Friday, September 9, 2011

Apple wins (again) in Germany: Galaxy Tab 10.1 injunction upheld

A reporter from Germany's leading news agency DPA (Deutsche Presse Agentur) was first to report on Twitter that the Düsseldorf Regional Court once again upheld the preliminary injunction against the Galaxy Tab 10.1 based on the alleged infringement of a Community design (a design-related intellectual property right registered with an EU agency) held by Apple. At this stage, the injunction is valid only in Germany with respect to Samsung's Korean parent company. Only the German subsidiary is barred from selling across the border, but that doesn't have any practical consequences.

The same court had granted the injunction on August 9 wih EU-wide scope except for the Netherlands (where Apple was pursuing a separate case), then suspended the cross-border part a week later (thereby limiting its geographic scope to Germany), and held a post-injunction hearing on August 25 (at which it was still upheld and a post-hearing decision scheduled for today).

Today's outcome means that Samsung has exhausted its options with the Düsseldorf Regional Court on the fast track, but:

  • Samsung may try to appeal this to the Oberlandesgericht Düsseldorf (Higher Regional Court) in another fast-track proceeding there. That could be a way to get the preliminary injunction lifted within a couple of months.

  • After today's decision, the main proceeding (in German: "Hauptsacheverfahren") before the first-instance court (the Regional Court) continues automatically -- regardless of whether or not Samsung tries a fast-track appeal to a higher court. In this context, "main proceeding" means a full-blown lawsuit, not a fast-track proceeding. At the end of the main proceeding, there will be a final ruling by the Regional Court. That one could still be appealed.

The preliminary injunction stays in force until it is either overturned by the Higher Regional Court in a fast-track appeals proceeding or by the (lower) Regional Court at the end of the full-blown main proceeding, which would probably take about a year.

If the outcome of the full-blown main proceeding (including possible appeals of that one to one or two higher courts) is that the preliminary injunction was rightfully granted, it becomes a permanent injunction.

However, if the decision at the end of the full-blown main proceeding is that the injunction should not have been granted in the first place, then Apple will be liable to Samsung for damages. Samsung will then also be allowed to sell the product, but at least for the current generation of devices, a lifting of the injunction at the end of the main proceeding would likely have little commercial value (or none at all). But it would be useful for Samsung with respect to future devices having the same exterior design as the currently banned products.

Potential implications for the decision on a preliminary injunction in the United States

Apple is also seeking a preliminary injunction against the Galaxy Tab 10.1 (and other products) in the United States. On July 1, Apple filed a related motion, and a hearing will be held on October 13. In that court (the United States District Court for the Northern District of California), Apple asserts four different IPRs (three design-related rights, one of which is very similar to the one asserted in Europe, plus one software patent) against four Samsung products, one of which is the Galaxy Tab 10.1.

The decision in the U.S. will be legally independent from the findings of the German court. But Apple gets psychological mileage out of this. If the California-based court now also grants a preliminary injunction, it can't be accused of favoring its local hero over a foreign competitor after a court in a neutral country (in the sense that neither Apple nor Samsung are German companies) also decided to protect Apple.

Lucy Koh, the judge presiding over the lawsuit in California, is the first-ever Korean-American U.S. federal judge. There's no reason whatsoever to doubt her fairness.

Scope of today's decision

I talked to someone who attended the announcement of the decision. The judge didn't say "Galaxy Tab 10.1" -- she just said "Galaxy Tab" and explained that the injunction relates to all products that have the visual characteristics protected by the asserted Community design. However, the scope of the word "Galaxy Tab" in the announcement of today's decision depends on what exactly the court did with respect to the Galaxy Tab 7.7:

A week ago, the Düsseldorf Regional Court took another decision with respect to the 7.7" version of the Galaxy Tab, which Samsung was showing at its IFA trade show booth. Based on what a Samsung spokesman told news agencies, there was a new injunction. As I pointed out at the time, the court (and Apple) could have achieved the same objective through a fine based on the Galaxy Tab 10.1 injunction, arguing that the nature of the infringement is the same. The German legal term for this is "kerngleicher Verstoss": a violation sharing the same core (as a previous one).

The way the judge reportedly pronounced today's decision, Samsung won't be able to promote or sell any new products in Germany that infringe the successfully-enforced Community design for as long as the injunction is in force. In other words, if Samsung came out (hypothetically speaking) with a Galaxy Tab 9.0, it seems the injunction would apply.

Samsung can still sell the original Galaxy Tab, which had a 7.0" screen, until Apple perhaps wins an injunction in a full-blown main proceeding. By the time Apple sought an injunction against the 10.1" version, it was too late for a preliminary injunction against the original 7.0" version. Generally, German courts won't hand an injunction if a right holder has been aware of an infringement for a month (some say two months in certain parts of the country) prior to filing a complaint. The logic is that if you wait so long, it can't be urgent and therefore you can't rush the court to a decision. You can still stop an infringement, but only on the normal track.

The "urgency" argument also came up in today's announcement. Realistically, it was the sole remaining chance for Samsung to get a more favorable outcome today. Samsung argued that it advertised the Galaxy Tab 7.7 on its website back in early June. The judge would have been willing to lift the preliminary injunction -- for lack of urgency -- if Samsung had shown Apple's awareness of the infringement at that point. However, the judge said today that the pictures that appeared on Samsung's websites in early June were inconsistent (for example, the Samsung logo had different positions) and, therefore, Apple could not have been reasonably expected to take legal action just based on those photos. The judge concluded that Apple did the right thing by waiting until the first actual product surfaced in the marketplace.

Impact on other OEMs

Only Samsung is bound by today's decision. However, the asserted Community design has a rather broad scope, a fact that the judge also confirmed at the August 25 hearing. Unless and until someone achieves its invalidation (Samsung is trying, and so is a small German company named Jay-tech), this intellectual property right (IPR) is deemed valid by the Düsseldorf Regional Court and Apple could easily obtain preliminary injunctions against other products infringing that design right, provided that Apple discovers new products and files a complaint within a few weeks of becoming aware of them.

As a result, other OEMs will be careful about releasing tablet computers in the German market at this stage...

EU reality: same IPR valid in Germany, invalid in the Netherlands

There's a certain oddity here. The Community design that the Düsseldorf Regional Court deems valid and infringed was also presented by Apple in its Dutch proceeding, but a judge in The Hague threw it out.

This is the same problem the EU faces with its monetary policy as well. There's a common currency (for 17 of the 27 EU member states), but no common economic and fiscal policy -- a disconnect at the heart of the current euro crisis.

When the predecessor institutions of today's EU were created, the founding fathers viewed it as a peace project and had a very long-term vision. They thought that increasing economic integration would at some point result in political unity along the lines of the "United States of Europe". They wanted to get there gradually. That has also been the agenda of European "federalists" in recent years and decades. But gradual integration results in inconsistencies. In this case, it increases choice for German consumers that can just go across the border -- such as to the Netherlands -- and buy a Galaxy Tab 7.7 or 10.1 there.

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