Apple v. Samsung (Fed. Cir. 2015)
This portion of the saga focuses on Judge Koh’s refusal to award a permanent injunction against Samsung to prevent that company from continuing to infringe Apple’s slide-to-unlock patents. See U.S. Patent Nos. 5,946,647; 8,046,721; and 8,074,172. Judge Koh reasoned that Apple had not shown that it would suffer irreparable harm without injunctive relief.
In a split decision, the Federal Circuit has rejected the lower court’s holding – vacated and remanded.
Apple was able to show lost sales and other market harms due to Samsung’s competing sales – but the core of the fight is whether those harms are being caused by infringement of the patents in question. I.e., is there a “causal nexus” or proof of “some connection between the patented features and the demand for the infringing products.” The district court’s error here (according to the panel) was that it required apple to prove that the infringing elements were the sole or primary drivers of the infringing sales.
Thus, in a case involving phones with hundreds of thousands of available features, it was legal error for the district court to effectively require Apple to prove that the infringement was the sole cause of the lost downstream sales. The district court should have determined whether the record established that a smartphone feature impacts customers’ purchasing decisions. Though the fact that the infringing features are not the only cause of the lost sales may well lessen the weight of any alleged irreparable harm, it does not eliminate it entirely. . . .
Walking through some of the evidence, the appellate panel found that Samsung’s copying of infringing features was evidence of a causal nexus as was willful infringement. From the consumer viewpoint, the court identified evidence that consumers preferred infringing setup to non-infringing designs. And finally, Apple’s internal evidence showed that it saw the infringing features as critical aspects of the iPhone.
Given the strength of the evidence of copying and Samsung’s professed belief in the importance of the patented features as a driver of sales, and the evidence that carriers or users also valued and preferred phones with these features, the district court erred by disregarding this evidence, which further establishes a causal nexus and Apple’s irreparable harm.
Bringing this together, the court writes:
In short, the record establishes that the features claimed in the ’721, ’647, and ’172 patents were important to product sales and that customers sought these features in the phones they purchased. While this evidence of irreparable harm is not as strong as proof that customers buy the infringing products only because of these particular features, it is still evidence of causal nexus for lost sales and thus irreparable harm. Apple loses sales because Samsung products contain Apple’s patented features. The district court therefore erred as a matter of law when it required Apple to show that the infringing features were the reason why consumers purchased the accused products. Apple does not need to establish that these features are the reason customers bought Samsung phones instead of Apple phones—it is enough that Apple has shown that these features were related to infringement and were important to customers when they were examining their phone choices. On this record, applying the correct legal standard for irreparable harm, Apple has established irreparable harm.
On remand, we can expect Judge Koh to issue an injunction to stop Samsung’s ongoing infringement.
The following are a few key excerpts from the three decisions:
Judge Moore (Opinion of the Court):
The right to exclude competitors from using one’s property rights is important. And the right to maintain exclusivity—a hallmark and crucial guarantee of patent rights deriving from the Constitution itself—is likewise important. “Exclusivity is closely related to the fundamental nature of patents as property rights.” Douglas Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336 (Fed. Cir. 2013),. And the need to protect this exclusivity would certainly be at its highest when the infringer is one’s fiercest competitor. Essentially barring entire industries of patentees—like Apple and other innovators of many-featured products—from taking advantage of these fundamental rights is in direct contravention of the Supreme Court’s approach in eBay. (“[E]xpansive principles suggesting that injunctive relief could not issue in a broad swath of cases . . . cannot be squared with the principles of equity adopted by Congress.”). . . .
If an injunction were not to issue in this case, such a decision would virtually foreclose the possibility of injunctive relief in any multifaceted, multifunction technology.
Judge Reyna (Concurring Opinion): Judge Reyna’s opinion is a strong push-back against eBay – arguing that infringement should create a presumption of irreparable harm:
I write to add that I believe Apple satisfied the irreparable injury factor based on Samsung’s infringement on Apple’s right to exclude and based on the injury that the infringement causes Apple’s reputation as an innovator. There is no dispute that Samsung has infringed Apple’s right to exclude and, absent an injunction, it will likely continue to do so. I believe that such a finding satisfies the irreparable harm requirement because the infringement is, in this case, “irreparable.” On reputational injury, the roles are reversed: it is undisputed that such an injury is irreparable; the question is whether this injury will likely occur. As I explain below, I believe that the record here—particularly the toe-to-toe competition between Apple and Samsung, Apple’s reputation as an innovator, and the importance of the patents-in-suit to that reputation—establishes that Apple will likely suffer irreparable harm to its reputation.
Chief Judge Prost in Dissent:
This is not a close case. One of the Apple patents at issue covers a spelling correction feature not used by Apple. Two other patents relate to minor features (two out of many thousands) in Apple’s iPhone—linking a phone number in a document to a dialer, and unlocking the screen. Apple alleged that it would suffer irreparable harm from lost sales because of Samsung’s patent infringement. For support, Apple relied on a consumer survey as direct evidence, and its allegations of “copying” as circumstantial evidence. The district court rejected both evidentiary bases. On the record of this case, showing clear error in the district court’s factual findings is daunting, if not impossible.
If I were you, I’d read this decision: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1802.Opinion.9-15-2015.1.PDF
[…] Circuit issued another decision in the Apple v. Samsung smartphone war (summarized previously here). In the fourth court decision dealing with injunctions, Apple IV gave new guidance on the level of […]
FYI anyone have thoughts on how the 7th amendment challenges to SEC APJ jurisdiction impacts the 7th amendment challenges facing the AIA? See below,
U.S. Appeals Court Halts SEC Fraud Case Against Financier Tilton: Reuters
By Reuters News
(Reuters) – A federal appeals court on Thursday temporarily blocked the U.S. Securities and Exchange Commission from pursuing its case accusing New York financier Lynn Tilton of defrauding her investors.
The brief order by the 2nd U.S. Circuit Court of Appeals in New York puts on hold the regulator’s Oct. 13 in-house administrative proceeding against the head of Patriarch Partners.
Known as the “Diva of Distressed” for her efforts to turn around troubled companies, Tilton had objected to the SEC’s effort to try her in-house rather than in federal court.
Administrative proceedings are handled by judges on the SEC payroll.
Critics say they are unfair to defendants because discovery and depositions are limited, and there are no juries. Tilton and others have also said the appointment of the presiding judges is unconstitutional, and must be made by SEC commissioners.
A federal judge rejected Tilton’s lawsuit to block the SEC case in June, and the 2nd Circuit heard her appeal on Wednesday.
The appeals court did not say when it might lift the stay, or rule on the appeal.
SEC spokeswoman Judith Burns declined to comment, as did Tilton’s lawyer David Zornow.
The SEC charged Tilton and Patriarch with hiding the poor performance of assets underlying their Zohar collateralized loan obligation funds, for which they raised more than $2.5 billion and allegedly collected nearly $200 million of improper fees.
Two federal judges have ruled that SEC administrative proceedings are likely unconstitutional. Other judges have said the commission itself should made that determination.
On Sept. 3, a divided SEC rejected a constitutional challenge by a former radio host, Raymond Lucia. (Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Tom Brown)
Appointment of judges is a different issue.
Also impacted is the agency charter (I do wonder if we will have a guest post on that subject as it does seem to come up on a regular basis, and admin law is so important to understanding the administration of statutory law that is patent law).
One would think the legal beat reporter for Reuters News could provide more imformation when sweeping:
Two federal judges have ruled that SEC administrative proceedings are likely unconstitutional. Other judges have said the commission itself should made that determination.
Iwasthere, I don’t know about the reporters in general. But I had a devil of the time trying to get the reporter talking about the oral argument that took place on September 11 in MCM Portfolio LLC v. HP to accurately quote what I said. He refused to do so. He ended up quoting me complaining about the way he is reporting a story. It was incredible because what he reported I said made no sense and was not even close the argument I was making or actually made.
Anon, indeed. An historical property right was not involved in those cases. In fact, if I recall correctly, the complaining party in the 1st case actually conceded that the right involved was a public right.
Here is your market survey. Issue an injunction (as required by the rules) on the slider feature, i.e., narrow and following the claim elements. Then Samsung can decide whether to stop infringing. Since equity, civil contempt, is the means to enforce the injunction – it should be based on unjust enrichment – crafted to increase over time as disgorgment of unjust profits – until the infringer stops infringing. In other words, sure go on infringing – just disgorge all your profits over to the property owner. The burden of damage/valuation/etc should not be shifted to the patent owner (the wronged party) as the infringer is the one, if anyone, that holds the evidence of the value of the infringing component (plus all the intangibles like market share, momentum, convoyed sales, etc). I believe there is an SCOTUS Westinghouse case (concerning the oil filled transformer), circa Continental Paper Bag, that holds exactly that. I know some disagree with me on this – but my view is that equity is the ONLY ‘law’ of the case left post jury trial and post injunction (To be sure, you could start a new case and attempt to recover missing legal damages there). In other words, the patent statute on ‘legal’ damages does not apply at this equity stage. Equity will not impose an imputed license between the parties. I believe it proceeds under an equity theory of unjust enrichment.
Equity: make the affirmed transgressed as whole as possible.
The “traditional” notion of injunction as “the most severe” manner of delivering equity really does need to take into context the type of right involved.
Just another example of the wax nose being mashed against the patentee’s interests.
Re the requirement here that: “The district court should have determined whether the record established that [one particular patented] smartphone feature impacts customers’ purchasing decisions.” How can that ever be validly determined by other than a valid professionally run customer survey of the type used in trademark infringement suits?
I suppose you could compare a company’s product line that includes a range of products that include and do not include a particular feature or set of features. In that case, you could compare sales numbers to develop an approximation of the consumer’s intensity-of-preference for the feature(s) and their dollar figure assigned to those feature(s). Secondary markets and the retention of value in used products across a feature range could also be examined. No survey required for either approach.
That would only seem to work if the products sold at approximately the same price and only one single feature was different between them. But smart phones have numerous different features.
There is such a thing as using patents as a buffer for sales – with NO use of the patented item required in order to have a very real affect on sales.
Those of us a bit more mature in the innovation protection services readily recognize this real world aspect.
How many smartphones have you had? I currently have a Nokia/Windows phone and had a Motorola/Google phone. My wife has had two iPhones. There are so many differences between them, they’re nowhere near similar.
Even if you were to look for phones in one OS, as a consumer of these, I rarely buy on one single item (though I did buy my Nokia phone because of its camera).
What is the feature they’re saying the district court should’ve examined?
I find myself agreeing with all the judges but with Prost most of all. Their role as reviewer court takes precedence and they didn’t show “clear error” in the DC’s fact findings. At best they showed a reversible error or simple “error”.
The serious consequences of Samsung’s failure to mount an effective timely U.S. 103 defense in court or in the PTO to the “swipe to unlock” patent [inter alia] continues on here. Contrast this previous Bloomberg report:
“Apple Inc. lost a ruling at Germany’s top civil court over a patent for unlocking smartphones with a finger swipe. The Judges said that the iPhone maker’s method didn’t reach a level of sophistication needed to award patent protection — backing an earlier patent tribunal ruling in favor of Lenovo Group Ltd.’s Motorola Mobility Holdings Inc. “This user-friendly display was already suggested by the state of the art,” the Karlsruhe-based court wrote. “The contested patent thus isn’t based on an invention.” Samsung Electronics Co. had initially joined Motorola Mobility in the case, but later withdrew. In 2012, Apple won a Munich court injunction against Motorola Mobility based on the patent. That case is pending on appeal and was stayed to wait for the outcome of this suit. This case is BGH, X ZR 110/13.”
Yeah but obviousnesses is a different beast than “invention” and “inventive step”.
The serious consequences of Samsung’s failure to mount an effective timely U.S. 103 defense in court or in the PTO to the “swipe to unlock” patent [inter alia] continues on here.
No doubt. This was an easy one to crush between the 101 and 103 pinchers and Samsung managed to blow it. That said, even from the little bits of the record that have managed to creep into the CAFC’s multiple poor decisions relating to this case, it’s impossible to deny the formidable nature of the duststorm Apple’s attorneys and media manipulators kicked up over this garbage.
The [German] Judges said that the iPhone maker’s method didn’t reach a level of sophistication needed to award patent protection
But heuristics are, like, totally sophisticated! Never mind that the general concept of heuristics was already incredibly old and its utility well-understood long, long before Apple decided to employ it in the context of one of an infinite number of obvious situations where it could be employed.
Any two Fed Circuit judges can wield incredible power over patent law. How many times has DDR already been cited?
We have a huge gap in being able to fairly apportion the value of components in technically complex products. There must be incentives for patentees to fairly value their demands when there are thousands of features involved in a sale.
A key basis of morality is proportionality. When giving someone a license to grab the fruits of another’s success, the enterprise is going to absolutely fraught with the wrong kinds of incentives.
Well Martin, somebody certainly has a screw loose somewhere. I am sure Apple would have been happy with an injunction without even trying to prove damages, because damages in a multi-patent product are almost impossible to prove. And yet, even though Samsung agreed that taking the infringements out would be simple and fast, the court did not grant the injunction leaving Samsung free to use the inventions in it phones ad infinitum unless Apple sues again.
People out there knowing nothing about the law would say that the courts have it completely backwards. With a patent, the injunction is perhaps the only remedy that should be be pursued.
The Fed Circuit judges have a body of law and precedent to work with that is problematic at best. I’m not judging the judges on this one- but pointing out that the law is really weak on this important subject of apportionment. In a simpler world, an “invention” of serious patentable weight would generally come one-to-a-product, not hundreds to a product.
This is what you get into when you patent everything under the sun….
Pay the asking price, go without, or INVENT something yourself.
What could be more fair than that?
This should stress the point that the patent system BY DESIGN seeks to block others. Somehow (?) this feature has been propagandized into some type of loathsome bug.
Pay attention folks.
From the background section:
claim 18 of the ’172 patent claims a method for automatically correcting spelling errors on touchscreen devices.
Because correcting spelling errors on a “touchscreen device” is totally different from correcting spelling errors on a non-touchscreen device! Maybe because Apple didn’t invent the touchscreen, or touchscreen devices generally, Apple believed that the idea of touching an option-displaying screen options in order to indicate one’s intent was new when it filed its applications ….? Is that possible?
Claim 9 of the ’647 patent claims a system that detects “data structures” within text and generates links to specific actions that can be performed for each type of detected structure—for example,
detecting a phone number in a text message and creating a link that would allow the user to dial the phone number or store it in an address book.
On its face, that looks like ridiculous functional-claimed junk of the lowest possible order. But the real joke is that anyone who has a new iPhone — sold in 2015, years after this patent was filed — knows that Applie’s contact-managing software totally blows. The iPhone will readily display contact information from diverse groups (e.g., one’s Outlook account) so that there’s no doubt the phone “knows” how to handle the information. But a simple button to merge those contact groups into one exhaustive list? Nope. Apparently Apple’s “technology” has yet to evolve to such lofty heights. Maybe in 2025 or 2050?
MM, one wonders why Samsung did not assert a 101 defense? Or, perhaps they did? But these inventions at times seem trivial at best.
They did: link to fosspatents.com
For reasons that I no longer recall, it didn’t stick. But Samsung should have been ahead of Alice rather than lagging behind it. Probably they were compromised by the usual fear of shooting their own junk-filled portfolio in the foot.
And once again, a patent on ridiculous computer-implemented junk bleeds into the rest of patent law and compels a Federal Circuit panel to double down on the ridiculousness.
Congrats to Judge Prost for managing to keep her eyes open through the dust.
As for Judge Moore: Apple does not need to establish that these features are the reason customers bought Samsung phones instead of Apple phones—it is enough that Apple has shown that these features were related to infringement and were important to customers when they were examining their phone choices.
That’s enough to show “irreparable harm”? To satisfy this test for “irreparable harm”, all you need to show is that people don’t actively dislike the patented feature.
As bad as Moore’s decision is, this circular nonsense from Reyna is truly beyond the pale:
Apple’s reputation as an innovator, and the importance of the patents-in-suit to that reputation—establishes that Apple will likely suffer irreparable harm
Say what? So now Apple’s “reputation” as an “innovator” rides to a substantial degree on the validity of its junky “slide to unlock” patent? Too bad about Germany …
MM, do you agree or disagree that patent damages are difficult if not impossible to prove? Consider that congress provided that at least a RR be awarded, which itself is extremely hard to prove.
do you agree or disagree that patent damages are difficult if not impossible to prove?
I think the only answer is “it depends.”
I don’t think it’s impossible or difficult to see that some “patent damages” determinations are off-the-charts absurd even if you know nothing about technology or patent law. Prost did a good job illustrating that.
What happened here, I think, is an example of systemic problem — maybe one that isn’t even limited to the IP sphere — where a business with a nearly infinite amount of money to spend can literally buy the perception that some “feature” of its products is sooper dooper important techno that must — simply must! — be protectable by a broad patent.
Another aspect of the case that is driven by Apple’s “reputation” (=wealth and power) is the mistaken idea that just because one has highly-successful, popular and first-to-market product that all of the popular and/or well-known features of that product must somehow be patentable. That’s simply not the case. Some products are highly successful, popular and first-to-market for reasons that have very little to do with patent-worthy innovation and everything to do with simply being faster to market (usually because you have the money and power to make it happen more quickly than your competitors).
Apple didn’t invent hand-held phones. They didn’t invent touch-screens for controlling devices and they didn’t invent hand-held phones with touchscreens. They didn’t invent spell checking. They didn’t invent “displaying options”. They didn’t invent locks. They didn’t invent heuristics.
You know what they did invent? iTunes. And iTunes blows chunks.
I believe you that Apple wasn’t the first to invent any of the items in your list. However, facts such as the pre-existence of smartphones, touch-screens, and screen locking in general may actually favor non-obviousness of the swipe-to-unlock feature, depending on the timing of their development. Regardless of how easy one perceives their chances of invalidating a claim for obviousness purposes, these facts can act as a double edged sword in terms of long felt need (without a solution) or the prior art’s failure to recognize a problem. Conversely, if Apple had invented smartphones, touch-screens, and locked screens, their swipe-to-unlock could be obvious, depending on the timing of development.
The pendulum swings back.
And it is about time.
The pendulum swings back.
I’m pretty sure that hasn’t happened, Ned. When an NPE with patents as junky as the patents being asserted here manages to enjoin Apple then you might have a case. Somehow I don’t see, e.g., Intellectual Ventures’ “reputation for innovation” tilting the scale in IV’s favor, if you know what I mean.
MM, historically, patent damages were in fact hard to prove. That is why for more than a century, patent owners exclusively pursued equitable remedies.
We may not need a per se rule on this, but this is simply an historical and current fact. It IS true, but generally, and not in all cases.
Now if one has a licensing program with many licensees taking a license at a particular rate, and the courts would actually recognize this rate as the reasonable royalty rate, then reasonable royalty rates would be certain, and perhaps an injunction would not be warranted.
But that is not what the Federal Circuit requires for determining a RR. They require one to trash this evidence in favor of a battle of experts about the value of the inventive contribution to the product.
So long as the Feds do this, damages and RR will remain so hard to prove that we should simply trash that approach altogether in F A V O R of a return to the good old days of the equitable remedy.
I agree that the use of competing paid-for experts, who operate on more a less a blank slate, is a real problem in the damages calculation phase of patent cases. But it’s not an intractable problem and it’s no excuse to return to the pre-Ebay world.
Ned,
Your path leads to more infringement. What’s the downside of getting caught infringing? Just pay what everyone else is. What is the upside? $$$
Ig nore human nature at your own peril.
anon, I know. I know. I know.
The system is really rigged against the patent owner now. With no real threat of an injunction, and with willful infringement all but gone, anybody can sit by and infringe with impunity knowing in the end that if he is sued all he has to do is pay the same royalty anybody else.
The system has become a joke for patent owners.
If I were you, I’d read this decision
That’s good advice. All 3 opinions are interesting.
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