Some Connection Between Samsung's Infringement and Apple's Lost Sales Justifies Permanent Injunction: Federal Circuit

Practical Law Legal Update 5-618-8588 (Approx. 4 pages)

Some Connection Between Samsung's Infringement and Apple's Lost Sales Justifies Permanent Injunction: Federal Circuit

by Practical Law Intellectual Property & Technology

Published on 22 Sep 2015 • USA (National/Federal)

In Apple Inc. v. Samsung Electronics Co., the US Court of Appeals for the Federal Circuit vacated and remanded the district court's denial of Apple Inc.'s motion for a permanent injunction, holding that demonstrating some connection between the patented product features and consumer demand for the infringing products is sufficient to show irreparable harm, and it is not necessary to show that the patented features are the sole cause of consumer demand.

On September 17, 2015, in Apple Inc. v. Samsung Electronics Co., the US Court of Appeals for the Federal Circuit vacated and remanded the US District Court for the Northern District of California's denial of Apple Inc.'s motion for a permanent injunction, holding that demonstrating some connection between Apple's patented product features and consumer demand for the infringing products is sufficient to show irreparable harm (No. 2014-1802, (Fed. Cir. Sept. 17, 2015)). The court explained that it is not necessary to show that the patented features are the sole cause of consumer demand for the infringing smartphones and tablets because the products have thousands of features, which would make such a showing nearly impossible.

In February 2012, Apple filed a lawsuit against Samsung Electronics Co., alleging infringement of five patents covering interface technologies used in Apple's iPhone and tablet products. The district court granted summary judgment of infringement of US Patent No. 8,074,172. At trial, the jury found that Samsung's products infringed one or both of US Patent Nos. 5,946,647 and 8,046,721. The jury awarded Apple a total of $119,625,000 for Samsung's infringement of the '172, '647 and '721 patents.

Subsequently, Apple sought a permanent injunction that would:

Bar Samsung from, among other things, making, using, selling, importing or developing software or code capable of implementing the infringing features in Samsung's products.
Stay enforcement of the injunction for 30 days to allow Samsung to design around the infringing features, which Samsung claimed that it could easily do.

The district court denied Apple's motion for a permanent injunction, finding that although the balance of hardships and the public interest favored granting the injunction, Apple had not shown that it would suffer irreparable harm without the injunction nor that there was no adequate remedy at law. Consequently, the district court denied Apple's motion.

With respect to the irreparable harm requirement, Apple argued on appeal that the district court:

Should not have required Apple to prove that a causal nexus links Samsung's infringement to the harms suffered by Apple because the proposed injunction is limited to only the infringing features and not Samsung's products as a whole.
Erred in finding no irreparable harm stemming from Apple's sales-based losses and from harm to its reputation as an innovator.

In response to Apple's arguments, the Federal Circuit reviewed the district court's findings for abuse of discretion and held that:

A causal nexus must be established between the patent owner's irreparable harm and the infringing acts regardless of whether the injunction is for an entire product or is narrowly-limited to particular features of that product. Therefore, the district court did not err in requiring Apple to satisfy the causal nexus requirement to show irreparable harm.
The district court erred, however, in requiring Apple to prove that Samsung's infringement was the sole cause of Apple's lost sales. The Federal Circuit explained that:
- the fact that the infringing features are not the sole cause of the lost sales may lessen the weight of the alleged irreparable harm, but it does not eliminate it completely;
- demonstrating some connection between the patented features and the demand for Samsung's infringing products is sufficient to show a causal nexus;
- the record establishes that the patented features were important to Samsung's product sales and customers sought these features in the phones they purchased; and
- this is sufficient and Apple does not need to demonstrate that the features were the only reason the customers purchased Samsung's infringing products.

The Federal Circuit held that the lost sales evidence weighed in favor of granting Apple the injunction. With respect to the other requirements for granting an injunction, the Federal Circuit held that:

The fact that the lost sales were difficult to quantify weighed in favor of granting the injunction.
The district court did not abuse its discretion in finding that the balance of hardships favored the granting of the injunction because Samsung could easily design around the infringing features and Apple was deprived of its exclusivity and forced to compete against its own innovations.
The district court did not abuse its discretion in finding that the public interest strongly favored an injunction because the public interest nearly always weighs in favor of protecting property rights in the absence of countervailing factors. The court also noted that the public would not be deprived of Samsung's products if the injunction were granted.

Accordingly, the Federal Circuit:

Held that the district court abused its discretion when it did not enjoin Samsung's infringement.
Vacated the district court's denial of Apple's motion and remanded the case back for further proceedings.

Some Connection Between Samsung's Infringement and Apple's Lost Sales Justifies Permanent Injunction: Federal Circuit | Practical Law