Apple Inc. v. Samsung Electronics Co., Ltd.

Addressing the factors for granting injunctive relief in multifaceted, multifunction technology, the U.S. Court of Appeals for the Federal Circuit vacated and remanded the district court’s denial of Apple’s request for a permanent injunction finding Apple had proven irreparable harm, the balance of harm tipped in its favor and that the public interest supported an injunction. Apple Inc. v. Samsung Electronics Co., Ltd., Case No. 14-1802 (Fed. Cir., Sept. 17, 2015) (Moore, J.) (Reyna, J., concurring) (Prost, J., dissenting).

Following its jury verdict win, Apple sought a narrowly tailored injunction to enjoin Samsung from including software or code capable of implementing certain infringing features on its devices. Apple also proposed a 30-day “sunset period” to allow Samsung to create a design around. The district court found that despite the public interest favoring an injunction and the narrowness of Apple’s request tilting the balance of the hardships in Apple’s favor, Apple had not shown it would suffer irreparable harm without an injunction and denied the motion. Apple appealed.

The Federal Circuit confirmed that Apple must show a causal nexus between the infringement and the lost sales even where the requested injunction does not target specific products. It went on to find that the causal nexus “is a flexible analysis” requiring the patentee to show “some connection” between the patented features and the demand for the infringing products. The patentee need not prove that the infringing features “drove consumer demand.” Evidence of Samsung’s copying of the infringing features and consumer demand for the features supported their value to the Samsung product and while alone would not provide a causal nexus, were to be considered in the analysis. The Court held Apple had met the causal nexus test.

The Federal Circuit also concluded that Apple’s sales-based losses were difficult to quantify due to the effect on the sales of downstream accessories, computers, software and future Apple products. The Court went on to find that this inability to quantify the damages “strongly” weighed in favor of a finding of irreparable harm and an injunction.

The Federal Circuit agreed with the district court’s finding that the balance of the hardships weighed in Apple’s favor and “strongly” favored an injunction. Samsung’s infringement forced Apple to “compete against its own patented invention.” The Court concluded that Apple’s proposed injunction was narrowly tailored and would cause little harm to Samsung.

Finally, the Court agreed that the public interest favored an injunction and noted that “the public interest nearly always weighs in favor of protecting property rights in the absence of countervailing factors, especially when the patentee practices his inventions.”

Because it found Apple suffered irreparable harm from its sales-based losses, the Federal Circuit did not address whether Apple also suffered irreparable reputational harm. Judge Reyna’s concurrence noted that he would have also found the injury to Apple’s reputation as a direct competitor to Samsung and an innovator satisfied the irreparable harm factor. Judge Reyna noted that recently courts had extended eBay too far and ignored “the fundamental nature of patents as property rights granting the owner the right to exclude.”

Chief Judge Prost issued a vigorous dissent, writing, “[t]his is not a close case.” Chief Judge Prost argued that the majority failed to defer to the district court’s analysis of evidence presented by Apple and improperly considered evidence of Samsung’s copying as part of the causal nexus analysis.

Practice Note: As Judge Reyna noted in his concurrence, this decision “leaves open the door for obtaining an injunction in a case involving infringement of a multi-patented device” which had been “near shut under current law.”