Opinion

Alison Frankel

Lesson from the smartphone wars: Litigation is not a business plan

Alison Frankel
May 19, 2014 19:55 UTC

After almost five years of suing each other in courts in the United States and Europe over patents on mobile devices, Apple and Google abruptly announced Friday night that they’ve called a ceasefire: They’re dropping all of the litigation. They’re not even making a deal to cross-license one another’s IP, just declaring a truce and walking away.

Apple has not yet settled with Samsung, the device manufacturer that most successfully employs Google’s Android operating system, so the two companies haven’t entirely resolved their dispute; evidence from the recently concluded patent infringement trial between Apple and Samsung in San Jose, Calif., revealed that Google is paying at least part of Samsung’s defense costs. (The Korea Times reported Monday that Apple and Samsung are in global settlement talks.) Until there’s a Samsung deal, two law professors, Brian Love of Santa Clara University and Michael Risch of Villanova told Bloomberg, the Google settlement is more important as a symbol than for any actual impact.

What is increasingly obvious is that the same can be said for the entire panoply of smart device patent cases. Apple and Samsung have now been through two long and expensive patent infringement trials before U.S. District Judge Lucy Koh in San Jose. Apple has won both, but the jury in the trial that concluded earlier this month awarded the company only $119.6 million in damages, less than a day’s sales for Samsung. Most importantly, Apple failed to win an injunction in the federal-court litigation. Samsung also tried and failed, in its case at the U.S. International Trade Commission, to win any prohibition on the importation of Apple products. Microsoft, meanwhile, established in separate litigation against Google that individual patents in high-tech devices are worth a pittance.

It has taken five years and untold tens of millions of dollars in legal fees to confirm that competition over high-tech products that make use of hundreds of patents will not — and should not — be decided by the courts. Despite Steve Jobs’ famous description of Android as “a stolen product” that he would destroy through “thermonuclear war,” it simply doesn’t make business sense to throw money into a litigation bonfire that will leave you with nothing more than a handful of cold ashes.

I’ve said this before, but the settlement between Apple and Google makes it manifestly clear: No one won the smartphone patent wars.

Dueling cert petitions give SCOTUS choice on software patent review

Alison Frankel
Nov 8, 2013 19:26 UTC

On Wednesday, CLS Bank filed a brief opposing U.S. Supreme Court review of a spectacularly controversial en banc decision from the Federal Circuit Court of Appeals. You probably remember the Federal Circuit ruling from last May in the CLS case: The en banc court held that Alice Corp’s computer-implemented escrow system is not eligible for patents, but couldn’t muster a majority to explain why. The 10 appellate judges ended up writing six different opinions, none of which attracted enough co-signers to provide long-sought clarity on a standard for the patent-eligibility of abstract ideas that are implemented via computers. As Alice’s lawyers at Sidley Austin explained in their certiorari petition in May, “The legal standards that govern whether computer-implemented inventions are eligible for patent protection … remain entirely unclear and utterly panel dependent.”

CLS’s counsel at Gibson, Dunn & Crutcher didn’t contest that assertion – the precedential muddle isn’t really debatable – but argued that the Federal Circuit reached the right conclusion when it found Alice’s escrow system ineligible for patenting. With three new judges on the Federal Circuit, CLS said, it makes more sense to give the new judges – Richard Taranto, a former senior partner at Farr & Taranto; Raymond Chen, the onetime solicitor general of the U.S. Patent and Trademark Office; and Todd Hughes, who most recently served in the Justice Department’s civil division – a chance to consider computer-implemented patent eligibility. “The reconstituted court is capable of settling its own internal divisions,” CLS’s brief said. Gibson Dunn actually uses seemingly irreconcilable post-CLS Federal Circuit panel decisions in Bancorp v. Sun Life and Accenture v. Guidewire to underscore its argument that the discussion of software patent eligibility is still percolating healthily in the Federal Circuit so the Supreme Court needn’t get involved.

If, however, the court does decide to take up the issue, CLS wants the justices to use Alice’s case as their vehicle. And here’s where things get interesting in the great debate over whether otherwise-unpatentable abstract ideas become eligible for patents when they’re implemented via computers. Alice isn’t the only party with a pending cert petition on software patent eligibility. The online game company WildTangent is asking for Supreme Court review of a Federal Circuit panel decision that, according to WildTangent’s counsel at Latham & Watkins, sets so low a bar for patent eligibility that just about every computer-implemented abstract idea would survive. The Alice and WildTangent cases really pose the exact same question for the Supreme Court. So which should the justices take?

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