Apple's Motion for a Preliminary Injunction, Court's Denial and Federal Circuit Appellate Opinion

Transition between D’677 and D’087           
Recall the last blog that discussed the district court’s finding that Apple had not fulfilled its burden of showing irreparable harm. Therefore, even though Apple had shown it was likely to succeed on the merits at trial, Apple’s failure to prove irreparable harm was fatal. The district court denied a preliminary injunction against the Samsung Galaxy S 4G and Infuse 4G cell phones on the basis of Samsung’s infringement of the D’677 patent.
However, Apple had also requested an injunction against those two devices on the basis of Samsung’s alleged infringement of another patent; this time the D’087 design patent. Apple alleged that Samsung’s Galaxy S4G and Infuse 4G cell phones also infringed the D’087 patent and should be granted a preliminary injunction against those devices on that basis. The next post will walk you through Apple’s argument about the D’087 infringement issue.

District Court's Finding rd Irreparable Harm from Infringement of D'677 - Part II

As mentioned previously, Apple’s argument for an injunction against the Galaxy S 4G and Infuse 4G based upon D’677 infringement failed due to a failure to establish likely irreparable harm. This post examines the court’s rejection of Apple’s argument about lost market share.

Apple had argued actual and potential loss of market share (lost sales) as being its second basis for irreparable harm. In order for Apple’s argument about lost market share to succeed, Apple must prove that it lost market share and that this loss was caused by Samsung’s infringement of D’677. Because D’677 is a design patent, not a technology patent, Apple must prove that design of its product is important to consumers’ purchasing decisions. If design is not important to consumers, then Samsung’s infringement of Apple’s design is irrelevant to purchasing designs and cannot be grounds for an injunction.

Accordingly, both parties sought to either prove or disprove the importance of design to consumer’s purchasing decisions. Apple argued that design was a determinative factor and the release of Samsung’s infringing products into the market will induce people that otherwise would have purchased Apple’s smartphones to instead purchase Samsung’s alleged copycat products (Court Order Denying Apple’s Motion for Preliminary Injunction, 33). Meanwhile, Samsung argued the opposite—that product design was a factor in purchasing decisions but certainly not a determinative one. To Samsung, Apple’s lost market share was not the result of Samsung’s infringement.

The parties used experts on this topic, and Samsung conducted consumer surveys. Much of this evidence is sealed from the public, so it is difficult to ascertain the details of the evidence (especially since, Apple’s evidence in the actual motion was somewhat bare-boned and mostly involved statistics about sales of Samsung’s accused phones). Though the details of the surveys are not clear, Samsung used the surveys to evince the importance of factors other than design on purchasing decisions. The court seemed to favor Samsung’s use of consumer surveys. In another later paragraph, the court seemed to suggest that Apple should have also used surveys to show consumer confusion between products or to show how Samsung’s design infringement otherwise affected consumers. For example, the court referred to the lack of evidence, establishing actual consumer confusion or some other direct or circumstantial evidence that Samsung’s design choices have impacted Apple’s market share. Surveys are generally a good way to provide direct evidence of consumer opinions. Overall, the court’s emphasis on surveys is important to note and should guide practitioners in their evidentiary decisions.

Based on Samsung’s presented evidence about the importance of other factors (such as the novelty to consumers), the court found that the evidence about the importance of product design to consumers’ purchasing decisions was ambiguous (Court Order Denying Apple’s Motion for Preliminary Injunction, 34). As such, Apple did not meet its burden in demonstrating that the design was a determinative factor to consumers. This meant that Apple did not prove the causal connection between Samsung’s design infringement and any market share loss that it suffered. Accordingly, the court did not find that Apple had proved likely irreparable harm.

The district court’s decision on Apple’s failure to establish likely irreparable harm was affirmed in the Federal Circuit’s appellate opinion. The Federal Circuit reiterated the necessity of showing a causal nexus between the infringement and the alleged harm. The Federal Circuit declined to overturn the lower court’s finding that Apple had not proved this nexus.

District Court's Finding re Irreparable Harm from Infringement of D'677- PART I

Recall that the district court had found in favor of Apple’s likely success on the merits. But when addressing the irreparable harm prong, the court found that Apple had failed to establish likely irreparable harm as a result of Samsung’s D’677 infringement. Because of this failure, district court denied an injunction based upon D’677 infringement against the Infuse 4G and Galaxy S 4G phones. Because of the length of this topic, the court’s finding will be discussed in two parts. This first part will focus on the rejection of Apple’s consumer goodwill argument. The second part will focus on the court’s rejection of Apple’s lost market share argument.

Apple had argued that Samsung’s infringement caused an erosion of Apple’s design and brand distinctiveness, which caused irreparable harm to Apple through loss of consumer goodwill. The court rejected this argument, mainly because Apple had failed to present sufficient proof.

Regarding the loss of design distinctiveness argument, the court felt that Apple had put forth a circular argument, stating its conclusion as the main support for the argument. For example, “Samsung’s phones are similarly designed to the iPhone, so the iPhone must not be so unique anymore, and we must have lost consumer goodwill” (Court Order Denying Apple’s Motion for Preliminary Injunction at 29). The only evidentiary support presented in the actual motion was some sales statistics and advertising descriptions. The court referred to Apple’s experts as having presented declarations and arguments on this point, but apparently those were similarly, ‘conclusory statements and theoretical arguments’.

The crux of the question here was if the dilution of Apple’s design caused consumers to lose goodwill toward Apple. Other than Apple’s claim that it did so, there was such a causal relationship between lost design distinctiveness and any lost consumer goodwill. In essence, the court boiled down to the fact that Apple had not articulated a theory as to how erosion of ‘design distinctiveness’ led to irreparable harm.

Regarding the brand dilution argument: the court was hesitant about this argument since brand dilution is actually a type of harm under trademark (not patent) law. The court was unsure about the applicability of a trademark injury as an irreparable harm for a design patent infringement matter.  However, the court did not have to resolve this issue since it found Apple had not presented sufficient evidence about the likelihood of brand dilution occurring. Surveys could have been conducted to demonstrate either consumer confusion (about the products) or consumer blurring of Apple’s brand with Samsung’s. The court also pointed out that such surveys could have proved the likelihood of brand dilution. However, without any such evidence, the court could not find that there was the likelihood of the harm of brand dilution.

On appeal, the Federal Circuit upheld the court’s rejection of Apple’s irreparable harm argument stating that: “The district court was correct to require a showing of some causal nexus between Samsung’s infringement and the alleged harm to Apple” (Federal Circuit Opinion at 16-17). It is important to note the Federal Circuit did have some interesting points about design and brand dilution, which will be discussed in a later post.

Sources:
1. Court Order Denying Apple’s Motion for Preliminary Injunction at 29.

2. Federal Circuit Opinion at 16-17.

Apple's Argument Regarding Irreparable Harm from Infingement of D'667 - Part II

In addition to loss of consumer goodwill, Apple argued that Samsung’s infringement also harmed their market share, causing both actual and potential market share loss.  Apple threw in several statistics in an attempt to support this statement. For example, after starting to sell “its iPhone-imitating Galaxy S,” Samsung experienced a 350% increase in the number of smartphones that it sold. These sales caused Samsung’s market share to also increase to 10.8% (when it was previously at 4.3%). These statistics are the only evidentiary proof provided in the motion for the argument that Samsung’s infringement caused Apple to lose some of its smartphone market share.  Again, Apple may have presented more evidence in its declarations and reply, but the evidence in the motion is very bare-boned.
It’s especially problematic that Apple sort of just threw in the conclusion that Samsung’s similar phone designs (infringement) must have been the main contributing factor for Samsung’s volume of sales and increased market share. Nor is there anything in the motion that would support a conclusion that consumers who bought Samsung phones bought them because of their similar design to Apple’s phones (or for that matter, that those same consumers would have purchased the iPhone if it were it not for Samsung’s copycatted design). I believe some of Apple’s experts may have tried to present evidence on this topic, but it must not have been very sufficient either (the court’s rejection of this argument is discussed in a later blog)

Apple's Argument Regarding Irreparable Harm from Infingement of D'667 - Part I

 Apple claimed it had suffered two types of irreparable harm as a result of Samsung’s infringement of D’677: loss of consumer goodwill and loss of market share.  Due to the length of this argument, this blog series has been split into two parts; today’s post examines Apple’s argument about loss of consumer goodwill.

Apple’s loss of goodwill argument surrounded the erosion of design distinctiveness. First, Apple’s D’677 and the iPhone design were distinctive; the iPhone’s immense commercial success and extensive design-centric advertising (ads that focused on product design) created consumer goodwill in the design of the iPhone.
Second, Samsung infringed Apple’s D’677 patent by marketing and selling phones that were substantially similar to the design of Apple’s iPhone (embodiment of D’677). Third, Samsung’s selling and marketing of such substantially similarly designed smart phones caused Apple to lose design distinctivenessalso called erosion or dilution of design distinctiveness. Fourth, this loss of design distinctiveness resulted in a loss of consumer goodwill for Apple. This loss of goodwill argument hinged upon Apple’s claim that product design was a determinative factor to consumers and their purchasing decisions. Apple summarized its argument as, “Samsung’s sale of products that mimic Apple’s designs threatens to erode the value of the designs and attenuate the hard-won link in the public’s mind between the designs and Apple” (Id. at 31).
However, there wasn’t much evidence to support this argument in the actual motion (other than sales statistics and descriptions of advertising). Apple made a very theoretical (not to mention, circular) argument, but it didn’t present much evidentiary supportat least not in the actual motion. Even if Apple presented more concrete evidence in its declarations and reply, this evidence must not have been very substantial as indicated by the district court’s response.
In its order denying Apple’s motion, the court also referenced an Apple argument about brand dilution (see note below). The gist of this brand dilution argument is that Samsung’s D’677 infringement also caused erosion of Apple’s brand distinctiveness, because “the design features of its products were closely intertwined with the Apple brand, and that Samsung’s products necessarily erode the distinctiveness of Apple’s brand” (Court Order Denying Apple’s Motion for Preliminary Injunction at 28, 29).
This brand dilution also resulted in Apple’s loss of consumer goodwill and irreparable harm. Like the design dilution argument, this brand dilution argument also relied on Apple’s claim that product design was important to consumers. Apple also argued that the dilution of its brand’s distinctiveness harmed the company, because the dilution threatened to diminish the value of Apple’s brand. (Although, that sort of argument really just restates the meaning of dilution in trademark law.)
**In the district court’s eventual denial of this motion, the court mentioned that Apple had made a brand dilution type argument to support irreparable harm in which it rejected. The district court even cited that this brand dilution argument was made on page 27 of Apple’s motion. However, I have scoured the public version of Apple’s motion, and I cannot find any mention of this argument. This brand dilution argument must have been made in a sealed version of the brief, a supporting declaration or reply brief, because I cannot find it in the public version of Apple’s brief online. **