In Apple v. Samsung Electronics, No. 2014-1802 (Fed. Cir. Sep 17, 2015), a split panel decision of the Federal Circuit vacated the district court’s refusal to issue a permanent injunction against Samsung. According to the Court, all four factors set forth in eBay v. MercExchange were satisfied: (1) Apple suffered an irreparable harm with a causal nexus relating the alleged harm to the alleged infringement; (2) the remedy at law is inadequate to compensate Apple’s injury; (3) there is a balance of hardship; and (4) the public interest is not disserved by the injunction.
For the first eBay factor, the Court disagreed with the district court that Apple must show its patented features “were the exclusive or predominant reason” driving consumers’ purchasing decisions. Instead, Apple need only show that there is “some connection” between the patented features and the market demand, i.e., that the patented features simply “impact” consumers’ purchasing decisions. And the Court clarified that a causal nexus is required regardless of whether Apple sought a product-based injunction or a more limited injunction to particular features.
Apple satisfied the causal-nexus inquiry by showing (1) evidence of Samsung’s internal discussions demonstrating Samsung’s subjective belief that the infringing features drove sales; (2) evidence of carriers’ and users’ valuing and preferring phones with the infringing features; (3) evidence of Samsung’s copying; and (4) evidence that Samsung is Apple’s top rival. Accordingly, it found that the first eBay factor favored Apple.
The Court found the remaining three eBay factors also favored Apple. On the second, the Court agreed with the district court that Apple’s sales-based losses are difficult to quantify due to the “ecosystem effect,” i.e., the effect that the sale of one product can have on downstream sales. However, the Court disagreed with the district court’s holding that the second eBay factor weighs against Apple despite that Apple’s sales-based losses are difficult to quantify, since that holding was predicated on weighing the first eBay factor against Apple, which the Court vacated. It also agreed with the district court that the third eBay factor favors Apple because Apple must compete against its own patented invention and the proposed injunction is narrowly tailored. Finally, the fourth eBay factor also favored Apple because, according to the majority, the public interest nearly always weighs in favor of protecting property rights especially when the patentee (Apple) practices its inventions. Accordingly, the Court vacated the denial of injunction and remanded.
In a dissenting opinion, Chief Judge Prost criticized the majority’s holdings as inconsistent with precedent. In a previous case involving the same parties, Apple v. Samsung Electronics, 735 F.3d 1352 (Fed. Cir. 2013) (“Apple I”), the Court held that the focus for causal nexus should remain on objective reasons for the patentee’s lost sales, not the infringer’s subjective beliefs as to why it increased its sales. Chief Judge Prost maintained that the majority’s holdings—that Apple is required to show only “some connection” between the infringement and the lost sales and that Apple’s allegation of copying is sufficient to satisfy the causal-nexus requirement—are inconsistent with Apple I. She also cautioned against the majority’s holding that public interest always weighs in favor of protecting property rights.