By Dan Levine
SAN FRANCISCO, June 12 (Reuters) – Apple Inc has
spent nearly three years fighting its rivals in a global
smartphone patent war. Now, setbacks in two key U.S. court cases
are laying bare why a drawn-out battle could be bad news for the
iPhone maker.
Last Thursday, Judge Richard Posner in Chicago federal court
canceled Apple’s long-awaited trial against Google Inc’s
Motorola Mobility division, which makes devices powered
by the Internet search company’s Android mobile operating
system. The trial had been set to start this week.
Then in an order late on Monday, U.S. District Judge Lucy
Koh in San Jose, California, effectively dashed Apple’s hopes of
stopping the launch of Samsung Electronics Co Ltd’s
new Galaxy S III smartphone, which also runs on Android. Koh had
said Apple’s push to get a court order blocking the June 21
launch would overload her calendar, given Apple’s high-stakes
trial over other Samsung devices set for July that she is
overseeing.
The latest decisions don’t doom Apple’s courtroom efforts –
the company can appeal Posner’s ruling, while Koh’s directive
had nothing to do with the merits of the Samsung case about to
go to trial, or the legal arguments for an injunction on the new
Samsung smartphone. But delays in moving its cases through the
courts is a blow to Apple’s efforts to get quick and favorable
rulings that it hopes would give it an edge in the marketplace
for mobile devices.
Apple has waged the international patent war since 2010,
part of its attempt to limit growth of Android, which last year
established its dominance as the world’s best-selling mobile
operating platform. Apple’s opponents, meanwhile, say the iPhone
maker is trying to use patents to avoid competing solely in the
market.
A clear victory in one of the U.S. legal cases could
strengthen Apple’s hand in negotiating cross-licensing deals
outside court, where companies agree to let each other use their
patented technologies.
“The stalemate is much more of a victory for the accused
infringers than it is for Apple,” said Brian Love, a professor
at Stanford Law School who studies patent litigation.
Apple spokeswoman Kristin Huguet reiterated a previous
statement, saying the blatant copying of its devices was wrong.
Google spokesman Jim Prosser said the rise of patent litigation
is due to too many vague software patents, and that Google’s
success makes it an attractive target. A Samsung representative
declined to comment.
Apple is not the only smartphone combatant that has faced
setbacks in litigation over its technology. Last month, Oracle
Corp came up empty in a trial against Google, a case
where Oracle’s damages estimates ranged up to $6 billion.
U.S. District Judge William Alsup in San Francisco rejected
Oracle’s copyright claims on parts of the Java programming
language. The enterprise software company said it would appeal.
LAND GRAB
Apple is in a pitched battle with its competitors over who
can develop the most innovative smartphone features. In an
attempt to help keep Android at bay, the company announced new
features for its voice-activated Siri software at its annual
developer’s conference on Monday.
The company’s first lawsuit in its global patent fight was
against smaller competitor HTC Corp in a Delaware
federal court in March 2010. Apple also filed an action against
HTC before a U.S. trade panel, which has forced delays in sales
of some HTC smartphones.
Michael Yoshikami, chief executive of Destination Wealth
Management, says HTC stock has suffered due to adverse court
rulings. But for a larger player like Apple, the patent battle
is important but not for its share price. Rather, it is used for
a short-term edge in the land grab for smartphone and tablet
sales, said Yoshikami, whose fund holds Apple shares.
In a move that was widely seen as a preemptive strike
against an imminent Apple lawsuit, Motorola sued Apple in
October 2010 in Chicago, and Apple filed its own claims against
Motorola the same month. That case landed before Posner, who
issued a series of pre-trial rulings that eliminated nearly all
of Motorola’s patent claims against Apple from the prospective
trial, while maintaining more of Apple’s claims against
Motorola.
That meant Apple had more to gain in the trial, which was
set to start on Monday. But in an order last week, Posner
scrapped the trial after finding that neither side could prove
damages. Apple had sought an injunction barring the sale of
Motorola products, but Posner said that would be “contrary to
the public interest.”
Nick Rodelli, a lawyer and adviser to institutional
investors for CFRA Research in Maryland, rated Posner’s decision
an “incremental negative” for Apple. However, Rodelli doesn’t
think it will stand up on appeal, saying in part that Posner
improperly denied Apple a hearing on its right to an injunction.
Yet Stanford’s Professor Love said that Posner’s ruling, and
the delay it causes in Apple getting the case to trial even if
it wins an appeal, will reduce Apple’s leverage during any
potential licensing talks.
In the Samsung lawsuit, filed last year in California, the
iPhone maker says Samsung “slavishly” copied the iPhone and
iPad. Samsung denies the claims and countersued.
The trial centers around Apple’s claims against multiple
Samsung phones, as well as a Galaxy tablet. But those products
are not the most pressing worry for Apple at the moment:
Samsung’s Galaxy S III phone is set to launch in the U.S. on
June 21, and Apple fears blockbuster sales.
But courts don’t move as quickly as new technology. At a
court hearing last week, Apple attorney Josh Krevitt complained
that Samsung is able to release new phones before the legal
system has time to address their patent violations.
“Samsung is always one step ahead, launching another product
and another product,” Krevitt said.
Koh last week said Apple could ask for a temporary
restraining order against the Galaxy S III phone, but that would
likely delay the trial over a Galaxy tablet and other
smartphones. In her order on Monday, the judge said Apple would
have to request a new hearing date if it wanted to stop sales of
the Galaxy S III phone. That likely would not take place before
the phone’s scheduled launch. Apple has not said what its next
move will be.
Court-ordered mediation between the CEOs of Apple and
Samsung did not produce a settlement in the wide-ranging
litigation. Barring a last minute agreement, the trial is slated
for July 30.
Apple cannot afford to get bogged down in its global legal
campaign against Android, said Paul Berghoff, a Chicago-based
patent attorney with McDonnell Boehnen Hulbert & Berghoff who is
not involved in the litigation.
“If Apple’s goal still is the Steve Jobs holy war, then the
status quo is not in their benefit,” Berghoff said.
(Reporting By Dan Levine; Editing by Martha Graybow, Amy
Stevens and Phil Berlowitz)
