Does Apple’s Latest Bruising Mean the End of Sales Bans for Smartphones?

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Another round between Apple and Samsung left Apple bruised when the Court of Appeals for the Federal Circuit unanimously refused to review its earlier decision that Apple had failed to show a sufficiently strong connection between Samsung’s smartphone sales and its infringing use of Apple’s patented technology. The test that governs future cases will make it difficult for Apple and those in its position to convince courts to grant bans on smartphones and tablets, says Professor Daryl Lim of The John Marshall Law School in Chicago.

Apple Inc. suffered a setback in the Court of Appeals for the Federal Circuit when the court unanimously refused to review a decision by one of its panels (Re: Docket No. 13-1146). This development essentially allows Samsung to continue selling smartphones despite allegations that they contain technology which likely infringes on Apple’s patents.

Apple and Samsung are battling in numerous legal actions as Apple attempts to enforce its many patents—some registered to founder Steve Jobs.

“Apple sees Samsung as a thief,” said Professor Daryl Lim of The John Marshall Law School in Chicago. “Obviously Samsung disagrees and it wants to show that its success has resulted from more than manufacturing savvy. Samsung wants to be recognized as a serious innovator worthy of respect.”

The Jan. 31, 2013, decision supports that view, and also signals that sales bans in future smartphone wars will not be easily won. “This development will help push warring parties closer to the inevitable settlement,” observed Lim, an intellectual property expert.

Apple was attempting to convince the court that purchasers of Samsung smartphones chose the Korean brand because it incorporates Apple’s patented search technology into its products.

“The court found Apple’s evidence inadequate to support its request for the ban,” Lim said.

“Apple failed to show that its technology was a top reason for consumers selecting Samsung’s smartphones. Other documents that Apple submitted were inadequate because they were based on anecdotal beliefs or were directed to software developers rather than consumer demand.”

Had Apple been able to convince the court of Samsung’s wrongdoing, it would have had a distinct advantage.

“Both companies are cash rich and market share is more crucial. Had the appeals court ruled with Apple, Samsung would have been forced to redesign its products,” Lim explained. “That would have bought Apple valuable lead-time before its trial in 2014.”

As it stands now, Samsung’s products can remain on store shelves for the years it would take from trial to appeal.

“This development could also significantly affect the amount of damages Apple will ultimately get—if it wins,” the professor believes. More significantly, “the court’s causal nexus test puts Samsung and others like it in a much stronger position.”

“Preliminary injunctions have traditionally required a clear showing of irreparable harm. With smartphones and other devices covered by a multitude of components, patent owners like Apple must now do more than connect the dots between the asserted injury and the infringing conduct,” Lim said.

“They must show that consumers chose to buy the defendant’s products specifically because they contained the patented technology,” he added. “Showing that the device would be less valued or even inoperable without the technology is not good enough. This is a difficult burden to overcome and can be decisive in many cases.”

The professor sees the appeals court’s recent decisions as a significant shift in its stance from routinely granting injunctions to awarding damages to patent holders for infringement of products with multiple components.

“The decision indicates the court’s awareness of the mischief that may result if patent owners can easily get bans on smartphones, tablets and similar products which are typically covered by hundreds of thousands of patents owned by many different parties,” Lim said.

Looking ahead, patent owners in high tech markets “would do well to support their claims with more rigorous economic analysis. At the same time, dominant tech companies need to be careful not to overplay the importance of their technology. Otherwise, they may find themselves accused of denying access to an technology needed by others to compete and open themselves up to the accusations of violating the antitrust laws,” Lim warns.    

Daryl Lim is an intellectual property law professor at The John Marshall Law School in Chicago.

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Marilyn Thomas
The John Marshall Law School
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