Another Battle in the Patent War of Apple and Samsung

On September 17, the federal circuit decided Apple, Inc. v. Samsung Electronics Co., Ltd., the latest patent case decision in a protracted series of smartphone patent infringement battles between the two electronics giants.  The case concerned Samsung’s alleged infringement on a few Apple smartphone patents, perhaps most notably the patent for the swipe-to-unlock feature. The District Court had ruled that Samsung had infringed on the Apple patents in question, but the court denied to issue a permanent injunction on the grounds that Apple  failed to demonstrate that the infringement resulted in irreparable harm.

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Historically, courts issued injunctions in patent infringement cases almost as a matter of course, but the Supreme Court put the kibosh on this practice in Ebay, Inc. v. MercExchange, LLC.  The Supreme Court stated that an injunction in a patent infringement case is like any other form of equitable relief and subject to the same four-part test an injunction in any other context is subject to: The plaintiff must demonstrate (1) that it has suffered irreparable harm; (2) that legal remedies, such as monetary damages, are insufficient to compensate for that harm; (3) that the balance of hardships weighs in favor of equitable relief, and (4) that the public interest would not be disserved if an injunction were issued.  While the Supreme Court rejected the rule of injunctions issuing by default, it also rejected the argument that non-practicing entities should never receive injunctions because their sole business is licensing patents in exchange for monetary compensation.

Although the litigation between Apple and Samsung is most familiar to the public, there has been a frenzy of patent infringement litigation in the smartphone industry.   These legal battles are not are not endemic to the United States by any means, with patent infringement cases decided in such countries as Japan or Germany, for example.  It should be interesting to see where the Courts ultimately land on injunctive relief; if Apple does not have a right to prevent competitors from using its patented technology, chances are we will see the same features in all phones on the market.  It is likely that companies like Samsung would rather just pay infringement damages than market phones without features sought after by consumers.

In reversing the District Court’s denial of an injunction, the Fed Circuit stated that the District Court erred in failing to find that Samsung’s infringement caused Apple irreparable harm.  The Federal Circuit stated that to satisfy the “causal nexus” requirement of the irreparable harm eBay factor, Apple need only show “some connection” between the patented features and consumer demand for the infringing products.  More practically, the Federal Circuit framed the question as “whether the record established that [an infringing smartphone feature] feature impacts customer’s purchasing decisions.”  Additionally, considering the adequacy of monetary damages, the second eBay factor, the Fed Circuit agreed with the district court’s conclusion that the sales lost due to the infringement were difficult to quantify as a result of downstream sales losses, or the “ecosystem effect.”  The Court also decided that the injunction was fair, because it gave a 30-day “sunset period” for Samsung to remove the infringing features.  Samsung itself had argued that the features were extremely minor and removing or changing them would be trivial.

In a very thought provoking concurrence, Judge Reyna stated that he believed that Apple had satisfied the irreparable injury factor based solely on the damage to Apple’s reputation as an innovator.  Perhaps more importantly, he went on to argue that any injury to the property right of exclusion is an injury, and in this case, an irreparable one.  Judge Reyna analogizes the legal harm to a violation of Constitutional Rights, because, after all, the Constitution expressly provides Congress the power to institute a patent system such as we have in the United States today.

It would seem that without the right of exclusion the patent system in the US would functionally be a compulsory licensing system.  The Supreme Court took a long step in this direction in eBay v. MercExchange, but where the line on permanent injunctions in patent infringement cases will solidify ultimately remains to be seen.

*Tyler S. Hood is a third-year law student at Wake Forest University School of Law.  He holds a Bachelor of Science in Chemistry from the University of North Carolina at Chapel Hill, and a Master of Science in Organic Chemistry from Texas A&M University.  Upon graduation, he intends to pursue a career in patent law.