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Judge took issue with Apple's refusal to assign a reasonable licensing value to patents

Apple, Inc. (AAPL) had a dream.  In its dream it no longer had to compete with Google Inc.'s (GOOG).  Instead it resorted to "thermonuclear war" with Android, gaining sales bans and suing Android device makers with damage claims so exorbitant that licensing was a non-option.

But it's looking increasingly like Apple's dream is but a fantasy, as the U.S. federal court system, like its peers, are growing tired of the company's legal crusade.

I. Great Expectations for Apple

Judge Richard A. Posner, a Seventh Circuit Court of Appeals judge who moonlighted in the U.S. District Court, Northern District of Illinois (Chicago), tossed Apple and Motorola Mobility's (a Google Inc. (GOOGsubsidiarysuits/countersuits out of court "with prejudice" during the first week of June.  He was upset about both companies' refusal to place realistic evaluations of their patents' worth (both companies reportedly lofted astronomical figures).

It was Motorola who originally initiated this suit, but it was essentially just committing to a preemptive strike after CEO Steve Jobs and Apple lawyers verbally threatened to sue it in late 2010.  During the month of October 2010 Motorola dropped the hammer and Apple followed in suit with its promised infringement lawsuit.

Northern District Court
The legal war was waged in Chicago court. [Image Source: Flickr/pobrecito33]

By 2011, Apple was growing eager with anticipation.  Motorola was facing scrutiny, as its lawsuit was founded on fair, reasonable, and non-discriminatory (FRAND) standards patents.  Motorola's decision to sue using FRAND IP had already provoked complaints from Apple and Microsoft Corp. (MSFT).

By contrast, Apple's patents were non-FRAND and carried fewer licensing restrictions.

Apple perceived this as an opportunity to demand essentially infinite damages, leading to a complete ban on current handset models and forcing Motorola, et al. to scrap key features that seemingly overlapped with Apple's massive software patent portfolio.  Paid critics of Google, such as Florian Mueller, eagerly salivated at Android's impending doom after it was "neutered" by Apple patent lawsuits.

Motorola's lawyers fought fire with fire, also requesting massive damages, despite realizing that their patents FRAND status made those damages even more risky.

II. Case Dismissed, Again

In the end Judge Posner rebuked both companies for this approach, dismissing the case.  The dismissal was a blow to Google's defense efforts, but was a far bigger blow to Apple's offensive efforts.  For that reason it was Apple who petitioned Judge Posner to reconsider, pleading for additional hearings to present revised arguments.

But those hearings came and went and Judge Posner has yet again dismissed the case with stinging words for Apple.

He comments in his ruling, "No more can Apple be permitted to force a trial in federal court the sole outcome of which would be an award of $1."

Judge Richard Posner
Judge Richard Posner was not happy with Apple. [Image Source: Abel Uribe, Chicago Tribune]

There would be no injunctions he added -- for either side.  They would simply have to compete on the free market, seeing as they could not be reasonable with their requests in court.

He comments, "Both parties have deep pockets.  And neither has acknowledged that damages for the infringement of its patents could not be estimated with tolerable certainty."

6.22 Opinion

III. Begrudging Apple Forced to Compete

Apple has seen its anti-Android legal blitzkrieg sputter to a crawl in recent months.  HTC Corp. (TPE:2498) successfully implemented a workaround allowing its handsets to skirt a sales ban based on "data-tapping" -- converting phone numbers or addresses to actionable links.

Meanwhile, Apple's efforts to ban Samsung Electronics Comp., Ltd.'s (KSC:005930) flagship Galaxy S III phone failed in U.S. District Court for the Northern District of California (San Jose/San Francisco).  Judge Lucy Koh, like Judge Posner, admonished Apple's zealous legal team.  She accused them of trying to monopolize her time, commenting, "I cannot be a [full time] Apple v. Samsung judge."

In the Chicago Motorola case part of Judge Posner's frustration stemmed from the fact that Apple complained at virtually every single stage -- even after he had handed them apparent victories.  Apple now is stuck between a rock and a hard place, as if it tries to appeal the ruling, the appeal will likely go to the same circuit appeals court that Judge Posner sits on.

Motorola's Razr MAXX will face no sales bans. [Image Source: Verizon Wireless]

The failure of its lawsuits is a very dangerous dilemma for Apple.  A sales ban could help preserve Apple's strong position amid a period where it has made no bold or decisive moves.

Following the illness and death of Steve Jobs in 2011, Apple's iPhones have seen slipping release schedules.  The iPhone 4S did not land until October 2011, while this year's sixth generation model has yet to be even announced.  This slippage stands in contrast to the reign of Jobs in which an iPhone was announced like clockwork each June and launched by late June (with the exception of the iPhone 3GS which launched in early July).

Likewise, after bold steps in terms of interface in early builds, Apple has since stalled. IOS 6 has suffered from bugs in test builds and lags behind Android 4.0 Ice Cream Sandwich and Windows Phone 8 in GUI design.  Apple is trying to spin its lack of refinements as sticking with "simplicity", but amid these attractive competitors it's looking increasingly demure and dated.
Apple iPhone
Product progress at Apple has slowed following the passing of Apple CEO/co-founder Steve Jobs
David Paul Morris/Getty Images]

In short, the trainwreck of its legal efforts against Android couldn't come at a worse possible time for the iPhone's market hopes.

Source: Scribd

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RE: What Jason did not say....
By JasonMick on 6/25/2012 5:13:39 PM , Rating: 1
Conversely, and something I didn't see in the story Jason is telling, the judge did say that if the case had gone to trial he would have killed Motorola's (Google's) suit outright as he felt Motorola did not have a case at all.
No I explicitly explain in early paragraphs that Apple's case was seemingly stronger than Motorola's due to it being based on non-FRAND IP. I also linked to past stories in which Judge Posner said precisely that.

I don't think I was being disingeneous when I didn't repeat every single point Judge Posner made, particular when those points merely recap/reiterate points he already raised in past filings which I wrote about in detail and link to.

Don't you think the story was long enough, as is?? :)
So the bottom line (according to Posner) is Apple *might* have had a case but screwed it up so completely that the judge had to throw it out because the legal team messed up so badly that Apple would never have been awarded a dime even if they won at trial AND Motorola never had a case at all.
I agree here, not sure why you were downrated, although I disagree on the basic premise of your comment that I left out that point.
Yes, the judge very rightly smacked Apple. However, he did not say Apple did not have any case at all. He said Apple failed to show it was being damaged in any way that could provide for a judgement.
No, as I said in the piece, he took issue with Apple's refusal to come to reasonable/appropriate damages.

I think we both agree on this, you just didn't like something with the wording. Regardless, good news for the free market, I/we say, eh?

RE: What Jason did not say....
By Khato on 6/25/2012 5:36:53 PM , Rating: 3
No, as I said in the piece, he took issue with Apple's refusal to come to reasonable/appropriate damages.

Precisely. Roughly the first 2/3 of the opinion is primarily the justification for the ruling, it's the last third that actually sheds light on the root of the issue. Namely that Apple is attempting leverage its patents to gain an injunction to harm its competition for more than the value of the infringement rather than seek reasonable relief.

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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