IT’S JUST A PHONE….NOT!

colorful-phone-1538113The expression too little too late perfectly sums up the recent ruling of the U.S. Court of Appeals for the Federal Circuit in Apple Inc. v. Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America, LLC, wherein the Court of Appeals by a 2-1 majority, granted an injunction in favour of Apple Inc. (Apple). In 2012, Apple had filed a suit against Samsung Electronics Co., Ltd.; Samsung Electronics America, Inc.; and Samsung Telecommunications America, LLC (collectively, “Samsung”), alleging that Samsung had infringed five of their patents by using them in their smart phones and tablet interfaces.[i] The case proceeded to trial and it was held that Samsung had infringed three patents. Hence, Apple was awarded $119,625,000 for Samsung’s infringement of these three patents.[ii]

Upon the verdict being granted in their favour, Apple filed a motion for injunction that would prevent Samsung from, “inter alia, making, using, selling, developing, advertising, or importing into the United States software or code capable of implementing the infringing features in its products.” From the above, it is evident that Apple had only sought an injunction against the infringing features and not against the smartphones and tablets to which they were applied. Moreover, Apple had even offered a “sunset period”, meaning that the enforcement of the injunction would be stayed for a period of 30 days, “during which Samsung could design around the infringing features.” However, the District Court denied the motion for injunction, the reason being that Apple ‘failed’ to show that they would suffer irreparable harm without the injunction. Based on this finding, the District Court took the view that Apple failed to prove that monetary damages were not adequate.

A party seeking a permanent injunction must prove the following four factors:

  • Firstly, that there has been an irreparable injury;
  • Secondly, that remedies available at law, like monetary damages, are not adequate to compensate for that injury;
  • Thirdly, that bearing in mind the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
  • Fourthly, that the grant of permanent injunction world not disserve the public interest.

 

While the first two factors were found not to weigh in favour of an injunction by the District Court, the latter two factors were found to be favoring the injunction, hence, injunction was denied. On an appeal, the Court held that the District Court had erred when it had denied the grant of an injunction.

The Court of Appeals held that the District Court erred when it asked Apple to prove that infringing features were the primary reason why consumers opted for Samsung products to find irreparable harm. What District Court should have done instead was to find if there was any connection between the patented features and demand for Samsung products, a point which was clearly in favour of Apple. The Court of Appeals held that Apple had shown a connection between the patented features and demand for the Samsung products.

The District Court while admitting that losses suffered by Apple were difficult to quantify, it erred when it held that monetary damages given to Apple were adequate. The Court of Appeals held that District Court’s decision relating to the second factor was based on its view regarding the first factor, and if the latter was overturned, it would result in the finding, pertaining to the second factor being overturned as well.

With respect to the third factor, the Court of Appeals upheld District Court’s views that the balance of hardship weighed in favour of Apple. Since Apple had only sought an injunction against the infringing features and Samsung had repeatedly emphasized that “designing around the asserted claims of the three patents at issue would be easy and fast,” the District Court held that Samsung would “not face any hardship”from the injunction. The District Court was of the view that a patentee should not be forced to compete against its own patented invention, and that Apple would suffer hardship without an injunction.

Fourth factor too was in favour of injunction. The Court of Appeals agreed with the District Court that public interest favored protection of patent rights as this encouraged investments based risks. The Court of Appeals held that Apple did not seek to enjoin the sale of lifesaving drugs, but to prevent Samsung from profiting from the unauthorized use of infringing features in its cellphones and tablets.

There is a growing consensus amongst the judicial community that a person should not be allowed to infringe patent rights of others, and this verdict will surely serve as an impediment to those who seek to ride on the hard work of others.

 

[i] The features at issue were the “slide to unlock”, the data structures detection system, and method for correcting spelling error on touchscreen devices. The Patents in question were the ’721 patent, the ’647 patent, the ’172 patent, among two others. The district court held on summary judgment that Samsung infringed the ’172 patent. The case proceeded to trial, and a jury found that nine Samsung products infringed one or both of Apple’s ’647 and ’721 patents.

[ii] Apple Inc. v. Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America, LLC

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