Party Seeking Preliminary Injunction Must Demonstrate a Nexus Between the Patented Feature and the Consumers’ Decision to Purchase Its Product

In an opinion that provides evidentiary guidance for parties seeking preliminary injunctive relief in patent infringement cases, the U.S. Court of Appeals for the Federal Circuit upheld a district court’s denial of Apple’s request for a preliminary injunction against Samsung smartphones based on a failure to establish a nexus between the claim and feature(s) that drive sales of the accused product.  Apple, Inc. v. Samsung Elec. Co., Ltd., Case No. 11-1846 (Fed. Cir., May 14, 2012) (Bryson, J.) (O’Malley, J., dissenting).

Apple sued Samsung for patent infringement, alleging that certain Samsung smartphones and tablets infringed the claims of several Apple design and utility patents.  Apple sought a preliminary injunction to prevent the sale of smartphones and tablets manufactured and sold by Samsung, arguably one of Apple’s most significant competitors in the industry.  After a preliminary injunction hearing, the district court denied the request for injunctive relief, finding that Apple failed to prove that it would suffer irreparable harm without an injunction.  Apple appealed.

The Federal Circuit upheld the district court.  Focusing on the “irreparable harm” factor of the traditional, four-factor injunctive relief analysis, the Federal Circuit explained that “[t]o show irreparable harm, it is necessary to show that the infringement caused harm in the first place.”  The patentee must therefore demonstrate that the patented feature actually drives consumer demand for the product.  That is, there must be a “nexus between the patent and market harm.”

The Federal Circuit noted that Apple failed to submit evidence of lost sales of its products and, further, that Apple failed to make a “clear showing” of a substantial loss in market share.  The Court distinguished i4i v. Microsoft, a case in which an injunction was granted even though consumers were not buying Microsoft’s product for the infringing feature.  In that case, i4i’s XML editor product was sold as an add-on product to Microsoft Word and therefore the injunction was necessary because Microsoft’s infringement “would have completely eradicated the market for [i4i’s] add-on [product].”  In this case, Samsung’s infringing features were not shown to “threaten to have any such dramatic effects on the [smartphone] market generally or on Apple’s share of the market.”

The Federal Circuit agreed with the district court that Apple was likely to succeed on the merits with respect to allegations of infringement for several of its asserted patents.  However, the Court also concluded that the district court’s anticipation and obviousness analysis was flawed with respect to several of the other patents-in-suit.  In any event, the denial of the requested injunction was premised on Apple’s failure to prove that it would suffer irreparable harm driven by the implementation of the infringing features in the accused products.

Practice Note:  Parties seeking preliminary injunctive relief must be prepared to demonstrate evidence of irreparable harm by showing that the allegedly infringing features of the accused product(s) drive the demand for their sale; parties who seek injunctive relief must demonstrate a nexus between the patent claims in issue and market harm.