Is The U.S Apple vs. Samsung Biggest Patent War About To Come To An End? Apple Finally Has A Good Chance To Get A Permanent Injunction.

The legal battle between the world’s two largest phone manufacturers Apple and Samsung isn't over, and the fighting in courtrooms is getting more intense than ever! Get ready for a new Apple vs. Samsung event on August 9th, 2013. 

Last year, on August 24, 2012, one of the most watched trials ever in the tech world and, probably, one of the most exciting Intellectual Property case took place in California: Apple Inc. v. Samsung Electronics Co. Ltd. et al, Case No. C 11-1846 LHK. As you all remember, Samsung has been found guilty of infringing on several patents (design and utility) and trade dress owned by Apple. All in all, the jury found 28 products to infringe some of Apple's intellectual property rights (IPR) (http://www.fosspatents.com/2012/08/apple-to-request-preliminary-injunction.html). In other words, a verdict largely favorable to Apple.

As a reminder, the total of the jury's damages award was $1,049,393,540. Here is a detailed list of the products and multiple IPR that allowed Samsung to capture part of Apple's market share by implementing the very features that attracted consumers to Apple's products (in smaller characters because you will not read it anyway), via idownloadblog:

• 'Samsung products that were found to violate Apple’s ’301 patent (the bounce-back or rubber-band scrolling patent) – Galaxy Tab Wi-Fi, Continuum, Droid Charge, Exhibit 4G, Galaxy Ace, Prevail, S, 4G, S II, Galaxy Tab, The Gem Indulge, Infuse 4G, Mesmerie, Nexus S 4G, Replenish and Vibrant. 

• Samsung products that were found to violate Apple’s ’915 patent (or pinch to zoom) – Captivate, Continuum, Droid Charge, Fascinate, Galaxy Prevail, Galaxy S 4G, Galaxy S II, i9100, Galaxy S 2 T Mobile, Tab, Tab 10.1, Gem, Indulge, Infuse, Nexus S 4G 

• Samsung products found to violate Apple’s ’163 patent (tap to zoom) – Droid Charge, Epic 4G, Exhibit 4G, Fascinate, Ace, Prevail, Galaxy X, Galaxy S 4G, S II AT&T, i9100, S II T-Mobile, Galaxy Tab, Tab 10.1, Infuse 4G, Mesmerize, and Replenish 

• Samsung products that infringed on Apple’s on ’677 design patent – Fascinate, Galaxy S, S 4G, S 2 ATT, S2 i9100, S2 Tmobile, S 2 Epic 4G touch, Skyrocket, Showcase, Infuse 4G, Mesmerize, and Vibrant  

• Samsung products that infringed on Apple’s ’087 design patent – S i9000, S 4G, and Vibrant. 

• Samsung products found infringing on Apple’s ’305 design patent – Captivate, Continuum, Droid Charge, Epic 4G, Fascinate, Galaxy S i9000, S 4G, Showcase, Gem, Indulge, Infuse 4G, Mesmerize, and Vibrant 

• Was Samsung willful in its infringement? – Yes for all patents but design patent ’087, and ’889. 

• None of Apple’s patents were proven invalid by Samsung. 

• No across the board on whether Apple infringed on any of Samsung’s patents, although it also didn’t prove any of Samsung’s patents invalid'.

A couple of months later, Apple expectedly sought a permanent U.S. sales ban (a permanent injunction [1] to block Samsung smartphones) over the patents the jury had found infringed. Apple obviously wanted to protect the intellectual property rights the district court found their competitor to infringe. However, Judge Lucy Koh, the federal judge presiding over the Apple v. Samsung litigation in the Northern District of California, denied the injunction. She found no causal link to justify an injunction, and 'added that it would not be in the public’s best interest if they were deprived the right to buy Samsung products, when only a few features were at issue' (more info).

Here’s an excerpt from the order:

'In sum, to the limited extent that Apple has been able to show that any of its harms were caused by Samsung’s illegal conduct (in this case, only trade dress dilution), Apple has not established that the equities support an injunction. Accordingly, Apple’s motion for a permanent injunction is DENIED'[2].

Of course, Apple Inc. appealed. The United States Court of Appeals for the Federal Circuit has given a notice of a scheduling decision on August 9th, 2013 (very soon!!!). As clearly explained by the IP expert Florian Mueller, "the key issue remaining in Judge Koh's now is about damages, but not about past damages. It's about future damages ("post-judgment royalties") (...). The court won't stop the infringement, but the infringement, if any still occurs going forward, must be compensated" (more info).  

Samsung argued that the sales ban sought by Apple "would not stop any ongoing infringement, for Samsung has either discontinued the accused products or design around any infringing features in the ones it still sells"[3]. Moreover, "the only effect of an injunction would be confused and intimidate Samsung's carriers and retailers with respect to non-accused products never adjudicated in this case, harming Samsung's longstanding market relationships". Yeah, right! That's easy to say...

The key legal questions of transcendental importance can be summarized as follows (via FOSS Patents):

1. Have the Federal Circuit's rulings on the preliminary injunctions against the Galaxy Tab ("Apple I") and the Galaxy Nexus ("Apple II") and/or Judge Koh's application of the "causal nexus" requirement they established set an insurmountably high bar for patentees to ever obtain injunctive relief against multifunctional products such as smartphones and tablet computers, demand for which is driven by numerous features rather than a particular one? If so, is this state of affairs desirable or does it require correction?

2. What implications should a fiercely competitive situation between two parties (in this case, a "two-horse race" in the marketplace) have for the injunctive-relief analysis and the related burden of proof? In other words, should there be a reasonably strong presumption of irreparable harm -- and of patent enforcement being in the public interest -- if infringements are identified in a dispute between two direct competitors, considering that a legitimate innovator shouldn't have to compete with its own patented features (in the form of a compulsory license on court-determined terms as opposed to a voluntary license agreement), or should there still be a strong presumption that monetary relief is adequate comparable to non-practicing entity (NPE) cases?

3. Does the fact that an infringer has worked (designed) around a given patent weigh in favor of grant (given that the availability of workarounds suggests no or limited harm to the infringer) or denial (considering that designarounds may call into question the strategic significance of a feature) of an injunction?

4. Can license agreements involving the patents-in-suit (in this case, with IBM, Nokia and HTC) be a reasonably strong indicator of the adequacy of monetary compensation if they either don't involve comparable devices (IBM) or come with significant limitations and restrictions (Nokia and HTC) that represent a fundamental difference between what an infringer is allowed to do (and for how long etc.) after issuance of an injunction and what a licensee is allowed to do within the scope of an agreement that, such as in the Apple-HTC case, comes with an "anti-cloning provision"? In other words, would it be sufficient for a patent holder to make a showing that the competitive/strategic effect of a given license agreement is markedly different from the effect of a compulsory license resulting from the denial of injunctive relief?

5. The District Court committed legal error in refusing to enjoin Samsun's trade dress dilution[4]. An injunction "will not harm Samsung, which claims to have ceased manufacturing its diluting phones, but will indisputably provide Apple with crucial security against the prospect of Samsung diluting Apple's trade dress design again"[5]. In addition, the FTDA states that following a dilution finding “the owner of a famous mark (such as Apple) ... shall be entitled to an injunction … regardless of the presence or absence … of actual economic injury.” 15 U.S.C. § 1125(c) (emphasis added). Moreover, the statute specifically provides that the plaintiff is entitled to an injunction “at any time” after its mark has been diluted, suggesting that the dilution need not be ongoing"[6].

The situation is pretty strange... Since August 2012, when a jury found multiple intellectual property rights infringements by Samsung, Apple still didn't win an injunction over a single patent. But "it's become virtually impossible to obtain injunction relief in cases of that kind, especially due to the "causal nexus" hurdle" said Florian Mueller. Indeed, it's getting extremely difficult to satisfy the rigid test applied by the district court. It requires specific proof that each patented feature by itself drives demand for the infringing products[7]. 

In Apple's reply brief, the Counsel explained how Apple has satisfied any reasonable causal nexus requirement, as follows:

"Apple offered compelling evidence that the patented features are important drivers of demand, including: (1) consumer surveys by Samsung, Apple, and third  parties concluding that design and ease-of-use are important to consumers; (2)evidence that the patented features are central to the iPhone’s beautiful design and revolutionary user interface, including praise for those features by consumers, industry reviewers, and Samsung; (3) a conjoint analysis showing that consumers would pay a significant premium for the patented features; and (4) evidence that Samsung deliberately copied the patented features. See Apple Br. 5-6, 12-16, 62-66 (citing evidence). That evidence should have sufficed to prove a causal nexus (if one were required). Any greater requirement would encourage competitors to engage in precisely the type of copying that Samsung undertook here (Apple Br.12-16), knowing that they need only pay a royalty and face no risk of injunctive relief as a consequence of their infringement (underline added)."

Based on this last underlined sentence, if no injunction is ordered in this case, it will be hard to see which other smartphone company, or any patent holder, could ever prevail on such a motion. And Apple to add: "even though a successful patent infringement plaintiff can no longer rely on presumptions or other short-cuts to support a request for a permanent injunction, it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude (underline added)". 

          It is supposed to be the most important Apple Inc. v. Samsung Electronics Co. Ltd trial since last summer. Indeed, without an injunction Apple is unlikely to collect the damages. It seems that Apple has a pretty good chance to obtain (this time!) an injunction (and if you recently read what Nobel prize J. Stiglitz had to say about this battle, Apple has even more chances to win). Whether or not it will be granted over all the intellectual property rights at issue, that's another question. If there is not a second hearing in front of the full court ("en banc") as already asked by Apple in the past, this Appeal is going to be very exciting!!

[UPDATE:  On August 9, 2013 the ITC imposed a ban on Samsung products that infringe certain Apple patents, one having to do with finger swiping, and the other with headphone jacks[1]:

• U.S. Patent No. 7,479,949 on a "touch screen device, method, and graphical user interface for determining commands by applying heuristics".
• U.S. Patent No. 7,912,501 on an "audio I/O headset plug and plug detection circuitry"

“The USTR will now have sixty days to decide whether to veto the ITC ban or to let it stand.  There will surely be pressure on the USTR to ensure that there is no hint of unfairness leveled against a foreign company so soon after it acted to protect the sales of a domestic company.  On the other hand, the Apple patents at issue are not considered to be “standards-essential patents”, which the patent owner must offer under license to competitors on “terms that are fair, reasonable, and non-discriminatory (‘FRAND’)”.  If the USTR doesn't consider the Apple patents to be SEPs, it is likely to let the ITC ruling stand”, said the IPKat[2]].

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[1] More info: http://www.fosspatents.com/2013/08/itc-orders-import-ban-against-samsung.html

[2] https://mail.google.com/mail/u/0/#inbox/14077f81472bc3a5

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[1] In legal terms, permanent injunction is a type of injunction which is granted by a court at the end of a lawsuit. A permanent injunction order requires a party to do or refrain from a particular act (http://definitions.uslegal.com/p/permanent-injunction/).

[2] For the full decision, see: http://www.scribd.com/doc/117196813/Apple-Denied-Motion-for-Permanent-Injunction (last visited on July 17, 2013).

[3] http://www.fosspatents.com/2013/05/samsung-to-appeals-court-injunction-for.html

[4] This issue was not listed on FOSS Patents Blog.

[5] See Apple Reply Brief in Appeal of Denial of Permanent Injunction Against Samsung, p. 27: http://www.scribd.com/doc/143028286/13-05-16-Apple-Reply-Brief-in-Appeal-of-Denial-of-Permanent-Injunction-Against-Samsung (last visited on July 17, 2013).

[6] See Apple Reply Brief in Appeal of Denial of Permanent Injunction Against Samsung, p. 29: http://www.scribd.com/doc/143028286/13-05-16-Apple-Reply-Brief-in-Appeal-of-Denial-of-Permanent-Injunction-Against-Samsung (last visited on July 17, 2013).

[7] See Apple Reply Brief in Appeal of Denial of Permanent Injunction Against Samsung, p.17: http://www.scribd.com/doc/143028286/13-05-16-Apple-Reply-Brief-in-Appeal-of-Denial-of-Permanent-Injunction-Against-Samsung (last visited on July 17, 2013).