Friday, December 21, 2012

Apple gives notice of appeal of order denying injunction: decisive hearing in a few months?

On early Thursday afternoon local time, Apple gave notice of appeal of Judge Koh's order entered at the beginning of the week and denying Apple's motion for a permanent injunction against Samsung. There was no doubt that Apple would appeal. There was also no doubt that it would do so as quickly as possible in order to keep up the pressure on Samsung to take a royalty-bearing license with an anti-cloning provision.

The notice itself is just a notice, and the substantive issues here will only be addressed in an opening brief. We're still a few months away from that one, and under normal timelines probably about a year from a decision by the United States Court of Appeals for the Federal Circuit on this new appeal. While preliminary injunction requests are adjudged rather quickly, this here is an appeal from a final ruling on a permanent injunction.

But if we change the perspective and think about this not just in terms of case numbers (11-cv-01846 being the number of first Apple v. Samsung case in the Northern District of California and 12-cv-00630 being the number of the second one) but in terms of substance, then the most important hearing, which is the rehearing that Apple may get on the standard for injunctive relief (in connection with the Galaxy Nexus preliminary injunction), could already take place in a very few months. And if it does take place and if the full bench of the Federal Circuit modifies that ruling, then Judge Koh's denial of injunctive relief would suddenly be based in no small part -- and in some very crucial areas -- on an obsolete and overly strict "causal nexus" requirement (hard evidence that irreparable harm is caused by the infringement of specific patent claims as opposed to infringing products). I don't mean to say that the ruling is a house of cards, but Judge Koh applied the "causal nexus" part of the Galaxy Nexus appeals ruling extremely strictly and very much to Apple's disadvantage, so if that basis is modified, the entire house on top of it may have to be rebuilt as well.

So what could happen procedurally in this scenario of a standard that would make an injunction more available to Apple than the original (pre-rehearing) Galaxy Nexus ruling? It would probably be an unprecedented situation that you have two injunction cases, involving the same two parties and therefore partly the same business issues (product categories, competitive dynamics etc.), pending at the Federal Circuit at the same time, with one case being possibly reheard by the full court and another case just starting now after Apple's Thursday notice. This is rare because in most cases there would be some consolidation of two appeals, or one would be finished before the next one starts. Rehearings en banc are also very rare: in most of the recent years, the Federal Circuit granted only one. So the combination of two somewhat-overlapping appeals and a rehearing en banc is a very special situation, and the law, including procedural law, usually finds a way to adjust to new circumstances while complying with existing rules and general principles.

Theoretically, the Federal Circuit could accelerate the new appeal if a rehearing of the Nexus appeal works out in Apple's favor. But this is a fairly high-level court and an extremely busy one. So this is less likely. What I could imagine, however, is that Apple finds a way to have Judge Koh reconsider her denial after a fundamental change of the applicable case law on injunctive relief. She can't reconsider a case over which she doesn't have jurisdiction while it's before the appeals court, but there's a procedural option for this: a limited remand of the case for the purpose of reconsideration. Samsung also got a limited remand to have the Galaxy Tab 10.1 injunction dissolved (yes, there have already been three Apple-Samsung injunction appeals: Galaxy Tab 10.1 preliminary injunction, Galaxy Nexus preliminary injunction, and now the permanent injunction multi-product case that went to trial in the summer). Apple has experts who know far more about civil procedure than I do, and they can figure out a way, but generally speaking, if Judge Koh's denial loses its legal basis due to a rehearing and modified decision in the closely-related Galaxy Nexus case, Apple is not going to sit around for another six or nine months or whatever until the appeal of the permanent injunction case is resolved on a regular schedule. It will at least try to speed things up, and that's what I wanted to highlight.

This is not speculative: there can be no doubt that Apple will try something if it wins a modified Galaxy Nexus decision with respect to the "causal nexus" requirement. And it's a fact that Apple, also on Thursday, wrote a letter to the Federal Circuit, showing Judge Koh's ruling and claiming that it confirms the need for a rehearing en banc.

I'm not saying that Apple will get a new shot at a U.S. permanent injunction against Samsung in a few months, but I did want to point out that things could work out more quickly than usually because of the unusual circumstance that a denial of an injunction is based on a ruling that appeared final but now suddenly appears to be, at least potentially, in flux, given that a rehearing en banc is now far more likely (or: far less unlikely) than it normally is.

Obviously, there are also ways in which Samsung's position could be strengthened with respect to particular intellectual property rights. For example, Apple's patents-in-suit might face ever bigger validity problems in the meantime. Samsung could also prevail on some of its Rule 50 (overrule-the-jury) requests and have one or more liability findings overturned. But all of this is about one patent (or trade dress) at a time, while Apple has the opportunity to achieve a fundamental breakthrough by lowering the standard for injunctive relief as compared to the Galaxy Nexus ruling (which doesn't necessarily mean a low standard, just not the unbelievably high one as it currently stands).

Now that I've talked about possible paths and permutations that others haven't even started to address, let me remind you of something closely related on which I reported in late August (without much pick-up elsewhere): Apple and Samsung still have some "back-burner" patents-in-suit: patents that were dropped before the summer trial but with the right to reassert them later. The injunctive-relief question is very key to what may or may not happen to them. Apple at some point voiced the idea of reasserting some or all of those patents only for the purpose of winning injunctions. They were prepared to forego damages in order to avoid the need for another jury trial (and because the first trial already resulted in fairly high damages on certain products, so high that at some point Apple will hardly be able to increase that amount to any significant degree). As long as the current framework stands, with the "causal nexus" requirement in its current form and applied extremely strictly by Judge Koh, there's also no point in seeking injunctions: even if Apple prevailed on some liability counts, it would be told that Samsung is allowed to continue to infringe (except that Samsung would always have to pay ongoing royalties for post-judgment use for valid rights it is found to infringe, and such per-unit running royalties could also be strategically useful to Apple). At some point something will have to happen with those back-burner patents, or if we still don't see Apple reassert them in 2013, then it will be likely that Apple decided to focus on the patents it's asserting in the second California litigation, which is scheduled to go to trial in March 2014. I'm sure that the availability of injunctive relief (or at least Apple's expectations as to what the availability will be in the near term, after the next related decision by the Federal Circuit) is going to play a key role in Apple's decision-making on the back-burner patents.

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