Thursday, January 17, 2013

Apple asks full U.S. appeals court for exceptional attention to Samsung injunction case

On Wednesday afternoon local time Apple filed a petition asking the United States Court of Appeals for the Federal Circuit, which hears all appeals of U.S. patent infringement cases, for an "initial hearing en banc" on Judge Koh's recent denial of a permanent injunction against Samsung. The petition also suggests that such a full-bench hearing could address this case as well as the Galaxy Nexus preliminary injunction case, in which the court appears to be contemplating a full-bench rehearing.

I have previously stressed, more than once in fact, the enormous strategic importance of the legal issue presented here, which is whether a patent holder who has prevailed on the merits at a trial or is deemed likely to prevail at trial has to prove a causal nexus between the identified infringement and the alleged irreparable harm, i.e., make a showing that a particular patented feature drives consumer demand even for multi-feature, multi-purpose products such as smartphones and tablet computers. There's an objective and a subjective dimension here. There are certainly people who generally don't like patent injunctions (or, even more generally, patents), and they will beg to disagree with Apple's recent representation (to the same appeals court) that "the costs to innovation will be profound" if injunctions become practically unavailable in this industry. But no matter on which side one comes down at the policy level, no reasonable person (unless you're Samsung and legitimately want to avoid injunctive relief) can deny the outstanding importance of the question, and the need for clarity. Samsung's opposition to a rehearing on the Galaxy Nexus case made some valid points concerning the merits of that particular appeal but didn't change my conviction that this should be the most important question of patent law for the Federal Circuit to address in a long time as far as the information and communication technology industry is concerned.

Apple's proposal makes a lot of procedural sense (again, as long as you're not Samsung and just want to preserve the status quo in that particular dispute). As I said after Apple gave notice of appeal of the denial of a permanent injunction in the case that was tried in the summer, 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 [the Galaxy Nexus one] being possibly reheard by the full court and another case [the permanent injunction case] just starting now". If a rehearing on the Galaxy Nexus case was held and the original October 2012 opinion modified with respect to the causal nexus requirement (there's also a claim construction issue, but that one is irrelevant to the permanent injunction case), this would have major implications for the more important case.

Apple's petition stresses the relevance of all of this but is very respectful, knowing that the appeals court usually assigns a case to only one panel and grants full-bench reviews of panel decisions in only one or two cases a year, and an initial full-bench hearing is even more extraordinary. Apple told the court that it "is prepared to meet whatever briefing schedule the Court directs in both this case and [the Galaxy Nexus case]". It's clear that Apple's priority is to have the full appeals court look at the causal nexus issue, and the Galaxy Nexus as a product is a very low priority (or next to no priority) by now. A combined full-bench hearing on both cases would have advantages for everyone but Samsung:

  • The appeals court could provide a maximum degree of clarity concerning whether the standard for a permanent injunction (where the merits have been adjudged) and the standard for a preliminary injunction (where the court has to assess the likelihood of different outcomes) should differ with respect to the causal nexus requirement. Apple is particularly interested in what the standard should be in the event of "a direct competitor's deliberate and successful copying of the patentee’s innovative designs and features for use in competing products". Two consecutive decisions could ultimately also do the job, but a single ruling can make any differences between the standards perfectly clear from the beginning, while there would again be some lack of clarity between two successive rulings.

  • If the appeals court agrees with Apple that the causal nexus question is important enough to warrant the attention of all of its judges (which some experts doubt but which I think is quite realistic), it may consider it more efficient to address both cases at the same time, and to do so on a schedule that would give everyone more time to prepare than the accelerated schedule for a preliminary injunction case.

All the uncertainty surrounding the causal nexus requirement is having effects on other U.S. patent cases and is bound to result in a number of inconsistent decisions, by district courts as well as by Federal Circuit panels, until the full appeals court clarifies the issue. Apple's petition mentions that two months after the Galaxy Nexus decision, another Federal Circuit panel issued a more injunction-friendly ruling in a different IT patent case (Presidio Components, Inc. v. American Technical Ceramics Corp.) without the exacting causal nexus requirement. I've also heard of a case in which Brocade won an injunction and in which the causal nexus requirement did not play a role because a judge (Magistrate Judge Grewal, who is assisting Judge Koh on Apple v. Samsung) thinks it's still very much in flux. But there are many other patent cases pending and in some there will now be denials of injunctive relief on that basis.

Finally, I'd like to quote a passage from Apple's petition that I think explains particularly well the implications of the causal nexus requirement in the current situation:

"The district court's application of the causal nexus requirement in this case makes it all but impossible to obtain a permanent injunction in a case involving complex patented products or designs, even where, as here, the plaintiff has proven extensive, willful infringement by a competitor across numerous products and patents. Although individual features in complex products may be generally important, they will almost never drive consumer demand by themselves, at least not provably. Consumers buy complex technological products for a whole host of reasons, often with no one reason determining the customer's decision. Many patented features may contribute in a significant way to customer demand even though no one is a reason, by itself, why a customer makes the final purchase."

The above paragraph is factually accurate. Apple then goes on to propose its preferred way forward, and that's where different people will have different positions, and different companies will have different interests.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: