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IP Alert: Federal Circuit Issues Opinion Regarding Standards for Issuance of Permanent Injunction

December 6, 2013

On November 18, 2013, in Apple, Inc. v. Samsung Electronics Co., Ltd., the Court of Appeals for the Federal Circuit addressed the requirements for obtaining a permanent injunction in patent infringement lawsuits, and clarified how a court should evaluate whether the patent owner will suffer irreparable harm absent the injunction.

Apple holds several patents related to smartphones and tablets, and also owns certain trade dress rights related to its iPhone product. Apple sued Samsung for both trade dress and patent infringement. A jury found that the Samsung devices infringed six Apple patents—three utility patents and three design patents—and that Samsung had diluted Apple’s trade dress rights. 

Apple requested a post-verdict permanent injunction to stop further importation or sales of these devices. The district court denied Apple’s request, and Apple appealed. 

On appeal, the Federal Circuit considered the factors enunciated by the U.S. Supreme Court in eBay, Inc. v. MercExchange, LLC regarding when a district court may enter a permanent injunction. The eBay test requires a plaintiff to demonstrate (1) that it has suffered an irreparable injury; (2) that remedies such as monetary damages are inadequate to compensate for that injury; (3) that, considering the balance of the hardships between the plaintiff and defendant, an injunction is warranted; and (4) that the public interest would not be disserved by a permanent injunction. 

Regarding the first eBay factor, the Federal Circuit held that Apple’s showing of irreparable harm was insufficient absent a “causal nexus” between the harm and Samsung’s infringement. The court reasoned that without this causal nexus the patentee would suffer the same harm with or without an injunction, thus obviating the need for injunctive relief.

The patentee must therefore show a connection between the patented feature and the demand for the accused products. The patented features need not be the sole reason consumers purchase the infringing products. Evidence that the patented feature is one that impacts consumer purchasing decisions, or that it makes the product significantly more desirable, may be sufficient. The court also held that a patentee need not prove the causal nexus on a patent-by-patent basis. Circumstances may allow considering patents related to the same technology in the aggregate.

Applying those standards, the Federal Circuit held that Apple failed to prove a causal nexus between infringement of Apple’s design patents and its lost market share and downstream sales. Apple’s evidence showed only that design, as a general matter, was important to consumers broadly. But because Apple had had not shown that the patented design attributes drove consumer demand, Apple had not met the first eBay factor. 

The court reached a different conclusion with regard to Apple’s utility patents. At trial, Apple had introduced survey evidence that, Apple argued, established that consumers would be willing to pay a premium for the features claimed in the utility patents. The court found that this evidence supported Apple’s contention that the corresponding infringing features of the Samsung products increased their desirability to consumers. The court held that the district court had improperly discounted this evidence, and remanded the case for further consideration. 

Addressing the remaining eBay factors, the court ordered further consideration on remand of factor (2), the adequacy of other remedies. The court held that factor (3), the balance of hardships between the parties, was neutral, and that factor (4), the public interest, weighed against the grant of an injunction. Also, because Samsung had stopped selling the products that were found to dilute Apple’s trade dress, the Federal Circuit upheld the court’s refusal to enjoin these products.

This decision is important for those considering seeking permanent injunctive relief from patent infringement, and for those seeking to avoid such an injunction. Survey evidence about the impact of a patented feature on a consumer’s purchasing decision may be a key factor when compiling evidence to show causal nexus between infringement and injury. 

If you would like to discuss the implications of the Apple v. Samsung decision, please contact Fitch Even partner Timothy P. Maloney.

Written by Fitch Even attorney Nicole L. Little

 

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