On February 14, Apple and Samsung met with the Hon. Lucy Koh, who is presiding over their current patent dispute in Apple v. Samsung II, in the very same courtroom where she presided over their first patent litigation in San Jose, CA back in August. The purpose was to go over the parties' claims in the patents they say are infringed, explaining to her how the technology works. This is in preparation for the upcoming Markman hearing next month, where they will argue officially over what the terms in the claims mean. We had a volunteer in the courtroom, and we have that report for you.
Meanwhile, in Apple v. Samsung I, which is still going on, the parties will be arguing before the Federal Circuit on March 26, as both parties believe the magistrate judge is threatening to unseal too many documents in that case, and things are on hold until the appeals court decides who is right. So far, that is about the only thing the parties *do* agree on, that the magistrate has gone too far. Here's Apple's supplemental appeal brief [PDF] on that issue of sealing from Apple v Samsung I. William Lee of Wilmer Cutler will
argue [PDF] for Apple on March 26, and Victoria F. Maroulis of Quinn Emanuel will argue [PDF] for Samsung. That's at 10 AM on March 26 at the US Court of Appeals for the Federal Circuit in Washington, DC.
If you are getting confused, so is everybody. The judge even asked at the February 14th hearing in Apple II if it didn't make good sense to put that case on hold until they get a ruling from the Federal Circuit on Apple I, the other appeal in Apple I, the one Apple filed about Judge Koh's refusal to order a permanent injunction against Samsung, which you'll find
I do wish Apple would spend this much time and money and heart into creating new products instead of throwing it to the winds like this. This litigation never seems to resolve anything that matters, and only the lawyers are having any fun.
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Here's our report from the courtroom from the February 14th hearing by our own Debra B.:
Meanwhile, back in Apple v. Samsung I, here's the latest on the battle over unsealing:
The Valentine’s Story of Apple and Samsung
On Valentine’s Day, Apple, Inc. and Samsung Electronics, Co. appeared in the now all-familiar San Jose, California federal district court to present technology tutorials on the patents at issue in their newer case. A week later, on February 21, 2013, they will meet at the Markman hearing where the Hon. Lucy Koh will hear the parties’ positions on the meanings of particular words in the claims and specifications in the court's process of “construing the claims.”
Last year’s case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-001846. This is the second case, Apple II, Apple Inc. v. Samsung Electronics Co., 12-cv-00630. Both are in U.S. District Court, Northern District of California of San Jose, California.
This second case includes Apple’s claims and Samsung’s counterclaims of patent infringement. Apple accuses multiple products including the Galaxy S III smartphone of infringing eight utility patents. Samsung is asserting five utility patents against Apple products including various versions of iPhones, iPads, iPod Touches, Apple computers, Apple TV, iCloud, and iTunes.
But wait. Before the technology tutorial began, the Hon. Lucy Koh asked whether the second set of disputes should be put on hold until after the Court of Appeals of the Federal Circuit resolves the earlier lawsuit between the two companies. (That Apple-Samsung jury trial resulted in a pricey box of chocolates: a $1.05 billion verdict for Apple). Currently the second case, Apple II, is scheduled for trial in March 2014.
“I was going to ask if we can stay this case while the other appeal is going on.” Koh said that she assumed that a potential resolution of the Apple-Samsung legal disputes would be a global settlement and thus would cover both lawsuits. "I just don't know if we really need two cases on this," Koh said. (Koh’s role as marriage counselor has not been too successful to date.)
Apple attorney William Lee said the cases should proceed in parallel since they involve different patents. Samsung attorney Victoria Maroulis disagreed, saying the two proceedings had substantial "overlap."
After soliciting their input, Judge Koh ordered the opposing attorneys to meet in person to discuss the possibility of a stay and then to file a joint status report by March 7th, indicating whether the parties consent to putting the current case on hold. She said, "I assume there have been no further settlement discussions, or at least none that have gone anywhere?" William Lee replied, "The answer to the last question is: that's correct.”
The court also requested that by February 15th, each party file a chart of their affirmative cases, identifying for each patent its lead claims and the devices accused of infringing those claims.
Now it was time to present the technology and to disagree on how to squeeze toothpaste.
In the Valentine’s hearing from noon to 4:30 p.m., the parties presented tutorials for the judge on the technology of their patents. Actually, Judge Koh was already asking the parties during the tutorial about their proposed claim constructions. She focused in on the meaning of specific words and phrases that are in dispute between Apple and Samsung. Every word matters because her interpretation of one word over another may determine how well the accused infringer is able to argue that it does not practice a claim as construed.
Apple is asserting U.S. Patents Nos. 5,946,647; 6,847,959; 8,046,721; 8,074,172; 8,014,760; 5,666,502; 7,761,414; and 8,086,604. Samsung is also asserting eight patents. They are Patent Nos. 7,756,087, 7,551,596, 7,672,470; 7,577,757; 7,232,058; 6,292,179; 6,226,449; and 5,579,239. The technology tutorial covered the subset of Apple’s ‘502, ‘647, ‘414 and ‘760 patents and Samsung’s ‘087, ‘757, ‘239 patents.
Below are a few notes about the issues and specific words being discussed, claim by claim.
Apple’s ’502 patent - Graphical user interface using historical lists with field classes:
The judge’s questions focused on Claim 11 and the meaning of “field classes” (see Figure 8). The first dispute is about what the history list is, and the second is whether the list has to be shared between different applications. As a preliminary matter, the parties had used different words in their proposed claims constructions but Samsung seems to be okay to using the word “code” instead of “data element.”
Apple’s ’647 patent - System and method for performing an action on a structure in computer-generated data:
Apple thinks sharing between different applications is optional. Samsung argues that sharing is the whole reason why invention was allowed over prior art. The presentations included a dialogue about the patent’s prosecution history and prior art, which arguably included Turbo C++ (keeping a list of previously entered file names) and Windows 95 dialogue boxes.
At the end of the tutorial, the judge gave her tentative thinking that the history lists can be but are not required to be shared between/among applications.
The discussion focused on the phrase “separate from a client” and whether the invention required software separate from a client. One issue is over the word “server” in claims.
Apple’s ’414 patent - Asynchronous data synchronization amongst devices:
Samsung reads a server-client relationship into the claims. Judge Koh said “Posner” [referring to the Hon. Richard Posner in Apple, Inc. v. Motorola, Inc. (N.D. Ill. 2012)] found that the analyzer server in this patent required separateness. Samsung asserted collateral estoppel for “analyzer server” because Judge Posner held Claim 15 to be invalid. [Collateral estoppel is an affirmative defense and a doctrine by which an earlier court decision is conclusive as to the issues or controverted points so that they cannot be relitigated in subsequent proceedings involving the same parties.]
Judge Koh said she would look over the patent again, but her tentative thinking is that the action of the processor does not have to be separate from the client.
Again, every word is important and even dictionaries! The tutorial and questions of the judge on the ‘414 patent led to discussion points on: 1) dual-core processors; 2) Apple’s use of terms from 1992 and 1994 dictionaries rather than from dictionaries published nearer time of invention in 2007; and 3) what “at the same time” or “concurrently with” means if only a single-core processor is used.
Apple’s ’760 patent - Missed telephone call management for a portable multifunction device:
Judge Koh asked whether under the patent claims one processor can be multicore. Apple suggested no cell phones had dual-core processors until three years after ‘414 patent filed. A PHOSITA [“person who is skilled in the art”] reading would not have thought of using dual-core processors. Samsung countered that the specification referred to many types of electronic devices including computers, some of which did have dual-core Intel processors at the time. Additionally, the judge suggested, is would have been obvious to use a dual-core processor in a cell phone.
Apple’s position is that a single-core processor, could process two threads concurrently, as written in the claims. Apple asserts that a PHOSITA would have understood the words “concurrent” and “at same time” to imply interleaved threads in overlapping time intervals. Samsung’s position is the plain meaning of “concurrent” means “at the same instance.”
Judge Koh's tentative thinking is that “concurrently with” just has to be an overlapping time interval.
One term at dispute with the ‘760 patent is what “complete substitution” means. Is the invention completely substituting the content of a display or just substituting the display? The judge implored the parties to come to agreement on what the term means, or to at least narrow the dispute before the February 21st hearing.
Samsung’s ’087 patent - Performing non-scheduled transmission in a mobile communication system (FRAND patent that is part of the 3GPP standard):
Judge’s tentative thinking is that the parties are not far apart in their wording and should come to an agreement on '760.
The tutorial involved a discussion of what information is included in the scheduled or unscheduled transmission information. Terms flew by like TTIs, UE (device), bay station, RNC, NTTIs, EDCH data… N and K variables. The judge asked questions like, “Can you have transmission from a phone without the RNC giving the data rate?” No data rate is required in the claim.
Samsung's ’757 patent - Multimedia synchronization method and device:
The judge’s tentative thinking is that the claim construction for “nonscheduled transmission” is Samsung’s construction. At the end of the hearing, she chided the parties about their disagreement on the definition of variable N. “You should agree on N. That’s almost embarrassing.” Is N a positive integer? [Parties will likely agree before the next hearing on the variable of N, if not their preferred brand of toothpaste.]
Samsung pointed out that this patent with a 2001 priority date is six years earlier than Apple’s ‘414 - Asynchronous data synchronization patent (see above). An issue is whether “zone-specific” refers to a specific and fixed room or not. Samsung says no because the specification mentions a yacht as a possible location for the invention. Figure 7 includes LAN, WAN, central storage devices, and zone-specific storage interface devices.
Samsung’s ’239 patent - Remote video transmission system:
The judge and Apple attorney suggested the patent was confusing. Apparently much of the specification relates to method claims that were never issued.
Judge Koh asked the parties’ help with language that is not as rigid as words “fixed” or “bounded” (Apple’s suggestions), but indicates something like “resides” or “remains.”
This patent’s specification talks about different transmission methods – phone, cell, and other telemetric frequencies, along with a remote unit (device) that digitizes, compresses, splits and organizes signal, and ultimately transmits.
During the patent prosecution, the term “video card” was removed from Claim 9 and replaced with “video capture module.” To Judge Koh, it seemed like the examiner rejected the phrase “audio and/or video.” Apple’s proposed construction would require “audio and video.” Samsung countered that a PHOSITA wouldn’t have understood the claim to require both. So can the video be transmitted without audio?
Judge Koh asks about another term. “Modem issue – Do we need a modem to transform analog signals to digital signals?” Samsung said that a modem is really an interface and other things can convert signals. Look at the patent’s column 4, lines 25-27 – computer interfaces such as modems just modulate and interpret information.
The attorney presentations and judge’s questions focused on what the telemetric frequencies are; the difference between an audio care and a video-capture card; and the necessity of a capture-software sequence. An exemplary inquiry from Judge Koh was: “Your software, page 6, line 9-14 [ in patent ‘239] has the video card doing everything . Why would you need software?”
Apple is arguing that all software steps as disclosed are required. Judge Koh questions whether some steps are not required. Apple mentioned Function Media, L.L.C. v. Google, Inc., No. 2012-1020 (Fed. Circ. 2013), a recent case where the Federal Circuit found the independent claim indefinite. [See Jason Rantanen, FM v. Google: Means-plus-Function Indefiniteness and O2 Micro Challenges, on Patently-O, for a summary.]
The judge’s tentative thinking on the ‘239 patent is that she will use a “Frankenstein combination” of Apple’s and Samsung’s suggested language for the claim construction. Some long string of words including [which I did not capture!] using “audio card and a video card with a video capture module.” The judge does not think software is required for capturing. She believes that the claims are “somewhat ambiguous.”
This and other hearings tend to be more laid-back. Frontline attorneys even chit-chat before the judge appears. Although fewer than in the jury trial last August, attorneys associated with each party could easily have numbered over twenty for each side: Morrison & Foerster, LLP (for Apple) and Quinn Emanuel (for Samsung). [Cha-ching.]
After a discussion about the starting time for the Markman hearing on February 21st, all agreed to keep the 10:30 a.m. time. The Hon. Lucy Koh quipped, “I know there’s lot of love in air right now.”
The unwinding of the SamApple love story continues.
Filed & Entered:
02/14/2013 The appeal is about earlier documents ordered unsealed. On February 1, the judge ordered many more to be unsealed, and the parties are struggling with his order to refile with new documents giving him more reasons to seal. Here's what Samsung writes in #2231, for context:
ORDER GRANTING REQUEST TO EXTEND TIME TO RE-FILE DOCUMENTS by Judge Paul S. Grewal granting  Stipulation (psglc2, COURT STAFF) (Filed on 2/14/2013)
Filed & Entered:
Administrative Motion to File Under Seal APPLE'S RENEWED MOTION TO SEAL filed by Apple Inc.. (Attachments: # (1) Declaration of Erica Tierney, # (2) Proposed Order)(Hung, Richard) (Filed on 2/15/2013)
Filed & Entered:
CERTIFICATE OF SERVICE by Apple Inc. re  Administrative Motion to File Under Seal APPLE'S RENEWED MOTION TO SEAL (Hung, Richard) (Filed on 2/15/2013)
Filed & Entered:
MOTION to Stay re  Order on Administrative Motion to File Under Seal, Samsung's Motion to Stay Portions of Court's February 1 Order filed by Samsung Electronics America, Inc.(a New York corporation), Samsung Electronics Co. Ltd., Samsung Telecommunications America, LLC. Responses due by 3/1/2013. Replies due by 3/8/2013. (Attachments: # (1) Proposed Order Granting Motion to Stay)(Maroulis, Victoria) (Filed on 2/15/2013)
Filed & Entered:
Administrative Motion to File Under Seal Samsung's Renewed Administrative Motion to File Documents Under Seal (Re Court's February 1, 2013 Order) filed by Samsung Electronics America, Inc.(a New York corporation), Samsung Electronics Co. Ltd., Samsung Telecommunications America, LLC. (Attachments: # (1) Declaration of Hankil Kang, # (2) Proposed Order Granting Samsung's Renewed Administrative Motion to File Documents Under Seal)(Maroulis, Victoria) (Filed on 2/15/2013)
On February 1, 2013, the Court granted-in-part and denied-in-part 24 administrative motions to file under seal hundreds of pleadings and documents related to the parties’ discovery and pre-trial motions. (Dkt. No. 2222.) The Court based its ruling on its conclusion that the parties had not “provided substantive reasons that [certain financial] information should not be disclosed” sufficient to meet the “good cause” standard (id. at 8 n.18), and in some instances found that a document included both sealable and non-sealable information (see, e.g., id. at 24). The documents at issue include source-code references2 and detailed financial information, including product-specific revenues, pricing, cost, and profit data.3 The Court ordered the parties to file within fourteen days documents that complied with the Court’s findings. (Id. at 37.) They didn't think they could get it all done in 14 days, so both parties asked for a little more time. Meanwhile, here's how Samsung explains some of the reasons why it's turning purple at the thought of all these documents being made public:
2 Exhibits 6 to the Pernick Motion to Strike Declaration includes third-party source code references.
Exhibits 2, 3, 8, and 9 to the Martin Rule 37 Declaration, Exhibits B and F to the Sheppard Rule 37 Declaration, Exhibits C to the Price Rule 37 Declaration, Exhibit 34 to the Pernick Motion to Strike Declaration, Exhibit A to the Musika Motion to Strike Declaration, and the Pernick Motion to Strike Reply Declaration and Exhibits 10 and 11 thereto include confidential financial information.
The documents at issue here, which include per-product revenue, pricing, cost, and financial information, fall squarely in the realm of trade secrets. For instance, Exhibits B and F to the Sheppard Rule 37 Declaration includes product-specific sales, costs of goods sold, expenses, and profits data for all accused products for each month between 2007 and 2011. (Declaration of
Hankil Kang (“Kang Decl.”) ¶ 16.) Exhibit C to the Price Rule 37 Declaration synthesizes this data and presents it in a format that those with little accounting or financial experience could use to gain valuable insight into Samsung’s pricing strategies. (Id. ¶ 17.) The exhibits are extremely valuable to Samsung, because the data guide the company’s pricing, distribution, financial planning, and other business decisions. (Id. ¶ 5.) Conversely, their release would be a windfall to Samsung’s vendors, buyers, and competitors, could use insight about Samsung’s financial data to its substantial detriment. (Id. ¶¶ 7-10.) The documents contain trade secrets, a fact that alone is sufficient to establish “compelling reasons”—and , a fortiori, “good cause”—for sealing the selected portions. Kamakana, 447 F.3d at 1179; In re Elec. Arts, 298 Fed. App’x at 569-70. Both sides seem fairly confident that the Federal Circuit will help them, and so Samsung asks for the following relief, if the magistrate doesn't agree with the parties' sealing requests:
Even if the technical definition of trade secrets were not met, the documents should nonetheless be sealed as they clearly meet Rule 26’s definition of confidential “commercial information” and Samsung has made particularized showings sufficient to meet the “good cause” standard for each document at issue. (Kang Decl. ¶¶ 12-21.) For instance, a competitor could use Samsung’s profit information to determine Samsung’s pricing “floor” and price its products at a level Samsung would not be able to profitably match. (Id. ¶ 8.) Per-product profit data would also inform Samsung’s competitors as to which of its products are performing best and worst, allowing them to target such product lines in marketing campaigns. (Id.) Samsung’s vendors would be able to use Samsung’s profit margins to negotiate better prices for components they provide while clients would be able to use the same information to negotiate better prices for Samsung’s smart phones and tablets. (Id. ¶¶ 9-11.)
Should the Court find that confidential financial information at issue here may not be
sealed, the Court should deny Samsung’s motion without prejudice to it re-filing a renewed motion to seal should the Federal Circuit disagree with this Court’s reasoning in the pending appeal from the Court’s August 9, 2012 and July 17, 2012 Orders. Both Apple and Samsung have sought “review of this Court’s decision on the sealability of precisely this type of information” (Dkt. No. 2210 at 4) and at least one of the documents at issue here—Exhibit C to the Price Rule 37 Declaration—is identical to a document as issue on appeal. Others are “largely subject to the same analysis.” (Dkt. No. 2168 at 8.) “Thus, the outcome of the appeal of the August 9 Order bears on the present” motion.” (Id.)
Frankly, I side with Apple and Samsung on this one. I agree that the magistrate has been a little too harsh in his unsealing orders, and I can't really see why the public needs to know this sort of thing, particularly if it results in this kind of harm. A company should be able to seek help from the courts without losing all its trade secrets as a result.