The on-going litigation between Apple and Samsung reached a high point last August when the US company won a $1 billion plus damages award from a Northern District of California jury, which found that a number of its patents had been infringed by the Korean company. Since then, however, things have not exactly gone Apple’s way.
First of all, and perhaps most dramatically, Judge Koh, who heard the case, ruled that Apple should not be granted the right to an injunction because “to the limited extent that Apple has been able to show that any of its harms were caused by Samsung’s illegal conduct (in this case, only trade dress dilution)” the company failed to show that “the equities” supported one. Then earlier this week, Koh decided that Samsung had not wilfully infringed the patents in suit, which means that as of now the original jury award of $1.045 billion stands, but no more.
Koh could reduce that amount; however, if she does not it will be one of the biggest – if not the biggest - damages awards ever made in a US patent case. Cash-rich Samsung, though, will not give a stuff – as long as Apple is unable to injunct. And that leads us to the third piece of news in this case. It came yesterday when the CAFC decided to refuse Apple’s request to have its appeal against Koh’s decision heard en banc. Instead, a panel of three judges will hear the arguments.
There are a couple of thoughts I have on recent developments:
• Apple is just one CAFC decision away from having its entire litigation strategy blown out of the water. For quite a while the company was in a strong position to negotiate an incredibly powerful settlement with Samsung (and others). If it is forced to agree terms now because the CAFC agrees with Koh, then the leverage it has in doing a deal will be severely restricted, unless Samsung is advised very poorly by its lawyers. In short, should the CAFC rule that Koh was correct, Apple will have lost, even though it would have won. With the company’s share price already vulnerable, that could prove to be very painful. I understand why Apple has been so aggressive, but as I have said previously thermonuclear war is incredibly risky. It’s far better, surely, to take a hefty licensing fee and to compete on product and price, rather than to rely so much on the courts to do damage to rivals – however strongly you feel about your case. Constant litigation is not the “cool” thing to do, that is for sure. And what is the Apple brand if it is not “cool”? What’s more, even if Apple does get its injunction now, Samsung has won precious time not only to sell its current products in a key market, but also to develop workarounds for its future ones and/or to avoid infringement problems in the first place. All that before you think of the brand-building the case has enabled.
• From a wider perspective, all patent owners in the US need to watch this case very carefully. Should the CAFC uphold the district court injunction decision then the implications for all of them could be hugely significant. The Supreme Court’s eBay decision had a major impact on the ability of NPE’s to get injunctions; if Koh’s ruling gets the green light, many operating companies – especially those in areas, such as mobile devices, in which a number of patents underpin product offerings – could find their chances of obtaining them severely restricted too. Indeed, in certain industries we may see a situation in which there is de facto compulsory licensing of a sort, even if it does not exist de jure. That, in turn, could have a major impact on patent valuations, as well as on overall corporate approaches to IP. This will draw in the wider US market that has developed around IP and patents in particular, and could create scenarios which are not necessarily to everyone’s liking. In short, an awful lot hinges on this case, beyond what it means to Samsung and Apple.
Finally, I will leave you with this question: is it stretching it too far, I wonder, to state that Google is also just one CAFC decision away from having its entire Android IP strategy vindicated?
IP management, Licensing, Brands, Patents, IP business