Apple Wins Samsung Ban at ITC, Urges Federal Circuit Injunction on 26 Devices

The U.S. International Trade Commission issued an injunction after our deadline Friday on Samsung mobile devices that violated two Apple patents. The full details of the ban, which will take place within 60 days of Friday’s ruling, were not yet available. The ITC vote followed a hearing earlier Friday at the Court of Appeals for the Federal Circuit. There, Apple told a three-judge panel that upholding a lower court’s decision not to ban 26 Samsung mobile devices a San Jose federal jury found last year violated six Apple patents would be a “fundamental change” to U.S. patent law. Apple also faced a hearing at the U.S. District Court, Manhattan, in connection with the ruling last month that Apple violated antitrust laws by conspiring with publishers to “eliminate retail competition and raise the prices for e-books."

The ITC ruling stems from ITC Administrative Law Judge Thomas Pender’s ruling in October that Samsung had violated one Apple design patent and three Apple software patents (CD Jan 25 p10). Lawyers previously told us they believed the ITC’s ruling would not be affected by U.S. Trade Representative Michael Froman’s veto of an ITC ruling that would have banned early-model Apple iPhones and iPads, including the iPhone 4. Froman found that the patents involved were considered standard-essential patents (SEPs), which Samsung hadn’t been able to prove it made enough of an effort to license from Apple (CD Aug 8 p4). The patents involved in Friday’s ITC case aren’t SEPs.

Apple’s Federal Circuit appeal stems from U.S. District Judge Lucy Koh’s decision not to ban the sale of the Samsung products (CD Dec 19 p14). She ruled that although Apple was entitled to damages from the infringement, it had not successfully proven that the infringement caused “irreparable harm” to Apple’s sales because it didn’t prove that each infringing component in a Samsung device was a “causal nexus” -- a main reason behind lost Apple sales. A San Jose jury originally awarded Apple $1.05 billion in damages related to the infringement, but Koh eventually reduced the damages by $410 million. A retrial on the amount of damages Apple is entitled to is set to begin Nov. 12 in San Jose.

Circuit Judges William Bryson, Kathleen O'Malley and Sharon Prost considered Friday whether Apple needed to prove each component was a causal nexus in order to get an injunction. Samsung spent three months copying the iPhone, “a revolutionary product” that Apple had spent five years and $5 billion developing, said Apple counsel William Lee. Companies should be required to prove “irreparable harm” in patent infringement cases, but “I don’t think that anybody in Apple’s position” could prove with certainty that any one component or group of components was the main reason behind a device’s sale, Lee said.

Bryson got Lee to acknowledge that Apple’s main purpose in appealing Koh’s injunction ruling was to give the company an expedited way to seek injunctions on newer Samsung products. Since Apple first filed the lawsuit in 2011, Samsung has stopped selling 23 of the 26 infringing devices and implemented design changes on the other three devices that sidestep Apple patents. Lee argued that although Samsung says “the product with this name is off the market,” they might issue near-identical versions of the infringing products under new names. If the Federal Circuit grants an injunction, Apple could go after products it views as near-identical to the 26 infringing products via a contempt hearing, Lee said.

Samsung counsel Kathleen Sullivan said “Apple had suffered lost sales, but what was missing was a causal nexus to those lost sales.” A study Apple presented during the San Jose trial showed customers were willing to pay up to $100 more for a phone that included some of the infringed features. Sullivan attempted to bring the relevance of the study into question, claiming it “still doesn’t tell you that the phone with the infringing feature will be chosen over the non-infringing product.” Bryson said he believed the study showed “consumers value that feature.”