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Apple Loses Motion to Add Galaxy S4 to Apple v. Samsung II ~pj Updated
Thursday, June 27 2013 @ 02:37 PM EDT

Magistrate Judge Paul Grewall has denied Apple's motion asking for leave to add Samsung's Galaxy S4 to Apple v. Samsung II. The presiding judge already ordered the parties to streamline the case and adding it would necessitate massive discovery. Also, he noted Samsung's argument that as a very new product, the financial data needed for litigation is not yet available. However, he suggests in a footnote that if Apple believes it's being irreparably harmed by the sale of this product, Apple instead should start a new case:
Although Apple did not raise the issue, the court notes that to the extent that Apple believes it is irreparably harmed by Samsung’s sale of the Galaxy S4, a new case might actually be the better option to prevent sales as the time for a preliminary injunction in this case has long passed.
Imagine a third Apple v. Samsung litigation? The judge assumes there will be one anyway, because Apple had to drop some other products already, in the streamlining process.

Samsung wanted to amend its contentions, which the judge ruled in certain respects it can do and not in others, and to add some new products, which was denied. Samsung has 7 days to amend some contentions Samsung says are not new but Apple asserted were, in harmony with the judge's particular guidance.

And there was a Samsung motion to compel, mainly hoping to get materials from other cases Apple is or was involved in as a party. On that, the court allowed some and denied some, and it granted Samsung's request for Apple source code, including "any code that it created to allow the third-party components to interact with the software or other hardware in the accused devices."

The filing:

636 - Filed & Entered: 06/26/2013
ORDER RE MOTIONS FOR LEAVE TO FILE AMENDED INFRINGEMENT CONTENTIONS AND MOTIONS TO COMPEL by Judge Paul S. Grewal granting in part and denying in part [496] Motion to Compel; granting in part and denying in part [525] Motion to Amend/Correct; granting in part and denying in part [476] Motion to Amend; granting in part and denying in part [498] Motion to Compel (psglc2, COURT STAFF) (Filed on 6/26/2013)
And here's the section of the order about the Galaxy S4:
1. Galaxy S4

Apple seeks leave to add the Galaxy S4, which Samsung released in April 2013, as an accused product. According to Apple, it diligently sought to add the product because it filed its request within a matter of weeks after the Galaxy S4 was available for purchase. Apple contends that Samsung will suffer no prejudice from the late addition because Apple believes that the Galaxy S4 infringes in the same way as the other accused products and so Samsung’s resulting discovery obligations will not be substantial.

Samsung objects, asserting several grounds that it argues preclude Apple from adding the Galaxy S4 at this stage of the case. Samsung first points to Apple’s position at a similar point in discovery in the 11-1846 case, when Apple objected to Samsung’s attempt to add the iPhone 4S and argued that the late addition was prejudicial.63 Apple won that battle,64 and Samsung argues that it cannot now reverse course and argue that the same limited amount of time for discovery is not prejudicial to Samsung. Apple responds that the issues in the 11-1846 case and the issues here are markedly different. Apple asserts that unlike in the 11-1846 case, in which Samsung sought to add a product running on separate hardware and with separate software than the other accused products, the Galaxy 4S has essentially the same hardware and functionality.

Samsung also highlights that Judge Koh has ordered the parties to narrow the size and scope of this case, making Apple’s attempt to add a new product at this point a violation of her order. Apple assures the court that no such violation has occurred as it merely will substitute one of the currently accused products for the Galaxy S4 when the time comes to drop a product or patent. Apple notably has not identified which of the products it will remove from its contentions; it just promises that by the deadline Judge Koh set it will winnow the products accordingly.

In the event that both of these arguments fail, Samsung raises a third – that addition of the Galaxy S4 will require “massive additional discovery,” including source code collection and identification and investigation of witnesses. Samsung also asserts that the Galaxy S4 is not in fact a “product” but rather a “product line” with different models for each of the cellular carriers who carry service for the phone. According to Samsung, models for some of the carriers have not yet been released. Apple’s new contentions, Samsung asserts, ignore the differences in functionality and the possibility that Apple again will need to amend its contentions once it obtains discovery on the different versions of the product. Samsung also argues that if Apple can add the Galaxy S4, it will have little time to develop its defenses to Apple’s infringement allegations and particularly its theories regarding damages and other post-trial remedies. As Samsung points out, the Galaxy S4 has been available for sale for less than two months and so detailed evidence regarding sales, consumer demand, and marketing are unavailable.

Apple responds that because Samsung possesses information about its own product and that because its infringement theories for the Galaxy S4 essentially parallel its theories for the accused products already in the case, Samsung’s arguments are meritless. As Apple emphasized at the hearing, Samsung had six weeks to present plausible differences between the Galaxy S4 and the products already accused in the case, and yet it has failed to show how it would be prejudiced by radically different infringement theories. Apple also contends that Samsung has sufficient information regarding sales and marketing and that any extra discovery will not be an undue burden even at this stage in the case.

Were liability the only issue in this case, the court might be inclined to agree with Apple, but as with most issues involving this suit, things are not that simple. Samsung may not have shown differences in how the products infringe, but damages and post-trial remedies are a significant part of this case.65 As Samsung highlights, the Galaxy S4 is new to market and so Samsung would be put to the task of marshaling evidence of consumer preferences through surveys as well as sales and marketing data on the newly released product to defend itself against Apple’s damages claims. Apple’s response that Samsung only need ask if and when it wants to add additional reports glibly avoids the realities of this case. Before Samsung could even seek relief from the court, it would need to meet and confer with Apple, obtain Apple’s response, and only then engage in motion practice.66

The court also is not persuaded by Apple’s assurances that any additional discovery is minimal. Apple claims to seek only source code and financial data, but as the court just explained, production of financial data for such a new product does not involve merely a “push of a button” as Apple claims. And Apple admits that although it does not seek any additional depositions, it does want the remaining deponents to be prepared to testify about the Galaxy S4 in addition to the accused products. Preparation of witnesses to testify as to an additional product is not an insubstantial task.

Even assuming that the armies of lawyers on each side of this suit could collect, review, and exchange the necessary documents and prepare the remaining deponents within the waning hours of fact discovery and not suffer any prejudice, the tax on the court’s resources warrants pause before allowing another product into this case. Since April, this court has had nine fully briefed discovery motions to resolve67 and there are four more to hear in the next month.68 Adding a new product at this late stage in the fact discovery period invites disputes between the parties about what discovery each side is entitled to, whether Apple disclaimed certain rights to discovery because of its claims that infringement is exactly the same, and how prepared the deponents are to testify about the new product. Each time these parties appear in the courtroom, they consume considerable amounts of the court’s time and energy, which takes time away from other parties who also require and are entitled to the court’s attention.69

Judge Koh has been explicit with both parties that this case must be streamlined, which requires reducing the number of products and patents at issue – not increasing them.70 Apple’s promise to substitute an already-accused product for the Galaxy S4 does not solve the problem.

Apple conflates a quantitative analysis with a qualitative one. The number of products may be the same, but as the court described, the potential disputes revolving around Galaxy S4 are greater than whatever product it will replace because of its late addition.

Throughout the hearing, Apple warned that excluding the Galaxy S4 would result in yet another case with more claims of infringement and would require Apple to continue to play, in counsel’s words, “whack-a-mole” with Samsung. Apple presented the exact same argument to Judge Koh during an April 23, 2013 hearing during which she required them to set a schedule to drop products and patents.71 Judge Koh was not persuaded by this argument and neither is the undersigned. Apple already needs to dismiss without prejudice several products from this case72 and so a new trial would be likely regardless.

Given the likely undue prejudice to Samsung and Judge Koh’s directives regarding the management and progression of this case, the court DENIES Apple’s request to add the Galaxy S4 to its contentions.

____________
63 See Apple, Inc. v. Samsung Elecs. Co., Ltd., Case No. 11-1846 LHK (PSG), 2012 WL 1067548, at *8 (N.D. Cal. Mar. 27, 2012).

64 See id.

65 See Docket No. 261 (requesting damages and a permanent injunction); Docket No. 480 at 23:9-14 (Apple’s counsel observing that parties are “head-to-head competitors” and that damages and an injunction are remedies Apple is pursuing because of the harm it currently is suffering). q

66 See Civil L.R. 37-1(a).

67 See Docket Nos. 395, 398, 401, 404, 418, 476, 496, 498, 525. At least one other dispute was calendared but then resolved and withdrawn. See Docket Nos. 433. The court has not counted the numerous sealing motions filed concurrently with these briefs that the court also must address, or any motions whatsoever from the 11-1846 case.

68 See Docket Nos. 540, 543, 614, 633.

69 Counsel’s jokes to Judge Koh that this case “always takes precedence,” see Docket No. 480 at 31:25 – 32:1, reveal intentionally or otherwise the degree to which both this case and the earlier 11-1846 case confiscate time and energy away from other cases involving legitimate, albeit less high profile, disputes. 70 See Docket No. 480 at 19:20-22.

71 See Docket No. 480 at 15:5 – 17:17 (“We will one day have to have another trial on the exact same patents with the exact same proof when we’re all here and the proofs at trial will be identical.”).

72 See Docket No. 471 (setting schedule for dismissing patents and products).

Update: Matt Levy has an interesting piece on Patent Progress on the pointlessness of the smartphone wars. Neither Apple nor Samsung has benefited from it. And for sure neither have consumers. The very pointlessness is what encourages privateering, he writes:
There are at least two larger points to this. First, this is a colossal waste of resources. According to news reports, Apple started this fight with Samsung based on a personal vendetta, not for business reasons. Both sides have spent millions and millions of dollars in legal fees and costs, and they have nothing to show for it. On the other hand, there are a number of lawyers who are a bit richer, which is good news for the legal economy.

But what do consumers get from this? Nothing that I can see.

The second point is less obvious: this dispute shows just how little use patents have in the software industry, and as a result, why privateering is growing as a problem....

That means that the patent can’t serve its purpose of “clearing the field” and raising the barriers to entry. In the software industry, except for standards essential patents (SEPs) (which are a separate topic), patents just don’t do much for companies in the software industry beyond the ability to drain their competitors’ resources.

This helps explain why privateering has grown as a trend. If, as I’m suggesting, software patents are mainly valuable for raising your competitors’ costs, there’s no point in doing the dirty work yourself and drawing fire. Outsource the lawsuits and get the benefit without wasting your own resources.

By spending so much money and taking so much criticism for so little benefit, Apple has shown the benefits of privateering to the rest of the industry.

And that is definitely not good for the rest of us.


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