CAFC says district court erred in refusing Apple permanent injunction against Samsung


Recently, the United States Court of Appeals for the Federal Circuit issued another in the long list of judicial decisions in the ongoing patent saga between Apple and Samsung. See Apple v. Samsung Electronics (Fed. Cir. Sept. 17, 2015).

This latest appeal arises from a suit filed by Apple against Samsung in February 2012 alleging infringement of five patents directed to smartphone and tablet interfaces. The district court held on summary judgment that Samsung infringed U.S. Patent No. 8,074,172. The case proceeded to trial, and a jury found that nine Samsung products infringed one or both of Apple’s U.S. Patent Nos. 5,946,647 and 8,046,721. The jury awarded Apple a total of $119,625,000 for Samsung’s infringement of the three patents.

Following the verdict, Apple filed a motion seeking a permanent injunction that would bar Samsung from making, using, selling, developing, advertising, or importing into the United States software or code capable of implementing the infringing features in its products. Apple did not seek to enjoin Samsung’s infringing smartphones and tablets, but only the infringing features. Moreover, Apple’s proposed injunction included a 30-day “sunset period” that would stay enforcement of the injunction until 30 days after it was entered by the district court, during which time Samsung could design around the infringing features. This “sunset period” coincided with Samsung’s representations at trial that it could remove the infringing features from its products quickly and easily.

Despite the narrowness of Apple’s proposed injunction, the district court denied Apple’s motion, finding that Apple had not shown that it would suffer irreparable harm without an injunction. The district court reasoned that Apple could not establish that monetary damages were inadequate. Although the district court found that the public interest favored Apple’s request and that the narrowness of Apple’s proposed injunction tilted the balance of hardships in Apple’s favor, it still nevertheless determined that these factors did not overcome Apple’s lack of irreparable harm.

According to the district court, the reason Apple did not show irreparable harm was because they did not show that the infringing features “drive consumer demand for Samsung’s infringing products.” On this point, the Federal Circuit, per Judge Moore, determined that the district court erred.

The Federal Circuit explained that when a patentee alleges it suffered irreparable harm stemming from lost sales solely due to a competitor’s infringement, a finding that the competitor’s infringing features drive consumer demand for its products necessarily satisfies the causal nexus inquiry. In such a case, the entirety of the patentee’s alleged harm weighs in favor of injunctive relief. Of course, such a showing may be nearly or practically impossible from an evidentiary standpoint, which is why the Federal Circuit has never required the direct causation evidence found lacking by the district court. Instead, the Federal Circuit explained that the casual nexus inquiry is a flexible analysis, which is appropriate given the discretionary nature of the four-factor test for injunctive relief. In order to prove a causal nexus, the patentee only needs to show “some connection” between the patented features and the demand for the infringing products.

Thus, in this case, which related to phones having hundreds of thousands of available features, the Federal Circuit explained that it was legal error for the district court to effectively require Apple to prove that the infringement was the sole cause of the lost downstream sales. According to the Federal Circuit, the district court should have determined whether the record established that the infringing feature impacts customers’ purchasing decisions.

After recognizing the right to exclude is an important property right afforded to the patent owner, a right most important when dealing with infringement by a competitor, the Federal Circuit explained that essentially barring entire industries of patentees having many-featured products from obtaining an injunction is in direct contravention of the Supreme Court’s approach in eBay.

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