Bloomberg News

Apple Says Appeals Court Hobbles Its Fight With Samsung

January 18, 2013

Apple Says U.S. Appeals Court Hobbles Patent Fight With Samsung

Two Samsung Electronics Co. smartphones are arranged for a photograph next to the Apple Inc. logo. The companies, which together make about half of the smartphones sold worldwide, are fighting over patents as part of a global battle for market share. Photographer: SeongJoon Cho/Bloomberg

Apple Inc. (AAPL:US) says a U.S. appeals court hobbled its efforts to protect patented designs and features against copying by Samsung Electronics Co., its biggest competitor for smartphones and tablet computers.

The iPhone maker has asked the full complement of judges at the U.S. Court of Appeals for the Federal Circuit to review, at the same time, two appeals seeking to block sales of Samsung products that Apple says violate its patents. Panels of three judges typically hear appeals first, with the entire court sometimes stepping in when broad legal issues must be settled.

“The two cases would present an ideal vehicle for eliminating the uncertainty regarding when a patentee can prevent a competitor from trespassing on its patented innovations,” Apple told the court in a filing Jan. 16.

Apple, which claims that Samsung “slavishly” copied the iPhone and iPad tablet computer, claims a Federal Circuit ruling is hindering its efforts to get court orders that would force Samsung to change its products or remove certain models from the market. Samsung denies copying Apple’s devices.

The companies, which together make about half of the smartphones sold worldwide, are fighting over patents as part of a global battle for market share.

A three-judge Federal Circuit panel said in October that Samsung could continue selling its newest Galaxy Nexus smartphone while battling patent-infringement claims by Apple. To obtain an order, called an injunction, that would block sales, Apple must show that the patented search feature under dispute drives consumer demand for the product, the panel said.

Blocking Sales

Based on that standard, a trial judge in December rejected Apple’s effort to halt sales of other Samsung products during the continuing legal fight over a $1 billion infringement verdict against Samsung.

Apple had already asked the full Federal Circuit to reconsider the three-judge panel’s October ruling. On Jan. 16, Apple urged the full court, which specializes in patent law, to review the trial judge’s December decision at the same time without first having the case heard by a panel of three judges.

By refusing to halt sales of Samsung products that were at the center of the $1 billion verdict, U.S. District Judge Lucy Koh “made it essentially impossible for a patentee to halt a direct competitor’s deliberate and successful copying of the patentee’s innovative designs and features for use in competing products,” Apple wrote.

“Although individual features in complex products may be generally important, they will almost never drive consumer demand by themselves, at least not provably,” Apple said. “Consumers buy complex technological products for a whole host of reasons, often with no one reason determining the customer’s decision.”

Consumer Demand

In a Jan. 11 filing in the Galaxy Nexus case, Samsung said the appeals court ruling in October, requiring a link between the patented feature and consumer demand, is “an inherent, well-established” part of the legal analysis used to determine whether a patent owner would be harmed if an infringing product stays on the market.

Otherwise, it “would permit patent holders to remove complex products from the marketplace based on a single, minor feature that had not been linked to consumer demand,” Suwon, South Korea-based Samsung said in the filing.

The October ruling over Samsung’s Galaxy Nexus concerned whether to halt sales while a different patent-infringement case is pending. The more recent trial court decision involves the legal standard that should be applied after a jury has issued an infringement finding.

Jury Verdict

Apple argued that, even if the Federal Circuit requires a link to consumer demand during pre-trial proceedings, that standard shouldn’t apply once a jury or judge finds that the patent is infringed. Patents grant owners the right to exclude others from using their inventions.

“Although the jury awarded Apple a significant damages verdict, the district court correctly found that Samsung’s deliberate and wide-ranging infringement had harmed Apple’s standing in the marketplace in ways that money cannot repair,” Apple said. “The denial of a permanent injunction allows Samsung to continue its attempts to attract Apple’s customers through deliberate copying, with a damages award being merely a cost of doing business.”

The case is Apple Inc. v. Samsung Electronics Co. (005930), 13-1129, U.S. Court of Appeals for the Federal Circuit (Washington). The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).

The Galaxy Nexus case is Apple Inc. v. Samsung Electronics Co., 12-1507, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Apple Inc. v. Samsung Electronics Co., 12-630, U.S. District Court for the District of California (San Jose).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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