Federal Circuit Reverses Injunction In Samsung, Apple Patent Dispute

by Tara Arick on October 15, 2012 · 0 comments

in Contract Law,Legal Technology

- From LexisNexis® Mealey’s™ Daily Legal News.

U.S. Judge Lucy H. Koh of the Northern District of California abused her discretion in barring Samsung Electronics America Inc. from selling the Galaxy Nexus smart phone, the Federal Circuit U.S. Court of Appeals ruled Oct. 11 (Apple Inc. v. Samsung Electronics America Inc., No. 12-1507, Fed. Cir.).

In reversing and remanding the judge’s injunction, the appellate panel found that “the causal link between the alleged infringement and consumer demand for the Galaxy Nexus is too tenuous to support a finding of irreparable harm.”

Furthermore, despite noting that it “ordinarily” would not address any issues beyond that of irreparable harm, “in the interest of judicial economy,” the Federal Circuit deemed Judge Koh’s claim construction of a disputed limitation erroneous.

Unified Search

At issue in the dispute is Apple’s U.S. patent No. 8,086,604, which is directed to an apparatus for “unified search” that uses heuristic modules to search multiple data storage locations through a single interface. Apple sued Samsung in February, asserting infringement of several patents relating to smart phone technology. In similar litigation, a jury empanelled before Judge Koh in August awarded Apple more than $ 2 billion in damages in connection with different patents infringed by Samsung. The verdict, and subsequent post-trial judgments by Judge Koh, are also being appealed to the Federal Circuit.

In June, Judge Koh agreed with Apple that the Quick Search Box (QSB) – the unified search application – of the Galaxy Nexus likely infringes claim 6 of the ’604 patent. The judge entered an injunction from selling the accused product, but the Federal Circuit later issued a temporary stay of the relief.

Not True Or False

In the instant ruling, the appellate panel noted that the parties dispute only Judge Koh’s likelihood-of-success and irreparable-harm analyses. With regard to the latter, the Federal Circuit wrote that Apple must demonstrate irreparable harm absent an injunction and a sufficiently strong causal nexus that relates the harm to the alleged infringement. Apple is unable to satisfy the second factor, according to the appellate panel.

A causal nexus analysis “is not a true or false inquiry” according to the Federal Circuit, which instead framed the “relevant question” as “whether there is some causal relationship between the asserted injury and the infringing conduct, but to what extent the harm resulting from selling the accused product can be ascribed to the infringement.”

“It is not enough for the patentee to establish some insubstantial connection between the alleged harm and the infringement and check the causal nexus requirement off the list. The patentee must rather show that the infringing feature drives consumer demand for the accused product. Only viewed through the prism of the causal nexus analysis will the irreparable harm allegations reflect a realistic sense of what the patentee has at stake,” the appellate panel held.

Inference Not Permitted

Finding that Apple presented “no evidence that directly ties consumer demand for the Galaxy Nexus to its allegedly infringing feature,” the Federal Circuit rejected the “circumstantial” nature of Apple’s claimed nexus, which focus primarily on the popularity of the iPhone 4S application “Siri.” Although the Galaxy Nexus has a unified search feature, it does not have a feature equivalent to Siri – an automated personal assistant that responds to personal commands – according to the appellate panel.

“We hold that the district court abused its discretion. To begin with, to the extent the district court endorsed Apple’s articulation of the causal nexus test, it erred as a matter of law. The causal nexus requirement is not satisfied simply because removing an allegedly infringing component would leave a particular feature, application, or device less valued or inoperable. A laptop computer, for example, will not work (or work long enough) without a battery, cooling fan, or even the screws that may hold its frame together, and its value would be accordingly depreciated should those components be removed. That does not mean, however, that every such component is ‘core’ to the operation of the machine, let alone that each component is the driver of consumer demand. To establish a sufficiently strong causal nexus, Apple must show that consumers buy the Galaxy Nexus because it is equipped with the apparatus claimed in the ’604 patent-not because it can search in general, and not even because it has unified search,” the Federal Circuit wrote.

“This record does not permit the inference that the allegedly infringing features of the Galaxy Nexus drive consumer demand. There is therefore no need for us to review the district court’s assessment of Apple’s allegations of irreparable harm. Regardless of the extent to which Apple may be injured by the sales of the Galaxy Nexus, there is not a sufficient showing that the harm flows from Samsung’s alleged infringement,” the appellate panel added.

ResQNet Reliance

The Federal Circuit next addressed the likelihood of success of Apple’s infringement allegations, focusing on Judge Koh’s construction of the claim limitation “a plurality of modules . . . wherein . . . each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm” because that construction “may become important on remand.” Based on the ruling in ResQNet.com Inc. v. Lansa Inc. (346 F.3d 1374, 1382 [Fed. Cir. 2003]), the judge found that the term “plurality” means “at least two,” or “simply the state of being plural.” Additionally, Judge Koh concluded that the QSB likely infringes because it contains at least two modules that use different heuristic algorithms.

Again siding with Samsung, the Federal Circuit wrote that Judge Koh’s determination that “each” modifies “plurality of heuristic modules” is erroneous because “it contravenes the plain terms of the claim.”

“The word ‘each’ appears not before ‘plurality of modules,’ but inside the ‘wherein’ clause and before the phrase ‘heuristic modules.’ The district court drew support for its construction from ResQNet . . . . But ResQNet in fact counsels the opposite conclusion . . . . Here, the district court eliminated the very distinction that we deemed material in ResQNet by plucking ‘each’ from where it appears and planting it before the phrase ‘plurality of modules.’ That was error, and Apple’s reliance on ResQNet based on the assertion that it ‘involv[ed] almost identical claim language’ is – at best – incorrect,” the appellate panel concluded.

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