/198219/20110815/apple-samsung-patent-war-ipad-2-galaxy-tab-10-1-flaw.htm. At best, this is inappropriate. At worst, it is deceptive. If Apple is planning to fill its reply with similarly manipulated photos, this is just one more reason it should not be allowed to double the length of its reply brief."

The "independent media" referenced by Samsung all reference material produced by Webwereld's Andreas Udo de Haes, the reporter who analyzed Apple's German preliminary injunction motion (and subsequently also other documents) from this angle. A German court -- the Düsseldorf Regional Court -- did not take issue with those findings (I translated that court's decision in favor of a preliminary injunction). But Samsung apparently brings up this issue again in California. It apparently did so in its August 22 reply to Apple's preliminary injunction motion, which is (as I said before) sealed.

Court denies Apple's motion to stay Motorola lawsuit in Florida but Apple keeps fighting for a stay in Wisconsin

Three weeks ago, Apple filed motions with federal courts in Wisconsin and Florida to stay two lawsuits between and Apple and Motorola Mobility pending the latter's acquisition by Google, arguing that the merger agreement between Google and Motorola Mobility makes a variety of patent-related actions and decisions subject to Google's prior consent. Last week, Motorola Mobility (MMI) said that it wanted those lawsuits to continue, and even offered to try to amend the Google-MMI merger agreement in order to address any concerns the court might have.

Yesterday, Judge Ursula Ungaro of the United States District Court for the Southern District of Florida denied Apple's motion with respect to a lawsuit in that district. She didn't provide any reasoning -- she just denied. That's why it's difficult to conclude from this what it means for Apple's materially consistent motion in the Western District of Wisconsin. If Apple had won a stay in Florida, it would have increased the likelihood of a stay in Wisconsin, but the Florida lawsuit is scheduled to go to trial in August 2012, while the Wisconsin trial is scheduled for April 2012. If the decision in Florida was mostly based on the assumption that Google's acquisition of MMI would most likely be concluded by August 2012, the Wisconsin court might decide differently since its own trial is scheduled for a point in time at which the merger could easily be pending regulatory clearance.

In Wisconsin, Apple filed a reply to MMI's opposition, and along with it, Apple provided several declarations that explain the timeline of merger review processes in four major jurisdictions: the United States, the European Union, China, and Russia. In connection with the EU process, Apple's lawyers used Oracle's acquisition of Sun as an example of a merger that was approved in by United States Department of Justice in August 2009 but by the EU only in late January 2010. I was quite actively involved with that matter. China cleared the merger at a similar time as the EU, and in Russia, some remedies were still imposed in March 2010. These four major jurisdictions as well as a couple of smaller ones (Canada, Israel, Taiwan and Turkey) are critical for Google's acquisition of MMI to go through. The merger agreement specifies jurisdictions whose consent is required.

In the United States, a second request for information has just been issued by the DoJ, which shows that the merger raises issues that dissuaded regulators from granting fast-track approval. According to Apple's declarations attached to the Wisconsin filing, it seems that notifications in the other major jurisdictions mentioned above weren't made or at least not confirmed officially.

In connection with whether MMI would be prejudiced by a stay of the Wisconsin litigation, Apple notes that its motion relates to a stay of all claims, including Apple's own claims. (Actually, Apple is asserting 15 patents in that lawsuit, and MMI, 6). Apple also rejects MMI's suggestion that it has "grown tired of pursuing its claims". Apple explains that it suggested a stay of both parties' claims just "because, inter alia, it would be more efficient for the Court". As an external obsserver of many smartphone patent disputes, I certainly don't see any indication of litigation fatigue on Apple's part.

AMD subsidiary ATI claims claims it's the rightful owner of the patents S3 Graphics asserted against Apple in its first ITC complaint

The Commission, the six-member decision-making body at the top of the ITC, is currently reviewing an initial determination on S3 Graphics' first complaint against Apple. I recently analyzed the situation in that process: it appears that S3G is unlikely to win an import ban against Apple's iOS devices, and things could get better or worse for the equally accused Macintosh computers.

Meanwhile, S3G has even lodged a second ITC complaint against Apple, over two new patents.

With respect to the four patents at issue in the first investigation, there's a surprising development. On September 15, ATI and its parent company, AMD, filed a motion proposing that the ITC dismiss the case since the patents-in-suit allegedly belong to ATI rather than S3G -- and ATI has no intention of suing Apple over them.

The AMD/ATI motion includes a detailed history of the ownership of those patents, and ATI apparently believes to have acquired them years ago regardless of whatever the assignment database of the patent office may say.

I'm waiting to see S3G's rebuttal and the ITC staff's opinion on this. It's a strange story to say the least. Since U.S. patents can be sold without a report to the patent office, it's possible for such disputes to come up later, but it would be unusual, if not unprecedented, for a patent litigation to end with a dismissal just because of an ownership issue.

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HTC subsidiary-to-be S3 Graphics sues Apple over two patents in new ITC complaint and federal lawsuit

Yesterday (Thursday, September 22, 2011), S3 Graphics, a company in the process of being acquired by HTC, filed two new complaints against Apple, further escalating the patent dispute between the "HTC camp" and Apple:

• an ITC complaint (click here for the official notice) over "Electronic Devices with Graphics Data Processing Systems, Components Thereof, and Associated Software"

• a federal lawsuit in the District of Delaware, targeting "certain electronic devices and components, [for example], the Apple iPhone, iPad, an[d] iPod Touch mobile devices, Apple Mac desktop and notebook computers, alone or in combination with associated system and application software sold or distributed by Apple"

S3 Graphics asserts the same two patents in either complaint:

1. U.S. Patent No. 5,945,997 on "block- and band-oriented traversal in three-dimensional triangle rendering" (applied for by S3 in 1997)

2. U.S. Patent No. 5,581,279 on "VGA controller circuitry" (applied for by Cirrus Logic in November 1993, granted by the USPTO in December 1996 and sold to S3 in 1998; it appears that this patent will expire in late 2013, but an ITC investigation is usually finished within about 18 months, so an import ban could be in effect for roughly eight months if S3 successfully enforced this one)

If the ITC agrees to investigate the new complaint, the "companion lawsuit" filed in Delaware will be stayed until after the ITC trial, provided that Apple asks for it. Companion lawsuits are filed because the ITC cannot order damages -- only federal courts can.

Now let's talk about how those filings fit into the overall dispute between Apple and HTC.

This is S3's second ITC complaint against Apple

The dispute between Apple and the "HTC camp" started in March 2010 with Apple's first ITC complaint against HTC. In May 2010, HTC retaliated with an ITC complaint against Apple (which looked rather weak), and S3 Graphics filed its first ITC complaint against Apple.

Preliminary decisions ("final initial determinations" as well as decisions to review them) have already been taken by the ITC with respect to two of those three complaints:

• An Administrative Law Judge (ALJ) found Apple to infringe two S3 patents, but only with certain Macintosh computers and not with its iOS devices. The Commission (the six-member decision-making body at the top of the ITC) is reviewing that decision in its entirety, which could make things better or worse for the Macintosh line but it appears rather unlikely that Apple's iOS devices (iPhone, iPad, iPod) would be found to infringe.

  Apple is trying to have S3's case dismissed or at least some discovery conducted with respect to the question of whether S3 Graphics owns the patents-in-suit, given that ATI (AMD) now claims, surprisingly, to be the rightful owner.

• Another ALJ found HTC's Android devices to infringe two Apple patents. That determination is being reviewed in part, and the final outcome could range from zero to four valid patents that are deemed infringed. I believe HTC will probably be found to infringe at least one valid Apple patent, possibly two, but probably not three or four, and I would also be moderately surprised if HTC got away without any infringement finding at all, even though one of its senior executives claimed so according to the Korea Times.

Concerning HTC's first ITC complaint against Apple, the target date was recently pushed back by a month. Based on the current schedule, a final initial determination is due by October 17, 2011. Those "IDs" sometimes come a week or two ahead of schedule.

Meanwhile, three second complaints have been filed with the ITC by these parties:

• In mid July, Apple filed a second ITC complaint against HTC. That one is already being investigated.

• Earlier this month, HTC filed a second ITC complaint (and a Delaware lawsuit) against Apple, using patents provided to HTC by Google.

• And with yesterday's filings, S3 has also lodged a second complaint against Apple with the ITC.

Yesterday it became known that VIA Technologies, which is selling its shares in S3 to HTC, also filed an ITC complaint against Apple (over CPU-related patents). It would be too speculative to see an HTC hand in this, but it's an interesting coincidence for sure.

Earlier this week, the Financial Times quoted a European lawyer representing HTC before the High Court of England and Wales as saying that an action brought by HTC against Apple in London in late July would go to trial in late March 2012, most likely before a German lawsuit brought by Apple would be decided. The article refers to actions in Mannheim and Munich. I don't have access to the documents but by far the most likely interpretation of this is that HTC filed declaratory judgment actions against four Apple patents in London, and Apple filed an infringement action in Mannheim. The Munich case won't be another infringement action: German patent cases can be, and frequently (but not always) are, interrupted pending nullity actions (attempts to invalidate the asserted patents) before the Federal Patent Cout in Munich. From a legal point of view, the German court is not at all bound by whatever the London court may decide on the validity of those patents since European patents have to be litigated country by country. In Apple v. Samsung, a German court also chose to disagree with a foreign (in that case, Dutch court on the validity of a design-related right.

So there's a lot going on between those two parties. Apple doesn't comment on these disputes in public other than referring everyone to a March 2010 statement by Steve Jobs (on the occasion of Apple's first complaint against HTC). By contrast, HTC's executives talk a lot about this dispute. I mentioned that Korea Times article about HTC claiming that it will win at the ITC, and two weeks ago, the acting president of HTC America also spoke out in public on this matter.

Apple is getting used to such bravado. They also get to hear similar statements from Samsung, which just sent out a taking-the-gloves-off message. On Monday, there will be a hearing in The Hague, Netherlands, on four Samsung complaints aiming to have the iPhone and iPad banned, using FRAND standards patents (a problematic strategy on which I gave comments to the Wall Street Journal) and is already talking about plans to have the iPhone 5 banned in Korea and/or Europe.

Ultimately, neither Samsung or HTC can fend off Apple's patent assertions just by way of public statements and scattershot litigation. If they want to achieve anything, they will have to score important wins in court. So far, Apple is on the winning track against both of them.

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