This week I tried to keep better track of the intellectual property news as it happened. I will take the opportunity to direct readers to the article I wrote on the Apple v. Samsung case. You can also read the Reuters article or the San Jose Mercury article on the pretrial conference if you want. Given more news to cover, it’s time to begin another Week in IP article.
Back in 1984 Congress passed the Hatch-Waxman act to increase the availability of low-cost generic drugs. Generic manufactures can file an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA) to allow the generic drug to rely on the FDA testing of the patented version of the drug. As a precondition the generic must not be violating any patents. Drug companies found out that they could pay off the generic drug makers to not file suits questioning the validity of the drug companies’ patents in court. The Federal Trade Commission (FTC) has been trying to stop these pay-for-delay drug settlements. FTC research indicates that pay-for-delay settlements cost consumers billions annually. One year after the generic is released, the generic drug takes the vast majority of the patented drug sales and is much cheaper. Furthermore, according to the FTC, when generic drug manufacturers sued to question patent validity, about three-fourths of the time the court invalidates the patent.
This week the 3rd Circuit Court of Appeals released its decision in In Re: K-Dur Antitrust Litigation. Patent holder Schering-Plough paid generic drug manufacturers to drop their patent suits in return for a monetary sum and an agreement not to enter the market for a specified period. The court ruled that, contrary to rulings in other jurisdictions, the pay-for-delay settlement is “prima facie evidence for an unreasonable restraint of trade.” While a patent is presumed valid in court proceedings challenging, the 3rd Circuit believes the issue to be a procedural matter rather than the patent holder’s right.
Professor Michael Carrier of Rutgers Law School wrote that other courts have considered the pay-for-delay settlements as part of the scope of the right to exclude a patent grants to its owner. However, the courts have been assuming the scope of patent test applies to a patent whose validity is in question. If the patent is invalid, then there is no right to exclude to begin with, so the courts should balance the pay-for-delay settlements with antitrust scrutiny to ensure patents are examined correctly and invalidated when necessary to the public interest. The court mentions in its opinion that the scope of the decision should be limited because of the nature of antitrust scrutiny cases.
Research in Motion (RIM) is in a lot of trouble. To save a billion dollars RIM is trying to lay off about five thousand employees, and the Blackberry 10 release has been delayed until next year. On Monday a jury in the Northern District of California found RIM guilty of infringing two of Mformation’s patents in RIM’s development of the Blackberry Enterprise Server (BES). RIM owes $8 for the 18.4 million smartphones with BES capability sold after Mformation filed suit in 2008. The current total for damages is $417 million.
Mformation claimed BES violated patent 6,970,917, System and Method for Remote Control and Management of Wireless Devices. The other patent was patent 7,343,408, System and Method for Wireless Data Terminal Management Using Telecommunication Signaling Network. While both patent applications were filed in 2001, the ’917 was granted in 2005, and the ’408 patent was granted in 2008. A CRN report notes that RIM is trying to allay the amount of total damages and reiterates that BES was developed independently. Of course, independent development is mostly irrelevant in a patent trial. During this case, what mattered was if Mformation invented the subject matter of its patent before RIM did. For future cases, the issue will be which party filed for the patentable material first.
Apple and Samsung have both been trying to keep information related to their patent battle in San Jose out of the hands of the public. Reuters filed in opposition to both companies’ motions to redact information in some of the case documents. Late on Tuesday Judge Koh denied the motions to seal.
To help explain the reasoning behind the decision, legal affairs paper the Recorder interviewed U.S. District Judge Jeremy Fogel about confidentiality concerns. Fogel said that judges need to weigh business and technological concerns against the public interest to determine which information is proprietary and thus kept under seal and which information can be disclosed. The media can raise issues that opposing parties did not litigate, which is especially important because companies seem to file for sealing documents when they do not really need the confidentiality.
Last week Apple lost its patent infringement suit against Samsung in the UK because Apple’s products were cooler than Samsung’s and represented different design impressions than any of Samsung’s tablet designs. On Wednesday, UK Judge Birss ordered Apple to publicize the judge’s decision by posting on Apple’s UK website and in UK papers that Samsung did not copy Apple’s designs. Judge Birss also denied Samsung’s request for an injunction banning sales of Apple products in the UK. Apple has appealed the decision of noninfringement.
The International Trade Commission (ITC) was founded to give U.S. companies a better venue for challenging unfair foreign competition. On Wednesday the House of Representatives Judiciary Committee met to discuss changes in the ITC forum based on recent trends in the patent wars. Companies have been using the ITC because companies have an easier time obtaining an injunction barring sales of a foreign competitor’s products through the ITC than through a U.S. District Court. Congress in general wants to limit the opportunities to request an injunction in two different federal forums, especially when the plaintiff is a non-practicing entity and is just looking for a quick settlement instead of promoting its own products in the marketplace.
On Tuesday, Apple was granted patent 8,223,134, Portable Electronic Device, Method, and Graphical User Interface for Displaying Electronic Lists and Documents. It is a continuation of an application that later became patent 8,130,205, Portable Electronic Device, Method, and Graphical User Interface for Displaying Electronic Lists and Documents. Thus, the recently granted patent concerning the method of scrolling through electronic documents and lists on a smartphone claims priority from applications filed back when the iPhone was first announced. Android and Windows phones contain similar methods, so the new Apple patent could spell trouble in new litigation to bar the sales of products Apple considers to be iPhone and iPad copycats.
On Thursday Taiwan-based smartphone manufacturer HTC announced that it was suing Apple in U.S. District Court for the Southern District of Florida for violating two patents HTC acquired from Hewlett-Packard. The two patents are patent 7,571,221, Installation of Network Services in an Embedded Network Server, and patent 7,120,684, Method and System for Central Management of a Computer Network. This is another segment of the long battle the two tech giants have been fighting. For example, last week a UK court ruled that HTC did not infringe any of Apple’s patents.
Last month Judge Koh granted Apple’s motion for a preliminary injunction barring the sale of the Samsung Galaxy Tab 10.1 tablet in the United States. With a jury trial closely approaching, Apple has petitioned to talk about the injunction in front of the jury. On Thursday Koh ruled that Apple could not tell the jury about the injunction because the prejudicial harm to Samsung outweighs any relevance to the jury’s actual decision in the patent infringement suit.
Eastman-Kodak, once known for as a leader in the photography field, is now a bankrupt company. All Kodak has left is its patent portfolio, but with a recent ITC decision, Kodak has lost its patent case against Apple and RIM. Kodak sued the two companies based on a digital imaging patent that records high resolution stills but saves energy by previewing low res moving images. An ITC commission agreed with an ITC judge ruling that Apple’s iPhone 3G and RIM’s BlackBerry phones would violate Kodak’s digital imaging patent, but Kodak’s patent was not valid. While Kodak’s patent was found to be obvious in light of earlier image processing invention, Kodak is still suing Apple and HTC based on different Kodak patents. The trial for that case is scheduled for next February.
In June Judge Posner dismissed with prejudice Apple and Motorola’s patent infringement suits against each other in the Northern District of Illinois. This Friday both companies appealed the dismissal. Apple wants to appeal the motion for an injunction, and both companies want to appeal Posner’s dismissal of their experts related to damages and the dismissal of the underlying theories for damages. Posner dismissed the case before jury trial because he did not think either side could prove damages to either party. Apple and Motorola continue to fight in the ITC as well as in other venues across the world.
While Apple was not successful in its patent infringement suit against Samsung in the UK, Apple managed to ban the sale of Samsung tablets in the US. A recent report from Fitch Ratings indicates that the Apple v. Samsung battle will last another twelve months with over forty different lawsuits happening in courts around the world. Fitch considers Samsung to be a leader among Android smartphone manufacturers, so Fitch does not expect courts in general to ban Android products from competition with Apple products. While bans on the Galaxy Tab 10.1 tablet and Galaxy Nexus smartphone do not really affect Fitch’s forecasts for Samsung revenues, Fitch notes that bans on the sale of the Galaxy S II and Galaxy S III smartphones would change Fitch forecasts.