apple v. samsung (14-1802) pet. for rehearing

8/20/2019 Apple v. Samsung (14-1802) Pet. for Rehearing

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Appeal No. 2014-1802

United States Court of Appeals for the

Federal Circuit

APPLE INC., a California corporation,

Plaintiff-Appellant,

– v. –

SAMSUNG ELECTRONICS CO., LTD., a Korean corporation, SAMSUNGELECTRONICS AMERICA, INC., a New York corporation, and SAMSUNG

TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company,

Defendants-Appellees,

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA IN CASE NO. 5:12-CV-00630-LHK

JUDGE LUCY H. KOH

DEFENDANTS-APPELLEES’ PETITION FOR

REHEARING EN BANC

K EVIN P. B. JOHNSON VICTORIA F. MAROULIS BRIAN C. CANNON QUINN EMANUEL URQUHART

& SULLIVAN , LLP555 Twin Dolphin Drive, 5 th FloorRedwood Shores, California 94065(650) 801-5000

K ATHLEEN M. SULLIVAN W ILLIAM B. ADAMS QUINN EMANUEL URQUHART

& SULLIVAN , LLP51 Madison Avenue, 22 nd Floor

New York, New York 10010(212) 849-7000

JOHN B. QUINN M ICHAEL T. ZELLER SCOTT L. WATSON

QUINN EMANUEL URQUHART & SULLIVAN , LLP

865 South Figueroa Street, 10 th FloorLos Angeles, California 90017(213) 443-3000

Attorneys for Defendants-Appellees


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CERTIFICATE OF INTEREST

Counsel for Defendants-Appellants certifies the following:

1. The full name of every party or amicus represented by me is:

Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc.

Effective January 1, 2015, Samsung Telecommunications America, LLC (“STA”)

merged with and into Samsung Electronics America, Inc., and therefore STA no

longer exists as a separate corporate entity.

2. The name of the real party in interest (if the party named in the caption

is not the real party in interest) represented by me is:

N/A

3. All parent corporations and any publicly held companies that own 10

percent or more of the stock of the party or amicus curiae represented by me

are:

Samsung Electronics America, Inc. (“SEA”) is a wholly-owned subsidiary of

Samsung Electronics Co., Ltd. (“SEC”), a publicly held corporation organized

under the laws of the Republic of Korea. SEC is not owned by any parent

corporation and no other publicly held corporation owns 10% or more of its stock.

No other publicly held corporation owns 10% or more of SEA’s stock.


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4. The names of all law firms and the partners or associates that appeared

for the party or amicus now represented by me in the trial court or are

expected to appear in this court are:

Quinn Emanuel Urquhart & Sullivan, LLP: Deepa Acharya; William B. Adams;

Anthony P. Alden; Carl G. Anderson; Alexander D. Baxter; Katherine B.

Bearman; Robert J. Becher; Rebecca A. Bers; Kara M. Borden; Todd M. Briggs;

Amy H. Candido; Brian C. Cannon; Kenneth R. Chiate; David M. Cooper; Lindsay

Cooper; Clark Craddock; Patrick D. Curran; Jacob K. Danzinger; Edward J.

DeFranco; Samuel M. Drezdzon; Marissa R. Ducca; David Elsberg; Eric J.

Emanuel; Richard W. Erwine; Susan R. Estrich; Michael L. Fazio; Anastasia M.

Fernands; Scott A. Florance; Ryan S. Goldstein; John S. Gordon; Ron Hagiz;

Nathan A. Hamstra; Jordan R. Jaffe; Joshua P. Jaffe; Kevin P.B. Johnson; James

D. Judah; Robert N. Kang; Rachel M. Kassabian; Scott B. Kidman; Peter A.

Klivans; Valerie A. Lozano; Kristin J. Madigan; Victoria F. Maroulis; John T.

McKee; Joseph Milowic; David A. Nelson; Jared W. Newton; Sean S. Pak; Daniel

C. Posner; Christopher E. Price; Maxim Price; William C. Price; B. Dylan Proctor;

John B. Quinn; Carlos A. Rodriguez; Shahin Rezvani; Patrick M. Shields; Elliot J.

Siegel; Kevin A. Smith; Robert W. Stone; Kathleen M. Sullivan; Stephen A.

Swedlow; Derek J. Tang; Amardeep L. Thakur; Bill Trac; Charles K. Verhoeven;

Matthew S. Warren; Scott L. Watson; Cleland B. Welton II; Alan L. Whitehurst;


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Lance L. Yang; Michael T. Zeller

Crone Hawxhurst LLP: Daryl M. Crone

Sheppard Mullin Richter & Hampton LLP: Gary L. Halling; David R. Garcia;

Michael R. Heimbold; Mona Solouki

Squire Patton Boggs (US) LLP: Mark C. Dosker

Steptoe & Johnson LLP: John M. Caracappa; Michael R. Heimbold; Huan-Yi Lin;

Dylan Ruga

Williams & Connolly, LLP: Stanley E. Fisher; Dov P. Grossman; David M.

Horniak; David M. Krinsky; Aaron P. Maurer

Dated: October 19, 2015 Respectfully submitted,

By: /s/ Kathleen M. SullivanKathleen M. SullivanQUINN EMANUEL URQUHART

& SULLIVAN, LLP51 Madison Avenue, 22nd Floor

New York, NY 10010(212) 849-7000

Attorney for Defendants-Appellees


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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .................................................................................... V

STATEMENT OF COUNSEL PURSUANT TO FED. CIR. R. 35(B)(2)................ 1

PRELIMINARY STATEMENT ............................................................................... 1

FACTUAL STATEMENT ........................................................................................ 5

ARGUMENT ............................................................................................................. 8

I. THE PANEL MAJORITY’S HOLDING CONCERNING CAUSAL NEXUS TO IRREPARABLE HARM CONFLICTS WITHSUPREME COURT AND THIS COURT’S PRECEDENT .......................... 8

A. The Panel Majority’s Resurrection Of A Near-Automatic GrantOf Injunctive Relief In Patent Cases Conflicts With eBay ................... 8

B. The Panel Majority’s Evisceration Of The Causal-Nexus TestConflicts With Apple I , Apple II , And Apple III ................................. 10

C. The Panel Majority’s “Some Connection” Standard CreatesConfusion And Uncertainty For The District Courts .......................... 12

II. THE PANEL MAJORITY’S DECISION CONFLICTS WITHORDINARY STANDARDS OF REVIEW FOR CLEAR ERRORAND ABUSE OF DISCRETION ................................................................. 12

A. The Panel Majority’s Decision Discards The District Court’sFactual Findings In Favor Of Its Own ................................................ 12

B. The Panel Majority’s Decision Conflicts With PrecedentRequiring That Any New Legal Test Be Applied By The

District Courts In The First Instance ................................................... 15

CONCLUSION ........................................................................................................ 15


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TABLE OF AUTHORITIES

Page(s)

Cases

Ala. Legislative Black Caucus v. Alabama ,135 S. Ct. 1257 (2015) ........................................................................................ 15

Apple, Inc. v. Samsung Elecs. Co. ,678 F.3d 1314 (Fed. Cir. 2012) (“ Apple I ”) ..................................... 1, 4, 6, 11, 14

Apple Inc. v. Samsung Elecs. Co. ,695 F.3d 1370 (Fed. Cir. 2012) (“ Apple II ”) ................................ 1, 2, 4, 6, 10, 11

Apple, Inc. v. Samsung Elecs. Co. ,735 F.3d 1352 (Fed. Cir. 2013) (“ Apple III ”) .................. 1, 2, 4, 7, 10, 11, 12, 14

Ashcroft v. ACLU ,542 U.S. 656 (2004) ............................................................................................ 12

Faulkner v. Jones ,10 F.3d 226 (4th Cir. 1993) .................................................................................. 9

eBay Inc. v. MercExchange, L.L.C. ,547 U.S. 388 (2006) .................................................................................. 1, 4, 8, 9

i4i Ltd. Partnership v. Microsoft Corp. ,598 F.3d 831 (Fed. Cir. 2010) ............................................................................ 13

Parker v. Winnipiseogee Lake Cotton & Woollen Co. ,67 U.S. 545 (1862) ................................................................................................ 9

Senju Pharm. Co. v. Lupin Ltd. ,780 F.3d 1337 (Fed. Cir. 2015) .......................................................................... 13

Walther v. Secretary of Health & Human Servs. ,485 F.3d 1146 (Fed. Cir. 2007) .......................................................................... 12

Winter v. Natural Resources Defense Council, Inc. ,555 U.S. 7 (2008) .................................................................................................. 9


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STATEMENT OF COUNSEL PURSUANT TO FED. CIR. R. 35(b)(2)

Based on my professional judgment, I believe the majority decision is

contrary to the following decisions of the Supreme Court and this Court: eBay Inc.

v. MercExchange, L.L.C. , 547 U.S. 388 (2006); Apple, Inc. v. Samsung Elecs. Co. ,

678 F.3d 1314 (Fed. Cir. 2012) (“ Apple I ”); Apple Inc. v. Samsung Elecs. Co. , 695

F.3d 1370 (Fed. Cir. 2012) (“ Apple II ”); and Apple, Inc. v. Samsung Elecs. Co. ,

735 F.3d 1352 (Fed. Cir. 2013) (“ Apple III ”).

Based on my professional judgment, I believe this appeal requires an answer

to these precedent-setting questions of exceptional importance: (a) Whether “some

connection” between infringing features and irreparable harm, even if that

connection is not “significant,” is enough to show the causal nexus required for

issuance of a patent injunction; and (b) Whether a court of appeals may substitute

its own factual findings for the district court’s findings concerning irreparable

harm or announce a new legal test without remanding to allow the district court to

apply that test in the first instance.

/s/ Kathleen M. Sullivan

PRELIMINARY STATEMENT

Few decisions call for this Court’s en banc review as clearly as this sharply

divided 2-1 decision deviating from an unbroken line of recent precedent on the

standard for granting patent injunctions. eBay made clear that injunctions should

no longer issue automatically in patent infringement cases. And Apple I , Apple II ,


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and Apple III held consistently that a patent-infringement injunction may issue

only where the patentee shows a causal nexus to irreparable harm. To prove a

causal nexus between infringement and harm where the harm is tied to lost sales, a

patentee must show “some connection between the patented feature and demand

for [the accused] products,” Apple III , 735 F.3d at 1364, but this Court has

repeatedly made clear that “ some connection” does not mean just any connection

no matter how trivial. To the contrary, this Court has held that “[i]t is not enough

for the patentee to establish some insubstantial connection between the alleged

harm and the infringement and check the causal nexus requirement off the list.”

Apple II , 695 F.3d at 1375 (emphasis added). “The patentee must rather show that

the infringing feature drives consumer demand for the accused product .” Id.

(emphasis added). Although Apple III clarified that the infringing feature need not

be the sole driver of consumer demand, Apple III , 735 F.3d at 1364, nothing in

Apple III diminished the requirement that a patented feature be a significant driver

of consumer demand or make the product “ significantly more desirable” to

consumers, id. at 1364-65 (emphasis added); see also id. at 1368.

The district court (Koh, J.) faithfully followed these precedents, concluding,

“[a]fter careful examination of all the evidence, … that Apple fails to prove that

‘the infringing feature[s] drive[] consumer demand for the accused product[s].’”

A31 (quoting Apple II , 695 F.3d at 1375); see A14-18 (finding same as to


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reputational harm). As Chief Judge Prost makes clear in her 14-page dissent (at 1),

this finding is unsurprising, for “[o]ne of the Apple patents at issue covers a

spelling correction feature not used by Apple” and “[t]wo other patents relate to

minor features (two out of many thousands) in Apple’s iPhone—linking a phone

number in a document to a dialer, and unlocking the screen.” The panel majority

(Moore, J., joined by Reyna, J.) agrees that “Apple did not establish that these

features were the exclusive or significant driver of customer demand ” (Op. 17

(emphasis added))—but nonetheless reverses the district court.

As the dissent states, “[t]his is not a close case” under this Court’s

precedents. Dissent 1. To avoid affirmance, the dissent explains, the panel

majority must first distort this Court’s precedents, “repeating as a mantra the

phrase ‘some connection’ in [ Apple III ] detached from the causal nexus standard

explained in our prior cases” ( id. at 5) so as to replace the significant-driver-of-

consumer-demand test with a new some-connection test. As the dissent further

explains (at 6-12), the panel majority must next distort the record, “even creat[ing]

new evidence” ( id. at 7) to attribute supposed clear error to what the dissent calls

“the unassailable factual findings by the district court” ( id. at 12).

For both reasons explained by the dissent, the panel majority’s decision

warrants en banc review. First , the holding that causal nexus may be established

even though “Apple did not establish that the [infringing] features were … [a]


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significant driver of customer demand” (Op. 17) flatly conflicts with eBay and with

Apple I , Apple II , and Apple III. And the panel majority’s sharp turn away from

those precedents creates confusion and disarray for the district courts: they can

now either return to a pre- eBay world where they grant injunctions virtually

automatically because “ some connection” between infringement and harm can

always be shown, or try to interpret and apply the “some connection” test to avoid

that result without any guidance from the panel majority as to how much of a

connection is enough or how a connection can be “not significant” but still not

“insubstantial.” This Court’s en banc review is needed to dispel this confusion.

Second , en banc review is warranted because the panel majority’s decision

conflicts with the clear-error and abuse-of-discretion standards long governing

appellate review of district court injunction decisions. As the dissent notes, the

panel majority relies on evidence “found nowhere in the record” (Dissent 2) in its

effort to distinguish Apple I , Apple II , and Apple III . For example, the district court

was “not clearly erroneous” ( id. at 6) in rejecting (A22-25) Apple’s expert survey

evidence implausibly predicting, among other things, that consumers would be

willing to pay up to $102 each and more than $270 in total for four patented

features (A11181)—nearly twice the $149 total cost of an entire smartphone .

While the panel majority suggests (Op. 16) that the district court rejected the

survey evidence based on legal error, the dissent correctly points out (at 4) that the


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district court “simply weighed the evidence and found it lacking.” Under clear-

error review, the panel majority may not reweigh that evidence, and under well-

settled law it may not announce a new legal test without remanding to the district

court to apply it in the first instance. En banc review is warranted.

FACTUAL STATEMENT

1. The Apple patents at issue are very narrow. While the panel majority

defines (Op. 3-4) claim 9 of the ’647 (quick links) patent broadly as a system that

“detects ‘data structures’ within text and generates links,” the claim itself covers

only one particular means of creating links, using (among other things) an

“analyzer server” and a pop-up menu. A354; A365; A368. Claim 8 of the ’721

(slide-to-unlock) patent covers one particular means of sliding to unlock a phone,

using an “unlock image” moving from one predetermined location to another with

visual cues to communicate the direction of movement. A397. And claim 18 of

the ’172 (autocorrect) patent covers a particular form of providing word

recommendations for text correction, whereby a “current character string” is

displayed in a first and second area of a touch screen display. A419-20. Apple

does not practice the ’647 or ’172 patents. Dissent 10 (citing A26-28). A jury

found infringement of the ’647 and ’721 patents and the district court granted

summary judgment of infringement of the ’172 patent. (The merits of those

judgments are the subject of a separate, pending appeal, Nos. 15-1171, 15-1195.)


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In post-trial proceedings, the district court denied Apple’s motion for a

permanent injunction. A1-42. The court held (A7-31) that Apple failed to show

irreparable harm from the infringement, having failed to prove any causal nexus to

irreparable harm based on lost sales (A22-31) or reputational effects (A10-20).

As to lost sales, the district court rejected any finding of causal nexus based

on a conjoint survey from Apple’s expert Dr. John Hauser, noting (A22) that the

survey was multiply flawed, “could not account for actual market prices … and

inflated the value of the patents by overemphasizing the relevant features while

inadequately presenting noninfringing alternatives.” It also held (A27) that

Apple’s supposed copying evidence “does not establish that the infringing features

drove customer demand for Samsung’s smartphones,” noting that “Samsung

valued numerous other noninfringing features” and that “Samsung’s subjective

beliefs are not dispositive of causal nexus,” an objective inquiry. It concluded that

“Apple fails to prove that ‘the infringing feature[s] drive[] consumer demand for

the accused product[s].’” A31 (quoting Apple II , 695 F.3d at 1375).

As to reputational harm to Apple, the district court noted (A15) that Apple’s

sole witness on the issue, Mr. Phil Schiller, “did not link any harm to infringement

of the three patented features” and that Apple’s licenses of the patents to IBM,

Microsoft, and smartphone competitors Nokia and HTC (A16, A19-20) precluded

any argument “that Samsung’s use of patented features will damage Apple’s


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reputation for exclusivity” (A20).

3. On appeal, the panel majority reversed (Op. 7-17), holding that the

patentee need show only that there is “‘ some connection ’ between the patented

features and the demand for the infringing products” ( id. at 10-11 (emphasis

added) (quoting Apple III , 735 F.3d at 1364)). Applying that standard, the majority

held ( id. at 17) that it was “clear error … for the district court to conclude that

Apple failed to establish ‘some connection’ between the patented features and

demand for the infringing products,” even though the majority admitted ( id. ) that

“Apple did not establish that these features were the exclusive or significant driver

of customer demand ” (emphasis added).

4. Judge Reyna filed a concurring opinion, stating that Apple satisfied the

irreparable harm requirement based on (a) infringement of Apple’s right to exclude

(Concurrence 3-9), and (b) the injury that the infringement caused to Apple’s

reputation as an innovator ( id. at 10-18).

5. Chief Judge Prost dissented, stating that “[t]his is not a close case.”

Dissent 1. Faulting the panel majority for finding “legal error by the district court

where none exists” ( id. at 2), the dissent would have found ( id. at 3-4) that the

district court properly applied this Court’s causal-nexus precedents, and explains

(id. at 5) that “the majority deviates from our precedent by repeating as a mantra

the phrase ‘some connection’ … detached from the causal nexus standard


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explained in our prior cases.” The dissent further would have affirmed the district

court’s causal-nexus factual findings as “not clearly erroneous” ( id . at 6) and “well

within its discretion” ( id . at 11) under ordinary standards of review.

ARGUMENT

I. THE PANEL MAJORITY’S HOLDING CONCERNING CAUSALNEXUS TO IRREPARABLE HARM CONFLICTS WITH SUPREMECOURT AND THIS COURT’S PRECEDENT

A. The Panel Majority’s Resurrection Of A Near-Automatic GrantOf Injunctive Relief In Patent Cases Conflicts With eBay

In holding in eBay that the usual four-factor test for injunctions applies in

patent cases, the Supreme Court made clear that the test for injunctions in patent

cases must be the same as for any other case and rejected any “categorical” rule

requiring that injunctions shall issue for patent infringement. 547 U.S. at 391-94.

In so holding, the Court rejected reliance on the patentee’s supposed right to

exclude as supporting automatic injunctive relief. Id. at 392.

The panel majority all but ignores eBay in discussing (Op. 5-6, 12) the need

for injunctions to protect the patentee’s “right to exclude.” 1 The concurrence

likewise disregards eBay in opining (Concurrence 3-9) that the violation of Apple’s

right to exclude itself constitutes irreparable harm warranting an injunction. One

1 The panel majority also fails to mention Apple’s licenses of the patents ( seesupra at 6) or willingness to license one patent to Samsung (A34)—undisputedfacts that make this case a poor vehicle for resurrecting pre- eBay notions of theright of patentees to exclusivity.


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member of the panel candidly stated at oral argument that “I think eBay was

wrongly decided …. I think patentees should get injunctions.” Oral Argument

8:32-8:40. But eBay is the law, and the panel majority’s decision conflicts with it

in at least two ways.

First , the panel majority creates a new special rule for patent-infringement

injunctions, precisely the approach rejected in eBay . The Supreme Court has held

that the irreparable harm that matters is the harm caused by the legal violation. See

Winter v. Natural Resources Defense Council, Inc. , 555 U.S. 7, 22-23 (2008)

(“irreparable harm from sonar-training exercises generally” does not suffice where

“the Navy challenged only two of six restrictions imposed by the court”); Parker v.

Winnipiseogee Lake Cotton & Woollen Co. , 67 U.S. 545, 551 (1862) (“A Court of

Equity will interfere when the injury by the wrongful act of the adverse party will

be irreparable ….”) (emphasis added). 2 The panel majority departs from those

traditional requirements by holding that irreparable harm supports a patent

injunction if it has “some connection” to (rather than is caused by) infringement.

Second , the panel majority’s decision makes injunctive relief in patent cases

virtually automatic again, contrary to eBay. The panel majority concedes (Op. 17)

that Apple failed to prove any of its patented features was a “significant” driver of

2 The causation requirement is a logical necessity because if the harm is notcaused by the violation, then an injunction will not remedy the violation, and thereis no basis for injunction. See Faulkner v. Jones , 10 F.3d 226, 236 (4th Cir. 1993).


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consumer demand. But if an “insignificant” connection suffices to create a causal

nexus to irreparable harm, the panel majority’s approach would give rise to an

injunction in virtually any case involving a competitor’s infringement of a patented

feature, no matter how insignificant that feature is to the product as a whole. 3

B. The Panel Majority’s Evisceration Of The Causal-Nexus TestConflicts With Apple I , Apple II , And Apple III

The panel majority’s decision also conflicts with this Court’s decisions

requiring that, where claimed irreparable harm is tied to lost sales, the infringing

feature must be a significant driver of consumer demand. Apple I , 678 F.3d at

1324-25; Apple II , 695 F.3d at 1376; Apple III , 735 F.3d at 1364-65. The district

court faithfully applied the test outlined in these cases. A7. The panel majority’s

adoption of a conflicting, lesser “some connection” test warrants en banc review. 4

“[T]he majority deviates from our precedent by repeating as a mantra the

phrase ‘some connection’ in [ Apple III ] detached from the causal nexus standard

3 The panel majority suggests (Op. 10, 22) that weakening the test for irreparableharm is necessary because otherwise a patentee could never get an injunction for amulti-feature product. But under this Court’s causal-nexus test, an injunctioncould well issue in a multi-feature-product case where the evidencewarrants. Dissent 14. In Apple I , for example, this Court, applying its usual

causal-nexus test, found a likelihood of irreparable harm from infringement ofApple’s D’889 patent by the Galaxy Tab 10.1. 678 F.3d at 1328.4 The panel majority suggests (Op. 11) that the district court committed legal error

by “effectively requir[ing]” Apple to prove infringement was the sole cause of lostsales, but as the dissent explains (at 3-4), “[t]here is simply nothing in the districtcourt’s opinion that explicitly or implicitly” made such a requirement.


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explained in our prior cases.” Dissent 5. The words “some connection” in Apple

III are not a separate test, but rather were stated once, with an explanation of what

that “some connection” must entail: “evidence that a patented feature is one of

several features that cause consumers to make their purchasing decisions”;

“evidence that the inclusion of a patented feature makes a product significantly

more desirable”; or “evidence that the absence of a patented feature would make a

product significantly less desirable.” 735 F.3d at 1364. The majority errs (Op. 11

n.1) in treating those three examples as a ceiling rather than a floor. Dissent 5-6.

The panel majority’s “some connection” test further conflicts with this

Court’s prior recognition that an “insubstantial” connection between the patented

feature and harm from lost sales does not suffice for an injunction. Apple I , 678

F.3d at 1324-35; Apple II , 695 F.3d at 1375. The panel majority expressly holds

(Op. 17) that a “significant” connection did not exist here, but that the irreparable-

harm factor still favored Apple. The panel majority decision conflicts with

precedent unless there is a difference between “insubstantial” and “insignificant.”

Finally, the panel majority’s decision conflicts with Apple III ’s holding that

causal nexus “reflects general tort principles of causation.” 735 F.3d at 1361.

Those principles have never suggested that “some connection” is equivalent to

causation. Rather, those principles establish that, where there are many

contributing factors, liability exists only for a “substantial cause.” See, e.g. ,


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Walther v. Secretary of Health & Human Servs. , 485 F.3d 1146, 1151 n.4 (Fed.

Cir. 2007).

C. The Panel Majority’s “Some Connection” Standard CreatesConfusion And Uncertainty For The District Courts

En banc review is further warranted because the panel majority’s new “some

connection” test will be impossible for district courts to apply with any

consistency. The panel majority provides no guidance as to how much of a

connection between the patented feature and lost sales constitutes “some”

connection, suggesting only (Op. 11 n.1) that the line falls “somewhere in the

middle” between the example of a patented cup holder in a car and a patented

feature that actually drives consumer decisions. 5

II. THE PANEL MAJORITY’S DECISION CONFLICTS WITHORDINARY STANDARDS OF REVIEW FOR CLEAR ERROR ANDABUSE OF DISCRETION

A. The Panel Majority’s Decision Discards The District Court’sFactual Findings In Favor Of Its Own

The Supreme Court “has always applied the abuse of discretion standard on

review of a preliminary injunction.” Ashcroft v. ACLU , 542 U.S. 656, 664 (2004)

(internal quotation marks omitted). Permanent injunctions are subject to the same

standard. Apple III , 735 F.3d at 1362-63. “Factual findings made in support of

5 As the dissent notes (at 6), “Apple’s evidence still fell short of even this meagerand insufficient cup holder example because Apple failed to offer any defensibleevidence on consumers’ willingness to pay even a nominal premium for the

patented features over non-infringing alternatives.”


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[decision on] the injunction are reviewed for clear error; the district court’s

conclusion as to each eBay factor is reviewed for abuse of discretion.” i4i Ltd.

Partnership v. Microsoft Corp. , 598 F.3d 831, 861 (Fed. Cir. 2010).

The panel majority’s decision conflicts with these well-established standards

of review. First , it improperly finds (Op. 15-16) that the Hauser survey supports

injunctive relief despite the district court’s contrary factual finding. A22-25. The

panel majority fails to address any of the major defects in the survey identified by

the district court. A3498-3502, A3289-3295. For example, the survey omitted

major features driving consumer choice (such as camera megapixels, brand, and

battery life) and produced the absurd result that consumers would pay about $102,

on a $149 phone, solely for the word-correction feature in the ’172 patent (a patent

Apple never practiced). A12109-10, A10697. Abuse-of-discretion review does

not permit the majority to reject the district court’s finding (A23) that Apple made

“only cursory arguments about how the conjoint survey evidence demonstrates

causal nexus” in the face of “extensive critiques” by Samsung’s experts. See Senju

Pharm. Co. v. Lupin Ltd ., 780 F.3d 1337, 1351 (Fed. Cir. 2015).

Second , the panel majority improperly finds (Op. 13-15), contrary to the

district court’s findings (A25-28), that evidence of Samsung’s supposed copying


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supports a nexus to irreparable harm. 6 But, as the dissent correctly explains (at 9-

10), the district court’s discussion of Apple’s copying contentions did not amount

to factual findings of copying ( id. at 15). 7 The panel majority further errs by

substituting its own view of the copying evidence for the district court’s, for it

overstates what Apple’s patents cover (Op. 3-4), ignores that Apple does not even

practice the ’647 or ’172 patents ( see Dissent 10 (“Without Apple practicing these

patents, Samsung obviously could not have copied the patented features from

Apple’s products.”)), and relies on the jury’s verdict of willful infringement of the

’721 patent even though the district court overturned that judgment (A3950).

Third , the panel majority lacks any record basis for supposed evidence of

carrier and user preferences for the infringing features. “[T]here is nothing” in the

record to support the majority’s statement that the district court “acknowledged”

this evidence; to the contrary, “[t]he majority reaches its creative interpretation of

the evidence to find ‘carriers’ or users’ preference’ all on its own.” Dissent 7.

Such appellate factfinding undermines this Court’s settled division of labor

6 Even if there were strong evidence of copying here (and there was not), copyingdoes not suffice to show irreparable harm caused by the infringement. See Apple I ,

678 F.3d at 1327-28; Apple III , 735 F.3d at 1367. The majority’s reliance onsupposed copying evidence conflicts with that precedent. Dissent 11.7 For instance, as the district court explained, while “Apple refers to one pagefrom a Samsung manual as an example of Samsung instructing customers on howto use a feature that infringes the ’647 patent … , that manual is over 1300 pagesand describes dozens of unaccused features.” A27.


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15

with the district courts and warrants en banc review.

B. The Panel Majority’s Decision Conflicts With PrecedentRequiring That Any New Legal Test Be Applied By The DistrictCourts In The First Instance

If a new “some connection” test for patent injunctions is to be announced,

the district court must be permitted to apply it in the first instance. The panel

majority’s decision to make its own findings thus conflicts with well established

law that “remand is required when the District Court failed to make a finding

because of an erroneous view of the law.” Ala. Legislative Black Caucus v.

Alabama , 135 S. Ct. 1257, 1268 (2015) (internal quotation marks omitted).

CONCLUSION

For the foregoing reasons, the petition should be granted.

Dated: October 19, 2015 Respectfully submitted,

By: /s/ Kathleen M. Sullivan


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16

Attorneys for Defendants-Appellees

Kevin P.B. JohnsonVictoria F. MaroulisBrian C. CannonQUINN EMANUEL URQUHART

& SULLIVAN, LLP555 Twin Dolphin Drive, 5th FloorRedwood Shores, CA 94065Telephone: (650) 801-5000Facsimile: (650) 801-5100

Kathleen M. SullivanWilliam B. AdamsQUINN EMANUEL URQUHART

& SULLIVAN, LLP51 Madison Avenue, 22nd Floor

New York, NY 10010Telephone: (212) 849-7000Facsimile: (212) [email protected]

John B. QuinnMichael T. ZellerScott L. WatsonQUINN EMANUEL URQUHART

& SULLIVAN, LLP865 S. Figueroa St., 10th Floor

Los Angeles, CA 90017Telephone: (213) 443-3000Facsimile: (213) 443-3100


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ADDENDUM


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United States Court of Appealsfor the Federal Circuit

______________________

APPLE INC., A CALIFORNIA CORPORATION, Plaintiff-Appellant

v.

SAMSUNG ELECTRONICS CO., LTD., A KOREANCORPORATION, SAMSUNG ELECTRONICS

AMERICA, INC., A NEW YORK CORPORATION,SAMSUNG TELECOMMUNICATIONS AMERICA,

LLC, A DELAWARE LIMITED LIABILITYCOMPANY,

Defendants-Appellees ______________________

2014-1802 ______________________

Appeals from the United States District Court for theNorthern District of California in No. 5:12-cv-00630-LHK,Judge Lucy H. Koh.

______________________

Decided: September 17, 2015 ______________________

W ILLIAM F. LEE , Wilmer Cutler Pickering Hale andDorr LLP, Boston, MA, argued for plaintiff-appellant.

Also represented by S ARAH R. F RAZIER , L AUREN B.

F LETCHER , R ICHARD WELLS O’N EILL , M ARK CHRISTOPHERF LEMING , A NDREW J. D ANFORD ; J AMES QUARLES , III, THOMAS GREGORY S PRANKLING , Washington, DC; M ARK D.SELWYN , Palo Alto, CA; R ACHEL K REVANS , CHRISTOPHER


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APPLE INC . v. SAMSUNG ELECTRONICS CO ., LTD .2

ROBINSON , N ATHANIEL BRYAN S ABRI , Morrison & Foerster,LLP, San Francisco, CA; E RIK J EFFREY OLSON , Palo Alto,CA.

K ATHLEEN M. SULLIVAN , Quinn Emanuel Urquhart &Sullivan, LLP, New York, NY, argued for defendant-appellees. Also represented by W ILLIAM A DAMS ; B RIANCOSMO C ANNON , V ICTORIA F ISHMAN M AROULIS , K EVIN P.B. J OHNSON , Redwood Shores, CA; S COTT L. W ATSON , M ICHAEL THOMAS ZELLER , J OHN B. QUINN , Los Angeles,CA; K EVIN A LEXANDER SMITH , San Francisco, CA.

M IKE MCK OOL , McKool Smith, P.C., Dallas TX, foramicus curiae Ericsson Inc. Also represented byTHEODORE S TEVENSON , III; J OHN BRUCE C AMPBELL , J OELL ANCE THOLLANDER , Austin, TX.

J OHN D. H AYNES , Alston & Bird LLP, Atlanta, GA, foramici curiae Nokia Corporation, Nokia USA, Inc. Alsorepresented by P ATRICK J. F LINN ; R YAN W. K OPPELMAN ,East Palo, CA.

M ATTHEW SCHRUERS , Computer & CommunicationsIndustry Association, Washington, DC, for amicus curiaeComputer & Communications Industry Association.

J OSEPH C ARL CECERE , J R., Cecere PC, Dallas, TX, foramicus curiae The National Black Chamber of Commerce.

K EVIN MCG ANN , White & Case LLP, New York, NY,for amici curiae Google Inc., HTC Corporation, HTC

America, Inc., LG Electronics, Inc., Rackspace Hosting,Inc., Red Hat, Inc., SAP America, Inc. Also represented byCHRISTOPHER J. GLANCY ; W ARREN S. H EIT , Palo Alto, CA.

______________________

Before P ROST , Chief Judge, MOORE , and R EYNA , Cir-cuit Judges.


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APPLE INC . v. SAMSUNG ELECTRONICS CO ., LTD . 3

Opinion for the court filed by Circuit Judge MOORE , inwhich Circuit Judge R EYNA joins.

Concurring opinion filed by Circuit Judge R EYNA .

Dissenting opinion filed by Chief Judge P ROST .

MOORE , Circuit Judge .

Apple Inc. appeals from an order of the district courtdenying Apple’s request for a permanent injunctionagainst Samsung Electronics Company, Ltd.; SamsungElectronics America, Inc.; and Samsung Telecommunica-tions America, LLC (collectively, “Samsung”). We vacate and remand for further proceedings.

B ACKGROUND

In 2007, Apple introduced the iPhone, revolutionizingthe cell phone market. To develop the iPhone, Appleinvested billions of dollars over several years—investmentthat came with significant risk. J.A. 10424–26, 10585–98.Indeed, Apple executives referred to the iPhone as a “youbet your company” product because of the uncertaintyassociated with launching an untested product line in anew market. J.A. 10425–26, 10451–52.

To protect the inventions developed as a result of thisinvestment, Apple applied for and received patents cover-ing much of the innovative technology incorporated intothe iPhone. Apple’s patents are numerous and includeU.S. Patent Nos. 5,946,647; 8,046,721; and 8,074,172, thepatents at issue in this appeal. Claim 8 of the ’721 patentclaims a touchscreen device that unlocks when the usermakes contact with an “unlock image” and moves thatimage to a second, predefined location. ’721 patent col. 19l. 51 – col. 20 l. 12. Although seemingly straightforward,

Apple considered this feature so core to the Apple iPhoneuser experience that it opened the first iPhone ad withimagery illustrating the operation of this “slide to unlock”feature. J.A. 10433–34, 21014. Claim 9 of the ’647 patent


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claims a system that detects “data structures” within textand generates links to specific actions that can be per-formed for each type of detected structure—for example,detecting a phone number in a text message and creatinga link that would allow the user to dial the phone numberor store it in an address book. ’647 patent col. 7 ll. 52–54,fig.7. And claim 18 of the ’172 patent claims a method forautomatically correcting spelling errors on touchscreendevices. ’172 patent col. 12 l. 49 – col. 13 l. 4.

The iPhone was undisputedly successful. After its re-lease, reviewers praised a number of features on theiPhone, including its multitouch screen, software, ease of

use, and overall user experience. Trial Transcript Day 2at 436–40, Apple, Inc. v. Samsung Elecs. Co. , No. 12-CV-00630-LHK (N.D. Cal. 2014) (No. 1622). Other companiesfollowed. Samsung, in particular, developed competingsmartphones. Internal Samsung documents show thatSamsung “paid close attention to, and tried to incorpo-rate” some of Apple’s patented technology, which was“indicative of copying by Samsung.” Apple, Inc. v. Sam-sung Elecs. Co. , No. 12-CV-00630-LHK, 2014 WL7496140, at *14 (N.D. Cal. Aug. 27, 2014) (“ InjunctionOrder ”). Today, Apple and Samsung are fierce competi-tors in the smartphone and tablet market. Id. at *8.

The instant appeal springs from a suit filed by Appleagainst Samsung in February 2012 alleging infringementof five patents directed to smartphone and tablet interfac-es, including the ’721 patent, the ’647 patent, and the ’172patent. The district court held on summary judgmentthat Samsung infringed the ’172 patent. The case pro-ceeded to trial, and a jury found that nine Samsungproducts infringed one or both of Apple’s ’647 and ’721patents. The jury awarded Apple a total of $119,625,000for Samsung’s infringement of the three patents.


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Following the verdict, Apple filed a motion seeking apermanent injunction that would bar Samsung from, interalia , making, using, selling, developing, advertising, orimporting into the United States software or code capableof implementing the infringing features in its products.That is, Apple did not seek to enjoin Samsung’s infringingsmartphones and tablets, but only the infringing features.Moreover, Apple’s proposed injunction included a 30-day“sunset period” that would stay enforcement of the injunc-tion until 30 days after it was entered by the districtcourt, during which Samsung could design around theinfringing features. This “sunset period” coincided with

Samsung’s representations at trial that it could removethe infringing features from its products quickly andeasily. Injunction Order at *20–22.

Despite the narrowness of Apple’s proposed injunction,the district court denied Apple’s motion, finding that

Apple had not shown that it would suffer irreparableharm without an injunction. Id. at *23. Predicatedentirely on this finding, the district court reasoned that

Apple could not establish that monetary damages wereinadequate. Id. at *19. Although the district court foundthat the public interest favored Apple’s request and thatthe narrowness of Apple’s proposed injunction tilted thebalance of hardships in Apple’s favor, it determined thatthese factors did not overcome Apple’s lack of irreparableharm. Id. at *23. Apple appealed. We have jurisdictionunder 28 U.S.C. § 1295(a)(1).

D ISCUSSION

The Patent Act provides a patentee with the “right toexclude others from making, using, offering for sale, orselling the [patented] invention.” 35 U.S.C. § 154(a)(1).

This right has its roots in the U.S. Constitution’s Intellec-tual Property Clause, which refers to inventors’ “exclusiveRight to their respective . . . Discoveries.” U.S. Const. art.


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I, § 8, cl. 8. In furtherance of this right to exclude, districtcourts “may grant injunctions in accordance with theprinciples of equity to prevent the violation of any rightsecured by patent, on such terms as the court deemsreasonable.” 35 U.S.C. § 283. “[N]ot surprising[ly], giventhe difficulty of protecting a right to exclude throughmonetary remedies that allow an infringer to use aninvention against the patentee’s wishes,” historicallycourts have “granted injunctive relief upon a finding ofinfringement in the vast majority of patent cases.” eBayInc. v. MercExchange, L.L.C. , 547 U.S. 388, 395 (2006)(Roberts, C.J., concurring) (emphasis in original).

A party seeking a permanent injunction must demon-strate:

(1) that it has suffered an irreparable injury;(2) that remedies available at law, such as mone-tary damages, are inadequate to compensate forthat injury; (3) that, considering the balance ofhardships between the plaintiff and defendant, aremedy in equity is warranted; and (4) that thepublic interest would not be disserved by a per-manent injunction.

Id. at 391 (majority opinion). The decision to award ordeny permanent injunctive relief lies within the equitablediscretion of the district court; these traditional equitableprinciples do not permit the adoption of “certain expan-sive principles suggesting that injunctive relief could notissue in a broad swath of cases.” Id. at 391, 393. Thedistrict court’s decision is reviewable for abuse of discre-tion. Id. at 391. A court abuses its discretion when it“ma[kes] a clear error of judgment in weighing relevantfactors or exercise[s] its discretion based upon an error of

law or clearly erroneous factual findings.” Innogenetics,N.V. v. Abbott Labs. , 512 F.3d 1363, 1379 (Fed. Cir. 2008).We review the district court’s conclusion as to each eBayfactor for abuse of discretion and its underlying factual


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findings for clear error. i4i Ltd. P’ship v. Microsoft Corp. ,598 F.3d 831, 861 (Fed. Cir. 2010).

A. Irreparable Harm

To satisfy the first eBay factor, the patentee mustshow that it is irreparably harmed by the infringement.This requires proof that a “causal nexus relates the al-leged harm to the alleged infringement.” Apple Inc. v.Samsung Elecs. Co. , 695 F.3d 1370, 1374 (Fed. Cir. 2012)(“ Apple II ”). This just means that there must be proofthat the infringement causes the harm.

Apple argued to the district court that it was irrepa-

rably harmed by Samsung’s infringement due to damageto its reputation as an innovator, lost market share, andlost downstream sales. Injunction Order at *6, *11. Thedistrict court rejected Apple’s arguments regarding irrep-arable harm and found that Apple had not shown that acausal nexus connected Samsung’s infringement to thesealleged injuries. Id. at *8–9, *11–16. On appeal, Appleargues that the district court erred in a number of wayswith respect to this eBay factor. First, Apple argues thatthe court should not have required Apple to prove that acausal nexus linked Samsung’s infringement to Apple’s

harms because Apple’s proposed injunction was limited tothe infringing features alone, not the products as a whole. Apple also argues that the court erred when it found that Apple did not suffer irreparable harm stemming from itssales-based losses and from harm to its reputation as aninnovator due to Samsung’s infringement. We addresseach of Apple’s arguments in turn.

1. Causal Nexus Requirement

Apple claims that “[t]he purpose and substance of thecausal nexus requirement are necessarily satisfied in this

circumstance because there is no risk that Apple might be‘leveraging its patent for competitive gain beyond thatwhich the inventive contribution and value of the patent


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warrant.’” Appellant’s Br. 33 (quoting Apple, Inc. v.Samsung Elecs. Co. , 735 F.3d 1352, 1361 (Fed. Cir. 2013)(“ Apple III ”) (alterations omitted)). Apple argues that ourdiscussion of causal nexus to date has been limited tocases where the patentee sought a product-based injunc-tion. See Apple III , 735 F.3d at 1352; Apple II , 695 F.3d at1375–76; Apple, Inc. v. Samsung Elecs. Co. , 678 F.3d1314, 1324 (Fed. Cir. 2012) (“ Apple I ”). Apple asserts thatthere is no causal nexus requirement when the patenteeis seeking, as in this case, a narrow injunction, limited tothe infringing features.

Apple misunderstands the purpose of the causal nex-

us requirement. Although we stated in Apple II that thecausal nexus requirement “informs whether the patent-ee’s allegations of irreparable harm are pertinent to theinjunctive relief analysis, or whether the patentee seeksto leverage its patent for competitive gain beyond thatwhich the inventive contribution and value of the patentwarrant,” this statement was incomplete. Apple II , 695F.3d at 1375. The causal nexus requirement ensures thatan injunction is only entered against a defendant onaccount of a harm resulting from the defendant’s wrongfulconduct, not some other reason. For example, it ensuresthat an injunction is not entered on account of “irrepara-ble harm caused by otherwise lawful competition.” AppleIII , 735 F.3d at 1361. Whether a patentee’s irreparableharm stems from infringement of its patents is entirelyindependent of the scope of the proposed injunction.

And while, in the past, we have only had occasion torequire proof of causal nexus for product-based injunc-tions, we have also rejected Apple’s argument that nar-rowing the proposed injunction can eliminate the causalnexus requirement. In Apple III , we explained that, whilenarrowing a proposed injunction by delaying it so that theinfringer could design around the infringing featureswould make it “more likely to prevent only infringing


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features rather than the sale of entire products ,” it did not“show that the patentee is irreparably harmed by theinfringement .” Id. at 1363 (emphasis in original). Thesame is true here. That Apple’s proposed injunctionapplies only to infringing features says nothing aboutwhether Apple is irreparably harmed by Samsung’sinfringement. The purpose of the causal nexus require-ment is to establish the link between the infringementand the harm, to ensure that there is “some connection”between the harm alleged and the infringing acts. Id. at1364. Thus, a causal nexus linking the harm and theinfringing acts must be established regardless of whether

the injunction is sought for an entire product or is narrow-ly limited to particular features.

To be sure, the scope of an injunction plays a role indetermining whether that injunction is awarded. Forexample, it is crucial when considering the final twofactors of the eBay test. Here, the district court did noterr by requiring Apple to satisfy the causal nexus re-quirement to show irreparable harm.

2. Sales-Based Harm

Apple argues that the district court erred in findingthat Apple did not suffer irreparable harm due to lostmarket share and lost downstream sales stemming fromSamsung’s infringement. The district court noted that itwas undisputed that Apple lost market share and down-stream sales to Samsung. Injunction Order at *11. Itwas also undisputed that “Apple and Samsung competedirectly in the market for smartphones and tablets” andthat “this competition affects [Apple’s] downstream salesbecause of so-called ‘ecosystem’ effects, where one compa-ny’s customers will continue to buy that company’s prod-ucts and recommend them to others.” Id. Moreover, thecourt wrote that the record established that “the competi-tion between Apple and Samsung was ‘fierce’” and that“Apple was Samsung’s ‘largest smartphone competitor’ in


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the U.S. market.” Id. Because “[w]here two companiesare in competition against one another, the patenteesuffers the harm—often irreparable—of being forced tocompete against products that incorporate and infringe itsown patented inventions,” id. (quoting Douglas Dynamics,LLC v. Buyers Prods. Co. , 717 F.3d 1336, 1345 (Fed. Cir.2013)), the court found that “[t]he presence of directcompetition between Apple and Samsung in thesmartphone market weighs in favor of finding irreparableharm,” id .

Despite these findings, the district court found that Apple failed to demonstrate irreparable harm due to lost

sales because it failed to show a causal nexus between theinfringement and the lost sales. That is, according to thedistrict court, Apple did not show that the infringingfeatures “drive consumer demand for Samsung’s infring-ing products.” Id. at *13. Here, the district court erred.

When a patentee alleges it suffered irreparable harmstemming from lost sales solely due to a competitor’sinfringement, a finding that the competitor’s infringingfeatures drive consumer demand for its products satisfiesthe causal nexus inquiry. In that case, the entirety of thepatentee’s alleged harm weighs in favor of injunctiverelief. Such a showing may, however, be nearly impossi-ble from an evidentiary standpoint when the accuseddevices have thousands of features, and thus thousands ofother potential causes that must be ruled out. Nor doesthe causal nexus requirement demand such a showing.Instead, it is a flexible analysis, as befits the discretionarynature of the four-factor test for injunctive relief. Wehave explained that proving a causal nexus requires thepatentee to show “some connection” between the patentedfeatures and the demand for the infringing products.


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Apple III , 735 F.3d at 1364. 1 Thus, in a case involvingphones with hundreds of thousands of available features,it was legal error for the district court to effectively re-quire Apple to prove that the infringement was the solecause of the lost downstream sales. The district courtshould have determined whether the record establishedthat a smartphone feature impacts customers’ purchasingdecisions. Apple III , 735 F.3d at 1364. Though the factthat the infringing features are not the only cause of thelost sales may well lessen the weight of any alleged irrep-arable harm, it does not eliminate it entirely. To say

1 As we explained in Apple III , “some connection”between the patented feature and consumer demand forthe products may be shown in “a variety of ways,” includ-ing, for example, “evidence that a patented feature is oneof several features that cause consumers to make theirpurchasing decisions,” “evidence that the inclusion of apatented feature makes a product significantly moredesirable,” and “evidence that the absence of a patentedfeature would make a product significantly less desira-

ble.” Id. These examples do not delineate or set a floor onthe strength of the connection that must be shown toestablish a causal nexus; rather, they are examples ofconnections that surpass the minimal connection neces-sary to establish a causal nexus. Apple III included afourth example to demonstrate a connection that does notestablish a causal nexus—where consumers are onlywilling “to pay a nominal amount for an infringing fea-ture.” Id. at 1368 (using example of $10 cup holder in$20,000 car). There is a lot of ground between the exam-ples that satisfy the causal nexus requirement and the

example that does not satisfy this requirement. Therequired minimum showing lies somewhere in the middle,as reflected by the “some connection” language.


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otherwise would import a categorical rule into this analy-sis.

The right to exclude competitors from using one’sproperty rights is important. And the right to maintainexclusivity—a hallmark and crucial guarantee of patentrights deriving from the Constitution itself—is likewiseimportant. “Exclusivity is closely related to the funda-mental nature of patents as property rights.” Douglas

Dynamics , 717 F.3d at 1345. And the need to protect thisexclusivity would certainly be at its highest when theinfringer is one’s fiercest competitor. Essentially barringentire industries of patentees—like Apple and other

innovators of many-featured products—from takingadvantage of these fundamental rights is in direct contra-vention of the Supreme Court’s approach in eBay . 547U.S. at 393 (“[E]xpansive principles suggesting thatinjunctive relief could not issue in a broad swath of cas-es . . . cannot be squared with the principles of equityadopted by Congress.”).

The district court thus erred when it required Appleto prove that the infringing features were the exclusive orpredominant reason why consumers bought Samsung’sproducts to find irreparable harm. See Apple III , 735 F.3dat 1364 (explaining that “[c]onsumer preferences are toocomplex—and the principles of equity are too flexible” fora patentee to have to show that patented features are the“one and only reason for consumer demand”). Instead, thedistrict court should have considered whether there is“some connection” between the patented features and thedemand for Samsung’s products. Id. That is, the districtcourt should have required Apple to show that the pa-tented features impact consumers’ decisions to purchasethe accused devices. Id. (explaining that causal nexus canbe shown with evidence that “a patented feature is one ofseveral features that cause consumers to make theirpurchasing decisions”).


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The record here establishes that these features do in-fluence consumers’ perceptions of and desire for theseproducts. The district court wrote that there was evi-dence that Samsung valued the infringing features,including evidence that Samsung “paid close attention to,and tried to incorporate, certain iPhone features,” whichwas “indicative of copying.” Injunction Order at *14. Thisincluded evidence that Samsung had copied the “slide tounlock” feature claimed in the ’721 patent, such as “inter-nal Samsung documents showing that Samsung tried tocreate unlocking designs based on the iPhone,” id. (citingPX119 (J.A. 20197), PX121 (J.A. 20274, 20347)); testimo-ny from a Samsung engineer about “the value of designsfor unlocking,” id. (citing Tr. at 1729:3–11 (J.A. 11735:3– 11)); and “Samsung e-mails noting that certain carriersdisapproved of the noninfringing ‘circle lock’ alternative,”id. (citing PX181 at 5 (J.A. 21019)). The district court alsonoted that the jury found that Samsung willfully in-fringed the ’721 patent. Id. For the ’647 patent, evidenceof copying included “an internal Samsung report thatshows iPhone screens and notes the ‘[n]eed to improveusability by providing Links for memo contents,’” id.(citing PX146 at 37 (J.A. 20584)), and “an internal Sam-sung document that copied a figure from the publicationof one of the ’647 patent’s inventors,” id. (citing PX107 at52 (J.A. 20063)); see also J.A. 20003 (inventor’s publica-tion). And for the ’172 patent, Apple presented evidencethat users criticized Samsung’s noninfringing keyboardsand word-correction designs. Injunction Order at *14(citing PX168 at 4 (J.A. 20985), PX169 at 4 (J.A. 21006),PX219 at 104 (J.A. 21318)); see also J.A. 10700–02 (ex-plaining that a Samsung carrier found Samsung’s non-infringing word-correction method “jarring,” which Sam-sung resolved by going to the word-correction methoddescribed in the ’172 patent). Finally, the district courtheld that Apple had shown that it too found the “slide tounlock” feature claimed in the ’721 patent valuable toconsumers. Injunction Order at *15 (citing Tr. at 432:20–


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433:18 (J.A. 10433:20–10434:18); Tr. at 600:23–601:15(J.A. 10602:23–10603:15)); see also J.A. 21014 (Apple’sfirst iPhone ad, which opened with imagery of the “slideto unlock” feature). The district court rejected this evi-dence as insufficient to establish the requisite causalnexus. Injunction Order at *13–15 (citing Apple I , 678F.3d at 1327–28; Apple III , 735 F.3d at 1367). In doing so,the district court relied on our previous statements thatcopying is not sufficient to show causal nexus:

While the evidence that Samsung’s employees be-lieved it to be important to incorporate the pa-tented feature into Samsung’s products is

certainly relevant to the issue of nexus betweenthe patent and market harm, it is not dispositive.That is because the relevant inquiry focuses onthe objective reasons as to why the patentee lostsales, not on the infringer’s subjective beliefs as towhy it gained them (or would be likely to gainthem).

Apple I , 678 F.3d at 1327–28.

The district court was correct that evidence of copyingdoes not, by itself, establish a causal nexus. But that does

not make the evidence wholly irrelevant. Here, too, wemust avoid categorical rules. Where the precise questionis about consumer preferences and buying choices, thestrength and weight to be given to such evidence is to bedetermined on a case-by-case basis based on what theevidence indicates. Sometimes this evidence will havelittle or no probative value, for example, if the recordcontains evidence that the infringer’s belief may be atodds with consumer preferences. But here, Apple’s evi-dence of copying established a further link between Ap-ple’s and Samsung’s subjective beliefs and consumers’

perceptions, thereby strengthening a causal nexus andirreparable harm to Apple. The dissent criticizes Apple’sevidence of copying as “lack[ing] any connection to the


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critical details that define the patented features.” Dissent10. The district court made no such findings. InjunctionOrder at *14. The district court acknowledged that Applepresented evidence that carriers (’721 patent) and users(’172 patent), not just Samsung, preferred and valued theinfringing features and wanted them in Samsung phones.Id. It also acknowledged that Apple presented evidencethat carriers or users disapproved of Samsung’s alterna-tive to the infringing features. The court failed to appre-ciate, however, that this evidence did not justdemonstrate that Samsung valued the patented features,but also that its carriers or users valued the features.The district court further correctly concluded that the ’721patent’s features are valuable to Apple’s consumers. Id.at *15. It was legal error for the district court to rejectsuch strong evidence in this case because Apple presentedevidence showing that Samsung’s subjective beliefs areindicative of consumers’ perceptions of the infringingfeatures. Given the strength of the evidence of copyingand Samsung’s professed belief in the importance of thepatented features as a driver of sales, and the evidencethat carriers or users also valued and preferred phoneswith these features, the district court erred by disregard-ing this evidence, which further establishes a causalnexus and Apple’s irreparable harm.

Furthermore, this record contained Dr. John Hauser’sconjoint study, which established that consumers wouldnot have purchased a Samsung phone if it lacked thepatented features, that they valued these features, andthat they were willing to pay considerably more for aphone that contained these features. Injunction Order at*12; see also J.A. 20491–98 (survey results showing thatmany respondents would not purchase a Samsung phonewithout the infringing features); J.A. 20539 (results

showing that respondents were willing to pay more fordevices that included the infringing features). Based onthe results, Dr. Hauser concluded that “[t]he features that


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were enabled by the patents at issue in this case have ameasurable impact on consumer demand for Samsungtelephones, smartphones, and tablets.” J.A. 11130. Thedistrict court appeared to disregard the Hauser study,writing that “[t]he weight of the evidence shows that [theHauser study] fails to demonstrate that the featuresclaimed in the ’647, ’721, and ’172 patents drive consumerdemand for Samsung’s infringing products.” InjunctionOrder at *13. The district court’s decision seems to bepredicated on an incorrect understanding of the nature ofthe causal nexus requirement, as discussed above.

In short, the record establishes that the features

claimed in the ’721, ’647, and ’172 patents were importantto product sales and that customers sought these featuresin the phones they purchased. While this evidence ofirreparable harm is not as strong as proof that customersbuy the infringing products only because of these particu-lar features, it is still evidence of causal nexus for lostsales and thus irreparable harm. Apple loses sales be-cause Samsung products contain Apple’s patented fea-tures. The district court therefore erred as a matter oflaw when it required Apple to show that the infringingfeatures were the reason why consumers purchased the

accused products. Apple does not need to establish thatthese features are the reason customers bought Samsungphones instead of Apple phones—it is enough that Applehas shown that these features were related to infringe-ment and were important to customers when they wereexamining their phone choices. On this record, applyingthe correct legal standard for irreparable harm, Apple hasestablished irreparable harm. The strength of its evi-dence of irreparable harm goes to this factor’s weightwhen assessing the propriety of the injunction. Appleestablished that customers wanted, preferred, and would

pay extra for these features. Apple established thatSamsung believed these features were important andcopied them. The evidence establishes that Samsung’s


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carriers and users wanted these features on phones. Theevidence establishes that Apple believed these featureswere important to customer demand. The evidence estab-lishes that Samsung was Apple’s biggest rival, its fiercestcompetitor. It was clear error in the face of this evidencefor the district court to conclude that Apple failed toestablish “some connection” between the patented fea-tures and demand for the infringing products. Apple didnot establish that that these features were the exclusiveor significant driver of customer demand, which certainlywould have weighed more heavily in its favor. We con-clude that this factor weighs in favor of granting Apple’sinjunction.

B. Inadequate Remedy at Law

The second eBay factor is whether “remedies availableat law, such as monetary damages, are inadequate tocompensate” for the irreparable harm suffered by thepatentee. 547 U.S. at 391.

The district court found that Apple’s sales-based loss-es were difficult to quantify. Injunction Order at *18. Insupport, the district court cited testimony by Mr. PhilSchiller, an Apple marketing executive; testimony by

Apple’s damages expert; and its own past findings on thesubject in the context of the Apple-Samsung litigation.Id. at *17. We agree with the district court’s analysis.Sales lost by Apple to Samsung are difficult to quantifydue to the “ecosystem effect”—that is, the effect the sale ofa single product can have on downstream sales of accesso-ries, computers, software applications, and futuresmartphones and tablets. Id. ; see also J.A. 10449–50. Inaddition to the downstream sales to the individual cus-tomer, Mr. Schiller testified that individual customershave a “network effect,” by which they advertise Apple’s

product to their friends, family, and colleagues. J.A.10449–50. Thus, the loss by Apple of a single smartphoneor tablet customer may have a far-reaching impact on


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Apple’s future revenues. Because of its variable anduncertain nature, this loss is very difficult to calculate.

Despite its finding that Apple’s sales-based losseswere difficult to quantify, the district court nonethelessfound that this factor weighed against injunctive reliefbased on its determination that Apple had failed to estab-lish any irreparable harm. Injunction Order at *19.

Apple argues that if we reverse the court on that point,this factor will also tip in its favor. We agree. Becausewe find the district court’s finding that Apple did notsuffer any irreparable harm stemming from its losses ofsales was predicated on a legal error, it also erred when it

found that this factor weighs against an injunction. Thisfactor strongly weighs in favor of Apple because, as thedistrict court found, the extent of Apple’s downstream andnetwork effect losses are very difficult to quantify.

C. Balance of Hardships

To satisfy the third eBay factor, the patentee mustshow that the balance of hardships weighs in its favor.547 U.S. at 391. This factor “assesses the relative effect ofgranting or denying an injunction on the parties.” i4i , 598F.3d at 862. Because “Apple’s proposed injunction targets

only specific features, not entire products” and contains a30-day “sunset provision,” Injunction Order at *20–21,and because “Samsung repeatedly told the jury thatdesigning around the asserted claims of the three patentsat issue would be easy and fast,” id. at *22, the districtcourt found that Samsung would “not face any hardship”from Apple’s proposed injunction, id. at *19. The court,reasoning that “requiring a patentee to ‘compete againstits own patented invention . . . places a substantial hard-ship’ on the patentee,” found that Apple would sufferhardship without an injunction. Id. at *22 (quoting

Robert Bosch LLC v. Pylon Mfg. Corp. , 659 F.3d 1142,1156 (Fed. Cir. 2011)). The court therefore found that


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this factor weighed in Apple’s favor. We agree. Thisfactor strongly favors granting Apple the relief requested.

Samsung argues that the district court erred in find-ing the balance of hardships favors the entry of an injunc-tion. It argues that Apple will not suffer any hardship inthe absence of an injunction because the patented fea-tures are minor components in a complex device. Sam-sung argues that it and its carriers, retailers, andcustomers would suffer substantial hardship if an injunc-tion issued, particularly because the proposed injunctionwould extend to unadjudicated products with softwarethat is “capable of implementing” the infringing features

or other features “not colorably different.” Appellees’ Br.55 & n.14 (quoting J.A. 2698).

The district court did not abuse its discretion in find-ing the balance of hardships favors an injunction; to thecontrary, this factor strongly weighs in favor of an injunc-tion. Samsung’s infringement harmed Apple by causinglost market share and lost downstream sales and byforcing Apple to compete against its own patented inven-tion, which “places a substantial hardship” on a patentee,especially here where it is undisputed that it is essential-ly a two-horse race. Bosch , 659 F.3d at 1156. Further-more, as the district court found, Apple’s proposedinjunction was narrowly tailored to cause no harm toSamsung other than to deprive it of the ability to continueto use Apple’s patented features. Injunction Order at*21–22. The court has overseen the Apple-Samsunglitigation from the beginning and has worked extensivelywith parties and their counsel. Given the court’s familiar-ity with the infringing products, the parties, and theirhistory of litigation, it is best-positioned to determine theimpact of the scope of the injunction on the parties.Furthermore, the district court presided over a trial inwhich Samsung’s witnesses and counsel assured the jurythat design-arounds to the infringing features would be“simple or already exist.” Id. at *20. And Samsung


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asserted at oral argument that none of the products itcurrently sells practice the ’721 patent or the ’172 patent,and that only a single product practices the ’647 patent.Oral Argument at 31:10–31:48, available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2014-1802.mp3. As we wrote in Douglas Dynamics , whenthe infringer “ha[s] a non-infringing alternative which itcould easily deliver to the market, then the balance ofhardships would suggest that [it] should halt infringe-ment and pursue a lawful course of market conduct.” 717F.3d at 1345. On this record, it is clear—Samsung willsuffer relatively little harm from Apple’s injunction, while

Apple is deprived of its exclusivity and forced to competeagainst its own innovation usurped by its largest andfiercest competitor. Given the narrow feature-basednature of the injunction, this factor strongly weighs infavor of granting Apple this injunction.

D. Public Interest

The fourth eBay factor requires the patentee to showthat “the public interest would not be disserved by apermanent injunction.” 547 U.S. at 391. The districtcourt found that the public interest “favor[s] the enforce-ment of patent rights to promote the encouragement ofinvestment-based risk,” particularly where, as here, thepatentee’s proposed injunction is narrow in scope andincludes a sunset provision limiting the impact of theinjunction on consumers. Injunction Order at *22–23(quotation marks omitted). The court also noted that “aninjunction may prompt introduction of new alternatives tothe patented features.” Id. at *23. It therefore concludedthat the public interest factor favors Apple.

Samsung argues that the district court erred in find-ing the public interest weighs in favor of an injunction.

Samsung also argues that the proposed injunction, whilestyled as narrow, is actually quite broad and would leadto the removal of products from store shelves, which it


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argues would harm the public interest. Samsung alsoargues that the public has a strong interest in competitionand the resulting variety of product choices, and that thecost of administering this injunction would be great.

The district court did not abuse its discretion in find-ing that the public interest favors an injunction. Indeed,the public interest strongly favors an injunction. Sam-sung is correct—the public often benefits from healthycompetition. However, the public generally does notbenefit when that competition comes at the expense of apatentee’s investment-backed property right. To concludeotherwise would suggest that this factor weighs against

an injunction in every case, when the opposite is generallytrue. We base this conclusion not only on the Patent Act’sstatutory right to exclude, which derives from the Consti-tution, but also on the importance of the patent system inencouraging innovation. Injunctions are vital to thissystem. As a result, the public interest nearly alwaysweighs in favor of protecting property rights in the ab-sence of countervailing factors, especially when the pa-tentee practices his inventions. “[T]he encouragement ofinvestment-based risk is the fundamental purpose of thepatent grant, and is based directly on the right to ex-

clude.” Sanofi-Synthelabo v. Apotex, Inc. , 470 F.3d 1368,1383 (Fed. Cir. 2006) (quotation marks omitted).

This is not a case where the public would be deprivedof Samsung’s products. Apple does not seek to enjoin thesale of lifesaving drugs, but to prevent Samsung fromprofiting from the unauthorized use of infringing featuresin its cellphones and tablets. Again, Apple seeks only anarrow feature-based injunction commensurate in scopewith its monopoly rights. And the evidence of record isthat Samsung can effect the removal of the patentedfeatures without recalling any products or disruptingcustomer use of its products. Apple has not attempted toexpand the scope of its monopoly. Given the importantpublic interest in protecting patent rights, the nature of


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the technology at issue, and the limited nature of theinjunction, this factor strongly favors an injunction.

CONCLUSION

The district court erred when it found the first twoeBay factors weighed against an injunction. Although theevidence may not make a strong case of irreparable harm,

Apple has satisfied the causal nexus requirement andtherefore established irreparable harm. 2 Apple has alsoestablished that the harm it will suffer is not easilycompensable at law. Moreover, as the district courtfound, the balance of hardships and public interest weighstrongly in favor of an injunction. Given this, the districtcourt abused its discretion when it did not enjoin Sam-sung’s infringement. If an injunction were not to issue inthis case, such a decision would virtually foreclose thepossibility of injunctive relief in any multifaceted, multi-function technology. We vacate the district court’s orderdenying Apple’s proposed injunction and remand forfurther proceedings consistent with this opinion.

VACATED AND REMANDED

COSTS

Each party shall bear its own costs.

2 Because we hold that the district court erredwhen it found that Apple did not suffer irreparable harmstemming from its sales-based losses, see supra at 9–17,and that on this record and consistent with the otherholdings of the district court, this harm is sufficient to

justify an injunction, see infra at 22, we do not reach theissue of whether Apple also suffered irreparable reputa-tional harm.


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United States Court of Appealsfor the Federal Circuit

______________________

APPLE INC., A CALIFORNIA CORPORATION, Plaintiff-Appellant

v.

SAMSUNG ELECTRONICS CO., LTD., A KOREANCORPORATION, SAMSUNG ELECTRONICS

AMERICA, INC., A NEW YORK CORPORATION,SAMSUNG TELECOMMUNICATIONS AMERICA,

LLC, A DELAWARE LIMITED LIABILITYCOMPANY,

Defendants-Appellees ______________________

2014-1802 ______________________

Appeals from the United States District Court for theNorthern District of California in No. 5:12-cv-00630-LHK,Judge Lucy H. Koh.

______________________

REYNA , Circuit Judge , concurring .

The Constitution bestows on Congress the power tosecure inventors’ “exclusive Right[s]” to their inventions.U.S. Const. Art. I, § 8. The utility of this power would,according to James Madison, “scarcely be questioned” asthe rights to inventions “belong to the inventors.” TheFederalist No. 43, p. 214 (L. Goldman ed. 2008) (J. Madi-son). In the years since Congress first exercised thispower and enacted the first Patent Act in 1790, courts


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have varied in how they have protected the right to ex-clude, first preferring damages, then granting injunctionsroutinely, and recently rigorously applying the irrepara-ble injury factor of the four-part eBay test. The courttoday correctly concludes that Apple, Inc. is entitled to anarrow, feature-based injunction against Samsung 1 because Samsung’s infringement will likely cause Appleto lose downstream sales. I agree with this decision andnote that it leaves open the door for obtaining an injunc-tion in a case involving infringement of a multi-patenteddevice, a door that appears near shut under current law.

I write to add that I believe Apple satisfied the irrepa-

rable injury factor based on Samsung’s infringement on Apple’s right to exclude and based on the injury that theinfringement causes Apple’s reputation as an innovator.There is no dispute that Samsung has infringed Apple’sright to exclude and, absent an injunction, it will likelycontinue to do so. I believe that such a finding satisfiesthe irreparable harm requirement because the infringe-ment is, in this case, “irreparable.” On reputationalinjury, the roles are reversed: it is undisputed that suchan injury is irreparable; the question is whether thisinjury will likely occur. As I explain below, I believe that

the record here—particularly the toe-to-toe competitionbetween Apple and Samsung, Apple’s reputation as aninnovator, and the importance of the patents-in-suit tothat reputation—establishes that Apple will likely sufferirreparable harm to its reputation.

1 I refer to Samsung Electronics Company, Ltd.;Samsung Electronics America, Inc.; and Samsung Tele-communications America, LLC collectively as “Samsung.”


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I. Injury to The Right to Exclude is an “Injury”That is, in this Case, “Irreparable.”

A patentee’s rights spring forth from the Constitution,which gives Congress the power to “secur[e] for limitedTimes to . . . Inventors the exclusive Right to their respec-tive . . . Discoveries.” U.S. Const. Art. I, § 8. Under thisgrant of authority, Congress has given patentees “monop-oly rights.” F.T.C. v. Actavis, Inc. , 133 S. Ct. 2223, 2240(2013) (Roberts, C.J., dissenting). That is, the patenteeobtains the right to invoke the “State’s power” to preventothers from engaging in certain activities. Zenith RadioCorp. v. Hazeltine Research, Inc. , 395 U.S. 100, 135

(1969). Those activities include “making, using, offeringfor sale, or selling the invention throughout the UnitedStates or importing the invention into the United States,”and if the invention is a process, “using, offering for saleor selling throughout the United States, or importing intothe United States, products made by that process.” 35U.S.C. § 154(a)(1).

These monopoly rights do not necessarily entitle a pa-tentee to injunctive relief. At least as far back as the 17thcentury, courts have required a showing of “irreparable”injury before granting injunctive relief. See Laycock,Douglas, Death of the Irreparable Injury Rule , 103 Harv.L. Rev. 687, 699 (1990) (“Laycock”). After Congresspassed the first Patent Act in 1790 up until 1819, Ameri-can courts generally found that the patent statutes pro-vided damages as the remedy for patent infringement,meaning that infringement of patent rights did not consti-tute an irreparable injury. See Root v. Lake Shore & M.S.Ry. Co. , 105 U.S. 189, 192 (1881); Frankfurter, Felix, The

Business of the Supreme Court of the United States — AStudy in the Federal Judicial System , 39 Harv. L. Rev.587, 616–17 (1926). In 1819, Congress specifically grant-ed courts the authority to grant injunctions in casesinvolving patent infringement. Root , 105 U.S. at 192.From this point until the 20th century, courts granted


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injunctions in patent cases where the defendant wasshown to be likely to continue to infringe. Robinson,William C., The Law of Patents for Useful Inventions , §1088 (1890); Lipscomb, Ernest Bainbridge, III, Walker on

Patents , § 25:33 (1988). In the early 20th century, courtswent further, holding that the default rule was thatmonetary damages were insufficient to compensate forinfringement on the right to exclude. E.g., Am. Code Co.v. Bensinger , 282 F. 829, 834 (2d Cir. 1922) (“In cases ofinfringement of copyright, an injunction has always beenrecognized as a proper remedy, because of the inadequacyof the legal remedy.”) Our court followed suit, holdingthat where “validity and continuing infringement havebeen clearly established,” irreparable injury is presumed.Smith Intern., Inc. v Hughes Tool Co. , 718 F.2d 1573,1581 (Fed. Cir. 1983). We eventually created a defaultrule that an injunction would issue when infringementhas been established, absent a “sound” reason for denyingit. Richardson v. Suzuki Motor Co. , 868 F.2d 1226, 1246– 47 (Fed. Cir. 1989), cert. denied , 493 U.S. 853 (1989).

In eBay Inc. v. MercExchange, L.L.C. , the SupremeCourt rejected that default rule, holding that a plaintiffseeking a permanent injunction must satisfy the four-

factor test historically employed by courts of equity,including establishing irreparable injury. 547 U.S. 388,391, 393 (2008). Though we read eBay to overrule ourpresumption of irreparable injury, we cautioned thatcourts should not necessarily “ignore the fundamentalnature of patents as property rights granting the ownerthe right to exclude.” Robert Bosch LLC v. Pylon Mfg.Corp. , 659 F.3d 1142, 1149 (Fed Cir. 2011). Yet ourrecent cases have done precisely that, ignoring the rightto exclude in determining whether to issue an injunction.Indeed, our opinions in the most recent cases between


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Apple and Samsung do not even mention the right

apple v. samsung (14-1802) pet. for rehearing

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