Wednesday, 7 December 2011

Apple Loses Bid for U.S. Injunction Against Samsung Galaxy Tab, Smartphones

In the latest installment of Apple, Inc.’s global patent war against Samsung over smartphone and tablet computer designs, a federal district court in California recently denied Apple’s request for a preliminary injunction. On December 2, the U.S. District Court for the Northern District of California ruled that Apple failed to prove that it faced irreparable harm from Samsung’s alleged infringement of its design patents for mobile phones and its utility patent covering touch screen display scrolling. The court also ruled that Apple’s design patent covering its iPad tablet computer was likely invalid. The full 65-page opinion is available here . Here are the high points:

Background. In April 2011, Apple filed suit against Samsung alleging three basic infringement claims: (1) Samsung infringed Apple’s U.S. Design Patents D618,677 and D593,087 by selling its Galaxy S 4G and Infuse 4G smart phones, (2) Samsung infringed U.S. Design Patent No. D504,889 by selling its Galaxy Tab 10.1 tablet computer, and (3) Samsung infringed U.S. Patent No. 7,469,381, entitled “List scrolling and document translation, scaling and rotation on a touch-screen display,” by selling all three devices and the Samsung 4G LTE smart phone. Apple moved for a preliminary injunction to bar the four accused Samsung products from the U.S. market pending a full trial on the merits (perhaps not coincidentally, during the holiday shopping season).

Injunction Standard. The court noted that in order to obtain interlocutory injunction relief, a patentee must establish (1) a likelihood of success on the merits of its infringement claim, (2) immediate irreparable harm if the injunction is not granted, (2) that a balancing of the hardships suffered by the parties weighs in favor of an injunction, and (4) that an injunction best serves the public interest. Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331, 1334 (Fed. Cir. 2006). Based on its review of the limited record assembled for the injunction hearing, the court ruled that Apple failed to establish all four grounds for an injunction against any of the products.

Smart Phone Design Patents. Although the court noted that an ordinary observed was likely to find that the Galaxy S 4G and Infuse 4G smartphones designs were substantially the same as the D’677 patented design, it ruled that Apple failed to prove that it faced irreparable harm without an injunction. Apple advanced the creative argument that Samsung’s sale of infringing phones in the U.S. market would result in irreparable erosion of the distinctiveness of Apple’s brand. It argued that product design was an important factor in consumer decisions to purchase phones, and the design features of its products were “closely entwined with the Apple brand[.]” Thus, it argued that Samsung’s infringement would erode Apple’s design and brand distinctiveness, and lead to the loss of goodwill. The district court rejected the argument, however. It noted that Apple offered no case authority for its theory, and --- if applied in this case – virtually any infringing product design would result in erosion of distinctiveness. The court also noted that Apple’s theory borrowed heavily from dilution in the trademark sense, but there was no legal support for applying that theory to injuries in a design patent claim. Ultimately, however, the court ruled that even if the theory was viable, Apple offered no evidence that Samsung’s products would result in confusion or loss of distinctiveness.

The court also rejected Apple’s argument that the Samsung infringing sales would directly result in loss of customers and market share. Apple and Samsung introduced conflicting evidence concerning the role design plays in customer selection of products in the crowded phone market. Much of that evidence was designated confidential by Apple and redacted from the public opinion. [Note that the court initially issued the opinion in a pdf version that revealed the redacted supposedly confidential information.] Ultimately, the court ruled that Apple failed to prove that design was the primary factor in customer purchases. In addition, the court noted that since 2007 Apple was aware that Samsung was copying the design of its products, yet delayed in seeking an injunction. The court concluded that this delay tipped the scale in Samsung’s favor.

Tablet Design Patent Likely Invalid. The district court then turned to Apple’s D’889 patent. Samsung argued that the patent was invalid for obviousness based on prior art tablet-type devices featuring framed displays. In particular, Samsung pointed to a 1994 Fidler/Knight Ridder tablet, which created the same overall visual impression as the D’889 patent. [See figures comparing D'889 patent with prior art].

Apple argued that secondary considerations of nonobviousness, such as commercial success and initial skepticism in the industry, supported a conclusion that the design was not invalid. However, Apple was unable to demonstrate a link between the secondary evidence and the protected tablet design. Thus, the court ruled that a substantial question existed as to the patent’s validity, and thus Apple had not proven a likelihood of success on the merits.

‘381 Utility Patent. Finally, the court considered Apple’s ‘381 patent. The patent claims methods for scrolling using a touch-screen display, a technology critical to Apple’s iOS. The court noted, however, that the claimed invention constituted only a small portion of the overall functionality of the accused products. Noting that Supreme Court Justice Anthony M. Kennedy commented in eBay Inc. v. MercExchange LLC that injunctions to protect patents covering only small components of a product may not be appropriate because “damages may well be sufficient to compensate the infringement and an injunction may not serve the public interest[,]” 547 U.S. 388, 397 (2006), the district stated:

The Court finds this argument persuasive. While Apple undoubtedly uses the patent and produces goods in the same market, Apple has neither alleged, nor established, that the ‘381 patent is either necessary to, or a core functionality of, the products that it seeks to enjoin. Nor has Apple shown that consumers’ purchasing decisions are based on the existence of a snap back feature protected by the ‘381 patent. Accordingly, the fact that the ‘381 patent is but one patent utilized in the accused products, and does not appear to be either necessary for the product to function, or a core technology of the product, weighs against a finding of irreparable harm.

Apple, at 63-64 (citations omitted). That reasoning may set a high standard for patentees seeking to enjoin the use of their patented inventions in complex electronic devices, which generally involve a myriad of technologies.

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