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Apple's High-Risk, High-Reward Closing Argument in Qualcomm Trial

Gaston Kroub

Closing arguments in the much-watched Qualcomm patent trial against Apple were delivered yesterday. As reported by CNET, Qualcomm’s closing argument was a typical one for patent trials, with the patent holder arguing that it deserves a return on its investment in the patents it asserts. In contrast, Apple’s closing was much more expansive, centering around the idea that Qualcomm’s motivation in bringing suit was to force Apple into a business relationship it was no longer interested in continuing. Unusual, especially for a patent trial, because such a theme seems disconnected from what the jury has to decide — whether the patents are infringed and valid, and if so, how much damages is Qualcomm entitled to. Qualcomm’s motivation in filing suit should be irrelevant.

Now we know that Apple is a super sophisticated patent litigant; with a leading IP trial lawyer at the helm of its trial presentation. Its closing argument strategy, therefore, is surely purposeful.

So what is behind Apple’s closing argument strategy? The answer starts with keeping in mind that this particular trial is a pretty low-stakes affair relative to the global Qualcomm-Apple dispute. The amount in controversy in this trial (Qualcomm is seeking 30mm USD in damages) pales in comparison to Qualcomm’s larger claim that Apple is on the hook for at least 7bn USD in royalty payments. Apple, therefore, seems unafraid about using this case to beta test its broader themes for the later, bigger battles it faces against Qualcomm. Apple and its trial team know the odds are against them in a jury trial anyway, since patentees have a very high win rate at trial. In short, Apple is willing to utilize a high-risk, high-reward closing argument strategy because the stakes of this particular trial are relatively low, and the odds of success are against Apple anyway.

We also know that Apple was interested in testing out the theme that Qualcomm’s licensing practices are improper, as we discussed in a prior post. That attempt was shut down in pre-trial motions. But it is further evidence that Apple viewed this trial as a way to test broader defense themes.

Now, if the jury buys Apple’s argument that Qualcomm’s motivations are relevant and delivers a verdict in Apple’s favor — Qualcomm would be put in a very bad position. Quite simply, Qualcomm needs a headline from this trial that Apple infringes Qualcomm patents. If the jury agrees with Apple that Qualcomm’s patents are just a cover for claiming money it is not entitled to, that would not bode well for Qualcomm’s odds of overcoming that narrative in later cases against Apple. Conversely, even if Apple loses, it will have gained valuable information about what is persuasive to the factfinder — namely, whether or not this “Qualcomm’s motivation” theme is worth returning to in future disputes. If not, we can expect Apple to double down on trying to argue that Qualcomm’s licensing practices are the true problem, or perhaps Apple will seek to develop a new theme once it absorbs the lessons of whatever verdict this particular jury delivers.

At bottom, while Apple’s closing argument strategy may be befuddling at first glance, it is actually indicative of a much deeper and longer-term focused approach by the company and its trial team. Remembering that this trial is just a skirmish in a global dispute is the key to unlocking the proper understanding of Apple’s defense strategy.

Markman Advisors