29 September 2011

Apple v Samsung Hearing to Continue…

Galaxy-TimebombFederal Court Judge Annabelle Bennett today adjourned, until tomorrow afternoon, the hearing to determine whether Apple will be granted a preliminary injunction barring Samsung from marketing its Galaxy Tab 10.1 product in Australia pending the outcome of a full trial on Apple’s claims of intellectual property infringement.

Today was the second of the two days originally scheduled for the hearing (see Apple and Samsung Return to Court With ‘Eyes Wide Open’ for our report of day one).  However, with the court still hearing evidence from representatives of the warring companies, Justice Bennett has decided to extend the hearings into the afternoon of a third day.

Although Samsung had previously indicated an intention to launch the tablet on Friday, 30 September 2011 (presuming a favourable outcome in court, of course), it will now have to wait a little longer for Justice Bennett’s ruling – most likely until at least next week.

Justice Bennett indicated during the morning session that she intends to rule narrowly in relation to the Galaxy Tab 10.1, since any wider ruling could have an impact upon other patents, products and countries.  We understand this to mean that whatever reasons are given for the orders that she makes, they are unlikely to include any general statements about the breadth or strength of Apple’s patent claims, which might subsequently be applied (in Australia or elsewhere) to different products, or alternative variations of the Galaxy Tab.

‘ANDROID PEOPLE’

Presumably in efforts to establish that the ‘balance of convenience’ would favour the grant of a preliminary injunction, Apple’s lawyers submitted that once consumers had chosen to purchase a Galaxy Tab instead of an iPad, they would be lost forever as Apple customers, because they would become ‘Android people’.  (We presume they meant that they would become ‘locked into’ the Android ecosystem, although the implication that consumers might turn into mindless robots, incapable of independent thought or choice, might also be pertinent!)

The ‘Android people’ argument addresses a potential difficulty faced by Apple in persuading the court that, if a preliminary injunction were not granted, a subsequent award of damages would not be adequate to compensate the company for lost sales.

The argument, however, strikes us as weak.  It is not clear that Android loyalty is as strong as – for example – MacOS loyalty.  And even in the case of ‘Mac versus Windows’ there are instances of people changing camp.  Furthermore, in the increasingly-competitive tablet market, it is far from clear that every Galaxy Tab 10.1 sale corresponds with a prospective iPad purchase.  A consumer could just as easily become an ‘Android person’ by purchasing a Motorola Xoom, or an Amazon Kindle Fire.  Indeed, Samsung’s counter-argument was very much along these lines, i.e. that its main tablet competitors are other Android-based products.

Tweeting from the courtroom, iTnews journalist James Hutchinson (@j_hutch) reported Justice Bennett to be taking the ‘middle ground’ that Samsung will compete with Apple along with other Android-based devices as the tablet market grows.  She also reportedly described the segment of the market without any predetermined allegiance to iOS or Android as ‘swinging voters’.

ELUSIVE TABLET SPIED IN COURT

In the course of the hearing, Justice Bennett became one of the first to have the opportunity to play with the proposed Australian version of the Galaxy Tab 10.1, when a sample was delivered to the bench concealed within a white envelope.  ZDNet journalist Josh Taylor (@joshgnosis), tweeting from the gallery, reported that the elusive product was not visible to others present in the court.

During an earlier hearing in the matter, Justice Bennett had admitted to owning an iPad, so she is presumably quite well-placed to compare the experience of using both devices.  We hope, however, that she is not an ‘iOS person’ of such commitment that it might cloud her decision-making in the case!

FURTHER MODIFICATIONS TO AUSTRALIAN GALAXY TAB

Of the five patents originally asserted by Apple in the interlocutory proceedings, two were previously dropped, and a third may also be dropped following additional undertakings by Samsung today.

Australian innovation patent no. 2008100011, relating to the use of a slider icon, had already been removed prior to  Monday's hearing.   The so-called ‘zoom bounce’ patent, no. 2009208103, was also removed earlier in the week after an undertaking from Samsung.

Today, Samsung’s lead counsel, David Catterns QC, conceded that Samsung could ‘live without’ the ‘selective rejection’ feature covered by Apple’s patent no. 2008258177.

This leaves only two patents to form the basis for a possible injunction: the ‘heuristics’ patent no. 2007286532, relating to algorithms for ‘correcting’ finger gestures, and the ‘touch screen’ patent, no.  2005246219, which relates to manufacturing techniques.  Samsung has argued today that it does not infringe these patents.

FULL TRIAL, OR SETTLEMENT?

Whatever the decision on the preliminary injunction, the case will then proceed to a full trial (unless Apple and Samsung reach some alternative settlement in the meantime).  In addition to Apple’s claims of infringement against Samsung, the Korean company has countered that Apple’s patent claims are invalid, and also that Apple infringes a number of Samsung patents.

Although Justice Bennett has urged the parties to proceed expeditiously, and lawyers for Apple have suggested during the preliminary hearing that they would be ready to proceed with the main hearing as soon as next week, the validity and infringement issues are complex and are likely to require substantial expert evidence to resolve.  Neither party has yet prepared and filed the type and extent of evidence that will be necessary to support their respective cases, and Apple’s assertions of readiness are almost certainly bluff and bluster.

The greater burden in this respect probably lies currently with Samsung, since establishing invalidity of a patent is generally a more evidence-intensive process.  Unsurprisingly, therefore, Samsung is resisting any attempts to bring forward further hearings, as Apple would certainly expect that they would.

As we have indicated before, we would find it very surprising if a case involving the infringement and validity of numerous patents could be resolved in less than a year.  The idea that the parties could be back in court as soon as next week is ludicrous.  Nonetheless, Justice Bennett today indicated that if she were looking at only one product, and only three patents, it would not be infeasible to proceed with hearings by November.  This would seem, however, to presuppose that Apple will drop its reliance upon the other patents raised in its original claim, and not pursued at the interlocutory stage, and that infringement is the only issue at trial.  It is difficult to see how all of the evidence relating to the validity issues could be adduced prior to hearings as soon as November.

At the interlocutory stage, it serves Apple’s purposes to show willingness to proceed rapidly.  The court may be more ready to grant a preliminary injunction if a final resolution of the matter is likely to be reached within a shorter, rather than longer, time frame.  Samsung’s position is more difficult.  On one hand, it would want to establish that the matter cannot be resolved quickly, to reduce the prospects of the injunction being granted.  On the other hand, it would go against Samsung if Justice Bennett were to form the impression that it was looking to delay proceedings for this reason.  At this stage, it appears that Samsung’s compromise position is that it may be ready to proceed with further hearings in early 2012.

It is quite possible that, once the court has ruled on the preliminary injunctions, one or both parties may change their tune in relation to the timetable.

It was also revealed in the court today that discussions seeking a global resolution have been proceeding between Apple and Samsung since July 2010.  Unfortunately, when Apple’s Richard Lutton was called to give oral evidence regarding the negotiations, observers (including the media) were required to leave the courtroom due to confidentiality considerations.  Clearly, however, progress has been slow, but in our opinion, the probability remains high that Apple and Samsung will settle their differences on a worldwide basis before a final ruling is made in the Australian proceedings.

The hearing will continue at 2.15pm tomorrow (Friday, 30 September 2011) in court no. 1, level 21, of the Federal Court in Sydney.
Acknowledgments
Patentology is indebted to ZDNet journalist Josh Taylor (@joshgnosis), iTnews journalist James Hutchinson (@j_hutch), and Fairfax journalist Asher Moses (@ashermoses) for live tweets from the courtroom today.

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