Thursday, October 18, 2012

Non-infringement finding and publicity order over Samsung Galaxy Tab upheld by UK appeals court

Earlier today there were various media reports on a UK appeals court decision in Samsung's favor against Apple with respect to the non-infringement of a Community design (EU equivalent of U.S. design patent) by the Korean electronics giant's tablet computers. Rather than commenting immediately I took my time to read and analyze the full decision by the England and Wales Court of Appeal.

In July, Judge Colin Birss of the High Court of England and Wales granted Samsung the requested declaration of non-infringement and ordered Apple to publicize its defeat. The non-infringement finding was upheld, and the publicity order was upheld in a modified form.

The declaration of non-infringement would have been overturned only if the appeals court had found that Judge Birss "erred in principle", which apparently corresponds to the "clear error" standard of review in the United States. The legal test for Community design infringement is whether a product produces "on the informed user a different overall impression" (taking into consideration "the degree of freedom of the designer in developing his design"), which is so subjective that a high degree of deference is afforded to the court of first instance.

In upholding Judge Birss' finding of non-infringement, Sir Robin Jacob stresses differences between Apple's 2004 design registration and the iPad (a gadget he owns, as he notes in hits order). In fact, the decision does not address (because it doesn't have to) whether the iPad itself would fall within the scope of that registration. In my interpretation of the ruling, it actually wouldn't. If Apple asserts a Community design, what matters is the document, not a subsequently-released product that is different in some respects. In Germany, Apple also brought an unfair competition claim, which is based on similarities between actual products -- but that was not the case in the UK.

The size and location of the Samsung logo also plays a role (though not a major one) in the UK reasoning, not because the logo would help avoid consumer confusion just because of the brand per se but because it is ornamental. I have a different perspective on this. I think it's clear that a registered design generally does not show a logo, but it's nevertheless obvious that companies wouldn't build devices of this kind without one.

Some of the reasoning behind the non-infringement ruling addresses a decision made by a German appeals court, the Düsseldorf Higher Regional Court, later that month (July), on the Galaxy Tab 7.7. The Düsseldorf court disagreed with Judge Birss. Sir Robin Jacob now defends his countryman and disagrees with his German counterparts.

Without a doubt, the London and Düsseldorf rulings in July contradicted each other, not only because of different findings concerning the same issues but because of geographic overlap. The Düsseldorf appellate decision enjoined Samsung from selling the Galaxy Tab 7.7 anywhere in the EU outside of Germany (the Düsseldorf Regional Court had already banned the product in Germany, but Apple appealed the cross-border part). This already included the UK, but, still worse, the UK declaratory judgment had EU-wide scope. So the question was how to resolve this contradiction.

Note that a Community design is an EU-wide intellectual property right, while patents granted by the European Patent Office are not subject to EU law except in some limited respects and areas.

Sir Robin Jacob makes an important point: the Düsseldorf rulings were related to a preliminary injunction request, while the UK declaration was a final ruling. Just like the Düsseldorf court is the forum that Germany designated as its national court authorized to make EU-wide Community design decisions, the London-based High Court is the UK's designated court for this purpose. But if one such court makes a final decision after a full-blown main proceeding with a trial, it should render any preliminary injunctions obsolete.

While it's unusual for UK officials to promote the idea of European unification, Sir Robin Jacob notes that "[i]f courts around Europe simply say they do not agree with each other and give inconsistent decisions, Europe will be the poorer", effectively accusing his German colleagues of being bad Europeans. If this represented nothing more than a professional disagreement between appellate judges, or maybe (I'm not taking a firm position here) even some kind of power struggle between the courts of two different EU member states, it would be an interesting debate to follow. But what Sir Robin Jacob and his two concurring colleagues decided to do was to punish Apple for its conduct. And I'm not sure that this is fair and appropriate.

The UK judges didn't like the fact that Apple still pursued its preliminary injunction appeal in Germany, which resulted in a late-July ruling that contradicted Judge Birss's earlier UK decision. This was outcome-determinative in the second part of today's appellate ruling, which obligates Apple to publicize the non-infringement finding in Samsung's favor. The legal test Sir Robin Jacob applied is whether there is a "real need to dispel commercial uncertainty". He believes Apple created such uncertainty because reports of the Düsseldorf ruling might have made Samsung customers in the UK wonder whether the Galaxy Tab was illegal on an EU-wide basis.

Apple actually ceased the enforcement of the German cross-border injunction during the course of the UK proceedings to address this concern. Nevertheless, the UK appeals court felt that a publicity order was necessary.

Again, Sir Robin Jacob is right that a final ruling should supersede preliminary injunctions. But Apple's pursuit of a preliminary injunction appeal in Germany was not a bad-faith action in my view. The German court had the right to disagree with Judge Birss if it considered his decision clearly erroneous. I believe Apple had every right to find out whether the German appeals court would arrive at that conclusion. It was acting in good faith, trying to defend its rights. Frivolous litigation and other misconduct should result in sanctions of some kind, possibly even drastic sanctions, but a legitimate defense of legal interests is an inherent part of the rule of law, including in multijurisdictional disputes. In my opinion, today's UK ruling disregards the legitimacy of Apple's course of action in a high-handed manner. The UK court can punish Apple but doesn't have the authority to punish its German equivalent. Still, Apple didn't commit any wrongdoing here in my view. The publicity order also appears disproportionate to me because Apple voluntarily ceased its enforcement of the German cross-border preliminary injunction.

Apple is still going to vigorously enforce its rights regardless of this order. But others may be discouraged by today's ruling from defending their rights in legitimate ways in multi-jurisdictional litigation in Europe if part of it takes place in the UK.

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