Dennis Crouch's Patently-O: Guest Post: Restoring “Causal Nexus”

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Guest Post: Restoring “Causal Nexus” Posted: 28 Oct 2015 09:24 AM PDT Guest post by Bernard Chao On September 17, 2015, the Federal Circuit issued another decision in the Apple v. Samsung smartphone war (summarized previously here). In the fourth court decision dealing with injunctions, Apple IV gave new guidance on the level of proof necessary to satisfy the “causal nexus” requirement. Although this requirement demands that patentees prove that the specific infringing feature cause irreparable harm, the majority opinion (by Judge Moore) observed that proving causation was “nearly impossible” in cases involving products with thousands of components. So the court watered down the causal nexus requirement by saying that it was enough for Apple to show the infringing features to be “important to product sales and that customers sought these features in the phones they purchase.” On October 19, 2015, Samsung filed a Petition for Rehearing en banc on this issue. Although I don’t agree with everything Samsung has to say about Apple’s injunction request, I do believe that the full Federal Circuit should revisit the decision and reinvigorate the “causal nexus” requirement. As I argue in greater depth in my upcoming essay, Causation and Harm in a Multicomponent World (forthcoming University of Pennsylvania Law Review Online), Apple IV is troubling on both doctrinal and theoretical grounds. On the doctrinal level, the decision fails to appreciate that most multicomponent technology products are made up of countless small advances, not a few far-reaching ones that change consumer preferences. Presumably, Apple chose its most valuable patents to assert against Samsung; but a review of the three Apple patents at issue show how minor the infringing features are — a conclusion that Chief Judge Prost’s dissent also made. If a powerhouse like Apple doesn’t have a pioneering patent to assert, there probably aren’t very many such patents out there. My point is that a single feature rarely, if ever, drives consumers from one technology-based product to another. Holding that causation is present for every important feature is therefore inconsistent with how consumers actually decide to buy multicomponent devices. On a theoretical level, Apple IV reveals a deeper debate within patent law. Some view patents as a kind of traditional property that allows owners to do with it what they will. Others understand patent law to be focused on the public good. Reviewing Judge Moore’s majority opinion and Judge Reyna’s concurrence reveals that their willingness to accept less evidence of harm has been clouded by their view of patents as a form of traditional property. But this view of patents is wrong. The fundamental purpose underlying patent law is to promote innovation. To the extent that inventors receive financial rewards, it is simply a byproduct of encouraging innovation. This concept is rooted in the Constitution, which authorizes laws “to promote the Progress of Science and the useful Arts . . .” Moreover, the Supreme Court has repeatedly sought to maximize innovation on behalf of the public when shaping various different patent doctrines. Most importantly, that is the view the Court took in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) when it held that patent owners no longer possess the automatic right to exclude others from infringing their patents. They must first satisfy eBay’s equitable four factor test. Of course, the first factor involves showing that the infringing feature actually caused irreparable harm. In sum, there are both doctrinal and theoretical reasons for the full Federal Circuit to reconsider Apple IV and restore the “causal nexus” requirement so that patentees have to show real causation and harm. The failure to do so will allow patentees to use a permanent injunction (or the threat of one) to force an infringer to take a license at a rate that reflects the value of the injunction, which is often greater than the value of the patented feature. This is the kind of patent holdup that a prudent application of eBay helps avoid.

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