25 November 2011

Judges Grill Apple Lawyers in Galaxy Appeal

never-lose-appealToday Samsung and Apple faced-off once again in the Federal Court of Australia, at a hearing which is likely to determine whether Samsung’s Galaxy Tab 10.1 tablet computer is ever officially released to the Australian market.

A full bench of the court, comprising Justices Lindsay Foster, John Dowsett and David Yates, sat to hear Samsung’s appeal – and Apple’s defence – of the preliminary injunction imposed last month by Justice Bennett against the Galaxy Tab, pending a full hearing of Apple’s patent infringement claims.  (See Date, Panel Set for Samsung Appeal Against Galaxy Injunction for further background on the judges.)

A decision in the appeal is expected early next week, which would still leave Samsung – if successful – with sufficient time to shift a few tablets in the lead-up to Christmas, and perhaps a few more in the post-Christmas sales.  However, if the full court upholds the injunction, and with a date for a full trial on Apple’s claims yet to be set, then it seems unlikely that the Galaxy Tab 10.1 will see the inside of Australian stores.

Last week, Samsung abandoned its own application for a preliminary injunction against Apple’s iPhone 4S, in exchange for an early trial on its patent claims, now set down for March and/or April next year (see Samsung Drops Injunction Demands, Grabs Reins in Apple Dispute).  This trial will not, however, encompass Apple’s complaint against the Galaxy Tab.  On the contrary, it is likely to result in further delays of that trial, ensuring that unless the current injunction is overturned, Samsung will be barred from distributing its tablet in Australia until at least the middle of 2012, by which time it will most likely have been rendered obsolete by some new Samsung product.

While we were not in court today, we had the benefit of informative live tweeting from the courtroom, particularly by @lukehopewell, @j_hutch and @ashermoses.  You can also check out the coverage at ZDNet.com.au (Samsung demoed other tablets in case) and Fairfax online (Samsung tablet ban 'grossly unjust').

APPLE PUSHED TO DEFEND INJUNCTION

By all accounts, the judges gave Apple a much tougher run than Samsung.  Apple’s lawyers were pressed hard to defend a number of the points which led to its success in the original hearing, such as:
  1. the finding that Samsung had made plans to launch the Galaxy Tab 10.1 in Australia with ‘eyes wide open’, including the relevance of earlier litigation commenced overseas, and of the fact that there are ‘thousands of patents on the register’ (according to Yates J);
  2. whether Apple had successfully established a prima facie case of infringement, and what is required to establish such a case; and
  3. whether Justice Bennett was unduly influenced by Apple’s proposal for an early final hearing, and Samsung’s apparent resistance.
The fact that Apple’s lawyers were subjected to more aggressive questioning that Samsung’s does not necessarily give any indication of the judges’ thinking.  After all, as the successful party in the original decision, it naturally falls to Apple on appeal to take on the role of primary defender of Justice Bennett’s reasons.

ISSUES CONSIDERED IN APPEAL

We have previously explained the process which is followed by the courts to determine whether it is appropriate to grant a preliminary injunction (see Apple and Samsung Return to Court With ‘Eyes Wide Open’).  In brief, it is necessary for the court to consider:
  1. whether there a ‘serious question to be tried,’ i.e. whether the patentee has made out a prima facie case in the sense that, if the evidence remains the same, there is a probability that a court will grant a permanent injunction at trial;
  2. whether the patentee will suffer ‘irreparable harm’ for which any damages awarded at trial would not be an adequate remedy; and
  3. whether other factors relevant to the ‘balance of convenience’ (i.e. the relative impact of the preliminary decision upon the parties) favour the grant of a preliminary injunction.
According to tweeted reports, the judges today raised some questions about whether these tests – which find authority in the decision of the High Court of Australia in Australian Broadcasting Corporation v O’Neill [2006] HCA 46 – had been applied correctly by Justice Bennett.

STRENGTH OF PRIMA FACIE CASE

It is worth bearing mind that O’Neill was a defamation case.  The ABC planned to broadcast a documentary, entitled The Fisherman, which would include claims by interviewees that the plaintiff, James Ryan O’Neill had been responsible for, amongst other crimes, the kidnap and murder of three children in 1966.  O’Neill sought, and obtained, an injunction from the Tasmanian Supreme Court barring transmission of the programme.  The High Court ultimately overturned the injunction, for reasons which are beyond the scope of this article, but in the process laid out the tests to be applied in assessing whether or not a preliminary injunction is appropriate in any given case.

As Justice Bennett pointed out in her decision granting an injunction to Apple (Apple Inc. v Samsung Electronics Co. Limited [2011] FCA 1164, at [21]), Justices Gummow and Haynes in the O’Neill decision stated, with regard to the requirement for a prima facie case that:

…it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. … [h]ow strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.

It probably goes without saying that the potential adverse consequences to an individual of a severely defamatory broadcast are generally far greater than those associated with infringement of a patent.  Even if – as both Apple and Samsung have asserted in this case – it would be extremely difficult to calculate appropriate damages in the event of an opposite finding at trial, the consequences are nonetheless purely commercial in nature, and are not fatally or permanently damaging to either party. 

It is plainly arguable, therefore, that the probability of Apple’s success should be somewhat higher than the probability of success required for O’Neill to have obtained an injunction blocking broadcast of The Fisherman.  This may be particularly so where, as in this case, the respondent is asserting invalidity of the patent claims in question.

CONCLUSION

We originally anticipated that the appeal would be run principally on the question of the ‘balance of convenience’ (see Samsung Appeals, Retaliates, in Patent War With Apple).  However, it seems that the threshold issue of whether Apple has established a prima facie case is also well and truly in-play.

The court has promised a decision within a week, and it cannot come too soon for Samsung!

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