{25} Apple Lacks Due Diligence in Checking Prior Patents

A ruling made last November found Apple guilty of infringing several VirnetX FaceTime patents, and was forced to pay $368m in damages. The legal battles revealed Apple's lack of due diligence process when it came to checking prior patents, as VirnetX's lawyers stated, "Apple developers testifies that they didn't pay any attention to anyone's patents when developing their system."

According to Slash Gear, "in Apple's recent quarterly report, the company filed Form 10-Q with the U.S. Securities and Exchange Commission (SEC) stating that it intends on challenging the verdict and has not 'recorded a loss accrual at this time."

Apple infringed 4 of the VirnetX patents that involved establishing virtual private networks (VPN) to secure communications. Apple used this technology for its FaceTime feature.

Many other companies, including Microsoft, Cisco, Siemens, and many other are being sued for infringement by VirnetX. Apple is also facing another lawsuit that includes infringing on the same patent in its other devices. 

{24} Google's Disappointment, Microsoft's Gain

Microsoft signed it's 20th royalty-bearing Android patent licence deal with Hon Hai, the parent company of Foxconn, which is the manufacturer of more than 40 percent of the world's consumer electronics. The agreement comes at a disappointment to Google's Android and Chrome operating systems. Specifically, this means that any Android or Chrome device made by the Hon Hai group will result in direct royalty payments to Microsoft.

Google has continued to deny the need for a patent license agreement with Microsoft even after the multiple losses by Google's Motorola Mobility. According to Foss Patents, the Hon Hai deal reflects as a huge disappointment for Google as it reflects a respectful approach to intellectual property, unheard of by Google. In a statement by Hon Hai:

"We recognize and respect the importance of international efforts that seek to protect intellectual property. The licensing agreement with Microsoft represents those efforts and our continuous support of international trade agreements that facilitate implementation of effective patent protection."

 While Google announced 1.5 million Android device activations per day, predicting one billion Andorid devices by the end of the year--this is in a large part possible due to the intellectual property belonging to third parties like Apple, Microsoft, Nokia, Oracle, and many more as evidenced by the large number of patent infringements brought towards Google in the last could of years. In answering these infringements, Google will be using a  chunk of the Android revenue which will affect Android's long-term competitiveness.

{23} Apple and Samsung: Co-writing But Not Compromising

In connection to the second Apple vs. Samsung lawsuit in California, the two companies prepared a "joint" statement, as to the reports of Foss Patents, where both parties listed out their positions onto a single document. Note that "joint" and a single document do not mean a consensus. This comes as a response from Judge Koh's March warning to both parties to narrow their claims, as I spoke about a couple weeks back. Currently there are 16 patents, 8 by both parties, that are in contention, but the number will be largely reduced soon. Apple has proposed to cap the patents to five per side, while reducing the number of claims to 12. Samsung, in defense, wants five claims per side, but eight "invalidity theories to be allowed per calim, while Apple would set a per-patent limit of five invalidity contentions".

Apple is pushing for a large part of the narrowing of the lawsuit to happen before summary judgement, while Samsung is pushing for the narrowing to occur towards the end of this lawsuit's days. This is in large part to Apple's confidence against Samsung, especially with this joint proposal. If Apple's side of the proposal is approved, Samsung would get to assert fewer patents not allowing for much buffer room for Samsung if one of the patents is dismissed by the judge.

Past the number of asserted patents and claims, the number of accused products is also up for narrowing. Until now, the parties were able to add an unlimited number of products to the case, thus creating a more complex case for the jury. In this case, Apple would only be able to accuse a subset of the large number of products Samsung owns--while Samsung will probably be able to to attack all relevant Apple products--as there are not that many in comparison. However, "Apple notes that even if there are many Samsung products at issue, it all comes down to only a few different Android versions that power those devices".

The fight will continue through every claim, every patent, every product. And the post-judgement will definitely payout for the winner, largely due to the high coverage of this lawsuit. 

{22} Apple Revolutionizes Call Waiting

Apple's recent patent on "communications system that provides user-selectable data when user in on-hold" reveals an advanced call hold feature that provides users with dynamic call holding and caller information on display, possibly making 'Please Hold' obsolete. The Patent No. 8,412,164 includes adaptive information, which according to Apple Insider, will cover a number of possibilities "automatically presented at times when the user may otherwise not expect to be presented with information".

Adaptive information includes contextual data taken from the user's phone like events in a user's calendar, according to Apple Insider. Adaptive information by definition is different from static information because it can be changed, rather than remain the same or fixed. Unlike Static information which only includes the duration of the call or the caller ID, adaptive information will include data that is generated every time a new connection is made between two callers. The data will be customized based on the line, date, time, user's schedule, location, and other metrics, according to Apple Insider. Furthermore, the adaptive system will also be able to display information not necessarily stored in teh user's device like news, weather, music or other information. 

According to information in the patent : 

"Adaptive information can also be presented using graphical representations. Graphical representations of adaptive information can be used separately from or in combination with audio signals. For example, a device can display a picture of the person a user is communicating with while also providing important facts about that person through an audio signal."

This technology is pretty encompassing, and will revolutionize how we take calls altogether. For example, ad space will be sold to offset some of the costs associated with the call--presenting users with advertisements when they are on hold. The time of the day is also considered, as the data presented will call upon a user's schedule for an early morning call or news or weather forecasts for late night calls. 

{21} Germans iCloud Users Almost Hassle Free

Back in Feburary 2012, Apple was forced to deactivate automatic push notifications for email, contact, and calendar updates for users accessing the iCloud in Germany due to an injunction Google's Motorola Mobility won against Apple. Specifically, it did not inhibit users from accessing this data, but whether the data was automatically sent to them instead of the users having to manually configure their devices to check how periodically they wanted the updates. According to Florian Mueller's take on the Karlsruhe Higher Regional Court hearing, the enforcement on the injuction will most likely end.

The only way Motorola may be able to render this patent, which was already found invalid on multiple reasons in the UK court last year--is by narrowing the claim to what the invention was originally related to: "ensuring the delivery of messages to pagers attached to different garments".

If Google does lose the case, if will eventually have to pay Apple in damages for enforcement of improperly granted injunction. Interestingly, this case is the only injunction any Android based company is enforcing against Apple, anywhere in the world. Though we might say there are an even wins-and-loses on both sides on the Android-Apple war, the only wins Android has scored are "non-defeats, not true wins in terms of offensive achievements  That's why licensing-- not litigation -- is the only pragmatic solution for Andriod device makers to address their platform's infringement problems.

{20} Patent Privateering on Rise

Google alongside Red Hat, BlackBerry, and EarthLink is pushing the Federal Trade Commission and the Department of Justice to pay greater attention to patent assertion entities (patent trolls), or more commonly termed Patent Privateers. These privateers have become a detrimental part of the tech industry as they embroil companies in expensive litigation over bogus claims on technologies. 

Google claims that the "asymmetric warfare" has cost the United States $30 billion in 2011, and $80 counting all direct and indirect costs. Asymmetric warfare is a tactic used by patent trolls who buy and split legitimate patents from companies and then go on to sue other companies for using them on multiple fronts--even though the patent trolls have no intention of actually manufacturing any of the patents they are suing for. These patent trolls have come to make a living solely by asking for money to stop them for suing. On Google's Public Policy Blog, it states that "Trolls are hurting consumers and are increasingly going after small businesses, hampering innovation, and reducing competition." 

According to TechCrunch's article on patent assertion entities (PAE), PAE's comprise 62% of all patent law suits now (as displayed on the graphic below). 

As we discussed in class last week, the idea behind Patent Trolling as become especially successful because these companies are comprised just on essentially two pieces of paper, and thus cannot by countersued. They don't manufacture any products, and thus can sue with impunity. Many times, the transferring companies that sell their patents to patent trolls hide behind the trolls to avoid themselves from litigation, while many times still getting the benefits (a cut of the win).

As rumor has it, Congress is considering requiring trolls who lose cases to pay court costs, which is a hefty part of what makes these litigations so expensive, for both sides. Since patent trolls have been enjoying their sweet ride of winning money or losing nothing, if Congress passes this law, patent trolls may finally be forced to consider their actions as they will  have something to lose in the process. 

{19} Samsung and Motorola Unlock Apple's Slide-to-Unlock

In Germany, Samsung and Google's Motorola Mobility have finally scored a big win over Apple regarding the user interface patent regarding "unlocking a device by performing gestures on an unlock image".

Germany's Federal Patent Court, Bundespatentgericht, has found the patent invalid as it does not cover all slide-to-unlock gestures--allowing Apple competitors to find loopholes to workaround to avoid infringement.   This is quite a famous patent, as all smart phone users use some variation of this motion. However, due to Apple's lack of extensiveness in describing its patent, Samsung and Motorola have been able to find a way around the patent.

For a large part, Apple was defeated in German court due to European law having restrictions on what is patentable and what is not, unlike in the United States, where nearly everything is patentable. German court's decision was based on the fact that the "claimed invention is new over the prior art" only due to the swiping gesture to unlock a device. However, under European patent law, this fails to meet the technicity requirement  as the mere action of sliding is visual representation and not deemed a technical innovation. In Europe, according to Foss, Software "as such" is not patentable unless it solves a technical problem with technical means.

According to Mueller's review on his blog, Foss Patent, the German decision can be appealed, so it will be interesting to see what Apple does in retaliation. This is a big patent for them to lose out on, especially because they could have gathered so many royalties on it as nearly all smart phones have need this technology. The fight between Samsung and Apple is being reflected in the market as well, as figures from this week alone indicate that while Apple has extended its lead over Samsung in the United States, Samsung leads worldwide. iOS has regained some lead from Android as of Feb 2013 in the United States, but Samsung's profits are expected to rise 53 percent to around $7.7 billion in the next quarter.

Now that the decisions between the Samsung and Apple battle are finally trickling through, it's interesting to see how the market is reflecting to these changes.