Markman Note: Did Apple Beat Samsung to a Draw?
June 1, 2015 (Mimesis Law) — Everyone knows that Apple (AAPL) sued Samsung for patent infringement years back. What people may not know is that the case is still going on! Only three years after the 2012 verdict that saw Apple awarded $930M (approximately a week’s worth of iPhone sales) in damages, the Federal Circuit recently tweaked the verdict by close to $400M in Samsung’s favor. Big numbers for patent cases to be sure, but trivial for these two tech giants in terms of the revenues generated by their respective smartphone businesses.
While the parties wisely decided to settle all their non-US patent litigation, this case keeps on trucking along. Absent a settlement, there will be yet another damages trial with respect to some claims found infringed. In short, this saga will continue. The lessons for investors? First off, when two large companies square off in a patent dispute, a draw is a likely outcome. Second, because this case started in the pre-IPR days, to some extent this was a fight fought under the “old rules” of patent litigation. Things could have been very different potentially if the case was brought more recently. Patent litigation is a different game today. Investors need to embrace that new reality.
Recent Patent Litigation-Influenced Moves
Sometimes companies just can’t get along. That seems to be the case for Illumina (ILMN) and Ariosa (a Roche company,) which are competing in the market for genetic sequencing technologies. Previously, Illumina had sued Ariosa on three patents, alleging that the sequencing-based version of Ariosa’s Harmony Prenatal Test infringed. That dispute is ongoing. Expanding the battle to a new battlefront, Illumina has filed a second case against Ariosa, alleging infringement of one of the three previously-asserted patents by the microarray-based version of the Harmony Prenatal Test. Pretty standard stuff so far, as competitors like to lob multiple grenades at each other before seeing the light and reaching a global settlement.
What makes this case interesting is that the patent at issue has already been challenged by Ariosa at the USPTO in an IPR proceeding. And the petition filed by Ariosa was successful, leading to an institution decision in their favor. Meaning that the IPR will proceed to the trial phase, and the preliminary finding of the PTAB was that the claims were likely invalid over the prior art presented. In short, Illumina’s patent may not be long for the world, and Ariosa will most likely be able to get this new case stayed pending the IPR decision. Oral argument in the IPR is set for September. Yet another scenario where IPR practice has completely altered the “rules” of patent litigation. Illumina’s investors are just the latest to learn the lesson.
There are still some big cases going on, and this case is one of them. A jury in Delaware returned a monster $450M+ verdict in Masimo’s (MASI) favor last October, and that verdict has just been affirmed by the District Court in the post-trial motions. This decision is an important incremental step in MASI’s march toward a hoped-for payday from Philips, and sets up a potential blockbuster Federal Circuit appeal. Importantly for investors, the case does reinforce the importance of patience with respect to litigation timelines. When plaintiffs want guaranteed money, they do their best to settle. Taking a case all the way is riskier, but with more upside potential. MASI is surely prepared for Philips to appeal, and as it enjoys the latest affirmation of its verdict, is probably thanking its lucky stars that an IPR was not available to Philips. We could be discussing this case very differently if one was.
The Week(s) Ahead — Expected Events
Marathon (MARA) upcoming Del. trial involving Schrader and Bridgestone – 6/1
And that is the note. Hopefully you have had a chance to catch our “Markman Minute” videos (available at www.mimesiswebtv.com/intellectual-property) for a deeper look at some of the biggest current patent stories of interest to investors. Finally, we want your feedback and suggestions, so feel free to send it along to firstname.lastname@example.org or to @markmanadvisors on Twitter. You can also visit our website at www.markmanadvisors.com. Questions from the readership are always welcome as well; we will try to get you answers in future issues of the Markman Note.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at email@example.com. All suggestions are welcome.
Main image via Flickr/Maurizio Pesce