Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 1170

ORDER Denying Samsung's Motion to Stay Preliminary Injunction. Signed by Judge Lucy H. Koh on 7/2/2012. (lhklc2, COURT STAFF) (Filed on 7/2/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
For the Northern District of California

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APPLE, INC., a California corporation,

)
)
Plaintiff,
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v.
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SAMSUNG ELECTRONICS CO., LTD., A
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Korean corporation; SAMSUNG
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ELECTRONICS AMERICA, INC., a New York )
corporation; SAMSUNG
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TELECOMMUNICATIONS AMERICA, LLC, )
a Delaware limited liability company,
)
)
Defendants.
)
)
)

Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S
MOTION TO STAY

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On December 2, 2011, this Court issued an order denying Apple’s motion for a preliminary
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injunction. Apple sought an injunction based on Samsung’s alleged infringement of Apple’s
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Design Patent Nos. D618,677 (“the D’677 Patent”), D593,087 (“the D’087 Patent”), D504,889
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(“the D’889 Patent”), and based on Samsung’s alleged infringement of Apple’s U.S. Patent No.
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7,469,381 (“the ’381 Patent”). ECF No. 452. The Federal Circuit affirmed, in part, this Court’s
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Order, but remanded for further proceedings solely with respect to the D’889 Patent. See Apple,
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Inc. v. Samsung Elecs. Co., Ltd., 678 F.3d 1314 (Fed. Cir. 2012). Upon remand, on June 26, 2012,
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the Court issued a preliminary injunction, enjoining the sale of Galaxy Tab 10.1 tablet computers.
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See ECF No. 1135. On the same day, Samsung filed an appeal of the preliminary injunction with
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the Federal Circuit.
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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On June 27, 2012, Apple posted bond, and the preliminary injunction went into effect. On

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the same day, Samsung filed a motion to stay the injunction pending resolution of the appeal.

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Samsung seeks to stay and suspend the preliminary injunction pending the Federal Circuit appeal,

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or, in the alternative, to stay and suspend the preliminary injunction at least until the Federal

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Circuit can rule on a motion for stay pending appeal. See Mot. at 7.
Samsung requested a motion to shorten time on the stay motion and requested an expedited

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briefing schedule without a reply or a hearing on the issue. The Court granted Samsung’s request.

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Apple served1 its opposition to the motion to stay on June 30, 2012. Because of the expedited

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nature of this issue, the Court will not go into great detail regarding the factual background and

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United States District Court
For the Northern District of California

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procedural history of the preliminary injunction. Instead, the Court refers the reader to (1) the

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December 2, 2011 Order Denying the Preliminary Injunction, (2) the May 14, 2012 Opinion from

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the Federal Circuit affirming in part and reversing in part the Court’s Order Denying the

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Preliminary Injunction, and (3) the June 26, 2012 Order Granting the Preliminary Injunction. After

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considering the briefing by the parties, the Court DENIES Samsung’s request for a stay pending

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appeal.

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I.

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STANDARD
Both the court of appeals and the district court have the authority to stay an order pending

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appeal. For the district court, Federal Rule of Civil Procedure 62(c) vests the power to stay an

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order pending appeal with the district court. See Fed. R. Civ. P. 62(c). For both the appellate court

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and the district court “the factors regulating the issuance of a stay are generally the same: (1)

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whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2)

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whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will

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substantially injure the other [parties’ interest] in the proceeding; and (4) where the public interest

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lies.” Hilton v. Braunskill, 481 U.S. 770, 776 (1987).

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Deciding whether to grant a stay of a preliminary injunction pending an appeal is an

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equitable inquiry. Each factor in the analysis need not be given equal weight. Standard Havens

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At the time that Apple’s brief was due, the Court’s Electronic Case Filing (“ECF”) system was
not functioning. Therefore, Apple served, on the Court and on Samsung, its response by e-mail.
Apple shall file its response on ECF now that the ECF system has been restored.
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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Prods. v. Gencor Indus., 897 F.2d 511, 512 (Fed. Cir. 1990). “When harm to applicant is great

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enough, a court will not require ‘a strong showing’ that applicant is ‘likely to succeed on the

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merits.’” Id. (citing Hilton, 481 U.S. at 776). Indeed, in Hilton the Supreme Court acknowledged,

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“the traditional stay factors contemplate individualized judgments in each case, the formula cannot

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be reduced to a set of rigid rules.” Hilton, 481 U.S. at 777. “Thus, the four stay factors can

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effectively merge,” and a court therefore, “assesses movant’s chances for success on appeal and

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weighs the equities as they affect the parties and the public.” Standard Havens Prods., 897 F.2d at

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513 (citations omitted).

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II.

United States District Court
For the Northern District of California

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APPLICATION
A. Likelihood of Success on Appeal
1. Whether the Court Erred in Following the Remand Order of the
Federal Circuit
Samsung first argues that the Court committed reversible error by not reopening the record

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or reconsidering the first two Winter factors on remand. “Upon return of its mandate, the district
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court cannot give relief beyond the scope of that mandate, but it may act on ‘matters left open by
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the mandate.’” Laitram Corp. v. NEC Corp., 115 F.3d 947, 951 (Fed. Cir. 1997) (citing Caldwell
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v. Puget Sound Elec. Apprenticeship & Training Trust, 824 F.2d 765, 767 (9th Cir. 1987)). “In
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other words, the court is entitled to assume that an appellant has raised all issues it deems important
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against a judgment appealed from.” Engel Indus., Inc. v. Lockformer Co., 166 F.3d 1379, 1383
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(Fed. Cir. 1999). “Unless remanded by [the court of appeals], all issues within the scope of the
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appealed judgment are deemed incorporated within the mandate and thus are precluded from
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further adjudication.” Id. “Only the issues actually decided—those within the scope of the
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judgment appealed from, minus those explicitly reserved or remanded by the court—are foreclosed
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from further consideration.” Id. Moreover, the district court’s actions on remand should not be
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inconsistent with either the letter or the spirit of the mandate. Quern v. Jordan, 440 U.S. 332, 347
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n.18 (1979). Therefore, the critical question is what issues were left open by the mandate.
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The Federal Circuit went through a detailed analysis of this Court’s December 2, 2011
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Order and explicitly upheld the Court’s findings of infringement and irreparable harm with respect
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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to the D’889 Patent, but reversed the Court’s invalidity finding as to that patent. See Apple, 678

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F.3d at 1328-33. The Federal Circuit’s remand instructed the Court to make findings regarding the

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third and fourth Winter factors, and to determine as a whole whether the injunction should issue.

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Id. at 1333. The Federal Circuit explicitly instructed this Court what should be considered on

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remand:

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On remand, the court should conduct a similar assessment of the balance of hardships with
respect to the D’889 Patent. To the extent that the court finds that the public interest factor
cuts in favor of either side, it should weigh that factor as well in determining whether to
issue a preliminary injunction against Samsung’s Galaxy Tab 10.1 tablet computer.
Id. Upon remand, this Court followed the Federal Circuit’s explicit instructions. The Court found

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that the last two Winter factors favored a preliminary injunction and then weighed all four Winter
United States District Court
For the Northern District of California

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factors and found that a preliminary injunction should issue. See June 26 Order at 3-6.
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Samsung argues that, notwithstanding the Federal Circuit’s Order, because of the
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prospective nature of an injunction, the Court was required to reopen the record. The Court is not
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convinced that the factual and procedural history of this case, in light of the remand Order from the
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Federal Circuit, compelled this Court to start anew in its analysis.
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The Supreme Court has explained that “[a]n injunction is an exercise of a court’s equitable
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authority, to be ordered only after taking into account all of the circumstances that bear on the need
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for prospective relief.” Salazar v. Buono, 130 S. Ct. 1803, 1816 (2010). “Because injunctive relief
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is drafted in light of what the court believes will be the future course of events, . . . a court must
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never ignore significant changes in the law or circumstances underlying an injunction lest the
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decree be turned into an ‘instrument of wrong.” Id. (internal quotation marks and citations
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omitted) (emphasis added). Thus, where significant changes in the law have occurred – for
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example, intervening federal statutes directly on point, or Supreme Court precedent that directly
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implicates the analysis of the preliminary injunction on remand – reconsideration of the entire
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record may be appropriate. See, e.g. id. (intervening federal statute on point must be considered on
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remand); NAACP v. N. Hudson Reg’l Fire & Rescue, 707 F. Supp. 2d 520 (D.N.J. 2010)
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(reconsidering four factors because Third Circuit sua sponte summarily remanded the matter for
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further proceedings in light of the Supreme Court’s recent decision in Ricci v. DeStefano, 557 U.S.
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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557 (2009)). Similarly, where the appellate court issues a broad mandate on remand, or when the

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record on appeal is three or four years old, reopening the record is appropriate. See, e.g.,

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MercExchange LLC v. eBay, Inc., 467 F. Supp. 2d 608, 611 (W.D. Va. 2006) (“Based on the

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prospective nature of the relief sought, as well as the significant time lapse subsequent to this

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court’s denial of MercExchange’s original motion for an injunction,” new evidence on remand was

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appropriate.).

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Given the procedural background of this case, however, the Court was not compelled to

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reopen the entire record and to reconsider the first two Winter factors as doing so would be directly

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contrary to the instructions of the Federal Circuit. Neither a major change in the law or

United States District Court
For the Northern District of California

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circumstances (see discussion below), nor a record that is three or four years old exists in this case

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such that reopening the record is necessary. Indeed, the Court’s ruling on this issue was both

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consistent with the Federal Circuit’s instructions on remand, and the Federal Circuit’s recognition

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that this Court’s findings “in the smartphone part of this case” might be “readily transferrable to the

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tablet part of the case” such that “the district court should be able to make [a determination] in

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short order, thus minimizing the amount of delay.” Apple, 678 F.3d at 1333. In light of the Federal

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Circuit’s discussion, Samsung has not demonstrated a likelihood of success on appeal of the

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preliminary injunction based on the Court’s refusal to reopen the record and allow the parties to

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relitigate the first two Winter factors.

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2. Whether Samsung is Likely to Show that The Preliminary Injunction
was Improperly Entered Because of “New Evidence”
Even assuming that the Court should have reopened the record to consider evidence and

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arguments that were not a part of the Federal Circuit’s Order, such new evidence is not likely to
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persuade the Federal Circuit that the preliminary injunction was improperly entered.
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a. Evidence of Infringement
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Samsung argues that the preliminary injunction was erroneously issued because Apple has
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not established a likelihood of success on its claim that the Galaxy Tab 10.1 infringes the D’889
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Patent. Specifically, Samsung argues that the “035” prototype of the D’889 establishes that the
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Galaxy Tab 10.1 does not infringe. Mot. at 12-14.
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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The 035 Prototype is not “new evidence” that establishes that the Galaxy Tab 10.1 likely

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infringes the D’889 Patent. Samsung included the 035 Prototype with additional evidence

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submitted to this Court shortly after the preliminary injunction hearing. Tung Decl. Ex. R;

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December 2, 2011 Order at 8. Moreover, Samsung also provided these same photographs to the

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Federal Circuit in support of its argument that this Court erred in finding the D’889 likely infringed

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by the Galaxy Tab 10.1. See Bartlett Decl. Ex. B. The Court agrees with Apple that it is unlikely

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that Samsung has established a likelihood of success on appeal in light of the fact that Samsung

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presented the same arguments to the Federal Circuit, to no avail.

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Additionally, the 035 Prototype is not a relevant comparison to establish infringement of

United States District Court
For the Northern District of California

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the D’889 Patent. The Examiner excluded the photographs of the prototype by cancelling the

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“statement regarding the appendix” which included the photographs. See Bartlett Decl. Ex. C at 2;

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see also 37 C.F.R. § 1.84 (“Photographs, including photocopies of photographs, are not ordinarily

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permitted in utility and design patent applications. The Office will accept photographs in utility and

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design patent applications, however, if photographs are the only practicable medium for illustrating

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the claimed invention.”) (emphasis added). Thus, the photographs do not otherwise change the

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scope of the D’889 Patent, as the drawings in the D’889 Patent establish the claimed design.

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In light of the discussion above, the proper comparison between the D’889 Patent and the

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Galaxy Tab 10.1 is the comparison that both this Court, and the Federal Circuit have already made.

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The relevant comparison chart is shown below. Based on this comparison, this Court found that

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the Galaxy Tab 10.1 likely infringed the D’889 Patent. The Federal Circuit did not upset this

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finding on appeal, nor did it direct the Court to address this issue on remand. Therefore, Samsung

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is not likely to show that the preliminary injunction was erroneously granted on this ground.

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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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b. Evidence of Invalidity

United States District Court
For the Northern District of California

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y
in
nal
Samsung also argues that newly disclosed prior art, not considered i the origin

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ion,
hes
D’889 is likely invalid. Mot. at 14-1
16.
preliminary injunction moti establish that the D

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Specifically, Samsung argues that the U.S. Patent No. D500,037 (the “D’03 Patent”) a the
U
37
and

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“Brain Box” render the D’8 obvious. For the re asons stated below, the C
889
Court disagre
ees.

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Samsung has not est
tablished tha it is likely to succeed o appeal in establishing that the
at
on
n
g

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D’889 Patent is obvious in light of the D’307 Pate nt and the Br Box. To obtain an in
l
D
rain
o
njunction,

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Apple bore the burden of pe
ersuading the Court that it is more li
ikely than no that Samsu will be
ot
ung

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unable to prove invalidity by clear and convincing evidence at trial. Titan T Corp. v Case New
b
c
Tire
v.

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Holland, Inc., 566 F.3d 137 1379-80 (Fed. Cir. 2 009). Samsung challeng the valid of the
72,
(
ges
dity

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D’889 Patent, claiming that the D’889 Patent woul d have been obvious to o skilled in the art at
t
P
one
n

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the time of inve
ention. In its recent opin
s
nion, the Fed
deral Circuit explained th proper ob
he
bviousness

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inquiry for design patents: “[t]o determi whether ‘one of ordi
“
ine
inary skill w
would have co
ombined

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teachings of the prior art to create the sa overall visual appearance as the claimed de
ame
e
esign, the

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finder of fact must employ a two-step process.” Ap
p
pple, 678 F.3d at 1329. F
First, “one m find a
must

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single reference, a somethin in existen the desi gn characteristics of whi are basic
ng
nce,
ich
cally the

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same as the clai
imed design. Durling v. Spectrum Furniture Co., 101 F.3d 100, 103 (F Cir.
.”
v
d
Fed.

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1996) (internal quotations and citations omitted). S
a
Second, after a primary r
reference is f
found, other

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secondary references “may be used to modify it,” b only if “they are so re
m
but
elated to the primary

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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG MOTION TO STAY
G’S
T

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reference that the appearance of certain ornamental features in one would suggest the application of

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those features to the other.” Id. (internal quotation marks, citations, and alterations omitted).

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“Once that piece of prior art has been constructed” by one skilled in the art, whether by

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“combin[ing] earlier references . . . or [by] modify[ing] a single prior art reference,” only then does

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“obviousness, like anticipation, require[] application of the ordinary observer test,” asking whether

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an ordinary observer would find the patented design substantially the same as the hypothetical prior

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art reference. Int’l Seaway Trading Corp. v. Walgreens Corp., 589 F.3d 1233, 1240-41 (Fed. Cir.

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2009).

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Samsung has not established that either the D’037 or the “Brain Box” is properly a primary

United States District Court
For the Northern District of California

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reference. In other words, Samsung has not established that “the design characteristics of [the

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D’037 or the Brain Box] are basically the same as the [D’889].” Durling, 101 F.3d at 103. As

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explained by the Federal Circuit, the overall visual impression of the D’889 Patent is as follows:

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“[t]he transparent glass-like front surface of the D’889 Patent . . . covers essentially the entire front

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face of the patented design without any breaks or interruptions. As a result, the D’889 design

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creates the visual impression of an unbroken slab of glass extending from edge to edge on the front

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side of the tablet.” Apple, 678 F.3d at 1331. In contrast, the D’037 Patent does not have the same

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overall visual impression as the D’889. The D’037 does not disclose oblique line shading (which

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is required to claim a translucent or transparent surface) or a border underneath the display.

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Instead, the D’037 Patent discloses certain detail on the back. The D’037 also discloses a thicker

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form with steeper, more angled sides. In light of the Federal Circuit’s description of the “overall

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visual impression” of the D’889 Patent, this Court cannot say that the D’037 has design

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characteristics that are “basically the same” as the D’889 Patent.

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Nor can “Brain Box” serve as a primary art reference. The one photograph of the Brain

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Box submitted by Samsung does not disclose all views of the reference. Thus, the fact finder will

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not be able to evaluate whether the reference creates “basically the same visual impression” as the

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D’889 Patent. See Durling, 101 F.3d at 103 (internal quotations omitted). For example, it is

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difficult to discern whether the Brain Box has a flat front piece, and whether the back view of the

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reference is flat, rounded, or otherwise has the same overall visual impression as the D’889. cf.
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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Contessa Food Prods., Inc. v. Conagra, Inc., 282 F.3d 1370, 1378 (Fed. Cir. 2002); Int’l Seaway

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Trading, 589 F.3d at 1241 (the obviousness inquiry on invalidity focuses on the overall design).

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Moreover, even if the D’037 Patent could serve as a primary reference and the Brain Box

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could be used to modify the D’037 Patent, it is not clear that this combination of references would

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render the D’889 obvious. As explained in the Court’s recent Order Denying Samsung’s Motion

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for Summary Judgment, there are several differences between the hypothetical combination of the

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D’037 Patent and the Brain Box and the D’889 Patent. Even assuming that a person of ordinary

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skill would combine the D’037 and the Brain Box, the hypothetical combination still would not

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necessarily disclose the D’889 Patent’s even borders that appear beneath the transparent front

United States District Court
For the Northern District of California

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surface or the D’889 Patent’s rounded edge profile. Order Denying Samsung’s Mot. for Summary

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Judgment at 37 (citing Bressler Decl. ¶ 112). Thus, Samsung has not raised a substantial question

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of validity of the D’889 Patent based on an obviousness challenge in light of the D’307 Patent and

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the Brain Box.

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Moreover, it is not clear that the D’037 Patent and the Brain Box should even be considered

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newly discovered evidence. The references are publicly disclosed prior art that were not briefed in

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the original motion for a preliminary injunction. Moreover, Samsung presented similar prior art

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references to the Federal Circuit in its petition for rehearing. See Bartlett Decl. Ex. E.

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Nonetheless, the Federal Circuit denied Samsung’s petition for rehearing or rehearing en banc.

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Finally, the Court notes that Judge Grewal recently excluded the D’037 and the Brain Box

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from trial because Samsung failed to timely disclose the prior art or invalidity theory. See Order

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Granting in part and Denying in part Mots. to Strike at 4-5, ECF No. 1144. In light of this ruling,

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Samsung cannot rely on the D’037 and the Brain Box to challenge the validity of the D’889 Patent

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at trial. In light of these considerations, it is unlikely that Samsung will succeed in its appeal of the

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preliminary injunction order.

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c. Evidence Related to Irreparable Harm
Samsung also argues that the tablet market has changed since the Court’s December 2,

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2011 Order such that Apple is no longer likely to suffer irreparable harm absent an injunction. See

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Mot. at 10-12. Specifically, Samsung argues that the tablet market is no longer a two-player
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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market and Samsung’s market share is much lower now than it was when the briefing was

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completed on the original motion, or when the Order issued on December 2, 2011.

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It is unlikely that the Federal Circuit will conclude that the preliminary injunction was

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improperly granted in light of this allegedly “new” evidence. For one, Samsung raised this issue

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before the Federal Circuit in its original briefing. See Bartlett Decl. Ex. A at 63-64. Despite

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awareness of this issue, the Federal Circuit affirmed this Court’s finding that Apple had shown that

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it was likely to suffer irreparable harm from the sales of Samsung’s infringing tablets because “the

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district court considered the relevant factors [and] properly weighed them.” Apple, 678 F.3d at

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1328.

United States District Court
For the Northern District of California

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Moreover, even if the Federal Circuit were to consider this “new” evidence, it is doubtful

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that Samsung will succeed in arguing that this one change in circumstances establishes that Apple

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is no longer likely to suffer irreparable harm. Although the tablet market is no longer a two-player

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market, and Samsung’s market share has decreased, this fact alone does not necessarily obviate the

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Court’s original finding of irreparable harm. As the Federal Circuit has explained, “[w]hile the

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existence of a two-player market may well serve as a substantial ground for granting an injunction

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– e.g., because it creates an inference that an infringing sale amounts to a lost sale for the patentee

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– the converse is not automatically true.” Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142,

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1151 (Fed. Cir. 2011). The entrance of additional market participants does not necessarily mean

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that there is no likelihood of irreparable harm.

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In contrast, several of the other factors upon which this Court rested its irreparable harm

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analysis continue to be true (or Samsung does not challenge them at this time): (1) Apple and

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Samsung continue to be direct competitors in the tablet market, (2) design matters more to

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customers in making tablet purchases, indeed design is an important driver in the demand for tablet

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sales, (3) Apple had claimed all views of the patented device, and (4) Apple was prompt in

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asserting its patent rights. December 2 Order at 49. In light of the fact that the Federal Circuit was

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aware of the change in market conditions, and the remaining factors upon which the Court based its

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decision remain, it is unlikely that Samsung will succeed on appeal in its argument that Apple will

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no longer be irreparably harmed.
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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY

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For the foregoing reasons, the Court DENIES Samsung’s Motion to Stay.

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IT IS SO ORDERED.

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Dated: July 2, 2012

____________________ ____________
LUCY H. KOH
United States District Judge

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United States District Court
For the Northern District of California

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Case No.: 11-CV-01846-LHK
ORDER DENYING SAMSUNG’S MOTION TO STAY