FEDERAL CIRCUIT DECISIONS CONCERNING SMARTPHONES HAVE CREATED UNCERTAINTY REGARDING THE EVIDENCE NEEDED TO PROVE IRREPARABLE HARM AND ESTABLISH ENTITLEMENT TO INJUNCTIVE RELIEF.

Author:Amundson, Steven M.
 
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  1. INTRODUCTION 232 II. THE APPLE V. SAMSUNG CASES: BACKGROUND 233 III. THE CAUSAL-NEXUS REQUIREMENT HAS EVOLVED AT THE FEDERAL 235 CIRCUIT A. The Federal Circuit First Considered the Causal-Nexus 235 Requirement in Apple I B. The Federal Circuit Reiterated, and Perhaps Heightened, the 236 Causal-Nexus Requirement in Apple II C. The Federal Circuit Refined the Causal-Nexus Requirement in 238 Apple III D. The Federal Circuit Clarified the Causal-Nexus Requirement 241 in Apple V E. Summary 243 IV. COURTS HAVE APPLIED THE CAUSAL-NEXUS REQUIREMENT 244 INCONSISTENTLY V. CONSIDERATIONS WHEN SEEKING TO SHOW OR REFUTE A CAUSAL NEXUS 259 VI. CONCLUSION 761 I. INTRODUCTION

    In four decisions by the Court of Appeals for the Federal Circuit in two patent cases that Apple filed against Samsung, the court has appeared to flip-flop when describing the evidence needed to prove an essential element for injunctive relief: irreparable harm. A patentee must establish irreparable harm, among other things, to obtain a preliminary or permanent injunction. (1) And to establish irreparable harm, a patentee must demonstrate a sufficiently strong connection--or causal nexus--between the patent infringement and the alleged irreparable harm. (2)

    In its Apple v. Samsung decisions, the Federal Circuit explained that "[s]ales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature." (3) So if "the accused product would sell almost as well without incorporating the patented feature," the infringement injures the patentee only insubstantially even if the accused product's sales cause substantial damage commercially. (4) Thus, the causal-nexus requirement (1) ensures that the infringement causes the irreparable harm "in the first place" (5) and (2) prevents the patentee from "leverag[ing] its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant." (6)

    This article discusses the causal-nexus requirement's evolution at the Federal Circuit based on two cases initially filed in April 2011 and February 2012. This article also discusses how various trial courts have applied the causal-nexus requirement when considering the propriety of injunctive relief. It then discusses points to consider when seeking to show or refute a causal nexus.

  2. THE APPLE V. SAMSUNG CASES: BACKGROUND

    Apple's 2011 case against Samsung has resulted in several Federal Circuit decisions, including two involving injunctions:

    a May 2012 decision addressing Apple's appeal from the denial of a preliminary injunction ("Apple I") (7); a November 2013 decision addressing Apple's appeal from the denial of a permanent injunction ("Apple III") (8); a May 2015 decision addressing Samsung's appeal from a final judgment concerning liability and damages ("Apple IV"). (9) In the 2011 case, Apple alleged that more than twenty Samsung smartphones and tablet computers infringed several design and utility patents. (10) The design patents covered ornamental features in Apple's iPhones and iPads, such as the products' minimalist appearance and the graphical user interface's design, e.g., the arrangement of square icons with rounded corners. (11) The utility patents concerned a bounce-back feature, a pinch-to-zoom feature, and a double-tap-to-zoom feature. (12)

    Apple's 2012 case against Samsung has also resulted in several Federal Circuit decisions, including two involving injunctions:

    an October 2012 decision addressing Samsung's appeal from the grant of a preliminary injunction ("Apple II") (13); a December 2015 decision addressing Apple's appeal from the denial of a permanent injunction ("Apple V") (14); a February 2016 decision addressing cross-appeals from a final judgment concerning liability and damages ("Apple VI"). (15) In the 2012 case, Apple alleged that seventeen Samsung smartphones infringed eight different utility patents than asserted in the 2011 case. (16) The utility patents asserted in the 2012 case concerned features allegedly relating to the ease of using smartphones, including a unified-search feature, a data-detection/linking feature, a slide-to-unlock feature, and a spelling autocorrect feature. (17)

    As an example, a device with the unified-search feature searches multiple data storage locations after a user enters a single search query. (18) The claim at issue recited a particular implementation where different search modules with different search algorithms searched different data storage locations. (19) As another example, a device with the data-detection/linking feature detects data patterns (such as phone numbers, addresses, and dates) in text and creates a link allowing a user to take further action, e.g., creating a link for a phone number that enables the user to readily dial the number or store the number in an address book. (20)

    In each of Apple I, Apple II, Apple III, and Apple V, the Federal Circuit considered the causal-nexus requirement for establishing irreparable harm. In Apple I and Apple II, the appellate court appeared to impose a stringent evidentiary standard for a causal nexus by requiring proof that the patented feature drives consumer demand. But in Apple III and Apple IV the court retreated from that position.

  3. THE CAUSAL-NEXUS REQUIREMENT HAS EVOLVED AT THE FEDERAL CIRCUIT

    1. The Federal Circuit First Considered the Causal-Nexus Requirement in Apple I

      When ruling on Apple's request for a preliminary injunction in Apple I, the district court determined that Apple failed to establish a connection between the alleged infringement and the alleged irreparable harm. (21) When considering Apple's appeal from the district court's decision denying an injunction, the Federal Circuit called that connection a "causal nexus." (22) The appellate court concluded that the district court correctly required "a showing of some causal nexus between Samsung's infringement and the alleged harm to Apple" to establish irreparable harm. (23) It said that "a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct." (24)

      The Federal Circuit reasoned that "[i]f the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product." (25) The court observed that "[a] mere showing that Apple might lose some insubstantial market share as a result of Samsung's infringement is not enough." (26) The court instructed that evidence that Samsung believed it important to incorporate the patented feature was "relevant" but "not dispositive... because the relevant inquiry focuses on the objective reasons as to why the patentee lost sales, not on the infringer's subjective beliefs as to why it gained them (or would be likely to gain them)." (27)

      The Federal Circuit's discussion of the bounce-back feature exemplifies its analysis. That feature functioned when a user attempted to scroll past the end of a displayed document and caused an area beyond the document's end to appear in the display, thus indicating that the user had reached the document's end. (28) Once the user stopped scrolling, e.g., by lifting the finger used for scrolling, the document's end bounced back to the bottom of the display. (29) The district court determined that Apple did not establish irreparable harm because Apple "failed to demonstrate that consumer purchasing decisions were based on the presence of the bounce-back feature," and the Federal Circuit upheld that determination. (30)

    2. The Federal Circuit Reiterated, and Perhaps Heightened, the Causal-Nexus Requirement in Apple II

      When ruling on Samsung's appeal from the grant of a preliminary injunction in Apple II, the Federal Circuit refined the causal-nexus requirement. (31) Although Apple alleged infringement of eight patents by seventeen products, Apple relied on only four patents in seeking a preliminary injunction against one smartphone, namely, the Samsung Galaxy Nexus. (32) The district court analyzed the likelihood-of-success and irreparable-harm factors on a patent-by-patent basis. (33)

      The district court decided that all four patents were likely valid and infringed but found that Apple established irreparable harm for only one patent, in particular, the patent covering the unified-search feature. (34) The court distinguished the causal nexus evidence for that patent from the evidence for the other three patents. (35) It reasoned that although "Apple has not clearly shown that the features claimed" by the other three patents "are substantial drivers of consumer demand, Apple has made such a showing with respect to the unified search functionality." (36) The court determined that the "unified search functionality drives consumer demand in a way that affects substantial market share." (37) In making that determination, the court noted that it did not read the Federal Circuit's decision in Apple I "to mean that Apple must show that its patented features are the sole or even the primary driver of consumer demand." (38) Because the court found a sufficiently strong connection between the infringement and the alleged irreparable harm, it issued a preliminary injunction barring importation and sale of the Galaxy Nexus. (39)

      On appeal in Apple II, the Federal Circuit decided that the district court abused its discretion in issuing a preliminary injunction because the district court wrongly determined that Apple established a sufficient causal nexus. (40) The Federal Circuit explained that the causal nexus analysis "is not a true or false inquiry" but should assess the extent to which "the harm resulting from selling the accused product can be ascribed to the infringement." (41) The appellate court further explained that "[i]t is not enough for the patentee to establish some insubstantial connection" but instead must demonstrate "that a sufficiently strong causal nexus relates the alleged...

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