Tuesday, September 18, 2012

Samsung inches closer to dissolution of Galaxy Tab 10.1 ban -- but outcome remains uncertain

Samsung's August 27 request for immediate dissolution of a June 26 preliminary injunction against the Galaxy Tab 10.1 (based on a finding of a likely infringement of an Apple tablet design patent, which the jury did not agree with) has succeeded to a limited extent. That limited extent, however, may be just about enough for Samsung to be allowed to sell the device again in the United States soon, even if there may only be a window of opportunity of a couple of months before entry of a possible permanent injunction.

In terms of what was decided, Samsung got extremely little and Apple could not have fended off this challenge to a greater extent. And the reasoning was carefully phrased to keep all options open for letting the ban stay in force. While Judge Koh's reasoning indicates that a dissolution decision is a possibility in the event that the United States Court of Appeals for the Federal Circuit quickly remands this preliminary injunction matter to her court, she will look at the most important question (whether Apple can get the jury overruled on the tablet design patent infringement question) only after a remand and declined to assess the likelihood of success of Apple's forthcoming motion at this stage. In the following I'll sum up the order and provide my interpretation.

Judge Koh denied Samsung's motion for immmediate dissolution of the preliminary injunction on purely procedural grounds: neither did she hold that the August 24 verdict had automatically dissolved the preliminary injunction nor did she see that she currently, with the preliminary injunction being on appeal before the Federal Circuit, has jurisdiction to make such a decision even if she thought that it would be the right one.

Samsung knew all along that the question of current jurisdiction would be a huge issue -- in fact, Samsung itself delayed entry of this preliminary injunction earlier this year on the basis of the same argument -- and asked, in the alternative, for an indicative ruling that Judge Koh would dissolve the injunction if the Federal Circuit restores her jurisdiction by remanding the case to her for this purpose. I believe that this would have been Samsung's "realistic best case" scenario, but it didn't happen either: Judge Koh is not prepared to issue such a ruling simply because she doesn't know when the remand will happen. If it happens at a time when the district court is close to ruling on Apple's Rule 50 ("overrule-the-jury") motion and the related motion for a permanent injunction (these motions will be filed on Friday), the court might well decide that letting the preliminary injunction stay in force for some more time (maybe just another few days, or weeks, or a little over a month) is reasonable. But if the remand happens quickly, Judge Koh believes that "any market disruption caused by dissolution [of the preliminary injunction] would be insignificant compared to Samsung's interest in restoring its product to market". In this context, she notes that "[e]ven if Apple ultimately prevails on its post-trial motions, any permanent injunction would be prospective and not retroactive", which means that a permanent injunction at the end of the process could still enter at that time (after Apple has prevailed on its Rule 50 motion), but a decision to be made on the existing preliminary injunction must be based on whether or not it's equitable to have that one in place before Apple succeeds under Rule 50. In other words, should Apple win a permanent injunction after the December 6 hearing, that outcome wouldn't retroactively justify a ban that was wrongful during the months before.

This means this injunction could become an on-again, off-again thing: granted in June, possibly dissolved in September/October and, potentially, reinstated in or after December.

Footnote 2 of the order is helpful to Apple: "The Court is not in any way commenting on the merits of any of the parties' post-trial motions." Indeed, Judge Koh's whole order is written in a way that steers clear of any assessment of Apple's chances of getting the jury overruled on the D'889 infringement count (and, conversely, of Samsung's chances of defending that part of the jury verdict).

In a formal sense, by merely saying in her indicative ruling that the jury verdict has raised a "substantial issue", Judge Koh only indicated an undeniable fact. A preliminary injunction requires a likelihood of success on the merits -- but a jury verdict can only be overturned if no reasonable jury could have made such a finding, which is a high hurdle. Consequently, no reasonable person can deny that there is a substantial issue here: Apple may or may not surmount the Rule 50 hurdle, but a challenge it is.

There is a "may" in Judge Koh's order that is not easy to interpret, but I'll try. On the one hand, after noting that the jury has found against the merits of the injunction, she says that "the sole basis for the June 26 Preliminary Injunction no longer exists" and that "[b]ased on these facts alone, the Court at this time would dissolve the June 26 Preliminary Injunction if the Court had jurisdiction" (emphasis mine). On the other hand, after conceding that Apple's Rule 50 motion could succeed (any motion can) and, as a result, make a permanent injunction a possibility, Judge Koh notes that "whether the Court would dissolve the June 26 Preliminary Injunction may depend on the timing of when the Federal Circuit issues the mandate restoring jurisdiction to this Court" (emphasis mine). So the first sentence appears to say: "send the thing back to me now and I'll dissolve for sure". The other sentence says: "send the thing back to me and I may or may not dissolve it". So the question is whether an immediate remand would be 100% certain to result in a dissolution, or whether the word "may" in the other sentence creates uncertainty about what the decision would be in the event of an immediate remand. Unfortunately for Samsung, the latter is the case.

In between the "would" and the "may" sentences, there is a reference to the possibility of Apple succeeding with its Rule 50 motion -- and the "would" sentence was "based on these facts alone", which facts did not include this possibility. So the uncertainty reflected by "may" is of a very general nature: no matter how quickly the remand happens, the court will have to reassess the likelihood of success on the merits. The jury verdict is a fairly strong indication of the absence of a likelihood of success on the merits -- but if the court believes that Apple is likely to get the verdict overturned, the preliminary injunction can stay in force. The sooner the remand occurs, the greater the harm to Samsung between that point in time and the potential entry of a permanent injunction, and the higher the hurdle for Apple to convince the court that it's so likely to get the jury verdict overturned that this harm is acceptable in light of Apple's chance to succeed. Still, Apple may be able to keep the preliminary injunction alive without interruption.

Samsung will most likely push for a quick remand because it only stands to gain. But if Judge Koh sides with Apple even after a quick remand, then she will really be convinced of the merits of the relevant part of Apple's Rule 50 motion. The court should have simplified this process. It would have been the most pragmatic choice to put the tablet design patent part of Apple's Rule 50 motion on a separate and tighter schedule, and decide on the preliminary injunction question on the basis of the outcome of that narrow Rule 50 process (while taking more time for the other Rule 50 issues). At a purely intellectual level, it is of course possible for the court to assess likelihoods as opposed to deciding first things first. But it's going to complicate the analysis -- the hurdle for Apple will be to prove a sufficient (but at least 50%+X) likelihood of success of being able to prove that no reasonable could have found that the D'889 patent is not infringed, and that likelihood would then have to be weighed against the harm to Samsung. And the court's chosen path comes with a significant risk of an on-again, off-again sales ban, which might be justified but would really be odd.

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