Winner Winner, Apple Dinner: Federal Circuit Issues Injunction Against Samsung for Patent Infringing Devices

samsung-apple211By Vijay Kumar

Another chapter of the Apple/Samsung cell phone wars was written earlier this month when the Federal Circuit ruled that Apple Inc. should have been granted an injunction against Samsung Electronics Co. devices for certain patent-infringing features. The ruling is significant, not only because of its effect on the two biggest cell phone manufacturers, but also because it will likely have a significant effect on a patentee’s ability to get injunctions granted. Samsung is appealing the decision to a Federal Circuit en banc panel.

The technology at issue dealt with features of mobile phones including spelling correction, linking phone numbers in a document to a dialer, and slide-to-unlock features. This appeal stems from a May 2014 district court decision from the Northern District of California, in which Apple was awarded $120 million in damages, but denied an injunction.

The legal background for whether an injunction should be issued after a finding of patent infringement stems from the 2006 U.S. Supreme Court’s ruling in eBay v. MercExchange LLC. eBay changed the standard for granting injunctions in patent litigation, making it more difficult for patentees. Instead of automatically granting a permanent injunction after a finding of patent infringement, as was previously done, the Supreme Court held that courts instead should apply the four-factor test that is traditionally used in other areas of the law. Most notably, a patentee must show a suffering of irreparable harm, meaning that there must be a “causal nexus [that] relates the alleged harm to the alleged infringement.” As the Federal Circuit noted in their decision, the “causal nexus requirement ensure that an injunction is only entered against a defendant on account of a harm resulting from the defendant’s wrongful conduct.”

Here, the primary disputed issue was whether the harms of lost market share and downstream sales were indeed caused by Samsung’s infringement of the patents in question. For product infringement cases, there are often hundreds or thousands of distinct features, making it difficult for a patentee to show evidence that the harm was caused, at least in part, to the one or two specific patented features at issue in litigation. The majority Federal Circuit opinion, written by Judge Moore, found that the district court erred in its decision because it required Apple to prove that the infringing features were the sole causes of the infringing sales. Instead, “[t]he district court should have determined whether the record established that a smartphone feature impacts customers’ purchasing decision.” From an evidentiary standpoint, the majority found that Samsung’s copying of the infringing features was evidence of a causal nexus, and thus warranted granting an injunction.

Chief Judge Prost wrote a dissenting opinion, stating that the patents at issue cover only minor features of the overall mobile device. Prost found that Apple’s consumer survey and its allegations of “copying,” were only circumstantial evidence and thus a permanent injunction was not warranted. Prost concluded by stating that “showing clear error in the district court’s factual findings is daunting, if not impossible.”

This decision is a big win for Apple and patentees in general, as it creates new arguments that plaintiffs can make when trying to get an injunction issued. The most notable impact of the Federal Circuit’s decision is that patent owners now do not need to show that the patented technology at issue in a case is the only factor that is driving consumer demand for a product. Instead, they need to show only that the patented feature has some impact on consumer demand. Exactly what that impact has to be, will undoubtedly be the subject of future litigation.

Image source: http://www.ubergizmo.com/2013/12/apple-spent-60-million-fighting-samsung-in-court/.

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