Apple’s longstanding spat with Samsung has finally reached a conclusion. On Wednesday, Judge Lucy Koh of the District Court for the Northern District of California entered a preliminary injunction barring the sale of the Samsung Galaxy Tab 10.1 in the United States. The case has been percolating for some time, and is part of a broader strategy of litigation in which Apple accuses Samsung of “slavishly” copying its iOS devices and infringing on its design patents. The injunction can go into effect as soon as Apple posts a $2.6 million bond against possible damages in case Samsung’s tablet is eventually found not to infringe; with well over $100 billion in the bank, few expect Apple to have any difficulty coming up with the bond.
Contrary to most accounts in the press right now, the injunction itself probably doesn’t represent much of a problem for Samsung’s tablet sales — although, of course, the company has already filed an appeal to get it set aside. However, the potential fallout from Judge Koh’s ruling may be worrying the South Korean electronics giant… and those problems won’t go away when the Galaxy Tab 10.1 disappears from the marketplace, whether through court orders or obsolescence.
What the judge said
Judge Koh’s decision to grant Apple a preliminary injunction is actually the court’s second go-around on this issue. Apple sued Samsung over the design of its Galaxy tablets and smartphones back in April 2011; the original suit alleged Samsung infringed on both technical and design patents owned by Apple. (Samsung countersued, but then dropped the countersuit, saying it would just address its case by refuting Apple’s claims.) Judge Koh’s court had previously found the Samsung Galaxy Tab to be substantially similar to both the original iPad and the iPad 2, at least to the “eyes of an ordinary observer.” Claims of design patent infringement usually come down to an ordinary observer test — basically, whether someone familiar with previous products would assume two products are the same. Judge Koh rather famously asked Samsung’s own counsel to distinguish between an iPad and their client’s own Galaxy Tab 10.1 from a moderate distance. Guess what? Samsung’s lawyers couldn’t tell which was which either.
Nonetheless, Judge Koh originally denied Apple an injunction on Samsung’s tablet on the assumption that Apple’s design patent covering the iPad would eventually be found invalid. In the court’s view, the design was likely too “obvious” to be patentable.
However, Apple appealed Judge Koh’s initial ruling to the Court of Appeals for the Federal Circuit — that court is in Washington D.C., rather than California, but they handle most appeals on patent cases. Somewhat surprisingly, back in May Apple won part of the appeal — specifically, the design patent covering the iPad. The appeals court ruled Judge Koh had erred in finding that Apple’s design patent covering the iPad was likely to be found invalid, and sent the case back for additional review. (The appeals court also ruled that Judge Koh correctly denied preliminary injunctions on Samsung smartphones.)
The appeals court has three judges. Of them, only one (Judge Kathleen O’Malley) recommended that Judge Koh take immediate action on Apple’s request for a preliminary injunction. The other two judges thought the district court should review the case and perform equitable analysis, but allowed that the process could be done quickly. At first, Judge Koh seemed to go along with the majority. Just this past Monday, she scheduled a hearing on the case for this Friday for further briefing and argument from Samsung and Apple.
However, instead of holding that hearing, Judge Koh cancelled it and granted Apple an immediate preliminary injunction on sales of the Galaxy Tab 10.1, saying that it was “unnecessary” to spend more court time on hearing again from the parties. Koh’s decision to grant the injunction seems to side with Judge O’Malley on the appeals court, who argued that public interest favored an immediate injunction.
“Although Samsung has a right to compete, it does not have a right to compete unfairly, by flooding the market with infringing products,” Judge Koh wrote.
The preliminary injunction granted by Judge Koh covers only the Samsung Galaxy Tab 10.1. It does not cover the Galaxy Tab 2, Galaxy Tab 8.9, Galaxy Tab 7.0, Samsung’s “phablet” Galaxy Note, or any of Samsung’s Galaxy smartphones — including the brand-new Galaxy S III.
Samsung’s smartphones aren’t entirely out of the picture, though. Judge Koh is due to rule on Apple’s remaining challenge to the Galaxy Nexus smartphones on technical patents. If Apple wins an injunction there, it could have very broad consequences, since the patents at issue are probably also applicable to a very wide range of Android products.
The District Court for Northern California isn’t the first court to side with Apple against Samsung on the Galaxy Tab 10.1 — in fact, it’s the third. The Düsseldorf Regional Court also granted Apple a permanent injunction against the Galaxy Tab 10.1 in Germany, and Apple also won an injunction against the Galaxy Tab 10.1 in Australia — although that was eventually lifted. The Australian injunction had been based on technical patents; however, the Düsseldorf decision was made on design grounds, albeit not the same precise patent Apple is pressing against Samsung in the United States.
Samsung wasted no time filing an appeal of Judge’s Koh’s entering a preliminary injunction. The company had previously wanted to introduce new evidence into the case, including new claims of prior art and material regarding an iPad 2 prototype. Although some observers looked at those arguments as mainly a delaying tactic, Samsung will now likely also argue that Judge Koh’s decision to grant a preliminary injunction runs against the majority opinion of the appeals court. For Samsung, the appeal is a chance to get that prior art and prototype information into the case — an effort which Judge Koh had previously denied.
In the meantime, Samsung has a more practical way to get around an injunction on the Galaxy Tab 10.1: Just change it. At this point, the product is already nearing the end of it’s life cycle, and Samsung’s more-recent designs (like the Galaxy Tab 2 and the Galaxy S III smartphone) feature trade dress that’s more visually-distinct from Apple’s iPhone. The Apple design patent at issue in the case is relatively restrictive, having to do with the all-black bezel surrounding the iPad’s display.
Samsung can easily design around that. In fact, it already has with both the Galaxy Tab 10.1N and its newer Galaxy Tab 2. Samsung brought out the 10.1N in response to Apple’s design patent injunction victory in Germany — the 10.1N features a silver frame around the tablet and a prominent Samsung logo. Of course, when Samsung introduced the Galaxy Tab 10.1N in Germany, Apple immediately filed for a preliminary injunction to block its sale, just like the original Galaxy Tab 10.1. But the Düsseldorf Regional Court already ruled that the 10.1N is sufficiently distinct from Apple’s products that it doesn’t violate Apple’s designs or seek to compete unfairly against Apple due to similar appearance. Samsung already has the Galaxy Tab 10.1N and could bring it to the United States. Apple would probably challenge the 10.1N as well, but by the time that challenge wound its way through the courts, Samsung would more than likely have retired the product line anyway.
The perils of design patents
The most likely upshot of Judge Koh’s ruling is that Samsung Galaxy Tab 10.1 tablets will disappear from retailers, to be replaced by another 10-inch Samsung tablet. Samsung could decide to the retire the product and focus on the Galaxy Tab II and launching whatever future Galaxy Tab products it has up its sleeves. Or Samsung could decide to bring the Galaxy Tab 10.1N to the United States market. Samsung could do both: perhaps offering the Galaxy Tab 10.1N as a competitor to things like the brand-new Google Nexus 7 and the iPad 2, while keeping its next-generation products focused on things like the iPad 3 and the upcoming Microsoft Surface products. In any case, Samsung is going to continue selling 10-inch tablets in the United States.
However, Samsung could find itself on a hook down the road. If Apple’s patent covering the iPad design holds up — and, right now, that’s looking promising for Apple — Samsung could eventually be found liable for design patent infringement. At that point, it won’t matter how long the Galaxy Tab 10.1 has been off the market. Every penny Samsung ever earned on sales of the Galaxy Tab 10.1 in the United States will be targeted by Apple. The companies will absolutely squabble over any damage award, but infringing on design patents can be hugely expensive — especially copying the design of a market-defining product like the iPad.
Furthermore, if Samsung is found to have infringed Apple’s design patent, Apple will win a tremendous public relations victory. It will always be able to say “We innovated the tablet market; Samsung slavishly copied us.” It’s a black mark that would stick with Samsung’s products for years — and one that Apple and its legions of loyal customers are not likely to let slip quietly into history.
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