16 November 2011

Samsung Drops Injunction Demands, Grabs Reins in Apple Dispute

reinsApple and Samsung were back in the Federal Court of Australia on 15 November 2011, for a hearing into Samsung’s application for a preliminary injunction barring sale of the iPhone 4S in Australia.  The hearing was scheduled for at least three days, but was over almost as soon as it started, after the parties agreed instead to prepare for a full trial early in the new year.  (See Fairfax Media report Apple v Samsung war 'might have been avoided', and ZDNet report iPhone 4S injunction gets final hearing date).

In earlier hearings relating to Apple’s (successful) application for an interim injunction against Samsung’s Galaxy Tab 10.1, it was Apple pressing for a rapid progression to a full trial, with Samsung maintaining that it would not be able to prepare its case for a trial before early 2012 (see Apple v Samsung Hearing to Continue…).  Indeed, on 29 September 2011, Apple professed that it could be ready for trial in the first week of October – a suggestion that we considered to be quite ludicrous.

Nonetheless, in her decision granting Apple its injunction, Federal Court judge  Justice Annabelle Bennett indicated that one of the factors she considered in ‘an almost evenly weighted’ balance was Samsung’s unwillingness to be available for a limited early final hearing this month.

So the shoe was firmly on the other foot when Samsung arrived in court for the first day of hearings into its own application for a preliminary injunction against the iPhone 4S, and almost immediately offered to withdraw its application for interim relief on condition that the matter be set down for an early trial in March 2012.

Seemingly blindsided, Apple’s lawyers responded with a counter offer to proceed with an ‘early’ trial in August 2012.  Only after leaving the courtroom to obtain further instructions from Apple itself were they able to return and – perhaps reluctantly – agree to a March trial date.

Emboldened by this initial victory, Samsung continued to press the point, urging Justice Bennett to set down dates for the trial, just in case the parties were unable to agree on mutually acceptable dates between themselves.

POTENTIAL IMPACT ON UPCOMING APPEAL

While Apple has called the shots in almost all aspects of the proceedings to date, today’s events may mark a turning point for Samsung.  Suddenly, it is exerting some control over the conduct of the proceedings, and it appears that Apple may no longer be able to have things all its own way.

And with the parties heading back into court next week, for Samsung’s appeal against the Galaxy Tab injunction before three different judges of the Federal Court of Australia, today’s events could certainly tip the delicate balance upon which the appeals court must make its decision.  The appeal seems likely to focus on whether Justice Bennett correctly applied the law in her determination of whether the ‘balance of convenience’ favoured Apple or Samsung.

On the face of it Samsung has shown consistency.  It has always indicated a willingness to proceed to trial in early 2012, but refused to be coerced into an earlier date for final hearings.

By contrast, Apple is left looking disingenuous.  When Apple was the plaintiff and Samsung the defendant, a few weeks would – apparently – have been more than adequate to prepare for trial.  However, when the roles were reversed, Apple immediately sought five more months of preparation than had been proposed by Samsung.  Justice Bennett has already shown a penchant for proceeding expeditiously, so Samsung would have been quite confident of support from the bench for its request for an early hearing.

DID SAMSUNG JUST BACK DOWN?

A common assumption when a party to litigation ‘backs down’ – as Samsung appeared to do today, from its request for a preliminary injunction – is that it must have determined that it would most likely lose, and decided discretion is the better part of valour.  This is almost always an oversimplification of the various factors informing a strategic decision.

Certainly Samsung faced an uphill battle in this case, if the decision on the earlier injunction was as finely-balanced as Justice Bennett has indicated.  All else being equal, if Justice Bennett was willing to grant an injunction to Apple, there is no reason why she should not be willing to do likewise for Samsung.  However, all is not equal, and there are at least two potentially decisive differences between Apple’s position and Samsung’s.

Firstly, unlike the Galaxy Tab 10.1 (which was yet to be launched when Apple commenced infringement proceedings), the iPhone 4S is already on the market in Australia.  While this does not necessarily prevent the grant of an injunction, it may give the court pause for thought as to the consequences of doing so.

Secondly, Samsung is relying on patents which are most likely encumbered by obligations to license on ‘fair, reasonable and non-discriminatory (‘FRAND’) terms (see FRAND Obligations to be Aired in Australian Court).  Again, while this is not necessarily a barrier to an injunction, there is a strong argument that damages would provide an adequate remedy for infringement of a FRAND-encumbered patent, which could mitigate against the grant of an injunction.

So Samsung probably would not have had high hopes of winning its injunction.  But this in itself does not fully explain its strategic move to drop its interlocutory application in favour of an early trial.

WHAT ARE APPLE AND SAMSUNG TRYING TO ACHIEVE?

From our observations, it seems unlikely that Samsung has any real desire to exclude the iPhone 4S – or any other Apple product – from the market.  It appears to have been pressed into litigation by Apple.  According to Samsung’s lawyers, in explaining their client’s position to Justice Bennett, Samsung has no problem with licensing its patents to Apple, and was negotiating to do so until Apple commenced litigation in California in April 2011, followed by further cases in other jurisdictions.  Samsung’s lawyers further asserted that ‘[i]n effect the informal policy of not suing Apple for patent infringement was terminated when Apple sued Samsung for patent infringement in California and then elsewhere.’

Apple, on the other hand, may well be seeking to block some of its most significant competitors from using its patents, if the attitude of the late Steve Jobs, as reported by his biographer Walter Isaacson, is any indication (see Jobs Biography Reveals Irrational Android ‘Thermonuclear’ Reaction). 

Samsung’s countersuit may therefore be primarily defensive, having the objective of enabling it to market its own products, rather than barring competing Apple products.  If so, then its primary objective right now will be to win its appeal next week, and have the Galaxy Tab injunction overturned, even if this is only over the important Christmas/New Year period.

Samsung’s latest strategic move – assuming it has any effect on the appeal – can only assist Samsung.  Its lawyers will now appear before the Full Court liberated from the stigma of alleged obstructiveness, since it is Apple that has now shown itself unwilling to go to trial sooner rather than later.  The ‘balance of convenience’ has clearly been shifted – if only a little – in Samsung’s favour, considering that a relatively short timetable for deciding the dispute is now likely to be set.

Apple, for its part, will find it far more difficult to argue that Justice Bennett was correct to ‘penalise’ Samsung (if that is what she did) for failing to cooperate with Apple’s efforts to set a very early hearing date for the original dispute.

WHERE TO FROM HERE?

It appears that Samsung was initially taken by surprise by Apple’s litigation offensive, commencing in April 2011.  Samsung perhaps failed to appreciate that it had a genuine legal battle on its hands, rather than just a PR fight, or a strategy by Apple to apply pressure in ongoing negotiations.  It seems to have been playing catch-up ever since, but with an apparent preliminary victory in Germany in the past week (see Samsung could win German injunction(s) against Apple's 3G-capable products in late January -- enforceability would be clarified later at the FOSS Patents blog), along with this turning of the tables on Apple in Australia, Samsung no longer appears to be limping along one step behind.

Indeed, for the first time since Apple filed its complaint in Australia at the end of July, it is Samsung that is setting the agenda and the timetable for the next stages of the dispute.  And if it is successful in its appeal next week – which is now looking to be at least an even-money chance – then the fight will start to look pretty evenly matched.

A further directions hearing is now set down for this Friday, 19 November 2011, to finalise the timetable and dates for the trial, expected to run over three weeks in March 2012.

1 comment:

jason_personal_injury_lawyer said...

We'll end up paying for it all in the end anyway!

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