After settlement talks failed as expected, it's business as usual for Apple v. Samsung. Late on Friday (almost at midnight by local time), Samsung filed its opposition to Apple's new motion for a U.S. preliminary injunction against the Galaxy Tab 10.1 following a partially successful appeal to the Federal Circuit. Subsequently, Samsung asked the court to reconsider its May 21, 2012 scheduling decision on this matter.
The availability of a preliminary injunction depends on four factors: likelihood of success on the merits; likelihood of irreparable harm; balance of the equities; public interest.
At this stage, the first two of those four factors have been previously decided. The CAFC reversed the district court's take on the validity of Apple's asserted design patent, tilting the scales for the likelihood of success on the merits in Apple's favor, and supported Judge Koh (and, by extension, Apple) with respect to irreparable harm. But it declined to do the district court's job with respect to the other two factors. That's why Apple had to bring a new motion, starting from a far better position than last time but without a guarantee that it will win.
One circuit judge, Judge O'Malley, even went beyond the majority opinion and argued that one could infer from the district court's original ruling (which denied Apple a preliminary injunction) that Apple would prevail on those two factors as well. Judge O'Malley indicated between the lines that she considers Samsung a reckless infringer whose Galaxy Tab 10.1 should be shut down sooner rather than later, and she clearly wants patent holders to have great access to injunctive relief. She makes a number of good points, and I'm sure Judge Koh may be convinced by some of them. But there is at least one respect in which Judge O'Malley's "done deal" kind of position may overstate the degree of clarity that exists here. Even though Judge Koh's denial of a preliminary injunction conceded that Apple is, the way I understood, considerably more likely to be entitled to a preliminary injunction against an infringing tablet than infringing smartphones, it may not meet the necessary threshold. From X < threshold one can't conclude that X+Y > threshold as long as X and Y are unknown (except for X > 0 and Y >> 0). Even the threshold is unclear. In the simplest scenario it would be 50%, but the majority of the CAFC noted that even a single one of the four factors could result in a denial of a preliminary injunction, so if, for example, the public interest factor weighed strongly against Apple, it might have to make up for this with a much stronger irreparable-harm case, if it could make up for it at all.
Judge O'Malley said in a footnote that it's "unwise unwise for a district court to render a decision on a motion for preliminary injunction before completing its assessment of each of the four relevant factors" since this makes it harder for the appeals court to assess all of this at once. Indeed, I'm sure Judge Koh's new analysis will be appealed by whoever comes out on the losing end, and then the CAFC will have to look at it again.
I re-read the Federal Circuit's decision, and the majority opinion is absolutely deferential to the district court. It doesn't suggest that entry of a preliminary injunction is a foregone conclusion. Predicting the outcome of an equation involving three unknowns (X, Y, threshold) is the kind of guesswork a probabilistic analyst like me can engage in, but not the ones in robes who get to make a decision that results in an actual ban.
That said, Samsung knows that it faces an uphill battle here. Apple has won on two of the four factors, a dissenting circuit judge even thought Apple had already effectively prevailed on the other two factors, and Judge Koh's decision to adopt Apple's proposed schedule (though she granted Samsung's wish for an oral argument) also bodes well for Apple.
In this situation, Samsung makes an argument that is not without merit (and, as always, phrased very persuasively) but, in my personal opinion, too weak to avoid a preliminary injunction. It may be just strong enough to cause a delay, but anything more than that would surprise me.
Samsung argues that Apple doesn't make any 4G version of the iPad 2, while Samsung doesn't sell the Wi-Fi version of the Galaxy Tab 10.1 anymore. Therefore, Samsung argues that the two products don't compete directly.
Furthermore, Samsung claims that its relationships with carriers (apparently it only sells the Galaxy Tab 10.1 in the U.S. through carriers who sell it together with 4G contracts) are so important to its business that an injunction causes major harm. It also reminds the court of the 4G-related public interest argument made by T-Mobile and Verizon last year (which didn't impress Judge Koh too much then). The carrier relationships and 4G public interest arguments are so weak that I don't want to spend more time on them. The argument that a 4G tablet doesn't compete with Wi-Fi and 3G tablets is more interesting. Not strong enough in my opinion, but it must be taken more seriously than those other points.
Apple can't easily brush that argument aside by pointing to the third-generation iPad. This case started more than a year ago, and Apple's argument was all about competition between the Galaxy Tab 10.1 and the iPad 2. Samsung would probably argue that Apple needs to bring a new lawsuit (not just a new preliminary injunction motion in an ongoing one) to present any arguments related to the latest iPad.
Samsung's 3G/4G competition argument doesn't consider that 4G devices are backward-compatible, and customers may buy such devices even if they don't use them on a 4G network at all, or not much. They may use them in off-line mode, or on 3G networks. Even if someone thinks that 4G is desirable, I doubt that the number of customers who are out to buy only a 4G tablet is limited. These devices are used for a year or maybe a couple of years. Many people who would like to buy a 4G device now nevertheless buy a 3G one, knowing they will upgrade in the not too distant future. By way of comparison, when I bought a Samsung Galaxy S II about a year ago, which I replaced with a Galaxy Note five months later, I was thinking about whether to wait for a smartphone with NFC, but I ultimately bought the S II anyway because I thought I would probably buy one or more other smartphones before NFC is widely adopted where I live. To date I still haven't used NFC even once, though I guess it won't take long.
For carriers that want to promote 4G and sell devices in order to sell contracts, the ability of a device to take advantage of 4G networks is definitely key -- but no matter what their promotional strategies are, those devices ultimately get bought by consumers who may have any number of reasons for their purchasing decisions regardless of the theories outlined on a flip chart in a carrier's board room or marketing department.
Even if the 3G/4G competition argument isn't rejected in its own right, I believe Samsung will ultimately lose because, regardless of 3G or 4G or WiFi, it could have modified the design of its product. Apple brought its first motion for a preliminary injunction almost a year ago. The Galaxy Tab 10.1 was also banned in Germany last August, and Samsung later relaunched a redesigned version named Galaxy Tab 10.1N. Samsung's brief doesn't mention that simple truth. While Apple continues to believe that the 10.1N still infringes (under EU law), the fact that Samsung made an effort to avoid further infringement calls into question that continued infringement must be allowed by the court for hardship and public interest reasons.
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