In its response to Apple's effort to win a permanent injunction in the United States against many Samsung products over multiple intellectual property rights, Samsung argues that the sales ban sought by Apple -- and denied by Judge Koh in December despite a multiplicity of infringement findings by a California jury in August 2012 -- "would not stop any ongoing infringement, for Samsung has either discontinued the accused products or designed around any infringing features in the ones it still sells". Alluding to letters a law firm sent on Apple's behalf to various U.S. retailers in connection with a preliminary injunction grnated last year, Samsung claims that "the only effect of an injunction would be to confuse and intimidate Samsung's carriers and retailers with respect to non-accused products never adjudicated in this case, harming Samsung's longstanding market relationships".
Samsung seeks affirmance of Judge Koh's holding that Apple failed to establish a causal nexus between the infringements identified and the harm it alleges to suffer from Samsung's competing products.
In footnote 1 of its brief, Samsung points to various commentary in the media that doubted the value of Apple's asserted patents:
"See, e.g., Charles Duhigg & Steve Lohr, The Patent Used as a Sword, N.Y. TIMES, Oct. 7, 2012; Kal Raustiala & Christopher Sprigman, Apple vs. Samsung: Is Copying Theft or Innovation?, L.A. TIMES, Sept. 4, 2012 ('Does anyone own the rectangle? Should anyone own the rectangle?' [for my rebuttal of this kind of propaganda, see my post on what Apple's design patents really cover]); Brian Love, Apple-Samsung patent fight: Fuzzy math, L.A. TIMES, Aug. 30, 2012; Editorial, Apple's Courtroom Win Reveals Deeper Woes in U.S. Patents, BOSTON GLOBE, Sept. 4, 2012; see also Bonnie Cao, Apple co-founder Wozniak says he hates Samsung patent verdict, FINANCIAL POST, Sept. 14, 2012 (''I hate it,' Wozniak said when asked about the patent fights between Apple and Samsung. 'I don't think the decision of California will hold. And I don't agree with it — very small things I don't really call that innovative.'')."
Before going into more detail on this particular dispute, let's step back and look at the broader strategic landscape.
2013: The Year of the Appeals Courts
2013 is definitely the Year of the Appeals Courts in the ongoing smartphone patent disputes. Some interesting appeals already started in 2012, but this year we're going to see high-impact rulings.
There's still quite some activity in district court (in the United States and in other jurisdictions) and (much less than in the past as far as disputes between two big parties are concerned) at the ITC. With respect to non-standard-essential patents, the Google Maps case in Germany is by far and away the most important one at that procedural stage (a decision will be announced on June 3), followed by Apple's second California case against Samsung (trial scheduled to begin at the end of March 2014) and Nokia's numerous assertions against HTC. But for the most part the key parties to these disputes -- with the rest of the industry standing on the sidelines and watching closely -- are waiting for clarification of some fundamental issues that determine who will have how much leverage in future litigations and negotiations.
In addition to appellate proceedings relating to issues of transcendental importance, there are numerous appeals dealing with case-specific issues, and those can also provide useful clarification in particular disputes (for example, if Microsoft obtained a broader import ban against Motorola than the one the ITC granted originally, this could have very significant impact on any Microsoft-Google settlement talks).
The smartphone patent spats haven't gone away or lost momentum only because there have been fewer new filings. The appellate proceedings are highly important, but they are lower-key. No discovery disputes. No jury trials. Less noise, more signal.
These are the three most important appeals going on at this stage (in no particular order):
The third one is the one I will focus on for the remainder of this post.
The key issues of transcendental relevance in the Apple v. Samsung denial-of-injunction appeal
Apple filed its opening brief in mid-February. On Wednesday, Samsung filed its responsive brief, which entered the public record yesterday and which I've uploaded to Scribd.
There are several issues of transcendental relevance in this case. While Apple obviously wants to win an injunction over the intellectual property rights the district court found Samsung to infringe, Apple could emerge victorious even if it didn't win an immediate injunction, provided that the Federal Circuit renders an opinion on one or more strategic issues that will help Apple in the future, such as after fairly possible infringement findings at next year's California jury trial involving different patents and newer products. It would also affect disputes with other parties as well as licensing talks prior to any litigation.
Having read both parties' opening briefs (except that Apple will get to reply to Samsung's brief), these are the key legal questions of transcendental importance that I've identified and that I'd like to see clarified (the parties' own statements of the issues and the structure of their pleadings are, or at least appear, more case-specific and in additional ways different than this overview of mine):
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?
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?
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? (In my opinion, this is hugely important, also because it makes all the difference between SEP and non-SEP cases.)
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?
There may also be issues of transcendental importance with respect to injunctions based on trade dress dilution. That is an area I don't research in detail; my focus is on patents, particularly utility (technical) patents.
All of the key issues I listed above have a common element: they are in whole or in part about the weight that should be given in the equitable analysis of an injunction request to certain considerations, and this weight can influence not only the outcome based on a given set of proven facts but also affect the proof that is required with respect to other factors. For example, the fiercely competitive situation in the "two-horse race" between Apple and Samsung could be held to lower the standard of proof in the "causal nexus" context. Apple showed that design and ease-of-use matter: maybe it wouldn't be a sufficient showing in some scenarios, but in a fiercely, directly competitive scenario a right holder shouldn't face too high a hurdle when trying to prevent a competitor from continued infringement. This is not a summary of anything particular Apple is saying (or that Samsung is arguing against) -- it's just my thinking based on what I've seen.
Now that I've taken the liberty to outline the issues in this case that I'd like to see addressed, I promise to focus for the remainder of the post on what the parties themselves have written so far, in the context of these and related issues.
Theoretically, the most transcendental issue is actually raised by Apple where it argues that the "causal nexus" standard should be different when a permanent injunction is sought at the end of the district court proceedings as opposed to a preliminary injunction before a final district court ruling on the merits. There is certainly a difference between a finding of an actual infringement versus one of a likely infringement, but I tend to agree with Samsung that the "causal nexus" requirement is part of the irreparable-harm analysis and unrelated to the type of injunction. I believe Apple raises this issue only because it would be an opportunity for the Federal Circuit to lower the "causal nexus" hurdle in the permanent-injunction context without having to reverse the Apple I and Apple II preliminary-injunction opinions. It's extremely hard for me to imagine that the Federal Circuit would find that Judge Koh erred in applying the "causal nexus" requirement in a permanent-injunction context but that the requirement should still govern preliminary-injunction decisions. At the most I could imagine that the standard of proof relating to the equitable factors is a lower one after a final (though appealable) liability finding than a mere assessment of a likelihood of such a finding. In this case the standard might also be lower for the "causal nexus", but I can't see that the "causal nexus" would have a raison d'être exclusively in the preliminary-injunction context.
Also, it can't be a key issue in its own right that the court denied injunctive relief although the jury found a multiplicity of infringements. Apple doesn't say so explicitly. It merely points to this fact in order to underscore the injustice it believes to be suffering, though in other contexts it sometimes suggested that if a product infringes one patent, you might as well ban it over another, too. The jury's finding of willful infringement (which lost relevance after Judge Koh identified a lack of objective willfulness) is also unrelated to the key issues. But the fact that a jury found multiple, subjectively-willful infringements and Apple still didn't win an injunction over a single patent is a circumstance that lends credence to Apple's claim that it's become virtually impossible to obtain injunctive relief in cases of this kind, especially due to the "causal nexus" hurdle. Samsung suggests that it's all just Apple's failure of proof, ultimately due to the facts the way Samsung sees them. But if even Apple, with its high quality and vast quantity of resources, can't overcome the hurdle with respect to at least one of half a dozen infringed intellectual property rights, the hurdle may indeed be virtually insurmountable.
The parties' key arguments relating to the key issues I outlined
In the causal nexus context, Samsung defends the status quo and (as I mentioned in the final paragraph of the previous section) says Apple just didn't have (or at least didn't present) sufficiently granular evidence of a patented-feature-drives-demand kind of causal nexus. Furthermore, Samsung claims (on the basis of non-patent cases) that the "causal nexus" has always been part of the case law relating to injunctions. And, obviously, Samsung leverages the standard of review (an injunction decision is overturned only if there's an abuse of discretion). But Samsung doesn't even try to defend, from a policy point of view, a scenario in which injunctive relief would be practically unavailable (as Apple, credibly in my view, claims) with respect to multifunctional products. Samsung's brief focuses very much on case-specific issues and its own interpretation of the relevant case law, refusing to engage in a policy debate. This exposes a weakness of Samsung's case (Apple clearly raises issues of exceptional importance), but this does not mean that it's a mistake by Samsung's lawyers. I guess it's a smart choice in light of the Federal Circuit's well-known, long-established pro-intellectual property positions. The judges there are the opposite of a patent skeptic like Judge Posner. In Judge Posner's court Samsung would most probably win a debate over whether the courts should "deprive consumers of complex products that infringe only patents covering limited non-core features and designs that are a minor part of accused products".
Samsung tries to downplay the "two-horse race" situation, but frankly, I didn't find any convincing argument on Samsung's part that this shouldn't really be a key consideration weighing in Apple's favor, or that there should be a massive burden of proof that customers who buy a Samsung product really wouldn't have considered buying an Apple product instead.
With respect to workarounds, I'm somewhat surprised that Samsung stresses this argument so much because I consider it a weak one, not just from a policy point of view but also because it doesn't seem to be the law that if you infringed in the past and cease to infringe, the right holder loses an entitlement to an injunction that would prevent you from resuming the infringement later. I already thought Apple should have placed more emphasis in previous proceedings on the workaround argument as a key reason for assuming no or limited irreparable harm to the defendant. Now, before the Federal Circuit, Apple raised this issue, and it's one on which I would side most clearly with Apple. In particular, I believe that the combination of the availability of workarounds (even though they may come with degradations of user experience, performance, or functionality) and a directly competitive situation (in this extreme case, a "two-horse race") should weigh very strongly in favor of an injunction. As for Samsung's arguments that it has workarounds in place, it's important to consider that the "workaround" for the '381 rubber-banding patent is a downright "throwout" (making it not unlikely that Samsung might, absent an injunction, re-implement the feature at some point) and that Apple disputes that the alleged workaround for the '915 pinch-to-zoom API patent is legally above board (a disagreement that doesn't really matter until Apple wins and enforces an injunction).
Samsung also tries to raise the bar for Apple to prove that its license agreements with IBM (unrelated to smartphones and tablet computers), Nokia and HTC don't suggest that monetary compensation is adequate. While I recognize that the existence of license agreements is considered by courts, Samsung tries to establish a high hurdle by criticizing that "there is no evidence (and Apple has not argued) that any of the accused features in Samsung's products would qualify as 'cloned features' under the HTC license". The key thing here in my view is that Apple's license to HTC is not an all-you-can-eat buffet. HTC doesn't have a license to those patents allowing it to do anything it wants as long as it pays a per-unit royalty. But if the court denies Apple an injunction against Samsung, and if Samsung (especially because U.S. courts make it so hard and slow for Apple to enforce its rights) doesn't agree to a license agreement of this kind, then the court's denial of injunctive relief (leaving Apple the option of pursuing post-judgment royalties, all of which comes down to a compulsory license) undoubtedly provides Samsung with a more liberal license than the one Apple extended to HTC. HTC at least has to fear that Apple may allege cloning and take it to court again; Samsung wouldn't even have to worry about this in the current situation.
Generally speaking, Samsung makes a number of good points on case-specific items. I may talk about them in more detail at a different point in time. As far as the "high themes" are concerned, I'm more sympathetic to Apple's positions and think there's a pretty good chance that the Federal Circuit will recognize the far-reaching implications of this appeal. To be clear, based on what I've read, I probably wouldn't grant Apple an injunction over more than a couple of intellectual property rights, if at all -- but I would agree that the hurdle was insurmountable and will continue to be insurmountable in similar cases unless the court sets the record straight and does something to discourage infringement.
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