Wednesday, June 22, 2011

Samsung has to wait for iPad 3 and iPhone 5, but Apple may have to wait for a preliminary injunction

Last week I reported on Apple's staunch opposition to Samsung's request for early access to product samples of (and packaging and marketing materials related to) the next generation of the iPad and the iPhone. Samsung claimed that this request was equally legitimate as Apple's previous (and granted) motion to get access to several Samsung products, most of which are already on the market by now. On Friday, there was a court hearing to discuss Samsung's request, but Judge Lucy Koh did not rule from the bench. On the eve of the hearing, Apple had amended its complaint.

Yesterday (Tuesday, June 21, 2011) the judge entered her decision on Samsung's iPhone 5/iPad 3 request:

  • The good news for Apple is that Samsung's motion is denied at least for the time being. This comes as little surprise.

    It was all too obvious that Samsung was comparing apples to bananas: Apple's request for expedited discovery was far more justified (in terms of a need to evaluate the requested material) and far less prejudicial (as Apple only requested products of which samples were already circulating, in the case of the Galaxy Tab 10.1 including 5,000 samples handed out at a Google developer conference) than Samsung's related motion.

    Even though the court had previously indicated that "what's good for the goose is good for the gander", the "what" was very different between the two requests, and the "why", too. The judge made a lot of effort in her 11-page order to explain that Samsung is entitled to "parity" but its motion was overreaching in this case.

  • The potentially bad news for Apple is that the court order contains a passage hinting that Apple may not get a preliminary injunction against the sale of certain Samsung products in the United States at this stage.

    Instead, it may be necessary for the court to evaluate such a motion against the background of the iPhone 5 (as far as any Samsung phones are concerned) and the iPad 3 (as far as any Samsung tablet computers are concerned), whenever Apple is in a position to present those products.

A hint to Samsung that Apple needs to be careful about

Let's look at the said hint in more detail. This is important because the possibility of a preliminary injunction would really give Apple the leverage to force Samsung into a near-term settlement, but this depends on how likely the court is to order one.

The hinting passage begins with a reference to a possible preliminary injunction motion that Apple may present in the near term. In its opposition to such a motion, Samsung can still "raise the possible introduction of next generation products", says the judge, and explains this in more detail:

Samsung is free to argue, for instance, that there is little likelihood of confusion because consumers will not encounter its products side-by-side with the iPhone 4 or iPad 2, but rather with Apple's next generation iPhone and iPad. Similarly, as to proximity, Samsung is free to argue that because the iPhone 4 and iPhone 2 will soon be outmoded and reduced in price, they are not being sold (or very soon will not be sold) to the same class of purchasers who are likely to buy new Samsung products. By choosing to allege infringement only of its current products, Apple opens itself up to these arguments.

The above passage is not a recipe for making Apple's possible preliminary injunction motion fail. Samsung might make the above points, and they might be more or less valid at that stage, but the court could still determine that the injunction should be granted for other (ultimately more important) reasons.

But Apple will have to think carefully about the scope and timing of a preliminary injunction motion.

Potential effects on Apple's possible motion

If Apple requested an injunction against the Galaxy phones, Samsung would certainly argue that a new iPhone will be released in the near term. In yesterday's order, the judge also notes "that Apple's past history of releasing a new iPhone each June over the past four years supports an inference that the next generation iPhone will be forthcoming."

If Apple can present the iPhone 5 to the court and show that the alleged problem of "consumer confusion" is essentially the same as currently (in terms of similarities between the Galaxy handset and the iPhone 4), Apple's motion for an injunction is no less likely to succeed (though it's clear that Samsung would try to overstate any possible differences in design).

But if Apple still doesn't want to show the iPhone 5 at that stage, the court may be hesitant to grant an injunction because an injunction may be the appropriate decision as long as the Galaxy competes with the iPhone 4 but it may no longer be justified after the release of the iPhone 5, which almost everyone believes we will see later this year, in the event that the iPhone 5's design departs in important ways from previous iPhones.

Should Apple limit its preliminary injunction motion to tablets, its past release history would suggest an iPad 3 release in 2012, so there's less of a basis than in the iPhone's case for claims that the release of a new product generation is almost imminent. But there are rumors in the media that the iPad 3 may become available this fall, too. If Apple indeed wants to launch the iPad 3 very soon, it may have to be careful about when to announce it because it could have implications for the court's evaluation of a preliminary injunction motion.

A preliminary injunction motion would be a gamble

As you can see, this gets a little more complicated. I still think it's possible that Apple will press on and request a preliminary injunction soon. So far, Apple appears quite determined.

If such a motion failed only due to poor (in terms of "premature") timing, Apple would technically still have the same rights before -- but psychologically (in terms of the court proceeding as well as how the outside world views it), a denied motion would look bad. It would create the impression of Apple making unreasonable demands -- and there are already many observers of this dispute who believe that Apple overshoots and interprets the scope of its exclusive rights too broadly.

My own opinion is that some of Samsung's products indeed look very similar to Apple's devices, to an extent that may very well be legally problematic. I use a Galaxy S II and it's really very iPhone-like in some areas. I believe it's very possible that, when all is said and done, Samsung will have to make some modifications to its design plus pay royalties because Android most likely violates the intellectual property of a variety of right holders, only one of which is Apple. But that doesn't mean that I support the entirety of Apple's claims to exclusive rights. Those who understand Apple's concern much less than I do would certainly view a failed preliminary injunction motion as another indication of Apple having -- to use a term that a reputable German newspaper (Frankfurter Allgemeine Zeitung) mentioned in connection with this dispute -- delusions of grandeur.

If Apple would rather avoid this kind of impression, it might want to proceed cautiously and wait with a preliminary injunction motion until the iPhone 5 can be shown, or present only a tablet-related motion in the very near term and a smartphone-related one a little later.

We'll see how bold or conservative Apple is.

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