By Dan Levine
It isn't hard to read Thursday's ruling by the Federal U.S.
Circuit Court of Appeals as an important victory for Samsung in
its continuing smartphone war with Apple. After all, the appeals
court in Washington didn't just reverse U.S. District Judge Lucy
Koh's pretrial injunction against Samsung's Galaxy Nexus phone,
an aging model that runs on Google's Android operating system.
It also substantially raised the bar for injunctions based on
minor features in complex devices, which IP experts think will
make it much harder for Apple to secure a permanent injunction
against the separate batch of phones it took to trial in August,
much less extend any sales ban to Samsung's high-flying Galaxy S
III, the most direct market threat to the iPhone.
But Samsung wasn't the only party succored by the ruling.
Without saying so directly, the court's reasoning clearly
bolsters Judge Richard Posner's view of the smartphone patent
wars -- a stance that hasn't been altogether helpful for Apple.
Posner is the outspoken 7th U.S. Court of Appeals judge who
volunteered to oversee Apple's battle against Google's Motorola
Mobility unit in a Chicago trial court. In January, soon after
he landed the case, Posner expressed extreme skepticism over
Apple's argument that it should be entitled to windfall damages
based on a patent that covers "little gimmicks" that aren't core
functions of the phones. If the Federal Circuit disagrees,
Posner said at a hearing, "they can reverse me if they want."
The judge was as good as his word. Five months later, he
threw out both Apple's and Motorola's claims against each other
just days before trial, ruling that neither side could prove
damages. In denying Apple's request for an injunction, Posner
wrote, "an injunction could force Motorola to remove lucrative
products from the market for as long as it took to remove the
infringing features -- minor features in complex devices most
features of which are not alleged to infringe."
Meanwhile, that same month in San Jose, California, Koh
granted Apple's request for an injunction against the Nexus
phone based on Apple's patent for unified search capability.
This patent, Koh said, lets a user quickly retrieve different
types of information located on any of a computer's storage
media, like a hard drive and the Internet, using a single,
unified search interface.
In her 101-page ruling, Koh cited consumer surveys and
industry praise as evidence of consumer demand for this
capability, which underlies Apple's Siri voice feature. That
"circumstantial" evidence, Koh wrote, buttresses Apple's case of
a causal link between the patented feature and market demand
necessary to grant a pretrial injunction against the Nexus.
This was a marked difference from Posner, who lambasted
customer survey evidence in the Motorola case. Koh acknowledged
that direct evidence of Nexus customers' feature preferences
"would certainly be even more compelling," but nonetheless said
Apple's survey evidence of its own customers is still relevant.
She also cited Google documents saying "search is a core user
feature on Android."
Fast forward to the Federal Circuit's opinion on Thursday,
which acknowledged it hadn't given Koh much previous guidance on
the proper standard for causality. Still, Federal Circuit Judge
Sharon Prost wrote that Koh abused her discretion in granting
the injunction, calling Apple's evidence of a causal link
"At best, the district court's findings indicate that some
consumers who buy the iPhone 4S like Siri because, among other
things, its search results are comprehensive," Prost wrote.
"That does not sufficiently suggest, however, that consumers
would buy the Galaxy Nexus because of its improved
comprehensiveness in search."
Prost then got to the nub.
"More specifically, that an application may sell in part
because it incorporates a feature does not necessarily mean that
the feature would drive sales if sold by itself," she wrote. "To
the contrary, here, the only pertinent evidence -- Apple's own
survey evidence -- shows that unified search is not one of the
top five reasons consumers select Android smartphones. In this
light, the causal link between the alleged infringement and
consumer demand for the Galaxy Nexus is too tenuous to support a
finding of irreparable harm."
This standard -- that a feature must be one of the top five
drivers of demand -- is sure to be embraced by skeptics of
software patents (including Google) who say complex devices with
thousands of functions should not be banned over minor patented
features. In an interview with us in July, Posner himself echoed
those points and questioned whether patents should cover
software at all.
As for Apple, the Federal Circuit's new injunction standard
is a "palpable blow" to the company's smartphone legal strategy,
said Nick Rodelli, a lawyer and adviser to institutional
investors for CFRA Research in Maryland. While the ruling isn't
controlling in the International Trade Commission -- and Apple
could seek en banc review -- it makes it much harder for Apple
to gain critical leverage and make Samsung contemplate a ban on
its hottest selling devices.
"When you weigh the relative importance between this
decision and that ($1.05 billion) jury verdict, I think there is
a case to be made that in the fullness of time, it is more
important," said Rodelli, who had previously been bullish about
Apple's litigation strategy.
An Apple representative did not respond to a request for
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