Apple Wins, Posner Loses in Smartphone Patent Appeal

Apple Wins, Posner Loses in Smartphone Patent Appeal J. Albert Diaz Judge Jimmie V. Reyna, United States Court of Appeals for the Federal Circuit

SAN FRANCISCO — “Daubert for Dummkopfs” has officially been debunked.

The U.S. Court of Appeals for the Federal Circuit on Friday tore up big chunks of Judge Richard Posner’s pretrial ruling in the Apple-Motorola smartphone litigation, particularly his decision that almost all of the damages evidence from both sides was inadmissible.

Apple’s evidence was so biased, Posner had written, that if presented anywhere but a courtroom its proponent would be fired as a “dummkopf.” His ruling inspired a law review article titled “Daubert for Dummkopfs.” But the Federal Circuit ruled Posner had been too quick to find zero damages. “The district court’s decision states a rule that neither exists nor is correct,” Judge Jimmie Reyna wrote.

On the surface, Apple v. Motorola appeared to be mostly a win for Apple in its holy war with Google-owned Motorola Mobility over smartphone technology. The Federal Circuit largely adopted claim constructions advanced by Apple, including that its specification of touchscreen “heuristics” was not indefinite. The court also ruled that Posner had correctly refused to enjoin Apple from infringing a Motorola standard-essential patent on wireless communication.

But one of those wins could come back to bite Apple in its smartphone trial against Samsung in San Jose, which involves one of the same Apple patents, According to press reports, Judge Lucy Koh ruled Friday that she would reopen testimony next week and let Samsung argue that Apple’s damages are limited under the claim construction adopted by the Federal Circuit for the patent, which covers “quick links” that flag phone numbers in messages.

The brawl decided Friday was assigned to Seventh Circuit Judge Posner while he was sitting by designation as a district judge. The focus was on Apple patents on touch screen technology and APIs, and Motorola patents on wireless communication and encryption.

After construing claims and holding a Daubert hearing, Posner granted summary judgment that neither side was entitled to damages or an injunction. He criticized each side’s case for damages, particularly Apple economics expert Brian Napper, who relied on data provided by an Apple technical expert. Suppose Napper had made the same presentation to Motorola, Posner wrote in his opinion. “Dummkopf, you’re fired,” would have been the response, he wrote.

On the contrary, Reyna wrote Friday for the Federal Circuit, Napper’s methodology was sound. “Experts routinely rely upon other experts hired by the party they represent for expertise outside of their field,” he wrote. It’s up to a jury to decide how much value to place on it, Reyna concluded.

University of Santa Clara law professor Brian Love said Friday that the decision is not too surprising. “The law of patent damages is vague and amorphous,” he said. Parties can plausibly reach valuations that diverge by a factor of 100.

Posner, he said, brought a great deal of economic rigor in assessing how much the parties actually would have agreed to pay. “He did what the law should be. It’s just not what the law currently is,” Love said.

The other meaty issue facing the Federal Circuit was whether Apple should be enjoined from infringing Motorola’s standard-essential patent. Posner ruled there could be no justification for an injunction unless Apple was refusing to pay a fair and reasonable royalty. By committing to FRAND terms, Motorola had “implicitly acknowledged that a royalty is adequate compensation.”

The three Federal Circuit judges had different viewpoints. Reyna held there is no “per se rule that injunctions are unavailable” for standard-essential patents. By committing to FRAND, a patentee may have difficulty establishing irreparable harm, Reyna wrote. “On the other hand, an injunction may be justified where an infringer unilaterally refuses a FRAND royalty or unreasonably delays negotiations.”

Because there was no evidence Apple was refusing to negotiate, Reyna wrote, Posner had properly granted Apple summary judgment and turned down the injunction.

Chief Judge Randall Rader dissented, saying Posner should have given Motorola the chance to prove Apple is an unwilling licensee. That, he said, “would strongly support its injunction request.”

The value of a standard-essential patent, which may be truly innovative or may simply benefit from being designated the standard, will often be a fact-intensive issue, making summary judgment inappropriate, he argued.

Judge Sharon Prost concurred in the grant of summary judgment, but disagreed with Reyna’s suggestion that the refusal to negotiate a license would justify the issuance of an injunction against an infringer.

Orrick, Herrington & Sutcliffe partner E. Joshua Rosenkranz argued the case for Apple. Quinn Emanuel Urquhart & Sullivan partner David Nelson argued for Motorola.

Contact the reporter at sgraham@alm.com.

LOAD MORE
Practice Area(s):