Last November in Apple, Inc. v. Samsung Elecs. Co., 735 F.3d 1352 (Fed. Cir. 2013), the court vacated the portion of Judge Lucy Koh's December 12, 2012 order (following the August 2012 jury verdict in Apple's favor) denying Apple a permanent injunction with respect to Samsung's infringement of three of Apple's utility patents. (I blogged about the Federal Circuit decision here.) This morning Judge Koh issued her decision on remand, once again denying Apple's request for an injunction. You can download the opinion here. Some points of interest:
On eBay factor 1 (irreparable harm), Judge Koh again concluded that Apple's evidence failed to establish a sufficient causal nexus between Samsung's infringement and the irreparable harm Apple has suffered as a result of competition from Samsung. Although the Federal Circuit in its November 2013 ruling did not require proof that the infringed patents were the sole reason for consumer demand for Samsung products, and instructed the court to consider the aggregate effect of the patented features on Samsung's sales, it was still incumbent upon Apple to
"show some connection between the patented feature and demand for Samsung's products," such as by introducing "[(1)] evidence that a patented feature is one of several features that cause consumers to make their purchasing decisions . . . [;(2)] “evidence that the inclusion of a patented feature makes a product significantly more desirable . . . [; or (3)] “evidence that the absence of a patented feature would make a product significantly less desirable.”
(Opinion at 15-16, quoting 735 F.3d at 1364.) In this regard, Judge Koh concluded that a conjoint analysis prepared by Apple's expert Dr. John Hauser did not prove the causal nexus, because (1) it "does not provide a way to directly compare consumers' willingness to pay for particular features to the overall value of the infringing devices"; (2) Dr. Hauser's results showed that "substantial portions" of the "price premiums" consumers were willing to pay were "attributable to features other than the patented features"; (3) "the survey appears to have failed to adequately account for noninfringing alternatives to the patented features"; and (4) the survey appeared to give "undue emphasis" to the patented features. (For more on conjoint analysis, see this post.) The court also reevaluated the evidence of ease of use and Samsung's copying, and didn't find that any of this evidence (even in combination with the Hauser analysis) sufficient to show a causal nexus. Altogether, "the evidence shows that the three patented features may add to a device’s appeal, but Apple has not shown that these specific features are among several that “cause consumers to make their purchasing decisions” or otherwise drive consumer demand. Apple IV, 735 F.3d at 1364. Accordingly, Apple has not met its burden of proving the requisite causal nexus to establish irreparable harm" (opinion at 33).
On eBay factor 2 (inadequacy of legal remedies), the court reversed its earlier decision that monetary remedies would be adequate, on the grounds that "the evidence was ambiguous as to whether Apple offered Samsung a license to the '381 Patent," that damages would be difficult to quantify, and that "Apple's past licensing behavior demonstrates a reluctance to license the utility patents-in-suit to Samsung . . . ." Nevertheless:
This conclusion, however, is ultimately of little help to Apple because the Court will not issue a permanent injunction based on irreparable harm that Samsung’s infringement did not cause, even if monetary remedies will not compensate Apple for that irreparable harm. To prevail on the inadequacy of legal remedies eBay factor, Apple needs to show that the irreparable harm established in the first eBay factor is not compensable through monetary remedies. . . . Apple, in other words, cannot obtain a permanent injunction merely because Samsung’s lawful competition impacts Apple in a way that monetary damages cannot remedy.
(Opinion at 37.) Although at first blush this conclusion might seem a bit odd, it is consistent with an idea that I and others have expressed, namely that irreparable harm and inadequacy of legal remedies are really one single factor. Thus, if there is no causal nexus between the infringement and the harm Apple has suffered from competing with Samsung, it's probably correct to conclude that Apple cannot prove inadequacy of legal remedies either. Whatever harm Apple will suffer and for which it is entitled to a remedy, monetary damages should suffice. (Since Samsung has stopped selling the goods covered by the patent, however, see opinion p.14 n.8, I don't think there's any pressing need to hold a hearing on an ongoing royalty in this case, though I don't actually know what the parties or the court is planning to do on this issue.)
Finally, on eBay factors 3 and 4 (balance of hardships, public interest) the court reaffirmed that factor 3 was neutral on the facts of the case and that factor 4 slightly weighed in Samsung's favor.
A few closing observations. First, if Apple is motivated to appeal, I assume it will argue that Judge Koh is still applying to strict a reading of "causal nexus," and that there was sufficient evidence to infer "some connection" between Samsung's infringement and Apple's irreparable harm. For now, however, I'm inclined to think that Apple's arguments will be less potent this time around, given the discretionary nature of the decision to award injunctive relief. As the Federal Circuit stated in its November 2013 opinion:
“The decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion.” eBay, 547 U.S. at 391, 126 S.Ct. 1837. “We may find an abuse of discretion on a showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings.” Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1379 (Fed.Cir.2008) (internal quotation marks omitted). “To the extent the court's decision is based upon an issue of law, we review that issue de novo.” Sanofi–Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1374 (Fed.Cir.2006).Second, although I am hardly an expert on conjoint analysis, I wonder if the problems Judge Koh identified in this case--in particular, the disconnect between consumer preferences for the patented features as revealed in the survey and the overall demand for the accused products incorporating those features--could ever be overcome in a manner sufficient to show causal nexus, given the relationship between demand and other factors such as price and the existence of competing products. Third, and relatedly, if Judge Koh's analysis becomes widely accepted it may become very difficult, perhaps impossible, for the owners of patents that are incorporated into multi-patent products such as smartphones to obtain injunctive relief. Perhaps that's taking things a bit too far, and certainly moves the U.S. farther out of step with practice in other countries. As I've stated on many occasions, I think courts should (and U.S. courts now generally do) avoid granting injunctions when there is a substantial risk that doing so will create or exacerbate patent holdup; but over the past few years, I've begun to worry that we are now denying injunctions in a much broader class of cases than the relevant policy considerations would suggest is desirable.