United States: Apple v. Samsung Part IV: The Injunction May Not Be Dead

On Thursday, September 17, 2015, in the fourth Federal Circuit opinion arising out of the patent skirmishes between global high technology titans Apple and Samsung Electronics, a sharply divided Federal Circuit panel vacated the trial court's denial of Apple's post-trial motion for a permanent injunction against Samsung.1  At trial, Apple prevailed on its infringement claims in the Northern District of California (and received a jury award of approximately $120M) but failed to persuade District Court Judge Koh to permanently enjoin Samsung from "making, using, selling, developing, advertising, or importing software or code capable of implementing the infringing features" in smartphones that directly compete with Apple's ubiquitous iPhone devices. 2

Despite the narrowness of Apple's requested injunction — which included a 30-day "sunset" period during which Samsung could design around the infringed claims that Samsung had represented at trial that it could design around quickly and easily — the trial court found that Apple had not demonstrated that it would suffer irreparable harm without an injunction. On this basis alone, the injunction was denied, notwithstanding Judge Koh's conclusions that both the public interest analysis and the balance of hardships favored Apple. The Federal Circuit held that the "district court abused its discretion when it did not enjoin Samsung's infringement. If an injunction were not to issue in this case, such a decision would virtually foreclose the possibility of injunctive relief in any multifaceted, multifunction technology." 3

The decision is an important departure from the weight of post-eBay4 precedent, which has diminished, if not removed altogether, the ability of patent holders to enjoin infringers. As Judge Reyna noted in his emphatic concurring opinion, the remedy of an injunction had for decades been an important aspect of the right to exclude enjoyed by a patent owner. Yet in recent years this remedy seemed increasingly difficult, if not impossible, to obtain. In fact, practitioners and commentators pointed to the district court's decision underlying Apple IV as an example of the fundamental erosion of injunctive relief as a potential remedy for patent infringement: at trial, a vigorous competitor of the infringer was denied an injunction by the trial court even after proving infringement (willful infringement, at that, for at least one of the three asserted patents) and after being awarded nine-figure damages by a jury. These practitioners and commentators queried whether obtaining injunctive relief was even possible in an Article III court anymore. In Apple IV, Judge Moore, joined by Judge Reyna, answered this question in the affirmative.

As to the first eBay factor of irreparable harm — which requires that the patent holder demonstrate the existence of a nexus, or "some connection," between the patented feature and consumer demand—the panel concluded that "[w]hen 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 satisfies the causal nexus" between infringement and lost sales. 5  The district court "erred when it required Apple to prove that the infringing features were the exclusive or predominant reason why consumers bought Samsung's products to find irreparable harm." 6  Apple had demonstrated that its customers wanted, preferred, and would pay extra for the patented features; Samsung believed that these features were important and copied them; Samsung's carriers and users wanted these features on their phones; Apple believed that these features were important to customer demand; and the two companies were fierce rivals. This evidence was sufficient to establish the requisite causal nexus between infringement and lost sales under the irreparable harm analysis. 7

As to the second eBay factor, whether remedies available at law are inadequate, the panel also reversed, stating that "[b]ecause we find the district court's finding that Apple did not suffer any irreparable harm stemming from its losses of sales was predicated on a legal error, it also erred when it found that this factor weighs against an injunction. This factor strongly weighs in favor of Apple because, as the district court found, the extent of Apple's downstream and network effect losses are very difficult to quantify." 8

On the third eBay factor, whether the balance of hardships tipped in Apple's favor, the district court concluded that because "Apple's proposed injunction targets only specific features, not entire products" and contains a 30-day "sunset provision," and because "Samsung repeatedly told the jury that designing around the asserted claims of the three patents at issue would be easy and fast," the district court found that Samsung would "not face any hardship" from Apple's proposed injunction. The Federal Circuit agreed. 9

The panel also affirmed the trial court's conclusion that the fourth eBay factor — whether the injunction would harm the public interest — favors Apple. It concluded that ... 

the public generally does not benefit when that competition comes at the expense of a patentee's investment-backed property right. To conclude otherwise would suggest that this factor weighs against an injunction in every case, when the opposite is generally true. We base this conclusion not only on the Patent Act's statutory right to exclude, which derives from the Constitution, but also on the importance of the patent system in encouraging innovation. Injunctions are vital to this system. As a result, the public interest nearly always weighs in favor of protecting property rights in the absence of countervailing factors, especially when the patentee practices his inventions. "[T]he encouragement of investment-based risk is the fundamental purpose of the patent grant, and is based directly on the right to exclude." ...

This is not a case where the public would be deprived of Samsung's products. Apple does not seek to enjoin the sale of lifesaving drugs, but to prevent Samsung from profiting from the unauthorized use of infringing features in its cellphones and tablets.

(Emphasis added.) 10

In his concurrence, Judge Reyna emphasized that although the Federal Circuit cautioned in the wake of eBay that courts should not necessarily ignore the fundamental nature of patents as property rights granting the owner the right to exclude, "our recent cases have done precisely that, ignoring the right to exclude in determining whether to issue an injunction." 11  This disregard for the right to exclude in assessing a plaintiff's right to an injunction "extends eBay too far." 12  According to Judge Reyna, a patentee earns the right to exclude by disclosing a useful invention to the public, and when the "courts do not force the public to hold up its end of the bargain they inhibit rather than 'promote' the 'progress of the useful arts.'" 13

Judge Reyna went on to stress that "irreparable" does not mean that the injury cannot be remedied at all — otherwise the plaintiff would lack standing to sue — but rather that monetary damages are inadequate to remedy the harm. The inadequacy of monetary damages was historically found where, among other reasons, such damages are merely difficult to measure.  Referring to an entity that uses patents primarily to obtain licensing fees as a counterpoint, Judge Reyna underscored that Apple's business objective clearly encompass far more than obtaining licensing fees and the relationship between Apple and Samsung is dramatically different from a non-practicing entity and an infringer. For example, the two companies fiercely compete as the clear leaders in the mobile device hardware and software markets. Due to this and other reasons, "it is difficult, if not impossible, for a court to accurately value Apple's right to exclude." 14

Because a jury found that Samsung injured Apple's right to exclude through its infringement of Apple's patents, and, in view of the parties' "unique competition," Judge Reyna would have concluded that a "court cannot accurately determine Apple's injury, and thus, I would find that [the infringement] irreparably injures Apple." 15  Judge Reyna went on to discuss his view that continued infringement by Samsung would irreparably injure Apple's reputation as an innovator. 16  Important to this conclusion was that the patented features at issue were ones that consumers regularly interact with while using Apple's products, and were not just latent features that consumers might not be aware of. 17

Chief Judge Prost began her vigorous dissent by stating that "this is not a close case." She emphasized that two of the three asserted patents relate merely to "minor features" on the iPhone while the third is not even practiced by Apple, and concluded that the majority reached a result "that comports with neither existing law nor the record in this case." 18  The Chief Judge criticized the majority for ignoring the weight of the evidence, including its purported failure to properly defer to the trial court which was "faithfully following our precedent" in requiring objective evidence demonstrating a nexus between the infringement and the alleged lost sales. 19 In fact, Chief Judge Prost wrote that "[t]here is simply no basis for this court, on an abuse of discretion review, to reverse the district court's denial of Apple's injunction request." 20  Perhaps in a nod to observers questioning whether an injunction could ever be obtained in the post-eBay world, Chief Judge Prost concluded by addressing the majority's warning that if an injunction were not available to Apple under these circumstances, such a decision would virtually foreclose the possibility of injunctive relief in any multifaceted, multifunction technology: "injunctive relief will be appropriate when and if, consistent with our case law, the causal nexus requirement is met. This is not such a case." 21

Samsung will undoubtedly petition to have this case heard en banc by the Federal Circuit and, given its importance with respect to the eBay decision, it is likely that the Supreme Court may also weigh in before all is said and done. In the meantime, Apple IV teaches several important things. 

First, injunctions are not dead post-eBay. Second, and most immediately, for at least part of the Federal Circuit and under the limited circumstances at issue in Apple IV (lost sales, direct and fierce competitors), an injunction is still a vital component of the redress for demonstrated infringement of a patent. Third, when such circumstances are present, the rift among the Federal Circuit revealed by this opinion is what quantum and quantity of evidence are needed to establish the causal nexus, or "some connection," requirement of the first eBay factor. Accordingly, en banc review, if granted, will likely center on whether the patented features were shown to drive consumer demand. Finally, at a more general level, Apple IV shows that at least among certain of the Federal Circuit judges, a concern exists that eBay has had too significant an impact on an injunction's vital role in our patent system and its ability to promote innovation.

Footnotes

1  Apple Inc. v. Samsung Electronics Co., Ltd., No. 14-1804, slip op. (Fed. Cir. Sept. 17, 2015) ("Apple IV").

2  Apple IV at 5.

3  Apple IV at 22.

4  eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 395 (2006) ("eBay").

5  Apple IV at 10.

6  Apple IV at 12.

7  Apple IV at 16-17.

8  Apple IV at 18.

9  Apple IV at 19.

10  Apple IV at 21-22 (quoting Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006)) (quotation marks omitted).

11  Apple IV Concurrence at 4 (Reyna, J.) (quoting Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed Cir. 2011)).

12  Apple IV Concurrence at 5.

13  Apple IV Concurrence at 5-6 (quoting U.S. Const. Art. I, § 8).

14  Apple IV Concurrence at 9.

15  Apple IV Concurrence at 9.

16  Prior to eBay, there was no requirement in patent cases to demonstrate reputational harm in order to show that such harm was irreparable — this was assumed on a showing of patent infringement. However, in non-patent cases evidence regarding damage to a plaintiff's reputation was a common means of demonstrating irreparable harm in supporting a request for injunction.

17  Apple IV Concurrence at 14.

18  Apple IV Dissent at 2 (Prost, C.J.).

19  Apple IV Dissent at 11.

20  Apple IV Dissent at 11-12.

21  Apple IV Dissent at 12.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
James Wodarski
Michael T. Renaud
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.