Causal nexus required to show irreparable injury for an injunction
In Apple v. Samsung (Fed. Cir. Nov. 18, 2013), the Federal Circuit upheld most of the lower court’s decision that Apple failed to show that they would be irreparably harmed if Samsung is allowed to continue selling its cell phones. In particular, Apple failed to show a causal nexus between Samsung’s infringement of its patent and the irreparable harm alleged by Apple. Apple failed to show that the patented features drove consumer demand. One example of these patented features lacking a nexus to consumer demand is the bounce-back at the end of a screen. Since Apple was unable to show that these features drove consumer demand, the Federal Circuit held that there was no causal nexus. For a few of the more important patented features, Samsung was able to sell those phones at a price premium. The Federal Circuit remanded the case to the lower court to determine whether Apple could show that those features drove consumer demand based on the price premium. These issues are discussed extensively here. <Injunctions are harder to get than ever>
This case also covers the basics of the irreparable injury prong which I will cover below.
To show irreparable injury for either a permanent injunction or permanent injunction, the patent owner must show a causal nexus between the infringing activity and the irreparable injury alleged by the patent owner. The purpose of the causal nexus requirement is to determine whether the patent owner’s allegations of irreparable harm is pertinent to the injunctive relief analysis, or whether the patent owner seeks to leverage its patent for competitive gains beyond that which the inventive contribution and value of the patent warrant.
In Apple v. Samsung (Fed. Cir. 2013), the Federal Circuit recites its prior opinion in that:
To show irreparable harm, it is necessary to show that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.
Apple contended that no causal nexus is required for a permanent injunction and even if a show of causal nexus is required that they have shown that the causal nexus exist in this case.
Apple argued that the causal nexus requirement is not required under prior cases. The Federal Circuit disagreed and indicated that those cases did not raise the issue of whether a causal nexus existed or not. Rather, they were directed to simple products (e.g., windshield wiper blades in Bosch, orthopedic nails used to treat fractures of the upper arm bone in Acumed, and broadband capacitors used in electrical systems in Presidio) for which the impact of infringement was never in doubt. The Federal Circuit emphasized that the causal nexus requirement doesn’t depend on whether the product is simple or complex but did admit that the causal nexus requirement would be easier to prove for simpler products.
The Federal Circuit next identified two acceptable types of irreparable injury: (1) irreparable “erosion in reputation and brand distinction” (Douglas Dynamics case) and (2) competition based on “design wins” for incorporation into a line of products (Broadcom case), not competition that is instantaneous and on-going on a unit by unit basis (instant case).
The Federal Circuit also clarified that the standard used by the lower court to prove up causal nexus was too high. The lower court’s standard required the patent owner to show that the patented feature was the sole reason consumers purchased the infringing product. The Federal Circuit clarified that Apple need only show some connection between the patented feature and the customer demand for the infringing product. For example, does the patented feature cause consumers to make their purchasing decision? Does the patented feature make the product significantly more desireable? Does the absence of the patented feature make the product significantly less desireable?
Apple also attempted to show that its patents in the aggregate drove consumer demand for its product. While the courts normally conduct the analysis on a patent-by-patent basis in determining the causal nexus requirement, the Federal Circuit made clear that the patent owner may present evidence showing that several patents aggregated together establish a causal nexus for consumers to purchase the product. For example, when the patents relate to the same technology or where the patented features are combined to make a product significantly more valuable. This type of evidence can be used to show a causal nexus. To show irreparable harm based on a family of patents, the Federal Circuit wants to know whether the patented technologies as a whole drives demand for the infringing product.
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