Digest of Apple Inc. v. Samsung Electronics Co., Ltd., No. 2014-1802 (Fed. Cir. Sept. 17, 2015) (precedential). On appeal from N.D. Cal. Before Prost, Moore, and Reyna.

Procedural Posture: Plaintiff Apple appealed district court’s order denying plaintiff’s motion for a permanent injunction, which was limited to defendant Samsung’s use of software or code capable of implementing the infringing features. CAFC vacated and remanded.

  • Injunctions – Irreparable Harm: The district court did not err by requiring Apple to satisfy the casual nexus requirement to show irreparable harm. A causal nexus linking the harm and the infringing acts must be established regardless of whether the injunction is sought for an entire product or, as here, is narrowly limited to particular infringing features.

However, the district court erred when it found that Apple failed to demonstrate irreparable harm due to lost sales even though it was undisputed that Apple lost downstream sales to Samsung. It was legal error for the district court to effectively require Apple to prove that the infringing features were the sole or predominant cause of the lost downstream sales. Instead, the court should have determined whether the record established that there was “some connection” between the patented features and customers’ decisions to purchase Samsung’s accused devices. Applying this legal standard, the CAFC found that the record established that the features of the patents in suit were important to product sales and that customers sought these features in the phones they purchased. This was sufficient to establish a causal nexus for lost sales. Apple thus established irreparable harm, and the CAFC concluded that this factor weighs in favor of granting Apple’s injunction.

  • Injunctions – Inadequate Remedy at Law: The district court was correct in finding that Apple’s sales-based losses were difficult to quantify. However, the district court erred when it found that the inadequate remedy at law factor weighed against an injunction based on its finding of no irreparable harm. Since the district court erred in its irreparable harm analysis, it also erred in finding that the inadequate remedy at law factor weighed against an injunction. Instead, the CAFC found this factor weighs strongly in favor of Apple because of the difficulty in quantifying its downstream and network effect losses.
  • Injunctions – Balance of Hardships: Samsung argued that the district court erred in finding the balance of hardships favors an injunction. The CAFC found no abuse of discretion. This factor weighs strongly in favor of granting Apple’s proposed injunction, given that Apple was forced by Samsung’s infringement to compete against its own patented inventions in what is essentially a two-competitor market, that the proposed injunction was narrowly tailored to cause Samsung no harm other than to deprive it of the ability to use the patented features, that design-arounds were simple or already existed, and that Samsung currently sells only one product that uses only a single infringing feature of the patents-in-suit. Based on these factors, the CAFC found that Samsung would suffer little harm.
  • Injunctions – Public Interest: Samsung argued that the district court erred in finding the public interest weighs in favor of an injunction. The CAFC found no abuse of discretion. Given the important public interest in protecting patent rights, the absence of any evidence that Apple’s narrow proposed injunction would disrupt Samsung’s ability to deliver non-infringing products to consumers, the nature of the technology at issue, and the limited nature of the injunction, this factor strongly favors an injunction.

Reyna, concurring:

  • Injunctions – Irreparable Harm: Judge Reyna would conclude that, in addition to showing lost downstream sales, Apple satisfied the irreparable injury factor based on Samsung’s infringement on Apple’s right to exclude, and based on the injury that Samsung’s continued infringement would cause to Apple’s reputation as an innovator.

Prost, dissenting:

  • Injunctions – Irreparable Harm: Judge Prost would affirm the district court’s finding that Apple failed to show irreparable harm. The majority rested its findings on non-existent legal error, of “carriers’ preference” created without record support, and of “copying” as dispositive to show causal nexus to lost sales that is contrary to CAFC case law.
  • Injunctions – Public Interest: Judge Prost noted that the statutory right to exclude should not categorically bias the public interest factor “strongly” in the determination of the injunctive remedies as the majority asserts.