Tuesday, July 3, 2012

Galaxy Tab 10.1 injunction remains in effect for now -- Federal Circuit to make next decision

At close of business on Monday, Judge Lucy Koh denied Samsung's motion to stay the preliminary injunction against the Galaxy Tab 10.1. Since Apple already posted its bond last week, there's no question that Samsung now has to respect the injunction.

Samsung's resellers in the United States are major wireless carriers and they may still have significant quantities of the Galaxy Tab 10.1 in their warehouses. But at some point they'll run out unless Samsung gets the injunction stayed (or overturned, but that will take much longer than it would take to win a stay). Samsung can still win a stay, but it now depends on the Court of Appeals for the Federal Circuit (CAFC). Until the CAFC decides on Samsung's request for a stay, the injunction is in effect.

It was clear that Judge Koh was not going to stay her injunction for the duration of the entire appellate proceeding. If Samsung could have realistically won any kind of a stay at all, it would have been a very limited stay until the Federal Circuit's decision on a stay pending appeal. Samsung won neither kind of stay.

Before I comment on Judge Koh's decision, I'd like to point out that a far more important motion to stay a preliminary injunction is still pending and will most likely be adjudicated today, Tuesday: Samsung also asked for a stay of the preliminary injunction against the Galaxy Nexus smartphone it had codeveloped with Google. The amount of the bond required in that case is 35 times higher than in the case of the Galaxy Tab 10.1. The Nexus is more popular and it's at an earlier stage of its lifecycle. Apple has not yet posted the $95.6 million bond for the Nexus injunction but will presumably do so as soon as Judge Koh has adjudicated the motion to stay, if not before. While Judge Koh's decision may ultimately be the same one -- a denial --, the issues are very case-specific.

In her denial of a stay concerning the Galaxy Tab 10.1, Judge Koh made reference to Samsung's own representations that it isn't seriously harmed by that particular injunction. Judge Koh obviously defended the rationale behind her original decision to grant the injunction. She wasn't going to say, "I'm sorry, I erred last week".

Judge Koh still believes that there was no need to reopen the record and admit new evidence concerning developments in the market. I'm still not 100% convinced that it was the right decision not to look at the latest state of the market. The order denying a stay makes reference to the eBay v. MercExchange litigation, in which a record that was three to four years old (at the time of remand) was considered outdated. That decision, however, did not say that there's a three-year minimum for a "significant time lapse". In a very rapidly-evolving market, six months can be a more significant time lapse than three to four years in another market. Even two technology-driven markets can vary greatly in terms of pace.

But the second part of the decision begins with a sentence that shows why it's going to be hard for Samsung to win a stay at the Federal Circuit:

"Even assuming that the Court should have reopened the record to consider evidence and arguments that were not a part of the Federal Circuit's Order, such new evidence is not likely to persuade the Federal Circuit that the preliminary injunction was improperly entered."

Even with new evidence Samsung would probably lose again -- that's also my opinion. In light of that fact, and the fact that Samsung itself has admitted that there is no serious harm, Samsung will have a hard time convincing the Federal Circuit to order a stay. I guess Samsung's best chance is that the Federal Circuit considers Judge Koh's equitable analysis insufficient in one way or another and stays the injunction as a matter of principle until there's a new equitable analysis (which is hardly going to work out in Samsung's favor, but anyway).

In the Nexus case, Samsung's arguments for a stay are even weaker with one exception: there is significant economic harm.

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