Wednesday, 19 December 2012

California Court Denies Apple’s Request For Injunction Against Samsung Sales of Infringing Devices: Is The Standard Impossibly High?

On December 17, the U.S. District Court for the Northern District of California ruled on Apple’s motion for a permanent injunction blocking Samsung from selling 26 devices found by a jury to infringe Apple’s design and utility patents and to dilute Apple’s trade dress. Applying the Federal Circuit’s directive in a prior appeal at the preliminary injunction stage, see Apple, Inc.v. Samsung Electronics Co., 695 F.3d 1370 (Fed. Cir. 2012)("Apple II"), District Judge Lucy H. Koh denied the motion. A few key points in the ruling, which is available here:

First, although Apple established that Samsung smartphone sales had impacted Apple’s market share, Apple failed to establish a specific causal nexus between that competitive injury and the specific claims Samsung has been found to infringe. In the earlier appellate decision, the Federal Circuit stated that in order the establish irreparable harm, one of the equitable factors to be considered in awarding permanent injunctive relief under eBay Inc. v. MerchExchange, LLC, “a patentee must establish both of the following requirements: 1) that absent an injunction, it will suffer irreparable harm, and 2) that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement.” 695 F.3d at 1374. Judge Koh ruled that Apple failed to meet the second requirement, because: 
But even if design was clearly a driving factor [in customer demand for Apple smartphone products], it would not establish the required nexus. The design of the phones includes elements of all three design patents, as well as a whole host of unprotectable, unpatented features. Apple makes no attempt to prove that any more specific element of the iPhone’s design, let alone one covered by one of Apple’s design patents, actually drives consumer demand. The Federal Circuit made clear in Apple II that customer demand for a general feature of the type covered by a patent was not sufficient; Apple must instead show that consumers buy the infringing product specifically because it is equipped with the  patented feature. 695 F.3d at 1376.

 Instead, Apple argues that its patents “cover the iPhone’s most prominent design elements,” Reply at 3, and therefore, if design drives demand, so do the patents. Even if the Court accepted as true Apple’s contention that the patents cover the most central design features, it would not establish that any specific patented design is an important driver of consumer demand.
Order, at 8-9. The court also ruled that Apple failed to establish that Samsung’s infringement of its utility patents caused an irreparable competitive injury.

Second, the court noted that Apple had previously licensed design patents, utility patents, and trade dress that collectively formed the iPhone “user experience,” and that practice weighed against granting injunctive relief. Thus, it concluded, “Apple does appear willing, at times, to use its patents, including several of the patents at issue here, and even its trade dress, as tools in forging relationships and generating income. Further, Apple has agreed to licenses with companies with whom it competes, including Samsung.” Order, at 17.

Third, the court noted that the standard for an injunction after eBay may be a very difficult one for a patentee to meet when a patent covers only isolated components of a complex product:
The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple’s patents. Though Apple does have some interest in retaining certain features as exclusive to Apple, it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions. Especially given the lack of causal nexus, the fact that none of the patented features is core to the functionality of the accused products makes an injunction particularly inappropriate here.
 Order, at 22.

Essentially, Judge Koh’s reasoning requires a patentee to present specific evidence establishing that a particular patented feature is the determining factor in customer purchasing decisions. Given the incredible complexity of features and functionality in many modern products, and the spectrum of different customer preferences and values affecting the purchasing process, what sort of evidence could ever meet the court’s causal nexus requirement? 

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