Oct 12, 2012

Nexus ban issue - Appeals court sets the bar quite high

The recent judgement by the US Appeals court, lifting the interim ban on Nexus has some very interesting guidelines and judicial pronouncements. These could affect not just the present case, and the general Apple-Samsung dispute but several such infringement cases.

After all, when you are talking about two mega tech gorillas that rake in billions of dollars in QUARTERLY profits, it is not a fine of $1B, high as it is, that is going to break their backbones..it is the injunction, interim or otherwise, that affects sales, market share and of course, profits.

And in a market where product life cycles are measured in weeks, if not days, an interim injunction can be as good as a death penalty, regardless of the outcome of the litigation itself, which may take years.

Hence the need for a very high bar, that can only be crossed with great difficulty, in rarest of rare cases.

So what's the criteria? There is a four-way test ( I am not quoting the judges verbatim, to keep things simple)

1. The infringement claim itself should likely succeed
2. Irreparable harm, 

and as if these two alone are not enough,

3. Balance of equities tips in favor of accuser
4. Public interest

The last test may be more than enough to derail any ban or injunction in some cases.

Furthermore, in cases like the Nexus one, where the entire product is not infringing, but only a minority (in this case, just one) of features infringe, the accusing party as to show that the irreparable harm cited above is due to the alleged infringement. You can call it the NEXUS factor! And it is not a pun!!

In other words, just saying I lost sales is not enough..did you lose it because of that infringement? What if customers would have anyway bought the phone, without the feature?

The nexus has to be sufficiently strong. How do you prove that? By showing that it drives consumer demand, for instance. The link has to be substantial. As the judge puts it, you cannot tick that item off by showing some insubstantial connection between harm and the infringement.

Apple failed in the nexus factor and the judges also questioned the very first item - likelihood of success. I will ignore that aspect as it goes into semantics of claim construction and the significance of words like 'each' and 'plurality of modules' etc. Enough to say it does not look good for Apple. Obviously that is mainly concerning this particular case unlike the other parts of judgement which are quite far reaching in their impact.

Remember this appeal is only about the injunction, not the infringement lawsuit itself.

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