WASHINGTON — A year ago the clash of IP titans representing Apple Inc. and Samsung Electronics Co. drew crowds of lawyers, reporters and tech junkies to the federal courthouse in San Jose.
There, a relatively new Obama appointee grabbed headlines for her no-nonsense approach to refereeing the unwieldy trial that spanned six design and technology patents and dozens of devices.
And then there was the $1 billion verdict, a massive win for Apple, arguably, even after some portions were carved out for retrial and the total sum receded.
But if there was one echo in the blockbuster case that reverberated beyond Silicon Valley and across the field of patent litigation, it was U.S. District Judge Lucy Koh's decision in December to deny Apple's bid for permanent injunctions based on the jury's infringement findings.
On Friday Apple and Samsung squared off again, bringing the debate over what standard should apply to permanent injunctions in tech cases to the U.S. Court of Appeals for the Federal Circuit.
Arguing the appeal were two lawyers deeply entrenched in the litigation: for Apple, William Lee of Wilmer Cutler Pickering Hale and Dorr and for Samsung, Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan.
Lee told the panel Koh adopted too tough a standard and a Federal Circuit ruling siding with Samsung would "work a fundamental change" in U.S. intellectual property law.
Sullivan denied that Samsung was trying to create a new categorical rule. She said courts had already found that the standard for securing an injunction included proving infringed patents were drivers of demand. Apple, Sullivan said, failed to make that connection in seeking the injunctions against 26 Samsung products.
Judges William Bryson, Sharon Prost and Kathleen O'Malley did not seem clearly aligned with either side. In their questioning, some judges seemed to endorse the idea of requiring a strong connection between infringement and demand. However, they also questioned Koh's approach which evaluated the link between infringement and customer choice on a patent-by-patent basis.
Apple won a $1.05 billion jury verdict against Samsung in U.S. District Court for the Northern District of California last summer. In December, Koh denied the injunction request, finding Apple failed to show a "causal nexus" between the infringed patents and consumer demand for the Samsung products Apple wanted to block.
Patent lawyers said Koh's reasoning would make it nearly impossible in the field of complex electronics for any patent holder to block the sale of a competitor's product.
"Because the products are so complex and because consumers' decisions to buy a product are so complex, it's generally going to be hard to show a nexus," said law professor Brian Love at Santa Clara University School of Law.
Love said the challenge is drawing a line that doesn't produce gross windfalls for patent holders but still respects the patent holder's right to exclude. For large companies like Apple and Samsung, injunctions are more important than monetary damages, Love said. "What's more important than being able to sell your product?" he said.
That means a lot is resting on the Federal Circuit's decision in the case.
"If [Koh's ruling] is affirmed, it will be very hard for any company to get an injunction in a complex, multi-component industry like smartphones," Stanford Law professor and Durie Tangri partner Mark Lemley wrote in an e-mail.
Lee, a litigation partner in Wilmer's Boston office, argued in the Federal Circuit that Koh adopted a strict causal nexus standard that no federal circuit court or the U.S. Supreme Court had ever required in the context of a permanent injunction. Samsung was advocating for a standard that would "categorically deny relief," Lee said.
O'Malley, an Obama appointee and the newest member of the panel, said previous case law seemed to point to the need for a nexus between infringement and lost market share, even if the court hadn't explicitly used that term in the past.
"I can't imagine that you wouldn't have some nexus requirement, regardless of how you'd define it, in every case in which a permanent injunction is considered," she said.
Lee agreed there would need to be a connection between irreparable harm and infringement. If Apple lost market share because senior executives were indicted for felonies, for instance, there would be no connection, Lee said. But where there was a finding that a competitor's products infringed and the sale of those products caused the harm, he said, that should be sufficient.
Sullivan said the Federal Circuit had already established the causal nexus standard in previous decisions, quipping that Lee's threats of the death of injunctions were "greatly exaggerated".
Injunctions were once issued automatically in patent cases after a finding of infringement. However, that changed with the U.S. Supreme Court's 2006 decision in eBay v. MercExchange, 547 U.S. 388, which introduced a four-part balancing test.
Recently, trial judges have been giving closer scrutiny to injunction requests and considering whether infringing features of a product are significant enough to warrant its removal from the market.
Friday's hearing continues a dialogue on that subject between Koh and the appeals court, which have disagreed on when to grant injunctions in the two Northern District patent cases pitting Apple and Samsung.
In October 2012, the Federal Circuit reversed Koh's decision to grant a preliminary injunction against Samsung's Galaxy Nexus phone in the case set for trial next year that has become known as Apple II. Koh's December ruling closely tracked that Federal Circuit decision and embraced its new causal nexus standard.
Apple had argued that it demonstrated a causal nexus with evidence of how much consumers value the design features of iPads and iPhones that Samsung copied.
Prost, appointed in 2001 by President George W. Bush, and O'Malley both questioned whether Koh went too far in requiring a patent-by-patent analysis instead of taking a more holistic approach.
Sullivan responded that Apple failed to prove its patented features, considered individually or together, drove consumer demand, let alone were the major factor behind consumers choosing one phone over another.
Sullivan urged the court to reject Apple's evidence, saying it was too broad and not directly linked to specific patents. That consumers valued good design and "ease of use" was different from being driven to buy a product because of the specific design features at issue, she said.
The judges pressed Sullivan to explain why evidence that consumers would pay more for particular product features wasn't proof that they drove demand. Sullivan said consumers' willingness to pay a premium for certain features didn't necessarily explain why they picked one product over another.
Apple also challenged Koh's denial of a permanent injunction for Samsung products the jury found diluted Apple's "trade dress" — the visual and physical appearance of a product.
Prost asked Lee if Koh should have given weight to the fact that Samsung said it was no longer selling the diluting products.
Lee said it was a factor that ought to be given very little weight. Once Samsung was found to dilute Apple's trade dress, an injunction telling them to stop selling those products was appropriate. If Samsung wasn't selling the products anymore, they wouldn't be harmed by the injunction.
Sullivan countered that the fact that both Samsung and Apple were no longer selling the products involving the trade dress claims was relevant. To secure the injunction, she said, Apple had to prove Samsung was diluting a current mark. She argued the court shouldn't allow Apple to substitute an injunction for bringing new infringement cases in the future over new products, especially when it came to "amorphous" elements such as design patents and trade dress.
ALM staff contributed to this report.