Guest Post by Professor Daryl Lim (John Marshall Law School)
Apple and Samsung will once again lock horns at an appeals court. Apple is seeking a permanent sales ban on patented features contained in Samsung’s Galaxy S3 smartphone and nine other older smartphone models. The U.S Court of Appeals for the Federal Circuit, which will hear the oral arguments on March 4, had earlier ruled that those seeking injunctive relief must show a “causal nexus” between the infringement and the asserted “irreparable” harm.
The patents cover user-interface designs for software covering the “autocorrect,” “slide to unlock,” and “quick link” features. A lower court ruled (ruling here) that Apple had failed in carrying its burden to show the infringed features drove consumer demand for Samsung’s products. It also rejected Apple’s argument that its reputation had suffered “irreparable” harm.
1. Feature-Based Injunctions
Apple has argued that the narrow ban it sought covering the infringing features should have been granted. A ban focusing on infringing features rather than whole products has much to commend itself. It better tailors the remedy to address the harm and comports with the equitable basis of injunctive relief. The need for proportionality also manifests itself in the requirement that courts weigh the relative hardships to the parties in deciding whether to grant or deny an injunction, as well as in deciding whether the injunction is in the public’s interest.
At the same time, Apple’s view that a nexus “necessarily” exists because its injunction is narrowly tailored leans too far in the other direction. That kind of categorical thinking was rejected by the Supreme Court in its seminal eBay decision, which required courts to undertake an approach that emphasizes a careful balancing of the effects of granting the request for an injunction. Google, LG and others also cautioned against it, warning that it would breed patent hold-ups, with smartphones typically containing 250,000 patents. Rather than devoting time and resources to develop new products or improving existing ones, companies could be consumed with waves of vexatious litigation by patentees seeking feature-specific injunctions.\
On the other hand, Nokia warned that the value of exclusive licenses turns on robust exclusion rights, and their absence “would devalue those patent rights and stifle incentives for further innovation.” However, the Supreme Court has repeatedly held that the exclusive rights are a means to furthering the public interest by facilitating the dissemination of new and useful technology. The proper remedy for infringement is monetary compensation; unless eBay standards are met. Sales bans are the exceptions to that norm.
2. Reputation as a Proxy for “Irreparable Harm”
Apple also sought to show that infringement by a rival would harm its reputation. According to Apple, this qualifies for “irreparable harm,” warranting an injunction. As with all cases for injunctive relief, the facts are crucial in providing the proper context for delineating the scope of its applicability.
Apple relied principally on Douglas Dynamics, where the Federal Circuit held that the patentee’s reputation as an innovator would be damaged if customers found the same features in snowplows sold by its rivals. The owner promoted this “easy on, easy off” feature in its advertising, and the infringer had marketed itself as the patentee at “half the price.”
Apple argues that Douglas Dynamics did not require patent-specific proof in finding reputational harm. But it cannot have it both ways. If Apple seeks a feature-specific injunction to remedy a specific harm, then it must also accept that the harm to reputation must be similarly linked to the patented feature. Injunctions are a response to threats of imminent harm. It will be difficult for Apple to show this nexus.
First, during the relevant period Samsung launched nine flagship devices containing features Apple did not offer, such as near field communications technology. The lower court found its products independently reputable.
Second, consumers are unlikely to link the patented features with Apple. In the same way an infringing cooling fan in a computer does not harm the innovator’s reputation as a computer maker, features such “quick link”, “slide to unlock” and “autocorrect” do not harm Apple’s reputation for making smartphones. Moreover, Apple’s latest operating system, iOS7 has already abandoned features like the spot-specific “slide to unlock” feature.
Third, few would have missed Apple’s muscular pursuit of patent litigation. Its reputation cuts against the conclusion that “irreparable” harm has resulted from the infringement.
Fourth, its reputation as an innovator remains stellar. At $700 billion, Apple is the world’s largest company by market capitalization.
Fifth, if Apple is truly concerned about Samsung misappropriating its goodwill or consumer confusion, it is barking up the wrong tree. Trademark law, not patent law is Apple’s remedy to protecting its reputation.
This case represents one of the last in Apple-Samsung global litigation. Many in the tech world will watch with great interest where the Federal Circuit stands on both issues. Its pronouncements will define the final contours of the end-game.
Daryl Lim is an Assistant Professor at The John Marshall Law School where he teaches courses in intellectual property law as well as antitrust law. In 2014, he was nominated “Professor of the Year”, and was one of 24 law professors worldwide nominated for a list of top 10 antitrust/competition law professors under 40 on the Antitrust & Competition Policy Blog. His latest article “Standard Essential Patents, Trolls, and the Smartphone Wars: Triangulating the End Game” may be found here.
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What would be interesting and informative here is the case law basis for such patent infringement injunctions limited to only a specific feature of a product. Including what the case law says about how that is [or should be] affected by how difficult it is for the feature to be removed or “designed around” by available alternatives? If it is merely a matter of a simple software change, not impacting other software or product functions, and not causing customer confusion, that would seem to logically make this kind of an injunction more attractive?
[Would that also be relevant to a finding of willful infringement damages for post-jury infringement unless someone has a favorably progressing IPR or CBM in process?] [I mention this only to remind those still complaining about the Sup. Ct. eBay decision that getting hit with trebling of infringement damages for continued infringement could get many infringers of products [other than multi-function smartphones] to stop their competitive infringing nearly as effectively as an injunction.]
If one read Posner’s opinion on this point, it would seem that fixing software is simple. Take out the infringing code. Can be done for peanuts and within a short time. Think MS Word and i4i. Word still remained on the market. One wonders at time why MS fought that case so hard when a fix was so easy.
I assume most manufacturers update their phones software through the internet.
So, denying an injunction where the downside to the enjoined party is so small seems uncalled for.
Most (all?) cell phone manufacturers update their software via the carrier (AT&T, Verizon, etc.).
Changing functionality of code is usually MUCH more complex than people think it is. Removing code in particular can be hard to do. They’ve tried to modularize code (such that one function is in one “location”), but that’s not always the case.
Is there any mechanism by which a “labelling requirement” type remedy could be imposed rather than an outright ban?
e.g. Suppose a patentee, InnoGidget Inc. wants to maximize profits but retain the credit for the technology, can it ask for a specific remedy which is short of an injunction banning sale, a requirement that the competitor label the products or packaging “Implementing technology invented and patented by InnoGidget Inc.”
Any thoughts?
Was the Constituion amended to remove the word “exclusive?”
Just asking.
(attribution is not permission)
Well … I did say “suppose” they wanted to maximize profits that way…. not that they should not have the right to stop others …
It may in the self-interest of some specific parties (for a small players)to let the competition make profit for them (from the competitor’s market share)… rather than to try to gain their competitor’s market share for themselves.
E.g. Imagine a small player (practising entity) with 15% of the market … who does not have the capacity to service the other 85% cornered by Goliath… furthermore Goliath IS an infringer of small player’s patents but will NOT settle. All that profit is simply inaccessible if there is a ban on Goliath products… it would make more sense for the small player to have access to some of the profit Goliath makes (based on the infringed technology) so why not “let” Goliath keep selling… with imposed damages/royalties and with a little label to give the small player credit for the patented technology?
Far too many implied and accepted at face value positions here.
The reading of eBay is not universally accepted (another view is a simpler message: don’t take analytical shortcuts).
The attempt to make patent infringement a purely a matter if a business law style “efficient breach” should be rejected.
The BEST remedy is that which mirrors the right transgressed most closely – and the old saw that “injunction is just too severe and should be only a last resort” should NOT be allowed such a foundational view as appears to be so here.
In the context of products like smart phone, injunctions cannot be in the public interest because either the price of phone who rise or the selection would diminish (or both) because one product can implicate thousands of patents. In a perfect world, everyone would know every patent and who owns them so they can get a license. However, because patent related to software are unindexable and often the scope of the claims cannot be determined until they are construed in court, the uncertainty should cause any rational player not to enter the market.
No.
I would out of hand reject the argument that “too many” must mean enforcement of none.
Sorry, but you DO have to follow the law, even if it is inconvenient for you.
The answer simply is NOT “no patents” or even “weaker patents.” In fact, the answer is stronger patents. You parade a situation of horribles – yet, those self same horribles are what would “police” the system if they were allowed to run their own course.
The argument about “public interest” was a short one held long long ago. The result of that argument was Article 1, Section 8.
Waiving round Article 1, Section 8 is not some sort of trump card against any argument. Article 1, Section 8 is only a permissible statement that allows Congress to establish a patent system. There is still a lot of room to debate what rules and policies promote the progress of science and useful arts.
Hypothetically, if an inflexible exclusivity rule (that provides for injunctions in all circumstances) does not promote the progress of science and useful arts, then such a rule would be unconstitutional. And despite the influence of eBay on injunctions, innovators are still innovating.
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