Case: 12-1548 Document: 45 Page: 1 Filed: 11/27/2012
`NONCONFIDENTIAL
`Nos. 2012-1548, 2012-1549
`
`UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`APPLE INC. AND NEXT SOFTWARE, INC. (formerly known as NeXT
`Computer, Inc.),
`
`Plaintiffs-Appellants,
`
`–– v. ––
`MOTOROLA, INC. (now known as Motorola Solutions, Inc.) AND MOTOROLA
`MOBILITY, INC.,
`Defendants-Cross-Appellants.
`_________________
`
`Appeals from the United States District Court for the Northern District
`of Illinois, Case No. 11-CV-8540, Judge Richard A. Posner
`_________________
`
`OPENING BRIEF AND ADDENDUM OF PLAINTIFFS-
`APPELLANTS APPLE INC. AND NEXT SOFTWARE, INC.
`_________________
`
`Brian E. Ferguson
`Weil, Gotshal & Manges LLP
`1300 Eye Street, N.W., Ste 900
`Washington, DC 20005
`Matthew D. Powers
`Tensegrity Law Group LLP
`555 Twin Dolphin Dr., Ste. 360
`Redwood Shores, CA 94065
`
`E. Joshua Rosenkranz
`Orrick, Herrington & Sutcliffe LLP
`51 West 52nd Street
`New York, NY 10019
`(212) 506-5000
`
`Mark S. Davies
`Rachel M. McKenzie
`T. Vann Pearce, Jr.
`Orrick, Herrington & Sutcliffe LLP
`1152 15th Street, NW
`Washington, DC 20005
`
`Attorneys for Plaintiffs-Appellants
`
`

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`Case: 12-1548 Document: 45 Page: 2 Filed: 11/27/2012
`
`CERTIFICATE OF INTEREST
`Counsel for appellants certify the following:
`
`1. We represent APPLE INC. and NEXT SOFTWARE, INC.
`
`2.
`
`The name of the real party in interest (if the party named in
`
`the caption is not the real party in interest) represented: Not
`
`applicable.
`
`3.
`
`All parent corporations and any publicly held companies
`
`that own 10 percent or more of the stock of the party or amicus curiae
`
`represented: None. Apple Inc. has no parent corporation. According to
`
`Apple’s Proxy Statement filed with the United States Securities and
`
`Exchange Commission in January 2012, there are no beneficial owners
`
`that hold more than 10% of Apple’s outstanding common stock. NeXT
`
`Software, Inc. is a wholly owned subsidiary of Apple Inc.
`
`4.
`
`The names of all law firms and the partners or associates
`
`that appeared for party or amicus now represented in trial court or
`
`agency or are expected to appear in this court are:
`
`i
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`

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`Case: 12-1548 Document: 45 Page: 3 Filed: 11/27/2012
`
`ORRICK, HERRINGTON & SUTCLIFFE LLP:
`
`E. Joshua Rosenkranz
`Mark S. Davies
`Rachel M. McKenzie
`T. Vann Pearce, Jr.
`Alyssa Caridis
`Christopher J. Higgins
`Katherine M. Kopp
`Daniel Habib
`
`WEIL GOTSHAL & MANGES LLP:
`
`Jonathan Bloom
`Anne M. Cappella
`Brian C. Chang
`Justin L. Constant
`Mark G. Davis
`David M. DesRosier
`Brian E. Ferguson
`Nathan A. Greenblatt
`Jacqueline T. Harlow (no longer with firm)
`Jill J. Ho (nee Schmidt)
`Edward S. Jou
`Kevin S. Kudlac
`Christopher T. Marando
`Rodney R. Miller
`Julian Moore
`Danielle S. Rosenthal (no longer with firm)
`Stephen K. Shahida
`Elizabeth Stotland (no longer with the firm)
`Rachelle H. Thompson (no longer with firm)
`Robert T. Vlasis
`Robert P. Watkins, III (no longer with firm)
`Elizabeth S. Weiswasser
`
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`Case: 12-1548 Document: 45 Page: 4 Filed: 11/27/2012
`
`COVINGTON & BURLING LLP:
`
`Elena M. DiMuzio
`Christopher K. Eppich
`Samuel F. Ernst
`Robert D. Fram
`Danielle L. Goldstein
`Christine Saunders Haskett
`Robert T. Haslam
`Matthew J. Hawkinson (no longer with the firm)
`Richard A. Lopez
`Anupam Sharma
`Ranganath Sudarshan
`Winslow B. Taub
`
`TENSEGRITY LAW GROUP LLP:
`
`Steven S. Cherensky
`Paul T. Ehrlich
`Monica M. Eno
`Robert L. Gerrity
`Azra Hadzimehmedovic
`Matthew D. Powers
`Stefani C. Smith
`
`GODFREY & KAHN, S.C.:
`
`James D. Peterson
`Bryan J. Cahill
`
`BOARDMAN, SUHR, CURRY & FIELD LLP:
`
`Catherine Cetrangolo
`
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`Case: 12-1548 Document: 45 Page: 5 Filed: 11/27/2012
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`BRIDGES & MAVRAKAKIS LLP:
`
`James A. Shimota
`Lawrence Lien
`Michael Pieja
`
`SCHIFF HARDIN LLP:
`
`Stacie R. Hartman
`
`Date: November 27, 2012
`
`Respectfully submitted,
`
`ORRICK, HERRINGTON &
`SUTCLIFFE LLP
`
`By: /s/ E. Joshua Rosenkranz
`E. Joshua Rosenkranz
`Attorney for Plaintiffs-Appellants
`
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`

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`Case: 12-1548 Document: 45 Page: 6 Filed: 11/27/2012
`
`TABLE OF CONTENTS
`
`Page
`TABLE OF AUTHORITIES....................................................................viii
`TABLE OF ABBREVIATIONS...............................................................xiii
`STATEMENT OF RELATED CASES.................................................... xiv
`INTRODUCTION ....................................................................................... 1
`JURISDICTIONAL STATEMENT............................................................ 4
`STATEMENT OF THE ISSUES................................................................ 4
`STATEMENT OF THE CASE ................................................................... 5
`STATEMENT OF FACTS .......................................................................... 6
`Apple Develops “Heuristics” To Translate Imprecise User
`Touches (The ’949 Patent) ................................................................ 6
`Apple Spurs The App Explosion With Its Innovation In
`Streaming Audio And Video (The ’263 Patent) ............................... 8
`Apple Develops A Structure-Detection System For Text (The
`’647 Patent)...................................................................................... 10
`Motorola Copies Apple’s Heuristic, Real-Time Signal
`Processing, And Structure-Detecting Inventions.......................... 11
`Apple Sues To Halt Motorola’s Copying But The District
`Court Dismisses All Claims On Summary Judgment .................. 12
`SUMMARY OF THE ARGUMENT......................................................... 14
`STANDARD OF REVIEW........................................................................ 18
`ARGUMENT ............................................................................................. 19
`I.
`THE DISTRICT COURT ERRONEOUSLY LIMITED THE
`CLAIMS OF THE ’949 PATENT BY MISAPPREHENDING
`MEANS-PLUS-FUNCTION RULES ............................................. 19
`A.
`The “Next Item” Term Covers Any Rule That
`Translates A Gesture Into The Next Item Command......... 20
`
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`Case: 12-1548 Document: 45 Page: 7 Filed: 11/27/2012
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`B.
`
`C.
`
`B.
`
`B.
`
`C.
`
`II.
`
`The Claims Are Not Means-Plus-Function Claims
`Because They Neither Recite A “Means” Nor Exhibit
`Exceptional Characteristics That Override The
`Drafters’ Choice...................................................................... 22
`The Specification Describes A “Next Item Heuristic”
`That Covers Horizontal Swipes ............................................ 30
`THE DISTRICT COURT ERRONEOUSLY CONSTRUED
`TWO TERMS IN THE ’647 PATENT ............................................ 33
`A.
`The District Court Erred When Construing The
`“Analyzer Server” Term......................................................... 34
`The District Court Erred When Construing “Linking
`Actions To The Detected Structure” ..................................... 36
`III. THE DISTRICT COURT ERRONEOUSLY CONCLUDED
`THAT APPLE COULD NOT ESTABLISH DAMAGES FOR
`MOTOROLA’S INFRINGEMENT OF THE THREE
`PATENTS......................................................................................... 38
`A.
`Apple’s Expert Used A “Sufficiently Comparable”
`Benchmark To Estimate Apple’s Damages From
`Motorola’s Infringement Of The ’949 Patent. ...................... 40
`Apple’s Damages Expert Permissibly Relied On Apple’s
`Technical Expert To Identify Design-Around
`Alternatives To The ’263 Patent ........................................... 44
`Apple’s Expert Permissibly Relied On HTC’s Design-
`Around Efforts To Estimate Apple’s Damages From
`Motorola’s Infringement Of The ’647 Patent ....................... 49
`IV. THE DISTRICT COURT ERRONEOUSLY DENIED APPLE
`A TRIAL ON ITS CLAIM FOR INJUNCTIVE RELIEF .............. 52
`A.
`Apple Presented Evidence That Money Cannot
`Adequately Compensate It For Motorola’s
`Infringement........................................................................... 55
`1.
`Apple has a policy against licensing competitors
`to practice the three patents........................................ 56
`2. Motorola’s infringement will continue to erode
`Apple’s market share and consumer goodwill. ........... 62
`
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`Case: 12-1548 Document: 45 Page: 8 Filed: 11/27/2012
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`B.
`
`Apple Presented Adequate Evidence To Establish That
`The Balance Of Harms And Public Interest Support An
`Injunction................................................................................ 71
`CONCLUSION.......................................................................................... 73
`
`ADDENDUM
`
`Text of Claims 1, 2, 9 and 10 in Patent No. 7,479,949
`Text of Claims 1 and 8 in Patent No. 5,946,647
`Order, Dated January 16, 2012 (Dkt. 526) ..................................... A40-58
`Order, Dated March 19, 2012 (Dkt. 671) ........................................ A69-89
`Order, Dated March 29, 2012 (Dkt. 691) ........................................ A90-95
`Order, Dated April 27, 2012 (Dkt. 826)......................................... A96-100
`Order, Dated May 22, 2012 (Dkt. 956).......................................... A101-22
`Opinion and Order, Dated June 22, 2012 (Dkt. 1038) ................. A123-60
`Judgment, Dated June 22, 2012 (Dkt. 1039)......................................A161
`Patent No. 5,946,647, Dated August 31, 1999.............................. A162-77
`Patent No. 6,343,263, Dated January 29, 2002.......................... A178-193
`Patent No. 7,479,949, Dated January 20, 2009.......................... A194-555
`
`Material has been deleted from pages 8, 10-13, 41, 42, 49, 50, 56, 57, 62,
`63, 65-68 and 70 of the nonconfidential Brief of Plaintiffs-Appellants
`Apple Inc. and NeXT Software, Inc. This material is deemed
`confidential information pursuant to the Protective Orders entered
`January 28, 2011 and February 1, 2012. The material omitted from
`these pages contains confidential deposition and hearing testimony,
`confidential business information, confidential patent application
`information, and confidential licensing information.
`
`vii
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`

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`Case: 12-1548 Document: 45 Page: 9 Filed: 11/27/2012
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`CASES
`ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc.,
`694 F.3d 1312 (Fed. Cir. 2012)............................................................. 44
`Acumed LLC v. Stryker Corp.,
`551 F.3d 1323 (Fed. Cir. 2008)............................................................. 58
`In re Aoyama,
`656 F.3d 1293 (Fed. Cir. 2011)............................................................. 18
`Apex Inc. v. Raritan Computer, Inc.,
`325 F.3d 1364 (Fed. Cir. 2003)............................................................. 26
`Apple Inc. v. Samsung Elecs. Co., Ltd.,
`695 F.3d 1370 (Fed. Cir. 2012).......................................................65, 66
`Aristocrat Techs. Australia Pty Ltd. v. Int’l Game Tech.,
`521 F.3d 1328 (Fed. Cir. 2008).......................................................27, 29
`Broadcom Corp. v. Qualcomm Inc.,
`543 F.3d 683 (Fed. Cir. 2008).........................................................59, 60
`Broadcom Corp. v. Qualcomm Inc.
`No. SACV 05-467-JVS, 2007 U.S. Dist. LEXIS 97647
`(C.D. Cal. Dec. 31, 2007) ..........................................................54, 59, 60
`Celsis In Vitro, Inc. v. Cellzdirect, Inc.,
`664 F.3d 922 (Fed. Cir. 2012)............................................................... 64
`Cruz-Vasquez v. Mennonite Gen. Hosp.,
`613 F.3d 54 (1st Cir. 2010) ................................................................... 46
`Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (1993).........................................................................39, 44
`eBay Inc. v. MercExchange, L.L.C.,
`547 U.S. 388 (2006).............................................................53, 58, 60, 61
`
`viii
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`Case: 12-1548 Document: 45 Page: 10 Filed: 11/27/2012
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`Edwards Lifesciences AG v. Corevalve, Inc.,
`__ F.3d __, 2012 WL 5476839
`(Fed. Cir. Nov. 13, 2012).....................................................53, 58, 59, 72
`Ethicon, Inc. v. U.S. Surgical Corp.,
`135 F.3d 1456 (Fed. Cir. 1998)............................................................. 46
`Flo Healthcare Solutions, LLC v. Kappos,
`697 F.3d 1367 (Fed. Cir. 2012).......................................................24, 29
`Fresenius USA, Inc. v. Baxter Int’l Inc.,
`582 F.3d 1288 (Fed. Cir. 2009)............................................................. 58
`Georgia-Pacific Corp. v. U.S. Plywood Corp.,
`318 F. Supp. 1116 (S.D.N.Y. 1970) ................................................39, 40
`Grain Processing Corp. v. American Maize-Products Co.,
`185 F.3d 1341 (Fed. Cir. 1999)............................................................. 18
`High Tech Med. Instrumentation, Inc. v. New Image Indus., Inc.,
`49 F.3d 1551 (Fed. Cir. 1995)............................................................... 53
`Hologic, Inc. v. SenoRx, Inc.,
`639 F.3d 1329 (Fed. Cir. 2011)............................................................. 18
`Howmedica Osteonics Corp. v. Wright Med. Tech., Inc.,
`540 F.3d 1337 (Fed. Cir. 2008)............................................................. 37
`i4i Ltd. P’ship v. Microsoft Corp.,
`598 F.3d 831 (Fed. Cir. 2010)....................................................... passim
`Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc.,
`381 F.3d 1111 (Fed. Cir. 2004).......................................................37, 38
`Inventio AG v. ThyssenKrupp Elevator Americas Corp.,
`649 F.3d 1350 (Fed. Cir. 2011)..................................................... passim
`Jones v. Brown,
`461 F.3d 353 (3d Cir. 2006) .................................................................. 55
`Kumho Tire Co., Ltd. v. Carmichael,
`526 U.S. 137 (1999)............................................................................... 18
`
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`Case: 12-1548 Document: 45 Page: 11 Filed: 11/27/2012
`
`LG Elecs., Inc. v. Bizcom Elecs., Inc.,
`453 F.3d 1364 (Fed. Cir. 2006)............................................................. 28
`Lighting World, Inc. v. Birchwood Lighting, Inc.,
`382 F.3d 1354 (Fed. Cir. 2004).................................................24, 25, 30
`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009)............................................................. 44
`Micro Chem., Inc. v. Great Plains Chem. Co., Inc.,
`194 F.3d 1250 (Fed. Cir. 1999).......................................................30, 31
`Miller v. King,
`384 F.3d 1248 (11th Cir. 2004)............................................................. 55
`MIT v. Abacus Software,
`462 F.3d 1344 (Fed. Cir. 2006)............................................................. 25
`O’Leary v. Accretive Health, Inc.,
`657 F.3d 625 (7th Cir. 2011)................................................................. 51
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005)............................................................. 35
`Robert Bosch LLC v. Pylon Mfg. Corp.,
`659 F.3d 1142 (Fed. Cir. 2011)...........................................58, 60, 61, 73
`Tagatz v. Marquette Univ.,
`861 F.2d 1040 (7th Cir. 1988)............................................................... 46
`Thorner v. Sony Comp. Entm’t Am. LLC,
`669 F.3d 1362 (Fed. Cir. 2012)............................................................. 35
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)............................................................. 44
`United States v. 14.38 Acres of Land,
`80 F.3d 1074 (5th Cir. 1996)...........................................................46, 47
`Walker v. Soo Line R.R. Co.,
`208 F.3d 581 (7th Cir. 2000)................................................................. 47
`
`x
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`

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`Case: 12-1548 Document: 45 Page: 12 Filed: 11/27/2012
`
`Windsurfing Int’l, Inc. v. AMF, Inc.,
`782 F.2d 995 (Fed. Cir. 1986)............................................................... 72
`FEDERAL STATUTES AND RULES
`28 U.S.C. § 1295........................................................................................... 4
`28 U.S.C. § 1331........................................................................................... 4
`28 U.S.C. § 1338........................................................................................... 4
`28 U.S.C. § 2107........................................................................................... 4
`35 U.S.C. § 112................................................................................... passim
`Fed. R. Evid. 702............................................................................16, 38, 39
`Fed. R. Evid. 703........................................................................................ 45
`ADMINISTRATIVE AGENCY DECISIONS
`In re Certain Elec. Digital Media Devices and Components Thereof,
`Inv. No. 337-TA-796, 2012 WL 754088
`(U.S.I.T.C. Mar. 6, 2012)....................................................................... 24
`In re Certain Personal Data and Mobile Commc’ns Devices and
`Related Software,
`Inv. No. 337-TA-710, USITC Pub. No. 4331 (Dec. 19, 2011)
`(Final), available at http://www.usitc.gov/publications/
`337/Pub4331_337-TA-710.pdf ................................................. xv, 34, 36
`MISCELLANEOUS
`Apple Inc. Annual Report (Form 10-K) (Oct. 31, 2012), available at
`http://investor. apple.com/secfiling.cfm?filingID =1193125-12-
`444068&CIK=320193 (“2012 Apple 10-K”) ......................................... 56
`Ronan Arad et al., Patent Infringement Damages, in Litigation
`Services Handbook: The Role of the Financial Services Expert
`(Roman L. Weil, et al. eds., 5th ed. 2012)............................................ 45
`
`xi
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`

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`Case: 12-1548 Document: 45 Page: 13 Filed: 11/27/2012
`
`Nigam Arora, Apple Patent Victory Against HTC Doesn’t Cripple
`Google’s Android, Forbes (Dec. 20, 2011), available at
`http://www.forbes.com/sites/greatspeculations/
`2011/12/20/patent-victory-for-apple-against-htc-
`doesnt-cripple-googles-android............................................................. 51
`Matt Richtel, Motorola Scrambles to Restore Its Lost Cellphone
`Glory, N.Y. Times, May 1, 2009 ........................................................... 11
`Why the RAZR is Killing Motorola, Mobile Gazette (May 16, 2007),
`available at http://www.mobilegazette.com/why-the-razr-is-
`killing-motorola-07x05x16.htm............................................................ 11
`
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`Case: 12-1548 Document: 45 Page: 14 Filed: 11/27/2012
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`TABLE OF ABBREVIATIONS
`
`A_____
`
`Apple
`
`ITC
`
`Motorola
`
`’263 patent
`
`’647 patent
`
`’949 patent
`
`Cited page(s) of the Joint Appendix
`
`Apple Inc. and NeXT Software, Inc.
`
`United States International Trade Commission
`
`Motorola Mobility, Inc.
`
`U.S. Patent No. 6,343,263, Real-Time Signal
`Processing System for Serially Transmitted Data
`
`U.S. Patent No. 5,946,647, System and Method
`for Performing an Action on a Structure in
`Computer-Generated Data
`
`U.S. Patent No. 7,479,949, Touch Screen Device,
`Method, and Graphical User Interface for
`Determining Commands by Applying Heuristics
`
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`Case: 12-1548 Document: 45 Page: 15 Filed: 11/27/2012
`
`STATEMENT OF RELATED CASES
`
`In October 2010, Apple filed a complaint in the Western District of
`
`Wisconsin alleging that Motorola is infringing numerous Apple patents
`
`including (as relevant here) the ’949, ’263, and ’647 patents. Motorola
`
`filed counterclaims alleging that Apple infringes several Motorola
`
`patents. In December 2011, the case was transferred to the Northern
`
`District of Illinois, A4056-57, and assigned to Hon. Richard A. Posner of
`
`the Seventh Circuit, sitting by designation, A4058. No appeal from this
`
`proceeding was previously before the Court or any other appellate court.
`
`In October 2010, Motorola filed a proposed complaint with the ITC
`
`alleging that Apple infringed different Motorola patents. The Court is
`
`currently considering Motorola’s appeal of the ITC’s determination in
`
`that investigation. Motorola Mobility LLC v. ITC, No. 12-1666 (Fed.
`
`Cir. filed Sept. 19, 2012). Later that month, Apple filed a proposed
`
`complaint with the ITC alleging that Motorola infringed different Apple
`
`patents. The Court is currently considering Apple’s appeal of the ITC’s
`
`determination in that investigation. Apple Inc. v. ITC, No. 12-1338
`
`(Fed. Cir. filed Apr. 19, 2012).
`
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`Case: 12-1548 Document: 45 Page: 16 Filed: 11/27/2012
`
`The Court also was considering Apple’s appeal of an ITC decision
`
`involving infringement by HTC Corp. of the ’647 and ’263 patents at
`
`issue here, Apple Inc. v. ITC, No. 2012-1125 (Fed. Cir. filed Dec. 29,
`
`2011), and HTC’s appeal from that same decision regarding the ’647
`
`patent, HTC Corp. v. ITC, No. 2012-1226 (Fed. Cir. filed Feb. 24, 2012).
`
`A December 2011 ITC exclusion order prohibited HTC from importing
`
`devices that infringe the ’647 patent. In re Certain Personal Data and
`
`Mobile Commc’ns Devices and Related Software, Inv. No. 337-TA-710,
`
`USITC Pub. No. 4331 (Dec. 19, 2011) (Final). Also related to that case
`
`was Apple Inc. v. HTC Corp., No. 1:10-cv-00166-GMS (D. Del. filed Mar.
`
`2, 2010), which was stayed pending completion of the proceedings
`
`arising from the ITC.
`
`In November 2012, Apple and HTC dismissed all
`
`current lawsuits pursuant to a global settlement. Accordingly, this
`
`Court dismissed the consolidated appeals. HTC Corp. v. ITC, No. 12-
`
`1226, Dkt. No. 43 (Fed. Cir. Nov. 15, 2012); Apple Inc. v. ITC, No. 12-
`
`1125, Dkt. No. 48 (Fed. Cir. Nov. 15, 2012).
`
`The ’647 patent also is at issue in Apple Inc. v. Samsung
`
`Electronics Co., Ltd., No. 5:12-cv-00630-LHK (N.D. Cal. filed Feb. 8,
`
`2012). This Court recently considered Samsung’s appeal of the district
`
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`Case: 12-1548 Document: 45 Page: 17 Filed: 11/27/2012
`
`court’s grant of a preliminary injunction, but that appeal was limited to
`
`a single patent not at issue here. Apple Inc. v. Samsung Elecs. Co., No.
`
`12-1507 (Fed. Cir. filed Jul. 6, 2012).
`
`Apple has filed a complaint against Samsung in the ITC that
`
`involves the ’949 patent. In re Elec. Digital Media Devices, Inv. No.
`
`337-TA-796 (U.S.I.T.C. filed July 5, 2011). The ITC has not issued a
`
`final determination. Apple had also asserted the ’263 patent against
`
`Nokia in the District of Delaware, but all claims and counterclaims
`
`were dismissed when the parties settled. Nokia Corp. v. Apple Inc., No.
`
`1:09-cv-00791-GMS (D. Del. filed Oct. 22, 2009).
`
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`INTRODUCTION
`
`These appeals represent an important front in Apple’s efforts to
`
`stop other consumer electronics companies from appropriating its
`
`smartphone innovations. Apple and Motorola have asserted patent
`
`claims against each other. The district court dismissed all claims.
`
`Apple and Motorola both appeal from those dismissals.
`
`Apple’s appeal concerns three Apple patents disclosing inventions
`
`embodied in the operating software that runs the iPhone and iPad.
`
`Each is a popular feature that makes these devices easy to use. Just as
`
`the Mac’s user-friendly graphical interface revolutionized the computer
`
`desktop, the ease of using and programming both the iPhone and the
`
`iPad has fueled the meteoric rise of the most successful slate of
`
`consumer products of this generation.
`
`The first innovation is about how you tell the iPhone or iPad what
`
`to do. When you touch or swipe on the touchscreen, the device knows
`
`what you mean even if your movement is imprecise. The second
`
`innovation has fueled the rapid proliferation of applications—“apps,” in
`
`the vernacular—by making it easier for developers to make apps that
`
`stream audio and video in real time. The third advance is the so-called
`
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`“structure-detection” feature that recognizes patterns of characters such
`
`as phone numbers or email addresses and offers convenient options to
`
`act upon each (e.g., call the number, text it, or store it in contacts).
`
`Inventions like these propelled the iPhone’s meteoric rise. But as
`
`a hardware company, Motorola could not compete effectively with
`
`Apple’s operating software. So it launched a two-pronged attack—
`
`appropriate and litigate. First, Motorola built its devices around
`
`Google’s Android operating system. Android incorporates the very
`
`features that made Apple’s devices so popular, including Apple’s
`
`touchscreen gesture recognition, real-time streaming system, and
`
`structure-detection system. Next, Motorola initiated several actions
`
`against Apple.
`
`Apple responded with patent claims against Motorola in several
`
`actions, including this one. But there were key differences. Unlike
`
`Apple, Motorola pressed patents on trivial features. Among them were
`
`patents that Motorola insisted Apple must be infringing because they
`
`were incorporated in industry wireless communication standards. But
`
`Motorola had pledged to license all so-called “standard essential
`
`patents” to anyone for “fair, reasonable and nondiscriminatory”
`
`2
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`Case: 12-1548 Document: 45 Page: 20 Filed: 11/27/2012
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`(“FRAND”) rates. The district court correctly rejected Motorola’s tactic,
`
`as our next brief (third brief on appeal) will demonstrate.
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`But the district court erred in dismissing some of Apple’s claims.
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`The district court failed to follow this Court’s teaching on what claims
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`qualify as “means-plus-function” claims within the meaning of
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`35 U.S.C. § 112 ¶ 6. And it misconstrued two key terms of the
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`structure-detection patent. The district court’s general damages rubric
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`was unobjectionable, and it applied that rubric correctly to Motorola (for
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`reasons we will explain in the next brief). But it incorrectly applied the
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`principles to Apple (for reasons we explain below).
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`The district court’s most far-reaching error was to deny Apple
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`injunctive relief as a matter of law. Apple seeks an injunction to stop
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`infringement by an ardent competitor. Apple had a general policy
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`against licensing its central technology. It had proof that it is losing
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`market share and goodwill because of the ongoing infringement. None
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`of its asserted patents are standard-essential. Nevertheless, the district
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`court ruled that there was not even a triable issue as to whether Apple
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`would be able to satisfy the standards for injunctive relief. Sustaining
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`Case: 12-1548 Document: 45 Page: 21 Filed: 11/27/2012
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`this new legal rule would drastically curtail the patentee’s ability to
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`seek an injunction against infringement.
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`JURISDICTIONAL STATEMENT
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`The district court had jurisdiction under 28 U.S.C. §§ 1331 and
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`1338(a) and entered final judgment on June 22, 2012. This timely
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`appeal was filed on July 20, 2012. 28 U.S.C. § 2107(a). The Court has
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`jurisdiction under 28 U.S.C. § 1295(a)(1).
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`STATEMENT OF THE ISSUES
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`1. The drafters of claim 1 of the ’949 patent did not use the phrase
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`“means” or “means for” nor in any other way indicate an intention to
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`invoke the provisions of 35 U.S.C. § 112 ¶ 6. Did the district court err
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`in applying the means-plus-function statute to limit the claim?
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`2. In a separate action, the ITC adopted Apple’s construction of
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`two claim terms (“analyzer server” and “linking actions to detected
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`structures”) used in the ’647 patent. In this case, the district court
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`rejected Apple’s constructions. Did the district court misconstrue the
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`two terms by improperly limiting the claim to a single embodiment and
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`imposing limitations that are unsupported by the patent itself?
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`3. Did the district court err in excluding a damages expert who for
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`the ’949 patent relied on a sufficiently comparable benchmark
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`commercial product, for the ’263 patent relied on technical facts
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`provided by another Apple expert, and for the ’647 patent relied on the
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`length of time an infringing competitor took to design around?
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`4. Apple, which has a general policy against licensing its patents,
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`presented evidence that Motorola was cutting into Apple’s market share
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`and diverting goodwill. Did the district court err in rejecting Apple’s
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`claim for injunctive relief, concluding, as a matter of law, that no trial
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`was necessary because a “compulsory license with ongoing royalty is
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`likely to be a superior remedy”?
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`STATEMENT OF THE CASE
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`On October 29, 2010, Apple filed a complaint in the Western
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`District of Wisconsin, alleging that Motorola’s products infringed three
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`Apple patents. Motorola counterclaimed, alleging infringement of six
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`patents. Apple filed an amended complaint alleging that Motorola’s
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`products infringed 12 additional patents. In December 2011, the case
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`was transferred to the Northern District of Illinois, with Judge Posner,
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`sitting by designation, presiding. The district court construed certain
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`terms of the ’949 patent in three orders, dated: January 16, 2012, A45-
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`47; March 19, 2012, A80-83; and March 29, 2012, A90-95. The district
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`court also construed certain terms of the ’647 patent in its March 19,
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`2012 order. A76-79. In April 2012, the district court granted Motorola
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`partial summary judgment of noninfringement of the ’949 patent. A96-
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`100. Trial on the ’949, ’263, and ’647 patents (along with one other
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`Apple patent) was scheduled to commence on June 11, 2012. In May
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`2012, the court struck both sides’ damages experts, A101-22, and then
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`in June 2012 granted both sides summary judgment on the grounds
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`that neither was entitled to relief—either damages or an injunction,
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`A123-60. The court then dismissed the cases. A161.
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`STATEMENT OF FACTS
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`Apple Develops “Heuristics” To Translate Imprecise User
`Touches (The ’949 Patent)
`One of the challenges in designing and implementing a
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`touchscreen device is that fingers do not work like scroll buttons or
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`trackballs. As the ’949 patent explains, “user gestures may be
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`imprecise.” A489, col. 2:20-22. Particularly on the small screen of a
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`handheld device, “a particular gesture may only roughly correspond to a
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`desired command.” Id. To overcome the challenge, Apple’s ’949 patent
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`teaches how “to translate imprecise finger gestures into actions desired
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`by the user” by using “heuristics,” which is engineer-speak for rules
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`applied to data (here, various finger gestures) to assist in drawing
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`inferences (here, the user’s desired actions) from that data. A543, col.
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`109:50-51; see A45. The ’949 patent teaches several heuristics that
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`work together to provide many of the touchscreen features that
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`consumers have come to expect in modern smartphones and tablets:
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`finger swipes or flicks to scroll vertically, horizontally, or diagonally, to
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`select a next item (e.g., the next photo in an album), and so forth. See
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`infra at 20-22. A touchscreen that cannot effectively distinguish among
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`these commands will be DOA in the marketplace.
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`Apple first described these heuristics in a provisional patent
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`application filed in September 2006, just four months before the
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`iPhone’s debut. A194. Apple CEO Steve Jobs was the first named
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`inventor. This one application, which describes numerous inventions
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`and features that are now ubiquitous in smartphones, has yielded an
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`impressive 14 patents, including the ’949 patent. A489, col. 1:8-45.
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`Case: 12-1548 Document: 45 Page: 25 Filed: 11/27/2012
`Confidential
`Material Omitted
`Apple Spurs The App Explosion With Its Innovation In
`Streaming Audio And Video (The ’263 Patent)
`The iPhone would hardly have set the world on fire if it just made
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`phone calls (however seamlessly). Apple’s devices (and later Android
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`devices) flew off the shelves in large part because modern users love
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`their apps. A30,395. Apps, written mainly by independent software
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`developers, make the electronic devices infinitely adaptable to each
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`user’s interests. A14,898. As Motorola enviously observed, Apple
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`fostered a | | | | | | | | | | | | | | | | A30,276.
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`Apple’s ’263 patent describes one of the inventions that nurtured
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`that | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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`| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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`A29,231, 29,615. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
`
`| | | | | | | || | | | | | | | A29,231. | | | | | | | | | | | | | | | |
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`| | | | | | | | | | | | | | | A29,309. These apps do not work unless
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`the device can | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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`| | | | | | | | | | | | A29,150.
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`Apple’s engineers figured out a way to rapidly process streams of
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`different types of data. A29,140. The ’263 patent describes an
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`invention that “enables any arbitrary type of data, such as voice,
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`8
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`Case: 12-1548