The Apple – Samsung tussle is one that has now almost frequently found its way into our blog. It’s being watched so closely due to its near symbolism of how patent wars may affect the landscape for technological innovation as we progress into an era where patent policy can directly affect more and more aspects of our lives. We are happy to present to our readers with a guest post on the latest US update on this international battle. Amshula Prakash, a 4th year student from NLSIU, has submitted this analytical piece as part of her application for our SpicyIP Fellowship. She ends with some interesting notes on how the Court may have failed to give certain aspects of patent law the importance they deserved.
Court rejects Apple’s motion for Permanent Injunction against Samsung
Five days ago, the US District Court for the North District of California, San Jose Division, rejected Apple’s motion for a permanent injunction order against Samsung, following proof of patent infringement by the latter. The decision does not come as a big surprise, given the general trend followed by courts in the US post the epoch making decision in eBay v. MercExchange where the Supreme Court reversed the prevailing practice of granting a victorious patentee permanent injunction as a matter of right. The court held that patent law cannot be unique while dealing with permanent injunctions when an infringement has been proved and must go through the four factor test laid down in this case. In short, the case held that there is no presumption of the right to an injunction in a patent infringement case thus upturning the presumption that permanent injunctions are granted as matter of course in patent infringement cases.
In the Apple-Samsung case, the court considered Apple’s motion for permanent injunction in light of the four factors laid down in the eBay judgment, which requires the patentee to prove i) Irreparable injury suffered by the patentee ii) Inadequacy of monetary damages to compensate for the injury iii) Considering the balance of hardships between the plaintiff and defendant, a remedy in equity needs to be warranted and iv) Public service would not be disserved by such an injunction
The highlights of the court’s reasoning in the determination of the four factor test are as follows.
Irreparable Injury not attributable to Samsung’s conduct– The court, stating that the presumption of irreparable injury no longer applies, even when infringement in proved, held that Apple has not made claims on a patent to patent basis but argued in terms of aggregate harm from patent and trade dress infringement and rejected the argument. Though the court agreed that Apple had suffered irreparable harm, the failure to attribute these to Samsung’s conduct decided this in Samsung’s favour.
License evidence cuts in Samsung’s favour- Apple’s claim that monetary damages cannot make good the harm suffered was rejected by the court in light of Apple’s licensing activity. The court on its finding that Apple, in the past, has agreed to license its IP to competing companies such as Samsung held that this suggests the adequacy of monetary payments by Samsung.
Weighing the balance of hardships, the court held that neither Apple nor Samsung would be greatly affected by either outcome. The court rejected Apple’s argument that Samsung’s willful conduct tilted the scale in its favour by stating that injunctions are used to prevent further harm and not as punishment. Samsung’s counter that an injunction would create hardship by disrupting its relations with current consumers and carrier with pre-existing stock was also rejected by the court given the absence of an explanation by Samsung. The court thus held that the balance of hardship remained neutral.
The court decided on the harm that could be caused to the publicby looking at the public interest factor. This too was decided in Samsung’s favour as the court held Apple’s motion for injunction against 26 products to be ‘extremely broad’. The court while rejecting Samsung’s claims that an injunction would harm public interests by reducing competition for Apple held that it would not be equitable to deprive consumers of Samsung’s infringing phones as Apple’s IP was not core to the functionality of Samsung’s products. Additionally, the court also held that only a few features of the phones infringed Apple’s IP and doing so would deprive consumers of the non-infringing features in Samsung products.
The court thus decided that the equities were not in support of an injunction and rejected Apple’s motion. The question that comes to my mind is whether the standards determining equity in permanent injunctions in other areas of law such as tort and contract also be applicable to patent law? Patent law, by its very definition includes the right to exclude and it only makes sense to grant permanent injunctions as a matter of right to victorious patentees, including non-practising patent holders. Though the court pointed that a patentee’s right to exclude lies at the core of the grant of a patent, it is evident that this case, following the trend post the Ebaydecision, completely disregarded this crucial point and did so despite Samsung being a direct competitor of Apple. The court also explicitly states that absent an injunction, Samsung could begin again to sell infringing products further exposing Apple to harms such as loss of market share and downstream and future sales. Further, the court, despite mentioning the public interest factor involved in the granting of an injunction, by upholding the patent-holder’s rights and thus promoting risk based innovation, fails to give it the importance it deserves. Let’s hope the Federal Court give this aspect due consideration and uphold the very essence of patent law if Apple does decide to appeal.