04 October 2011

Back in Court, Apple Blames Samsung for Failure to Reach a Deal

No deal between Apple and Samsung At the adjournment of the Federal Court hearing last week (see Apple and Samsung Talk Possible ‘Deal’ as Hearing Again Adjourned), there appeared to be some glimmer of hope that Apple and Samsung would return to the Federal Court today bearing an agreement that would have seen Apple drop its application for a preliminary injunction, and the Samsung Galaxy Tab 10.1 on the market in Australia in good time for Christmas.

Alas, it seems that this was not to be.

Lawyers for both parties today returned to the courtroom in Sydney to continue submissions in the hearing, the outcome of which will determine whether or not Apple wins a preliminary injunction preventing Samsung from launching the Galaxy Tab 10.1 in Australia, prior to a final ruling on infringement and validity of Apple’s patents.  Samsung counsel Neil Young confirmed that no deal had been reached, and that ‘the parties are a considerable distance apart’.

And so the hearing continued, with both parties (finally) wrapping up their submissions to the court.

NO DEAL

Apple’s lead counsel Stephen Burley, for his part, was pulling no punches in laying the blame for a failure of negotiations squarely at Samsung’s feet, accusing the Korean company of wrongly treating a request for further detail as a rejection, and of wishing to ‘have their cake and eat it too’ in indicating that Samsung would agree to a more aggressive timetable for the trial only in exchange for Apple making concessions in relation to the preliminary injunction.  In Mr Burley’s submission, Samsung is either able to proceed rapidly to a full hearing, or it is not.

This might well be so, and we expect to see tactics such as these within the courtroom as both parties seek to appear the most open to compromise in order to curry favour from Justice Annabelle Bennett.  Of course, any deal would almost certainly involve other elements, such as agreement on a more limited range of issues to be tried, which might well influence Samsung’s preparedness to return to court sooner rather than later.

Burley also stated that ‘[Samsung’s proposal] is one we don't accept and there is no surprise.  The main reason we are here is to prevent the launch [of the Galaxy Tab 10.1] and maintain the status quo.’

APPLE’S ‘TOUCH SCREEN’ PATENT

There was substantial discussion today of Apple’s ‘touch screen’ patent, no.  2005246219.  Apple’s allegation is that Samsung infringes claims 6, 7 and 8 of this patent, which essentially cover a capacitive touch panel consisting of a transparent sheet (e.g. glass or plastic), on each side of which is ‘disposed’ (a term whose meaning appears to be the subject of some dispute between Apple and Samsung)  a layer including strips (like ‘wires’) made of a transparent conducting material.

The strips on each side of the sheet are arranged transversely (i.e. crossing each other), and they are close enough to be capacitively coupled.  What this means is that when a user’s finger approaches or touches an area of the panel, it influences the electric fields around the conductive strips, and can be detected as a change in capacitance of the associated strips.  This in turn enables the location of the area influenced by the finger to be determined.

To be honest, this seems like a very simple design, and it is difficult to believe that it did not exist prior to Apple’s original filing date of 6 May 2004.  And Samsung is alleging, of course, that it did indeed exist earlier than this date.  More particularly, Samsung’s contention appears to be that the transparent capacitive touch screen technology was invented at Synaptics.

Samsung also contends that it uses different manufacturing methods, to produce a different structure (not falling within the patents usage of ‘disposed’), and therefore does not infringe the touch screen patent.

APPLE’S ‘HEURISTICS’ PATENT

The other Apple patent remaining in-play in the present hearing is the so-called ‘heuristics’ patent no. 2007286532, which relates to algorithms for ‘correcting’ finger gestures. 

It is likely that the key to both infringement and validity of this patent will be the interpretation of the term ‘heuristics’ in the patent claims.  The claims have been characterised by some commentators as being very broad in scope, however we are not entirely sure that this is so.  In simple terms, the patent covers various algorithms for interpreting gestures made by a user on a touch panel.  In particular, the algorithms detect one or more contacts with the panel, and then (in the words of the patent) apply ‘one or more heuristics’ to determine exactly what the user is trying to do, based on angles and directions of motion between the points of contact.

In mathematics, a ‘heuristic’ refers to something for which no deterministic algorithm exists, and therefore the solution to a problem may instead be sought by applying inductive reasoning based on past experience.  We would suggest that, in the context of the Apple patent, this means that gestures are interpreted not by using mathematical equations, but rather based on various ‘rules’ derived from user testing and experience.  But we could be wrong about this – certainly the patent specification itself is not very clear on the matter, and there has already been much discussion of the interpretation of ‘heuristic’ in court.

Samsung, for its part, contends that the claims of the ‘heuristics patent’ are not new in light of an earlier US patent publication, no. 2002/0036618, entitled ‘Method and Apparatus for Detecting and Interpreting Path of Designated Position.’  Certainly this application describes various methods for interpreting a range of common touch screen gestures, which necessarily casts doubt on the scope of Apple’s claims.

If Apple’s ‘heuristics patent’ claims are indeed to be interpreted very broadly, then Samsung may well infringe them.  However, they may then also encompass the techniques described in the prior US patent application, rendering them invalid.  Alternatively, the meaning of the term ‘heuristic’, and the specific types of heuristics claimed, may be much narrower in scope.  In this case, the claims might be valid, but Samsung’s prospects of avoiding infringement by adopting alternative techniques are much better.

OTHER FACTORS INFLUENCING GRANT OF INJUNCTION

Adequacy of Damages as Compensation
Apple, it seems, had still more to say about the impact sales of Samsung’s Galaxy Tab 10.1, and why an award of monetary compensation by Samsung (in the event of a victory to Apple at trial) would not be adequate.

Apple’s argument in this regard is that the iPad is not a standalone product.  Much of the associated revenues are derived from the ‘ecosystem’ that encompasses other Apple products and services, such as iTunes, the Apple App Store, the iPhone, and Apple computers.  If someone buys an iPad, they continue to generate ongoing revenues for Apple through their use of these products and services.

This is a reprise of Apple’s submissions last Thursday about people buying Samsung tablets becoming ‘Android people’ (see Apple v Samsung Hearing to Continue…).  So Samsung is merely the current target for Apple’s wider battle to defend its ‘closed’ business model against competition from the ‘Android ecosystem’.

It will be interesting to see whether Justice Bennett considers this argument – which is essentially that she should grant an injunction to help Apple defend its ‘monopoly-building’ activities – to weigh sufficiently in Apple’s favour.  An equally plausible argument might be that, by granting an injunction, the court would be assisting Apple to ‘lock in’ more users which, if it is ultimately unsuccessful in its law suit, would cause unquantifiable damage not only to Samsung, but to all competitors and to consumers.

Samsung challenged Apple’s claims that it would be impossible to determine an appropriate level of compensation if no injunction is granted at that stage, but Apple is ultimately successful.  In particular, Samsung counsel Neil Young argued that, since both products are on sale in the US, pertinent sales figures should be available, and Apple has provided no evidence on its potential losses, or any reason to believe that determining suitable compensation would be ‘beyond the wit of Apple’.
Balance of Convenience
The issue of the rapid innovation cycle in the tablet market was also raised.  It appears that both sides have argued that this tips the balance of convenience in their favour.  Apple probably considers that Samsung will not be too greatly disadvantaged by an injunction, because it can simply ensure that the tablets which supersede the Galaxy Tab 10.1 are non-infringing.  Samsung’s counsel Neil Young seems to have turned this argument back on Apple, reportedly responding that ‘if products have a life cycle of 12-18 months then there's going to be minimal damage to [Apple's] goodwill or brand image’ in the long term.

On the timetable for the main proceedings, Samsung submitted that it would be unable to prepare its full case for trial any earlier than March 2012 – by which time the Galaxy Tab 10.1 would be ‘commercially dead’.  Clearly this submission was intended to emphasise the potential irreversible harm that would be caused by an injunction at this stage.  In the context of this case, this could prove to be a risky argument.  If not carefully presented, it is almost ‘extortionate’ – the consequences of a preliminary injunction, Justice Bennett is being told, are that the product will never be released, so there may be no need for a full trial, and so we will never know whether the injunction was rightly granted in the first place.

WRAP-UP – AND NOW WE WAIT

After three-and-a-half days in court (something of a marathon for an interlocutory proceeding) the hearing finally wrapped up shortly after 5.30pm – but not after Mr Burley, in concluding Apple’s case, had kept some long-suffering court officers on for over half an hour after they were supposed to finish for the day.

Justice Bennett has reserved her judgement, no doubt requiring a few days to consider the many issues raised in the course of the hearing.  She has not provided any timetable for issuing her decision, saying only ‘it’s going to take me a little time.’
Acknowledgment
Patentology is indebted once again to WSJ ‘Korea Realtime’ reporters David Fickling and Ross Kelly for their live-blogging from the courtroom this afternoon.

No comments:

Post a Comment