Source: http://www.groklaw.net/articlebasic.php?story=2013080915202257
Timestamp: 2019-04-20 23:13:29+00:00

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Today was the day Apple's appeal of Judge Lucy Koh's refusal to issue an injunction against Samsung was scheduled at the US Court of Appeals for the Federal Circuit in Washington, DC. And Groklaw had two volunteers there. The first report is in, and we expect Webster to send in his report next. Groklaw's RFD has the framework of how it went, but he confesses he couldn't predict the outcome.
I met Webster at the hearing. The Panel consisted of Judges Prost, O'Malley, and Bryson. From the discussion, I gathered that this may be the same panel that heard the appeal concerning the preliminary injunction.
The hearing lasted well beyond the 15 minutes per side that was scheduled, driven largely by questions from the judges. Apple's opening ran 27 minutes, Samsung used 34 minutes, and Apple had 7 minutes for rebuttal. There were about 50 to 60 people in the gallery.
William Lee argued for Apple and Kathleen Sullivan for Samsung.
The question being argued was whether District Judge Koh used the correct standard in evaluating Apple's motion for a permanent injunction. Some of the argument was about what standard she actually did apply. I am sure Webster will provide a clear summary of the legal arguments. I left the courtroom without a clue how the panel will rule.
To show irreparable harm, Apple must prove causal nexus between infringement and injury, but the district court properly found that the most Apple did was to introduce evidence that some consumers value “design” and “ease of use” in general, a far cry from a showing that the limited features covered by Apple’s design and utility patents drive consumer demand for Samsung products. Apple argues that it should not have to prove causal nexus, but that argument defies this Court’s binding precedents making such a showing a well-established feature of irreparable harm analysis. Apple also argues that such a requirement applies only to preliminary and not permanent injunctions, but such a distinction is baseless.
So they both claim precedent, and that may mean it's up to how you view the patent smartphone wars. What is really going on, in my view, is that courts are noticing that the smartphone patents wars are going crazy overboard. Almost everyone sees it's harmful, everyone but the parties, or at least Apple, who just survived having an injunction against it overturned essentially as a favor, and now, within days, wants to get an injunction to block Samsung from the US market. So there is no balance in this patent warfare, and judges and regulators are trying to figure out how to keep everything from blowing up the economy or damaging customers, who want to be able to buy both types of phones.
Unfortunately, the last place to find patent balance is the Federal Circuit, and so I can only hope they hop on that train and help out, but let's wait and see.
I'll post Webster's report as soon as it arrives.
"Is that really what we're dealing with?" Bryson asked.
The current case has dragged on for two years.
Apple lawyer William Lee acknowledged that if the iPhone maker's injunction request was granted, the company would seek a so-called contempt proceeding to go after newer Samsung phones.
There's Apple. Minus a soul.
"I can't imagine that you wouldn't have some nexus requirement, regardless of how you define it, in every case of injunction," Judge Kathleen O'Malley said.
But O'Malley also questioned whether Apple even could prove that one feature of a complex product is the single driver of consumer demand, as demanded by the lower court. She said that if Apple proves one patented feature -- such as "pinch-to-zoom" -- to be the most important driver of consumer demand, it would automatically disprove the same about other patents.
Weighing all of the factors, the Court concludes that the principles of equity do not support the issuance of an injunction here. First and most importantly, Apple has not been able to link the harms it has suffered to Samsung’s infringement of any of Apple’s six utility and design patents that the jury found infringed by Samsung products in this case.
Anyway, Apple has now admitted in open court what this appeal is really all about, and the argument about causal nexus isn't really the core. This is about nuclear war against Android.
As part of its findings, the ITC overturned an administrative judge's earlier finding that Samsung infringed a potentially important Apple patent on phone design.
The ITC said Samsung can continue to import and sell its infringing devices during a two-month period in which the Obama administration can review Friday's order.
Samsung had warned the ITC that a product ban potentially could have a significant impact on the South Korean company's U.S. devices and create "an immediate and long-lasting shortfall" of smartphones in the U.S. market.
Preface: August is a nice time to be in Washington even on the morn of an Apple v Samsung Appeal. It looks like everyone has gone to the beach. The new, tree-water bags arrived yesterday, about four months late, so one felt obliged to fill them this morning lest the two young adopted saplings perish. They are already twelve feet high with lush green leaves. Nature did well enough alone so far. With a contrived hose-to-bucket-to-bottle-funnel relay system, thirty gallons were going to seep into the tree systems this day. The irrigator was relieved to see nary a copyright, trade or patent marking on the label and instructions. There was a referral to a website but what does a gardener do with IP? There was no evidence of genetic mutation.
Fearing great interest in a small courtroom, some few arrived early to the Courthouse to find what only the regulars knew was a small crowd. The judges were away too, with few of the courtrooms in operation. Indeed Apple v. Samsung was switched to the large en banc courtroom where there were ultimately few judges on the bench and few spectators in the pews. Maybe that is why the Court Police forced the closure of this chromebook.
Apple had filed this appeal because Judge Lucy Koh had refused to issue a PI (Permanent Injunction) after the jury found infringement. She denied the injunction because she said there was no “causal nexus” established between the infringements and relative sales of the parties’ respective devices.
The panel consisted of Judges Prost, O’Malley and Bryson. Judge Prost, as the senior judge, presided but she immediately yielded to Judge O’Malley who swore her recent law clerk on to the Federal Circuit bar. She listed his distinctions which included a previous science career. He was going to the patent trenches at Covington and Burling. He was young and trim and had a suspicious punk haircut. He looked to be capable of far more than rounded corners.
At the last visit to this room Judge O’Malley gushed at the wonder of flowcharts and software patents. Judge Prost had written a software patent dissent following the Supremes. Her position was supported when the Circuit took up her cause en banc. One would expect Prost and O’Malley to cancel each other out leaving this decision up to the third panelist, Judge Bryson.
By the time readers see this account, the transcript or audio will be available so it will concentrate between the words.
Mr. Lee of Apple pointed out that six patents in twenty-six products were infringed by Samsung. Apple lost sales. The trial established that there was a causal nexus between the harm and the infringement. Yet the Court denied the PI because she did not find in the evidentiary record such causal nexus between the infringement and the harm to sales. Mr. Lee discussed varying tests for such harm from “some connection” to the infringed feature being “a driver” to finally the stringent requirement being the “sole driver.” He cited the eBay case as establishing that the jury’s finding harm from infringement should be enough for a PI.
He contrasted the instant case with practicing parties to the instance with a Non-Practicing-Entity (NPE --aka Troll) where there is no irreparable harm. Since an NPE does not sell products with their patent, they only suffer “reparable harm,” that is harm reparable by monetary compensation. Since they are not selling a competing product, an injunction does not make sense.
Judge O’Malley jumped in about here. There was a summer informal feel about this whole hearing. There were few judges and people in this huge courtroom, indeed in the whole courthouse. There were no other cases on the calendar so they took up double the prescribed time for over an hour.
Judge O’Malley commented that in a tort sense there was no need for the nexus at the PI stage since the wrong was found and harm presumed. The sale of the offending product was causing irreparable harm.
The discussion necessarily mentioned that certain infringing features caused consumer appeal to a product. Apple contends that their patented features stolen by Samsung, caused Samsung’s devices to have inordinate appeal and damage Apple’s sales and market share. There was reference to rounded corners and pinch to zoom.
All conceded that Samsung claimed to stop selling 23 of the 26 products and to have designed around the remaining three. But Apple did not credit this.
Infuriatingly unmentioned in talk of offending features and their consumer charm and harm was reference to distinctive Samsung features that should have clouded any conclusion of harm. One wanted to shout, “What about the big Samsung screens?” Clearly the District Court did not find the Apple features worthy of a PI and solely responsible for Samsung fortunes.
Tactfully left voluminously unsaid by Samsung -- because the courts willfully blind themselves to the inanities on hand and it is officiously irrelevant -- was the fact that the USPTO has invalidated some of the patents.
Judge O’Malley said that her court could not order a causal nexus. Neither should Judge Koh.
It became clear in a discussion with Judge Bryson that winning a billion dollar verdict with or without a PI is only half the battle. This appeal was targeted at new products that Apple say continue the infringement. Apple accuses Samsung of selling the same products under a different name. Apparently there is a rule that if you sell the same product that is not “appreciably different” from the offending product, then a party can move to find them in contempt of the PI.
Apple argues that the trial court found lost market share, loss of downstream sales and they can not stop it with a PI. Apple has to litigate the new products and the design-arounds to enforce the old judgment. Judge Bryson made the point of products not being sold and design arounds. These are why Apple wants the PI to go after Samsung with contempt in that the new Samsung products are not colorably different from the old, offending Samsung products. [Isn’t it stunning how if you have billions of dollars and you keep litigating and appealing, you can’t lose?!] It seems like every new product will have to be subject to a contempt hearing before Judge Koh if she orders a PI. If she denies the contempt and they lose apeals, they have to file a new case from scratch!
Apple discusses the risks of letting a multi-function product get away without a PI. They argue that no case precedent mandates a causal nexus. It would seem that a flexible, multi-function product, like a computer-phone, could avoid any patent.
Judge Prost steered the discussion back to their role. She noted conflict in 9th Circuit trade dress cases. She wondered if they are reviewing the District Court by the “abuse of discretion” standard. If they find an abuse of discretion, they can either order the PI, or send it back to Judge Koh to disabuse her discretion.
Apple concluded asking the Court to tell Samsung: “Don’t do it anymore.” Samsung says it stopped. [So Samsung is not paying on the new and Apple can’t complain without a PI to enforce and find continuing infringement.] The burden is on Apple without a PI.
Samsung began by distinguishing that they were found to have *diluted* -- not infringed. They discontinued the alleged infringement. The cessation is relevant to the PI. Apple failed to show that the infringements were the drivers of consumer demand. O’Malley wondered if the District Court had to find a causal nexus on a patent-by-patent basis. Samsung's response was that Apple failed to prove that the feature was a “driver of consumer demand.” Samsung said the design claims were too broad and that “ease of use” was too broad.
Judge Bryson referred to Dr. Howser’s testimony that “customers pay for features.” There was some discussion of $10 and $300 cupholders.
Update 4: Here's the audio [mp3].
SUMMARY: Notice is hereby given that the U.S. International Trade Commission has found a violation of section 337 in this investigation and has issued a limited exclusion order prohibiting respondents Samsung Electronics Co, Ltd. of the Republic of Korea (“SEC”); Samsung Electronics America, Inc. of Ridgefield Park, New Jersey (“SEA”); and Samsung Telecommunications America, LLC of Richardson, Texas (“STA”) (collectively, “Samsung”), from importing certain electronic digital media devices that infringe one or more of claims 1, 4-6, 10, and 17-20 of U.S. Patent No. 7,479,949 (“the ’949 patent”) and claims 1-4 and 8 of U.S. Patent No. 7,912,501 (“the ’501 patent”). The Commission has also issued cease and desist orders prohibiting SEA and STA from further importing, selling, and distributing articles that infringe one or more of claims 1, 4-6, 10, and 17-20 of the ’949 patent and claims 1-4 and 8 of the ’501 patent in the United States. The Commission has found no violation based on U.S. Patent Nos. D618,678 (“the D’678 patent”); D558,757 (“the D’757 patent”); RE 41,922 (“the ’922 patent”); and 7,789,697 (“the ’697 patent”). The Commission’s determination is final, and the investigation is terminated.
If Apple were to prevail with claims based on this patent, the effects could be severe - at least, in the United States. Devices made by companies other than Apple could lose a number of important techniques which make touchscreen-based interfaces usable.
What is wrong with the USPTO that everyone has to suffer so long over this goofball, overly broad functionality patent? You can't fool me. At the USPTO, there ain't-a no Sanity Clause.
At the time of issuance and publication of this certificate, the patent remains subject to pending reexamination control number 95/000,541 filed Apr. 2, 2010. The claim content of the patent may be subsequently revised if a reexamination certificate issues from the reexamination proceeding.
It was preliminarily found invalid in December of 2012. And the ITC wants to block Samsung from the US over this patent. Do you think the President will swoop down and save Samsung from this mockery of fairness?
Along with those protections for the iPhone’s design, Apple has numerous utility patents covering various functions of the unique user experience for the iPhone and iPad. Among those patents are U.S. Patent Nos. 7,469,381 (“’381 patent”), 7,844,915 (“’915 patent”), and 7,864,163 (“’163 patent”).
The ’381 patent claims the “bounce-back” feature used by the iPhone and iPad: when a user of a touchscreen device scrolls beyond the edge of an electronic document, the device causes the electronic document to bounce back so that no space beyond the edge of the document is displayed. A36502-36505; A36519- 36520; see also A21736-21739(1736:16-1739:21).
The ’915 patent claims the multi-touch display functionality of the iPhone and iPad, which allows those products to distinguish between single-touch commands for scrolling through documents and multi-touch gestures to manipulate a document (e.g., a two-fingered “pinch-to-zoom” gesture). A36448; A36459; see also A21817-21818(1817:8-1818:22).
The ’163 patent claims the “double-tap-to-zoom” capability of the iPhone and iPad, which allows a touchscreen device to enlarge and center the text of an electronic document when a user taps twice on a portion of that document and, in response to a second user gesture on another portion of the document, recenters the screen over that portion of the document. A36564; A36568; A36570; see also A21831-21832(1831:9-1832:21).
So please don't email me with complaints that I called it a case about a rectangle with rounded corners. That's what it is about, design patents and trade dress. Out of Apple's own mouth.
And if you don't think that's ridiculous -- and overbearing to even try to patent it -- see your doctor right away.
Pursuant to FRAP 28(j), Samsung respectfully writes to respond to Apple’s August 8, 2013 letter regarding Apple Inc. v. International Trade Commission, No. 2012-1338 (Fed. Cir. Aug. 7, 2013). Contrary to Apple’s argument, that decision does not suggest that the district court abused its discretion in denying a permanent injunction.
First, that decision does not address irreparable harm, but instead concerns application of a well-established standard for proving obviousness. The “causal nexus” for proving irreparable harm in the injunction context is distinct from the “nexus” for establishing the relevancy of “copying” or “industry praise” to obviousness. In the context of an injunction, the purpose of the causal-nexus requirement is to determine whether the patentee’s “sales would be lost even if the offending feature were absent from the accused product.” Apple Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1324 (Fed. Cir. 2012). The inquiry focuses on consumer demand for the infringing feature. The inquiry in determining whether “copying” or “industry praise” shows non-obviousness focuses on the response of persons of skill in the art to the invention.
Second, in the injunction context, this Court has already determined that copying of and praise for the patentee’s product is not evidence that any particular feature drives demand for the defendant’s product. Apple Inc. v. Samsung Elecs. Co., 695 F.3d 1376-77 (Fed. Cir. 2012); Apple, 678 F.3d at 1328. Apple’s argument to the contrary in their letter simply confirms that the obviousness and irreparable harm inquiries are distinct.
Third, Apple v. ITC does not concern any of the patents or accused products that are at issue in this appeal. The patent in Apple v. ITC claimed touch screen hardware relating to a circuit with first and second layers of transparent conductive lines. Slip Op. 3-4. In contrast, the three Apple utility patents at issue in the present appeal are software patents directed to minor user interface features, not touch screen circuitry. That decision therefore did not have occasion to consider what drives demand for Samsung’s accused products, the central inquiry with respect to causal nexus in this appeal.
In both cases, Samsung has said it designed around the patents, so any loss would have minimal impact on the company’s sales.
So, several months to wait until we know how they rule.
Update 8: I've finally had a chance to listen to the entire mp3 of the hearing. Apple's Mr. Lee states that Apple can't prove that the patents at issue in this litigation were drivers of user's decision to buy Apple products. He doesn't think anyone in Apple's position could prove that kind of causal nexus in a complex product with many patents involved. He cites a case where there was a product, a snow plow, and the patent was on a latch. There was no such requirement to prove that users bought the product to get the latch. So Apple's position is that this is a change in the law, if upheld, to have to prove a causal nexus of this strictness. They've read all 44 cases this appeals court has ruled on in this context, and they didn't find any like Judge Koh's standard.
It also suggests a time period where Samsung gets a chance to alter its products and prove it no longer infringes, but after that time period an injunction should issue.
As for Samsung, Ms. Sullivan opens by saying that this court has indeed upheld the concept of the need to establish a causal nexus. The jury found only trade dress dilution, not infringement. Trade dress is about source identification, and Apple doesn't use that trade dress any longer. So what would be the point of the injunction, since the district court found there was no such trade dress dilution on the current trade dress. Cessation on both sides, then, is a factor. But one judge asks, if Coke changes its can, and someone designs a similar can, Coke has no remedy to protect its old trade dress? Samsung's cessation has been established and is a relevant factor. But the judge doesn't seem to agree that this is the right standard.
Ms. Sullivan disagrees with her friend, Mr. Lee, that there is no such causal nexus standard in a permanent injunction context. She cites cases to demonstrate that this is established law. The same judge interrupts and asks if Koh didn't introduce the concept of "aggregate". She didn't say that, Sullivan points out. Apple failed to prove that any patent or any set in the aggregate was even *a* driver. Terribly weak evidence from consumer surveys were offered by Apple. Urges the court to review them. You won't see anything about rectangular, rounded corners, flat front face etc. You won't see anything about the patentd features. Surveyed people were just asked if "design matters". That's too broad.
What about Mr. Hauser's testimony, Judge Bryce asks, that people would pay more for such features? It's not the same, she answers. All Hauser's survey asked was would you pay more for the feature? The right question is whether a consumer would buy a *Samsung* phone with that feature *instead of* an Apple phone. The fact that I would pay $10 more for a cupholder in a car I've already decided to buy, Sullivan says, that isn't the same as proving that the person bought the car because of the cup holder. The judge doesn't seem to be buying that distinction. But Sullivan says it is not impossible to design a survey that *could* establish a causal nexus. Some collection of features might result in an injunction. But Apple failed to present such evidence.
But the judges seem to think that if people will pay more for something, that proves it's a driver. Sullivan says that would be new law, should they rule that way. But Samsung's other point is that there is a full remedy here, in that money can make Apple whole, so on what basis is an injunction available? Apple has licensed these patents, all of the designs in this case. It offered to license to Samsung itself. So money should be enough. Judge O'Malley asks if the patents aren't different, but Sullivan says no, it was the design patents. But Judge Bryce then says that Mr. Teksler denied that it was the same patents, and there is no finding that these are the same patents. Sullivan says if they have any question, they can remand on that, but there is enough in the slides from the meeting, so that documentary evidence should be enough. These judges are asking her a lot more aggressive questions than they did Apple's Mr. Lee. And some of the questions indicate that they were not fully familiar with the record. That doesn't prove anything about the outcome, necessarily, but it doesn't sound good to me. At a minimum, it indicates, to me anyway, that they started the hearing with a negative view of Samsung's position. I would say the outcome depends on how they accept, or not, Ms. Sullivan's answers to their questions.
After the flurry of questions, Sullivan corrects what Lee said earlier, that Koh found that Samsung's infringement constituted irreparable harm. But that is exactly what Koh did *not* find, she points out. They are not asking to a rule against injunctions. There was no jury finding of copying. Mr. Lee was incorrect in so stating. That issue was not before the jury. It was excluded as a sanction against Apple in discovery.
Mr. Lee in rebuttal says that there is no evidence that these design patents were offered to be licensed by Apple. What it offered to Microsoft was five years earlier and not the same. Judge Bryson says that there doesn't seem to be a law that this makes a big difference. But what about Nokia and IBM etc.? Mr. Lee says it was in a cross license but it was actually about an agreement not to sue. He says they are not saying there doesn't have to be some causal nexus. This judge found that there was a loss of sales, and that should be enough. What Apple doesn't want is a categorical rule that the patented feature has to be *the* driver. Judge Bryson asked, again, if price might be enough to establish that the feature is *a* driver. Apple insists that Samsung copied. That's not looking at their motive, only what they did. The fact that it felt it needed to copy is evidence that the feature matters.
There can be no hiding my reaction: the judges were markedly more friendly to Mr. Lee than to Ms. Sullivan.

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