What is the case about?
This case is about whether Samsung's Galaxy Tab 10.1 uses technology that only Apple has a right to use. Apple has two separate patents for inventions concerning the touch screen and heuristic computing technology used in the iPad2.
What has been happening?
A single judge of the Federal Court had ordered Samsung not to sell its Galaxy tablet in Australia until the Court had an opportunity to conduct a full hearing into the issue.
An appeal against that order was successful in the Full Federal Court
Apple sought special leave to appeal to the High Court, seeking to have the injunction reinstated. Leave was refused at around 11am this morning. Samsung's Galaxy Tab 10.1 will presumably hit the shelves shortly, just in time for Christmas.
There will probably still be a full hearing down the track, to determine whether Apple's patents are valid and whether they have been infringed. In the meantime, Samsung will be allowed to sell its tablet - keeping an account of its sales and profits - and suffer the financial consequences later if it was wrong to do so.
Why did the Full Federal Court overrule the first decision?
The three judges found that the first decision was clearly wrong.
Generally speaking, a court will assess an application for an interim order that a product be kept out of a market by asking:
- is there a prima facie case for infringement, in the sense that if the evidence remains unchanged, there is a probability that the applicant will succeed at the final hearing?
- having looked at a basket of discretionary considerations, does the balance of convenience and justice favour the grant of the injunction?
Justice Bennett had concluded that Apple had a prima facie case, and that the balance of convenience was almost evenly weighted between the parties. Her Honour's decision would inevitably inflict significant damage on one of the parties, and monetary damages would not be an adequate remedy for either of them. But, according to Justice Bennett, the balance of convenience fell slightly in Apple's favour, because:
- the grant or denial of an interlocutory injunction would, practically speaking, determine the matter for the whole of the products' short lifecycle, unless the parties agreed to an early final hearing. Samsung had been unwilling to accept an early final hearing.
- Her Honour gave some weight, albeit minimal weight, to the fact that Samsung launched its tablet with its "eyes wide open" to the impending legal proceedings, and
- Apple had a prima facie case against Samsung for infringement of two separate patents.
The Full Court overruled Justice Bennett because Her Honour failed to conduct two evaluative tasks.
Firstly, Her Honour should have assessed the strength of Apple's prima facie case against Samsung – not just whether it had one – and required Apple to make out a relatively strong prima facie case given that the practical consequence of the order would be to decide the commercial fate of the Galaxy tablet in Australia. Secondly, Justice Bennett should also have taken that assessment of the strength of Apple's prima facie case into account when she weighed up the balance of convenience and justice.
The Full Federal Court conducted its own evaluation of Apple's prima facie case, and thought that there were difficulties for the infringement case that mean that, if the evidence at the final hearing is the same as it was at the interlocutory hearing, Apple is unlikely to succeed at the full trial.
In the Full Court's view, the three factors that caused Justice Bennett to lean towards Apple on the balance of convenience 'paled into insignificance' in light of that assessment.
Why did the High Court refuse special leave to appeal?
The special leave application focused on whether the approach of Justice Bennett to the assessment of the prima facie case was correct, or whether the Full Federal Court was right to substitute their more in-depth analysis.
In refusing special leave to appeal, the High Court affirmed that the scope of the examination of the probability of success can vary, depending on the nature of the rights asserted and the practical consequence of the orders sought. The grant of an injunction would effectively be final relief, because it would probably keep Samsung's product out of the market for its entire life cycle. In those circumstances, there needed to be a reasoned examination of the strength of the prima facie case. The Full Federal Court had undertaken that analysis, and there was no cause for the High Court to intervene.
Who cares?
Global patent practitioners, anyone with patents, anyone who may have to challenge one, and anyone who wants a Galaxy tablet!
The speed with which the Court has moved in the Apple v Samsung matter to date means that many of the foreign combatants in this global patent war are watching the Australian decisions with great interest.
The Full Federal Court undertook a more rigorous analysis of the 'prima facie case' question than has been the norm in interlocutory injunction applications in recent years. Its focus on the assessment of the strength of Apple and Samsung's competing cases, and the key part that assessment played in the outcome, will be of great interest to patent challengers who, of late, have found it difficult to fight against applications for interlocutory injunctions on the basis that the case levelled against them has weaknesses or is subject to a strong counter attack on the basis that the patent is invalid.
The approach of the Full Federal Court got the nod from the High Court this morning, but the circumstances of the case, and particularly the draconian consequences of granting an injunction in light of the pace of change in the tablet computer market, were clearly very important to the result.
What remains unclear is precisely which circumstances will trigger the requirement to conduct this kind of close examination of the prima facie case. Those circumstances have not been (and perhaps cannot be) precisely defined by the Full Federal Court or the High Court - it will depend on the facts of each case. But Apple v Samsung sends a clear message to patentees of fast-moving technology: be prepared to prove you have reasonably strong prospects of success, and be prepared for a fight at the interlocutory stage. For patentees in those industries at least, we can expect to see more evidence and more argument at the outset.
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