By Dennis Crouch
Apple v. Samsung, --- F.3d ---, App. No. 2012-1507 (Fed.Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)
This case is important because it further reduces the chances that the owner of a component patent will obtain injunctive relief.
Patent litigation is fairly slow and often takes years for a case to proceed through trial and appeal. One shortcut to action is a motion for preliminary injunction. Such a motion asks a court to exert its equitable power to immediately stop the harm of ongoing infringement – even before ultimately concluding that the patent is valid, enforceable and infringed. Following an extension of eBay v. MercExchange, courts require a patentee to satisfy a four-factor test before granting injunctive relief.
A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest."
Generally, these preliminary injunction factors can be thought of as being identical to the eBay permanent injunction factors with the addition of having to prove the likelihood of success on the merits. (In a permanent injunction scenario, the merits have already been decided.) An important aspect of preliminary injunctions in patent cases is that they are immediately appealable as a matter of right. This right of immediate appeal is different from almost every other district court decision except for the ultimate dismissal of the case.
In this case, Judge Koh issued a preliminary injunction ordering Samsung to stop sales of its Galaxy Nexus smartphone based upon the likelihood of its infringement of Apple's Patent No. 8,086,604. I should pause for a moment to note that this case is different from the parallel Apple v. Samsung case that resulted in a $1b jury verdict for Apple that is currently being challenged by Samsung. The patent in the case-at-hand is related to Google's Siri system that uses a set of heuristic modules for searching various types of information.
On appeal, the Federal Circuit has vacated Judge Koh's decision – finding that the district court "abused its discretion" in issuing the injunctive order favoring Apple. The court found two basic problems: (1) that Apple had failed to prove irreparable particularly linked to Samsung's use of this particular invention; (2) that the district court had construed the asserted claims too broadly with the result being that Apple probably cannot prove infringement. Either of these issues would be sufficient to reject the preliminary injunction.
In discussions of injunctive relief, this opinion will likely be termed Apple II in order to distinguish it from the federal circuit Apple v. Samsung decision issued earlier this year in Apple, Inc. v. Samsung Electronics Co., 678 F.3d 1314, 1325 (Fed. Cir. 2012) (hereinafter Apple I). Both decisions build on the nexus analysis that links the patented invention to the alleged irreparable harm – "that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement."
This nexus analysis for irreparable harm is parallel to that employed in other areas of patent law such as consideration of secondary factors of non-obviousness and in proving lost profits. This development obviously makes it much more difficult to obtain injunctive relief in the typical high-tech scenario where a retail product includes thousands of small innovations that each contribute incrementally to the ultimate value of a product.
In Apple I, the court described the law as follows:
To show irreparable harm, it is necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.
In Apple II the court continues:
In other words, it may very well be that the accused product would sell almost as well without incorporating the patented feature. And in that case, even if the competitive injury that results from selling the accused device is substantial, the harm that flows from the alleged infringement (the only harm that should count) is not. Thus, the causal nexus inquiry is indeed part of the irreparable harm calculus: it informs whether the patentee's allegations of irreparable harm are pertinent to the injunctive relief analysis, or whether the patentee seeks to leverage its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant.
It only follows that the causal nexus analysis is not a true or false inquiry. The relevant question is not whether there is some causal relationship between the asserted injury and the infringing conduct, but to what extent the harm resulting from selling the accused product can be ascribed to the infringement. It is not enough for the patentee to establish some insubstantial connection between the alleged harm and the infringement and check the causal nexus requirement off the list. The patentee must rather show that the infringing feature drives consumer demand for the accused product. Only viewed through the prism of the causal nexus analysis will the irreparable harm allegations reflect a realistic sense of what the patentee has at stake.
Here, Apple proved that its Siri application (also covered by the patent) is popular and also that demand for the Galaxy Nexus had come at the expense of iPhone purchases. However, the court found that Apple failed to show that the customer demand for Galaxy Nexus was driven by its allegedly infringing feature. Without proving that link, the court could not find that the (alleged) infringement caused irreparable harm.
Apple I was decided by Judges Bryson and Prost with a partial dissent by Judge O'Malley (concurring on this issue). This case, Apple II was decided by Judges Prost, Moore, and Reyna acting unanimously.
Taken as a pair, Apple I and Apple II are important because they further reduce the chances that the owner of a component patent will obtain injunctive relief. Before eBay, irreparably harm was hardly a consideration. Since eBay, the irreparable harm factor has largely focused on whether the patentee has a product or potential product being harmed by ongoing infringement. Now, the question will move to the next level of granularity in a way that will be difficult for patentees to prove.