Failure in Apple/Samsung talks shows limits of mediation

A full-day negotiation session between Apple CEO Tim Cook, Samsung’s head of its mobile business JK Shin, and other company representatives in the first week of February to discuss a patent lawsuit reportedly failed to reach any agreement. The two sides were asked by a court to try mediation before a trial scheduled to start on March 31. A court filing in January said the companies had agreed to retain a mediator “who has experience mediating high-profile disputes”, but did not reveal his or her identity.

Although Judge Lucy Koh of the US District Court for the Northern District of California had not formally ordered the parties to show up for mediation, analyst Florian Müller suggests that she “created a situation in which both parties had to be constructive so as not to alienate her”.

In a February 21 California court filing the two parties revealed that Apple had “more than six” telephone calls with the mediator and Samsung “had more than four” calls after the face-to-face meeting.

“Notwithstanding these efforts, the mediator’s settlement proposal to the parties was unsuccessful,” said the filing. “Parties remain willing to work through the mediator jointly selected by the parties.” The filing was signed by WilmerHale’s Mark Selwyn on behalf of Apple and Quinn Emanuel Urquhart & Sullivan’s Victoria Maroulis on behalf of Samsung.

The lack of any progress was not very surprising given that previous mediation efforts between Apple and Samsung have failed. Cook and Samsung CEO Kwon Oh-Hyun met in 2012 to discuss a different patent dispute but also got nowhere. San Jose Judge Joseph Spero handled the negotiations that time.

A California jury went on to find that Samsung infringed a series of Apple patents and ordered the South Korean firm to pay $1.05 billion in damages. In that case, Judge Koh found that part of the award had been improperly calculated and reduced the figure by $450 million. This was later increased by $290 million in November 2013.

Now the second round is about to begin, with the trial set to start on March 31. Both companies have stripped down the list of patents they are disputing, at the behest of Judge Koh. Samsung says a number of Apple devices including the iPhone 4, 4S and 5 and iPad 2, 3 and 4 infringe four of its patents. In turn, Apple says its patents are being infringed by devices including: the Galaxy Admire; the Galaxy Nexus; the Galaxy Note and Note II; the Galaxy S II Epic 4G Touch, and S II Skyrocket; the Galaxy S III; the Galaxy Stratosphere; and the Galaxy Tab 2 10.1.

Mediation has many merits, as noted by my colleague Emma Barraclough in a recent blog post and in an upcoming cover story for Managing IP. But it would have been a big shock in this case if talks had borne any fruit. The battle lines had been too clearly drawn and the process was too far along. The sense was always that the two parties were going through the motions by agreeing to talks. As noted by IBM’s chief patent counsel Manny Schecter, mediation will only succeed if there is buy-in from the two parties. In Apple v Samsung, this clearly was not true.