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Apple Inc. v. Samsung Electronics Co., Ltd.

United States District Court, N.D. California, San Jose Division

June 22, 2017

APPLE INC., Plaintiff,
v.
SAMSUNG ELECTRONICS CO., LTD., et al., Defendants.

          ORDER RE: WILLFULNESS AND ENHANCED DAMAGES RE: DKT. NOS. 2186, 2191

          LUCY H. KOH, UNITED STATES DISTRICT JUDGE

         On May 5, 2014, after a thirteen-day trial and approximately four days of deliberation, a jury in this patent case reached a verdict, which included a finding of willful infringement of one of Apple's patents, U.S. Patent No. 8, 046, 721 (the “'721 patent”). ECF No. 1884. On May 23, 2014, Samsung filed a motion for judgment as a matter of law and motion to amend the judgment. ECF No. 1896-3. On September 9, 2014, the Court granted in part and denied in part Samsung's motion for judgment as a matter of law. ECF No. 1965. As relevant here, the Court held that despite the jury verdict finding willful infringement, Samsung did not willfully infringe the '721 patent as a matter of law under the standard set in In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007). On October 7, 2016, the Federal Circuit en banc upheld the judgment in the instant case, and remanded the issue of willful infringement in light of the United States Supreme Court's intervening decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S.Ct. 1923 (2016). ECF No. 2168; Apple Inc. v. Samsung Elecs. Co., 839 F.3d 1034 (Fed. Cir. 2016).

         Before the Court is Samsung's and Apple's briefing on the issues of willfulness and enhanced damages. Having considered the parties' briefing, the relevant law, and the record in this case, the Court finds that the jury's finding of willfulness is supported by substantial evidence and that a moderate award of enhanced damages is warranted.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. The '721 Patent

         On October 25, 2011, the United States Patent & Trademark Office issued the '721 patent. ECF No. 1-3. The '721 patent is titled “Unlocking a Device By Performing Gestures on an Unlock Image.” ECF No. 1-3. This patent claims a “slide-to-unlock” function for portable electronic device touchscreens. Id. This slide-to-unlock function allows a user to unlock a device by sliding an image on the device's touchscreen from one predefined location to another predefined location. Id. Although Apple originally asserted multiple claims from the '721 patent, only claim 8 of the '721 patent was tried to a jury. Claim 8 of the '721 patent is dependent on claim 7. The claims recite as follows:

7. A portable electronic device, comprising: a touch-sensitive display; memory; one or more processors; and one or more modules stored in the memory and configured for execution by the one or more processors, the one or more modules including instructions:
to detect a contact with the touch-sensitive display at a first predefined location corresponding to an unlock image; to continuously move the unlock image on the touch-sensitive display in accordance with movement of the detected contact while continuous contact with the touch-sensitive display is maintained, wherein the unlock image is a graphical, interactive user-interface object with which a user interacts in order to unlock the device; and to unlock the hand-held electronic device if the unlock image is moved from the first predefined location on the touch screen to a predefined unlock region on the touch-sensitive display.
8. The device of claim 7, further comprising instructions to display visual cues to communicate a direction of movement of the unlock image required to unlock the device.

ECF No. 1-3, '721 patent cls. 7, 8.

         B. Pre-Trial Proceedings in the Instant Suit

         On February 8, 2012, Apple brought suit against Samsung for infringement of eight patents: U.S. Patent Nos. 5, 946, 647 (the “'647 patent”), 6, 847, 959 (the “'959 patent”), 8, 074, 172 (the “'172 patent”), 8, 014, 760 (the “'760 patent”), 5, 666, 502 (the “'502 patent”), 7, 761, 414 (the “'414 patent”), 8, 805, 604 (the “'604 patent”), and the '721 patent. ECF No. 1 (“Compl.”) ¶ 12. Apple asserted that the following products or classes of products infringed these patents: the Galaxy S II Skyrocket, Galaxy S II Epic 4G Touch, Galaxy S II-T-Mobile, Galaxy S II-AT&T, Galaxy Nexus, Illusion, Captivate Glide, Exhibit II 4G, Stratosphere, Transform Ultra, Admire, Conquer 4G, and Dart smartphones, the Galaxy Player 4.0 and Galaxy Player 5.0 media players, and the Galaxy Tab 7.0 Plus and Galaxy Tab 8.9 tablets. Compl. ¶ 16.

         Also on February 8, 2012, Apple sought a preliminary injunction against Samsung as to Samsung's Galaxy Nexus smartphone. ECF No. 10. On April 23, 2012, Samsung filed an opposition. ECF No. 115. On May 14, 2012, Apple filed a reply. ECF No. 175. A hearing was held on Apple's preliminary injunction motion on June 7, 2012. ECF No. 210.

         On June 9, 2012, the Court granted Apple's motion for preliminary injunction as to the Galaxy Nexus. ECF No. 221 (“Prelim. Injunction Order”). The Court evaluated Apple's motion under the four factors described in Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), that is, the Court examined whether (1) Apple was likely to succeed on the merits of the underlying litigation; (2) Apple was likely to suffer immediate, irreparable harm in the absence of preliminary relief; (3) the balance of equities weighed in Apple's favor; and (4) an injunction was in the public interest. See Prelim Injunction Order at 4. The Court granted Apple's motion for preliminary injunction because (1) “Apple has shown that it is likely to prove at trial that the Galaxy Nexus phones infringe claims 6 and 19 of the '604 Patent; claims 1 and 8 of the '647 Patent; claims 7, 8, 12 and 15 of the '721 Patent; and claims 18, 19, and 27 of the '172 Patent, and that these patent claims are valid”; and (2) “Apple has further shown that it is likely to suffer irreparable harm in the absence of immediate relief, and that this irreparable harm will be attributable to Samsung's infringement of the '604 Patent, though Apple has not made the same showing with respect to Samsung's infringement of the '647, '721, or '172 Patents.” Id. at 100. Moreover, the Court found that the other two factors, the balance of the equities and the public interest weighed in favor of an injunction. Id. On October 11, 2012, on interlocutory appeal, the Federal Circuit reversed the Court's order granting a preliminary injunction against Samsung as to the Galaxy Nexus phones. See Apple Inc. v. Samsung Elecs. Co., 695 F.3d 1370 (Fed. Cir. 2012) (finding that Apple had not demonstrated a likelihood of success on the merits or irreparable harm as to the '604 patent).

         As noted above, the Court's preliminary injunction order held that Apple had shown a likelihood of success on the merits as to the '721 patent, but denied the preliminary injunction as to the '721 patent because Apple had failed to show that Apple's “irreparable harm will be attributable to the . . . '721 . . . Patent[].” Prelim. Injunction Order at 100. The Court also found that Apple had shown a likelihood of success on the merits despite Samsung's invalidity arguments. Id. Samsung attempted to rely on two pieces of prior art-the Plaisant reference and the NeoNode devices-to argue that the '721 patent was obvious, and thus invalid. The Plaisant reference was “a paper and video demonstration showing the work done by Catherine Plaisant of Human-Computer Interaction Lab at the University of Maryland. Dr. Plaisant's research focused on touch screen toggle switches as user interface control mechanisms.” Prelim. Injunction Order at 47. The Plaisant reference disclosed some, but not all of the claim limitations of the '721 patent slide-to-unlock technology.

         The NeoNode devices “were mobile phones with touchscreens that were released at some point in the 2004-2005 time period.” Id. at 49. The Neonode devices disclosed claim limitations beyond those in the Plaisant reference. Id. at 50. However, the Court concluded that Samsung had failed to establish that the NeoNode devices were properly admissible as prior art. Id. at 50- 51. As a result, because the Plaisant reference was insufficient on its own to render the '721 patent obvious, the Court found that Apple had shown a likelihood of success on the merits. However, as noted above, the Court denied Apple's motion for a preliminary injunction based on the '721 patent because Apple had failed to show irreparable harm with a causal nexus to the '721 patent. Id.

         C. Trial, Verdict, and Post-Trial Proceedings

         At trial, Apple presented evidence that Samsung had infringed claim 8 of the '721 patent. Samsung argued and presented evidence that the asserted '721 patent was invalid based on the Plaisant reference and the NeoNode devices. Samsung also argued and presented evidence that the Galaxy Nexus did not infringe the '721 patent. Samsung did not present evidence that Samsung's Admire and Stratosphere phones did not infringe the '721 patent.

         At trial the jury was instructed on invalidity, patent infringement, and willful patent infringement. ECF No. 1848 (“Final Jury Instructions”). With respect to invalidity, the jury was instructed on anticipation, statutory bars, and obviousness. Id. at 41-45. With respect to willful patent infringement, the jury was provided the following instruction:

In this case, Apple and Samsung both argue that the other side willfully infringed its patents.
To prove willful infringement, the patent owner must first persuade you that the alleged infringer infringed a valid and enforceable claim of one or more of the patent owner's patents. The requirements for proving such infringement were discussed in my prior instructions.
In addition, to prove willful infringement, the patent owner must persuade you by clear and convincing evidence that the alleged infringer acted with reckless disregard of the patent it infringed.
To demonstrate such “reckless disregard, ” the patent owner must persuade you that the alleged infringer actually knew, or it was so obvious that the alleged infringer should have known, that its actions constituted infringement of a valid and enforceable patent.
In deciding whether Samsung or Apple acted with reckless disregard for any patent that you find is infringed, you should consider all of the facts surrounding the alleged infringement including, but not limited to, the following factors.
A factor that may be considered as evidence that Samsung or Apple was not willful is whether it acted in a manner consistent with the standards of commerce for its industry.
A factor that may be considered as evidence that Samsung or Apple was willful is whether it intentionally copied a product of the other side that is covered by a patent.

ECF No. 1848 (“Final Jury Instructions”) at 39

         On May 5, 2014, the jury reached a verdict. ECF No. 1884 (“Verdict”). With respect to the '721 patent, the jury found that (1) Samsung had failed to show by clear and convincing evidence that the '721 patent was invalid; (2) Samsung infringed claim 8 of Apple's '721 patent with respect to three of Samsung's products, the Admire, the Stratosphere, and the Galaxy Nexus; and (3) Samsung willfully infringed the '721 patent. Id.

         On May 23, 2014, Samsung filed a motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50. ECF No. 1896. With respect to the '721 patent, among other arguments, Samsung argued that (1) the jury's determination that the '721 patent was valid was not supported by substantial evidence, (2) Apple did not provide sufficient evidence that Samsung's products infringed the '721 patent, and (3) the jury's finding that Samsung willfully infringed the '721 patent was not supported by substantial evidence and could not be upheld as a matter of law. Id. On June 6, 2014, Apple filed an opposition, ECF No. 1908, and on June 14, 2014, Samsung filed a reply, ECF No. 1917.

         On September 9, 2014, the Court granted in part and denied in part Samsung's motion for judgment as a matter of law. ECF No. 1965 (“JMOL Order”). Specifically, the Court held that (1) substantial evidence supported the jury's finding that the '721 patent was valid, and (2) because Samsung's invalidity defense was reasonable, a finding of willful infringement could not be upheld as a matter of law. Id. at 29.

         On November 25, 2014, judgment was entered against Samsung and in favor of Apple in the amount of $119, 625, 000, ECF No. 2076, the same amount awarded by the jury, see Verdict at 8. The jury attributed $2, 990, 625 of the damages to claim 8 of the '721 patent ($1, 372, 696 attributable to the Admire; $867, 281 attributable to the Galaxy Nexus; and $750, 648 attributable to the Stratosphere). Verdict at 9. With respect to Samsung's cross-claims, judgment was entered against Apple and in favor of Samsung in the amount of $158, 400. ECF No. 2076.

         D. Appeal and Remand

         On November 25, 2014, Samsung filed a notice of appeal. ECF No. 2077. On December 5, 2014, Apple filed a notice of cross appeal. ECF No. 2079.

         On February 26, 2016, a three-judge panel of the Federal Circuit affirmed in part and reversed in part the November 25, 2014 judgment. ECF No. 2159. Among other holdings, the Federal Circuit held that the jury's finding that the '721 was not invalid was not supported by substantial evidence and reversed the judgment in favor of Apple with respect to the '721 patent. Id.

         On October 7, 2016, the Federal Circuit en banc vacated in part the February 26, 2016 three-judge panel order. Apple Inc., 839 F.3d at 1063. The Federal Circuit en banc affirmed this Court's November 25, 2014 judgment. Id. Among other holdings, the Federal Circuit en banc held that the jury's finding that the '721 patent was not invalid was supported by substantial evidence. Id. at 1058. With respect to willful infringement of the '721 patent, the Federal Circuit en banc ruled as follows:

The district court's decision was solely based on its determination that Samsung's defenses were objectively reasonable under the standard from In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007). J.A. 63-66. Given the Supreme Court's recent willfulness decision in Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923 (2016), we remand the willfulness issue for the district court to consider under the new standard in the first instance.

Id. at 1058-59. On December 5, 2016, the mandate issued as to the Federal Circuit's October 7, 2016 en banc decision. ECF No. 2169.

         On April 14, 2017, Samsung filed its Opening Brief on Willfulness. ECF No. 2186 (“Samsung Op.”). On April 28, 2017, Apple filed its Response Regarding Willfulness and Opening Brief Regarding Enhanced Damages. ECF No. 2191 (“Apple Resp.”). On May 5, 2017, Samsung filed its Reply Regarding Willfulness and Opposition Regarding Enhanced Damages. ECF No. 2192 (“Samsung Resp.”). On May 12, 2017, Apple filed its Reply Brief Regarding Enhanced Damages. ECF No. 2195 (“Apple Reply”).

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 50 permits a district court to grant judgment as a matter of law “when the evidence permits only one reasonable conclusion and the conclusion is contrary to that reached by the jury.” Ostad v. Or. Health Scis. Univ., 327 F.3d 876, 881 (9th Cir. 2003). A party seeking judgment as a matter of law after a jury verdict must show that the verdict is not supported by “substantial evidence, ” meaning “relevant evidence that a reasonable mind would accept as adequate to support a conclusion.” Callicrate v. Wadsworth Mfg., Inc., 427 F.3d 1361, 1366 (Fed. Cir. 2005) (citing Gillette v. Delmore, 979 F.2d 1342, 1346 (9th Cir. 1992)). The Court must “view the evidence in the light most favorable to the ...


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