Last week, U.S District Court Judge Lucy Koh granted Apple's motion for a preliminary injunction against the Samsung Galaxy Tab 10.1 based on Apple's D'889 design patent.
“Although Samsung has a right to compete, it does not have a right to compete unfairly by flooding the market with infringing products,” Koh explained in her order. “While Samsung will certainly suffer lost sales from the issuance of an injunction, the hardship to Apple of having to directly compete with Samsung’s infringing products outweighs Samsung’s harm in light of the previous findings by the Court.”
The injunction went into effect immediately after Apple posted a $2.6 million bond last Wednesday and Samsung, as expected, was quick to appeal.
Yesterday, Koh ruled against Samsung's motion to stay the order and the preliminary injunction remains intact. Interestingly enough, Samsung's boastfulness may have played a small role in Koh's order.
In determining whether or not to grant a stay of an injunction, a court takes into account four factors that aren't obligated to weigh evenly.
1) Can the moving party (in this case Samsung) show that they're likely to succeed on the merits
2) Can the moving party demonstrate that they'll suffer irreparable harm if a stay isn't granted
3) Will the issuance of a stay significantly injure third party interests in the proceeding
4) Where does the public interest lie
After looking at all of the pertinent factors, the Court was unpersuaded by all of Samsung's positions, but one of Samsung's arguments in particular is worth taking a closer look at - the issue regarding irreparable harm.
Now for Apple to have been granted a preliminary injunction in the first place, they had to prove that they would suffer irreparable harm absent a preliminary injunction.
To this end, Samsung argues that the dynamics of the tablet industry have changed to such an extent that Apple, as it stands today, will not suffer irreparable harm as a result of Galaxy Tab 10.1 sales.
The order states in part:
Specifically, Samsung argues that the tablet market is no longer a two-player market and Samsung’s market share is much lower now than it was when the briefing was completed on the original motion...
In a tablet market where Samsung and Apple are the only major players, it's obviously easier for Apple to make a strong case for irreparable harm. After all, in a market where a consumer can only choose between an iPad and a Samsung offering, each lost iPad sale is in effect a gained sale for Samsung.
But the tablet market today is an ever changing beast. The Kindle Fire now has its own niche in the marketplace, and with the Google Nexus 7 set for release in just a few weeks, there is merit to the assertion that the tablet market is no longer a two person race.
Still, the Court wasn't convinced, pointing out that a two-player market isn't the only scenario in which a company can suffer irreparable harm.
Although the tablet market is no longer a two-player market, and Samsung’s market share has decreased, this fact alone does not necessarily obviate the Court’s original finding of irreparable harm. As the Federal Circuit has explained, “[w]hile the existence of a two-player market may well serve as a substantial ground for granting an injunction – e.g., because it creates an inference that an infringing sale amounts to a lost sale for the patentee – the converse is not automatically true.”
The entrance of additional market participants does not necessarily mean that there is no likelihood of irreparable harm.
The court then lays out a number of reasons explaining why their original finding of irreparable harm for Apple remains valid.
(1) Apple and Samsung continue to be direct competitors in the tablet market, (2) design matters more to customers in making tablet purchases, indeed design is an important driver in the demand for tablet sales, (3) Apple had claimed all views of the patented device, and (4) Apple was prompt in asserting its patent rights.
Again, one of the factors for the Court to consider is whether or not Samsung itself will suffer irreparable harm should an injunction be put into effect. To this effect, Samsung loosely argues that an injunction will harm its business relationships - an argument the Court wasn't buying.
Almost comically, the Court cites public statements made by Samsung in the wake of the preliminary injunction wherein Samsung spokespeople flat out deny that Samsung will be seriously affected by the injunction.
So in public Samsung is boasts that the injunction is no big deal, yet they sing a completely different tune in Court.
For example, a Samsung spokesman last Wednesday said that the injunction will not have a "significant impact on our business operations", while also pointing out that the company has other Galaxy Tab tablets to sell.
And on Thursday of last week, a Samsung spokesperson explained:
"Our view is that in the US this will not deal a big blow to sales of tablet PC's, since the successor model to the Galaxy Tab 10.1 is already on the market.
In light of these statements from Samsung, Koh found Samsung's argument that they'd suffer irreparable harm rather weak.