The Court of Appeal has handed down its judgment in relation to the dispute between Samsung and Apple concerning Samsung's tablet computers and a registered Community design owned by Apple.  The Court dismissed Apple's appeal and upheld the first instance High Court judgment.  In doing so, the Court of Appeal has confirmed that Samsung's tablet computers do not infringe Apple's registered design, and that orders requiring a claimant to publicise decisions of non-infringement are a valid remedy within the jurisdiction of the court.  The Court of Appeal also criticised a decision of the German Court of Appeal, the Oberlandesgericht, for producing a decision that conflicted with the High Court judgment, leading to commercial uncertainty.

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Introduction

In the latest development in the ongoing worldwide IP disputes between Apple Inc ("Apple") and Samsung Electronics ("Samsung"), the Court of Appeal has dismissed Apple's appeal against the High Court judgments of 9 and 18 July 2012, confirming that Samsung's tablet computers do not infringe Apple's registered design.

Background

On 9 July, HHJ Birss held that three Samsung Galaxy tablet computers did not infringe Apple's registered Community design (the "non-infringement judgment").  The court found that Samsung's products did not have the same understated and extreme simplicity – they were simply "not as cool", in the judge's words.  In his second decision of 18 July on applicable relief, HHJ Birss held that Apple was required to publicise this decision on their website and in certain written publications (the "Publicity Order").  Apple applied for the Publicity Order to be suspended pending their substantive appeal of the underlying action.  The stay was granted until the appeal had been decided.

The non-infringement judgment

In determining whether a registered Community design has been infringed, the relevant test is the overall impression the design produces on the "informed user".  Exactly what characteristics should be attributed to the informed user has been considered at length in previous cases, and the parties were for the most part in agreement on this.  However, Apple argued that the presence of the Samsung trade mark on the front and back of the tablets should not have been taken into account in the original decision on whether or not the designs were sufficiently different, as the informed user would disregard the trade mark altogether when viewing the design.  The Court of Appeal rejected this argument, on the basis that Apple themselves had contended that a feature of the registered design was "a flat transparent surface without any ornamentation covering the front face of the device up to the rim."  If a key feature of a design is that is has no ornamentation, then the presence of any ornamentation will affect the aesthetics of a design and should be taken into account.  Similarly, Apple's assertion that another key feature was "a design of extreme simplicity without features which specify orientation" meant that the presence of the trade mark could not be disregarded.

An additional aspect considered by the Court was the edge of the designs.  The Apple design has a 90° sharp edge, while the Samsung products have a slightly curved edge, with no vertical portion.  The Court considered that this constituted a significant difference, which meant the designs could be "members of the same "family" perhaps, but cousins or second cousins at most."

The thickness of the products also came into play, with the fact that the Samsung's tablets were all significantly and noticeably thinner than the registered design being an important factor.  Apple's arguments that the informed user would pay little attention to the thickness of the design were rejected.

In all, the Court held that HHJ Birss had made no material error in his application of the law in the first instance decision.  To interpret the scope of the design as widely as Apple had contended would be to exclude much of the tablet computer market:  "Alterations in thickness, curvature of the sides, embellishment and so on would not escape its grasp.  Legitimate competition by different designs would be stifled."

The Publicity Order

The second aspect of the appeal was against the Publicity Order requiring Apple to post a notice and link to the judgment on its website and in various national newspapers and technology magazines.  Although publication of a court decision in this way is permitted under the Intellectual Property Enforcement Directive, this is usually in cases where a product is held to have infringed.  To require a claimant who had alleged infringement to publicise a finding of non-infringement was an untested interpretation.  The Court granted Apple's swift application to have this order stayed just eight days after the original decision was handed down in July, stating that public humiliation was not the intention behind the decision, and Apple should be permitted to argue its case on appeal before being condemned to this fate.

However, the appeal against the Publicity Order was also dismissed.  The Court considered that granting a publicity order in favour of a non-infringer who had been granted a declaration of non-infringement was within the remit of the law and the court's jurisdiction, although whether or not it should be granted would depend on the circumstances of the case.

The key factor in the Court's decision to uphold the Publicity Order was the need to dispel commercial uncertainty.  This uncertainty had been generated by the plethora of cases worldwide between the two entities, and in particular, a decision of the German Court of Appeal, the Oberlandesgericht, on 24 July 2012 granting a pan-European interim injunction against Samsung in respect of one of its tablet computers.  This was in spite of the fact that just days earlier, HHJ Birss, sitting as a Community design court and considering the same registered design, had already concluded that there had been no infringement.

The Court of Appeal questioned both the reasoning and the jurisdiction of the Oberlandesgericht in reaching such a decision, not just in this case, but also the wider implications this could have on EU law:  "If courts around Europe simply say they do not agree with each other and give inconsistent decisions, Europe will be the poorer."  However, the Court did point out that Apple had undertaken to apply forthwith to the Oberlandesgericht for that injunction to be withdrawn in respect of infringement of the registered design.

The Court considered that the presence of two conflicting decisions that had received significant press attention had resulted in real commercial uncertainty which would affect the ordinary consumer, who may wonder whether purchasing Samsung's products was in fact legal.  The uncertainty created by these previous conflicting reports warranted upholding the order.

Apple did not argue against publishing the notice in the requested newspapers, but it had concerns that displaying such a notice on its homepage would interfere with the design, layout and effectiveness as a marketing tool.  The order was therefore amended so that instead of the full notice having to be displayed on the homepage, a link to the notice would be sufficient.  The link must stay on the website for one month.

Conclusions

In deciding to uphold the Publicity Order, the Court of Appeal has confirmed that publicising decisions of non-infringement is a legitimate remedy.  The effect that such a notice will have on Apple's reputation and sales figures, and whether this will indeed serve to resolve the commercial uncertainty referred to by the Court of Appeal, remains to be seen.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 19/10/2012.