Saturday, May 24, 2014

Apple seeking U.S. permanent injunction against Samsung based on this month's jury verdict

Surprise. Not. In a follow-up to this month's $119 million jury verdict in the Northern District of California, Apple filed a motion for a U.S. permanent injunction against Samsung late on Friday by local time. With respect to the three patents Samsung has been held to have infringed (one of them by summary judgment and two by the jury), Apple is asking Judge Lucy Koh to order a U.S. sales ban. The proposed injunction order would refer to the products at issue in the recent trial but would relate to any "software or code capable of implementing any Infringing Feature, and/or any feature not more than colorably different therefrom", including software or code found in newer (even future) devices.

Apple's track record with U.S. injunction motions against Samsung does not suggest that an injunction will issue, or that it would be upheld by the appeals court should Judge Koh suddenly lower her standard for injunctive relief. Apple's motion is sealed, but the evidence it presented at trial for the competitive harm it is allegedly suffering from Samsung's infringement has largely the same shortcomings based on which Judge Koh, in March, denied a permanent injunction in the earlier-filed California case. Even if an injunction of some sort ultimately entered into force, Samsung would be able to work around the relevant patent claims and its products would be just as attractive to consumers as before. (In fact, Apple has a U.S. import ban in place against Samsung, over two patents including the "Steve Jobs patent", and it has no commercial effect due to a workaround that the ITC had cleared.)

The key piece of evidence based on which the Federal Circuit gave Apple a second chance to persuade Judge Koh to grant an injunction was a conjoint survey (an attempt to identify what price premiums consumers are willing to pay for particular features in multifunctional products) by Apple's expert witness Dr. Hauser. But Judge Koh found that his study fell far short of proving irreparable harm. She held that the survey "measure[d] the market demand for the patented features in a vacuum, without relation to the actual price or value of the devices"; she found that "numerous features that were not tested--such as battery life, MP3 player functionality, operating system, text messaging options, GPS, and processor speed--are highly important to consumers"; in her view, the study also "appear[ed] to have failed to adequately account for noninfringing alternatives to the patented features"; and additionally, the study was tainted by the fact that the relevant features were overemphasized and consumers received more information about those features than average smartphone buyers have.

I was way too optimistic for Apple's ability to obtain an injunction. Judge Koh's decision to deny an injunction once again, which makes a whole lot of sense to me now (wiser after the event), was the only one of the six most important smartphone IP decisions in the first half of 2014 on which I was wrong. (Well, five out of six ain't bad.)

The same MIT marketing professor did another study, with largely the same methodology, for Apple in connection with this second California case. While Apple argues that he has now established a more direct connection between the relevant features and demand, I don't think Judge Koh can order an injunction this time around without being inconsistent with her decision in the first case. The price premiums Dr. Hauser arrived at this time were so clearly unrealistic -- far more than in the first case -- that Judge Koh is still going to be concerned about "relation to the actual price or value of the devices". It's easy to see that something was wrong with that study when the results were just crazy. While juries don't decide on injunction requests, the fact that the California jury fundamentally disagreed with Dr. Hauser's findings is yet another indication of how unreliable that conjoint survey was. Those were basically consumers who live in Apple's backyard, and they didn't buy the Hauser results.

In my view, the biggest problem with the Hauser conjoint survey is that consumers were asked to respond based on the value of features that the patent claims-in-suit don't actually monopolize. Judge Koh's concern in the first case about a failure to "adequately account for noninfringing alternatives to the patented features" must be an even greater one in the second case. Here, Apple didn't even claim that its own current products implemented the autocomplete patent claim-in-suit. Even Apple didn't accuse newer Samsung products of infringing the slide-to-unlock patent, and the jury cleared certain accused products of infringing that one.

For the '647 "quick links" patent, the procedural situation is a bit complicated. The Federal Circuit affirmed Judge Posner's claim construction. As a result, the patent was defanged and devalued because Judge Posner himself had already explained in 2012 how it can be worked around based on his interpretation. For complex procedural reasons, Apple might somehow try to still have the patent interpreted more broadly, but would hardly succeed if it tried. Ahead of a deadline for filing petitions for rehearing, Apple and Google jointly asked the Federal Circuit to dismiss the Posner cross-appeal under an agreement between them to withdraw all pending lawsuits against each other worldwide. I would have liked to see Google further appeal the "Posner case", not with respect to the '647 patent (on which the panel was unanimous) but some overarching issues. Instead, the Federal Circuit has now granted the motion, dismissed the appeal, and remanded the case to the Northern District of Illinois, where Apple and Google will get the whole case dismissed now. So in a strictly formal sense, neither Judge Posner's claim construction nor its affirmance by the Federal Circuit are precedential. However, it's really hard to see that Judge Koh or the Federal Circuit would arrive at a different claim construction in the future. And Apple itself accepted that construction on May 14 when it moved, jointly with the United States Patent and Trademark Office (USPTO), for a remand of the reexamination of the broadest '647 claims. The motion says that the USPTO and Apple "parties recently conferred and agree that the case should be remanded to the Patent Trial and Appeal Board (Board) for reconsideration of the rejected claims in light of this Court's construction of 'linking actions' in [the 'Posner case']". The remand motion was brought only two days before the Apple-Google motion to dismiss the "Posner appeal".

Before Judge Koh can rule on Apple's injunction request, she will probably have to adjudicate Samsung's motion for judgment as a matter of law (JMOL). Samsung brought that motion late on Friday as well. It's sealed, but it's possible that Samsung is asking the court to overrule the jury with respect to some or all of its liability findings.

Apple has attached to its sealed injunction motion some media reports that quote Samsung's lead trial counsel, John Quinn, such as this CNET article by Shara Tibken and this Mercury News article by Howard Mintz. The selection of articles suggests that Apple wants to get mileage out of the fact that Samsung's lawyer says Apple hasn't really gained any leverage through all of this litigation and hasn't been able to enforce any remedies (neither has any cent of those damages awards been paid so far nor has Apple obtained a permanent injunction). I doubt that Judge Koh, who most likely read those reports anyway, will be impressed by this: it's Apple's problem that its patents aren't strong enough to win, not the court's problem. Apple may have attached those reports mostly for the appeals court to see them, hoping that the Federal Circuit would then be concerned about the absence of forceful remedies.

Apple will also face a reasonably steep challenge at the appeals court, which previously established a fairly high "causal nexus" standard that patent holders must satisfy in order to obtain injunctive relief. Circuit Judge Sharon Prost, who has played a key role in the push for the "causal nexus" requirement, will succeed patent holder-friendly Chief Judge Rader at the end of this month. Her dissent in the "Posner case" was absolutely great. Judge Prost has a much more balanced approach to intellectual property than Judge Rader. Judge Rader's knowledge of patent law is unsurpassed, and he has taken some very good positions on issues such as damages, but I was shocked when he labeled the USPTO's patent trial and appeals boards (PTAB) "death squads" that kill patents: those patents aren't "killed" but simply should never have been granted in the first place. Even as the future chief judge, Judge Prost will have only one vote on a panel, but her opinions and statements will now get far more attention. Again, I recommend strongly to read her dissent in the "Posner case". She's great, but her statutory promotion is not great news for Apple.

Finally, I'd like to mention that a Dutch appeals court upheld an injunction Apple had won against Samsung (originally as a preliminary injunction back in the summer of 2011, which was then turned into a permanent one) in the Netherlands, over a photo gallery-related member of the rubberbanding patent family, EP2059868 on a "portable electronic device for photo management". As I already explained last month, rubberbanding is the only feature (that consumers would really be able to identify and describe as a feature) Apple has been able to require Google and its device maker partners to remove from Android products. The affirmance of the photo gallery rubberbanding injunction is a symbolic victory for Apple that doesn't make any difference whatsoever in the marketplace. In 2011 Samsung was granted a grace period of about six weeks to modify its products so as to steer clear of further infringement, and it has been doing fine ever since. The best news in this for Apple is actually that the patent was not invalidated in the Netherlands. HTC also failed to get it invalidated in the UK (but due to a settlement with Apple, HTC did not pursue this invalidation request on appeal), while the Federal Patent Court of Germany agreed with Samsung and Google's Motorola in September 2013 that the patent was invalid (a decision that Apple has presumably appealed to the Federal Court of Justice).

[Update] On Saturday, Apple made a public redacted version of its injunction motion available:

14-05-24 Public Version of Apple Motion for Permanent Injunction Against Samsung by Florian Mueller


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