Apple Inc. v. Samsung Elecs. Co., Ltd.

• Decision Date: 16 December 2015
• Docket Number: No. 2014–1802.,2014–1802.
• Citation: 809 F.3d 633
• Parties: APPLE INC., A California Corporation, Plaintiff–Appellant v. SAMSUNG ELECTRONICS CO., LTD., A Korean Corporation, Samsung Electronics America, Inc., A New York Corporation, Samsung Telecommunications America, LLC, A Delaware Limited Liability Company, Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

809 F.3d 633

APPLE INC., A California Corporation, Plaintiff–Appellant

v.SAMSUNG ELECTRONICS CO., LTD., A Korean Corporation, Samsung Electronics America, Inc., A New York Corporation, Samsung Telecommunications America, LLC, A Delaware Limited Liability Company, Defendants–Appellees.

No. 2014–1802.

United States Court of Appeals, Federal Circuit.

Dec. 16, 2015.

William F. Lee, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, argued for plaintiff-appellant. Also represented by Sarah R. Frazier, Lauren B. Fletcher, Richard Wells O'Neill, Mark Christopher Fleming, Andrew J. Danford ; James Quarles, III, Thomas Gregory Sprankling, Washington, DC; Mark D. Selwyn, Palo Alto, CA; Rachel Krevans, Christopher Robinson, Nathaniel Bryan Sabri, Morrison & Foerster, LLP, San Francisco, CA; Erik Jeffrey Olson, Palo Alto, CA.

Kathleen M. Sullivan, Quinn Emanuel Urquhart & Sullivan, LLP, New York, N.Y., argued for defendant-appellees. Also represented by William Adams; Brian Cosmo Cannon, Victoria Fishman Maroulis, Kevin P.B. Johnson, Redwood Shores, CA; Scott L. Watson, Michael Thomas Zeller, John B. Quinn, Los Angeles, CA; Kevin Alexander Smith, San Francisco, CA.

Mike McKool, McKool Smith, P.C., Dallas TX, for amicus curiae Ericsson Inc. Also represented by Theodore Stevenson, III ; John Bruce Campbell, Joel Lance Thollander, Austin, TX.

John D. Haynes, Alston & Bird LLP, Atlanta, GA, for amici curiae Nokia Corporation, Nokia USA, Inc. Also represented by Patrick J. Flinn; Ryan W. Koppelman, East Palo, CA.

Matthew Schruers, Computer & Communications Industry Association, Washington, DC, for amicus curiae Computer & Communications Industry Association.

Joseph Carl Cecere, Jr., Cecere PC, Dallas, TX, for amicus curiae The National Black Chamber of Commerce.

Kevin McGann, White & Case LLP, New York, N.Y., for amici curiae Google Inc., HTC Corporation, HTC America, Inc., LG Electronics, Inc., Rackspace Hosting, Inc., Red Hat, Inc., SAP America, Inc., Lenovo, Inc., eBay, Inc., ASUSTeK Computer Inc., Facebook, Inc., Newegg Inc. Also represented by Christopher J. Glancy ; Warren S. Heit, Palo Alto, CA.

Kimberly N. Brown, Chevy Chase, MD, for amici curiae Michael J. Santorelli and Charles M. Davidson.

Charles Duan, Public Knowledge, Washington, D.C., for amici curiae Public Knowledge and Electronic Frontier Foundation.

Before PROST, Chief Judge, MOORE, and REYNA, Circuit Judges.

Opinion for the court filed by Circuit Judge MOORE, in which Circuit Judge REYNA joins.

Concurring opinion filed by Circuit Judge REYNA.

Dissenting opinion filed by Chief Judge PROST.

MOORE, Circuit Judge.

Apple Inc. appeals from an order of the district court denying Apple's request for a permanent injunction against Samsung Electronics Company, Ltd.; Samsung Electronics America, Inc.; and Samsung Telecommunications America, LLC (collectively, "Samsung"). We vacate and remand for further proceedings.

BACKGROUND

In 2007, Apple introduced the iPhone, revolutionizing the cell phone market. To develop the iPhone, Apple invested billions of dollars over several years—investment that came with significant risk. J.A. 10424–26, 10585–98. Indeed, Apple executives referred to the iPhone as a "you bet your company" product because of the uncertainty associated with launching an untested product line in a new market. J.A. 10425–26, 10451–52.

To protect the inventions developed as a result of this investment, Apple applied for and received patents covering much of the innovative technology incorporated into the iPhone. Apple's patents are numerous and include U.S. Patent Nos. 5,946,647 ; 8,046,721 ; and 8,074,172, the patents at issue in this appeal. Claim 8 of the '721 patent claims a touchscreen device that unlocks when the user makes contact with an "unlock image" and moves that image to a second, predefined location. '721 patent col. 19 l. 51–col. 20 l. 12. Although seemingly straightforward, Apple considered this feature so core to the Apple iPhone user experience that it opened the first iPhone ad with imagery illustrating the operation of this "slide to unlock" feature. J.A. 10433–34, 21014. Claim 9 of the '647 patent claims a system that detects "data structures" within text and generates links to specific actions that can be performed for each type of detected structure—for example, detecting a phone number in a text message and creating a link that would allow the user to dial the phone number or 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 for automatically correcting spelling errors on touchscreen devices. '172 patent col. 12 l. 49–col. 13 l. 4.

The iPhone was undisputedly successful. After its release, reviewers praised a number of features on the iPhone, including its multitouch screen, software, ease of use, and overall user experience. Trial Transcript Day 2 at 436–40, Apple, Inc. v. Samsung Elecs. Co., No. 12–CV–00630–LHK (N.D. Cal. 2014) (No. 1622). Other companies followed. Samsung, in particular, developed competing smartphones. Internal Samsung documents show that Samsung "paid close attention to, and tried to incorporate" some of Apple's patented technology, which was "indicative of copying by Samsung." Apple, Inc. v. Samsung Elecs. Co., No. 12–CV–00630–LHK, 2014 WL 7496140, at *14 (N.D.Cal. Aug. 27, 2014) ("Injunction Order "). Today, Apple and Samsung are fierce competitors in the smartphone and tablet market. Id. at *8.

The instant appeal springs from a suit filed by Apple against Samsung in February 2012 alleging infringement of five patents directed to smartphone and tablet interfaces, including the '721 patent, the '647 patent, and the ' 172 patent. The district court held on summary judgment that Samsung infringed the '172 patent. The case proceeded to trial, and a jury found that nine Samsung products infringed one or both of Apple's '647 and '721 patents. The jury awarded Apple a total of $119,625,000 for Samsung's infringement of the three patents.

Following the verdict, Apple filed a motion seeking a permanent injunction that would bar Samsung from, inter alia, making, using, selling, developing, advertising, or importing into the United States software or code capable of implementing the infringing features in its products. That is, Apple did not seek to enjoin Samsung's infringing smartphones and tablets, but only the infringing features. Moreover, Apple's proposed injunction included a 30–day "sunset period" that would stay enforcement of the injunction until 30 days after it was entered by the district court, during which Samsung could design around the infringing features. This "sunset period" coincided with Samsung's representations at trial that it could remove the infringing features from its products quickly and easily. 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 irreparable harm without an injunction. Id. at *23. Predicated entirely on this finding, the district court reasoned that Apple could not establish that monetary damages were inadequate. Id. at *19. Although the district court found that the public interest favored Apple's request and that the narrowness of Apple's proposed injunction tilted the balance of hardships in Apple's favor, it determined that these factors did not overcome Apple's lack of irreparable harm. Id. at *23. Apple appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

The Patent Act provides a patentee with the "right to exclude others from making, using, offering for sale, or selling the [patented] invention." 35 U.S.C. § 154(a)(1). This right has its roots in the U.S. Constitution's Intellectual Property Clause, which refers to inventors' "exclusive Right to their respective ... Discoveries." U.S. Const. art. I, § 8, cl. 8. In furtherance of this right to exclude, district courts "may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." 35 U.S.C. § 283. "[N]ot surprising[ly], given the difficulty of protecting a right to exclude through monetary remedies that allow an infringer to use an invention against the patentee's wishes," historically courts have "granted injunctive relief upon a finding of infringement in the vast majority of patent cases." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 395, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) (Roberts, C.J., concurring) (emphasis in original).

A party seeking a permanent injunction must demonstrate:

(1) that it has suffered an irreparable injury;

(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Id. at 391, 126 S.Ct. 1837 (majority opinion). The decision to award or deny permanent injunctive relief lies within the equitable discretion of the district court; these traditional equitable principles do not permit the adoption of "certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases." Id. at 391, 393, 126 S.Ct. 1837. The district court's decision is reviewable for abuse of discretion. Id. at 391, 126 S.Ct. 1837. A court abuses its discretion when it "ma[kes] a clear error of judgment in weighing relevant factors 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 eBay factor for abuse of discretion and its underlying factual 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...