Federal Circuit Revives Possibility of Permanent Injunction in Apple-Samsung Patent Dispute
In Apple Inc. v. Samsung Electronics Co., Appeal No. 2014-1802, the Federal Circuit reversed for abuse of discretion the denial of a permanent injunction because the moving party needed only to show “some connection” between infringement and irreparable harm to establish causal nexus.
Samsung was found to infringe Apple patents on iPhone features such as slide-to-unlock, autocorrect, and detecting data structures within text. Apple was awarded $120M in damages and moved to permanently enjoin Samsung from making, using, selling, or importing software capable of implementing the infringing features in its products. The district court denied Apple’s motion, finding Apple had not shown it would suffer irreparable harm. Specifically, the district court found Apple failed to show a causal nexus between Samsung’s infringement and the irreparable harm of Apple’s lost sales. Apple appealed.
Reviewing the district court’s denial for abuse of discretion, the Federal Circuit reversed. While the district court had required proof that the infringing features were the predominant reason why customers bought Samsung’s products, the Federal Circuit majority required only that there be some connection between the infringing features and demand for Samsung’s products. The majority held that such a connection was established by evidence that the infringing features were valued by customers and carriers, were copied by Samsung, and drove sales. Accordingly, the Federal Circuit held the district court abused its discretion when it did not permanently enjoin Samsung from engaging in activities based on the infringing features.
En Banc Federal Circuit Preserves Patent Laches Defense
In SCA Hygiene Products AB v. First Quality Baby Products, Appeal No. 2013-1564, the en banc Federal Circuit held that laches remains a defense in patent suits and can bar equitable relief as well as pre-suit damages. But, absent extraordinary circumstances, laches does not preclude an ongoing royalty.
In 2003, SCA sent First Quality a letter alleging patent infringement. First Quality responded by citing prior art and arguing that the patent was invalid. Communications between the parties ceased and First Quality invested heavily in its business. Nearly seven years after sending the letter, SCA sued First Quality alleging infringement of the patent addressed in the letter. First Quality moved for summary judgment of laches and equitable estoppel, which were granted by the district court. SCA appealed, and a Federal Circuit panel affirmed the finding of laches but reversed as to equitable estoppel. SCA petitioned for en banc review in light of the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), which held that laches was not a defense to legal relief in copyright law.
The Federal Circuit, sitting en banc, affirmed that laches remains an available defense in patent law. All eleven members of the Federal Circuit agreed that laches can bar equitable relief. But laches may only bar equitable relief of an ongoing royalty in “extraordinary circumstances.” In a 6-5 split, the majority held that laches can also bar recovery of pre-suit damages. The Federal Circuit held that 35 U.S.C. § 286 of the Patent Act is a “damages-barring time provision” rather than a statute of limitations like § 507(b) of the Copyright Act addressed in Petrella.
Change in Claim Scope after Reexamination Bars Patent Damages
In R+L Carriers, Inc. v. Qualcomm, Inc., Appeal No. 2014-1718, the Federal Circuit affirmed a district court’s finding that claims amended during reexamination were not substantively identical to the original claims, and the resulting dismissal.
R+L sued Qualcomm alleging infringement of a patent relating to freight consolidation. Claim 1, the sole independent claim, recites “a method for transferring shipping documentation data for a package from a transporting vehicle to a remote processing center.” While the suit was pending, R+L filed for ex parte reexamination of its asserted patent. During the reexamination, R+L amended claim 1 to change a limitation of preparing “a loading manifest” to preparing “an advance loading manifest document for another transporting vehicle.” The PTO allowed claim 1 and issued the reexamination certificate, explaining that the key prior-art reference only discussed a loading “manifest for the current shipping vehicle and not an advance loading manifest document for another transporting vehicle.”
Under 35 U.S.C. § 252, R+L could only recover damages for Qualcomm’s acts before amended claim 1 issued if amended claim 1 is “substantially identical” to original claim 1. Qualcomm had stopped its allegedly infringing activities before the reexamination certificate issued, so those were the only accused acts. The district court held that the amendment substantively narrowed the claim, finding that, while the original claim 1 covered both manually and computer-prepared loading manifests, amended claim 1 encompassed only the preparation of computer-generated loading manifests. Thus, R+L was precluded from recovery of damages and its case was dismissed. R+L appealed.
The Federal Circuit affirmed on different grounds. The Federal Circuit held that amended claim 1 was still broad enough to cover both computer-generated and manual loading manifests. But the Federal Circuit noted that the PTO based the reasons for allowance on the amendments made during the reexamination, and that the “examiner’s commentary reveals a method that would be covered by original claim 1 but not amended claim 1.” The Federal Circuit further explained that “it is irrelevant why an amended claim is narrowed during reexamination, or even whether the patentee intended to narrow the claim in a particular way.” Accordingly, the Federal Circuit affirmed the district court’s holding that the amended claims were not “substantially identical” to the claims, and the resulting dismissal.
