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Judge orders Apple and antitrust monitor to play nice
Judge Denise Cote yesterday published a ruling elucidating her decision to deny Apple's request to have antitrust monitor Michael Bromwich removed. Apple, if you recall, took umbrage with Bromwich's excessive fees (more than US$1,000/hr), his desire to confer with Apple employees like Jony Ive who are far removed from anything antitrust related and a number of other actions that led Apple to conclude that Bromwich wasn't an impartial party. Cote's ruling explained that many of the arguments laid out by Apple have since become "moot," while also adding that Apple didn't make a strong showing that keeping Bromwich in his position would cause Apple irreparable harm. Taking an optimistic slant, Cote writes that she hopes Apple and Bromwich can start over with a clean slate. The deterioration of the relationship between Apple and the Monitor is unfortunate and disappointing. Hopefully, that relationship can be "reset" and placed on a productive course. But it is strongly in the public's interest for the Monitor to remain in place. Now, it's worth pointing out that appointing an external monitor in the first place, in the eyes of many, seemed extremely heavy handed. Cote, however, and for whatever reason, seemed to treat Apple as a company in dire need of serious punishment for not taking the antitrust accusations as seriously as she would have hoped. Cote, for example, previously wrote that she would have preferred Apple "adopt a vigorous in-house antitrust enforcement program..." thereby making the appointment of an external monitor wholly unnecessary. But when Apple subsequently disclosed its plan to enhance its antitrust compliance program with a special antitrust legal department, Cote wasn't impressed. Cote noted at the time that there was "no showing of institutional reforms to ensure that its executives will never engage again in such willful and blatant violations of the law." But what I find particularly troubling about Cote's ruling is that it seemingly glosses over many of Apple's valid complaints. Again, Cote conveniently trots out the argument that because many of Apple's concerns are now moot, there is nothing for Apple to be worried about. For example, recall that Apple had 90 days under which to implement internal antitrust safeguards. Bromwich, however, decided to begin his investigation as early as November where he demanded to meet with Apple bigwigs like Ive and Al Gore. He also demanded to see the weekly schedules of Apple employees who claimed that they didn't have the time to meet with him when he desired. That type of behavior is understandably worrisome from Apple's perspective. But not to Cote, who takes the position that because the 90-day period has since passed (as of this week), Apple's argument falls flat. In its motion for a stay, Apple argued that the Injunction did not authorize the Monitor to conduct interviews during the first ninety days of his appointment. That ninety day period has now passed, and any complaints regarding it are now moot and could provide no basis for a motion for a stay. While technically true, doesn't Cote miss the larger picture here? Namely that Bromwich seems to be unjustifiably expanding the scope of his court-mandated role? Cote, though, takes the position that Bromwich was well within his means to begin his appointment before the 90-day period so he could become familiar with Apple personnel and "relevant aspects of the company" and its procedures. In any event, should Apple take issue with Bromwich's behavior going forward, Cote writes that there are now dispute-resolution mechanisms in place to address any concerns that arise. And then there's this doozy of a statement. While Apple would prefer to have no Monitor, it has failed to show that it is in the public interest to stop his work. If anything, Apple's reaction to the existence of a monitorship underscores the wisdom of its imposition. A little self-serving, wouldn't you say? It's quite the stretch to state that any objections Apple has is de facto proof that Cote's appointment of her good friend Bromwich was a wise choice. The full ruling is available here courtesy of AppleInsider.
DoJ accuses Apple of 'character assassination' as Judge Cote denies Apple's request for new anti-trust monitor
One has to wonder if Apple now regrets its decision to take a principled stand and not settle the antitrust charges levied against it by the Justice Department. It's no secret that Apple hasn't exactly meshed well with Michael Bromwich, the court-appointed monitor tasked with keeping an eye on Apple's antitrust compliance measures. In November, Apple filed a motion laying out a vast number of complaints about Bromwich. For starters, Apple took issue with Bromwich's fee, an astounding US$1,100 an hour. On top of that, Bromwich hired an outside attorney to compensate for the antitrust experience that he lacks -- Apple's words, not mine. Apple also expressed deep concern that Bromwich took it upon himself to expand his court-appointed duties by demanding to speak with Apple executives like Jony Ive who have absolutely nothing to do with anything antitrust related. You can gather more details surrounding Apple's numerous complaints over here, but suffice it to say that Apple and Bromwich didn't exactly get off on the right foot. With that as the backdrop, Apple last week submitted a letter to US District Judge Denise Cote asking her to remove Bromwich from the position that she herself appointed him to. The letter reads in part: His [Bromwich's] wholly inappropriate declaration in an adversarial proceeding is compounded by his conduct and the circumstances surrounding his appointment and activities, including his reliance on preappointment conversations with the Court and plaintiffs as grounds for expanding his mandate beyond the terms of the Final Judgment, his active collaboration with plaintiffs to broaden the scope of his mandate in this manner and oppose Apple's motion for stay, his financial demands, and his adversarial, inquisitorial, and prosecutorial communications and activities toward Apple since his appointment. The Justice Department, meanwhile, lambasted Apple for actions it argued amounted to nothing more than character assassination. In a letter sent to Cote, the Justice Department said that "Apple had chosen a campaign of character assassination over a culture of compliance." The letter further added: [Apple] could have been spending the past few months working with the External Compliance Monitor with the ultimate goal of reforming its policies and training, and in the process, change its corporate tone to one that reflects a commitment to abiding by the requirements of the antitrust laws. That, of course, sounds all well and good, but one of Apple's chief complaints about Bromwich was that he was dead set on beginning his monitor-ship weeks before Apple got around to implementing new antitrust compliance and training programs. Specifically, Apple had until January 14 to get things up and running. Bromwich, meanwhile, was already requesting meetings with folks like Apple board member Al Gore as early as November. With two competing letters in hand, Cote this week ultimately ruled against Apple. Reuters reported earlier this week: At a hearing, U.S. District Judge Denise Cote in Manhattan denied Apple's request to stay an order requiring an external compliance monitor pending the company's appeal. "I want the monitorship to succeed for Apple," she said. The judge also said there was "nothing improper" about a declaration filed by a lawyer chosen to serve as monitor, Michael Bromwich, that became the basis of Apple seeking his disqualification. Cote said she will promptly issue a decision explaining her reasoning. Apple will then have 48 hours to seek an emergency stay from the federal appeals court in New York, she said. One can only hope, perhaps wishfully, that Apple and Bromwich will somehow find a way to tolerate each other. Arguing back and forth about whether Apple is intransigent or if Bromwich is exploiting his position is ultimately a bad look for all involved. Lastly, Salon this past weekend published a nice piece detailing the absurdity of the Justice Department's seeming vendetta against Apple.
Tim Cook to meet with Samsung CEO to discuss settlement opportunities on February 19
With seemingly endless motions still being filed in Apple's first suit against Samsung, it's easy to forget that the two tech giants have yet another patent infringement trial looming and slated to begin in March. Same issues, different products. That being the case, both Apple and Samsung, thanks to some friendly nudging from the courts, have agreed to have their head honchos meet on February 19 to discuss settlement opportunities. The recently filed proposal in US District Court indicates that Tim Cook, along with three to four members of Apple's in-house legal team, will meet with Samsung CEO Kwon Oh-hyun and his own team of legal lieutenants. And overseeing this meeting of the minds will be an already agreed-upon mediator with "experience mediating high-profile disputes." The news was originally reported by Reuters. Notably, the filing indicates that senior legal executives from both companies already met this past Monday in an effort to reach a settlement agreement, or at the very least, placate the court. The upcoming tete-a-tete between the two companies shouldn't come as much of a surprise if you've followed the Apple-Samsung legal battle closely. You might recall that both companies already went through this same song and dance a few months before their July 2012 trial kicked off. Negotiations back then didn't bear any fruit and Apple, as you know, went on to win a nearly US$1 billion judgment against Samsung. Perhaps this time around, Apple, with a bit more leverage at its disposal, will be able to sway Samsung toward whatever settlement terms it's looking for. But given how fiercely and shrewdly Samsung continues to fight its current legal battle with Apple, something tells me that a signed and sealed settlement agreement won't be reached. As a final point of interest, recall that Cook briefly touched on Apple's patent suit philosophy during an April 2012 earnings conference call. "I've always hated litigation and I continue to hate it," Cook said at the time. Cook next added that he's open to settlement agreements so long as companies agree to stop copying Apple and focus on inventing "their own stuff." "If we could get to some kind of arrangement where we could be assured that that's the case, and a fair settlement on the stuff that's occurred," Cook calmly stated, "I would highly prefer to settle versus battle."
Citing 'racial prejudice,' Samsung wants a retrial of its recent retrial against Apple
At a certain point, the truth becomes so much stranger than fiction that it's hard to differentiate a real headline from one crafted by the talented folks over at The Onion. It appears that we've now reached that point in Apple's ongoing patent dispute against Samsung. A few weeks ago, Judge Lucy Koh oversaw an Apple/Samsung retrial that focused solely on calculating how much Samsung owes to Apple for being found guilty of patent infringement. After a brief trial, a jury determined that Samsung should pay Apple a grand sum of US$930 million. Now, believe it or not, Samsung wants a retrial of the retrial. Why? Because they allege, amongst other things, that Apple's attorneys relied on "racial prejudice" in arguing their case. Florian Mueller reports that Samsung filed a motion seeking a Judgment as a Matter of Law (JMOL), a new trial altogether or a substantial reduction in the damages it owes. Samsung's arguments for a retrial of the retrial have two truly interesting aspects and one that is idiotic. The stupid point Samsung makes can be addressed quickly. It claims, as it did at trial, that Apple's lead counsel, Morrison & Foerster's Harold McElhinny, appealed to "racial bias" against Asians. But he didn't use any pejorative terms of the kind you can hear at the beginning of Full Metal Jacket or say anything other that really has to do with race. At most one can say that he appealed to patriotism, but even that would be at least an exaggeration given that he just explained how domestic companies go out of business if they can't defend their intellectual property against foreign copyists. I just don't understand why Samsung made the decision to press this non-point instead of focusing on its more reasonable arguments. Samsung's motion, with respect to its claims of racial prejudice, reads in part: Independently, new trial is warranted under Rule 59 because Apple's appeals to prejudice against race, ethnicity, and nationality, which have no place in American courtrooms, rendered the trail unfair to Samsung. Such appeals to prejudice are "an affront to the Constitution's guarantee of equal protection of the laws" and "offend the defendant's right to an impartial jury." Because Apple engaged in such improper appeals, Samsung's renewed motion for mistrial should be granted. Apple's insidious "American-us versus foreign-them" theme permeated the trial. Apple's counsel referred to SEC employees as the "Korean bosses" of "Samsung America." Throughout trial, Apple gratuitously reinforced SEC's foreign status, rebranding it as "Samsung Korea," "Korean Samsung," the "Korean parent," and "the Korean company," or simply equating SEC with Korea. Apple injected additional reminders of "otherness," repeatedly pointing out when witnesses could not speak or read Korean and that certain Samsung engineers "don't speak English." By closing, Apple lumped all the defendants with "Samsung Korea," arguing that no "Samsung executive has been brave enough to come into this courtroom"... Meanwhile, Apple's counsel appealed to U.S. nationalism and local parochialism, describing the Bay Area as "the center of one of the most vibrant economies in the world," and threatening: "if we allow [the patent] system of law to decay, investors will not invest, people will not take risks, and our economy will disappear." His meaning was clear: accept Apple's arguments or a foreign company will destroy Silicon Valley business. Samsung, as one would expect, also tosses out the argument that the jury, yet again, did not apply proper frameworks when calculating their final damages amount. It's just bizarre, as Mueller points out, that Samsung would resort to a racial/ethnic based argument in pleading for an appeal. You can check out Samsung's full 51-page motion below. 13-12-14 Samsung's Corrected Motion for Judgment as a Matter of Law
Seoul court: Apple didn't violate Samsung patents
Much of the reporting we see surrounding Apple's patent infringement case against Samsung centers on the US, which is why it's sometimes easy to forget that the two tech giants are going after each other in numerous jurisdictions across the globe. From the Netherlands to Germany to Australia and a number of places in between, the legal battle between Apple and Samsung is monumental. In the most recent update to Apple's ongoing legal battles, a court in South Korea this week dismissed Samsung's claims that accused Apple products infringed upon Samsung-owned patents. Reuters reports: A judge at the Seoul Central District Court said Apple products such as the iPhone 4S, iPhone 5 and iPad2 did not violate Samsung patents on short message display methods and messaging grouping features. The court ruled against a sale ban on the products and threw out Samsung's claim for 100 million won ($95,100) in damages. Regarding the ruling, an Apple spokesman said, "We are glad the Korean court joined others around the world in standing up for innovation and rejected Samsung's ridiculous claims." In dismissing the claims, the court found that the patented technologies asserted by Samsung were natural extensions of already existent technologies. All told, Samsung has had a difficult time gaining much traction against Apple, though it has seen a few small legal victories thus far. But Samsung's collection of patents can seemingly be squared away under two categories: 1) weak patents that aren't truly innovative and 2) strong patents that are subject to FRAND licensing rules. Samsung's weak patents, naturally, don't pose any threat to Apple. Samsung's strong patents, meanwhile, are standard-essential patents, which means that Samsung is obligated to license said technologies to Apple on fair, reasonable and non-discriminatory terms. A Samsung spokesman said the South Korean-based company will review the ruling before deciding whether or not to appeal.
Apple provides detailed listing of Samsung's misconduct during the discovery process
Apple last week filed a motion seeking to recoup US$15.7 million out of the approximately $60 million it incurred in legal fees during its first trial against Samsung. In its brief detailing all of the legal work that went into litigating the case, Apple writes that its legal fees were "multiplied" on account of Samsung's own conduct during the discovery process. As a direct result of Samsung's behavior, the brief reads, Apple's legal team was forced to "file multiple motions to compel, including motions seeking production of copying documents, source code and financial information." Apple also points out that because Samsung initially failed to make key executives available for deposition, Apple was forced to send its attorneys back to "Korea at considerable expense." On account of Samsung's intransigence during the discovery process, the tech giant was slapped with sanctions a number of times, something which Apple was all too happy to detail in its brief. Below is a summary of Samsung conduct that resulted in court-imposed sanctions. 1) Samsung was sanctioned for failure to comply with discovery orders regarding copying documents Samsung's initial document production was due on September 12, 2011. When the deadline came and passed, Samsung only handed over to Apple approximately 15,000 pages of documents. Of those documents, only a small number related to design issues, which Samsung was required to look for and produce. Apple's motion reads in part: At the hearing on Apple's motion, Samsung told the Court that such documents did not exist: "[I]n producing our design documents we are not obligated to manufacture documents that don't exist. They are looking for a smoking gun document, a document that says we copied something from Apple. We don't have those documents." Judge [Paul] Grewal ordered Samsung to produce all documents from the custodial files of Samsung designers of the Samsung products at issue... Samsung failed to comply with that order. Apple moved to enforce the Court's order and won. Samsung was again ordered on December 22, 2011 to produce the above documents by December 31, 2011. Samsung produced many additional documents after the second order, even retaining a second e-discovery vendor to assist as the volume of additional production was so high. Apple then moved for, and was granted, sanctions. Judge Grewal sanctioned Samsung for violating two discovery orders requiring production of design and copying documents. Samsung was sanctioned for withholding source code Samsung was also required to produce source code for its accused products by December 31, 2011. Samsung missed this deadline, and though they offered up an explanation, Grewal found that there was no evidence to demonstrate that Samsung, in good faith, attempted to procure said source code by the aforementioned deadline. Samsung was sanctioned for withholding financial information During the course of the trial, Apple sought to review Samsung's financial information as a means to determine the extent to which Samsung's profits stemmed from its accused products. After Apple filed a motion to compel the production of pertinent financial information in January 2012, Samsung was directed by the Court to produce sales and financial information by February 3, 2012. When February 3 came around, Samsung handed over a single spreadsheet. Understandably not content, Apple moved for discovery sanctions, which Grewal soon ordered. In total, Samsung revised its production of sales and financial information six times- on February 3, 10 and 28, March 8 (the close of fact discovery), March 22 and March 29. On April 16, which was more than a month after the discovery cut-off, Samsung completely overhauled its financial calculation methods immediately prior to the delivery of Mr. Wagner's expert report. Samsung was sanctioned for untimely disclosure of its theories Samsung was also sanctioned for withholding its defenses regarding Apple's utility and design patents until after discovery had already closed. Samsung faced sanctions again as a result of its decision to withhold until after the close of discovery its defenses to Apple's utility and design patent claims. On November 14, 2011, Apple served contention interrogatories seeking disclosure of Samsung's non-infringement and validity theories. Samsung's response, served on December 19, 2011, was 18 pages of boilerplate and Bates numbers. On March 19, 2012, nine days after the close of fact discovery, Samsung served a 145-page supplemental response. Apple moved to strike the portions of Samsung's expert reports relying on these untimely disclosed theories. Judge Grewal struck those portions of Samsung's expert reports, and the Court affirmed his Order. All told, it's no secret that Samsung and its legal team were no strangers to controversy during the course of this litigation. If you recall, Apple also took Samsung to task regarding its email-retention policy and recently asked for sanctions following news that Samsung executives were erroneously given access to confidential Apple licensing agreements.
Apple's spent upwards of $60 million in legal fees during its first trial with Samsung
Apple today remains embroiled in patent disputes with Samsung and Motorola across the globe. With top law firms charging as much as US$1,000 per hour for complex patent disputes, there's no doubt that Apple's legal bills are rather significant. In his recent book Dogfight: How Apple and Google Went To War And Started a Revolution, Wired columnist Fred Vogelstein, citing an attorney who previously worked on patent cases for Apple, relayed that Apple is spending approximately $200 million per year in legal expenses on Android related patent litigation alone. Last week, a court filing from Apple shed more light on the magnitude of its legal fees with respect to Samsung. If you recall, Apple last week filed a motion seeking $15 million in attorneys fees from Samsung. In laying out its position, Apple revealed that its attorneys' fees during the first Samsung trial checked in at around $60 million. The $60 million figure covers work done from April 2011 (when Apple first filed suit against Samsung) through March 2013. Note that this excludes expenses incurred during the subsequent retrial on damages. Notably, the $60 million figure only includes legal work by attorneys who billed more than $100,000 on the case. Apple and its counsel from Morrison & Foerster LLP ("M&F"), who prosecuted its claims against Samsung, have taken numerous steps to ensure that the fees addressed in this motion are reasonable... ... For purposes of this motion, Apple included only the fees it incurred for timekeepers who billed more than $100,000 in this case , thereby eliminating fees from timekeepers who provided meaningful work but did not play a substantial ongoing role in the case. Apple made further reductions in the amounts of fees in connection with this motion to be conservative. As a result of all of these efforts and reductions, the hours underlying the fees at issue are reasonable. The billing rates for the fees at issue also are reasonable, and reflect substantial discounts. No M&F attorney billing to this matter charged over per hour, and the rest were well below that number. The rates are within the ranges of the American Intellectual Property Law Association Economic Survey and are generally less than the rates that Samsung has paid for lawyers at Quinn Emanuel with comparable experience. Applying these parameters, Apple has paid or expects to pay M&F approximately $60 million for its work on this case through the damages retrial. Apple also has paid or expects to pay approximately $2 million to Wilmer Hale for its fees in the damages retrial, again counting only timekeepers who billed more than $100,000 to the case. In total, using these parameters, Apple has incurred over $60 million in fees for prosecuting its claims against Samsung. In a separate brief, Apple makes a point of noting that its legal costs were higher than they would have ordinarily been thanks to Samsung's conduct during the discovery process: Samsung forced Apple to file multiple motions to compel, including motions seeking production of copying documents, source code, and financial information. In several instances, Apple needed multiple orders before Samsung finally complied. Samsung also pursued extensive discovery on hopeless defenses that it later abandoned, including many arguments regarding the alleged "functionality" of the design patents and asserted trade dresses. For example, Samsung demanded depositions of individuals that worked in Apple's model shop or as paint mixers... These depositions required Apple to review tens of thousands of documents. Samsung insisted that Apple run special searches regarding white iPhone issues, which resulted in Apple reviewing additional thousands of documents totaling many tens of thousands of pages. White iPhone issues were not raised at trial. In the grand scheme of things, the $60 million Apple paid out in legal fees is merely a drop in the bucket given Apple's financial position. For starters, Apple was awarded close to $1 billion in damages from Samsung. Second, during its most recent quarter, Apple posted $37.5 billion in revenue. That being the case, Apple last quarter earned more than $60 million every four hours.
Apple seeking $15 million in attorneys fees from Samsung
In addition to the nearly US$1 billion judgment Apple secured against Samsung for patent infringement, Apple now wants the Korean-based tech giant to foot a percentage of its legal costs. In a motion filed on Thursday, Apple articulates why Samsung should fork over $15.7 million in attorneys' fees. According to the filing, that figure amounts to about less than one-third of what Apple spent on legal fees from the outset of the case through March 1, 2013, the date marking "the last order on motions arising from the first trial." To bolster its position, Apple cites Section 1117(a) of the Lanham Act, which details appropriate remedies in cases where willful trade dress dilution is present. The Lanham Act allows for an award of reasonable attorneys' fees in "exceptional cases." Apple's motion explains that previous court rulings have fashioned the term "exceptional" to mean cases where "fraudulent, deliberate or willful" conduct has been found. To that end, Apple's motion doesn't mince words, calling Samsung's copying "willful, deliberate and calculated." Under any measure, this was an exceptional case. The evidence that Samsung deliberately copied every aspect of Apple's revolutionary iPhone product was overwhelming. Apple prevailed on one or more claims of trade dress dilution or patent infringement against 26 of 28 accused products. Apple's motion also references a 138-page Samsung report that painstakingly detailed the positive attributes of the iPhone and ways in which Samsung devices could incorporate them. The Relative Evaluation Report compared virtually every aspect of the iPhone with the Samsung phone then in development, each time finding Samsung's phone wanting and each time directing that Samsung's phone be changed to resemble the iPhone. Samsung acted in complete disregard of Apple's IP - there is not a shred of evidence in the record to suggest that Samsung made any effort to determine whether the various iPhone features were protected, much less to avoid violating Apple's IP rights. In sum, Apple argues that Samsung, in its zeal to amass market share in the smartphone market, blatantly copied a number of iPhone features without any regard to Apple's intellectual property. As a final point, Apple insinuates that Samsung should be glad it's only being asked to pay $15.7 million, a figure which Apple claims is "conservative."
WSJ slams judge in Apple e-book trial
The Wall Street Journal today came to the very public defense of Apple in an editorial opinion piece titled "Apple's Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker." The abuser in question is Clinton appointee Judge Denise Cote, who thrashed Apple back in July for allegedly conspiring with publishers to raise digital book prices. As part of her ruling, Cote appointed a friend -- Michael Bromwich (AP photo above) -- to monitor antitrust compliance and training procedures. Bromwich has since decided "to act as the inquisitor of all things Cupertino," to quote the WSJ. Cote's original injunction provided a period of time ending on January 14, 2014 for Apple to thoroughly examine and update its antitrust policies. But as the Journal notes, by late October, Bromwich had "demanded immediate interviews starting in November with every top Apple executive and board member, including CEO Tim Cook, lead designer Jony Ive and Al Gore," adding with no small amount of snark, "Does he want to disinter Steve Jobs too?" Things have gotten worse since then, with Bromwich asking for documentation outside of the clearly defined area of his appointment and ordering board members and executives to meet with him without lawyers present. Cote proposed making things even easier for Bromwich just before Thanksgiving, suggesting amending her injunction to give Bromwich more power and then have him report to her monthly, once again without Apple's participation. The Journal points out, "the arrangement is flatly unconstitutional. Special masters are typically imposed on a company to remedy a pattern of especially egregious conduct using a settlement consent decree in which litigants agree to the terms of the appointment." In this case, Apple objected to Bromwich's appointment to no avail. The WSJ article notes that, "Judges aren't supposed to appoint their own agents to annex ... activities reserved for the executive branch," and that Bromwich has "rewritten his job description to investigate Apple all over again." As TUAW has noted earlier and as reiterated in the WSJ editorial, Bromwich has no antitrust law experience, is billing Apple US$1,100 per hour and has brought in a "friendly" law firm -- Fried Frank -- to cover his lack of antitrust abilities at $1,025 per hour, once again billed to Apple. The Journal ends its piece with a flat-out suggestion that "the Second Circuit where her ruling is on appeal should remove her from the case," and that Cote's cozy agreement with Bromwich "is offensive to the rule of law and a disgrace to the judiciary." It's not often that we see a major news source like the Wall Street Journal come to the defense of a corporation, but it appears in this case that the harsh words in print are justified.
Judge Denise Cote responds to Apple's concerns over court-appointed monitor
As you may have already read, Apple is none too thrilled with Michael Bromwich, the court-appointed monitor Judge Denise Cote chose to keep an eye on Apple's antitrust compliance measures. This past Monday, Cote issued an order addressing Apple's many complaints. In short, the order relays that if Apple has problems with either Bromwich or Cote herself, Apple knows what protocols it has to follow. One thing worth noting is that Cote denies that there has been any ex parte communication between her and Bromwich, while also indicating that there won't be any such meetings in the future. The order reads in part: Through its November 27 submission, Apple offers other objections as well. It objects to the Monitor's performance of his duties to date and to his fees. On September 5, the Court set forth specific procedures designed to resolve any concerns about the monitoring. The procedures are as follows: within ten calendar days of any action giving rise to an objection, Apple was directed to write to the Department of Justice and Plaintiff States setting forth its objections. And so, the legal song-and-dance continues. While Apple could have avoided the entire headache this saga has created by simply settling with the Justice Department, Tim Cook said during this year's AllThingsD conference that Apple, as a matter of principle, would rather take the antitrust battle to court than admit to doing something it didn't do. [via Roger Parloff]
Apple and its court-appointed e-books monitor
While we previously covered Apple's dissatisfaction with its new court-appointed monitor, a more thorough reading of Apple's complaint reveals deep-seated concerns the company has with Michael Bromwich, and perhaps, with Judge Denise Cote herself. Broadly speaking, Apple takes issue with the fact that Bromwich is charging more than US$1,000 for an hour of his time and is seemingly seeking to broaden the scope of what his duties entail. What's more, Apple's complaint expresses concern that Bromwich may be holding ex parte discussions with Cote. Fortune summarizes Apple's objection thusly: The immediate triggering event for Apple's tirade was an order by Judge Cote issued on November 21, proposing that Bromwich be permitted to hold regular ex parte meetings with herself -- that is, meetings where only she and he would be present and where no transcript would be made to preserve a record of what was said. At those meetings, Apple said it feared, Bromwich could potentially share with her everything he had learned from his meetings with Apple officials and his perusals of potentially confidential and privileged Apple documents. Apple labels this an "exceedingly problematic and disturbing" issue, arguing that Cote cannot in good faith "simultaneously receive ex parte reports from the monitor and preside over the pending damages trial and putative class action." That Apple is not pleased with Cote is no secret: "No litigant," it concludes, "could possibly take comfort in the objectiveness of a court's judgment in ruling on fiercely contested motions and proceedings when the court is regularly meeting privately with a judicially appointed investigator charged with looking to uncover evidence of possible wrongdoing by that litigant. And to the extent the Court actually intended to unleash Mr. Bromwich as its agent in this manner, such order transforms the Court from an impartial arbiter of "Cases" and "Controversies" into Apple's litigation adversary. Apple's complaint also alleges that Bromwich was dead set on beginning his monitoring duties well before Apple finished putting its new compliance and training programs in place. Note that per Cote's order, Apple has until January 14 to begin implementing internal compliance measures and protocols. But Bromwich's zealous effort to get the ball rolling immediately, the complaint reads, placed an undue burden upon Apple. The complaint reads in part: ... to begin interviewing Apple's entire board and its executive team, as well as additional senior executives on November 18 is premature, not authorized by the Final Judgment, and would not only be disruptive to Apple's business operations but also directly contrary to Judge Cote's intent. In addition to requests for interviews with Apple executives such as Tim Cook and Phil Schiller, Bromwich also put in requests to interview Apple board members, including Al Gore. In a specific example cited by Apple, Bromwich suggested that he stop by the courthouse where Apple and Samsung where having their re-trial on damages so that he could meet with Apple General Counsel Bruce Sewell. Apple also notes that Bromwich wanted to meet with Apple's new antitrust compliance officer on what was "literally" her first day on the job. On top of that, Bromwich informed Apple that when a requested interviewee could not be made available, the company should provide him with "detailed copies of their schedules for that entire week" in order to corroborate that they are, in fact, busy. Apple's complaint further reads: Mr. Bromwich's incessant "demands for immediate attention" compelled Apple to once again explain how "incredibly disruptive" Mr. Bromwich's requests had become. Apple reminded Mr. Bromwich that the "reason for th[e] three-month window is of course to provide Apple and its counsel with time to develop new, comprehensive antitrust training and compliance materials in accordance with the Final Judgment, without hampering Apple's business." And Apple tried to persuade Mr. Bromwich that his "continual requests for additional interviews and other information before January 14, 2014[] affirmatively hamper Apple's efforts to develop a new antitrust training and compliance program as efficiently and effectively as possible within the deadline set by Judge Cote." So why is Bromwich so eager to get the ball rolling? Well, Apple says it's on account of him having an ex-parte meetings with Cote: Mr. Bromwich, however, has determined that his duties must commence immediately. And his basis for rejecting Apple's reading of the record is what he termed his "distinct advantage of having discussed [his] intentions to get off to a fast start directly with [the Court] during the interviewing process." As for the very fact that Apple has a court-appointed monitor to begin with, Fortune notes that the penalty from the outset seemed rash. Apple had strenuously opposed the appointment of a monitor, contending that it was an unusual and unnecessary step. In the first place, the conduct the government was complaining about ended years ago. Each of the five publishers -- who settled long ago -- committed back then to stop using the sorts of agency contracts to which the government objected, all without the appointment of any compliance monitors. Compliance monitors are usually required in cases where a defendant has acted egregiously over a long period of time, manifesting longstanding contempt and resistance to the law... This may get really interesting really soon, folks.
Apple not happy that court-appointed monitor in e-book antitrust case charges $1,100 an hour
Apple this past October became tethered to a court appointed external monitor tasked with overseeing Apple's antitrust compliance. The court appointment stemmed from Apple being found guilty of conspiring with an assortment of book publishers to artificially raise the price of e-books across the industry. The monitor chosen to keep an eye on Apple was former Assistant US Attorney Michael Bromwich. Handpicked by US District Judge Denise Cote, Bromwich's role entails him working within Apple to help maintain the company's compliance with antitrust law. Notably, Bromwich's legal fees, per Cote's orders, must be footed by Apple. Only thing is, Bromwich's fees have turned out to be astronomical. According to a report in Bloomberg, Apple this past week filed a motion asserting that Bromwich's fees are exorbitant and unprecedented. All told, Bromwich is charging Apple $1,100 an hour, a rate higher than what Apple has paid out to lawyers in any of its previous litigation matters. During his first two weeks on the job, Bromwich billed Apple a whopping $138,432. Indeed, $1,100 an hour is more expensive than what top lawyers at top legal firms across the country charge for doing complex legal work. Apple's filing reads in part: Mr. Bromwich appears to be simply taking advantage of the fact that there is no competition here or, in his view, any ability on the part of Apple, the subject of the authority, to push back on his demands. So why is Bromwich's fee so high? Well as it turns out, Bromwich is charging Apple a 15% administrative fee on top of his legal duties. He's also charging Apple for other attorneys he's hired to help him carry out his job. The Bloomberg report further relays: Apple also objected in its filing to proposals by Cote to allow Bromwich to interview company personnel without counsel present and to report to her without Apple lawyers present. Those conditions "impermissibly expand the scope of the monitorship," according to Apple's filing. In my view, it's really hard to see this as anything more than a shameless money grab.
Judge Lucy Koh dismisses location tracking lawsuit against Apple
U.S. District Judge Lucy Koh earlier this week dismissed a lawsuit against Apple which alleged that the the company had illegally tracked and transmitted user location data. The suit was initially filed in 2011 by a group of plaintiffs who argued that Apple was in violation of its own privacy policy and that they, as a result, over-paid for their iPhones. Specifically, the plaintiffs argued that in collecting and transmitting location data without user consent, Apple diminished the overall value of their devices by degrading its "battery, bandwidth, and storage resources." In dismissing the lawsuit, Koh explained that the plaintiffs failed to demonstrate that they, in fact, suffered any tangible harm as a result of Apple's actions. The ruling reads in part: Plaintiffs must be able to provide some evidence that they saw one or more of Apple's alleged misrepresentations, that they actually relied on those misrepresentations, and that they were harmed thereby. While the iDevice Plaintiffs identify numerous purported misrepresentations and argue that they relied on them in purchasing their iPhones, the evidentiary record is devoid of "specific facts" to support Plaintiffs' assertions. Critically, none of the Plaintiffs presents evidence that he or she even saw, let alone read and relied upon, the alleged misrepresentations contained in the Apple Privacy Policies, SLAs, or App Store Terms and Conditions, either prior to purchasing his or her iPhone, or at any time thereafter. As a final point, Reuters relays that this case is just one part of a much broader case that "consolidates 19 related lawsuits."
Daily Update for November 26, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
Apple's CPA witness credited with helping jury reach $290 million verdict against Samsung
After a weeklong trial, a jury yesterday determined that Samsung owes Apple US$290 million in damages on top of the $600 million the Korean-based tech giant already owes. During the course of the trial, Apple argued that Samsung should fork over upwards of $380 million while Samsung, not surprisingly, said they should only owe Apple about $52 million. In reaching the $290 million figure, the jury indicated after the fact that they were particularly swayed by a CPA witness introduced by Apple. Bloomberg reports: Apple used the same lead lawyers, arguments and witnesses for this trial as it did last year, with the exception of a new damages expert to replace a witness who died. Jurors said after the verdict that the new expert, Julie L. Davis, a Chicago-based certified public accountant, provided clear evidence they could use to arrive at their damages sum and was unflappable on the stand. "Ms. Davis was on it," jury forewoman Colleen Allen, a former US military medic who served a tour in Afghanistan and now runs a mobile blood-collecting business, said in an interview. Davis was a "superstar witness" who remained steady "even when she was cross-examined," Allen said. The $290 million figure awarded to Apple covers damages resulting from 13 infringing Samsung devices. Nearly $100 million of that total was on account of the Samsung Infuse 4G. For a quick reference point, here's a photo of the Infuse 4G courtesy of Engadget:
The verdict is in: Samsung to pay $290 million in additional damages to Apple in infringement case
Update: Apple issues a statement to AllThingsD basically saying the money is great, but it's the principle of the thing. But the money, we'll take that too. This just in: The jury in the Samsung vs. Apple retrial has reached a verdict, and the news is in Apple's favor. Samsung will pay Apple additional damages in the amount of US$290 million. This amount is in addition to about $600 million already owed to Apple. Judge Lucy Koh reduced the original damages award last year, then ordered the retrial to determine a more realistic amount than Apple was asking for. The lawyers for both Samsung and Apple will now have an opportunity to view the verdict and will most likely quibble over the numbers, so it's not over yet. Earlier in the week, the jury was complaining about being forced to eat sourdough bread sandwiches every day for lunch, sending a note to Judge Koh asking for new lunch options with the word "please" underlined three times. Shortly before the verdict announcement, the jury members asked the judge for a copy of the courtroom artist's depiction of the jury... No word on any book deals yet.
Apple and Samsung damages trial comes to an end; Jury begins deliberations
Apple and Samsung's retrial on damages came to an end yesterday. Now, the jury is busy deliberating in an effort to determine just how much of the vacated US$450 million judgment Samsung will ultimately have to fork over to Apple. During the course of the trial, Apple argued that it deserves $380 million while Samsung argued that $52 million would be a more appropriate amount for its infringing activities. During closing arguments yesterday, Apple attorney Harold McElhinny said that the case wasn't about blindly punishing Samsung, but rather about creating a strong disincentive for further infringement. "This is not about punishment," McElhinny said. "This is not about pitchforks. This is not about getting even. If juries take the profit out of patent infringement, then patent infringement will stop." As for the $380 million figure touted by Apple, Apple justified the amount by pointing out that Samsung generated upwards of $3.5 billion from its infringing products. Apple believes it's entitled to 10 percent of that revenue, hence the $350 million figure. For its part, Samsung maintained that the Apple patents in question had nothing to do with the reason why people purchased Samsung devices. On the contrary, Samsung argued that consumers were drawn to Samsung smartphones for differentiating features such as larger screens. Echoing a sentiment tossed about quite often during Apple and Samsung's 2012 trial, Samsung attorney Bill Price said that "Apple doesn't own beautiful and sexy." Interestingly enough, reporter Howard Mintz, who has done a great job covering the trial, noted yesterday that Samsung actually moved for a mistrial. After closing arguments, Samsung moved for a mistrial because of McElhinny's comment to the jury that American companies long ago were squeezed out of the television manufacturing market because they didn't protect their patent rights, his attempt to highlight the importance of Apple's need to protect its technology. Samsung, which in jury selection asked about bias against foreign companies, argued the remark could taint the jury against the South Korea-based tech giant. That seems highly unlikely, but interesting nonetheless. Of course, the ongoing song and dance between Apple and Samsung shows no sign of letting up. Samsung plans to appeal the initial ruling and we have another trial between the two tech giants set to kick off in March of 2014.
Appeals Court says Judge Lucy Koh erred in not considering injunction against Samsung devices
The Wall Street Journal is reporting that the US Court of Appeals for the Federal Circuit on Monday found that Judge Lucy Koh erred when she ruled, back in Apple and Samsung's summer of 2012 trial, that infringing Samsung products should not be subject to a permanent injunction. The appeals court ruled unanimously that US District Judge Lucy Koh in San Jose, Calif., made errors last year when she denied Apple's request for a court injunction against 26 Samsung products. The court said parts of Judge Koh's ruling against Apple were correct, but it said the judge should spend more time considering evidence offered by the iPhone maker to support arguments that Apple is being irreparably harmed by Samsung's patent infringement. Samsung, of course, has long maintained that monetary compensation is an appropriate remedy for instances of infringement. For its part, Apple argues that Samsung's infringement is so grave and widespread as to make the damage irreparable. In other words, Apple isn't content to receive a check from Samsung, no matter how big it is. Rather, they want the marketplace completely clear of any products that infringe upon patented design and technologies that underlie the iPhone and iPad. Now, many of the products that were at issue during Apple and Samsung's trial are either a) no longer available for purchase or b) completely irrelevant and outdated. Consequently, it's only natural to ask why this federal appeals court ruling is significant in the first place. Well, not only does Apple have another patent infringement case against Samsung slated to kick off in early 2014, but also FOSS Patents concisely articulates why the ruling has broader implications: I wish to stress that it's popular misbelief -- yes, misbelief -- that an injunction would affect only older products that Samsung no longer sells. Apple requested an injunction that also covers any devices with an infringement pattern that is no more than colorably different from the accused products in this particular case. And so, the protracted legal battle between Apple and Samsung continues.
Phil Schiller takes the stand in Apple/Samsung damages trial; calls the iPhone a 'bet the company' type of product
Apple executive Phil Schiller took the stand on Thursday as the Apple/Samsung re-trial on damages entered its third day. As a quick refresher, this sole purpose of this particular trial is to determine just how much in damages Samsung owes to Apple for infringing upon Apple's design and utility patents. Schiller took the stand late on Thursday, giving Apple's marketing chief just enough time to introduce himself and touch on just how important and risky the iPhone was when Apple began working on it. Echoing a sentiment that was prevalent during Apple and Samsung's original trial in the summer of 2012, Schiller intimated that the iPhone was a huge undertaking that would have had an adverse effect on the company had it floundered. CNET was there covering the latest proceedings and relayed some choice quotes from the stand. "There were huge risks [with the first iPhone]," Schiller said. "We had a saying inside the company that it was a 'bet the company' product. We were starting to do well again in iPod. Then here we're going to invest all these resources, financial as well as people in creating this product." Also of note is that Schiller said that "almost everyone" at Apple now works on the iPhone in some capacity or another. Given how Apple has increasingly melded iOS and OS X, this certainly seems plausible in a broad sense. When Schiller returned to the stand on Friday, he explained rather bluntly that Samsung's initiative to copy Apple's iPhone designs made it much more difficult for Apple's marketing team to do their job to the extent that differentiating Apple products from the competition became more of a challenge. Schiller added that with Samsung copying the iPhone, both in terms of software and aesthetic design, it's been "harder for us to get new customers and bring them into our ecosystem." Indeed, this was a point Apple tried to emphasize during its first trial, namely that the iOS ecosystem is "stickier" than other smartphone platforms. Consequently, a lost sale when a customer opts for a Samsung device over an iPhone is compounded as Apple is not just losing one sale, but potentially a number of other sales to what may have otherwise been a longtime iOS user. "At the end of the day," Schiller explained, "there's a cumulative effect of doing all of this that's incredibly damaging." Schiller also added that Samsung's smartphones put Apple's design prowess into question for the first time. The trial is scheduled to run through early next week.
Daily Update for November 13, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
