Today the Federal Circuit issued a decision that reversed and remanded the denial of Apple’s request to permanently enjoin Samsung mobile devices found to infringe Apple patents. This decision appears more flexible than the court’s prior rejection of a preliminary injunction in this case with respect to establishing a casual nexus between the alleged infringement and the alleged irreparable harm that would be caused if the infringement were not enjoined.
This case does not involve any standard essential patents (“SEPs”), but is worth reading given its general impact and guidance on seeking injunctions in patent cases. Further, the issues presented demonstrate that some standard essential patent issues are not entirely unique and might be addressed through traditional patent law analysis. For example, there is a concern that owners of standard essential patents may seek to extract value from the patented technology being incorporated into the standard beyond the value of the patented technology itself. That same concern exists generally in typical patent cases involving non-standard essential patents where the Federal Circuit repeated in this case that “the casual nexus inquiry … informs … whether the patentee seeks to leverage its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant.”
The court walked through the four eBay factor test for injunctive relief as applied to both design patents and utility patents found to have been infringed, ultimately affirming no permanent injunction for the design patents but remanding for further consideration whether an injunction should issue for the utility patents. Below is a short summary on some aspects of the utility patent ruling, and we encourage you to do your own in-depth review of the decision to appreciate its import.
Irreparable Harm. The Federal Circuit confirmed that the patentee must “show some casusal nexus between [the accused] infringement and the alleged harm to [the patentee] as part of the showing of irreparable harm.” But the district court erred by requiring a showing “that one of the patented features is the sole reason consumers purchased [the accused infringing] products” [emphasis in original]. While its true that the patent owner must show that the infringing feature “drives consumer demand for the accused product”, this does not require showing that the patented feature is “the sole reason for consumer’s purchases”, “the one and only reason for consumer demand” or “the exclusive reason for consumer demand” [emphasis in original]. Rather, the patent owner “must show some connection between the patented feature and demand for [the accused infringer’s] product.” The line distinguishing the two is far from clear, so reproduced below is the entirety of the court’s illustration of the point:
[A] battery does not necessarily drive demand for a laptop computer simply because its removal would render the laptop ineffective as a portable computer. That is because consumers often do not chose a laptop based on its battery, and presumeably at this point, no inventor has a patent covering all laptop batteries. Nevertheless, it is indisputable that the ability to carry around a computer without having to plug it in is one of the reasons people buy laptops. Thus, if the first person to invent a laptop battery had obtained a patent covering all laptop batteries, then it would be reasonable to say that the patented invention was a driver of demand for laptops. And if a particular patented laptop battery lasts significantly longer than anyother battery on the market, then the replacement of that battery with a noninfringing battery might make a laptop less desirable. In that case, it might be reasonable to conclude that the patented battery is a driver of consumer demand for the laptop.
The court’s analysis indicates that this “nexus” issue ultimately is a question of degree. For example, though “evidence that a patented feature significantly increases the price of a product [could] show that the feature drives demand for the product”, this may not apply if it contributes only a “nominal amount” to the price: “For example, consumers’ willingness to pay an additional $10 for an infringing cup holder in a $20,000 car does not demonstrate that the cup holder drives demand for the car.”
The Federal Circuit ultimately ruled that the district court erred in dismissing survey evidence “that consumers would be willing to pay fairly significant price premiums for the features claimed in Apple’s utility patent,” because such evidence could show that the patented features drive demand. Although this is a question of degree, the district court erred by not reaching this question and deeming the survey evidence to be irrelevant.
Inadequecy of Legal Remedies. Amont other things, the Federal Circuit considered whether the district court erred in finding legal remedies adequate based on Apple’s prior licensing of the patents-in-suit to others and prior licensing to Samsung of other patents. The Federal Circuit ruled that the district court erred by not considering the differences between the patentee’s prior licensing and the current situation. That approach erroneously “hints at a categorical rule that [the patentee’s] willingness to license its patents precludes the issuance of an injunction.” The Federal Circuit vacated this ruling and remanded for further consideration of this factor.
Balance of Hardships. The Federal Circuit ruled that the district court did not err in finding this factor neutral in this case.
Public Interest. Among other things, the Federal Circuit considered whether the district court properly considered whether the breadth of the injunction sought would disserve the public interest. The Federal Circuit defined the concern as “not that a large number of products would be enjoined, but rather that entire products would be enjoined based on ‘limited non-core features'” and “that an injunction [may] depriv[e] the public of access to a large number of non-infringing features.” The Federal Circuit ruled that the district court did not abuse its discretion in “recogniz[ing] the public’s interest in enforcing patent rights,” but that such interest was “outweighed by other considerations” in this case such as “removing phones from the market when the infringing components constitute such limited parts of complex, multi-featured products.”
In sum, the Federal Circuit found some problems with the district court’s permanent injunction analysis and remanded the decision for further consideration of injunctive relief.