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First Report from the Apple v Samsung Hearing - Judge Koh Takes It Under Advisement ~pj Updated 2Xs
Thursday, December 06 2012 @ 08:57 PM EST

We have our first report from the US District Court in San Jose, CA, as the hearing Apple and Samsung's motions for judgment as a matter of law or new trial just concluded. Our reporter sends an initial report, with more to come later.

And it appears from our report that the media may be overplaying somewhat that Samsung said peace was up to Apple, that the ball was in Apple's court, as if Samsung is ready to settle. I see nothing to corroborate that yet in our reporter's notes. What they actually said was a lot sharper, with the meaning intended to be that Apple is the problem. Samsung accused Apple of going to Samsung's suppliers after the jury verdict and scaring them by claiming the verdict meant they couldn't sell the affected Samsung products any more. It's the judge, the Hon. Lucy Koh, who really wants the parties to settle this. But there was no settlement.

And yes, there was discussion about jury misconduct, with Samsung requesting a hearing, with the jurors brought in and the foreman questioned. Apple sneered at that, saying that when the foreman said serving on the jury was the highlight of his life, it didn't mean he was trying to get on the jury because he had an agenda. Rather, it should be taken as a tribute to how wonderfully the judge handled this case.

Blech. Apple lawyers apple-polishing the judge. We'll see if it works. The judge will issue written orders on all the motions in due course.

Jump To Comments

[Update 1, Update 2]

Here's the initial report:

Judge Lucy Koh: When is this going to resolve? Is there some event?

Harold J. McElhinny [Apple attorney] - I talked to you about this in 2011. It would be clear when the law was clear and then it would be clear it would be enforced. You granted an expedited trial. You had a hard-working jury.

Koh: Where is this point of law you want to establish? Trade dress, injunctions?

McElhinny: Area of damages. It's a mathematical calculation about how far to infringe, how willful and when. If you look at what's happened with market share. We have a $1B verdict. It's now about the going-forward conduct. It's now a question whether the American system has a method to apply a remedy that changes behavior.

Charles K. Verhoeven [Samsung attorney]: Not going on and on giving a long speech. Apple attempting thermonuclear war throughout the world. We see it differently, after the getting of the initial adjudication, they went and scared our suppliers saying that they couldn't sell us any more. So you're asking about when are the parties going to talk? We're ready to talk, the ball is in their court. [PJ: Note that Howard Kurtz in a tweet attributes this to attorney Kathleen Sullivan for Samsung.]

Koh: I'm not going to order anyone to talk as that hasn't been helpful.

Verhoeven: Ask Apple.

Koh: Time for peace. If there's any way that I can help reach a resolution. I think it would be good for consumers, good for the companies.

McElhinny: Ask Judge Sparrow. He's been trying very hard.

John Quinn [for Samsung] on Hogan: We know he was dishonest. From interviews he's given, he very much wanted to be on this jury. High point of his life after his children. He was asked if he'd ever been involved in a lawsuit. He lied on the key question. He never claimed he forgot it. He claimed he thought it was limited to 10 years and that wasn't in the record. He also gave the inconsistent explanation that he wasn't asked to explain every case he'd ever been involved in. It was only a year ago when Samsung became Seagate's largest owner. Only public US company with foreign board member. He had to declare bankruptcy to protect his family. He told the reporters what he didn't tell the court. The closeness of the relationship, the bankruptcy, he should have been excused.

The Dyer case: Kosinski - juror indifferent to serving on the case. "A juror who lies to get on the jury is indifferent, is a juror in name only". That type of juror is inclined not to listen to court. From the public statements, the jury was undecided, then he had an ah hah moment, such that he made a difference.

Koh: Velvin disclosed that he worked at Seagate.

Samsung: The way it was left, he left us with the impression that he was never involved in any legal issues. With limited time in voir dire. Piecing this together, Kosinski says "this juror was too eager to get on the jury". This was a man who worked in hard drives for 36 years. I submit, he knew about the relationship with Seagate and Samsung. Case law says that "where a possibility of dishonesty"… at a minimum, hold a hearing. That Hogan be brought as we haven't had a chance to question. And secondly the other jurors are brought in to understand the impact of this.

William F. Lee [for Apple]: What Samsung has said: that jury foreman has lied: not true. McDonough standard: "Just has to be dishonest, not incomplete but dishonest". [PJ: That is referring to the US Supreme Court decision in the case McDonough Power Equipment, Inc. v. Greenwood.] His request is a little bit absurd. They're claiming that Hogan harbored a grudge for 19 years, that he then executed. Mr. Hogan was asked if he was ever involved in a lawsuit and he raised his hand. Verhoeven voir dired him for 2 1/2 pages. I think it's outrageous that he's being called a liar.

Samsung: McDonough is about the mistaken but dishonest juror. Had an agenda. I take no pleasure saying that a jury engaged in misconduct.

McElhinny: I never met, never have spoken with Velvin Hogan. When Mr Quinn attacked the court, you handled that attack. Mr Hogan didn't have a choice here. When a juror said that this was a highlight of their life, that's a tribute to you. Take the time, if you agree, to make it clear to the public that this was another unprofessional motion.

Koh: Thank all of you for your patience. I will try to get these orders out as quickly as I can.

To understand what the lawyers were arguing about regarding the jury misconduct issue, you might want to read this article, Judicial Confusion and Inconsistency in Handling Juror Misconduct: A New Proposal by Kristin D. Clardy and published in 2009 in the William and Mary Bill of Rights Journal. The article runs through just how complex an area of law it is, when jurors are not truthful in their answers in voir dire. Here's another, Juror Misconduct: Recognizing It and Raising It On Appeal, by Lori Quick. It lists, for example, the 8 grounds on which a challenge for implied bias may be taken, hence disqualifying the juror, as per California's Civil Procedure Code Section 229. Three of them are
  • Interest on the part of the juror in the event of the action, or in the main question involved in the action, except his or her interest as a member or citizen or taxpayer of a county, city and county, incorporated city or town, or other political subdivision of a county, or municipal water district.
  • Having an unqualified opinion or belief as to the merits of the action founded on knowledge of its material facts or of some of them.
  • The existence of a state of mind in the juror evincing enmity against, or bias towards, either party.

It adds:

However, federal courts have held that bias can be implied or presumed from the “potential for substantial emotional involvement, adversely affecting impartiality” inherent in certain relationships. (United States v. Allsup (9th Cir. 1977) 566 F.2d 68, 71; Tinsley v. Borg (9th Cir. 1990) 895 F.2d 520, 527.)
This is why Samsung is arguing that it could have removed the foreman from the jury pool had the truth been on the table during voir dire. The paper discusses some other famous cases, including one Apple referenced, Dyer v. Calderone:
During deliberations, one of the seated jurors told the rest of the jury that Nesler was not a good mother. The juror claimed to know this because she knew Nesler’s babysitter who gave her unflattering information about Nesler’s parenting skills, specifically that she would leave her children for days at a time. (Id., at p. 571, 573-574.) She often told the other jurors that “if [they] knew what she knew” they would feel differently. (Id., at p. 571) She also told them that after the trial they would find out that Nesler was “not the angel everyone is painting her to be.” (Ibid.) The juror also referred to Nesler as a “crankster” and said that she fraternized with drug users and dealers. (Id., at pp. 571, 573-574.) Although the Court of Appeal found no substantial likelihood that Nesler suffered actual harm from juror misconduct, the Supreme Court felt otherwise and reversed the Court of Appeal’s judgment, reasoning that the juror’s “interjection of extraneous evidence into the deliberations suggests that . . . she was unable to put aside both the information she had acquired outside of court and her impressions and opinions derived from that information, thus indicating a substantial likelihood of actual bias on her part.” (Id., at p. 587.)

In In re Hitchings, supra, 6 Cal.4th 97, the defendant was being tried for a double homicide. One of the jurors worked at a bank with the wife of one of the arresting officers. She failed to reveal during voir dire that in the course of her employment at the bank, she had at the very least overheard conversations about the case prior to trial. She did not reveal that the crime had been a regular topic of conversation at the bank, and that all of the bank employees, including herself, felt that the defendant was guilty. The Supreme Court determined that this was misconduct and stated that the juror’s “ . . . concealment of her knowledge of the case was unquestionably a material issue on voir dire. Indeed, the record shows the prospective jurors’ prior knowledge of the case was of critical importance to defense counsel. We thus conclude the information concealed by [the juror] was sufficiently material and presents no obstacle to finding misconduct . . .” (Hitchings, supra, 6 Cal.4th at p. 116.)

In other cases, prejudicial juror misconduct has been found for a juror’s failure to reveal that she had been assaulted at knifepoint during an attempted rape despite having been specifically asked about prior experiences as a victim (People v. Diaz, supra, 152 Cal.App.3d at p. 931); failure of the juror in a murder prosecution to reveal that her brother had been murdered (Dyer v. Calderon (9th Cir. 1998) 151 F.3d 970); and the failure to reveal status as a convicted felon. (Green v. White (9th Cir. 2000) 232 F.3d 671.)

I think you get the idea. It's complex, and you usually see it in criminal cases, where it is extremely important that the accused receive a fair trial. But there is a lot of wiggle room for any judge to weigh various factors and to go either way, although juror misconduct is hard to win on, just because the consequences of having to do the entire trial over are serious in themselves.

Update: Here's Reuters' coverage of the day's events. And here's Joe Mullin's take at ars technica:

Judge Koh seemed skeptical about both Apple's desire to kick Samsung products off the market with an injunction, as well as the company's efforts to grab more than $500 million in additional damages. She also indicated she's inclined to invalidate at least one of the patents that led Apple to victory, saying that its claims might be too indefinite.

Koh barely brought up the most controversial post-trial issue—Samsung's accusations that the jury foreman lied his way on to the jury, and its request for a new trial because of that. "I think this issue has been fully briefed," she said.

But Samsung lawyer John Quinn brought up the issue just before the end of the hearing, and about 15 minutes of vigorous debate ensued. Still, Koh had a poker face, and there was no hint of how she might rule on the issue.

Saying it's been fully briefed doesn't indicate anything except that she felt she understands all the positions and arguments. It could mean she already had made her mind up. Or maybe she wanted to spare the jury foreman the embarrassment of being called a liar in public, with crowds of media in the room. But John Quinn took no chances, and stepped up to make sure to make a record and to win her, if he could.

But this is by far my favorite moment from the article:

Koh then had a question for Apple's lawyers: the jury had found that Samsung phones infringed the trade dress for the iPhone 3G and iPhone 3GS, but Apple doesn't even make those phones anymore. "If you are not using the trade dress yourself, then how would Samsung's use harm Apple?" asked Koh.

"We have a strong sense of residual goodwill," said Apple lawyer Michael Jacobs.

I adore Mr. Jacobs, as you know, but this is a truly hilarious argument. Residual goodwill. So creatively ridiculous to me. But it does demonstrate something. Lawyers are paid to think and to talk for the client, and when lawyers are at this level of skill, they are *never* at a loss for words. You see that in Apple's argument about the ah ha moment showing simply admiration for the way the judge handled matters at trial. I mean, both statements are a little bit ridiculous. But both also have enough plausibility that they might work on a good day with the right judge.

Mullin reports that she seemed inclined to invalidate the pinch to zoom patent, saying she found Samsung's arguments persuasive. She also spent more time on talking about reducing damages than increasing them, which is what Apple was arguing for. But a reduction is, I think, inevitable, as I've said from the day of the verdict, because the jury made mistakes, or as the judge put it, reached decisions that are not in harmony with the law.

But hold off drawing conclusions. You can't predict from the questions a judge asks precisely what will happen. But the very detailed account by Mullin is well worth reading, every bit of it. For one thing, you can see that when Samsung said that the ball was in Apple's court, it wasn't saying it wanted to settle. The question was whether it would be worthwhile for the judge to order settlement talks, and Samsung was willing to do that much. That isn't an indication of desire to settle. It is more a desire to look reasonable to a judge who very much wants them to settle. And in the end, she decided not to force it.

The Verge was live blogging the hearing. One detail is that the judge said she'll be issuing several orders, based on subject matter, not one big omnibus order. On the damages issue, Samsung's position was that a new trial on damages is needed if any changes are made to the damages the jury voted for. Koh:

The jury "did award 40 percent of Samsung's profits even though only utility patents were deemed to have been infringed."

Given that no design patents were found to have infringed, Koh seems skeptical that the damages awarded was in line with the law.

Apple's Howard McElhinny: "Why this is such a trap is that we disagree with the statement that anybody understands how the jury got to these various numbers."

Amen to that last, Mr. McElhinny.
Koh: "It looks like the jury has awarded Samsung's profits for virtually all of the products that it could. Maybe in some incidents where it couldn't."
They discussed standards essential patents:
Charles Verhoeven and William Lee are side by side, talking to Judge Koh. Verhoeven is stressing that the jury did not find that Samsung had violated ETSI policy in connection with its standards patents.

Lee says the danger of a company filing a patent and having it made part of a standard is that it can then use that patent to go after companies "for 2.4 percent" — even before the patent has been proven to be essential.

Proven to be essential. Maybe the danger is from companies that know a patent is already in the essential bucket but trying to get it out so they don't have to pay for it. Finally, the Verge opines that Koh doesn't seem to like John Quinn one bit.

Well, I do. He does what he needs to do for his client, no matter what. Remember, the hearing wasn't just for Judge Koh. There will be an appeal to come.

Newsday:

Apple lawyer Harold McElhinny claimed that Samsung "willfully" made a business decision to copy Apple's iPad and iPhone, and he called the jury's $1.05 billion award a "slap in the wrist." McElhinny said Apple intended to keep on fighting Samsung in court until it changed its business ways.

In turn, Samsung lawyer Charles Verhoeven responded that Apple was attempting to "compete through the courthouse instead of the marketplace." He said Apple wants to tie up Samsung in courts around the world rather than competing with it head-on.

In the third quarter of 2012, Samsung sold 55 million smartphones to Apple's 23.6 million sales worldwide, representing 32.5 percent of the market for Samsung compared with Apple's 14 percent.

Earlier in the hearing, Koh appeared ready to rework some of the jury's damage calculations. The jurors filled out a verdict form listing the amount of damages Samsung owed Apple for 26 separate products. For instance, the jurors said Samsung owed Apple nearly $58 million for sales of its Prevail smartphone found to have used Apple's "tap-and-zoom" technology. But the type of patent violation the jury found doesn't lend itself to that big of an award for the product, Koh said, musing that it appeared that Apple could recover perhaps $8 million over the Prevail dispute.

The Recorder has a bit more that fleshes out Jacobs' argument about residual goodwill, which to be fair I am including, not because I buy it:
If Chevrolet came out with a car today that looked exactly like the 1965 Ford Mustang, would that be acceptable because Ford no longer produces that particular model?

That's the scenario one Apple lawyer presented to U.S. District Judge Lucy Koh on Thursday to explain why Apple wants to block the importation and sale of Samsung phones and tablet computers a jury found to infringe on discontinued models of Apple's iPhone and iPad.

Morrison & Foerster partner Michael Jacobs said the answer is no for a Mustang and no for an iPhone, because both products are "iconic" and continue to generate goodwill for the company that produced them.

"The 3G design is going to be linked to Apple for as far as the eye can see." Jacobs said.

Update 2: And here are the complete notes from our reporter, who tells me that he sat next to someone who was a paralegal for a long time, but who has now qualified for the bar, Debra B. She helped him get this right by sharing her notes with him. She's a fan of Groklaw. Yay! I love the initiative you guys always show. It's what makes Groklaw Groklaw.

So here's the full story:

Complete Notes:

The first issue up was whether the "substantially centered" patent was indefinite. If it was, she was trying to figure out how to adjust the damages accordingly or whether a new trial on damages was necessary. There were a lot of speculative scenarios so she can attempt to tie up all the loose ends regardless of how she rules on indefiniteness.

Apple's McElhinny argued was that the verdict could stand by itself due to 9th Circuit "Baldwin Rule", the "harmless error" test, that the aggregate verdict is sufficient to sustain the general verdict: Del Monte Dune v. City of Monterrey.

Samsung argued for a retrial on damages, applying CAFC law – footnote 16 in JMOL - case (2007): "verdict failure to delineate will require new trial on ALL damages". Judge Koh commented that the jury was consistent and fairly precise. [PJ: They were consistent all right, but that is one of the problems.]

Kathleen Sullivan for Samsung was an extremely impressive lawyer. [PJ: She is famous, an appellate rock star.] She explained (and ridiculed) Apple's position better than Apple could present its case. She argued that the supplemental damages that Apple asked for in relation to recent sales should be limited to a very small amount. Arguing the basis was only $10M out of the $1B verdict. She made specific reference to the First Alliance case, arguing several problems: 1) Lost profits don't show adequate causation, 2) failed to demonstrate manufacturing and sale capacity, 3) ignored price elasticity, 4) Musika's [PJ: Apple's expert on damages] lost profit numbers assumed that every claim of trade dress, patents while jury didn't find infringement for '889 patent, trade dress etc. She also argued that given the notice dates that Samsung was given, some of the amounts needed to be adjusted.

Judge Koh asked: "Are we establishing a peverse policy outcome here?" Her point being that if the jury was ambiguous about how it came up with the numbers, then what? McElhinny argued that the verdict stands in aggregate. However if the jury was specific, then in these hearings, they can pick out individual numbers and adjust them. Sullivan: "If we can't surgically excise $58M from Prevail, then we need a new trial". McElhinny argued for the importance of the 7th Amendment and the sacrosanct nature of jury verdicts. He referenced Innis Energy Transportation: 25% profit rule was wrong. The court cannot correct jury award; in that case looked at overall record and affirmed verdict. We supplied evidence of lost profits and didn't get everything we asked for, he argued.

Judge Koh mentioned how she "didn't want to be avant garde" when it came to judgments on this. [PJ: She means she isn't interested in being the outlier, making new law, or doing something weirdly unusual.] McElhinny argued for not considering notice date for adjusting verdicts. Koh was unclear on what the law should be. Asked "If I strike infringer's profits from Aug 4, 2010 to June 16, 2011 but still account for '381 patent, then what?" She then remarked, "I was hoping to send you on your merry way to the Federal Circuit".

Sullivan argued that "actual notice is required", referencing Funille Electronic Company where jury had included damages before notice date: see Wagner declaration. She said "You live in a the 9th Circuit's world". You can use 50 or 59 rule. She described McElhinny's "lost buckets rule" as fanciful. Musika's lost profits came in low because of design-around period. Verhoeven came in to speak at this point. Arguing that the testimony on the '915 patent and others was 15 minutes on one product and then demonstratives for the other 22. Argued to reverse verdict and retry products.

Koh at this point spoke of being surprised by Apple's response [I'm not sure what this was in relation to]. Koh: "What is the strongest authority for supplemental damages?" Jacobs: 284, no reason to distinguish; Hinnix case 289 does not derogate from other remedies.

Koh: "Why should court award supplemental damages that jury never considered?" Jacobs: "Samsung did not show design-arounds. Preclusion, as it was their own fault." Koh: "Asking for injunction for design-around models?" Jacobs: "If not colorably different". Koh: "Need separate proceeding for other models."

In one of the more amusing back and forths, Koh asked "If not using trade dress yourself, how would Samsung's use harm Apple?" Jacobs: "Hypothetically, if Chevy made a 2012 car that looked like a 1965 Ford Mustang that Ford no longer makes." Made a point about "residual goodwill" and "Apple iconic design" and that "Samsung should not be free to dilute".

Our reporter also had a chance to ask the court artist something I wanted to know, namely how does the artist decide what to draw? She said it's based on what the lawyers are saying, which she then tries to filter and compose to reflect the event as a whole.

I also asked him his impression of how Koh seemed to be leaning. Here's his answer, which of course isn't a prediction, since it's only a guess or a feeling, but he was there and we were not, so it's equivalent to what we would be trying to get a feel for had we had the chance to be in the room:

Answer:

I think Judge Koh wants this done and done at this point. My personal guess is that just holding a hearing where Velvin Hogan is deposed will open a whole can of worms that she'd absolutely rather not touch. All the closing statements were about how to bring this case to a settlement or package them off to the Federal Circuit. She was hoping to do all of that today but clearly it wasn't possible and it may take further hearings. If she does agree to a hearing about jury misconduct, who knows where it would go, but I imagine it would quickly bog down the case again.

Again, not a prediction, but everyone there seems to have gotten the impression that the jury misconduct arguments aren't being received by this judge. That doesn't mean it will be the same reaction at the appellate level, but it is hard to overturn a jury verdict. Here's the Verge's article after the event was finished.

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