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.

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