Federal Circuit Rejects Galaxy Nexus Preliminary Injunction Finding No Irreparable Harm Despite a Market Shift in Samsung’s Favor.

By Dennis Crouch

Apple v. Samsung, — F.3d —, App. No. 2012-1507 (Fed.Cir. 2012) (N.D.Ill. 12-CV-0630) (APPLE II)

This case is important because it further reduces the chances that the owner of a component patent will obtain injunctive relief.

Patent litigation is fairly slow and often takes years for a case to proceed through trial and appeal. One shortcut to action is a motion for preliminary injunction. Such a motion asks a court to exert its equitable power to immediately stop the harm of ongoing infringement – even before ultimately concluding that the patent is valid, enforceable and infringed. Following an extension of eBay v. MercExchange, courts require a patentee to satisfy a four-factor test before granting injunctive relief.

A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

Generally, these preliminary injunction factors can be thought of as being identical to the eBay permanent injunction factors with the addition of having to prove the likelihood of success on the merits. (In a permanent injunction scenario, the merits have already been decided.) An important aspect of preliminary injunctions in patent cases is that they are immediately appealable as a matter of right. This right of immediate appeal is different from almost every other district court decision except for the ultimate dismissal of the case.

In this case, Judge Koh issued a preliminary injunction ordering Samsung to stop sales of its Galaxy Nexus smartphone based upon the likelihood of its infringement of Apple’s Patent No. 8,086,604. I should pause for a moment to note that this case is different from the parallel Apple v. Samsung case that resulted in a $1b jury verdict for Apple that is currently being challenged by Samsung. The patent in the case-at-hand is related to Google’s Siri system that uses a set of heuristic modules for searching various types of information.

On appeal, the Federal Circuit has vacated Judge Koh’s decision – finding that the district court “abused its discretion” in issuing the injunctive order favoring Apple. The court found two basic problems: (1) that Apple had failed to prove irreparable particularly linked to Samsung’s use of this particular invention; (2) that the district court had construed the asserted claims too broadly with the result being that Apple probably cannot prove infringement. Either of these issues would be sufficient to reject the preliminary injunction.

In discussions of injunctive relief, this opinion will likely be termed Apple II in order to distinguish it from the federal circuit Apple v. Samsung decision issued earlier this year in Apple, Inc. v. Samsung Electronics Co., 678 F.3d 1314, 1325 (Fed. Cir. 2012) (hereinafter Apple I). Both decisions build on the nexus analysis that links the patented invention to the alleged irreparable harm – “that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement.”

This nexus analysis for irreparable harm is parallel to that employed in other areas of patent law such as consideration of secondary factors of non-obviousness and in proving lost profits. This development obviously makes it much more difficult to obtain injunctive relief in the typical high-tech scenario where a retail product includes thousands of small innovations that each contribute incrementally to the ultimate value of a product.

In Apple I, the court described the law as follows:

To show irreparable harm, it is necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.

In Apple II the court continues:

In other words, it may very well be that the accused product would sell almost as well without incorporating the patented feature. And in that case, even if the competitive injury that results from selling the accused device is substantial, the harm that flows from the alleged infringement (the only harm that should count) is not. Thus, the causal nexus inquiry is indeed part of the irreparable harm calculus: it informs whether the patentee’s allegations of irreparable harm are pertinent to the injunctive relief analysis, or whether the patentee seeks to leverage its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant.

It only follows that the causal nexus analysis is not a true or false inquiry. The relevant question is not whether there is some causal relationship between the asserted injury and the infringing conduct, but to what extent the harm resulting from selling the accused product can be ascribed to the infringement. It is not enough for the patentee to establish some insubstantial connection between the alleged harm and the infringement and check the causal nexus requirement off the list. The patentee must rather show that the infringing feature drives consumer demand for the accused product. Only viewed through the prism of the causal nexus analysis will the irreparable harm allegations reflect a realistic sense of what the patentee has at stake.

Here, Apple proved that its Siri application (also covered by the patent) is popular and also that demand for the Galaxy Nexus had come at the expense of iPhone purchases. However, the court found that Apple failed to show that the customer demand for Galaxy Nexus was driven by its allegedly infringing feature. Without proving that link, the court could not find that the (alleged) infringement caused irreparable harm.

Apple I was decided by Judges Bryson and Prost with a partial dissent by Judge O’Malley (concurring on this issue). This case, Apple II was decided by Judges Prost, Moore, and Reyna acting unanimously.

Taken as a pair, Apple I and Apple II are important because they further reduce the chances that the owner of a component patent will obtain injunctive relief. Before eBay, irreparably harm was hardly a consideration. Since eBay, the irreparable harm factor has largely focused on whether the patentee has a product or potential product being harmed by ongoing infringement. Now, the question will move to the next level of granularity in a way that will be difficult for patentees to prove.

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

20 thoughts on “Federal Circuit Rejects Galaxy Nexus Preliminary Injunction Finding No Irreparable Harm Despite a Market Shift in Samsung’s Favor.

  1. What a very sensible reasoning by the Court of Appeals. How can Samsung possibly be responsible for infringing an Apple patent that is a feature of Android. Except of course Apple is well known to vigorously tackle anyone for any reason that they think might deter competition. They had a great product range but now their dominance is over. What goes around comes around.

  2. Apple’s best shot at obtaining injunction relief against Samsung will be a December 6 hearing on its motion for a permanent injunction based on the liability findings at this summer’s trial.

  3. Did anyone else think that the Fed. Cir. blew the claim construction issue? That was the real error coming out of this decision.

  4. Under these Apple I & II, to get preliminary injunctive relief, a patentee must show, inter alia, customer demand.
    And if there is customer demand, the entire market value would be appied. Then, could it be expected that if there is preliminary injunction, the entire market value rule would be applied in calculating damages?

  5. the court found that Apple failed to show that the customer demand for Galaxy Nexus was driven by its allegedly infringing feature.

    Gee, I can only imagine what some of the actual reasons are that some people have begun to prefer the Nexus to the iPhone. Greater flexibility and cheaper to upgrade?
    Maybe the result of improved marketing and (really going out on a limb here) lower prices?

    This really is a fantastic decision and a most welcome continuation of the trend since eBay. It’s another breath of fresh, rational air once again at the wonderful, worthwhile expense of the crippled ideology of the patent teebuggers.

  6. but your little exercise would still not prove that the majority of sales are driven by Google Search. As a matter of fact Google Voice Search:

    1) has been available since 2009 at least so any increase in Samsung sales in 2011 are hardly Google Search related
    2) is actually different than Siri- as in it doesn’t set appointments or it doesn’t tell you the results out loud – they are showing as a list of search results in the brower

  7. it should live with its own logic

    Is it just infringers who should “live with their own logic”? What about patentees?

  8. this is very much the intended result from eBay – making it harder to get an injunction against infringers of these sorts of component patents.

    Yup. Keep the hits coming!

    The beautiful part of it is that even if patents on computer-implemented method of telling your “virtual network of friends” that you just saw a “fall blockbuster” merely by clicking twice and reverse swiping on a rectangular screen somehow remains eligible and patent-worthy, they won’t be worth much to anybody.

    Then maybe people will stop filing applications directed to such gxrbxge and those inventors who actually work for a living will be able to get their applications examined and granted in a timely, professional manner.

  9. Why is this case about enjoining sales of the product? Couldn’t the injunction be specific to the patent? If it is a patent on a feature, enjoin sales of the feature. When the infringer belittles the feature as unimportant, it should live with its own logic and remove the feature.

    I guess Apple is reaping what it has been sowing.

  10. It’s fascinating to see how these two cases came out, because you have to wonder if a different panel would have come to a different result, especially in Apple II. With that being said, this is very much the intended result from eBay – making it harder to get an injunction against infringers of these sorts of component patents.

  11. Contrary to what you might believe, your trolling does not add any value to a legal conversation on the merits.

  12. I’m not aware of anyone who cares whether what kind of algorithm (heuristic ornot) their phone uses for searching. It’s completely irrelevant. For many types of information, Internet searching has gotten worse, not better. It’s not the fault of the search engines, it’s the fault of the “inventors” of new methods for fooling search engines into luring people to click on their fake website. I assume the USPTO is patenting these new methods of advertising as well. Why should it matter the only utility is put money in somebody’s pocket at the expense of everybody else’s time and convenience? Promote the progress!!!!

  13. This development obviously makes it much more difficult to obtain injunctive relief in the typical high-tech scenario where a retail product includes thousands of small innovations that each contribute incrementally to the ultimate value of a product.

    As it should be. There are a handful or fewer patent-worthy inventions in these devices that should ever lead to a preliminary injunction.

    People buy them because they want to have little computer with Internet access to carry around with them, and because they don’t want to carry a separate phone. Is a smaller portable computer patent worthy? Possibly, quite a few years ago, although interestingly the main problem (reliable power supply) persists for most consumers (the solution almost surely exists already but the cost of the device would be prohibitive). And combining a portable phone with a small computer was obvious at least since the time that both portable phones and computers were marketed.

    Bottom line: great result. More please.

  14. DC wrote:

    “The court found two basic problems: …(2) that the district court had construed the asserted claims too broadly with the result being that Apple probably cannot prove infringement”

    I’m confused. Usually when claims are construed broadly, it increases the likelihood of infringement, but also increases the likelihood that the claim encompasses (or is obvious in view of) the prior art and therefore invalid. What exactly did you mean?

  15. “Here, Apple proved that its Siri application (also covered by the patent) is popular and also that demand for the Galaxy Nexus had come at the expense of iPhone purchases. However, the court found that Apple failed to show that the customer demand for Galaxy Nexus was driven by its allegedly infringing feature. ”

    The problem is these guys did not work their way through school by selling phones in a mall kiosk. It would not take more than an 8-hour shift to prove this point one way or the other. All you’d have to do is create a new Galaxy Nexus that did not have the Siri ap, and have the sales guy be able to demonstrate what difference it would make. Then set the price points and in comes the data. For Samsung to use lack of data as a defense they should have to automatically give permission for Apple to bear the expense to run the test.

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