The court vacated the district court’s decision to deny Apple’s motion for a permanent injunction and remanded.  The jury found that Samsung infringed three Apple patents relating to its popular iPhone product.  Apple’s motion sought a limited injunction – only seeking to enjoin Samsung from making, using, and selling, etc., software and code capable of implementing the infringing features in its products – and included a 30-day “sunset period” that would stay enforcement of the injunction until 30 days after it was entered, during which Samsung could design around the infringing features (this was consistent with Samsung’s representations at trial that it could remove the infringing features from its products quickly and easily). 

As to the first eBay factor, irreparable harm, the district court held that Apple had not demonstrated irreparable harm because Apple had not shown a causal nexus connecting Samsung’s infringement to Apple’s injuries, i.e., Apple did not show that infringing features drive consumer demand for Samsung’s infringing products.  On appeal, Apple argued that it did not need to show a causal nexus linking Samsung’s infringement to Apple’s harms, because Apple’s proposed injunction was limited to the infringing features alone, not the product as a whole.  The court rejected Apple’s argument, because the causal nexus requirement ensures that an injunction is only entered due to harm resulting from the wrongful conduct, not for some other reason and the reason for the irreparable harm is independent from the scope of the injunction.  

The court further held that the causal nexus requirement does not require a showing that the competitor’s use of the infringing features exclusively drives consumer demand, because such a showing would be nearly impossible where the accused device has thousands of features.  Thus, the court held that proving a causal nexus requires the patentee to show “some connection” between the patented feature and the demand for the infringing products, i.e., that the patented features impact consumers’ decisions to purchase the accused devices.  Here, the record established through evidence of, among other things, copying and surveys that the patented features were important to product sales and that customers sought these features in the phones that they purchased, which was sufficient to show a causal nexus for lost sales and thus irreparable harm.  It was enough that Apple showed that the infringed features were “important to customers when they were examining their phone choices.”

As to the second factor, inadequate remedy at law, the court agreed with the district court, that sales lost by Apple to Samsung are difficult to quantify, due to the “ecosystem effect,” i.e., the effect that the sale of a single product could have on downstream sales of other products.  Thus, although the court agreed that, with the district court’s finding of no irreparable harm, this factor weighted against Apple, when it took into account its finding that there was irreparable harm to Apple, this factor thus weighed strongly in favor of Apple. 

As to the third factor, balance of hardships, the court agreed with the district court that the balance of hardships favored an injunction, because the proposed injunction was targeted only to the infringing features, the injunction had a built-in sunset provision that would give Samsung time to design around and Apple would suffer hardship without an injunction if it had to “compete against its own patented invention.” 

As to the fourth factor, public interest, the court agreed with the district court and held that the public interest strongly favors an injunction, because the public interest favors the enforcement of patent rights to promote the encouragement of investment-based risk.  The court rejected Samsung’s arguments that an injunction may cause products to be removed from the shelves, but this was not necessarily the case, as the injunction was narrow. 

Thus, the district court abused its discretion when it did not enjoin Samsung.  The court vacated and remanded for further proceedings.

In his concurrence, Judge Reyna argues that any injury to the “right to exclude” is itself sometimes irreparable injury. 

In her dissent, Judge Prost argues that neither the law nor the facts support a finding of irreparable injury. 

Apple Inc. v. Samsung Electronics Co., Ltd., Case No. 2014-1802 (September 17, 2015); Opinion by: Moore, concurring opinion by Reyna, dissenting opinion by Prost; Appealed From: District Court for the Northern District of California, Koh, J. Read the full opinion here.

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