Monday, December 22, 2014

Samsung argues Apple still can't tie patented features to lost sales, latest bid for ban should fail

On Wednesday, Samsung responded to Apple's opening brief (shown in this October 2014 post) in its appeal of Judge Koh's August 2014 denial of a permanent injunction based on the spring 2014 trial in the second California litigation between these parties. The public version of Samsung's brief became available late on Friday (this post continues below the document):

14-12-17 Samsung Brief (Reponse to Apple Appeal of Injunction Denial) by Florian Mueller

As usual in the dispute between these parties, it's a very persuasively-written document. Apple argued in its opening brief that it should, at long last, get a permanent injunction because it believes is evidence of a causal nexus between the infringements identified (Samsung notes that it's appealing the merits in parallel) and the alleged irreparable harm is better and because it's now seeking a more feature-specific kind of injunction than before. Now Samsung is saying that Apple's causal-nexus evidence is still too weak and the distinction between a "product" injunction and a "feature" injunction is "mere semantics, since an injunction targeting 'features' in complex, technological 'products' would equally force the 'products' with those features 'off the market'" and, in Samsung's opinion, just as much as any other injunction "threatens to unfairly sow fear, uncertainty, and doubt about the product in the marketplace; to hinder competition; and to grant overprotection to patents."

It's an interesting debate to follow. Of the four ways in which legal blogging can give value to readers (identifying otherwise-overlooked facts, digesting/summarizing, putting into context, commentary), I'll focus on the latter two because, without context, this is all very confusing. As Samsung's brief mentions, this is already the fourth time for the Federal Circuit to look into an injunction question involving the Apple-Samsung dispute. All previous decisions were basically saying "yes, a patent holder can obtain an injunction in principle, but these are the requirements." It's obvious that Apple can find a number of "yes, you can" passages in those prior rulings (and from decisions in cases involving different parties) while Samsung can find (even more) "however, provided that" type of statements.

It's difficult to predict the outcome because what one party argues to be a fundamentally stronger case for an injunction can often be described by the other party as merely a gradual (at best) or cosmetic (at worst) improvement. In the past I tended to be too optimistic for Apple. In the first half of this year, a failure by Apple to win an injunction was the only major smartphone IP decision on which this blog made the wrong call (while it got five other key decisions right). I now tend to come down on the skeptical side, and that's to some extent also (though not only) because this second California Apple v. Samsung case was already fairly advanced when the more recent decisions relating to injunctive relief came down, so I believe Apple may not have been able to present its strongest case simply because some procedural doors had closed when everyone was wiser after some other event.

Assuming for the sake of the argument that my skepticism is wrong, inhowfar would it matter if Apple obtained some kind of an injunction this time around? I can see a couple of tangible benefits to Apple. More than anything else, this would show to the industry at large that Apple finally figured out how to obtain sales bans over individual, arguably minor features of highly complex and multifunctional products. That would serve as a deterrent going forward, not with respect to patents that have been asserted before and have turned out to be of a rather narrow valid scape, but possibly with respect to future patents. And, generally speaking, it would make Apple look and feel better. But none of that means that this would hurt Samsung's business: with the particular patent claims-in-suit here, Samsung would have a strong workaround case for every one of them (the clearest one is slide-to-unlock since Apple didn't even accuse all of the products at issue in this year's trial of infringing that one).

I know it sounds cynical but chances are that, apart from the aforementioned benefits to Apple, this would merely be an opportunity for lawyers to have arguments about workarounds in light of the "no more than colorably different" standard. These two companies kept many smartphone patent litigators around the world very busy for a few years. The days of the Smartphone Patent Litigators Full Employment Act are over, but if Apple got an injunction, we might see some wrangling in the form of contempt motions and hearings over, for example, the '647 "quick links" patent. There would be some more clarity about the limits of that patent but Apple could try to relitigate the claim construction that Judge Posner adopted and the Federal Circuit previously affirmed. That is so because after the Federal Circuit ruling, no formal mandate was issued before Apple and Google entered into a second-class settlement. It would obviously be an uphill battle to try this, and I'm not even sure they would try, but that's the kind of thing that could happen if Apple won an injunction. Samsung would have to handle it, and it would be able to handle it, I'm sure.

It's really time for them to settle the U.S. part of their dispute as well (everything outside the U.S. already ended this summer), as I wrote in my previous post. But as long as they don't, the question of injunctive relief is probably Apple's highest priority--not because the devalued and defanged "quick links" patent could deal a major blow to Samsung but because Apple wants the world to see that it knows how to enforce its patents against rival smartphones and tablet computers.

It may be helpful now to do a quick recap of Apple's previous attempts to obtain injunctions (not talking about ITC import bans here) against Samsung in the U.S.:

  1. In 2011, Judge Koh originally denied Apple a preliminary injunction over three design patents and the rubberbanding software patent. Apple's motion failed for a combination of liability and equitable (access to injunctive relief) issues.

    Apple appealed, and in May 2012, the Federal Circuit reversed Judge Koh's decision only with respect to a tablet-related design patent. The remand was more of a formality (Judge O'Malley did not even deem it necessary, but the other two judges on the panel did want to leave it to Judge Koh to reevaluate the question). Apple finally obtained a "preliminary" injunction, at a time when the product has pretty much reached the end of its lifecycle. And that one had to be lifted after the 2012 jury did not hold that design patent infringed.

  2. In the early summer of 2012, Apple won a short-lived preliminary injunction against the Galaxy Nexus smartphone over a unified search-related patent (this was already part of the second California case). Shortly after it entered into force, that preliminary injunction was stayed pending the appeal. It never became enforceable again because the Federal Circuit held that Apple was not entitled to an injunction over this patent for equitable reasons (no Nexus injunction for lack of a causal nexus between infringement and alleged irreparable harm). Also, the appeals court expressed serious doubt about the underlying merits. This combination was a worst-case scenario for Apple, and the "causal nexus" part of that ruling generally upped the ante for Apple's further pursuit of injunctive relief against Samsung.

  3. Meanwhile the first California Apple v. Samsung case had gone to trial and Apple was able for the first time in this litigation to seek a permanent injunction. But Judge Koh said no. While Apple had several liability findings from the jury trial in its favor, Judge Koh applied the "causal nexus" standard the way she understood it from the Nexus preliminary injunction ruling, and the result was that Apple didn't get its sales ban. Apple appealed, and in late 2013 the Federal Circuit upheld the denial of an injunction over certain design patents but with a view to three software patents found that Judge Koh had not given enough consideration to a piece of evidence (a so-called conjoint survey). But the appeals court did not direct Judge Koh to enter an injunction. She just had to look at that piece of evidence again, but she ultimately wasn't impressed and denied Apple's renewed motion for a permanent injunction.

    Apple's initial reaction was that it wanted to fight and give it a third try. But it probably realized that none of the three software patents was likely to give it much leverage (if any). And litigation fatigue set in after this year's trial didn't go too well for Apple (it got only about 6% of the damages award it demanded). So in late July 2014, Apple dropped its cross-appeal (Samsung had meanwhile, after a partial retrial, been able to appeal the underlying merits; the related hearing took place last week).

Everyone's wiser after the event. If Apple had known all of the above decisions (the reasons more so than the outcome) at the outset of the Samsung litigation, it might have been able to present theories that would have been more likely to succeed than the ones it used based on the knowledge it had at the time it had to make its choices. But I don't think this is Apple's biggest problem here. The biggest problem is that those devices are multifunctional and Samsung's products are substantially lawful. In this industry, no one can build a complex, highly multifunctional product without being held to infringe a third-party patent from time to time. That's everyone's problem, not just Apple's, and especially not just Samsung's. In light of this reality, courts are hesitant to give too much leverage to patent holders unless they can really prove that something is a reasonably significant driver of demand. With "quick links" and stuff like that, and with claims that can be worked around (Apple itself doesn't even implement all of them), a causal nexus probably couldn't be established even if Apple could go back in time, use today's knowledge and develop and present its evidence accordingly.

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