Judge Koh has denied Apple's motion for an injunction, ruling that Apple has not proven irreparable harm. She has also denied Samsung's motion for a hearing or a new trial based on its claim of jury misconduct, essentially accepting Apple's theory that Samsung could have discovered the Seagate litigation if it had acted more promptly in ordering the jury foreman's bankruptcy file, hence waiving its claim. I'm sure that will be appealed. For that matter, Apple is likely to appeal as well. I think they'll have to, in that her order rejects essentially their entire design patents theory. I asked our reporter at the hearing on all this what he thought her inclinations were, and he said he thought she was sick of both of the parties and wanted to kick them out and upstairs to the appeals court. And on these two motions, that is what she has done.
The best part on the injunction denial is the judge totally rejected Apple's design patents theory:
However, Apple’s evidence does not establish that any of Apple’s three design patents covers a particular feature that actually drives consumer demand. ...First, though more specific than the general “design” allegations, they are still not specific enough to clearly identify actual patented designs. Instead, they refer to such isolated characteristics as glossiness, reinforced glass, black color, metal edges, and reflective screen. Id. Apple does not have a patent on, for example, glossiness, or on black color. Thank heaven she understood that. Having failed to prove a "causal nexus between infringement of its design patents and irreparable harm", or on the utility patents, Apple's motion fails:
The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple’s patents. Though Apple does have some interest in retaining certain features as exclusive to Apple, it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions. Especially given the lack of causal nexus, the fact that none of the patented features is core to the functionality of the accused products makes an injunction particularly inappropriate here.... Plus she considered the public interest, which is refreshing:
Weighing all of the factors, the Court concludes that the principles of equity do not support the issuance of an injunction here. First and most importantly, Apple has not been able to link the harms it has suffered to Samsung’s infringement of any of Apple’s six utility and design patents that the jury found infringed by Samsung products in this case.
It would not be equitable to deprive consumers of Samsung’s infringing phones when, as explained above, only limited features of the phones have been found to infringe any of Apple’s intellectual property. Though the phones do contain infringing features, they contain a far greater number of non-infringing features to which consumers would no longer have access if this Court were to issue an injunction. The public interest does not support removing phones from the market when the infringing components constitute such limited parts of complex, multi-featured products. She also noted that Apple was asking for an injunction as a punishment, and the law doesn't allow injunctions to be used for that purpose. They were awarded money, and that's all they get. I kept trying to tell Apple that it was going too far, that its position was too extreme, and now the judge has confirmed. The thermonuclear option doesn't pay off in this court of law. Keep in mind that this isn't the last of things in this court. Both Apple's and Samsung's motions for judgment as a matter of law or new trial or remittitur, in the case of Samsung, are still pending.
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Here are the orders:
Filed & Entered: 12/17/2012
We'll be working to get them to you as text in full.
STIPULATION WITH PROPOSED ORDER For Briefing Schedule on Samsung Electronics Co., Ltd's Ex Parte Application for an Order Pursuant to 28 U.S.C. § 1782 Granting Leave to Obtain Discovery for Use in Foreign Proceedings filed by Samsung Electronics Co. Ltd.. (Attachments: # (1) Proposed Order)(Ruga, Dylan) (Filed on 12/17/2012)
Filed & Entered: 12/17/2012
ORDER re  Motion for Permanent Injunction filed by Apple Inc.. Signed by Judge Lucy H. Koh on 12/17/2012. (lhklc2, COURT STAFF) (Filed on 12/17/2012)
Filed & Entered: 12/17/2012
ORDER re  Jury Misconduct. Signed by Judge Lucy H. Koh on 12/17/2012. (lhklc2, COURT STAFF) (Filed on 12/17/2012)
Update: Let's start with the order on Apple's motion for a permanent injunction, so here it is as text:
On the jury misconduct claims, the judge not only felt that Samsung waived its claim, she also didn't agree to an evidentiary hearing, essentially on the grounds: 1) the law wants juries left alone and so there is a presumption that they do follow instructions; and 2) she quotes from a case that held:
UNITED STATES DISTRICT COURT
APPLE, INC., a California corporation,
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
SAMSUNG ELECTRONICS CO., LTD., A
Korean corporation; SAMSUNG
ELECTRONICS AMERICA, INC., a New York
TELECOMMUNICATIONS AMERICA, LLC,
a Delaware limited liability company,
Case No.: 11-CV-01846-LHK
ORDER DENYING MOTION FOR
Plaintiff Apple, Inc. (“Apple”) filed this action against Defendants Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC (collectively “Samsung”) on April 15, 2011, alleging infringement of several Apple patents and dilution of Apple’s trade dress. On August 21, 2012, a jury returned a verdict that 26 Samsung products infringed Apple’s patents or diluted Apple’s trade dress. Apple now brings this motion for a permanent injunction seeking to enjoin Samsung “from infringing, contributing to the infringement, or inducing the infringement of any of Apple’s U.S. Patent No. 7,469,381, U.S. Patent No. 7,844,915, U.S. Patent No. 7,864,163, U.S. Design Patent No. 604,305, U.S. Design Patent No. 593,087, and U.S. Design Patent No. 618,677, including by making, using, offering to
sell, selling within the United States, or importing into the United States any of the Infringing Products or any other product not more than colorably different from an Infringing Product as to a feature or design found to infringe.” Proposed Order Granting Apple’s Motion for a Preliminary Injunction and Damages Enhancement, ECF No. 2133. Apple also seeks to enjoin Samsung from diluting Apple’s registered iPhone trade dress and Apple’s unregistered iPhone 3G trade dress, including by selling or offering to sell in the United States any of six products the jury found to dilute Apple’s trade dresses.
1 Id. After hearing oral argument on the matter and reviewing the briefing by the parties, the evidence offered in support of the briefing, and the relevant law, the Court DENIES Apple’s Motion for a Permanent Injunction.
The Patent Act provides that in cases of patent infringement a court “may grant injunctions
in accordance with the principles of equity to prevent the violation of any right secured by patent,
on such terms as the court deems reasonable.” 35 U.S.C. § 283. Though injunctions were once
issued in patent cases as a matter of course, the Supreme Court ruled in 2006 that “broad
classifications” and “categorical rule[s]” were inappropriate in analyzing whether to grant a
permanent injunction. eBay v. MercExchange, L.L.C., 547 U.S. 388, 393 (2006). Instead, a
patentee seeking a permanent injunction must make a four-part showing:
(1) That it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Id. at 391. In considering Apple’s motion, the Court will consider each of these four factors in turn, and will then consider whether, on balance, the principles of equity support the issuance of a permanent injunction in this case.
A. Irreparable Harm
Historically, once a plaintiff in a patent case succeeded on the merits or established a likelihood of success, irreparable harm in the absence of an injunction was presumed. As the
Federal Circuit has recently made clear, however, there is no longer any presumption of irreparable harm, even if a patentee is able to prove that a patent is valid and infringed. Robert Bosch LLC v. Pylon Manufacturing Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011). While the presumption of irreparable harm no longer applies, the Federal Circuit noted that “it does not follow that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude.” Id. Thus, the patentee’s right to exclude must be considered by a district court in determining whether an injunction is an appropriate remedy, but does not alone satisfy the irreparable harm requirement.
Further, a showing that the patentee has suffered harm is insufficient. Rather, “to satisfy the irreparable harm factor in a patent infringement suit, a patentee must establish both of the following requirements: 1) that absent an injunction, it will suffer irreparable harm, and 2) that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement.” Apple, Inc. v. Samsung Electronics Co., Ltd., 695 F.3d 1370, 1374 (Fed. Cir. 2012) (“Apple II”).
2 This test requires a showing that consumers buy the infringing product “because it is equipped with the apparatus claimed in the . . . patent,” and not merely because it includes a feature of the type covered by the patent. Id. at 1376.
This Court has already performed significant irreparable harm analysis in this case. Specifically, in considering Apple’s motion for a preliminary injunction, this Court found, and the Federal Circuit agreed, that Apple had not demonstrated irreparable harm from the likely infringement of the D’677 or D’087 patents. See ECF No. 452 at 27-38; Apple I, 678 F.3d at 1324-26. The Court considered Apple’s arguments that it had suffered irreparable harm in the form of erosion of design distinctiveness and irreversible loss of market share and loss of customers. The Court concluded that Apple had not explained how erosion of design distinctiveness actually caused any irreparable harm, and rejected Apple’s theory that infringement diminished the value of
Apple’s brand, which could not be separated from its products. ECF No. 452 at 29-30. The Court further found that though there was some evidence of loss of market share, Apple had not established that Samsung’s infringement of Apple’s design patents caused that loss. Id. at 33-34. The Court noted that the evidence regarding how consumers chose smartphones was ambiguous, and given that the D’677 and D’087 patents cover only part of the phone design, limited to the front face, even what evidence there was that design was important to choice did not create a strong link to infringement of these design patents.
The Court also found, at the preliminary injunction stage, that there was no irreparable harm from infringement of the ’381 patent. Specifically, the Court noted that Apple had presented no evidence of any causal relationship between the features covered by the ’381 patent and any loss of market share, customers, or goodwill, and had not established that that feature was “necessary to, or a core functionality of” Samsung’s products. Id. at 63.
These decisions at the preliminary injunction stage are not necessarily determinative now, after all the evidence is in and the Court has the benefit of a more complete factual record. Apple has presented some additional arguments and new evidence in support of its irreparable harm argument. Further, there are two additional utility patents (the ’915 and ’163 patents) and one additional design patent (the D’305 patent), in addition to a finding of trade dress dilution, on which Apple did not previously seek a preliminary injunction and upon which this Court has not previously ruled. The Court’s earlier analysis does, however, provide a starting point for the present inquiry. The Court will thus analyze Apple’s claims of irreparable harm in light of its prior findings. The Court will first consider the harms Apple claims to have suffered, and will then consider whether Apple has demonstrated that Samsung’s infringement caused those harms.
Apple’s Alleged Harms
Apple alleges that it has suffered three types of irreparable harm as a result of Samsung’s patent infringement: (1) loss of market share; (2) loss of downstream and future sales; and (3) injury to Apple’s ecosystem.
As an initial matter, the Court considers the relationship between the parties, which bears generally on the likelihood that Apple will suffer harm from Samsung’s infringement. At the preliminary injunction phase, Apple argued, and this Court found, that Apple and Samsung are direct competitors, based largely on evidence that the two companies compete for first-time smartphone buyers. ECF No. 452 at 32 (citing testimony from Samsung’s expert Michael Wagner). Apple has presented further evidence of this relationship, including Samsung’s own documents revealing Samsung’s view of Apple as its primary competitor. See PX60 (Samsung presentation describing the US market as a “two horse race between Apple and Samsung); PX184 (Samsung business plan emphasizing competition with Apple). Samsung has presented no new evidence to refute that finding. Thus, the Court finds that Apple and Samsung continue to compete directly in the same market. This finding increases the likelihood of harm from continued infringement. See, e.g., Robert Bosch, 659 F.3d at 1153.
Regarding market share, Apple introduced evidence at the preliminary injunction phase that it had already lost some market share to Samsung during the span of 2010, and the Court considered evidence from both parties’ experts regarding further lost customers and market share. ECF No. 452 at 32-33. The Court found that the evidence could support a finding of irreparable harm. Id. At trial and in the permanent injunction briefing, Apple presented additional evidence that Samsung’s market share grew substantially from June of 2010 through the second quarter of 2012, Musika Decl. ¶ 30 & Exh. 4.1, and that Samsung had an explicit strategy to increase its market share at Apple’s expense. PX62.11-15. Samsung does not refute this evidence in its opposition. Thus, the cumulative evidence shows that, consistent with the Court’s finding at the preliminary injunction phase, Apple has continued to lose market share to Samsung. As this Court explained at the preliminary injunction phase, loss of market share or the permanent loss of customers as a result of infringing conduct can support a finding of irreparable harm. See Robert Bosch, 659 F.3d at 1153-54; Polymer Techs. v. Bridwell, 103 F.3d 970, 976 (Fed. Cir. 1996).
Regarding downstream sales, this Court found at the preliminary injunction stage that given network compatibility issues (Apple phones and Samsung phones use different operating systems) and brand loyalty, there were potentially long-term implications of an initial purchase, in the form
of lost future sales of both future phone models and tag-along products like apps, desktop computers, laptops, and iPods. ECF No. 452 at 32. The Court also found that such damages would be difficult to calculate, rendering them potentially irreparable. Id. Since then, Apple has submitted further evidence to bolster its claim that both Apple and Samsung rely on customers being locked in to one platform. See PX60.18 (internal Samsung document discussing Apple’s “very sticky/loyal subscribers”); Musika Decl. ¶ 24 (discussing testimony of Apple’s Vice President Phil Schiller); Musika Decl. ¶¶ 25-26 (discussing testimony of Samsung’s Justin Denison and Corey Kerstetter); Musika Decl. ¶ 28 (discussing Apple’s internal study of iPhone owners). In its opposition, Samsung has made no attempt to refute this evidence that its conduct has cost Apple potential downstream sales. Thus, the evidence this Court found sufficient to justify a finding of irreparable harm at the preliminary injunction stage remains undisturbed, and has in fact been strengthened by the additional evidence. Accordingly, as at the preliminary injunction stage, the Court finds that Apple has suffered some irreparable harm in the form of loss of downstream sales.
Finally, Apple has argued that it has suffered irreparable injury to its “ecosystem.” It is not clear how this alleged harm differs from the loss of downstream sales discussed above. Apple asserts harm from “network effects” and the fact that “customer demand increases as the number of other uses on the platform increases.” Mot. at 5. But how this will harm Apple in a way distinct from the loss of downstream sales (of future iPhones and of other related products), Apple does not say. Thus, the Court considers any harms to Apple’s so-called ecosystem to be included in the harm the Court has already found in loss of downstream sales.
Changes to products
Samsung argues that changes to Samsung’s products preclude a finding of irreparable harm. Specifically, Samsung argues that since 23 of its 26 infringing products have already been discontinued and that the remaining three have been altered by design-arounds so as to no longer infringe, Apple cannot be irreparably harmed by Samsung’s conduct going forward. But the law on this point is clear: a defendant’s voluntary cessation of illegal behavior does not moot a request for an injunction. See Allee v. Medrano, 416 U.S. 802, 810-11 (1974). The fact that Samsung may
have stopped selling infringing products
4 for now says nothing about what Samsung may choose to do in the future. Absent an injunction, Samsung could begin again to sell infringing products, further exposing Apple to the harms identified above. Thus, Samsung’s decision to cease selling its infringing phones does not alter the Court’s irreparable harm analysis.
The Federal Circuit has been quite clear that a showing of harm is not enough; Apple must
link any harm it suffers directly to Samsung’s infringement. This Court and the Federal Circuit have analyzed this “causal nexus” issue on a patent-by-patent basis. See Apple I, 678 F.3d at 1323- 33 (analyzing appropriateness of injunction for each of four patents separately). Apple has not analyzed its alleged harm on a patent-by-patent basis, but rather has argued for harm from each group of intellectual property rights: design patents, utility patents, and trade dress. Apple has also argued that the combined harm from the patents and trade dress combined justifies an injunction. However, Apple has identified no law supporting its position that an injunction could issue on a finding of harm caused by Samsung in the aggregate. Rather, injunctions are authorized by statute for specific acts of infringement and dilution. Moreover, the jury found that different products infringed or diluted different patents or trade dress rights. Thus, even if there was such a combined effect, it would not apply to all of the products Apple seeks to enjoin. Yet Apple has made no attempt to identify which products it believes would benefit from a hypothetical aggregate harm theory. Instead, consistent with the practice of this and other courts, including the Federal Circuit, the Court will consider whether Apple has established a causal nexus for each of its patents and trade dresses individually.
First, Apple argues that Samsung’s infringement of Apple’s design patents caused irreparable harm because Apple’s designs drive demand for the infringing products. Mot. at 7; Reply at 2. At the preliminary injunction stage, this Court found that Apple had not established a causal nexus between the D’677 and D’087 patents and the harms Apple had experienced. However, Apple now provides evidence, much of which was not presented at the preliminary
injunction stage, that customers choose smartphones based on appearance and design. See Mot. at 7-8. Thus, the Court’s finding that Apple had not established a causal nexus at that time does not determine the result here.
However, Apple’s evidence does not establish that any of Apple’s three design patents covers a particular feature that actually drives consumer demand. Apple has presented significant evidence that design, as a general matter, is important in consumer choice. See PX185.11 (Samsung study finding exterior design to be an important factor in phone choice); Bartlett Decl. Exh. 4 at 395 (third-party survey identifying “design/style” as important factor). At the same time, Samsung has come forward with a fair amount of countervailing evidence, suggesting that design is considerably less important than Apple claims. See DX 592.023 (results of Apple internal survey revealing “design/color” as the reason for choice in a very small percentage of cases); Pierce Decl. Exh. 5 (results of Apple survey ranking design eighth on a list of important features and attributes for iPhone buyers); DX572.26 (Apple’s assessment of features important to smartphone buyers, not including design). Thus, the evidence remains mixed concerning the weight smartphone buyers place on the design of the phone.
But even if design was clearly a driving factor, it would not establish the required nexus. The design of the phones includes elements of all three design patents, as well as a whole host of unprotectable, unpatented features. Apple makes no attempt to prove that any more specific element of the iPhone’s design, let alone one covered by one of Apple’s design patents, actually drives consumer demand. The Federal Circuit made clear in Apple II that customer demand for a general feature of the type covered by a patent was not sufficient; Apple must instead show that consumers buy the infringing product specifically because it is equipped with the patented feature. 695 F.3d at 1376.
Instead, Apple argues that its patents “cover the iPhone’s most prominent design elements,” Reply at 3, and therefore, if design drives demand, so do the patents. Even if the Court accepted as true Apple’s contention that the patents cover the most central design features, it would not establish that any specific patented design is an important driver of consumer demand. The only evidence Apple provides that any particular designs are important to consumers take the form of a
few quotations from Samsung’s consumer surveys and one quotation from industry review praising various elements of both Apple’s and Samsung’s phone designs. See Reply at 3. These quotations are insufficient for two reasons. First, though more specific than the general “design” allegations, they are still not specific enough to clearly identify actual patented designs. Instead, they refer to such isolated characteristics as glossiness, reinforced glass, black color, metal edges, and reflective screen. Id. Apple does not have a patent on, for example, glossiness, or on black color. Though the patented designs incorporate some of these features, see Order Regarding Design Patent Claim Construction, ECF No. 1425, at 9, the patent is for the entire design – not for any isolated characteristic. Each of the consumer quotations on which Apple relies refers only to a single characteristic. None of the consumer quotations considers more than one characteristic or discusses the way the characteristics are combined into a complete, patentable design. Apple cannot establish a causal nexus by showing an individual consumer’s demand for glossiness, or for black color, as these qualities are not themselves patentable. Second, even if these quotations did specifically reference the precise designs covered by Apple’s patents, they do not begin to prove that those particular features drive consumer demand in any more than an anecdotal way. One consumer mentioning a feature in a survey says very little about what drives consumer demand generally, and one journalist’s description of features proves nothing beyond that individual’s preferences. Thus, while Apple has presented evidence that design, as a general matter, is important to consumers more broadly, Apple simply has not established a sufficient causal nexus between infringement of its design patents and irreparable harm.
Apple has also attempted to make a showing, which it failed to make at the preliminary injunction stage, that Samsung’s infringement of Apple’s utility patents caused Apple’s harm. This Court previously found that Apple had not established that the ’381 patent was “necessary for the product to function, or a core technology of the product.” ECF No. 452 at 64. Apple now attempts to prove that Samsung’s infringement of Apple’s utility patents caused Apple harm with three types of evidence: (1) documents and testimony showing the importance of ease of use as a factor in phone choice; (2) evidence that Samsung deliberately copied the patented features; and (3) a conjoint survey performed by Apple’s expert, Dr. Hauser. Mot. at 9; Reply at 4-6.
Apple’s evidence of the importance of ease of use suffers from the same problems this Court identified with Apple’s design patent nexus evidence. First, the showing is simply too general. Many factors go into making a product easy to use, but the features for which Apple is asserting patent protection are very specific. A consumer may want a phone that is easy to use, but this does not establish that a tap-to-zoom feature, for example, or any given type of gesture, is a driver of consumer demand. Thus, Apple’s evidence of a survey showing the importance of ease of use as a general matter, PX 146.6, does not establish that infringement of any of Apple’s patents caused any harm that Apple has experienced. To establish the required nexus, Apple must make a showing specific to each patented feature. See Apple II, 695 F.3d at 1376. This, Apple has not done.
Second, to the extent that Apple’s evidence of consumer preference discusses more specific
ease-of-use-related features, it is insufficient to establish anything other than a single consumer’s
experience. For instance, Apple has offered a report from a consulting firm hired by Samsung
identifying features that Apple customers like about their phones, including individual consumers’
observations that you “can enlarge pictures and move them around” and use “[g]estures like a two
finger pinch and flick.” Mot. at 8, citing PX36. But these quotations do not identify features at a
level of specificity sufficient to determine whether they are actually covered by Apple’s patents.
Apple does not have a patent on enlarging pictures and moving them around, but rather on a
specific way of enlarging pictures. Nor does Apple have a patent on the general concept of a two-finger pinch or flick. The Federal Circuit has been quite clear that demand driven by a feature does
not establish a causal nexus unless it is more specifically driven by “the apparatus claimed in the. .
. patent.” Apple II, 695 F.3d at 1376. Moreover, evidence of what Apple customers like about
their phones does not establish that any consumers bought Samsung phones because of these same
features. Further, the language on which Apple relies consists of quotations that Samsung’s
consultant gathered from individual iPhone users; the quotations do not make any broader claims
about the market and the factors that influence consumer choice generally. Apple’s only evidence
of the market more broadly is limited to the general category of “ease of use,” which, as explained
above, is insufficient to establish a causal nexus under Apple II. Accordingly, as with the design
patents, the Court finds that Apple’s evidence that consumers value a general category of features related to Apple’s utility patents cannot, under the Federal Circuit’s guidance, establish the requisite causal nexus.
Next, Apple attempts to prove a causal nexus by pointing to evidence that Samsung intentionally copied some of Apple’s patented features. At the preliminary injunction phase, this Court considered evidence that Samsung employees believed that Samsung needed the bounce- back feature from the ’381 patent to compete with Apple. This Court and the Federal Circuit found that such evidence was not sufficient to establish the required causal nexus. See Apple I, 678 F.3d at 1327-28. Evidence of copying, like the evidence of Samsung employees’ beliefs that this Court previously considered, also proves what Samsung thought would attract purchasers, not what actually attracted purchasers. Here, as at the preliminary injunction phase, Samsung’s impressions of what might lure customers, while relevant, are not dispositive. Accordingly, though evidence that Samsung attempted to copy certain Apple features may offer some limited support for Apple’s theory, it does not establish that those features actually drove consumer demand.
Finally, Apple has presented evidence from a choice-based conjoint survey conducted by Apple’s expert Dr. John Hauser. The survey purports to establish the prices that Samsung consumers would pay for particular patented features, including the ’915 patent alone, and all three utility patents together. See PX30. Samsung disputes the validity of the study based on methodology. Opp’n at 13.
Even if the survey is taken at face value, it does not establish a causal nexus under the standard articulated by the Federal Circuit in Apple II. The parties have submitted competing declarations concerning the applicability of Dr. Hauser’s study to the question at hand. See Wind. Decl. in support of Samsung’s opposition; Sukumar Decl. in support of Samsung’s opposition; Hauser Decl. in support of Apple’s reply. The Court agrees with Samsung that evidence of “the price premium over the base price Samsung consumers are willing to pay for the patented features,” PX30, is not the same as evidence that consumers will buy a Samsung phone instead of an Apple phone because it contains that feature. See Sukumar Decl. at ¶ 4 (distinguishing between willingness to pay for a feature and consumer demand for a complete product). Apple’s only
response to this argument is to point to Dr. Hauser’s assertion that demand for a product is often defined as consumers’ willingness to pay for that product, and thus the concepts of willingness to pay and demand are interchangeable. Hauser Reply Decl. at ¶ 8. However, the survey does not measure willingness to pay for products; it measures willingness to pay for features within a particular product amongst consumers who have already purchased the particular product – in this case, a Samsung phone. It does not address the relationship between demand for a feature and demand for a complex product incorporating that feature and many other features. To establish a causal nexus, Apple would need to show not just that there is demand for the patented features, but that the patented features are important drivers of consumer demand for the infringing products. Apple’s survey evidence does not establish that any patented feature drives consumer demand for the entire product.
In sum, to establish irreparable harm, Apple must show that “the infringing feature drives consumer demand for the accused product.” Apple II, 695 F.3d at 1375. Apple did not establish at the preliminary injunction stage that the ’381 patent was central enough to Samsung’s products to drive sales, and has not established that fact here either. Nor has Apple established that either the ’915 or the ’163 patents actually drive sales of any Samsung products. Neither statements about broad categories, nor evidence of copying, nor the conjoint survey provides sufficiently strong evidence of causation. Without a causal nexus, this Court cannot conclude that the irreparable harm supports entry of an injunction. See Apple II, 695 F.3d at 1377.
Trade Dress Dilution
Apple argues that once trade dress dilution has been established, no additional showing of harm need be made for the Court to issue an injunction for the six Samsung products the jury found to dilute Apple’s trade dress. Apple argues that the dilution itself – the lessening of the capacity of the trade dress to identify Apple’s brand – is the harm, as Congress acknowledged in drafting the dilution statute.
5 The Federal Trademark Dilution Act (FTDA)
6 provides, in relevant part, that a trademark owner who establishes dilution:
shall be entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.
15 U.S.C. § 1125(c)(1). Apple argues that the choice of the word “shall,” along with the fact that the injunction shall issue “regardless of the presence or absence of . . . actual economic injury” demonstrates Congress’s intention that injunctions issue where dilution is found, without a further showing of harm.
Samsung argues that Apple must still show irreparable harm that would occur if Samsung continued to use the diluting designs, and that Apple cannot possibly make this showing because Apple no longer makes or sells the phones that embody the protected trade dresses. In support of its argument that Apple must make a specific showing of harm, Samsung points to language in the FTDA that a dilution injunction issue “subject to the principles of equity,” 15 U.S.C. § 1125(c)(1), and to three out-of-district cases applying the four eBay factors to trademark infringement cases. But the trademark infringement statute, unlike the dilution statute, does not contain the mandatory “shall” language, and says nothing about an injunction issuing without a showing of harm. 15 U.S.C. § 1116(a). Thus, cases applying the trademark infringement statute do not bear on the proper analysis of the dilution statute.
Though the Court is aware of no cases specifically discussing the irreparable harm requirement in the trade dress dilution context, the Court agrees with Apple that the language of the FTDA makes clear that Congress contemplated the issuance of an injunction upon a showing of dilution, without an additional showing of irreparable harm. The fact that the statute specifically states that no economic harm is necessary defeats Samsung’s claim that Apple must make some additional showing of harm, beyond the harm of the dilution itself, in order to be entitled to an injunction. Since the statute contemplates both that an injunction issue “subject to the principles of equity” and that an injunction issue without a showing of economic harm, the Court cannot
conclude that, even after eBay, equity requires an additional showing of harm for an injunction to issue. eBay was not interpreting the FTDA; it dealt with the Patent Act, which says that courts “may” grant injunctions, and says nothing to authorize relief in the absence of economic harm. 35 U.S.C. § 283. Thus, even if eBay’s message to consider the principles of equity in granting injunctions may apply beyond the Patent Act, it does not override the specific language of the FTDA authorizing injunctions even without a showing of economic harm. Instead, Courts have treated dilution itself as the harm. See, e.g., Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 433 (2003) (the fact that actual dilution must be proved “does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved.”).
Further, other parts of the FTDA also appear to envision an injunction as the primary remedy upon a finding of dilution. In particular, the statutory factors for determining whether a mark is famous include “the degree of recognition of the mark in the trading areas and channels of trade used by the marks’ owner and the person against whom the injunction is sought.” 15 U.S.C. § 1125 (emphasis added). This language confirms that Congress envisioned a dilution action, unlike a patent or trademark infringement action, to be an action for an injunction, such that a finding of dilution would normally result in an injunction.
Here, the jury found that Apple’s registered iPhone and unregistered iPhone 3G trade dresses were diluted by several Samsung products. Accordingly, Apple has shown the necessary harm. The fact that Apple no longer sells products embodying these particular trade dresses may, as Samsung points out, make it difficult for Apple to show continuing economic harm, but as such harm is not necessary for an injunction to issue, Apple’s discontinuation of those products is of no moment. The only case that either of the parties or the Court has found discussing dilution for a product no longer on the market found that harm could continue even though the Plaintiff had ceased to make or sell products using the protected design. See Ferrari S.p.A. Esercizio Fabbriche Automobili e Corse v. McBurnie, No. 86-1812, 1989 U.S. Dist. LEXIS 13442 (S.D. Cal. May 26, 1989) (issuing an injunction on a finding of dilution of dress, though the car embodying that trade dress had been discontinued). Thus, Apple’s cessation of use of these trade dresses does not prevent the Court from considering injunctive relief.
Regarding causal nexus for the trade dress claim, the jury found not just that Apple’s trade dresses had been diluted, but that it was the Samsung entities that diluted Apple’s trade dress. See Amended Jury Verdict, ECF No. 1931, at 11-12. This finding satisfies the requirement that the defendant’s conduct cause the harm. Accordingly, Apple has established irreparable harm with regard to its trade dress dilution claims.
However, Samsung has represented, and Apple has not disputed, that none of the Samsung products found to dilute trade dress are still on the market in any form. See Opp’n at 13-14; Decl. of Hee-chan Choi at ¶¶2-9; Decl. of Corey Kerstetter at ¶¶ 2-13. The Court is aware of no cases discussing the propriety of an injunction under the FTDA where there is no allegation of continuing dilution. The cases in which the Ninth Circuit has upheld the issuance of an injunction for trademark dilution under federal law have involved ongoing diluting conduct. See, e.g., Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165, 1177 (9th Cir. 2007). The parties have cited, and the Court is aware of, no case issuing a permanent injunction under the FTDA for products that are no longer available.
Further, the Ninth Circuit frequently identifies the appropriate test as whether “(1) its mark is famous; (2) the defendant is making commercial use of the mark in commerce; (3) the defendant's use began after the plaintiff's mark became famous,” Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999), and whether there has been a showing of actual dilution, Moseley v. v. Secret Catalogue, Inc., 537 U.S. 418, 433–34 (2003); see also Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1010 (9th Cir. 2004); Perfumebay.com, 506 F.3d at 1180. This statement that an injunction is appropriate when the defendant “is making commercial use” confirms the Ninth Circuit’s interpretation that the injunction remedy is intended to allow courts to put a stop to ongoing diluting behavior. Here, there is no ongoing diluting behavior to enjoin, and Apple cannot credibly claim to suffer any significant hardship in the absence of a trade dress injunction.
The parties have cited, and the Court is aware of, no cases applying the eBay factors to
trade dress or trademark dilution injunctions. However, Apple appears to believe that, though there
is no harm requirement for a trade dress injunction, the other three eBay factors – inadequacy of
money damages, balance of the hardships, and public interest – still bear on the appropriateness of an injunction in this context. See Reply at 6. The law is clear that trade dress dilution injunctions issue “subject to the principles of equity.” 15 U.S.C. § 1125(c)(1). Moreover, the Supreme Court’s ruling in eBay held that patent cases are subject to the same four-part injunction analysis as other civil cases. This ruling would indicate that the same four-part analysis would apply to other intellectual property cases, such as those involving trade dress dilution. Accordingly, the Court will consider each of the three remaining eBay factors in turn.
B. Inadequacy of Money Damages
Apple has argued that money cannot compensate Apple for the harm it has suffered and will continue to suffer. Mot. at 9-10. Specifically, Apple argues that its lost downstream sales cannot be calculated to a reasonable certainty, and thus cannot be compensated with a monetary award. “Difficulty in estimating monetary damages is evidence that remedies at law are inadequate.” Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 703-04 (Fed. Cir. 2008).
As noted above, the Court agrees that Apple has likely suffered, and will continue to suffer, the loss of some downstream sales. The Federal Circuit has confirmed that “the loss of customers and the loss of future downstream purchases are difficult to quantify, [and] these considerations support a finding that monetary damages would be insufficient to compensate Apple.” Apple I, 678 F.3d at 1337.
Samsung argues that the fact that Apple sought – and was awarded – significant damages demonstrates that damages can indeed compensate Apple. However, Apple has alleged multiple forms of harm. The fact that the jury was able to put a number on the harm Apple has suffered in terms of sales already lost directly to Samsung does not necessarily mean that those damages captured the full extent of Apple’s harm. Indeed, if this were the case, no Court would ever award both damages and an injunction for the same infringement, but Courts do so routinely. See, e.g., i4i Limited Partnership v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010). Thus, Apple’s evidence of lost downstream sales does provide some evidence that Apple may not be fully compensated by the damages award.
However, Apple’s licensing activity suggests that Apple does not believe that these patents are priceless, such that there can be no fair price set for Samsung’s practice of the claimed inventions or designs. Both parties discuss the evidence of Apple’s previous licenses and offers for these and other patents. Apple claims that it “would not willingly license the infringed patents and designs for use in iPhone knockoffs,” Mot. At 10. Apple attempts to draw a distinction between the current injunction request and the licenses to which Apple has agreed in the past. But Apple’s past licensing behavior does not demonstrate that it treats either these specific patents, or Samsung as a licensing partner, as somehow off limits. Specifically, Apple offered Samsung a license to some of Apple’s patents. See DX 586 (Apple presentation describing license offer to Samsung). Apple has also licensed the precise utility patents at issue here, in agreements with Nokia (’381 patent), IBM (’915 patent; ’163 patent), and HTC (’381 patent; ’915 patent; ’163 patent). See Pierce Decl., Ex. 12-1, 12-2; Beecher Decl., ECF No. 2194, at Exh. 1. Further, when asked if Apple ever licenses its “unique user experience IP,” Apple’s top licensing executive, Boris Teksler, said, “Certainly over time we have.” Tr. at 1955:23-1956:1, 1957:5. The fact that Apple is now expressing an unwillingness to license these properties does not change the fact that Apple has, in the past, felt that money was a fair trade for the right to practice its patents, and that Apple has in the past been willing to extend license offers to Samsung.
Moreover, although trade dress is not generally a form of intellectual property that is licensed to competitors, Mr. Teksler did testify that the “unique user experience IP” that Apple has previously licensed includes trade dress, along with design patents, and some utility patents. Id. at 1956:9-12. Thus, there is some evidence that Apple has not always insisted on exclusive use of its trade dress, but rather has found money to be an acceptable form of compensation.
In sum, the license evidence cuts in Samsung’s favor. Apple does not seek “to retain exclusive use of its invention,” as did the plaintiff in i4i. 598 F.3d at 862. Rather, Apple does appear willing, at times, to use its patents, including several of the patents at issue here, and even its trade dress, as tools in forging relationships and generating income. Further, Apple has agreed to licenses with companies with whom it competes, including Samsung. Though after eBay this
fact alone could not justify an injunction, see eBay, 547 U.S. at 393, it certainly weighs in Samsung’s favor.
Finally, courts have considered the defendant’s ability to pay in considering the adequacy of damages. See, e.g., Robert Bosch, 659 F.3d at 1155. Here, there is no suggestion that Samsung will have any difficulty paying the damages it owes. This fact serves to further reinforce the fact that Apple will be substantially compensated for its injuries without an injunction.
In sum, the difficulty in calculating the cost of lost downstream sales does suggest that money damages may not provide a full compensation for every element of Apple’s loss, but Apple’s licensing activity makes clear that these patents and trade dresses are not priceless, and there is no suggestion that Samsung will be unable to pay the monetary judgment against it. Accordingly, the Court finds that this factor favors Samsung.
C. Balance of Hardships
This factor “assesses the relative effect of granting or denying an injunction on the parties.” i4i, 598 F.3d 831, 862. Here, neither party would be greatly harmed by either outcome. Apple has not identified any hardship it would face in the absence of an injunction. Apple’s only argument that the balance of hardships weighs in its favor seems to be its claim that Samsung’s conduct was willful.
7 See Mot. at 10-11. An injunction, however, may not be used as a punishment. See Hynix Semiconductor Inc. v. Rambus Inc., 609 F. Supp. 2d 951, 969 (N.D. Cal. 2009) (“[A]n injunction may deter future harm, but it may not punish.”). A finding of willfulness would not change the effect the injunction will have on Apple. Apple’s argument that willfulness tips the balance of hardships in Apple’s favor thus appears to depend on an impermissible use of an injunction as punishment. Apple has not identified any other hardship.
If an injunction were granted, Samsung would not be able to sell any of the twenty-six products found to infringe Apple’s patents. But as Samsung has made clear in its briefing, it no longer sells 23 of these products in any form, Opp’n at 13-14, and has already begun to implement
design-arounds for the three products it does still make.
8 Id. What is more, Samsung has entirely stopped selling the six trade dress diluting products. Having made this argument in the hopes of establishing that Apple cannot be harmed, Samsung cannot now turn around and claim that Samsung will be burdened by an injunction that prevents sale of these same products.
Samsung has further argued that an injunction would “disrupt its relationships with carriers who may be selling pre-existing stock and with consumers who may still be using the accused products.” Id. at 18. But Samsung has not explained how an injunction would cause the asserted disruptions, or what hardship they would actually present for Samsung, as opposed to hardship for the carriers and consumers. Further, carriers who sold the infringing products have assumed the risk of this type of disruption. Courts have found that “one who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against a continuing infringement destroys the business so elected.” Telebrands Direct Response Corp. v. Ocation Commc’ns, Inc., 802 F. Supp. 1169, 1179 (D.N.J. 1992). Harm to consumers is more appropriately considered under the fourth factor, addressed below. As neither party will suffer any particularly great hardship based on either outcome, the Court finds that this factor is neutral.
D. Public Interest
Courts have recognized that “the touchstone of the public interest factor is whether an injunction, both in scope and effect, strikes a workable balance between protecting the patentee’s rights and protecting the public from the injunction’s adverse effects.” i4i, 598 F.3d at 863. Courts consider “the harm that an injunction might cause to consumers who can no longer buy preferred products because their sales have been enjoined, and the cost to the judiciary as well as to the parties of administering an injunction.” Motorola, 2012 WL 2376664 at *20.
Here, the injunction Apple has sought is extremely broad, and would prevent the sale of 26 specific products, as well as other potential future products incorporating the protected features. Relief of this breadth is significantly less likely to be in the public interest than a very narrowly tailored injunction. See i4i, 598 F.3d at 863 (finding that a very narrow injunction has less of an impact on the public than would a broad injunction).
Apple has articulated just one argument that an injunction would be in the public interest: the public’s interest in preserving the rights of patentholders. Mot. At 11. As this Court found at the preliminary injunction stage, the public interest does favor the enforcement of patent rights to promote the “encouragement of investment-based risk.” See Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 1985).
On the other hand, Samsung has identified some potential consequences of the requested injunction that would not be in the public interest. Specifically, Samsung has argued that an injunction would be disruptive to suppliers, retailers, carriers, and customers. Opp’n at 19. The Federal Circuit has agreed that disruption to carriers and other third parties can weigh against an injunction. See Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 704 (Fed. Cir. 2008). However, if Samsung is to be believed that it is no longer manufacturing or selling any infringing phones, then this disruption will be limited to existing stock, and would surely be brief.
Further, third- party retailers should not be protected from the disruption when they have been benefitting from Samsung’s infringement. As explained above, Courts have recognized that “one who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against a continuing infringement destroys the business so elected.” Telebrands, 802 F. Supp. at 1179.
Samsung has also argued that an injunction would cause great harm to the public because it would reduce competition in the phone market, leaving customers beholden to Apple, who cannot meet the demand for phones. Samsung overstates the danger. Consumers will have substantial choice of products, even if an injunction were to issue. Apple and Samsung, despite being direct competitors, are not the only suppliers of mobile phones in the market, nor are Samsung’s
infringing phones the only phones Samsung offers. Even if Samsung were able to establish that Apple will not be able to supply as many iPhones as the market would like to buy – and the news reports of such rumors Samsung cites, see opp’n at 19, are clearly insufficient to establish any such thing – it does not follow that an injunction removing three of Samsung’s products from the market would leave customers with no other smartphone options.
However, the injunction would make certain phones unavailable to consumers. It would not be equitable to deprive consumers of Samsung’s infringing phones when, as explained above, only limited features of the phones have been found to infringe any of Apple’s intellectual property. Though the phones do contain infringing features, they contain a far greater number of non-infringing features to which consumers would no longer have access if this Court were to issue an injunction. The public interest does not support removing phones from the market when the infringing components constitute such limited parts of complex, multi-featured products.
In addition, Samsung argues that an injunction would create an administrative burden on the Court, as it would require the Court’s continuing supervision to enforce. This is likely true, though on its own, it does not carry significant weight.
Finally, regarding trade dress, the Court finds that, in the absence of case law authorizing a trade dress dilution injunction where there are no diluting products still on the market, an injunction cannot be in the public interest. The potential for future disruption to consumers would be significantly greater if this Court were to issue an injunction, and such disruption cannot be justified in the absence of clear authority.
In sum, while the public interest does favor the protection of patent rights, it would not be in the public interest to deprive consumers of phones that infringe limited non-core features, or to risk disruption to consumers without clear legal authority.
Weighing all of the factors, the Court concludes that the principles of equity do not support the issuance of an injunction here. First and most importantly, Apple has not been able to link the harms it has suffered to Samsung’s infringement of any of Apple’s six utility and design patents that the jury found infringed by Samsung products in this case. The fact that Apple may have lost
customers and downstream sales to Samsung is not enough to justify an injunction. Apple must have lost these sales because Samsung infringed Apple’s patents. Apple has simply not been able to make this showing. Though this is a case where the “plaintiff practices its invention and is a direct market competitor,” Edwards Lifesciences, 699 F.3d at 1315, it is not a case where the patented inventions are central to the infringing product. Without the required causal nexus, the parties’ status as direct competitors simply does not justify an injunction.
Further, the Court has found that neither the inadequacy of money damages nor the public interest favors an injunction here, for either patent infringement or trade dress dilution. Regarding trade dress dilution specifically, as explained above, the case for an injunction is especially weak, because there are no diluting products still available, even without an injunction.
Finally, this Court has previously noted the relevance to the present situation of Justice
Kennedy’s observation in eBay:
“When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.”
547 U.S. at 396-97. The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple’s patents. Though Apple does have some interest in retaining certain features as exclusive to Apple, it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions. Especially given the lack of causal nexus, the fact that none of the patented features is core to the functionality of the accused products makes an injunction particularly inappropriate here.
This case is simply not comparable to i4i or to Edwards, the Federal Circuit’s most recent case discussing permanent injunctions in the patent context. In i4i, the plaintiff was a very small company whose business depended on its patented product, and the defendant was a large company of whose business, the infringing product was but a small part. Thus, the defendant’s infringing product “significantly change[d] the relevant market. . . forcing i4i to change its business strategy.” 598 F.3d at 862. Without an injunction, there was simply no way for the plaintiff to continue to
compete. Here, Samsung may have cut into Apple’s customer base somewhat, but there is no suggestion that Samsung will wipe out Apple’s customer base, or force Apple out of the business of making smartphones. The present case involves lost sales – not a lost ability to be a viable market participant. Edwards involved a patent that was much more central to the infringing product than the patents at issue here; there was no doubt that the patented technology in that case was a central force driving sales of the infringing product. 699 F.3d at 1308 (describing a prosthetic heart valve implanted by use of a collapsible stent, and a patent for the necessary collapsible stent). If the patents at issue here were similarly essential to the core of Samsung’s products, the Court might see things differently.
In sum, to the limited extent that Apple has been able to show that any of its harms were caused by Samsung’s illegal conduct (in this case, only trade dress dilution), Apple has not established that the equities support an injunction. Accordingly, Apple’s motion for a permanent injunction is DENIED. IT IS SO ORDERED.
Dated: December 17, 2012
LUCY H. KOH
United States District Judge
In the same motion, Apple also requested an enhancement of $535 million to the jury’s damages award under both the Patent Act and the Lanham act. Because this request is intertwined with the other damages issues in this case, the Court will address Apple’s enhancement request in a separate Order.
The Federal Circuit’s Apple II opinion addresses a preliminary injunction. However, the irreparable harm requirement applies to both preliminary and permanent injunctions, and there is nothing in the Apple II opinion suggesting that its discussion of irreparable harm should be limited to the preliminary injunction context. Indeed, Courts regularly cite cases from the two contexts interchangeably. See, e.g., Apple v. Samsung Electronics Co., 678 F.3d 1314, 1323 (Fed. Cir. 2012) (“Apple I”) (preliminary injunction opinion citing Voda v. Codis Corp., 536 F.3d 1311 (Fed. Cir. 2008) (permanent injunction opinion)).
Apple has also alleged harm stemming from Samsung’s dilution of its trade dress. This harm raises different issues, and is addressed separately below.
The Court takes no position on whether or not Samsung’s design-arounds infringe any of Apple’s
This argument is distinct from Apple’s argument at the preliminary injunction stage, which this Court rejected, that the erosion of design distinctiveness could constitute irreparable harm suffered in connection with design patent infringement. There, Apple had no authority for its argument that the erosion of distinctiveness was a cognizable harm for a patentee. Because the FTDA explicitly addresses the requirements for an injunction, Apple’s present argument is quite different, and draws on different authority and reasoning.
The FTDA applies to trade dress as well as trademark. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992).
Apple’s briefs argue that the balance of equities tips in its favor – not the balance of hardships. Though historically the factor has been denominated using both terms, recent Supreme Court and Federal Circuit cases have consistently referred to the balance of hardships. See eBay, 547 U.S. at 391; i4i, 598 F.3d at 862; Robert Bosch, 659 F.3d at 1156;
The Federal Circuit’s recent decision in Edwards Lifesciences v. Corevale, 699 F.3d 1305 (Fed. Cir. 2012), does not render this fact any less relevant. The court in Edwards did reverse the denial of an injunction that had been granted in part in reliance on the defendant’s statement that it was going to stop manufacturing in the United States, depriving the injunction of its practical effect, and thus largely stripping the balance of hardships and public interest factors of their power. Slip Op. at 18-19. The Federal Circuit reversed the denial, noting that the defendant had not, in fact, ceased manufacture in the United States, making that basis for denying an injunction erroneous. Id. at 19. It did not suggest that district courts should not consider the practical effect, or lack thereof, of an injunction.
At the December 6, 2012 hearing, Samsung represented that there were approximately 77,000 infringing units currently with retailers that could be subject to Apple’s requested injunction.
"An evidentiary hearing is justified only when these materials are sufficient on their face to require setting aside the verdict.
Where a losing party in a civil case seeks to impeach a jury verdict, it must be shown by a
preponderance of the evidence that the outcome would have been different. Unless the affidavits
on their face support this conclusion, no evidentiary hearing is required. Unless such a showing is
made at the evidentiary hearing, no new trial is required.” Hard, 870 F.2d at 1461. So it's on that basis that she denied the hearing. It's a shame, in that a lot of the public, including me, will now believe that this trial was unfair to Samsung and that the foreman misled the other jurors as to the law on prior art. It leaves a bad taste in the air. After all, she has now ruled in effect that even if the jury foreman was dishonest, it's too late to do anything about it. And here's where I think the judge erred factually:
Samsung does not suggest that Mr. Hogan improperly consulted another source during jury deliberations, nor that he introduced any factual material whatsoever. He did introduce "factual material", in that he
"instructed" the jury as to how prior art is determined to be valid or not, information that was not in harmony with how the law actually works or in harmony with the jury instructions they had been given by this judge, basing his instructions on what he said he learned from his own defense of his patents at the USPTO, and on showing them code, which he claimed to be able to read. That was the basis for the entire verdict on the utility patents and the design patents. And it was wildly off.
Hogan also in post-trial statements
said that it wasn't the jury's place to decide if patents had issued properly. That was precisely the question before them. A hearing could have established if the entire jury was persuaded by him that this was the way the law works. If so, Samsung was prejudiced. It shouldn't be the law that a company must pay a billion dollars based on serious mistakes by a jury and nobody can even question it or even look into it. Juries are presumed to do their best to follow instructions, but when they utterly fail to get it right, someone needs to be able to do something about it, even if it's rare, because justice -- and the appearance of justice -- is more important than the sanctity of jury verdicts. Of course, the judge can address that billion dollar judgment when she rules on Samsung's JMOL motion.
Here is her order on the Samsung motion, as text:
ORDER RE: JUROR MISCONDUCT
On August 21, 2012, a jury returned a verdict that Samsung was liable to Apple for infringement and dilution of a range of patents and trade dresses. ECF No. 1890. Samsung has now filed a motion for a new trial. ECF No. 2013 (“Motion”) at 3. Samsung alleges that the jury foreperson, Velvin Hogan, gave dishonest answers during voir dire, and that statements he made in interviews given after the verdict show that he was biased. Id. at 2-3. Specifically, Samsung claims that Mr. Hogan lied about his involvement nineteen years ago in a lawsuit with Seagate, a company in which Samsung is, as of 2011, a 9.6% shareholder. Samsung also argues that Mr. Hogan improperly presented extraneous prejudicial information during jury deliberations. Id. at 3.
For the reasons explained below, Samsung’s request for an evidentiary hearing and a new trial on these grounds is DENIED.
Jury selection in this case took place on July 30, 2012. The Court conducted extensive voir dire, and then allowed counsel for each side to question prospective jurors for an additional twenty minutes each. Transcript of Proceedings held on July 30, 2012 (“Tr.”) at 212:1-4. The Court asked a number of questions to elicit factual information from prospective jurors about their experiences and potential relationships with the parties and the issues in the case. The Court also repeatedly questioned jurors as to their ability and willingness to be fair and impartial, and to follow the law as it was given to them.
Initially, the Court instructed jurors to “raise your hand if you have such strong feelings about this case, the parties, what the charges and the claims are that you could not be fair and impartial.” Tr. at 45:5-9. Five prospective jurors raised their hands and were questioned further, but Mr. Hogan was not among them. The Court then asked whether any prospective juror knew any of the parties, witnesses, or attorneys in the case. Again, Mr. Hogan did not raise his hand. The Court then again asked prospective jurors to “raise your hand if what you have read or heard about this case would affect your ability to be fair and impartial to both sides.” Tr. at 100:13-16. Mr. Hogan did not raise his hand. The Court went on to ask “if you’ve basically already formed an impression in your mind about – and this is for everybody – if you’ve basically already formed an impression in your mind about who you think ought to win this case based on what you’ve read.” Tr. at 100:24-101:4. Two prospective jurors raised their hands, but Mr. Hogan did not. The Court continued its questioning, instructing prospective jurors: “If you cannot keep an open mind and you cannot decide this case based solely on the evidence that’s admitted during this trial, based on what you’ve read previously about this case, raise your hand.” Tr. at 101:13-17. Mr. Hogan did not
raise his hand. The Court then asked “if you have any belief or feeling towards any of the parties,
any of the lawyers, any of the witnesses that would make it difficult to be fair and impartial. If so, would you raise your hand?” Tr. at 101:24-102:3. Mr. Hogan did not raise his hand. The Court then asked, “does anyone else have any special interest, financial or otherwise, in the outcome of this trial?” Tr. at 102:7-9. Again, Mr. Hogan did not raise his hand.
The Court then moved on to the question of prospective jurors’ ability to follow the law:
Now, many of you may have your own views about what our laws should be, but I just need to ask you one more time whether you would accept the instructions on the law that I give you and not insert and substitute your own personal views of what the laws should be. Whether you disagree or disagree with what I tell you the law is, will you accept it? If you cannot do that, will you please raise your hand?
Tr. at 103:16-25. Mr. Hogan did not raise his hand. The Court then asked whether the prospective jurors had “been negatively impacted
by the recent economic downturn?” Tr. at 104:2-4. Here, Mr. Hogan did raise his hand.
He then had the following exchange with the Court:
The Court: Let me start with Mr. Hogan. Go ahead, please. Mr. Hogan: When the economy – excuse me – went south, I was trying to establish a start-up, and it went belly up and, in the course of events, I diminished all savings that I had and subsequently, through foreclosure, lost my house.”
Tr. at 104:12-105:11. The Court then asked prospective jurors, “[H]ave you or a family member or someone very
close to you ever been involved in a lawsuit, either as a plaintiff, a defendant, or as a witness?” Tr. at 148:18-21. Mr. Hogan answered that “[i]n 2008, after my company went belly up, the programmer that worked for me filed a lawsuit against me and ultimately, across the next few
months, it was dismissed and in such a fashion that neither one of us could sue the other one for
The Court: I’m sorry to hear that.
Mr. Hogan: So that was a negative impact. But in terms of anything else, I feel totally impartial to the proceedings.
The Court: Okay. Would you – you’ve seen the number of days that this trial would require, correct?
Mr. Hogan: Yes.
The Court: Would it be a hardship for you to serve this many days?
Mr. Hogan: No, not at this time.
The Court: Okay. All right. And nothing about your experience – I’m very sorry to hear about it – that would make you feel resentful to one of these parties here today?
Mr. Hogan: Of course not.
The Court: Okay. Thank you.
that matter.” Tr. at 148:25-149:5. The Court then elicited a few further details, before asking whether there was “anything about that experience that would affect your ability to be fair and impartial to both sides in this case?” Tr. at 148:14-16. Mr. Hogan responded, “I don’t believe so.” Tr. at 149:17.
After questioning another prospective juror about lawsuit experience, the Court then
returned to Mr. Hogan:
The Court: So I want to make sure that both Mr. Hogan, and [the other prospective juror], that you would apply the law as I instruct you and not based on your understanding of the law based on your own cases. Is that correct, Mr. Hogan? Tr. at 152:25-153:5.
Mr. Hogan: Yes.
There was, however, an additional lawsuit in Mr. Hogan’s past that Mr. Hogan did not disclose during this exchange: Mr. Hogan was sued by his former employer, Seagate, in 1993 (Seagate Tech., Inc. v. Hogan, Case No. MS-93-0919 (Santa Cruz Mun. Ct. Filed June 30, 1993)). Nor did he mention that he filed for personal bankruptcy six months after being sued by Seagate (In re Velvin R. Hogan and Carol K. Hogan, Case No. 93-58291-MM (Bankr. N.D. Cal. Dec. 27, 1993)), which appears, at least in part, to be due to that lawsuit. RT 148:25-150:11; Estrich Decl., Exs. A, B.
Next, the Court questioned prospective jurors about their experiences with the patent
system. Mr. Hogan indicated that he had a patent for video compression software, which had been
issued in 2008, and a second patent application that was currently pending. Tr. at 163:19-24. After
hearing about another prospective juror’s patent experience, the Court then asked both of them
The Court: You all have a lot of experience, but will you be able to decide this case based solely on the evidence that’s admitted during the trial? Mr.
Tr. at 165:14-18. The Court then asked the entire pool of prospective jurors, “If you have strong feelings or strong opinions about either the United States patent system or intellectual property laws, would you raise your hand, please?” No prospective jurors raised their hands.
The Court: Okay. Mr. Hogan says yes.
The last portion of the Court’s voir dire involved each prospective juror responding to a
series of demographic and biographical questions about their education, profession, families, and
hobbies. When Mr. Hogan’s turn came, he said: “I was in the hard drive industry for 35-plus years
as an electrical engineer. I worked for companies like Memorex, Digital Equipment Corporation to
name a few, seven altogether.” Tr. at 190:19-23. The Court then asked Mr. Hogan to list the seven
companies. He responded:
Okay. To begin with, I worked for a company that no longer exists called Caylis memories; then Memorex Corporation; then Storage Technology Corporation in Colorado; Digital Equipment Corporation in Colorado Springs; I worked for Seagate Technology; and the last company was – and then Micropolis Corporation, which no longer exists. And Quantum.”
Tr. at 191:20-192:2. The Court engaged in no further questioning of Mr. Hogan, and turned
the questioning over to the attorneys. Counsel for Samsung, William Price, asked Mr.
Hogan several detailed questions:
Mr. Price: Mr. Hogan, would – were you actively involved in the prosecution of your patent? That is, obviously you had an attorney?
Mr. Hogan: Yes.
Mr. Price: And my understanding is yours was not for your company, but it was actually you?
Mr. Hogan: Yes.
Mr. Price: So how – how active were you in that process of working with the patent office?
Mr. Hogan: We spoke almost every day until we got it penned and submitted. Very active.
Mr. Price: And you –
Mr. Hogan: Even when the office actions came back, I was active in – with my attorney to settle those.
Mr. Price: Okay. And so you have a lot of back and forth? Was it like a six-year period, I think?
Mr. Hogan: From 2001 when – 2002, excuse me, until 2008 when it was actually issued. So yes.
Mr. Price: Okay. Now, does that experience give you any bias for or against, for example, the patent office?
Mr. Hogan: No, not really. Although I will say that I was glad to hear that they opened – that they’re contemplating opening up an office here in town to speed the process along. It took me seven years to get my patent, and that seemed like a long time to wait, you know?
Mr. Price: And did you go to D.C.?
Mr. Hogan: No, no, no. It was all done over the phone and through correspondence. But seven years seemed like a long time, and the first four years of that, there was no activity from the patent office whatsoever.
Mr. Price: And I wasn’t exactly clear then, what was the technology that your patent was on?
Tr. 228:19- 230:18. Though this exchange included questions about Mr. Hogan’s experiences with the patent system and his hobbies, Samsung’s counsel expressed no concerns about Mr. Hogan’s past employment at Seagate.
Mr. Hogan: Video compression.
Mr. Price: That’s your hobby, too. That’s your hobby, also I think you said?
Mr. Hogan: Yes.
Mr. Price: Anything else that you have as a hobby? No? Okay.
The basis for Samsung’s present motion, however, is a relationship between Samsung and Seagate. In April 2011, Seagate purchased Samsung’s hard disk drive-manufacturing division for $1.375 billion in cash and stocks, which resulted in Samsung holding approximately 9.6% of Seagate’s stock and becoming Seagate’s single largest direct shareholder. Motion at 2; ECF No. 2013, Declaration of Susan Estrich in Support of Samsung’s Rules 50 and 59 Motion (“Estrich Decl.”), Exh. C at 1. Despite this relationship, counsel for Samsung did not ask Mr. Hogan about his relationship with Seagate, and did not seek to elicit any information about whether that relationship might influence Mr. Hogan’s view in any way.
Samsung asserts that it learned of Mr. Hogan’s lawsuit with Seagate from Mr. Hogan’s bankruptcy file, which Samsung reviewed only after the trial had concluded.
1 ECF No. 2022, Supplemental Declaration of Michael T. Zeller in Support of Samsung’s Rules 50 and 59 Motion (“Zeller Decl.”) at ¶ 5. Though Samsung learned of the bankruptcy through its own research on July 30, 2012, the day of voir dire, see id., Samsung did not request the bankruptcy file, which mentions Mr. Hogan’s litigation with Seagate, until September 4, 2012, five days after the verdict in Apple’s favor. Id. ¶¶ 4-5, 9. Samsung received the bankruptcy file on September 10, 2012, and discovered the lawsuit. Id. ¶ 5. Samsung also learned on September 12, 2012, that the lawyer who filed the Seagate lawsuit against Mr. Hogan is the husband of a partner in the law firm of Quinn Emanuel. Id. ¶ 10. Although Quinn Emanuel represents Samsung in the present case, the partner was not a part of the trial team, nor has she worked on any part of this litigation. Id.
In post-verdict interviews, Mr. Hogan made several comments on the case and his involvement as the jury foreperson. He stated that he “expected to be dismissed from the jury because of [his] experience,” but was “very grateful to have been part of this case.” Estrich Decl., Ex. H. at 2. He also said, “[e]xcept for my family, it was the high spot of my career. You might even say my life.” Id., Ex. I at 1. Mr. Hogan was pleased that he was selected for the jury “because [he] wanted to be satisfied from [his] own perspective that this trial was fair, and protected copyrights and intellectual property rights, no matter who they belonged to.” Id. In other interviews, he disclosed that “[t]he jury ‘wanted to send a message to the industry at large that patent infringing is not the right thing to do, not just Samsung,’” and that the “message [they] sent was not just a slap on the wrist.” Id., Exs. J at 1, K at 1.
In addition to these sentiments, Mr. Hogan also commented on the deliberation process itself, and what legal tests he and the other jurors applied during that process. He explained, among other things, his view that whether design patents infringe depends on the “look and feel” of the device, and that a prior art reference is not invalidating unless it is “interchangeable.” Id., Exhs. L at 2-3, N at 2.
Samsung now argues that this Court should hold a hearing with all jurors to fully examine Mr. Hogan’s conduct during voir dire and jury deliberations. Motion at 3. Samsung contends that a new trial is warranted based on Mr. Hogan’s conduct because it shows that he was a biased juror who lied in order to obtain a seat on the jury, and that he inappropriately introduced extraneous prejudicial information to jury deliberations. Id. at 2.
Apple opposes Samsung’s request for an evidentiary hearing. ECF No. 2050, Apple’s Opposition to Samsung’s Rules 50 and 59 Motion (“Opposition”) at 4. Apple argues that Samsung waived its right to object to Mr. Hogan’s alleged dishonesty during voir dire by gambling on a favorable verdict despite having the opportunity to investigate the matter, and only raising the issue after an unfavorable verdict. Id. at 1-2. Apple also argues that statements made by Mr. Hogan in post-verdict interviews regarding the allegedly “incorrect and erroneous standards” applied during jury deliberations and cited by Samsung are barred by Federal Rule of Evidence 606(b), and thus
cannot form the basis for a new trial. Opposition at 3-4.
Samsung’s argument is based on two contentions. First, Samsung claims that Mr. Hogan’s bias should be presumed because he deliberately concealed his lawsuit with Seagate during voir dire when he gave an incomplete answer to the Court’s question about prior lawsuits. Samsung alleges that this lie was motivated by a desire to secure a seat on the jury. Motion at 2. Second, Samsung argues that Mr. Hogan improperly introduced incorrect and erroneous standards during the jury deliberation process. Id. at 3.
Samsung has waived its claim for an evidentiary hearing and a new trial based on Mr. Hogan’s alleged dishonesty during voir dire. Prior to the verdict, Samsung could have discovered Mr. Hogan’s litigation with Seagate, had Samsung acted with reasonable diligence based on information Samsung acquired through voir dire, namely that Mr. Hogan stated during voir dire that he had worked for Seagate.
1. Legal Standard
The right to challenge the partiality of a jury verdict based on a juror’s alleged misconduct during voir dire may be waived. See McDonough Power Equip., Inc. v. Greenwood, 464 U.S. 548 at 551 n. 2 (“It is not clear . . .whether the information stated in Greenwood’s affidavit [about the juror] was known to respondents or their counsel at the time of the voir dire examination. If it were, of course, respondents would be barred from later challenging the composition of the jury when they had chosen not to interrogate [the] juror ... further upon receiving an answer which they thought to be factually incorrect.” (citing Johnson v. Hill, 274 F.2d 110, 115-16 (8th Cir. 1960))); see also City of Richmond v. Madison Mgmt. Grp., Inc., 918 F.2d 438, 459 (4th Cir. 1990) (“If the right to challenge a juror is waived by failure to object at the time the jury is empanelled if the bases for objection might have been discovered during voir dire, such a right surely is waived if the basis could have been discovered before voir dire.”) (citation and internal quotation marks omitted).
The Supreme Court recently reiterated that constitutional rights can be waived, even in complex cases:
We have recognized “the value of waiver and forfeiture rules” in “complex” cases, Exxon Shipping Co. v. Baker, 554 U.S. 471, 487-88, n.6 (2008), and this case is no exception. In such cases, as here, the consequences of “a litigant ... ‘sandbagging’ the court—remaining silent about his objection and belatedly raising the error only if the case does not conclude in his favor,” Puckett v. United States, 556 U.S. 129,  (2009) (some internal quotation marks omitted)—can be particularly severe. . . . Pierce repeatedly stated to the Bankruptcy Court that he was happy to litigate there. We will not consider his claim to the contrary, now that he is sad.
Stern v. Marshall, 131 S.Ct. 2594, 2608 (2011).
The waiver doctrine as explicated in McDonough and Stern reflects courts’ disfavor of
litigants who fail to act on information in their possession only to claim later that such information resulted in a violation of their rights. For example, in United States v. Brazelton, 557 F.3d 750, 755 (7th Cir. 2009), counsel for the defendant did not challenge for cause a juror who was the second cousin to the victim of a shooting by the defendant, which led to the defendant’s arrest on the drug and weapons charges for which he was on trial. On appeal, the defendant argued that he was denied his right to an impartial jury, which he claimed was not waivable. The Seventh Circuit disagreed:
In this circuit, there is no ambiguity on the question whether the right to an impartial jury can be waived. We have held that “[t]he Sixth Amendment right to an impartial jury, like any constitutional right, may be waived.” United States v. Zarnes, 33 F.3d 1454, 1472 (7th Cir. 1994); accord United States v. Joshi, 896 F.2d 1303, 1307 (11th Cir. 1990). Brazelton’s on-the-record decision to pass up not one, but two opportunities to ask that Juror Number Four be struck for cause was a waiver. If a defendant is allowed to twice forego challenges for-cause to a biased juror and then allowed to have the conviction reversed on appeal because of that juror’s service, that would be equivalent to allowing the defendant to “plant an error and grow a risk-free trial.” United States v. Boyd, 86 F.3d 719, 722-23 (7th Cir. 1996).
Brazelton, 557 F.3d at 755.
The discussion in United States v. Bolinger, 837 F.2d 436, 438-39 (11th Cir. 1988), is
similarly instructive. In Bolinger, on a weekend break in the middle of jury deliberations, an attorney for the defense learned from a relative of a juror’s neighbor that the juror had purportedly formed a view of the defendant’s guilt prior to the close of evidence. The jury did not return a
verdict until three days later. Rather than inform the court of what he had learned, defense counsel
filed a post-verdict motion for a new trial based on the juror’s bias and purported misconduct. The Eleventh Circuit upheld the district court’s denial of the new trial motion, explaining:
Our cases teach that “a defendant cannot learn of juror misconduct during the trial, gamble on a favorable verdict by remaining silent, and then complain in a post- verdict motion that the verdict was prejudicially influenced by that misconduct.” United States v. Jones, 597 F.2d 485,  n.3 (5th Cir. 1979). In Jones, the court explained that a motion for new trial based on juror misconduct is a form of new trial motion for newly discovered evidence. Id. at 488. As such, the motion must be supported by proof that the evidence of misconduct was not discovered until after the verdict was returned. In the particular context of juror misconduct, this rule serves to ensure that the trial court is given every available opportunity to attempt to salvage the trial by ridding the jury of prejudicial influences. Thus, where the defendant or defense counsel knows of juror misconduct or bias before the verdict is returned but fails to share this knowledge with the court until after the verdict is announced, the misconduct may not be raised as a ground for a new trial. Id.; see also United States v. Edwards, 696 F.2d 1277, 1282 (11th Cir. 1983) (no abuse of discretion in refusing to interrogate jury about alleged juror misconduct where defendant waited to hear the verdict before contesting jury’s impartiality); United States v. Dean, 667 F.2d 729, 732-34 (8th Cir. 1982) (en banc) (untimely notification of juror misconduct waives right to new trial even where actual prejudice can be shown).
Bolinger, 837 F.2d at 438-39 (footnote and subsequent history omitted).
Further, actual knowledge of misconduct is not required. Ultimately, parties waive their
right to challenge the jury’s impartiality if they are aware of the evidence giving rise to the motion for a new trial or fail to exercise reasonable diligence in discovering that evidence. See Bolinger, 837 F.2d at 439 (“Although the June 10 telephone call did not disclose the full extent of [the juror’s] misconduct, enough information was relayed that counsel should have contacted the district court for instructions while counsel continued his investigation. . . . [The defendant’s] decision to gamble on the jury rather than inform the court of the problem in time to allow the court to determine if corrective action was possible prior to verdict is fatal to his claims regarding juror Hunter.”).
To be sure, actual knowledge of facts establishing juror bias is an absolute bar to any challenge to that juror after a verdict. McDonough, 464 U.S. at 551 n.2. But a litigant cannot consciously avoid learning the truth in the hope the jury verdict will be in his favor. See Johnson,
274 F.2d at 115-16. In Johnson, a decision on which the Supreme Court relied in McDonough, the Eighth Circuit explained:
The right to challenge the panel or to challenge a particular juror may be waived, and in fact is waived by failure to seasonably object. It is established that failure to object at the time the jury is empanelled operates as a conclusive waiver if the basis of the objection is known or might have been known or discovered through the exercise of reasonable diligence, or if the party is otherwise chargeable with knowledge of the ground of the objection.
274 F.2d at 115-16 (quoting Batsell v. United States, 217 F.2d 257, 260 (8th Cir. 1954)) (emphasis added, internal citations omitted); see also Gray v. Hutto, 648 F.2d 210, 212 (4th Cir. 1981) (“In short, however strong Gray’s case for a mistrial might have been had the court been immediately notified, counsel’s deliberate inaction amounted to a conscious decision to find out what the jury was going to do.”); Burden v. CSX Transp., Inc., No. 08-CV-04-DRH, 2001 WL 3793664, at *8-9 (S.D. Ill. Aug. 30, 2011) (“The Court agrees because all the information about Juror Nos. 2 and 9 submitted by defendant was found in public documents, primarily by internet searches, consistent with McDonough, Johnson, and Stanczak [v. Penn. RR Co., 174 F.2d 43, 48-49 (7th Cir. 1949)] the Court finds that defendant waived its present objections because the basis of the objections might have been known or discovered through the exercise of reasonable diligence. Defendant gambled with the possibility of a verdict and now raises questions it might have raised earlier.”).
The facts of Johnson are also illustrative. In a personal injury case arising from a multi-car accident, prospective jurors were asked whether they or their family members were involved in accidents of any kind. Juror Harry Strege answered “no” to those questions, when in fact his son had been in a car accident, and Strege had acted as a guardian ad litem in a property damage claim arising from the accident. In affirming the district court’s rejection of the motion for a new trial, the Eighth Circuit noted that defense counsel, having “information from two sources that an individual by the name of ‘Harry’ or ‘Harris’ Strege had been involved in a property damage suit in Richland County ... was possessed of information which was sufficient to put him on notice as to the prior Strege incident.” Johnson, 274 F.2d at 116. Defense counsel “made no request of the court for a further interrogation.” Id. The Johnson court further noted that the trial spanned a
week, “which certainly afforded counsel ample time and opportunity to apprise the court of his knowledge with respect to juror Strege.” Id.
As Johnson and subsequent cases make clear, litigants and their counsel must act with reasonable diligence based on information about juror misconduct in their possession, or they will be deemed to have waived their right to challenge the verdict based on that juror misconduct. Delay is of special concern where it appears that a party may have been taking a calculated risk that the concealed information would turn out to work in that party’s favor.
2. Lack of Reasonable Diligence
Samsung asserts that Mr. Hogan’s dishonesty during voir dire “prejudicial[ly] impair[ed] [its] right to the exercise of peremptory challenge.” Motion at 2 (internal quotations and citations omitted). Apple argues, and the Court agrees, that waiver is appropriate here because of Samsung’s lack of reasonable diligence in investigating Mr. Hogan’s relationship with Seagate. Opposition at 1-2.
As an initial matter, it is not clear whether Mr. Hogan was intentionally dishonest. Neither party has conclusively shown whether Mr. Hogan intentionally concealed his lawsuit with Seagate, or whether he merely forgot to mention it when asked by the Court whether he was ever involved in a lawsuit, or whether he believed that the answer he gave had sufficiently responded to the Court’s question. Further, it is not even clear that Mr. Hogan knew of any relationship between Seagate and Samsung. Mr. Hogan left Seagate’s employment in 1993, and his lawsuit against Seagate was nearly two decades ago. Further, as detailed above, Mr. Hogan repeatedly stated that he had no bias toward either party, and could be a fair and impartial juror. However, because the Court finds that Samsung waived its right to object to Mr. Hogan’s answer even if it was dishonest, no evidentiary hearing or factual finding regarding Mr. Hogan’s state of mind during that portion of voir dire is required.
Samsung argues that the issue can be raised now because the Seagate lawsuit was not discovered until after the verdict. ECF No. 2131, Samsung’s Reply in Support of Rules 50 and 59 Motion (“Reply”) at 4. Samsung further contends that it was post-verdict events which brought to
light the potential for bias, and thus the basis for Samsung’s investigation did not exist before the
verdict. Id. However, the record shows that Samsung had the chance to investigate the matter on its own or pursue further questioning in voir dire.
First, Samsung admits that it knew about Mr. Hogan’s bankruptcy on the day of jury selection on July 30, 2012. Zeller Decl. ¶ 9. According to Samsung, it took a week after making the request to obtain Mr. Hogan’s bankruptcy file, and Samsung discovered his lawsuit with Seagate in Mr. Hogan’s bankruptcy file on the same day Samsung received the file. Id. ¶¶ 4-5. Had Samsung requested the bankruptcy file on July 30, 2012 and received it one week later, Samsung would have had nearly three weeks to look over the file, discover the potential bias, and alert the Court before the jury reached a verdict on August 24, 2012. Thus, Samsung certainly had the ability to learn about the Seagate lawsuit before the verdict.
Instead, Samsung contends that it had no reason to investigate until after the verdict. Samsung argues that it learned facts giving rise to its suspicions only after the verdict, when Mr. Hogan made “public statements after the verdicts that so clearly favored Apple that the press speculated about their possible financial ties.”
2 Reply at 4. However, the statements cited by Samsung (Motion at 3) neither show that Mr. Hogan favored Apple nor show that he was being deceitful in voir dire. The statements Mr. Hogan made after the verdict only reveal his gratitude for being part of what he considered a “landmark decision.” Estrich Decl., Ex. I at 1. When Mr. Hogan commented on the damages the jury ultimately found in favor of Apple, he specifically stated that the “message” was “to the industry at large” and “not just Samsung.” Id., Ex. J at 1. This is consistent with Mr. Hogan’s repeated confirmation during voir dire that he did not have any bias toward either party, and could be fair and impartial. There was also nothing in the post-verdict statements on which Samsung relies that referred to Seagate, bankruptcy, lawsuits, or any other information Mr. Hogan allegedly concealed.
3 Thus, Mr. Hogan’s comments cannot serve to trigger Samsung’s investigation obligations.
Samsung, instead, had all the information it needed to uncover Mr. Hogan’s lawsuit against Seagate – the fact of the bankruptcy and the fact that Mr. Hogan had a relationship with Seagate – on the day of jury selection, nearly four weeks before the verdict was reached. Samsung cannot use post-verdict statements unrelated to any potential bias to restart the clock on its obligation to investigate. What changed between Samsung’s initial decision not to pursue questioning or investigation of Mr. Hogan, and Samsung’s later decision to investigate was simple: the jury found against Samsung, and made a very large damages award. This is precisely the situation that courts have consistently found constitutes a waiver of the juror misconduct claim.
Second, despite learning through the Court’s initial questioning that Mr. Hogan had once been employed by Seagate, Samsung’s counsel failed to ask any follow-up questions regarding that relationship. Tr. at 191:24-25. After learning that Mr. Hogan had worked for Seagate, Samsung’s counsel was given twenty minutes to ask the prospective jurors any additional questions. But as explained above, Samsung’s counsel questioned Mr. Hogan only about his patents and his hobbies, and did not take the opportunity to delve into the nature of his relationship with Seagate.
Samsung’s entire bias theory is premised on the relationship between Samsung and Seagate. If Samsung believes that its relationship with Seagate is close enough that feelings toward Seagate could bias a juror one way or the other toward Samsung, counsel should have pursued the subject during voir dire. Questioning Mr. Hogan about the nature and valence of that relationship also could have led him to reveal his lawsuit with Seagate. The record does not suggest that Samsung’s counsel was running out of time and unable to ask Mr. Hogan about his employment with Seagate. Rather, by not asking Mr. Hogan about his relationship with Seagate, or further investigating that relationship, Samsung either conceded that the relationship was too remote to give rise to a serious claim of bias, or took a calculated risk. If Mr. Hogan had a positive relationship with Seagate, then Samsung might have stood to benefit by having Mr. Hogan on the jury. Now that an unfavorable verdict is in, Samsung cannot cry foul on grounds that bias ran the other way. See Stern, 131 S.Ct. at 2608 (find waiver where litigant was “sandbagging the court—
remaining silent about his objection and belatedly raising the error only if the case does not conclude in his favor” (internal quotations and citation omitted)); Bolinger, 837 F.2d at 438 (“[A] defendant cannot learn of juror misconduct during the trial, gamble on a favorable verdict by remaining silent, and then complain in a post-verdict motion that the verdict was prejudicially influenced by that misconduct.” (internal quotations and citation omitted)).
“It is established that failure to object at the time the jury is empaneled operates as a conclusive waiver if the basis of the objection is known [or] might have been known or discovered through the exercise of reasonable diligence, or if the party is otherwise chargeable with knowledge of the ground of the objection.” Johnson, 274 F.2d at 116. Samsung could have uncovered the Seagate lawsuit, or at least Mr. Hogan’s feelings regarding Seagate, had it exercised reasonable diligence in questioning Mr. Hogan during its allotted time in voir dire. Moreover, even without asking Mr. Hogan directly, Samsung could have exercised reasonable diligence outside of trial and could have discovered the lawsuit by requesting the bankruptcy file, exactly as Samsung did later, when it became motivated to do so. Samsung had twenty-five days between jury selection and when the verdict was reached to investigate the matter and inform the Court. Because Samsung failed to exercise reasonable diligence, Samsung’s argument pertaining to Mr. Hogan’s dishonesty is waived.
4 Samsung’s request for an evidentiary hearing or a new trial on this ground is DENIED.
B. Extraneous Prejudicial Information
Samsung argues that an evidentiary hearing and a new trial are also warranted based on Mr. Hogan’s post-verdict interviews, which show that he introduced “incorrect and extraneous legal
standards” to jury deliberations. Motion at 3. These statements, however, are barred by Federal Rule of Evidence 606(b).
1. Legal Standard
“[T]he law presumes that jurors carefully follow the instructions given to them.” Caudle v. Bristow Optical Co., Inc., 224 F.3d 1014, 1023 (9th Cir. 2000). The Supreme Court has explained that this is a “crucial assumption underlying [the] system.” Parker v. Randolph, 442 U.S. 62, 73 (1979), abrogated on other grounds by Cruz v. New York, 481 U.S. 186 (1987). Thus, courts do not disturb jury verdicts because of allegations that the jury may not have fully understood the judge’s instructions.
This rule is given effect in part through evidentiary rules protecting the deliberative process. “The near-universal and firmly established common law rule in the United States flatly prohibited the admission of juror testimony to impeach a verdict.” Tanner v. United States, 483 U.S. 107, 107 (1987); McDonald v. Pless, 238 U.S. 264, 267 (1915) (“[T]he weight of authority is that a juror cannot impeach his own verdict.”). Federal Rule of Evidence 606(b) is an embodiment of this longstanding policy, strongly disfavoring the admission of juror testimony to impeach a verdict. It states:
Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any matter or statement occurring during the course of the jury’s deliberations or to the effect of anything upon that or any other juror’s mind or emotions as influencing the juror to assent to or dissent from the verdict or indictment or concerning the juror’s mental processes in connection therewith. But a juror may testify about (1) whether extraneous prejudicial information was improperly brought to the jury’s attention, (2) whether any outside influence was improperly brought to bear upon any juror, or (3) whether there was a mistake in entering the verdict onto the verdict form. A juror’s affidavit or evidence of any statement by the juror may not be received on a matter about which the juror would be precluded from testifying.
Fed. R. Evid. 606(b).
Rule 606(b) applies not only to testimony, but any statement made by a juror after the
verdict has been reached. See Hard v. Burlington N. R. Co. (Hard II), 870 F.2d 1454, 1461 (9th Cir. 1989). When such evidence is submitted, the Court must review the statements under the same standard as would be applied were the statement spoken live, in court. Id.
In deciding whether an evidentiary hearing will be required to determine the necessity of retrial, the Court must consider only that portion of the affidavit or testimony which would be admissible under Rule 606(b). Hard II, 870 F.2d at 1461. To that end, the Court “may not consider jurors’ testimony addressing the jury’s deliberative process unless the testimony ‘bear[s] on extraneous influences on the deliberation.’” Harrison v. Gillespie, 640 F.3d 888, 896 n.4 (9th Cir. 2011) (quoting United States v. Pimentel, 654 F.2d 538, 542 (9th Cir. 1981)).
The question then becomes what constitutes an extraneous influence. A “juror’s personal knowledge constitutes extraneous prejudicial information where the juror has personal knowledge regarding the parties or issues involved in the litigation.” Hard v. Burlington N. R.R. (Hard I), 812 F.2d 482, 486 (9th Cir. 1987). Jurors are expected to bring their own personal experiences with them into the courtroom, and may generally rely on their personal knowledge or past experiences when hearing the evidence, deliberating, and deciding their verdict so long as they do not have knowledge related to the specific case they are deciding. Id.
However, “[a]fter a verdict is returned a juror will not be heard to impeach the verdict when his testimony concerns his misunderstanding of the court’s instructions,” even where a juror would be able to “testify, objectively, of incidents tending to indicate that other jurors may have misunderstood the court’s instructions on the elements of the offense,” as “the inquiry would still concern the mental processes by which the jurors reached their decision and would therefore be barred by the nonimpeachment rule.” United States v. Stacey, 475 F.2d 1119, 1121 (9th Cir. 1973). Thus, a juror’s understanding of the Court’s instructions is not considered extraneous prejudicial information, and the Court cannot receive testimony on how the jurors understood or followed instructions. To do so would be to undermine the “crucial assumption” necessary for the functioning of our jury system. Parker, 442 U.S. at 73.
Should there be any portion of a juror’s statement to the court which is eligible for consideration, the court must then determine whether the information contained in the juror’s admissible statement is sufficient to justify an evidentiary hearing. “An evidentiary hearing is justified only when these materials are sufficient on their face to require setting aside the verdict.
Where a losing party in a civil case seeks to impeach a jury verdict, it must be shown by a
preponderance of the evidence that the outcome would have been different. Unless the affidavits
on their face support this conclusion, no evidentiary hearing is required. Unless such a showing is
made at the evidentiary hearing, no new trial is required.” Hard, 870 F.2d at 1461.
2. Mr. Hogan’s Post-Verdict Statements Do Not Suggest Extraneous
Samsung argues that Mr. Hogan’s post-verdict interviews show that he introduced “incorrect and erroneous legal standards” pertaining to infringement and invalidity issues. Motion at 3. Mr. Hogan gave several post-verdict interviews in which he recounted the legal standards that were utilized during deliberations to enable the jury to reach a verdict. See Estrich Decl., Exs. L, M, N, O. These statements, however, all pertain to what occurred during jury deliberations, or to the jurors’ mental processes – evidence specifically barred by Rule 606(b). Samsung does not argue that Mr. Hogan introduced any outside knowledge specific to the facts of this case. Even if the standards related by Mr. Hogan were completely erroneous, those statements would still be barred by Federal Rule of Evidence 606(b) and cannot be considered in deciding whether to hold an evidentiary hearing. Stacey, 475 F.2d at 1121 (“After a verdict is returned a juror will not be heard to impeach the verdict when his testimony concerns his misunderstanding of the court’s instructions”); Hard II, 870 F.2d at 1461 (court must decide whether to hold hearing “[l]ooking only at affidavits and testimony admissible under Rule 606(b)”).
Prejudicial Information, and Are Therefore Barred by Federal Rule of
Further, Mr. Hogan agreed several times that he would do his best to follow the law as it
was given to him:
The Court: So I want to make sure that both Mr. Hogan, and [another prospective juror], that you would apply the law as I instruct you and not based on your understanding of the law based on your own cases. Is that correct, Mr. Hogan? Tr. at 152:25-153:5.
Mr. Hogan: Yes.
The Court: You all have a lot of experience, but will you be able to decide this case based solely on the evidence that’s admitted during the trial?”
Tr. at 165:14-18.
Mr. Hogan: Yes.
The Court: Okay. Mr. Hogan says yes.
The judicial system can ask no more of jurors, who are brought into the case through no initiative of their own and who devote their time as a matter of civic duty, than that they do their best to apply the law as they are instructed. Moreover, at the hearing on post-trial motions, Samsung repeatedly praised the jury, noting the care, precision, and consistency with which the jury calculated damages based on trial damages evidence. Samsung also praised the jury for ruling for Samsung on Apple’s breach of contract and antitrust claims. Samsung cannot credibly claim that the jury’s conduct was simultaneously worthy of such great praise and so biased as to warrant a new trial.
Samsung cites several cases in support of its argument that Mr. Hogan’s statements show that extraneous prejudicial information was improperly brought to the jury’s attention, and thus the statements should not be barred. Motion at 3. None of these cases establishes that Mr. Hogan’s statements concerned extraneous prejudicial information. The Court will address each case in turn.
In Hard I, the Ninth Circuit ruled that the district court should have held an evidentiary hearing after it received jurors’ testimonies revealing that another juror had talked about the defendant’s prior settlement practices during deliberations. Id., 812 F.2d at 485-86. In other words, that juror has specific knowledge about one of the parties, and shared it with fellow jurors. Similarly, in United States v. Perkins, 748 F.2d 1519 (11th Cir. 1984), the court held that a new trial was warranted based on prejudicial extrinsic evidence where one of the jurors had personal knowledge of the facts of the case and told other jurors during deliberation. Id., 748 F.2d at 1534. Here, Mr. Hogan had no “personal knowledge regarding the parties or issues involved in the litigation.” Hard I, 812 F.2d at 486. Instead, the knowledge he is alleged to have introduced concerned only the general principles of the patent system. Thus, these two cases are inapposite.
In Gibson v. Clanon, 633 F.2d 851 (9th Cir. 1981), jurors improperly consulted medical encyclopedias on their own during deliberations. Id. at 851-55. The court found that to be extrinsic evidence that could have affected the verdict and therefore granted the petitioner federal habeas relief. Id. at 855. Samsung does not suggest that Mr. Hogan improperly consulted another source during jury deliberations, nor that he introduced any factual material whatsoever. Thus,
nothing about Gibson establishes that any of Mr. Hogan’s statements, which concern legal standards, constitute extraneous prejudicial information.
Finally, in Casanas v. Yates, No. 08–02991 CW, 2010 WL 3987333 (N.D. Cal. Oct. 12, 2010), a juror, surprised to find that his personal conduct could have constituted the same offense for which the defendant was being tried, discussed his personal experience in voir dire to question the wisdom of the law. Id., 2010 WL 3987333 at *6. The court found that this was a proper ground to dismiss the juror for cause before a verdict was reached. Id. Because the statements in Casanas were made before a verdict was reached, it was not subject to the same Rule 606(b) bar that is relevant here.
In sum, the integrity of the jury system and the Federal Rules of Evidence demand that the Court not consider Mr. Hogan’s post-verdict statements concerning the jury’s decision-making process. None of the cases Samsung cites suggests otherwise. Because the Court cannot consider these inadmissible statements in determining whether to hold an evidentiary hearing, there is no evidence properly before the Court to require such a hearing. Instead, the Court must apply the well established presumption that the jury followed the law. See Caudle, 224 F.3d at 1023.
For the reasons explained above, Samsung’s arguments concerning Mr. Hogan’s connection to Seagate are waived. The Court cannot consider Samsung’s evidence concerning the standards applied during jury’s deliberations because that evidence is barred by Federal Rule of Evidence 606(b). Accordingly, Samsung’s motion for a new trial is DENIED.
IT IS SO ORDERED.
Dated: December 17, 2012
United States District Judge
1 Samsung filed a motion to compel Apple to disclose when and how Apple learned of the Seagate lawsuit. ECF No. 2108. As Apple voluntarily filed such a disclosure on November 30, 2012, ECF No. 2176, Samsung’s motion to compel is DENIED as moot.
2 As discussed below, many of Mr. Hogan’s post-verdict statements revealing his sentiments about the case are barred by Federal Rule of Evidence 606(b). See United States v. Pimentel, 654 F.2d 538, 542 (9th Cir. 1981) (“Testimony of a juror concerning the motives of individual jurors and conduct during deliberation is not admissible”).
3 When Mr. Hogan did discuss his voir dire answers in the press, it was after Samsung had done its investigation and filed its motion, and thus cannot justify undertaking the investigation to begin with. See Reply at 2 (citing interview given on September 25, 2012). Samsung’s motion was filed on September 21, 2012. ECF No. 1990-3.
4 Samsung also suggests that possible bias can be shown from the fact that the lawyer who filed the Seagate lawsuit against Mr. Hogan in 1993 was a Quinn Emanuel partner’s husband. Motion at 2. Given that counsel for Samsung – themselves Quinn Emanuel lawyers – did not even know about this relationship until weeks after the trial, it is implausible to suppose that Mr. Hogan would know a Quinn Emanuel lawyer who is not working on the Apple v. Samsung case, and know that that lawyer is married to a lawyer who represented Seagate nineteen years ago. Samsung does not provide this as a separate ground for holding an evidentiary hearing or having a new trial. See id. at 2-3. In any event, because Samsung’s probing of the Seagate relationship could have uncovered any potential bias against Samsung because of Mr. Hogan’s relationship with Seagate or with Seagate’s counsel, the Court’s finding that Samsung waived its right to object to Mr. Hogan’s allegedly dishonest answer also results in Samsung’s waiver of juror bias claims based on the Seagate lawyer’s marriage.
Update 2: So you are not misled by the surprise and shock being expressed on FOSSPatents ("It may be unprecedented in the legal history of the United States for an injunction motion to be denied across the board despite such a large number of infringement findings (roughly half a dozen) by a jury and, especially, in light of the competitive situation between the two as well as the jury's findings of willful infringement"), here's a patent lawyer, Dennis Crouch, of Patently O's take on why we should not be surprised that the permanent injunction was not granted:
If the Apple-Samsung patent infringement lawsuit had been litigated back in 2005, the parties would have likely settled by now. Ebay changed that calculus and now an adjudged infringer such as Samsung can afford to push cases and appeals further because there is little downside risk that a US court will actually force the company to stop distributing its well known and respected products.
In an order on December 17, 2012, Judge Koh denied Apple's motion for permanent injunctive relief to stop Samsung from continuing to infringe Apple's patents and trade-dress. Thus, Apple must be satisfied with the payment of money damages. Although major, the ruling is not unexpected since based both on the law (eBay) and the fact that the court previously denied Apple's motion for preliminary injunctive relief based upon Apple's failure to prove irreparable harm.
In order to be eligible for injunctive relief the prevailing party must show that it will suffer irreparable absent an injunction. A key to current irreparable harm doctrine is proof of the nexus between the infringement and the irreparable harm. I.e., that infringement of the particular features or designs protected by the patent right (as opposed to some other factor) will cause the loss of market share. Unlike infringement and damages, the issues associated with injunctive relief are all seen as equitable issues and therefore decided by the judge rather than a lay jury.