Causal Nexus Required for Permanent Injunction, But Infringement Need Not Be The Sole Cause Of Injury

Fed Cir affirms the denial of a permanent injunction for infringement of design patents and for trade dress dilution but vacates and remands the denial of a permanent injunction for infringement of utility patents. --more-->

Apple, Inc. v. Samsung Elecs. Co. __ F.3d __ (Fed. Cir. Nov. 18, 2013) (PROST, Bryson, O'Malley) (N.D. Cal.: Koh) (4 of 5 stars)

Injunction: On the injunction issue, the Fed Cir considered the four-factor test set out in EBay.
(1) Irreparable Harm: The Fed Cir held that a showing of a causal nexus between the infringement and the alleged harm is required to establish irreparable harm for purposes of obtaining a permanent injunction, explaining that the requirement "reflects general tort principles of causation and applies equally to the preliminary and permanent injunction contexts." Slip op. at 12-13. However, disagreeing that a patentee must show "that a patented feature is the exclusive reason for consumer demand," the Fed Cir ruled that there must at least be "some connection between the patented feature and demand for [infringing] products." Id. at 19 (emphasis in original). Further disagreeing that a patentee must show irreparable harm on a patent-by-patent basis rather than for a group of patents, the Fed Cir ruled that aggregation could be appropriate if the patents "all relate to the same technology or where they combine to make a product significantly more valuable." Id. at 20-21. On the facts of the case, the Fed Cir affirmed the finding of no irreparable harm as to the design patents because (i) "evidence showing the importance of a general feature of the type covered by the patent" and (ii) "isolated, anecdotal statements about single design elements" were not sufficient to establish irreparable harm. Id. at 23. However, with respect to the utility patents, the Fed Cir ruled that the district court abused its discretion by categorically rejecting the patentee's survey evidence as irrelevant. Id. at 26. Thus, the Fed Cir vacated and remanded the issue of irreparable harm for reconsideration under the correct standard.

(2) Inadequacy of Legal Remedies: With respect to the utility patents, the Fed Cir determined that the district court placed undue weight on the defendant's ability to pay a large judgment: "unlike an infringer's inability to pay a judgment, which may demonstrate the inadequacy of damages, a defendant's ability to pay a judgment does not defeat a claim that an award of damages would be an inadequate remedy. Rather, a defendant's ability to pay merely indicates that a court should look to other considerations to determine whether a damages award will adequately compensate the patentee for the harm caused by continuing infringement." Id. at 29 (emphasis in original). The Fed Cir agreed that consideration of a patentee's past licensing behavior is proper, but disagreed with the district court's application of categorical rules "without exploring any relevant differences" between the past licensing and "the current situation." Id. at 30-31.

(3) Balance of hardships: The Fed Cir declined to reweigh the factors considered by the district court on this issue.

(4) Public interest: The Fed Cir ruled that the district court properly considered the scope of the "requested injunction relative to the scope of the patented features effect of depriving the public of access to a large number of non-infringing features." Id. at 36.

Trade Dress Dilution: The district court denied a permanent injunction because the defendant stopped selling the relevant products and would not be resuming such sales. Although "the cessation of diluting activity does not bar entry of an injunction in all cases" the district court could properly "consider[] a defendant's voluntary cessation of diluting behavior as a reason to deny injunctive relief." Id. at 39. Applying Ninth Circuit law, the Fed Cir saw no abuse of discretion.