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

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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