No one sweated the small details of consumer electronics design more than Steve Jobs. Today’s ruling by the United States Court of Appeals for the Federal Circuit, in a patent dispute between Apple and Samsung, must have him throwing quite a fit, wherever he is.
Apple accused Samsung’s smart phones of infringing patents (pictured) covering the iconic ornamental appearance of the iPhone, as well as a patent covering its handy touchscreen display “bounce back” feature. Apple sought a preliminary injunction against Samsung’s importation and sale of its competing phones. A federal district court in California denied that request, and this appeal followed.
To get a preliminary injunction, Apple needed to show that it would be “irreparably harmed” by Samsung’s infringement during the potentially lengthy pendency of litigation—that is, harmed in ways that could not be remedied by money damages later. Apple made two arguments. First, it argued that Samsung’s sales eroded Apple’s design and brand distinctiveness, resulting in a loss of goodwill. Second, it argued that Samsung’s sales took sales away from Apple and resulted in Apple’s losing market share. Apple argued that those kinds of losses would be difficult to quantify and that monetary damages thus would not be adequate to compensate it for the injuries caused by Samsung’s infringement. Indeed, the lower court
noted that Apple and Samsung were directly competing “for new consumers [who] are looking to make first-time smartphone purchases [and] thus the potential for harm from infringing conduct is strong.” The court added that the initial decision regarding which product to buy can have long-term effects on items such as down-stream purchases. [These include not only sales of later versions of the smartphones, but also products and accessories associated with the devices, such as digital media and software applications.] The court also observed that there may be “network compatibility” effects that stem from a particular purchasing decision: a purchaser of one phone system may be reluctant to switch to a competing phone for fear of incompatibility with previous digital purchases. The court concluded that the economic effect of such losses of customers and future downstream purchases would be difficult to calculate and could support a finding of irreparable harm.
Nonetheless, the Court of Appeals upheld the denial of the preliminary injunction, finding no basis to overturn the lower court’s finding that design features were not a substantial determinative factor in consumer decisionmaking on smartphones. (One must wonder whether the judges have seen Samsung’s ads dissing the cult of the iPhone.) Oddly, the court came to a different conclusion with respect to companion claims that Samsung was infringing a patent covering the iPad tablet design, finding that “design mattered more to customers in making tablet purchases.”