After the Federal Circuit Opinion: What Happens Now

Here’s a quick recap of what our previous blogs have discussed. Back in July of 2011, Apple filed a motion for preliminary injunction against four of Samsung’s products: Galaxy S 4G, Infuse 4G, Droid Charge and Galaxy Tab 10.1. For various reasons, the district court denied Apple’s request against all four of the devices. Apple appealed this decision to the Federal Circuit. In May of 2012, the federal circuit issued its opinion whereby the appellate court affirmed the denial against three of the devices but remanded for further proceedings on the last. The federal circuit found that the district court had improperly found the D’889 patent to likely be invalid. The federal circuit decided that the D’889 was likely to be found valid, which in connection with the prior district court decision of likely infringement, meant that Apple had successfully established likelihood of success on the merits. The federal circuit upheld the lower court decision of Apple’s likely irreparable harm in the absence of an injunction against continued D’889 infringement. This decision meant that Apple had proven two of the four preliminary injunction prongs. The Federal Circuit remanded the case to the district court so the district court could reach findings on the final two prongs of the preliminary injunction analysis (balance of hardships, public interest).

 
After the federal circuit issued this opinion, Samsung petitioned the federal circuit for an en-banc rehearing. This petition was denied. Following this, the district court reached its findings, concluding that the final two factors of the preliminary injunction analysis also weighed in favor of Apple. And, as such, on June 26, 2012, the district court (of the Northern District of California) GRANTED Apple’s motion for a preliminary injunction against Samsung’s Galaxy 10.1 on the basis of alleged D’889 infringement. Samsung has already appealed this decision to the Federal Circuit. However, for now the injunction against the Galaxy Tab 10.1 has gone into effect (and will remain unless the federal circuit decides to reverse the district court’s granting of a preliminary injunction here).
 
Readers should keep in mind that Samsung has other options in addition to its rights to seek an appeal. This same matter is being litigated in Germany, where a German court had earlier granted an injunction against the same Galaxy 10.1. In response, Samsung simply made a few alterations to the design of the tablet and started selling this new version of the tablet instead (apparently making a few alterations sufficed in getting around design patent infringement).
 
Our next few blog posts will discuss the potential ramifications of the federal circuit’s May 2012 opinion. This opinion potentially has important effects on the obviousness inquiry for design patents and the irreparable harm prong of preliminary analysis. Our blogs will explore these issues.
 
Please see the previous post: Apple Argument and District Court Decision re Irreparable Harm from D’889 Infringement for more on this topic. For more on emergency business litigation, click here or call 312-223-1699 to speak with one of our Chicago law firm attorneys.

Apple's Argument and District Court Decision re Irreparable Harm From D'889 Infringement

As our previous blogs have mentioned, Apple’s original motion for a preliminary injunction just contained a very general section on irreparable harm outlining arguments of loss of consumer goodwill and loss of market share. Please see the previous D’677 blogs for a detailed analysis of Apple’s irreparable harm argument since the arguments there are the same ones for the D’889. What is different, however, is that time the district court did find irreparable harm. The district court had previously rejected the irreparable harm argument as to the infringement of the other three patents (D’677, D’087 and the ‘381). But, as the argument applied to D’889, the district court held that the infringement of D’889 would cause irreparable harm.

 
According to the district court opinion, Apple’s argument for irreparable harm was stronger here. The court identified a few main reasons for finding irreparable harm for the D’889 while not finding it for the other patents (despite the fact that Apple had advanced the same arguments for all four).  For one, the number of competitors manufacturing tablet devices is substantially lower than the number of companies manufacturing smartphones. According to the court, “because there appear to be fewer players in the tablet market, and the market is growing, it is arguably more likely that market share lost by Apple will be lost to Samsung” (Id. at 49). Another reason involved the court’s interpretation of the evidence as being far clearer on the nexus between product design and consumers’ purchasing decisions. Samsung had conducted some consumer surveys, but the court interpreted the results of that survey to provide support for “apple’s argument that consumers are likely to be induced to purchase the Galaxy 10.1, instead of the Apple iPad, because the overall designs of the products are substantially the same” (Id). Thus, here, Apple was able to establish a causal nexus between infringement of its designs and loss of market share (albeit through a Samsung consumer survey).
 
For these reasons, the district court found that Apple had shown the likelihood of irreparable harm as a result of Samsung’s infringement of D’889. However, because the court had also found that Apple was unlikely to prevail against a validity challenge to the D’889, the court denied Apple’s request for a preliminary injunction against the Galaxy Tab 10.1 as based on the D’889 patent.
 
On appeal, the federal circuit affirmed the lower court’s finding of irreparable harm. The federal circuit also had several interesting things to say on proving irreparable harm that will be discussed in our later blogs.
  
Please see the previous post: Federal Circuit’s Appellate Opinion re D’889 Validity for more on this topic. For more on emergency business litigation, click here or call 312-223-1699 to speak with one of our Chicago law firm attorneys.

Federal Circuit's Appellate Opinion re D'889 Validity

When the federal circuit issued its decision, it took the opposite stance from the district court concerning the D’889 validity issue, holding that the district court had erred in its obviousness analysis. The federal circuit found that the district court had erroneously categorized the Fidler tablet as a primary reference. When the federal circuit engaged in a side-by-side visual comparison of the Fidler tablet and D’889, it reached the opposite conclusion that the district court had found. The district court had found that the Fidler tablet had basically the same overall appearance with only some minor differences. The federal circuit disagreed and found that the two had substantial differences, and that these substantial differences, in turn, prevented the court from viewing the Fidler tablet as having basically the same visual appearance as D’889. The appellate court referred to differences the devices’ respective frames and the D’889’s glass surface. These differences led both devices to create different visual impressions than the other.
 
Furthermore, the federal circuit was of the opinion that the district court had been comparing Fidler and the D’889 on too abstract of a level. As in, “Fidler does not qualify as a primary reference simply by disclosing a rectangular tablet with four evenly rounded corners and a flat back”(Federal Circuit Opinion at 31). It seems that the federal circuit finds that such similarities arise from the nature of the product (a tablet device) and should not count as similarities that give both devices the same appearance. Without the Fidler tablet as a primary reference, courts could not reach a finding of obviousness, since the obviousness standard for design patents requires that the prior art include one primary reference.
 
Even if the federal circuit presumed that the Fidler tablet was a primary reference, the federal circuit concluded that it would still be unable to find obviousness because the secondary reference “could not bridge the gap between Fidler at the D’889 design.” The district court had relied on a secondary reference that when used in conjunction with the Fidler tablet led to a conclusion of obviousness. For one, the federal circuit’s view was that the district court’s secondary reference did not actually qualify as one. Recall that secondary references are always combined with primary ones. However, in order to combine a primary reference with a secondary reference, the secondary reference must be so similar to the primary reference “that the appearance of certain ornamental features in one [design] would suggest the application of those features to the other” (Id. at 30). According to the appellate court, the secondary reference here was “so different in visual appearance from the Fidler reference that it d[id] not qualify as a comparison reference under that standard” (Id). The reason here was that the secondary reference had a gray frame that surrounded its glass screen. This led the secondary reference to seem too different from the Fidler tablet for it to properly qualify as a secondary reference. As will be discussed in a later blog, the federal circuit took a very strict view of secondary references.
 
After soundly rejecting Samsung’s Fidler and secondary reference obviousness argument, the federal circuit found that Samsung had not raised substantial questions about obviousness or the invalidity of the patent at issue, which left Apple with having demonstrated likelihood of success on the merits after all.
 
The next blog will begin our discussion on the irreparable harm prong for the D’889 analysis.
Please see the previous post: Apple’s Argument and the District Court’s Finding re D’889 Validity for more on this topic. For more on emergency business litigation, click here or call 312-223-1699 to speak with one of our Chicago law firm attorneys.

Apple's Argument and the District Court's Finding re D'889 Validity

 As mentioned in a previous post, Apple grouped the three design patents together and discussed their likely validity very briefly. However, at the same time, Apple could have expanded on this topic through declarations and replies, after it had received Samsung’s opposition brief. Regardless, the information we have available is from the original motion that contained a very sparse section, arguing the likely validity of all three design patents. Apple referred to the PTO prosecution for the D’889 patent where the patent was granted despite prior art references. Additionally, Apple’s argument did include news reports and reviews to further support the novelty of the iPad (embodying the D’889).

 
Samsung had argued that the D’889 patent was obvious, and the district court found this argument to be convincing. Samsung brought forth a 1994 Fidler tablet as a primary reference. The court agreed with Samsung that the Fidler tablet was a primary reference. Here, Apple protested. Apple pointed to several differences between the D’889 and the Fidler tablet—the court termed these minor ones and Apple disagreed. Apple referenced the flat glass surface in its D’889 patent that was not in the Fidler tablet. To Apple, the fact that the Fidler tablet did not have a flat glass surface prevented it from acting as a primary reference. The district court rejected this argument. From my reading of the opinion, it seems as though the court was very focused on the fact that the glass surface was just one element of the design patent; without more elemental differences, it could not disqualify Fidler as a primary reference. This seems strange, since the focus of the primary reference inquiry is on the overall visual appearance of the reference, as opposed to a comparison of individual elements. 
 
Nonetheless, to the district court, “[e]ssentially, it seems as though Apple is arguing for the primary reference to be ‘substantially the same’ as the patent in suit. Apple’s argument that one design element may be sufficient to defeat obviousness risks collapsing the obviousness inquiry into the anticipation inquiry” (Court Order Denying Motion for Preliminary Injunction at 41).
 
The district court also found Samsung’s expert report on the obviousness topic to be persuasive. Samsung’s expert argued that he would have found the D’889 tablet design to be obvious in light of the combination of the Fidler reference and secondary references. To the court, this conclusion was convincing, and it found that a person of ordinary skill in the art would have found the D’889 patent to be obvious in light of the Fidler tablet and secondary references. As a result, the district court declared that Samsung had raised substantial questions about the D’889 patent’s invalidity. It is unclear why the district court found this particular expert’s report to be so convincing.
 
With regard to Apple’s evidence consisting of news reports and reviews (secondary considerations), the court dismissed these arguments. For one, the court simply found that Samsung’s prior art references presented a stronger case than evidence of secondary considerations. Another reason involved Apple’s failure to show a connection between the design in D’889 and Apple’s commercial success in the iPad. Essentially, for patent holders, a lesson is that secondary considerations can be strong evidence that shows non-obviousness, but the patent holder must demonstrate how the patent subject matter is connected to the secondary consideration. Practitioners should also be sure to have very strong arguments that are predicated on the prior art references. Secondary considerations may not always be sufficient in demonstrating novelty when the opponent presents a strong case based on prior art. All the Graham factors are meant to be equal. However, it seems as though courts are reluctant to base an obviousness inquiry on secondary considerations.
 
Given that the district court found that Samsung had substantial questions about the invalidity of the D’889 patent, the court denied Apple’s request for an injunction against the Samsung Tab 10.1 on the basis of the Samsung tablet’s infringement of D’889.
 
The next blog will discuss the Federal Circuit’s appellate opinion on this validity topic. Please see the previous post: Apple’s Argument and the District Court Decision re D’889 Infringement for more on this topic. For more on emergency business litigation, click here or call 312-223-1699 to speak with one of our Chicago law firm attorneys.