International Patent Litigation – Is There a Home Court Advantage?

Author’s Note: Did Samsung get a fair trial against Apple in Northern California? Can Apple get a fair trial in Korea or China?  All interesting questions with potential billion dollar outcomes depending on the answer.

Some in Asia See Bias in U.S. Apple Verdict

By Jessica Seah  The Asian Lawyer  September 3, 2012

On August 24 a California federal jury awarded Apple Inc. over $1 billion in its smartphone patent infringement suit against Samsung Electronics Co. Ltd.—the largest patent verdict ever. The same day, a Korean court issued a split decision widely seen as more favorable to Samsung, and, last Friday, a Japanese court ruled against Apple outright, ordering the U.S. company to pay Seoul-based Samsung’s legal costs.

The contrast in outcomes has not been lost on intellectual property lawyers in Asia.

“I am surprised Samsung lost all counts in the case in the U.S.,” says one Beijing IP partner with an international firm. “I think there is a clear home court advantage there.”

Other IP lawyers in the region expressed similar sentiments, with some noting that perceptions of bias in the U.S. Apple ruling could provide cover to courts in the region, particularly those in China, that have been accused of favoritism themselves.

Matthew Laight, an IP lawyer and the Hong Kong–based China managing partner for U.K. firm Bird & Bird, says that inexperienced Chinese judges in patent cases could potentially draw the wrong lessons from the Apple case.

“Chinese judges are just getting their heads around whether or not to grant injunctions in patent disputes,” Laight says, “so the result of the Apple-Samsung case may influence how judges see things.”

Many lawyers in the region noted that the U.S. decision was made by a jury. The Korean and Japanese cases were both decided by judges.

The Beijing partner says he found the U.S. ruling less reasonable than the Korean one, in which the three-judge Seoul panel found that both Apple and Samsung infringed each other’s patents and ordered a halt to sales in the country of certain products from both companies. Some observers have said that ruling was more favorable to Samsung because it had already discontinued the affected products.

Apple’s hipper image helped with the California jury, the Beijing partner thinks. Despite being the world’s largest technology manufacturer by revenue, Samsung was the effective underdog in the U.S. case.

“Samsung was pitted against the most revered and successful company in the world,” he says. “So there is definitely a local bias there, especially when decided by jury. I have my doubts against the jury really understanding such a complex case.”

The seven men and two women of the jury found that Samsung infringed all but one of the seven patents at issue—a patent covering the exterior design of the iPad. They also decided that Apple didn’t violate any of the five patents Samsung asserted in the case.

In an interview with Bloomberg, jury foreman Velvin Hogan rejected accusations of local bias. He said the jurors were “inundated” by evidence, and the fact that Apple was headquartered in Cupertino, California—not far from the San Jose courtroom in which the case was heard—made no difference.

Morrison & Foerster and Wilmer Cutler Pickering Hale and Dorr represented Apple, while Quinn Emanuel Urquhart & Sullivan acted for Samsung.

In Japan, Apple had claimed that Samsung infringed its patent on synchronization and sought $1.3 million in damages. District Judge Tamotsu Shoji in Tokyo rejected Apple’s claim, though Apple has other infringement claims pending in Japan.

According to Yoshikazu Iwase, an IP partner at Tokyo-based Anderson Mori & Tomotsune, the Japanese court decision was not surprising because “traditionally Japanese judges are conservative in enforcing patents” and local judges are usually “not directly affected by the decisions of other jurisdictions.”

Still, large Asian corporations are generally accustomed to litigating in the United States and have faith in the fairness of the courts there. Though there may be a sense that Apple enjoyed a home-court advantage in San Jose, says Jones Day Tokyo partner Michiku Takahashi, that stops well short of the kind of bias they worry about in China, where courts are not independent and are generally seen as favoring well-connected parties.

“Experienced Japanese companies are not too bothered about court bias, but comparatively they are generally more concerned about decisions made by Chinese courts, than, say, in the U.S. or in Europe,” she says.

Many lawyers believe the Apple-Samsung fight will trigger a wave of new patent litigation targeting big Asian companies. Geoffrey Lin, a Shanghai-based IP partner at Ropes & Gray, says that lawyers will start to go back to look at their clients’ business models to make sure they are closely protected by their patents.

“International technology companies, especially those that manufacture smartphones, are going to start looking at jurisdictions where there is a lot of trolling,” says Lin.

Takahashi says smartphone-related patent litigation has already become common in recent years. “There has been an increasing number of patent troll cases here in Japan, where non [technology] practicing entities are registering smartphone patents,” she says. “So the Apple matter may give even the larger Japanese phone companies more confidence to litigate when they feel their patents have been infringed.”

But Laight says that while the Apple-Samsung case has gotten a lot of attention, the dispute might not be a sole driver for an increase in patent litigation in Asia.

Asian electronics companies from Japan, Korea, and Taiwan have long litigated against each other both in their home jurisdictions and around the world. Laight notes that now Chinese companies are getting in on the act. Last year Shenzhen-based telecommunications firm Huawei Technologies Co. filed patent infringement lawsuits against its smaller Chinese rival ZTE Corp. in courts in France, Germany, and Hungary. The patents relate to data card and 4G technologies, and ZTE has allegedly used Huawei’s trademark on some of its data cards. ZTE has countersued, alleging that Huawei infringed its 4G patents.