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Apple Inc. v. Samsung Electronics Co.
Citation: 258 F. Supp. 3d 1013Docket: Case No. 12-CV-00630-LHK
Court: District Court, N.D. California; June 23, 2017; Federal District Court
On May 5, 2014, a jury found Samsung willfully infringed Apple’s U.S. Patent No. 8,046,721 ('721 patent) after a thirteen-day trial. Samsung subsequently filed a motion for judgment as a matter of law on May 23, 2014, which the Court partially granted on September 9, 2014, ruling that Samsung did not willfully infringe the '721 patent according to the legal standard set by In re Seagate Tech. LLC. However, on October 7, 2016, the Federal Circuit upheld the judgment but remanded the willful infringement issue following the Supreme Court’s decision in Halo Electronics, Inc. v. Pulse Electronics, Inc.
In the current proceedings, the Court reviewed the parties' arguments regarding willfulness and enhanced damages. It concluded that substantial evidence supports the jury's finding of willfulness and deemed a moderate award of enhanced damages appropriate.
The '721 patent, issued on October 25, 2011, pertains to a "slide-to-unlock" feature for touchscreens. Specifically, claim 8, which was presented to the jury, is dependent on claim 7 and describes a device that unlocks through a gesture-based interaction involving visual cues for user guidance.
On February 8, 2012, Apple initiated a lawsuit against Samsung for infringing eight patents, including the '647, '959, '172, '760, '502, '414, '604, and '721 patents. The infringing products identified by Apple included various models of smartphones and media players, such as the Galaxy S II series and Galaxy Tab tablets. In conjunction with the lawsuit, Apple sought a preliminary injunction against the Galaxy Nexus smartphone. After Samsung opposed this motion on April 28, 2012, and Apple replied on May 14, a hearing occurred on June 7, 2012. The Court granted the injunction on June 9, 2012, after evaluating Apple’s motion against the four factors established in Winter v. Natural Resources Defense Council: likelihood of success on the merits, likelihood of irreparable harm, balance of equities, and public interest. The Court found that Apple was likely to prove infringement on several specific claims of the asserted patents and would suffer irreparable harm due to Samsung's infringement of the '604 Patent. However, Apple did not demonstrate irreparable harm regarding the '647, '721, or '172 Patents. The balance of equities and public interest favored Apple. Subsequently, on October 11, 2012, the Federal Circuit reversed the preliminary injunction order, ruling that Apple had not shown a likelihood of success or irreparable harm concerning the '604 Patent, despite the initial finding of likelihood of success for the '721 Patent. The injunction was denied for the '721 Patent due to insufficient demonstration of attributable irreparable harm.
Apple demonstrated a likelihood of success on the merits regarding the '721 patent, despite Samsung's invalidity claims. Samsung cited the Plaisant reference, which discussed touchscreen toggle switches but did not fully disclose the claim limitations of the '721 patent, and the NeoNode devices, which had additional claim limitations. However, the Court ruled that Samsung failed to properly admit the NeoNode devices as prior art. Consequently, the Plaisant reference alone was insufficient to prove the '721 patent's obviousness, supporting Apple's position. Nevertheless, Apple's motion for a preliminary injunction was denied due to a lack of evidence showing irreparable harm linked to the '721 patent.
During the trial, Apple provided evidence of Samsung's infringement of claim 8 of the '721 patent, while Samsung countered with claims of invalidity based on the Plaisant reference and NeoNode devices, and argued that the Galaxy Nexus did not infringe the patent. Notably, Samsung did not contest the infringement of its Admire and Stratosphere models. Jury instructions included topics of invalidity, patent infringement, and willful infringement. To establish willful infringement, the jury needed to find that Samsung infringed a valid patent and acted with reckless disregard. Factors for assessing reckless disregard included whether either party adhered to industry standards or intentionally copied the other’s patented product.
On May 5, 2014, a jury found that Samsung failed to prove the invalidity of Apple's '721 patent, that Samsung infringed claim 8 of the patent through specific products (Admire, Stratosphere, Galaxy Nexus), and that the infringement was willful. Samsung subsequently filed a motion for judgment as a matter of law (JMOL) on May 23, 2014, arguing the jury's findings lacked substantial evidence. On September 9, 2014, the court partially granted and denied this motion, affirming the jury's validity finding but ruling that the willful infringement finding could not be upheld due to the reasonableness of Samsung's defenses. A judgment was entered against Samsung on November 25, 2014, awarding Apple $119,625,000, with specific damages attributed to each infringing product. Both parties filed notices of appeal shortly thereafter.
On February 26, 2016, a Federal Circuit panel affirmed in part and reversed in part the previous judgment, concluding that the jury’s validity finding was unsupported. However, on October 7, 2016, the Federal Circuit en banc vacated part of the panel's ruling, affirming that substantial evidence supported the jury's validity finding. The en banc court remanded the willfulness issue for reconsideration under a new standard established by the Supreme Court in Halo Electronics, Inc. v. Pulse Electronics, Inc. Subsequently, in 2017, both Samsung and Apple filed various briefs regarding the willfulness and enhanced damages issues.
Federal Rule of Civil Procedure 50 allows a district court to grant judgment as a matter of law when the evidence supports only one reasonable conclusion that contradicts the jury's verdict. The party seeking such judgment must demonstrate that the jury's verdict lacks "substantial evidence," defined as evidence that a reasonable mind would find adequate to support a conclusion. The court must view the evidence favorably for the nonmoving party and draw all reasonable inferences in that party’s favor.
The discussion addresses the legal framework for willful patent infringement and enhanced damages in light of the Supreme Court's Halo decision. Prior to Halo, the Federal Circuit's Seagate decision established a two-prong test for enhanced damages: an objective prong requiring clear and convincing evidence of "objective recklessness" in infringement, and a subjective prong assessing the infringer's state of mind. The objective prong focuses on whether the infringer acted with an objectively high likelihood of infringement, while an objectively reasonable defense typically undermines a patentee's ability to meet this prong. If the objective prong is satisfied, the patentee must then prove that the risk of infringement was known or obvious to the accused infringer, with the objective inquiry being a court question and the subjective inquiry being a jury question.
The Supreme Court in Halo found the two-step Seagate inquiry too rigid, particularly criticizing its requirement for a finding of objective recklessness before awarding enhanced damages in patent infringement cases. The Court rejected Seagate’s strict requirement that patentees prove the objective unreasonableness of an infringer's defenses, confirming that proof of an objectively reasonable defense is not a defense to willful infringement. However, Halo did not alter the substantive standard for the second prong of Seagate, subjective willfulness, which can independently justify enhanced damages regardless of objective recklessness. The burden of proof for subjective willfulness was lowered to a preponderance of the evidence, aligning with the general standard in patent litigation. Enhanced damages remain at the discretion of district courts, which must consider the particular circumstances of each case and may refer to the nine Read factors, including the infringer's intent, behavior, financial condition, and any remedial actions taken. The court will first assess whether the threshold of subjective willfulness is met before deciding on the exercise of discretion for enhanced damages.
The jury found that Samsung willfully infringed the '721 patent, based on clear and convincing evidence. The jury was instructed to determine subjective willfulness if Apple demonstrated that Samsung acted with reckless disregard for the patent, implying either actual knowledge of infringement or an obvious risk thereof. The jury was also directed to assess Samsung's actions against industry standards and whether Samsung intentionally copied Apple's patented product. In a post-trial motion, Samsung contended that Apple did not prove its infringement was objectively reckless, and argued the jury's subjective willfulness finding lacked substantial evidence. The Court determined that, due to Samsung's invalidity defense, Apple did not meet the objective prong of the Seagate test, and thus did not evaluate the jury's subjective willfulness finding for substantial evidence. Following the Halo decision, which removed the objective prong requirement, the Federal Circuit remanded the case for a review of willfulness under the new standard. The district court is now tasked with assessing the sufficiency of evidence for subjective willfulness, shifting from a clear-and-convincing to a preponderance-of-the-evidence standard. The Court will consider whether substantial evidence supports the jury's finding of subjective willfulness, taking into account Samsung's conduct before and after the lawsuit was filed, with both parties acknowledging that the substantial evidence standard applies to this evaluation.
Samsung cannot be found to have willfully infringed the '721 patent prior to the filing of the current lawsuit because it lacked knowledge of the patent at that time. Both parties agree that Samsung was unaware of the '721 patent before the suit. Legal precedents establish that willful infringement requires knowledge of the patent, which Samsung did not possess. Apple attempts to present four documents as evidence of Samsung's copying of its slide-to-unlock feature, but these documents date from 2010, before the '721 patent was issued on October 25, 2011. Consequently, these exhibits do not demonstrate willful infringement, as Samsung had no knowledge of the patent when the actions reflected in those documents occurred. Therefore, the evidence presented does not support a finding of willful infringement against Samsung prior to the lawsuit.
Samsung contends that its actions following the filing of the lawsuit do not constitute substantial evidence of willful patent infringement for two reasons: first, that post-filing conduct alone cannot establish willfulness, and second, that its actions do not demonstrate willfulness. Apple counters that it is not claiming post-filing conduct is sufficient by itself to prove willful infringement. Instead, Apple argues that Samsung's prior unauthorized copying of the slide-to-unlock feature before the lawsuit and the issuance of the '721 patent renders its subsequent conduct "more culpable," contributing to a finding of willfulness. Apple emphasizes that ongoing infringement during litigation alone does not suffice to demonstrate willfulness; however, in this case, Samsung’s deliberate copying and strategy to leverage Apple's patented innovations, along with its continued infringement of the '721 patent despite available alternatives, supports a claim of willfulness. The Court will first evaluate the legal standing of post-filing conduct as evidence of willful infringement and subsequently assess whether Samsung’s actions in this instance support such a finding.
Post-filing conduct can influence findings of willful infringement under specific circumstances. The Federal Circuit's Seagate decision established that willfulness typically hinges on an infringer's conduct before litigation, asserting that initial claims must be based exclusively on pre-filing actions. However, the court allowed for a patentee to seek a preliminary injunction to address post-filing infringement, suggesting that failure to pursue such a remedy could preclude enhanced damages based solely on post-filing behavior. If a patentee unsuccessfully seeks injunctive relief but demonstrates a likelihood of success, this may not bar enhanced damages, although the specifics of each case will determine the viability of a willfulness claim based on post-filing conduct.
Before the Supreme Court's Halo ruling, many courts interpreted Seagate as establishing a strict requirement for patentee action regarding preliminary injunctions to claim enhanced damages. Nonetheless, post-Halo, the Federal Circuit clarified that there is no rigid obligation for a patentee to seek such an injunction to pursue enhanced damages. Instead, courts are granted discretion to award enhanced damages in "egregious cases typified by willful misconduct," focusing on the subjective belief of the accused infringer at the time of the infringing conduct. The determination of whether the infringing actions, pre- or post-filing, exemplify "egregious misconduct" remains central to the assessment of willful infringement.
Samsung referenced Radware, which upheld the Seagate standard for post-filing willful infringement despite the Halo decision. However, the Court finds Radware unpersuasive for several reasons: first, the Seagate ruling on post-filing conduct is considered dicta since it arose in the context of attorney-client privilege rather than a definitive ruling on willful infringement evidence. Furthermore, Radware predates the Federal Circuit's Mentor Graphics decision, which clarified that Halo eliminated strict rules regarding enhanced damages under 35 U.S.C. § 284. The Court notes that district courts have historically been divided on the relevance of Seagate's post-filing conduct rules to willful infringement findings. Consequently, the Court adheres to Halo's principles, allowing Samsung's post-filing conduct to support a jury's willfulness finding and potential enhanced damages award.
Regarding whether Samsung's post-filing conduct constitutes willful infringement, the Court states that to overturn the jury's finding, Samsung must demonstrate a lack of "substantial evidence." The determination of willful infringement hinges on whether Samsung knew or should have known that its actions constituted infringement at the time. The Court concludes there is substantial evidence supporting the jury's willfulness finding, based on three categories: (1) evidence of Samsung copying Apple’s slide-to-unlock feature; (2) evidence that Samsung had an available non-infringing alternative it opted not to pursue; and (3) evidence related to Samsung’s invalidity and non-infringement defenses. The Court emphasizes that Samsung did not contest the jury's finding of copying during the appeal, thus affirming the substantial evidence of willfulness.
Satasung does not dispute the existence of substantial evidence indicating that Samsung copied Apple's slide-to-unlock feature, nor does it contest that this evidence supports the conclusion that claim 8 is not obvious. The Federal Circuit en banc noted several internal Samsung presentations that acknowledged the superiority of the iPhone's feature over Samsung's alternatives and recommended improvements to align Samsung's products with Apple's design. An email from a February 2010 executive meeting emphasized the intention to create something akin to the iPhone and recognized it as a standard.
The evidence of Samsung's copying indicates willfulness, particularly because after being notified of the ’721 patent upon the filing of the lawsuit, Samsung continued to sell products featuring the copied design. The initial act of copying alone does not suffice for a willfulness finding, but continued sales after notification do support such an inference. The jury’s finding of willfulness is further bolstered by evidence that Samsung had viable non-infringing alternatives available, which they could have implemented quickly, such as a "circle unlock" feature. However, these alternatives were reportedly not well-received and had various flaws, suggesting that Samsung opted to continue infringing to maintain market share.
Samsung's defenses, including those related to invalidity and non-infringement, do not negate the finding of willfulness, as Apple does not claim that Samsung's invalidity defense was unreasonable.
Samsung contended that the ’721 patent was invalid due to obviousness, arguing that the Plaisant reference and NeoNode devices encompassed all claim limitations. A three-judge panel of the Federal Circuit initially found insufficient evidence to uphold the jury's determination of validity but later vacated this ruling. Subsequently, the Federal Circuit en banc concluded that substantial evidence supported the jury's finding of non-invalidity for the patent.
Key evidence considered by the jury included the Patent and Trademark Office's (PTO) issuance of the patent after evaluating the Plaisant reference and NeoNode devices, indicating the patent's validity. Furthermore, evidence of Samsung's copying behavior and its choice not to pursue less desirable non-infringing alternatives suggested a conscious decision to infringe, reinforcing the jury's finding of willfulness. Samsung did not demonstrate reliance on its invalidity defense in its business strategies, and its acknowledgment on appeal that the copying evidence supported the patent's validity further implied a lack of belief in the patent's invalidity.
The jury could reasonably conclude that Samsung's actions, alongside its defense and the PTO's analysis, indicated an awareness of infringing a valid patent. Additionally, Samsung’s defense only addressed non-infringement for the Galaxy Nexus, neglecting the Admire and Stratosphere models, which further supported the jury's finding of infringement with subjective awareness of the patent's validity.
The jury's verdict is upheld if there is adequate evidence supporting a finding of willfulness by a preponderance of the evidence. The court confirms that the evidence presented meets this standard, thereby upholding the jury’s finding of willfulness. Although substantial evidence supports the finding of willful infringement, enhanced damages are not mandatory. The Supreme Court has clarified that enhanced damages should not automatically follow a finding of egregious misconduct and that courts should consider the specific circumstances of each case when deciding on the awarding of damages. Enhanced damages are intended as punitive for egregious infringement behavior, characterized by willful, malicious, or flagrant conduct.
The court references the Federal Circuit's list of factors from the Read case to guide decisions on enhanced damages, emphasizing that these factors are no longer the only criteria considered. The Read factors include: 1) deliberate copying of another's ideas or designs; 2) whether the infringer investigated the patent and formed a good-faith belief regarding its validity; 3) the infringer's litigation behavior; 4) the infringer's size and financial condition; 5) the closeness of the case; 6) the duration of misconduct; 7) remedial actions taken; 8) motivation to harm; and 9) attempts to conceal misconduct.
The court evaluates these factors, starting with evidence of Samsung’s copying of Apple’s slide-to-unlock feature, which supports the case for enhanced damages. Samsung did not contest that it copied this feature on appeal, and substantial evidence from internal presentations indicates that Samsung acknowledged the superiority of Apple's feature over its alternatives.
Presentations related to Samsung's alternatives to the iPhone's slide-to-unlock feature recommend enhancements to align them more closely with Apple's design. An email from a February 2010 executive meeting highlights sentiments within Samsung to emulate the iPhone, indicating it had become the industry standard. Evidence suggests that Samsung copied the slide-to-unlock feature and other iPhone attributes, despite having access to quick-to-implement, non-infringing alternatives, such as a "circle unlock" method. However, these alternatives were viewed as less attractive, with negative feedback noted, which led Samsung to continue selling products that infringed on Apple’s patents. This behavior is considered a factor in favor of enhanced damages.
Regarding the adequacy of Samsung's investigation and belief in the invalidity of Apple's patents, Apple contends that there is no proof Samsung conducted any investigation or had a good-faith belief regarding the validity of the '721 patent. Conversely, Samsung claims its invalidity defense demonstrates it conducted an adequate inquiry and held a genuine belief in the patent's invalidity. The court finds that this factor slightly favors enhanced damages, noting that while Samsung asserted a non-infringement defense for the Galaxy Nexus, it did not do so for other models like the Admire and Stratosphere, suggesting a lack of good faith. Although Samsung maintained an invalidity defense during the trial, which was supported by a prior Federal Circuit ruling, this ruling was later vacated and does not conclusively show Samsung acted in good faith.
Evidence suggests that Samsung's invalidity defense lacks good faith. The Federal Circuit vacated a prior ruling, confirming substantial evidence supporting the jury's finding that the ’721 patent is valid. Samsung's admission of copying indicates that the patent was not obvious, and despite the availability of non-infringing alternatives, Samsung opted to continue its practices, further implying the patent's validity. The PTO issued the ’721 patent after reviewing the references Samsung cited in its defense. There is insufficient evidence regarding Samsung’s investigation into the patent after its emergence, and no record of Samsung’s subjective belief in the patent's non-infringement or invalidity, which factors into the consideration for enhanced damages. The lack of adequate investigation and reliance on defenses leans toward enhancing damages, as established in relevant case law.
Apple's motion for enhanced damages focuses on Samsung's deliberate copying rather than litigation misconduct, which typically involves unjustified lawsuits or discovery abuses. Courts have found that the absence of misconduct can weigh against enhanced damages. Consequently, since Apple does not assert litigation misconduct, this factor also weighs against enhancement.
Apple acknowledges that while Samsung's size and financial condition alone do not necessitate enhancement, they suggest that Samsung could have quickly adopted non-infringing alternatives to the slide-to-unlock feature. Testimony from Samsung's expert supports that Samsung could have easily designed around the ’721 patent, indicating it had feasible options available at the time of the case's filing.
Samsung's size is considered a factor favoring enhanced damages due to the potential for leveraging resources to implement non-infringing alternatives. The "closeness of the case" factor weighs against enhanced damages because both parties presented reasonable arguments regarding validity and infringement. A Federal Circuit three-judge panel found insufficient evidence for the jury's invalidity ruling, which, despite being vacated, indicates Samsung's defense was reasonable. Although Samsung did not argue non-infringement for two products, the case's closeness due to invalidity considerations mitigates against enhancement.
Regarding the duration of misconduct and remedial efforts, prolonged infringement supports enhanced damages, while prompt corrective actions do not. The Galaxy Nexus, Admire, and Stratosphere were found to infringe the ’721 patent. Samsung was notified of the patent in February 2012 and quickly implemented non-infringing designs for the Admire and Stratosphere by mid-2012. Apple's acknowledgment that these modifications lessen the case for enhancement further weighs against it. The Galaxy Nexus's infringement duration is disputed but spans approximately 12 months, from the complaint's filing in February 2012 until its non-infringing status in January 2013.
Samsung was found to have infringed on the ’721 patent for approximately 10 to 12 months after being notified, from April 25, 2012, to January 28, 2013. This period of infringement supports the case for enhanced damages, especially given that substantial evidence indicated Samsung copied Apple's slide-to-unlock feature. Samsung's expert acknowledged that non-infringing alternatives existed and could have been implemented quickly, but Samsung opted not to pursue them due to perceived drawbacks, despite evidence suggesting that the alternatives were viable. Unlike the case of Hako-Med USA, which did not involve direct copying or expert acknowledgment of alternatives, Samsung's situation involved both.
While the duration of infringement leans towards enhanced damages, this consideration is somewhat mitigated by Samsung's update in July 2012 that altered the slide-to-unlock feature to avoid infringement claims. The update changed the unlock mechanism from a continuously moving image to a sequence of dots, which Samsung argued did not infringe the patent. Nonetheless, the jury found that this updated feature still infringed upon the ’721 patent, a conclusion supported by substantial evidence from Apple’s expert.
The July 2012 update by Samsung was found to infringe on the ’721 patent, but it demonstrated an attempt to design around the patent, which, although unsuccessful, reduced Samsung’s culpability regarding the duration of infringement for the Galaxy Nexus. When comparing Samsung's remedial actions for the Admire and Stratosphere against those for the Galaxy Nexus, the Court determined that these efforts slightly mitigated the case for enhanced damages.
The Court then evaluated whether Samsung had a motivation to harm Apple by continuing its infringement post-lawsuit. Evidence indicated that Samsung and Apple were direct competitors in a highly competitive smartphone market, with Samsung’s actions aimed at gaining an advantage. The Court noted that Samsung had copied Apple's slide-to-unlock feature and could have implemented a non-infringing alternative but chose not to due to negative feedback from Verizon and various flaws in those alternatives. This indicated a deliberate choice to leverage Apple’s designs for competitive gain.
Samsung's argument referencing Power Integrations was found to be unconvincing as the context was different; the current case involved using a copied design to avoid less desirable alternatives. Consequently, this factor supported enhanced damages.
The Court also assessed whether Samsung attempted to conceal its infringement, concluding this factor was neutral since the slide-to-unlock feature was highly visible and consumer-facing. Overall, the balance of factors showed that three factors favored enhanced damages, two slightly favored it, two weighed against it, and one was neutral, leading the Court to lean toward awarding enhanced damages.
The Court determines that enhancement of damages is justified based on the jury's findings and the Read factors. Evidence of Samsung's direct copying and continued sales of infringing products after being notified of the ’721 patent, along with Samsung's intent to gain a competitive edge using Apple’s designs, supports this conclusion. Although Samsung's actions were deemed egregious, the Court notes that trebling damages is reserved for the most severe cases. Factors such as Samsung's remedial measures, the length of misconduct, and its litigation behavior suggest a moderate enhancement rather than a double or treble award. Consequently, the Court increases the jury's award of $2,990,625 to Apple by 30%, resulting in a total of $3,887,812.50.
The Court acknowledges substantial evidence of willfulness, leading to a moderate enhancement of $897,187.50. The discussion also touches on the Plaisant reference, consisting of a paper and a video, with the PTO considering only the paper, which undermines Samsung's claim of good faith reliance on its invalidity defense. Apple contends that the Galaxy Nexus, released on April 5, 2012, constitutes egregious misconduct given that Samsung was aware of the ’721 patent prior to the release. However, there are conflicting statements regarding the timing of when Apple identified the Galaxy Nexus as infringing, leaving the Court unable to definitively resolve the factual dispute and determining that this does not impact the decision to enhance damages.