Source: https://ja.scribd.com/document/210944697/14-03-06-Order-Denying-Apple-s-Renewed-Motion-for-Permanent-Injunction-Against-Samsung
Timestamp: 2019-04-20 14:11:48+00:00

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Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. 2011. sales would be lost even if the offending feature were absent from the accused product. the Federal Circuit affirmed this Court’s denial of Apple’s preliminary 13 injunction request in this case as to the ’381 Patent and two of the three design patents. The most significant holding in Apple I 16 for the purposes of the present motion is the Federal Circuit’s approval of this Court’s use of a 17 causal nexus requirement to evaluate Apple’s claimed irreparable harm. which issued a decision 8 that became the first of now three successive Federal Circuit opinions on injunction issues in this 9 and a related case involving the same parties. and Droid Charge smartphones and Galaxy Tab 10.1 tablet for infringing the ’381 Patent. 678 F. 15 Co. 452 at 63.889 (the “D’889 patent”). this Court denied Apple’s motion. 5 Case No. in response to detecting the second gesture. If the patented feature does not drive the demand for the product. Inc. Apple 4 moved for a preliminary injunction. 12 On May 14. instructions for. 2012. a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct. As these opinions guide the 10 United States District Court For the Northern District of California Court’s analysis here. the structured electronic document is translated so that the second box is substantially centered on the touch screen display. Thus.3d 1314. 2012). 4 Apple sought to preliminarily enjoin Samsung’s Galaxy S 4G and Infuse 4G smartphones and Galaxy Tab 10. Samsung Elecs.677 (the “D’677 patent”). See Apple.087 (the “D’087 patent”). 2011. 12-CV-00630. Cir. See ECF No.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION products for infringement of three of Apple’s design patents 4 and four Samsung products for infringement of the ’381 Patent. 452. but vacated 14 and remanded the denial as to one of the three design patents. seeking an injunction against three Samsung 5 6 7 ECF No. To show irreparable harm. PROCEDURAL BACKGROUND Apple filed this action on April 15. it is necessary to show that the infringement caused harm in the first place. 452. 1316-17 (Fed. The relevant portion of the 18 Federal Circuit’s opinion is reproduced below: 19 20 21 22 23 24 25 26 27 28 We hold that the district court was correct to require a showing of some causal nexus between Samsung's infringement and the alleged harm to Apple as part of the showing of irreparable harm. As explained below. See Apple I . 5 On December 2. D618. See ECF No. only the utility patents are 3 the basis for Apple’s instant request for a permanent injunction. the Court begins with an overview of the relevant holdings. Apple appealed that decision to the Federal Circuit.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page5 of 42 1 2 II. 11 A. v. see ECF No. D593.1 tablet computer for infringing Apple Design Patent Nos. 86. Case No. Infuse 4G. (“Apple I”). and D504. alleging infringement of several Apple utility and design patents and dilution of Apple’s trade dress. At the outset of this case. 5 Apple sought to preliminarily enjoin Samsung’s Galaxy S 4G.
). this Court dissolved the preliminary injunction. Inc. Inc. put simply. Apple renewed its motion for a preliminary injunction based only on the D’889 Patent. 1135. Co.D. Apple moved for a preliminary injunction against Samsung’s Galaxy Nexus smartphone for alleged infringement of four patents. Id. Cal.. 2012). Co. v..1.3d at 1324). a jury determined that the Galaxy Tab 10. 2011. This Court denied Apple’s motion as to the other three patents. Apple II Apple II arose out of a related case. In granting Apple’s preliminary injunction motion. Apple asserted that Siri. B. however. and vacated and remanded only as to the D’889 Patent on the issue of whether that patent was likely to be found invalid. Samsung Elecs. respectively. Siri uses voice-recognition technology to allow users to search across multiple locations by talking to their phone. which. Samsung Elecs.D.. On August 24. involving the same parties but different utility patents and accused products. In light of the jury’s noninfringement finding. Id. at 906. Inc. See ECF No.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . See Apple. (“Apple II”). Samsung Elecs. 695 F. at 905. Cal. 877 F. Co. Apple.” Id. This Court agreed with 6 Case No. Ltd. filed on February 8. embodies the unified search patent and drives demand. 2012). See Apple.3d 1370 (Fed. 1931. Id. The Federal Circuit thus affirmed this Court’s analysis of the irreparable harm factor. 2d 838 (N. a personal-assistant application in Apple’s iPhone 4S. See ECF No. 678 F. v. at 906 (quoting Apple I. This Court granted Apple’s motion as to the so-called “unified search” patent. of market share. Supp. this Court once again looked for a causal nexus between the patented features and the alleged irreparable harm: “[A] patentee seeking to establish irreparable harm by virtue of lost sales must show that the infringing feature is a ‘drive[r] [of] demand for the product. This Court noted. 2012. Case No. that the Federal Circuit had yet to provide “more detailed guidance on what standard of proof would satisfy the movant’s burden” to show that the patented features drive demand for the accused product. Upon remand.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page6 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Apple I. See ECF No.3d at 1324 (emphasis added). which this Court granted as to the Galaxy Tab 10.1 did not infringe the D’889 Patent. 678 F. v. 2012. refers to the concept of allowing a user to search multiple locations using one interface. Cir.’ such that its presence or absence from the product is responsible for the substantial gain or loss. 12-cv00630 (N.
as advertised. at 909. In particular. 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. at 1375 (emphases added). Turning to this Court’s causal nexus conclusions.” Id. That does not sufficiently suggest. The patentee must rather show that the infringing feature drives consumer demand for the accused product. Id. Further.. at 1376. Before addressing the flaw in the Court’s opinion. 695 F. 1383. also contributes to consumer interest in the iPhone 4S. On appeal.” id. the Federal Circuit expanded on the causal nexus requirement established in Apple I. the Federal Circuit reversed the Court’s finding that Samsung’s infringement of the unified search patent caused Apple’s irreparable harm. its search results are comprehensive.3d at 1380. at 1380.” Id. the Federal Circuit held that the facts did not support a causal nexus finding: At best. however. that an application may sell in part because it incorporates a feature does not necessarily mean that the feature would drive sales if sold by itself. This Court concluded that. “[e]ven accepting Samsung’s argument that the intelligent voice-recognition aspect of Siri. As a result.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . the district court’s findings indicate that some consumers who buy the iPhone 4S like Siri because. and that therefore “the district court abused its discretion in enjoining the sales of the 27 Galaxy Nexus. See Apple II. the Federal Circuit found that “[t]he causal nexus requirement is not satisfied simply because removing an allegedly infringing component would leave a particular feature. however. that consumers would buy the Galaxy Nexus because of its improved comprehensiveness in search. 28 7 Case No. More specifically. application. or device less valued or inoperable. the Federal Circuit held that: The relevant question is not whether there is some causal relationship between the asserted injury and the infringing conduct.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page7 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Apple that demand for Siri demonstrated the importance of the patented feature. This Court subsequently dissolved the injunction. Samsung appealed this Court’s ruling as to the unified search patent. but to what extent the harm resulting from selling the accused product can be ascribed to the infringement. Id. Apple has shown that the [unified search] Patented feature is core to Siri’s functionality and is thus a but-for driver of demand for Siri. among other things. the Federal Circuit concluded that “the causal link between the alleged infringement and consumer demand for the Galaxy Nexus is too tenuous to support a finding of irreparable 26 harm. See ECF No.” id. Apple did not appeal this Court’s denial of Apple’s motion for a preliminary injunction as to the other three patents.
: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . the Supreme Court held that a patentee seeking a permanent injunction must make a four-part showing: (1) that it has suffered an irreparable injury. v. are inadequate to compensate for that injury.. 8 Case No. 388 (2006). 2012. and the retrial jury awarded Apple $290. A brief description of the portion of the Court’s order denying Apple’s requested permanent injunction with respect to the utility patents-in-suit follows. 2947. See Apple. considering the balance of hardships between the plaintiff and defendant. based on the jury’s infringement and dilution findings. see ECF No. and public interest factors all favored Samsung and counseled against a permanent injunction. Cal. this Court denied Apple’s request as to all the intellectual property at issue. the Court struck $410. Co. 2012. a remedy in equity is warranted. Apple III Meanwhile. L. Samsung Elecs.C.L. (3) that. 2316 at 2 (Case Management Order reinstating portion of original jury award). The jury awarded Apple $1. Applying the four eBay factors. See ECF No. 2012). On December 17. v.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page8 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 C. the present case proceeded to trial. 2822 (Retrial Jury Verdict).456. 909 F.D.049. The Court found that the balance of hardships factor was neutral. at 391. MercExchange. such as monetary damages.S. A damages retrial was held in November 2013 to recalculate the damages for those sales. (2) that remedies available at law. 6 the Court found that the irreparable harm. and (4) that the public interest would not be disserved by a permanent injunction. 2d 1147 (N. ECF No. Id. (“Apple III”). on August 24. inadequacy of legal remedies.780.039.020.294 of the jury’s damages award.540 in damages for Samsung’s infringement.793 instead. Apple moved to permanently enjoin Samsung from continuing to infringe the patents-in-suit and dilute its trade dress. The Court upheld the retrial jury’s damages award. ECF No. Following the first trial. a jury returned a verdict that 26 Samsung products infringed one or more of Apple’s patents or diluted Apple’s trade dress. Id. 547 U. 2271 at 26 (Retrial Order).343. resulting in a total damages award to Apple of approximately $929. 1931 (Amended Jury Verdict). Because Apple had presented an incorrect legal theory and insufficient evidence for some of the infringing sales at issue. Because the causal nexus inquiry is again central to In eBay Inc. The Court held that Apple failed to prove a causal nexus between Samsung’s infringement and Apple’s alleged harm and thus failed to establish irreparable harm. Inc. and. Supp.
19. PX46. John Hauser.” Apple III. at 1155-56. Apple presented three types of evidence to prove a causal nexus: (1) documents and testimony showing the importance of ease of use as a factor in phone choice. PX145. even to the extent Apple’s documents and testimony touched on specific ease of use features.6 (iPhone buyer survey).36 (GravityTank consulting report to Samsung). Moreover.g. See. (internal quotation marks omitted).3d 9 Case No.3 (New York Times article). PX38. the Court reviews the previously presented evidence in some detail. establish the requisite causal nexus. media articles. ECF No. PX135. the Court found that Apple’s copying evidence was insufficient to establish a causal nexus because that evidence only “proves what Samsung thought would attract purchasers. The Court found that the ease of use evidence—Apple’s first type of causal nexus evidence—was “simply too general. PX44. PX57. e.5 (same). The Court concluded that “Apple’s evidence that consumers value a general category of features related to Apple’s utility patents cannot.. 678 F. PX36. PX144. and (3) a conjoint survey performed by Apple’s expert. See id. under the Federal Circuit’s guidance.73. See. that evidence was highly anecdotal—“insufficient to establish anything other than a single consumer’s experience.2 (Time Magazine article). 2d at 1155.6 (same). 38. Supp.” Id. Dr.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Relying on the Court’s earlier preliminary injunction order and the Federal Circuit’s Apple I opinion considering similar copying evidence. e. PX146.” Apple III.19. This evidence included several product reviews. (2) evidence that Samsung deliberately copied the patented features. the Court found that. PX143. not what actually attracted purchasers.g. but that Apple’s ease of use evidence refers at best to the broader touchscreen feature concepts. The Court also held that Apple’s utility patents-insuit cover only particular implementations of certain touchscreen features.” Id. see also Apple I. 2d at 1156. consulting report to Samsung). PX57.58.6 (same).Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page9 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Apple’s renewed motion for a permanent injunction. PX133.24. and consultant reports that refer to the touchscreen and interface of the iPhone or Apple’s tablet device (the iPad) as easy to use.. Supp. at 1155.” Id. 2127-15 at 45 (McKinsey & Co.66. Apple’s evidence of copying included several Samsung documents indicating that Samsung believed that Samsung should add some of the iPhone’s touchscreen effects to Samsung’s products. like “two finger pinch and flick. 909 F. 909 F.
Supp.A. the Court stated that “Apple’s licensing activity suggests that Apple does not believe that these patents are priceless.”). 10 Case No. The Court determined that Apple’s licensing activity tipped the inadequacy of legal remedies factor in Samsung’s favor. Apple had failed to show irreparable harm. the Court considered evidence stemming from the conjoint survey conducted by Apple’s expert Dr. Dr. Because the Court concluded that the survey did “not address the relationship between demand for a feature and demand for a complex product incorporating that feature and many other features. Id. In particular.1.” Id. That fact. not on the infringer’s subjective belief as to why it gained them (or would be likely to gain them). at 1160. Hauser. Hauser recorded each hypothetical device consumers chose and performed a statistical analysis of the results to arrive at the amount consumers are willing to pay for each tested feature relative to other tested features. 1363-1 (“Hauser Expert Report”).” Id. because Apple had failed to provide sufficient evidence to show a causal nexus between Samsung’s infringement and Apple’s alleged harm. Dr. the Court found as follows.” the Court held that “Apple’s survey evidence does not establish that any patented feature drives consumer demand for the entire product. 7 tested consumers’ willingness to pay for certain smartphone and tablet features by presenting respondents with four device choices with varying combinations of different feature sets.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page10 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 at 1327-28 (“[T]he relevant inquiry focuses on the objective reasons as to why the patentee lost sales.” Id. Finally. The Court ultimately found that. As to the remaining eBay factors. 2d at 1156 (citation omitted). On the 7 See infra Part IV. the Court found that “evidence of the price premium over the base price Samsung consumers are willing to pay for the patented features is not the same as evidence that consumers will buy a Samsung phone instead of an Apple phone because it contains that feature. led the Court to conclude that “Apple will be substantially compensated for its injuries without an injunction.” Apple III. such that there can be no fair price set for Samsung’s practice of the claimed inventions or designs. which is described in more detail below. Hauser’s survey. 909 F. See generally ECF No.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . at 1156-57. However. coupled with the Court’s conclusion that Samsung would not have any difficulty paying the damages judgment.
at 1364 (internal quotation marks omitted). at 1361. against the public interest in having several product choices when shopping for a smartphone or tablet.” Id. As to irreparable harm. Nevertheless. but vacated and remanded as to the utility patents-in-suit. the Court conclude[d] that the principles of equity d[id] not support the issuance of an injunction.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page11 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 balance of hardships. The Federal Circuit’s opinion in Apple IV primarily addressed and clarified the standard by which courts evaluating requests for permanent injunctions should determine whether the first two factors of the eBay test are satisfied. Apple IV Apple appealed the Court’s ruling in Apple III. “Weighing all of the factors. D.” Id. “[R]ather than show that a patented feature is the exclusive reason for consumer demand. on the one hand. and concluded that “while the public interest does favor the protection of patent rights. Apple must show some connection between the patented feature and demand for Samsung’s products. combined with the Court’s finding that neither the inadequacy of damages nor the public interest supported an injunction. Id. v. Id.” Id. the Court clarified that. the Court weighed the public interest in preserving the rights of patentholders. Co. 735 F.3d 1352 (Fed. See Apple. on the other hand. Cir. the Court determined that “neither party would be greatly harmed by either outcome” and therefore that factor was neutral. while “Apple must show that the infringing feature drives consumer demand for the accused product.” Apple is not “required to show that a patented feature is the sole reason for consumer purchases. or to risk disruption to consumers without clear legal authority. led the Court to hold that Apple was not entitled to a permanent injunction. Samsung Elecs. (“Apple IV”). it would not be in the public interest to deprive consumers of phones that infringe limited non-core features. at 1161. The Federal Circuit then listed three examples of 11 Case No. at 1163. Inc. and the Federal Circuit affirmed this Court’s ruling as to the design patent and trade dress claims.” Id. 2013).: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . the Federal Circuit confirmed that its preliminary injunction rulings in Apple I and Apple II as to causal nexus “appl[y] equally” in the permanent injunction context. Finally. Apple’s inability to establish a causal nexus between Samsung’s infringement and its harm.. Ltd.
The Federal Circuit held that. Id.” Id. to be evaluated by the district court. Hauser did not measure whether the patented features caused consumers to buy a Samsung device instead of an Apple device. at 1367-68.” that evidence would be relevant to show that the feature drives demand for the product. as explained below. Id. The Federal Circuit also identified error in this Court’s original analysis of the inadequacy of legal remedies factor. the district court never reached that inquiry because it viewed Dr. the Federal Circuit held that this Court erred by rejecting the survey results simply because Dr. the Federal Circuit rejected this Court’s reliance on Samsung’s 12 Case No. As to Dr.3d at 1365. On remand. Id.” Id.” or (3) “evidence that the absence of a patented feature would make a product significantly less desirable.” Apple IV. Id. at 1368 (emphasis added). Supp. Hauser’s survey evidence showed that “a feature significantly increases the price of a product. Here. The Federal Circuit held that “there may be circumstances where it is logical and equitable to view patents in the aggregate. 735 F. 909 F. First. and. at 1367. See Apple III. if Dr. Turning to Apple’s evidence of causal nexus. Hauser’s survey evidence as irrelevant. however. the Court does so. 2d at 1153 (requiring Apple to “establish a causal nexus for each of its patents and trade dresses individually”).” (2) “evidence that the inclusion of a patented feature makes a product significantly more desirable. The panel thus vacated this Court’s causal nexus findings and remanded to (1) evaluate the degree of consumers’ willingness to pay for the patented features. Hauser’s survey evidence.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . the Federal Circuit agreed with this Court that Apple’s ease of use and copying evidence was too general to establish a causal nexus by itself. and (2) consider Samsung’s additional criticisms of the Hauser survey’s methodology. Samsung does not dispute that the Court should view the patented features in the aggregate. The Federal Circuit also found a potential abuse of discretion in this Court’s decision in Apple III to analyze the patents-in-suit separately.” Id. The Federal Circuit left it to this Court “to address this issue in the first instance on remand.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page12 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 evidence that would suffice: (1) “evidence that a patented feature is one of several features that cause consumers to make their purchasing decisions. “The question becomes one of degree.” for example “where they all relate to the same technology or where they combine to make a product significantly more valuable.
distinguishing each license for various reasons. emphasis in original). at 1372-73. As to the other Apple licenses in the record—licenses to IBM. HTC.” Id. the Federal Circuit held that this Court “abused its discretion in analyzing Apple’s evidence of irreparable harm and the inadequacy of legal remedies. holding that. On the balance of the hardships factor. Id. the Federal Circuit affirmed this Court’s conclusion that the public’s interest in enforcing patent rights was outweighed by “the prospect that an injunction would have the effect of depriving the public of access to a large number of non-infringing features.7. The Federal Circuit went on to call into question the relevance of the licenses in the record.” Id. the panel held that the proper analysis considers whether Apple is willing to license the utility patents-in-suit to Samsung. at 1371. the Federal Circuit found that this Court also erred in its consideration of Apple’s past licensing behavior. a defendant’s ability to pay a judgment does not defeat a claim that an award of damages would be an inadequate remedy. at 1370-71. Second. the court should have resolved whether Apple’s offer included the asserted patents and trade dress.” Id. consistent with [the Federal Circuit’s] opinion. which may demonstrate the inadequacy of damages. As to the public interest factor. at 1373. Apple’s request for a permanent injunction against Samsung’s infringement of its three utility patents. even though many of those products remained with retailers. at 1370 (emphasis in original).” Id. Even if the evidence showed that Apple may be willing to license some patents to Samsung at some price. Finally. “unlike an infringer’s inability to pay a judgment.” and remanded the case so that this Court could “reconsider. 735 F. Id.” Apple IV. the Federal Circuit affirmed this Court’s analysis of the last two eBay factors. the Federal Circuit found no abuse of discretion in this Court’s determination that the factor was neutral because Samsung is no longer selling the infringing products.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . In sum.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page13 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ability to pay money damages. 13 Case No. at 1370 n. “[B]efore relying on Apple’s licensing offer as evidence of the adequacy of damages. and Nokia—“[t]he district court’s exclusive focus on whether Apple’s patents are ‘priceless’ and whether Samsung is ‘off limits’ led it to disregard Apple’s evidence that Samsung’s use of these patents is different.3d at 1369 (citation omitted. Id.
S. 695 F. See supra n.” 35 U. 2915-4. This Court previously found that Apple will suffer irreparable harm from Samsung’s continued sale of infringing smartphones and tablets. on such terms as the court deems reasonable. ECF No. and determines whether. IV.S. LEGAL STANDARD The Patent Act provides that in cases of patent infringement a court “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent. Medrano. 8 “Apple and Samsung are direct competitors” that fiercely compete for first-time smartphone buyers. 139 (2010). Apple III. 547 U. which should not be granted as a matter of course. According to Samsung documents. 802.3d at 1374. § 283. ECF No.” Apple II. See Allee v. “An injunction is a drastic and extraordinary remedy. 561 U.S. DISCUSSION A. 810-11 (1974). a patentee seeking a permanent injunction must make the four-part showing discussed above. the Court now reevaluates each of these four factors in the light of the Federal Circuit’s further guidance. and 2) that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement. 14 Case No. Instead. Supp. a patentee must establish both of the following requirements: 1) that absent an injunction.C.7. the Supreme Court ruled in 2006 that “broad classifications” and “categorical rule[s]” were inappropriate in analyzing whether to grant a permanent injunction. and Apple filed a reply. v. eBay.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Geertson Seed Farms. at 393. 2014. 2d at 1151. 416 U. ECF No.S. the principles of equity support the issuance of a permanent injunction in this case. it will suffer irreparable harm. III.” Monsanto Co. Irreparable Harm “[T]o satisfy the irreparable harm factor in a patent infringement suit.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page14 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 8 Upon remand. Samsung views Apple as its primary competitor in the 28 The fact that Samsung has voluntarily ceased sale of its infringing products does not moot Apple’s request for an injunction. Though injunctions were once issued in patent cases as a matter of course. Samsung filed an opposition. on balance. The Court heard oral arguments on January 30. Apple renewed its motion for a permanent injunction for Samsung’s infringement of its utility patents. 2925. 2897. In considering Apple’s renewed motion. 909 F.
2d at 1152. 735 F. . [. [. The Court now undertakes this analysis and concludes that Apple’s evidence fails to establish the requisite causal nexus. 909 F. a patentee must nevertheless establish a causal nexus between any irreparable harm and the infringement of the patents-in-suit. Apple has also been harmed by its loss of downstream sales. Supp. .” remanding so that this Court could “assess whether Apple’s other evidence. or (3)] evidence that the absence of a patented 15 Case No.” such as by introducing “[(1)] evidence that a patented feature is one of several features that cause consumers to make their purchasing decisions . Throughout this case. in combination with Dr.3d at 1360. . 695 F.” Apple III. . “Apple has continued to lose market share to Samsung. for purposes of establishing the type of irreparable harm necessary to obtain a permanent injunction against patent infringement. it did hold that. Apple III.11-15. the Federal Circuit left to this Court the task of determining whether Apple can demonstrate “a sufficiently strong causal nexus” between the irreparable harm it is likely to suffer and Samsung’s infringement. Apple IV. Supp. To prove a causal nexus between Apple’s irreparable harm and Samsung’s infringement. market being a “two horse race between Apple and Samsung. Regarding this requirement. 695 F. suffices to establish irreparable injury.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page15 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 smartphone and tablet markets.S. at 1364 (quoting Apple II. Apple has consistently offered unrebutted evidence that Samsung’s market share has grown substantially from June 2010 to the second quarter of 2012. as network compatibility and brand loyalty cause many consumers to be “locked in” to either Apple or Samsung after their initial purchase. 735 F. Apple II.3d at 1375) (emphasis added). 2d at 1152.’” Id.3d at 1368.3d at 1374. Further. and that Samsung has followed an explicit strategy to increase its market share at Apple’s expense. “Apple must show some connection between the patented feature and demand for Samsung’s products. 909 F.” PX60. the Federal Circuit concluded that “additional analysis is required. PX184.” however. Although the Federal Circuit did not disturb any of these particular findings on appeal. with the U.(2)] evidence that the inclusion of a patented feature makes a product significantly more desirable .” Apple IV. Hauser’s survey evidence.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Accordingly. “Apple must ‘show that the infringing feature drives consumer demand for the accused product. PX62. including its ease-of-use evidence and evidence of copying. “[R]ather than show that a patented feature is the exclusive reason for consumer demand.
Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page16 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 feature would make a product significantly less desirable. Apple presents the same three groups of evidence that were before the Court in Apple III to prove that Samsung’s infringement caused Apple irreparable harm: (1) documents and testimony showing the importance of ease of use as a factor in phone choice. Dr. the value added is so small that the cup holder could not drive demand for the car.” Id.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .” Id. (2) evidence that Samsung deliberately copied the patented features. The Federal Circuit noted that not all evidence of demand for the patented feature would suffice to establish a causal nexus. the Court gave as an example an infringing cup holder in a $20. Hauser Expert Report ¶ 15. Here. suffices to establish irreparable injury. and (3) evidence stemming from a conjoint survey performed by Dr. Hauser’s Conjoint Survey Dr. at 1365. In particular. Samsung counters Apple’s evidence by submitting surveys showing the importance of attributes other than the patented features in consumer purchasing decisions. Hauser’s survey evidence. in conducting its causal nexus analysis. The Federal Circuit also counseled that “there may be circumstances where it is logical and equitable to view patents in the aggregate” when analyzing causal nexus. Id. 1. at 1368. including its ease-ofuse evidence and evidence of copying. Even though consumers may be willing to pay an additional $10 for the infringing cup holder. Hauser employed a web-based conjoint survey methodology to measure consumer preferences for Samsung products. Therefore. One such circumstance is “where [the patents] all relate to the same technology or where they combine to make a product significantly more valuable. Because in Apple IV the Federal Circuit agreed with this Court’s conclusions that the evidence in groups one and two could not establish causal nexus. the Court considers the aggregate effect of the utility patents-in-suit in driving consumer demand for Samsung’s products. and the inventions are all directed to making devices with touchscreens easier to use.000 car. “The general idea behind conjoint 16 Case No. the utility patents-in-suit cover different aspects of touchscreen software features.” Id. the Court here focuses first on Apple’s conjoint survey evidence in light of Apple IV’s instruction that the Court not truncate its review of that evidence. in combination with Dr. Id. Hauser. The Court will then “assess whether Apple’s other evidence. at 1368.
Hauser included “reliable touch” as an attribute within the touchscreen feature to distract respondents from the survey’s focus. and (D) reliable touch.” and to each hypothetical device in a choice set as a “profile. 10 The Even though it is not a patented feature. (B) very limited multi-touch. (6) number of apps. autofocus. Hauser asks respondents to choose among four hypothetical devices. Dr. (5) connectivity.” Id. tap to re-center after zoom. auto switch. (4) storage. 17 Case No. For the smartphone survey. auto switch. and (7) price. Dr. rubberband.” Id. ¶ 18. Id. Dr. (B) less reliable touch. ¶ 17. Each profile in a choice set had a different quality level for each feature.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page17 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 analysis is that consumers’ preferences for a particular product are driven by features or descriptions of features embodied in that product. or 12 megapixels.” Id. Dr. auto switch. (2) size and weight. D. ¶ 67. rubberband. rubberband. tap to re-center after zoom. 9 auto switch. In each survey. Hauser then set the “touchscreen capability” feature for each profile at one of four options consisting of different combinations of the patented features. tap to re-center after zoom.” and the functionality provided by the ’163 Patent as “Tap to Re-center after Zoom. Hauser refers to each selection question in his survey as a “choice set. For the “storage” feature. Ex. Hauser used “reliable touch” to signify a device that “reliably and accurately tracks finger movement. Dr. rubberband. Hauser varied the levels from 8 gigabytes capacity to 64 gigabytes capacity. Hauser included the following six features for each profile within a choice set: (1) touchscreen capabilities. (3) camera. for the tablet survey.” Hauser Expert Report. Hauser included the patented features in the “touchscreen capability” feature.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION 9 . For example. tap to re-center after zoom. Dr. Dr. Id. See Hauser Expert Report ¶ 67. Hauser used the following four options for “touchscreen capability”: (A) reliable touch. In particular. Hauser constructed two surveys. Dr. Dr. a 2 megapixel front-facing camera. 8. See id. the rear-facing camera “attribute” can have one of three “levels” of 3. Dr. 10 Similarly. Id. and zoom. 42-47. rubberband. tap to re-center after zoom. the “camera” feature in each profile had one or more of the following attributes: a 3. For both the smartphone and tablet survey. 16 successive times. (C) full multi-touch.” or “choice task. low. Ex. ¶¶ 38. Ex.or high-resolution video recording. and (D) full multi-touch. or 12 megapixel rear-facing camera. tap to recenter after zoom.” the functionality provided by the ’915 Patent as “Auto Switch. Hauser used the following four options for “touchscreen capability”: (A) full multi-touch (not a patented feature). (C) reliable touch. Hauser identified the functionality provided by the ’381 Patent as “Rubberband. ¶ 67. Dr. ¶ 17. D at 10 (capitalization removed). In the preceding example. E at 9. Dr. one for tablets and one for smartphones. rubberband. 8.
Using the data gathered from a large number of survey responses. as follows: Id. “For each set of four alternative smartphones [or tablets] in a choice task.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page18 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 parties refer to all the features other than the “touchscreen capability” feature as “distraction features. ¶ 19. Before beginning the survey. ¶ 68. Id. Hauser applied statistical methods to estimate consumers’ willingness to pay for each level of each tested feature. but only static images and text for the other attributes. See id. respondents were asked: ‘If these were your only options and you were choosing a new smartphone [tablet]. Id. After the animations and other descriptions. 18 Case No. respondents viewed descriptions of the surveyed features. ¶ 69. which Samsung smartphone [tablet] would you choose?’” Id. F at QCONJOINT. and connectivity features.” because Dr. Id. camera.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . These descriptions included animations for the touchscreen. Hauser included them in order to distract respondents from the survey’s focus. ¶¶ 63-66. the survey presented participants with the choice sets. Dr. Ex. Each of the four alternative product choices were displayed graphically.
¶¶ 20-34. Apple IV. the “market” in Dr. Hauser’s survey choice sets consists of four hypothetical devices with six features of varying levels. Hauser’s survey. Dr. The Federal Circuit vacated this Court’s prior treatment of Dr. The Federal Circuit also directed this Court to consider Samsung’s criticisms of Dr.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page19 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Id. Hauser’s methodology.”). Hauser’s survey and Samsung’s criticisms of it. without relation to the actual price or value of the devices. Dr. see ECF No. Dr. by the way. the Court fully considers Dr. holding that evidence of consumers’ willingness to pay for the patented features may be relevant to whether the patented features drive consumers’ purchasing decisions. In other words. rather than the realworld market. In other words. The Federal Circuit remanded so that this Court. the actual price that you pay depends upon both the demand and also what Apple and Samsung would be willing to supply. Id.” Id.g. I’m very clear on that.”) at 591:8-13 (“Q: And none of those numbers would reflect. examining the evidence. a. Hauser. Hauser Evaluates Relative Willingness to Pay for Features Rather than Effect on Product Prices First. could determine whether Dr. ¶ 96. on a “market. Declaration of 19 Case No. at 1368.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Id. Hauser’s survey measures the market demand for the patented features in a vacuum. Dr.” Id. however. Samsung vs. is careful to note that he “use[s] the term ‘market’ in a specific way to cover only smartphone and tablet types that [he] ha[s] varied in the survey. Hauser]: Oh. Hauser estimates a “price premium” garnered by each of the levels for each feature. 735 F. Apple). what people would actually pay in the marketplace? [Dr.3d at 1364.. Below. the Court concludes that the survey results fail to show the “requisite causal nexus” between Samsung’s infringement and Apple’s claimed irreparable harm. Dr. ¶ 96. Hauser’s survey demonstrates that consumer interest in the patented features is sufficient to find that the features “significantly increas[e] the desirability” of Samsung’s products. Hauser’s survey does not provide a way to directly compare consumers’ willingness to pay for particular features to the overall value of the infringing devices. I just have market demand and that the. In particular. 2840 (“Retrial Tr. including combinations of the patented features. For the following reasons. 2915-24. ECF No.” and that he has “not tested a market for smartphones or tablets in which consumers choose among various brands of smartphones or tablets (e. at 1367.
Hauser’s survey evidence. Sukumar (“Sukumar Decl.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page20 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Yoram (Jerry) Wind (“Wind Decl. If Dr. Ex. Hauser’s survey considered add up to a maximum of $422 for smartphones and $482 for tablets. Dr. This lack of information about how the patented features compare to the overall price of the infringing device is a significant hurdle for Dr. which reflects the real-world interaction of supply and demand for infringing and noninfringing devices. Wind Decl. Hauser testifying that “I just have market demand and .”) ¶¶ 46-47. The serious market competition in the smartphone and tablet industry works to depress prices. However. consumers would be willing to pay $621 for the same smartphone with all six of the tested features at the highest levels. The parties do not dispute that the ultimate price of a product is a combination of market demand and market supply. .: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . the actual price that you pay depends upon both the demand and also what Apple and Samsung would be willing to supply. Dr. the combined price premiums for just six of the hundreds of feature sets in the devices would very likely be less than the price of the devices. 20 Case No. Wind.”) ¶ 6. which are only a small subset of the features contained in the accused devices. 30. 2915-7. This failure to account for actual market prices explains why the price premiums for just the six features that Dr. Hauser’s survey did not account at all for competitor products or other supply at all. As a result. whereas the smartphone base price used was $199 and the tablet base price used was $499. at 591:8-13. Without a proper baseline figure to use for comparison. Hauser agreed at trial that he is “very clear” that his figures do not reflect “what people would actually pay in the marketplace. Hauser’s survey provides no way to determine the price of the car. Using the Federal Circuit’s car example. Decl. the survey leaves the Court with no way to compare Dr. . ECF No. the Court can compare only respondents’ willingness to pay for the patented features to respondents’ willingness to pay for different levels of the distraction features. Hauser’s willingness to pay estimates related to actual smartphone and tablet prices. given a base smartphone costing $199.” Retrial Tr. Declaration of R. ¶¶ 46-49.”).3d at 1368. see 735 F. see Retrial Tr. Hauser’s willingness to pay metrics—which relate only to demand for the patented feature—to the market price of the infringing devices. whereas Dr. at 591:8-13 (Dr. Hauser’s results indicate that. Hauser Expert Report ¶ 96 (defining the term “market” in a “specific way” that does not account for supply). Dr. even taking the price of the cup holder as $10.
” Id. Hauser’s Limited Features Provide Little Information as to Whether any Price Increase is Significant Of the price premium results in Dr. the distraction features account for 76% of the price premiums in Dr. Hauser’s survey instead created a market in which consumers could choose only among four hypothetical devices at a time with six features of varying levels. Hauser’s survey omitted these many significant smartphone and tablet features. much less the real-world intersection of market demand and market supply. Of those totals. HD video recording. In other words. Hauser’s survey evidence measures only demand for the patented features in Dr. Hauser’s survey results return a price premium for all six tested features at their highest level (e. Dr.g. 64 GB memory) of $422 for smartphones and $482 for tablets. autofocus. Specifically. 21 Case No. Dr. Here. however.. and processor speed—are highly important to consumers. Hauser’s tablet surveys.2.a. b. Because Dr. which sets the real-world market price for the devices. the survey results cannot demonstrate that the patented features significantly increase the price of a product. text messaging options. See infra Part IV. at 1368. substantial portions are attributable to features other than the patented features. Thus. Hauser’s smartphone survey and 81% of the price premiums in Dr. the price premiums for all the patented features are $100 in smartphones (or under one quarter of the total price premiums) and $90 in tablets (or under one fifth of the total price premiums). a multitude of other survey evidence not prepared for the purpose of litigation indicates that numerous features that were not tested—such as battery life. As the Court addresses more fully below.A. Hauser’s limited market and does not account for supply at all. Hauser’s smartphone and tablet surveys. Dr. If the features identified in the consumer surveys had been included in Dr. operating system. absent some baseline device price for comparison. features that surely have non-negligible value. and zoom.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page21 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Court recognizes that “evidence that a patented feature significantly increases the price of a product” may “be used to show that the feature drives demand for the product. Dr. the patented features would account for an even smaller percentage of the price premiums. a camera with an 8 MP rear camera. GPS.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . any price premium that consumers are willing to pay for the patented features in the survey is devoid of sufficient context. 2 MP Front Camera. Hauser’s survey. MP3 player functionality.
was confronted with similarly “odd” large price premiums (in that case.3d at 1364. at 1026 (internal quotation marks and alteration omitted). 2d 1006. of course. Id.. Hauser’s survey as evidence of causal nexus. Apple. 10-CV03561. 735 F. Inc. at 1025-26. as compared to a $150 Blu-ray player at issue).” Id. it is not clear whether the price premiums for the patented features in Dr. the conjoint survey expert explicitly warned against extrapolating the survey data to draw conclusions about the entire product. 2012 WL 850705. In this context. but faced only the question of whether to exclude the expert’s survey results on Daubert grounds.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Indeed. The TV Interactive court. as well as the survey’s failure to show that the patented features stand out even when viewed among all tested features. Sony Corp. in TV Interactive. argues that this Court would be wrong to criticize Dr. the value of the six tested features added to $133. the Court finds that the survey’s omission of numerous other important feature sets. The Court is weighing the persuasiveness of Dr. *9-11 (N. 929 F. Hauser’s conjoint survey to show a significant increase in product price could be unreliable..Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page22 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Thus.D. See Oracle Am.. No. citing TV Interactive Data Corp. Google Inc. Here. Cal. make it difficult for the Court to conclude that Dr. the Court is not addressing a Daubert challenge. 2012).D. The court did not need to take the extra step presented to this Court of drawing irreparable harm conclusions from the survey results. March 13. Hauser’s failure to test more than six features of the accused products. v.11. Cal.” Apple IV. Moreover. “making projections beyond [the surveyed] values.e. Hauser’s limited survey indicate that consumers are willing to pay significantly more for a product with the patented features or that the patented features “make the product significantly more desirable. however. Judge Alsup excluded on Daubert grounds a choice-based conjoint survey for purposes of calculating an infringer’s increase in market share due to infringing features (as opposed to establishing simply a relative willingness to pay for the infringing features). TV Interactive’s no-extrapolation warning suggests that using Dr. i. 1020-27 (N. v. 2013). Supp. Yet that is precisely what Apple asks this Court to do here: extrapolate from the survey results regarding a limited number of features to determine whether the patented features drive consumer demand for the entire product.. 22 Case No.
at 659:21-25 (“Q. Accordingly. not the degree of that demand. The Court’s above analysis of Dr. Hauser used in the present case. not the degree of demand. they concluded that the fact that “people were willing to pay more for a product because it had certain features suggested to me that they wanted those features. In other words. Did you actually use those dollar amounts in assessing damages? A. 575 F. There are some dollar amounts associated with the results of [Dr. I was relying upon his survey as an indicator of demand. At trial. Hauser’s survey evidence. v.” Dkt No. Apple’s damages expert from the original trial similarly relied on the same Dr. 1978). 28:23-24. No. at 1156.” Retrial Tr. See Opp. 11 The Federal Circuit In the related case between these parties. 1164. Id. But Apple did not use those results at trial to argue how much more people were willing to pay for the patented features. Panduit requires only that Apple show that “demand for the patented product” exists. Apple provided the Court access to the actual Internet survey taken by respondents in that case.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page23 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Hauser’s survey results establish that the patented features significantly increase the price of the product or otherwise drive demand for the product.” Id. Inc. Apple used Dr.. Apple’s counsel invited the Court to look at that survey to inform its understanding of the survey that Dr. the Court has reviewed the survey as provided to 23 Case No. Hauser’s conjoint survey results is consistent with the jury’s damages award in this case.”) 2077:1-8. See id. Fibre Works. 12-CV-00630. Apple had its damages expert in the damages retrial clarify on direct that she did not rely on the actual values from the survey results to establish any conclusions as to degree of demand. See Panduit Corp. Hauser survey to support only the damages expert’s conclusion “that there was demand for the three utility patents.”). the Court declines to use the survey results in a way that even Apple’s damages experts chose to avoid. At the hearing on Apple’s renewed injunction motion. Stahlin Bros. Apple’s damages experts testified that they used Dr. c. Hauser’s survey results only “as an indicator of demand. Case No. 1839 (“Trial Tr. Hauser’s] survey. To the contrary. Hauser’s Survey Inflates the Value of the Patented Features Samsung has raised a host of arguments based on the survey’s presentation that challenge the persuasiveness of Dr. 654:4-8.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION 11 . Now that the case has reached the injunction stage. See ECF No. See Hr’g Tr. at 25:9-12.2d 1152 (6th Cir. Hauser’s conjoint survey results to establish demand for the patented product as part of its lost profits case. Indications that Dr. at 8-10.
See Wind Decl. In that case. Hauser’s survey presentation further obscure the degree to which the patented features contribute to the demand of the patented features. as shown in the next subsection. The Federal Circuit in Apple IV suggested that courts should consider the impact of potential noninfringing alternatives in the causal nexus analysis. For example.3d at 1364-65 (“And if a particular patented laptop battery lasts significantly longer than any other battery on the market. because there must be “some connection between the patented feature and demand for Samsung’s products. i. Although respondents. Hauser’s survey.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page24 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 instructed this Court to address those “other [purported] methodological flaws” in the first instance. Inadequate Presentation of Noninfringing Alternatives The Court finds Dr. ¶ 45. the survey suggested that respondents were choosing between a device that helped a user identify the border of a document and one that did not.” Apple should show that the patented features are sufficiently valuable over noninfringing alternatives to drive consumer demand. even though it is undisputed that noninfringing alternatives to the border-identifying feature of the ’381 Patent existed. Hauser’s survey and concludes that at least two aspects of Dr.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . may have misled respondents into believing that the profile lacked any features of those types. However.3d at 1368. the Court has analyzed all of Samsung’s more than a dozen additional contentions regarding Dr. Apple IV. Accordingly. 24 Case No. 735 F. See Hauser Reply Decl. In other words. That review helped the Court reach its conclusions regarding the presentation of Dr. by asking respondents to choose between only “Rubberband” and “Rubberband” when choosing profiles in a choice set. Id. then the replacement of that battery with a noninfringing battery might make a laptop less desirable. rather than that the profile merely lacked the particular implementation of those features as patented by Apple. using a web browser. it might be reasonable to conclude that the patented battery is a driver of consumer demand for the laptop. at 1364 (emphasis added). Apple IV.”). 735 F. ¶ 78. Hauser’s survey results are undermined because the survey appears to have failed to adequately account for noninfringing alternatives to the patented features. Hauser’s use of mere shorthand descriptions of the patented features to depict the presence of the patented features and a strike-out to depict their absence. Dr.
when presenting the 16 choice sets.3d at 1376 (“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. ¶ 15. By instead merely crossing out the patented feature. and not even because it has unified search. Dr. Hauser described to respondents possible noninfringing alternatives to the patented features at the beginning of the survey. Moreover. However. Dr.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . See Apple II. See Hauser Expert Report. For example. Undue Emphasis of Patented Features Similarly. the touchscreen features are centrally located on the product choice screen. the survey likely inflated the measured price premiums. because it suggested that the patented features captured a broader concept then that claimed in the patents-in-suit. “Rubberband”) with a shorthand description of a noninfringing alternative. Ex. the survey employs different graphic effects when portraying the absence of the patented features. See Hauser Expert Report. the survey uses a darker colored background for the “touchscreen capability” feature (which includes 25 Case No. replacing the shorthand description of the patented feature (e. Ex.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page25 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dr. Not only do the more detailed descriptions of the patented features increase the likelihood that respondents dwell longer on the patented features when choosing their survey responses. see also Sukumar Decl. 695 F. In addition.”). ¶ 15. the patented features. When the survey presents respondents with a product choice missing one of the patented features. by virtue of receiving more description than the other tested features. G at QCONJOINT. when the survey presents respondents with a product choice without one of the distraction features.. the graphic displays a bright red line striking through the name of the patented feature. for example. See Sukumar Decl. but the patented features’ sizeable descriptions also cause the patented features to appear more prominent on the product choice screen.g. This placement focuses respondents’ attention on the patented features rather than the other tested features because respondents’ eyes are naturally drawn to the center of the screen. Hauser could have easily done so by. Even further. ii. the graphic simply omits the name of that feature. G at QCONJOINT. the survey highlights the patented features using various attention-drawing graphic effects. Hauser did not remind respondents that those noninfringing alternatives could replace the patented features. occupy more screen space than the other features.
12 The survey also appears to have inflated the relative value of the patented features by giving much more information to respondents about the patented features than consumers in the marketplace have about those features.” “2MP Front. Graded Pairs. The different effects underscore the absence of the patented features when they are missing from a product choice. Sukumar Decl. Research has shown that “attention can elevate the importance of particular attributes to a level that is greater than would occur in the marketplace. as was done in this case. the camera feature in Profile 2 omits Zoom by simply omitting that feature from the icon and substituting higher-level attributes (“High Res. See Wind Decl. ¶ 56. available at http://www. Sukumar Decl.com/download/ 12 Perhaps in response to Samsung’s criticism on this score. 26 Case No. are shown to be absent from Profile 2 by way of red strike-throughs. ¶ 15.” Joel Huber. As shown. in contrast. Dr. Full Profiles or Choice Experiments. 12CV-630 does not use white text on a dark background with red strike-throughs to indicate the absence of patented features. The attribute levels for the camera and touchscreen capability from two potential profiles illustrate these differing graphic effects: PROFILE 1 PROFILE 2 Hauser Expert Report.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page26 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the patented features) than for the other features. “What We Have Learned from 20 Years of Conjoint Research: When to Use Self-Explicated.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .sawtoothsoftware. Hauser’s survey in Case No. drawing attention to the patented features and underscoring the bright red lines. Ex. D at 15 (excerpted). which leave the underlying feature on the screen to remind the respondent that it is missing. The patented features.” Sawtooth Software Conference Proceedings 2 (1997).” and “12MP Rear”) with lower-level ones (“Low Res” and “3MP Rear”). ¶ 14.
“Simply mentioning an attribute increases its importance. without a more convincing rebuttal from Dr. at 10. Consequently. MA: Kluwer Academic Publishers. and. Related Modeling.edu/hauser/www/Papers/ (filename Hauser_Rao Conjoint Analysis Green Festchrift. Dr. Dr. Wind Decl. Advances in Market Research and Modeling: Progress and Prospects (Boston. John Hauser & Vithala Rao.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page27 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 techpap/whatlrnd. Jerry Wind contends that the multimedia animations could have signaled to respondents that those features should be relatively more important. camera.mit. and connectivity features. and Applications. the survey results likely overstate consumers’ relative willingness to pay for the patented features. 27 Case No.pdf). ¶ 72. “Conjoint Analysis.” Id. Hauser used multimedia animations to describe the touchscreen. ¶ 73.). Wind Decl.pdf. The Court finds that the extra attention given to the patented features in the survey through these various graphic effects and presentation methods likely inflated their price premiums. Samsung expert Dr. Hauser Reply Decl. the criticisms further reduce the persuasiveness of Dr.” in Wind. recognized in 2004 that this artificial-focus problem is a “conceptual issue” with conjoint studies that requires “further development” to address. it suffices to say that Dr. Hauser. Dr. ¶ 36. whereas he described the other tested features using only static images and text. Both sides find support in the fact that respondents valued all the feature types described by animations higher than all the features described only by text and static images. Wind’s criticisms appear genuine. in a paper written outside of the litigation context. Hauser’s survey appears to have drawn particular attention to the patented features in yet another way. Green (eds. J. Dr.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Although the Court does not decide which expert is correct on this point. Hauser responds that the higher willingness to pay estimates for the features described by multimedia animations could simply reflect consumers’ higher valuations of those features. thereby increasing respondents’ relative willingness to pay estimates for those features. and P. raising the specter of attributes appearing important that otherwise would be ignored in the market choice. Hauser’s survey results. Hauser himself. 2004):18 available at http://web.
929 F.”). but instead argued that the Federal Circuit substituted an “‘a connection’” test for the previous “driver of demand” test. Hauser’s survey to accomplish this latter showing. The Court is not persuaded by Apple’s attempt to stretch Dr. The Federal Circuit held there must be “some connection between the patented feature and demand for Samsung’s products.” Retrial Tr. the phrase “a connection” appears nowhere in Apple IV. it might be shown with evidence that the absence of a patented feature 28 Case No.”) (internal quotation marks omitted). 29:9-17.’ because that’s very much what they said. id. It does not readily provide an indicator of the degree of demand necessary to show that the patented features “drive consumer demand for the accused product[s]. Hauser’s conjoint survey and its results to determine whether they show the degree of connection necessary to establish that the patented features drive consumer demand for the infringing products. Even when this Court asked at oral argument whether Dr. either directly or circumstantially. with evidence that a patented feature is one of several features that cause consumers to make their purchasing decisions. see id. at 659:24-25. see Hr’g Tr. Despite Apple’s representation that the phrase “a connection” was briefed and argued to the Federal Circuit. Hauser’s Survey Evidence The Court has fully evaluated Dr. e. Apple’s counsel was unable to respond directly. 735 F.3d at 1364 (emphasis added). As Apple’s damages expert explained at trial.. (“There might be a variety of ways to make this required showing. See. Hauser’s survey evidence is unpersuasive on this point. It might also be shown with evidence that the inclusion of a patented feature makes a product significantly more desirable. Conversely.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page28 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 d. See TV Interactive. Conclusion Regarding Dr.3d at 1364. it is clear that the Federal Circuit’s use of “some connection” does not suggest that any connection is sufficient.” See Apple IV. Hauser’s survey provides simply “an indicator of demand.” Apple IV. id. Supp. (“Apple must show that the infringing feature drives consumer demand for the accused product. 34:8-36:17. In context. the Court concludes that Dr. for example. For the reasons set forth above. Hauser’s survey shows that the patented features drive demand for the accused products. 2d at 1026.g.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . 735 F. Dr. But that is not what the Federal Circuit said. at 36:4-6 (“I’m not trying to be difficult or to wordsmith when I focus on the words ‘a connection. Hr’g Tr.
is important to the iPhone” but “does not prove that Samsung’s incorporation of the patented features influenced demand for its products. that “[i]t is not enough for the patentee to establish some insubstantial connection between the alleged harm and the infringement.”). see also PX144.” Apple III. Hauser’s survey results. Hauser’s survey evidence. Throughout the Apple cases. Apple IV.3d at 1367. a. at 1368 (emphasis added). 678 F. including its ease of use evidence and evidence of copying. Hauser’s survey results simply do not allow the Court to determine whether the patented features meet this test. Ease of Use Evidence Apple’s ease of use evidence includes several product reviews. 695 F. 2d at 1155.3d at 1375. the Court again reviews Apple’s other evidence. without reference to any of the patented features. PX146.6. that an “insubstantial” loss of market share caused by the infringement is “not enough.” Apple IV. See PX143. in combination with Dr.6 (same).3d at 1324. For example. Dr. media articles. the Federal Circuit instructed this Court to consider fully Dr. PX145. Hauser’s survey evidence.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page29 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 would make a product significantly less desirable.” Apple I. Other Evidence of Demand The Federal Circuit’s decision in Apple IV did not disturb this Court’s conclusions with respect to Apple’s other evidence of irreparable harm: Apple’s ease of use and copying evidence. 29 Case No.6 (same). and consultant reports that refer to the iPhone or iPad’s touchscreen and interface as easy to use. Accordingly.” Id. 735 F. but this time with due regard to Dr.” id. an iPhone buyer survey shows that consumers care about ease of use generally. and then “assess whether Apple’s other evidence. at 1325. suffices to establish irreparable injury.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .” Apple II. 735 F. and that a “nominal” willingness to pay for an infringing feature will not establish a causal nexus.3d at 1368. 2. in general. This Court previously found that this ease of use evidence “is simply too general. The Federal Circuit approved this Court’s conclusion and itself found that Apple’s ease of use evidence “simply shows that ease of use. Supp. Instead. 909 F.5 (same). Most of the documents refer simply to ease of use. the Circuit has always required that the infringement cause more than “an insignificant amount of lost sales.
Other than “reliable touch. video. 30 Case No. Dr. in Samsung’s products. Because Dr. PX36. and allow easy access to new apps.10. among other things.”). Dr. Hauser acknowledges that his definition of “market” does not correlate the market for Apple devices to the market for Samsung devices. exhibit “[c]onsistent behaviors across apps.39.31. such as that popular devices have “[f]ew buttons” and “minimal and screen-centric” design. Accordingly. Hauser’s survey evidence. however. Hauser did not include distraction features that go to ease of use generally or that capture the acknowledged benefits of the touchscreen in particular. PX36. The Federal Circuit has already reviewed this type of inference with some disapproval. Apple falls short of its burden absent additional corroborating evidence that would help the Court draw the connection between what influences Apple’s customers to purchase Apple devices and what influences Samsung customers to buy Samsung devices.3d at 1376 (“At best.” see supra n. to satisfy Apple’s burden. Hauser’s survey results do not change the Court’s conclusion. which relate to particular ease of use aspects. and music.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . that consumers would buy the Galaxy Nexus because of its improved comprehensiveness in search. PX36. Apple has failed to provide a reliable depiction of how the patented features correlate to the demand for the overall infringing products. its search results are comprehensive. Dr. See Apple II. the Court continues to find Apple’s ease of use evidence as to the iPhone insufficient. That does not sufficiently suggest.35.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page30 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dr. the ease of use evidence from iPhone buyer surveys would have to allow the Court to make the inference that because ease of use is important to Apple’s iPhone customers. ¶ 96. Furthermore. Hauser’s survey did not address many of the other features referenced in Apple’s ease of use documents. to be helpful to Apple. Hauser focuses on the patented features. Unlike the ease of use evidence cited in the preceding paragraph. provide mobile access to television.” PX36.41. the district court’s findings [in favor of irreparable harm] indicate that some consumers who buy the iPhone 4S like Siri because. 695 F. But he does so to the exclusion of other ease of use features identified in Apple’s documents. See Hauser Expert Rep. even in conjunction with Dr. other customers may have purchased Samsung devices based on Samsung’s inclusion of the patented features.
Hauser’s survey evidence might helpfully supplement Apple’s copying evidence if. for example.] 21.1.25 (“[Feature No. PX44. Hauser’s survey appears to have improperly discounted the impact of noninfringing alternatives. Accordingly. In Apple IV the Federal Circuit said that Apple’s copying evidence “may be relevant. PX38. e. Evidence of Samsung Copying Apple’s evidence of copying included several Samsung documents indicating that Samsung should add some of the iPhone’s touchscreen effects to its products.24.”)). see supra Part IV. Hauser’s survey evidence does not supplement Apple’s copying evidence in a way that establishes a causal nexus. . i-Phone: When using voice recorder. it is easy to navigate between e-mail messages”).66. however.58. PX44. . see PX44. the survey evidence showed that Samsung’s subjective beliefs proved to be true in the marketplace. PX46. .c. Similarly. . See PX38. 678 F. 909 F.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page31 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 b. PX57.15-16. . . Dr. even as to the features that Samsung allegedly copied. PX57.A.19. Supp. .102 (“[Feature No. one of Apple’s copying documents suggests that Samsung believed that the double-tap-to-zoom feature was preferable to a touch-and-hold-to-zoom feature. the patented features were among those that drove demand. For example. Hauser’s survey does not evaluate most of the features included in Apple’s copying documents. but it is insufficient. . Hauser’s survey results do not reliably reconstruct the market.] 121 . not on the infringer’s subjective beliefs as to why it gained them (or would be likely to gain them. the Court concludes that Dr. Dr.19.g.3d at 1368..: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .126 (“[Feature No. . 2d at 1156 (citing Apple I.” Apple III.73.19.3d at 1327-28 (“[T]he relevant inquiry focuses on the objective reasons as to why the patentee lost sales. Hauser’s survey evidence does not give the Court a way to determine whether. Relying on Apple I. provides image of a microphone and displays volume”). For the reasons discussed above. See. this Court concluded that such evidence was “insufficient to establish the required causal nexus.] 97.. i-Phone: Can control the music playback from within the playlist through the control bar while music is playing”).” 735 F. But because Dr. .13. the survey fails to show whether consumers generally agreed with Samsung’s subjective belief as to this feature. Dr. PX44. because Dr. 31 Case No.i. i-Phone: With the Previous and Next buttons.
ease of use. Much of this evidence comes from Apple’s own consumer surveys that. appearance and design. “Q1 FY11 iPhone Buyer Survey” (APLNDC-Y0000027341-422.g. at 816). quality of apps. and 3G capabilities.” J. applications. e. for example “for personal related travel. FaceTime video calling. “Yankee Group Samsung Strategy Session” (SAMNDCA00250503-557. Other Consumer Surveys Samsung presents substantial and compelling counter evidence questioning the importance of the patented features.. “Attitudes and Usage of Smartphone owners. a 2011 iPhone Buyer Survey identified twelve features that consumers found to be important when choosing an iPhone: web capabilities. multi-tasking. at 525-526). camera. The equivalent study for iPads listed eleven key attributes: portability. Declaration of Tulin Erdem (“Erdem Decl. HD video recording and FaceTime video calling. For example. These and other similar consumer surveys demonstrate that ease of use is undoubtedly important to consumers.” 32 Case No. at 707-708. “August 2010 iPad Buyer Survey” (APLNDC-Y0000023361-427. “Q1 FY11 iPad Tracking Study” (APLNDC-Y0000023730-907. value for price paid. 2915-6. “iPhone Buyer Survey Q3 FY11” (APLNDC-Y0000027506-599. HD video recording. at 816). unlike Dr. battery life. quality. when they make their purchasing decisions.” Hall & Partners (SAMNDCA00252685775. Hauser’s survey and Apple’s other evidence of causal nexus. 13 Another iPhone consumer survey uses thirteen categories of attributes: easy to use. screen size. 714). at 347-369). “Q1 FY11 iPhone Buyer Survey” (APLNDC-Y0000027341-422. at 347-369). service and support. ease of use.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page32 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 13 c. cool/fun factor. Power and Associates (SAMNDCA00190144-243. and ability to edit video. camera with LED flash. ECF No. battery life. Hauser’s survey.D. battery life. value for price paid. see also. along with a number of other broad categories. at 523). ability to download and use applications. at 195-196). (Trust) Apple brand. quantity of apps.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . retina display. entertainment options. at 381- 28 Note that several other features were also included in that survey that relate more to the way in which the buyer uses the iPad. ability to sync iPhone content. “Q1 FY11 iPad Tracking Study” (APLNDCY0000023730-907. “2009 Wireless Consumer Smartphone Satisfaction Study Volume 1. which the Court weighs against Dr. Wi-Fi capabilities.”) ¶¶ 37-46. retina display. were not prepared for the purpose of litigation. weight. attractive appearance and design.
operating system. Dr..” such that Samsung’s infringement caused Apple irreparable harm. 3. relative impact of the patented features on demand for the infringing devices is unknown. Nor does the rest of the evidence supplement or otherwise corroborate Dr. See.3d at 1364. After careful examination of all the evidence. at 275-301). Apple has not shown that they are—not with Dr. Smartphones and tablets are complex devices embodying hundreds of features. to be evaluated by the district court. See Apple IV. Yet. Hauser’s survey. at 512-523). Summary as to Irreparable Harm The Federal Circuit held that the question of the causal nexus to Apple’s irreparable harm is “one of degree.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page33 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 389).: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Hauser’s survey evidence provided results for only six of those elements. Apple IV. at 591:8-13. Apple has not met its burden of proving the requisite causal nexus to establish irreparable harm.3d at 1367 (approving this Court’s prior treatment of Apple’s ease of use and copying evidence). Hauser’s survey. these surveys do not suggest that the patented features are a driver of demand.g. and screen size—the three patented features at issue here drive consumer demand. including Dr. 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. Retrial Tr. “iPhone Buyer Survey Q3 FY11” (APLNDC-Y0000027506-599. e. 735 F. inventions. and not with its copying evidence—and the Samsung evidence cited in this subsection further suggests the actual. the evidence shows that the three patented features may add to a device’s appeal.3d at 1368. “Q2 FY10 iPhone Buyer Survey” (APLNDC-Y0000026687-807. 735 F.3d at 1364. the Court finds that Apple has failed to demonstrate that Samsung’s inclusion of the patented features made Samsung’s products “significantly more desirable. do no more than confound the Court’s efforts to determine whether—of the many smartphone and tablet features such as the camera. The various consumer surveys presented to the Court.” Apple IV. and components. at 695-710). Put another way. screen quality. Accordingly. not with its general ease of use evidence. in a form that he readily concedes may not be extrapolated to the real market. Apple IV. 33 Case No. 735 F. Hauser’s results in a way that would allow Apple to meet its burden. “Q2 FY11 iPhone Buyer Survey” (APLNDC0000036266-348. 375 F.
However.. although the evidence is ambiguous as to whether Apple offered Samsung a license to the ’381 Patent. Mr. instead referring to a “Phone license. See DX 586.g. Throughout his testimony.7. See. Samsung.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .3d at 1370 n. The panel could not “tell if the district court reached a conclusion on this issue. 1839 at 2022:4-9. e. ECF No.” Id. the parties hotly contest whether Apple offered Samsung a license to any of Apple’s utility patents-in-suit. Teksler did not waver from his statements that Apple’s October 2010 offer “absolutely [did] not” include the patents-in-suit.” so the Federal Circuit thus directed that “before relying on Apple’s licensing offer as evidence of the adequacy of damages.” DX 586.” ECF No. Apple’s Director of Patent and Licensing Strategy in Fall 2010. 2022:22-24. The Court finds that. 1839 at 2013:9-21. The October 2010 presentation slides make clear that Apple discussed the possibility of licensing patents to Samsung. stating that “[t]he parties dispute the scope of Apple’s October 2010 licensing offer to Samsung. Apple. the Federal Circuit specifically addressed the evidence on Apple’s willingness to license the utility patents-in-suit to Samsung. Teksler testified that Apple’s October 2010 offer “never included Apple’s unique user experience and [Apple] made that clear.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page34 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. 1695 34 Case No. contends that Apple never offered Samsung a license to any of the asserted patents. On remand.” “Smart license. citing testimony from Boris Teksler.” and “Advanced Mobile License. argues that Apple offered Samsung a license in October 2010. Mr. referring to a presentation Apple made in October 2010.” Apple IV.008. The evidence is inconclusive as to whether the licenses discussed in October 2010 included the ’381 Patent. ECF No. 735 F. the court should have resolved whether Apple’s offer included the asserted patents and trade dress. perhaps even offering Samsung a license. Adequacy of Legal Remedies In its opinion. Apple’s licensing discussions with Samsung do not demonstrate that monetary damages were adequate compensation. the slides never mention any specific patents.
The Court need not conclusively resolve whether Apple in fact offered Samsung a license to the ’381 Patent because the foregoing evidence makes clear that Apple did not consider monetary remedies to be adequate compensation. Furthermore. Apple IV. Cir. a direct competitor.. Inc. The Court denied Samsung’s request for further discovery into these ongoing settlement discussions out of this very same concern. Inc. Quanta Computer. Negotiations apparently ended shortly after Apple outlined several possible frameworks for a license deal.” See. 735 F.. see also LaserDynamics.3d 51.g. 77 (Fed. 2012) (holding “that license fees that are tainted by the coercive environment of patent litigation are unsuitable to prove a reasonable royalty”). These recent settlement discussions have minimal probative value. Even assuming that Apple offered Samsung a license to the ’381 Patent. v. e. Apple licensed the utility patentsin-suit to HTC only in settlement of litigation and on terms preventing HTC from using the licensed patents in combination with Apple’s “Distinctive Apple User Experience. 21941 (“HTC Agreement”) at Ex. See ECF No. ECF No. This finding is consistent with Apple’s licensing practices with other competitors. For example. The Federal Circuit found that these exact license characteristics indicate that damages are an inadequate remedy. future patentees would be much less likely to engage in negotiations while litigation is pending. as they are “tainted by the coercive environment of patent litigation. the evidence demonstrates that Apple was highly reluctant to license its “unique user experience” patents to Samsung. 2913 at 4 (“‘[I]f participants cannot rely on the confidential treatment of everything that transpires during [mediation] sessions then counsel of 35 Case No.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page35 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 at 1955:22-1957:9. incurred from Samsung’s infringement. if any. Samsung presents no evidence indicating that Apple offered Samsung a license to either the ’915 Patent or the ’163 Patent prior to filing this suit.3d at 1370. 694 F. Were the Court to find that the parties’ recent settlement discussions disfavor entering an injunction. 2738 at 18. The evidence of Apple’s exceptionally restrictive licensing practices therefore establishes that monetary remedies would be inadequate to compensate Apple for the irreparable harm.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Samsung argues that Apple has made multiple license offers to Samsung within the past year. A.” ECF No.
For example. Moreover. (citation omitted). HTC. the Nokia license “was a ‘provisional license’ for a limited ‘standstill’ period. the Nokia-Apple and HTC-Apple licenses provide little insight into whether Apple would be willing to provide Samsung unencumbered access to the patented features for money. Supp. In particular.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page36 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 necessity will feel constrained to conduct themselves in a cautious. Therefore. as to the Apple-IBM license. Other Apple Licenses Samsung also contends that Apple’s other licenses confirm that monetary damages are adequate. and . Therefore. . at 15-18. Motion Picture Indus. and the HTC agreement excluded HTC products that were ‘clones’ of Apple’s products.” Apple IV. these discussions do not disturb the Court’s conclusion that Apple’s past licensing behavior as to Samsung demonstrates that legal remedies are inadequate. because IBM and Apple were not competitors in the smartphone or tablet market and the license was entered into five years before Apple launched the iPhone. Because of these special conditions. 735 F. Both the Nokia and HTC agreements resulted from litigation settlements.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . The Court agrees that.D. . Pension & Health Plans. tight-lipped.’”) (quoting Folb v. Id.” Id. Indeed. 36 Case No. the IBM-Apple license is of little relevance to whether Apple would be adequately compensated by a license to Samsung. noncommittal manner more suitable to poker players in a high-stakes game than adversaries attempting to arrive at a just solution of a civil dispute. the panel stated that “IBM is not a competitor in the smartphone market. the license was entered into five years before Apple launched the iPhone. Id. Opp. 16 F. the Federal Circuit noted that these licenses have “relevant differences from the current situation. Cal. and Nokia that include some or all of the three utility patents-in-suit. 2d 1164. Samsung cites Apple’s licenses with IBM.” Id. 1173 (C.3d at 1370. the Court holds that Apple’s other licenses do not support a finding that damages are an adequate remedy. 1. the Federal Circuit found that “numerous factors” suggested that Apple’s past licenses with other companies were not relevant because Samsung uses Apple’s technology differently than those licensed companies. On appeal. 1998)) (internal quotation marks omitted).
’” Apple IV. even if monetary remedies will not compensate Apple for that irreparable harm. 735 F. the Court ultimately finds that—despite Apple’s apparent unwillingness to license the patents-in-suit to Samsung—monetary remedies would more appropriately remedy the injury arising out of Samsung’s infringement of the 37 Case No. HTC. Summary as to Monetary Remedies The Court concludes that damages for the irreparable harm Apple alleges are difficult to quantify.S. Apple needs to show that the irreparable harm established in the first eBay factor is not compensable through monetary remedies. are inadequate to compensate for that injury”) (emphasis added). if. such as monetary damages. This conclusion. however. The Federal Circuit in Apple IV also highlighted that an injunction should not issue without a finding that Samsung’s infringement caused Apple irreparable harm when it held that “[o]f course. See eBay. 735 F.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page37 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2.3d at 1371. Apple cannot demonstrate that demand for Samsung’s products is driven by the infringing features. in other words. 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. on remand.3d at 1361 (quoting Apple II.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . (2) that remedies available at law. To award an injunction to Apple in these circumstances would ignore the Federal Circuit’s warning that a patentee may not “‘leverage its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant. then Apple’s reliance on lost market share and downstream sales to demonstrate the inadequacy of damages will be substantially undermined.3d at 1374-75). Although the Court in its previous determination found that Apple’s past licensing behavior indicated that legal remedies could provide adequate compensation. 547 U.” Apple IV. the Federal Circuit’s recent guidance and this Court’s further examination of the evidence lead to a different conclusion here. and Nokia from the present circumstances. at 391 (listing as the first two factors a patentee must show for an injunction “(1) that it has suffered an irreparable injury. Apple’s past licensing behavior demonstrates a reluctance to license the utility patents-in-suit to Samsung. To prevail on the inadequacy of legal remedies eBay factor. Apple. cannot obtain a permanent injunction merely because Samsung’s lawful competition impacts Apple in a way that monetary damages cannot remedy. and several factors distinguish Apple’s licenses to IBM. 695 F. For that reason.
Apple’s argument fails to tip the balance of this factor in Apple’s favor because Samsung has undisputedly ceased selling its infringing products. Samsung also makes two arguments. and does not demonstrate that Apple will suffer hardship absent an injunction. but an injunction against Samsung products will not greatly affect Samsung’s overall product offerings. many of which were not accused in this case. The Court sees no reason to depart from its earlier determination. at 42-43. and perhaps more importantly. Apple contends that an injunction is necessary to protect Apple against future infringement by Samsung through products not more than colorably different than those already found to infringe. Samsung asserts. Supp. Balance of Hardships The Federal Circuit found no abuse of discretion in this Court’s prior analysis concluding that the balance of the hardships factor was neutral. C. The Court previously considered this argument. finding that Samsung failed to explain “how an injunction would cause the asserted disruptions. 909 F. Apple also made this argument to the Federal Circuit. the second eBay factor favors Samsung.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page38 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 utility patents-in-suit than would an injunction. Further.1. Apple IV. The fact that the Federal Circuit found no error in this Court’s conclusion counsels against crediting Apple’s argument here. First. or what hardship they would actually present for Samsung. as opposed to hardship for the carriers and consumers. First. Accordingly. See ECF No. as it did before the Federal Circuit. at 9 n. that. at 19.3d at 1371. Ex. 6 at 42. 735 F.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Opp. see id. because Apple has a substantially smaller product line than Samsung. Apple’s fear that Samsung will reintroduce infringing products when Samsung has already stopped selling all the infringing products is speculative. 2915-34. Second. as it did before. Samsung’s continued infringement of Apple patents is especially harmful to Apple. See Mot. Again. that an injunction would disrupt its relationships with retailers and wholesalers. “carriers who sold the infringing products have assumed the risk of this type of 38 Case No. Apple argues. Three of the four main arguments the parties raise now are essentially the same arguments as in the briefing on Apple’s original motion for a permanent injunction in this case (Apple III) and in the briefing on appeal (Apple IV).” Apple III. 2d at 1161. In addition. Smith Decl.
The Court previously recognized that both concerns are valid but on balance found the concern over a small number of features exerting inordinate control over an entire product to be more compelling. 1992) (“One who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against a continuing infringement destroys the business so elected. Samsung’s second argument is the only new argument on the balance of the hardships factor. Other than the argument on the ’915 Patent’s reexamination proceedings that the Court already rejected. on the balance of the hardships. Thus.3d at 1371. Inc. At this point. “neither party will suffer any particularly great hardship” from either outcome of Apple’s renewed motion for a permanent injunction.3d at 1371-73. Supp. The Court again finds this factor to be neutral. 802 F.N. 1169. 909 F.”)). on the other hand. D. 1179 (D. As the Court noted in its order denying Samsung’s most recent motion to stay the case. it would not be in 39 Case No. See ECF No. Apple continues to press that the public interest favors strong patent rights. The Federal Circuit found no abuse of discretion in this analysis. Apple IV.. 735 F. v.” Id. 735 F. and on these facts.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page39 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 disruption. however. Samsung contends that entering an injunction based on infringement of the ’915 Patent would present a hardship for Samsung because the PTO has invalidated the asserted claim of the ’915 Patent on reexamination. (citing Telebrands Direct Response Corp. Apple III. Ovation Commc’ns. Apple III. Public Interest The Federal Circuit also found that this Court did not abuse its discretion in finding that the public interest factor weighed slightly in favor of Samsung. 2831. at 2-3.J. 2d at 1161-62. Samsung. and that an injunction is necessary to incentivize future innovation. Supp.: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Supp. it is impossible to know what the ultimate outcome of the ’915 Patent’s reexamination proceedings will be. non-core features. the reexamination proceedings are far from complete. 2d at 1163 (“[W]hile the public interest does favor the protection of patent rights. stresses the public policy against enjoining entire complex products based on the infringement of limited. the parties present no new arguments on the public interest factor. Apple IV. The Court declines to rely on a PTO office action now on appeal to the Patent Trial and Appeal Board as a basis for denying Apple’s request for a permanent injunction. 909 F.
See Hr’g Tr. Without consideration of the baseline price of the products or market supply (influenced for example by other competitors on the market). the actual price that you pay depends upon both the demand and also what Apple and Samsung would be willing to supply. For the reasons stated above. Hauser failed to appropriately consider noninfringing alternatives.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page40 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the public interest to deprive consumers of phones that infringe limited non-core features.” Apple IV.3d at 1368 (emphasis added).: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .”). As to whether the patented features’ impact is significant. The Federal Circuit instructed that “evidence that a patented feature significantly increases the price of a product” may “be used to show that the feature drives demand for the product. See Opp. Hauser himself concedes is inappropriate. 40 Case No. ECF No. Hauser’s willingness to pay numbers are devoid of a proper context. Dr. E. I just have market demand and that the. Dr.”). When the Court directly asked at oral argument. Apple presents no evidence that any current Samsung devices incorporate the patented features. Hauser’s willingness to pay estimates for the patented features to the market price of the product— something Dr. The only new fact is that Samsung represents that no infringing units are currently in the marketplace. Most significant is Apple’s failure to prove a causal nexus between Samsung’s infringement of Apple’s patents and Apple’s irreparable harm. what people would actually pay in the marketplace? A: Oh. Apple asks the Court to extrapolate from Dr. Hauser’s survey evidence does not demonstrate the patented features’ effect on the price of a product. even Apple’s counsel could not represent that Dr. Weighing the Equities: An Injunction is Not Warranted The Court concludes that Apple simply has not met its burden of proof to warrant an injunction. it appears that the public interest slightly favors Samsung. nor does it prove that the patented features’ effect on demand for the product is significant. As such. 735 F. I’m very clear on that. Hauser’s survey proves that the patented features drive demand for Samsung’s products. or to risk disruption to consumers without clear legal authority. by the way. Dr. and a host of presentation issues combined to inflate survey respondents’ willingness to pay for the patented features. 2840 at 591:8-13 (“Q: And none of those numbers would reflect. at 19. 34:8-35:9.
41 Case No. markets. Based on the totality of all of the evidence. legal damages may well be sufficient to compensate for the infringement. The Court concludes that. In the face of these studies. concurring). CONCLUSION For the foregoing reasons. and any products not more than colorably different. see also Apple IV. Apple’s Renewed Motion for a Permanent Injunction is hereby DENIED. Similarly here. In the end. Accordingly. .: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION . Not a single market research study conducted outside of the context of litigation even asks about the patented features. on this showing. Dr. Samsung presents several consumer surveys—commissioned by both Apple and Samsung to understand consumer preferences—showing that consumers value a multitude of features. in the United States based on Samsung’s infringement of three Apple utility patents. it would be inequitable to enjoin Samsung’s products from U.3d at 1372-73. the Court is left with Apple’s request to prohibit Samsung from selling 23 of its products.Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page41 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In addition. 547 U.S. J.. The Court has evaluated the patented features in the aggregate and has reviewed all of the evidence for and against an injunction submitted by both parties. the Court finds that Apple has not shown that the combined effect of the three patented features drive consumer demand. Apple has not met this burden. V.S. the contemporaneous consumer survey evidence not created for the purposes of litigation demonstrates that other smartphone and tablet features contribute to consumer demand for the products. . the Court continues to heed Justice Kennedy’s observation in eBay that “[w]hen the patented invention is but a small component of the product the companies seek to produce . at 396 (Kennedy. To persuade the Court to grant Apple such an extraordinary injunction—to bar such complex devices for incorporating three touchscreen software features—Apple bears the burden to prove that these three touchscreen software features drive consumer demand for Samsung’s products. Hauser’s survey and Apple’s ease of use and copying evidence fail to show that the patented features drive consumer demand. the totality of the evidence fails to show that the patented inventions drive consumer demand.” eBay. 735 F.
: 11-CV-01846-LHK ORDER DENYING APPLE’S RENEWED MOTION FOR PERMANENT INJUNCTION .Case5:11-cv-01846-LHK Document3015 Filed03/06/14 Page42 of 42 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IT IS SO ORDERED. KOH United States District Judge 42 Case No. Dated: March 6. 2014 _________________________________ LUCY H.
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