Apple Inc. v. Samsung Electronics Co. Ltd. et al, Docket No. 5:11-cv-01846 (N.D. Cal. Apr 15, 2011), Court Docket
Multiple Documents Part Description 1 44 pages 2 Declaration of Tulin Erdem STRICKEN PURSUANT TO ORDER #2212 3 Declaration of Stephen Gray 4 Declaration of R. Sukumar STRICKEN PURSUANT TO ORDER #2212 5 Declaration of Jerry Wind STRICKEN PURSUANT TO ORDER #2212 6 Declaration of Andries Van Dam
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1 QUINN EMANUEL URQUHART & SULLIVAN, LLP Charles K. Verhoeven (Cal. Bar No. 170151) ! [email protected] 50 California Street, 22nd Floor " San Francisco, California 94111 Telephone: (415) 875-6600 # Facsimile: (415) 875-6700 $ Kathleen M. Sullivan (Cal. Bar No. 242261) [email protected] % Kevin P.B. Johnson (Cal. Bar No. 177129) [email protected] & Victoria F. Maroulis (Cal. Bar No. 202603) [email protected] ' 555 Twin Dolphin Drive 5th Floor Redwood Shores, California 94065 ( Telephone: (650) 801-5000 Facsimile: (650) 801-5100 Susan R. Estrich (Cal. Bar No. 124009) [email protected] Michael T. Zeller (Cal. Bar No. 196417) ! [email protected] 865 S. Figueroa St., 10th Floor " Los Angeles, California 90017 Telephone: (213) 443-3000 # Facsimile: (213) 443-3100 $ Attorneys for SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS % AMERICA, INC. and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC & UNITED STATES DISTRICT COURT ' NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION ( APPLE INC., a California corporation, CASE NO. 11-cv-01846-LHK ! Plaintiff, SAMSUNG’S OPPOSITION TO APPLE’S ! MOTION FOR A PERMANENT vs. INJUNCTION AND DAMAGES !! ENHANCEMENT SAMSUNG ELECTRONICS CO., LTD., a !" Korean business entity; SAMSUNG Date: December 6, 2012 ELECTRONICS AMERICA, INC., a New Time: 1:30 p.m. !# York corporation; SAMSUNG Place: Courtroom 8, 4th Floor TELECOMMUNICATIONS AMERICA, Judge: Hon. Lucy H. Koh !$ LLC, a Delaware limited liability company, PUBLIC REDACTED VERSION !% Defendants. !& !'
02198.51855/5003337.14 Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page2 of 44
1 TABLE OF CONTENTS
2 Page 3
4 PRELIMINARY STATEMENT ...... 1 5 ARGUMENT ...... 1 6 I. THE COURT SHOULD NOT ISSUE A PERMANENT INJUNCTION ...... 1
7 A. Apple Has Not Shown That It Will Suffer Irreparable Harm From Samsung’s Use of Its Claimed Intellectual Property ...... 2 8 1. Apple Has Not Shown Irreparable Harm From Design Patent 9 Infringement ...... 3 10 (a) Apple Overstates The Importance Of Design In Purchasing ...... 4 11 (b) Apple Has Not Shown That Its Patented Designs Drive Demand ...... 5 12 (c) Changes To Apple’s Offerings Defeat Irreparable Harm ...... 6 13 2. Apple Has Not Shown Irreparable Harm From Trade Dress Dilution ...... 7 14 3. Apple Has Not Shown Irreparable Harm From Utility Patent 15 Infringement ...... 10
16 (a) Apple Has Not Shown That Its Features Patents Drive Consumer Demand ...... 10 17 (b) “Copying” Does Not Demonstrate a Nexus ...... 12 18 (c) Dr. Hauser’s Survey Results Do Not Show Consumer 19 Demand ...... 13
20 4. There Is No Basis For Apple’s Claimed Irreparable Harm ...... 13 21 B. Apple Has Not Shown That Monetary Remedies Are Inadequate ...... 15 22 C. The Balance Of Hardships Favors Samsung ...... 17 23 D. An Injunction Would Not Be In The Public Interest ...... 18 24 E. Apple’s Proposed Injunction Is Vague, Overbroad And Otherwise Improper ...... 20 25 F. Apple Should Post Security to Protect Samsung From A Wrongful Injunction ...... 21 26 II. THE COURT SHOULD NOT ENHANCE THE JURY’S DAMAGES VERDICTS ...... 22 27 A. Nearly $950 Million Of The Jury’s Award Represents Disgorgement Of 28 Infringer’s Profits That Is Not Subject To Enhancement ...... 23 02198.51855/5003337.14 -i- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page3 of 44
1 1. Products Found To Infringe Design Patents But Not Dilute Trade Dress ...... 23 2 2. Products Found To Infringe Design Patents And Dilute Trade Dress ...... 24 3 3. Products Found To Infringe Only Utility Patents ...... 27 4 B. Apple’s Requested Enhancement Is Unavailable Under The Lanham Act...... 27 5 1. Apple’s Claim Of Uncompensated Injury Is Unsupported ...... 28 6 2. Apple’s Calculation Is Flawed and Arbitrary ...... 28 7 C. Apple Is Not Entitled To Enhancement Based On Utility Patent 8 Infringement ...... 30 9 10 11 12 13 14 15 16 17 18 19
20 21 22 23 24 25 26 27 28 02198.51855/5003337.14 -ii- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page4 of 44
1 TABLE OF AUTHORITIES
2 Page
3 Cases 4 Accentra, Inc. v. Staples, Inc., 2011 WL 7563039 (C.D. Cal. Dec. 19, 2011) ...... 18 5 ActiveVideo Networks, Inc. v. Verizon Communications, Inc., 6 ___ F.3d __, 2012 WL 3636908 (Fed. Cir. Aug. 24, 2012) ...... 2, 15 7 Acumed LLC v. Stryker Corp., 551 F.3d 1323 (Fed. Cir. 2008) ...... 17 8 Advanced Cardiovascular Inc. v. Medtronic, Inc., 9 265 F.3d 1294 (Fed. Cir. 2001) ...... 32 10 Advanced Cardiovascular Sys. v. Medtronic, Inc., 2008 U.S. Dist. LEXIS 88892 (N.D. Cal. Oct. 21, 2008) ...... 17 11 Aero Prods. Int’l, inc. v. Intex Recreation Corp., 12 466 F.3d 1000 (Fed. Cir. 2006) ...... 26, 27 13 AFL Telecommunications LLC v. SurplusEZ.com, Inc., 2011 WL 5547855 (D. Ariz. 2011) ...... 7 14 ALPO Petfoods, Inc. v. Ralston Purina Co., 15 913 F.2d 958 (D.C. Cir. 1990) ...... 27 16 ALPO Petfoods, Inc. v. Ralston Purina Co., 997 F.2d 949 (D.C. Cir. 1993) ...... 27 17 Apple, Inc. v. Motorola, Inc., 18 __ F. Supp. 2d __, 2012 WL 2376664 (N.D. Ill. June 22, 2012) ...... passim 19 Apple, Inc. v. Samsung Elecs. Co., Ltd., 678 F.3d 1314 (Fed. Cir. 2012) ...... 3, 5, 10, 12, 13 20 Apple Inc. v. Samsung Elecs. Co., Ltd., 21 __ F.3d __, 2012 WL 4820601 (Fed. Cir. Oct. 11, 2012) ...... passim 22 Apple, Inc. v. Samsung Elecs. Co., No. 12-cv-630 ...... 3 23 Arnott v. Am. Oil Co., 24 609 F.2d 873 (8th Cir. 1979) ...... 24, 25, 26 25 Automated Merch. Sys, Inc. v. Crace Co., 357 F. App’x 297 (Fed. Cir. 2009) ...... 15 26 Baden Sports, Inc. v. Kabushiki Kaisha Molten, , 27 2007 WL 2790777 (W.D. Wash. 2007) ...... 34 28 02198.51855/5003337.14 -iii- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page5 of 44
1 Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., 682 F.3d 1003 (Fed. Cir. 2012) ...... 24, 31 2 Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 3 670 F.3d 1171 (Fed. Cir. 2012), vacated in part on other grounds, 682 F.3d 1003 (Fed. Cir. 2012) ...... 16 4 Belden Techs. Inc. v. Superior Essex Comms. LP, 5 802 F. Supp. 2d 555 (D. Del. 2011) ...... 19 6 Binder v. Disability Group, Inc., 772 F. Supp. 2d 1172 (C.D. Cal. 2011) ...... 28 7 Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 8 489 U.S. 141 (1989) ...... 6, 21 9 Braun Inc. v. Dynamics Corp. of America, 975 F.2d 815 (Fed. Cir. 1992) ...... 23, 27 10 Broadcom Corp. v. Qualcomm Inc., 11 543 F.3d 683 (Fed. Cir. 2008) ...... 19 12 Brooktree Corp. v. Adv. Micro Devices, Inc., 977 F.2d 1555 (Fed. Cir. 1992) ...... 31 13 Buddy Sys., Inc. v. Exer-Genie, Inc., 14 545 F.2d 1164 (9th Cir. 1976) ...... 21 15 Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277 (Fed. Cir. 2002) ...... 23, 26, 27 16 Conceptus, Inc. v. Hologic, Inc., 17 No. 09-2280, 2012 WL 44064 (N.D. Cal. Jan. 9, 2012) ...... 16 18 Creative Internet Advertising Corp. v. Yahoo! Inc., 689 F. Supp. 2d 858 ...... 31 19 Cybermedia, Inc. v. Symantec Corp., 20 19 F. Supp. 2d 1070 (N.D. Cal. 1998) ...... 22 21 DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314 (Fed. Cir. 2009) ...... 34 22 Dexter 345 Inc. v. Cuomo, 23 663 F.3d 59 (2d Cir. 2011) ...... 15 24 eBay v. MercExchange, LLC, 547 U.S. 388 (2006) ...... 2, 5, 17, 18 25 F.T.C. v. Whole Foods Market, Inc., 26 548 F.3d 1028 (D.C. Cir. 2008) ...... 9 27 Ferrari S.p.A. Esercizio Fabbriche Automobili e Corse v. McBurnie, No. 86-1812, 11 U.S.P.Q. 2d 1843 (S.D. Cal. May 26, 1989) ...... 9 28 02198.51855/5003337.14 -iv- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page6 of 44
1 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263 (Fed. Cir. 2007) ...... 20 2 Fractus, S.A. v. Samsung Elecs. Co., Ltd., 3 No. 6:09-cv-203, 2012 WL 2505741 (E.D. Tex. June 28, 012) ...... 19 4 Funai Elec. Co., Ltd. v. Daewoo Elec. Corp., 593 F. Supp. 2d 1088 (N.D. Cal. 2009), aff’d 616 F.3d 1357 (Fed. Cir. 2010) ...... 31, 32 5 Hako-Med USA, Inc. v. Axiom Worldwide, Inc., 6 2009 WL 3064800 (M.D. Fla. Sept. 22, 2009) ...... 31 7 High Tech Med. Instrumentation, Inc. v. New Image Indus., Inc., 49 F.3d 1551 (Fed Cir. 1995) ...... 7, 15, 17 8 Hiland Potato Chip Co. v. Culbro Snack Foods, Inc., 9 720 F.2d 981 (8th Cir. 1983) ...... 9 10 Hynix Semiconductor Inc. v. Rambus Inc., 609 F. Supp. 2d 951 (N.D. Cal. 2009) ...... 7, 14 11 iLOR LLC v. Google, Inc., 12 631 F.3d 1372 1378 (Fed. Cir. 2011) ...... 31 13 I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27 (1st Cir. 1998) ...... 30 14 Innogenetics, N.V. v. Abbott Labs., 15 512 F.3d 1363 (Fed. Cir. 2008) ...... 16 16 Int’l Longshoremen’s Ass’n v. Philadelphia Marine Trade Ass’n, 389 U.S. 64 (1967) ...... 20 17 Inwood Labs, Inc. v. Ives Labs, Inc., 18 456 U.S. 844 (1982) ...... 8 19 Judkins v. HT Window Fashions Corp., 704 F. Supp. 2d 470 (W.D. Pa. 2010) ...... 31, 32, 34 20 Jurgens v. McKasy, 21 927 F.2d 1552 (Fed. Cir. 1991) ...... 27 22 Kaufman Co., Inc. v. Lantech, Inc., 926 F.2d 1136 (Fed. Cir. 1991) ...... 25 23 Kowalski v. Mommy Gina Res., 24 2009 WL 855976 (D. Haw. Mar. 30, 2011) ...... 33, 34 25 Kusek v. Family Circle, 894 F. Supp. 522 (D. Mass. 1995) ...... 9 26 La Quinta Corp. v. Heartland Properties LLC, 27 603 F.3d 327 (6th Cir. 2010) ...... 28 28 02198.51855/5003337.14 -v- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page7 of 44
1 Lee v. Dayton-Hudson, 838 F.2d 1186 (Fed. Cir. 1988) ...... 6 2 Los Angeles Police Protective League v. Gates, 3 995 F.2d 1469 (9th Cir. 1993) ...... 8 4 Magna-RX, Inc. v. Holley, No. 05-3545, 2008 WL 5068977 (D. Ariz. Nov. 25, 2008) ...... 7 5 Mandile v. Clark Material Handling Co., 6 303 F. Supp. 2d 531 (D.N.J. 2004) aff’d, 131 F. App’x 836 (3d Cir. 2005) ...... 24 7 Mass Engineered Design, Inc. v. Ergotron, 663 F. Supp. 2d 361 (E.D. Tex. 2009) ...... 32, 33, 35 8 Mead Johnson & Co. v. Abbott Labs., 9 201 F.3d 883 (7th Cir. 2000) ...... 22 10 Mentor H/S, Inc. v. Medical Device Alliance, Inc., 244 F.3d 1365 (Fed. Cir. 2001) ...... 31 11 Modine Mfg. Co. v. Allen Group. Inc., 12 917 F.2d 538 (Fed. Cir. 1990) ...... 31 13 Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., 2010 WL 583960 (N.D. Cal. Feb. 16, 2010) ...... 24 14 Nichia Corp. v. Seoul Semi. Ltd., 15 2008 WL 346416 (N.D. Cal. Feb. 7, 2008) ...... 14 16 Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007 (9th Cir. 1994) ...... 29 17 Nissan Motor Co. v. Nissan Computer Corp., 18 378 F.3d 1002 (9th Cir. 2004) ...... 8 19 Paice LLC v. Toyota Motor Corp., 504 F.3d 1293 (Fed. Cir. 2007) ...... 16 20 Paice LLC v. Toyota Motor Corp., 21 2006 U.S. Dist. LEXIS 61600 (E.D. Tex. Aug. 16, 2006) ...... 18 22 Paper Converting Machine Co. v. Magna Graphics Corp., 745 F.2d 11 (Fed. Cir. 1984) ...... 25 23 Power Integrations, Inc. v. Fairchild Semiconductor Inc., 24 762 F. Supp. 2d 710 (D. Del. 2011) ...... 33, 34 25 Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 723 F. Supp. 2d 1284 (S.D. Cal. 2010) ...... 15, 17, 19 26 Read Corp. v. Portec, Inc., 27 970 F.2d 816 (Fed Cir. 1992) ...... 31, 35 28 02198.51855/5003337.14 -vi- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page8 of 44
1 In re Renard, 451 B.R. 12 (Bankr. C.D. Cal. 2011) ...... 18 2 Richardson v. Stanley Works, Inc., 3 597 F.3d 1288 (Fed. Cir. 2010) ...... 6 4 Ricoh Co. v. Quanta Computer, Inc., 2010 WL 1607908 (W.D. Wis. April 19, 2010) ...... 16 5 Ryco, Inc. v. Ag-Bag Corp., 6 857 F.2d 1418 (Fed. Cir. 1998) ...... 25 7 Saint-Gobain Autover USA, Inc. v. Xinyi Glass N. Am., Inc., 707 F. Supp. 2d 737 (N.D. Ohio 2010) ...... 24 8 Schmidt v. Lessard, 9 414 U.S. 473 (1974) ...... 20 10 In re Seagate Techs., LLC., 497 F.3d 1360 (Fed. Cir. 2007) ...... 31 11 Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 12 758 F.2d 613 (Fed. Cir. 1985) ...... 24 13 Skydive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105 (9th Cir. 2012) ...... 27 14 Soverain Software LLC v. Newegg Inc, 15 836 F. Supp. 2d 462 (E.D. Tex. 2010) ...... 16, 18 16 Spine Solutions v. Medtronic Sofamor Danek USA, 620 F.3d 1305 ...... 34 17 Stormans, Inc. v. Selecky, 18 586 F.3d 1109 (9th Cir. 2009) ...... 18 19 Taco Cabana Int’l, Inc. v. Two Pesos, 932 F.2d 1113 (5th Cir. 1991) ...... 28 20 Tate Access Floors v. Interface Architectural Res., Inc., 21 132 F. Supp. 2d 365 (D. Md. 2001) ...... 19 22 Techs., Inc. v. Microsoft Corp., 434 F. Supp. 2d 437 (E.D. Tex. 2006) ...... 16 23 Telecordia v. Cisco, 24 592 F. Supp. 2d 727 (D. Del. 2009) ...... 34 25 TiVo, Inc. v. Echostar Corp., 646 F.3d 869 (Fed. Cir. 2007) ...... 14 26 TrafFix Devices, Inc. v. Marketing Displays, Inc., 27 532 U.S. 23 (2001) ...... 9 28 02198.51855/5003337.14 -vii- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page9 of 44
1 Vanwyk Textile Sys., B.V. v. Zimmer Mach. Am., Inc., 994 F. Supp. at 379-381 (W.D.N.C. 1997) ...... 27, 28 2 Victor Stanley Inc. v. Creative Pipe Inc., 3 No. 06-2662, 2011 WL 4596043 (D. Md. Sept. 30, 2011) ...... 26, 27 4 Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26 (1st Cir. 2011) ...... 7 5 W.R. Grace & Co. v. Local Union 759, 6 461 U.S. 757 (1983) ...... 21 7 Wilson v. Burlington Northern Railroad, 803 F.2d 563 (10th Cir. 1986) ...... 24 8 Wordtech Sys., Inc. v. Integrated Network Solutions, Inc., 9 2009 WL 113771 (E.D. Cal. 2009) ...... 32 10 Statutes/Rules 11 15 U.S.C. § 1116(a) ...... 7, 21 12 15 U.S.C. § 1117(a) ...... 28 13 15 U.S.C. § 1125(c) ...... 7, 30 14 35 U.S.C. § 283 ...... 21 15 35 U.S.C. § 284 ...... 23, 26 16 35 U.S.C. § 289 ...... 22, 23, 24, 25, 26, 27, 31 17 Fed. R. Civ. P. 50 ...... 29 18 Fed. R. Civ. P. 65(d)(1) ...... 20 19
20 Miscellaneous 21 4 McCarthy on Trademarks and Unfair Competition § 24:102 (4th ed.) ...... 30 22 23 24 25 26 27 28 02198.51855/5003337.14 -viii- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page10 of 44
1 Preliminary Statement 2 Apple’s motion for an injunction attempts to convert the jury’s specific infringement 3 findings into a broad injunction that it can use to bully Samsung and third parties in an effort to 4 stifle lawful, fair competition. The severe threats to fair competition created by Apple’s positions
5 in this case have been widely reported.1 Apple now seeks, through its requested injunction, to 6 deprive consumers not only of the products that Apple has accused but also unspecified other 7 products that Apple will argue infringe or merely include “a feature or features not more than 8 colorably different” from features that Apple accuses. Dkt. 1987 at 2. The Court should reject 9 this effort to hinder competition and limit consumer choice. Apple Inc. v. Samsung Elecs. Co., 10 Ltd., __ F.3d __, 2012 WL 4820601, at *3 (Fed. Cir. Oct. 11, 2012) (“Apple II”) (requiring courts 11 to analyze whether “patentee seeks to leverage its patent for competitive gain beyond that which 12 the inventive contribution and value of the patent warrant”). 13 Likewise, Apple’s request for more than $500 million in additional damages as 14 “enhancements” shows that Apple’s goal is not to protect innovation but to hinder competition. 15 The enhancements that Apple seeks should not be awarded.2
16 Argument
17 I. THE COURT SHOULD NOT ISSUE A PERMANENT INJUNCTION 18 “For a permanent injunction to issue, the party requesting an injunction must demonstrate
19 1 See, e.g., Cao, “Apple co-founder Wozniak says he hates Samsung patent verdict,” Financial 20 Post, Sept. 14, 2012 (“‘I hate it,’ Wozniak said when asked about the patent fights between Apple and Samsung. ‘I don’t think the decision of California will hold. And I don’t agree with it — very 21 small things I don’t really call that innovative.’”); Love, “Apple-Samsung patent fight: Fuzzy math,” Los Angeles Times, Aug. 30, 2012; Nocera, “Has Apple Peaked?” New York Times, Sept. 22 21, 2012; Duhigg and Lorr, “The Patent Used as a Sword” New York Times, Oct. 7, 2012 (“Former Apple employees say senior executives made a deliberate decision . . . to use patents as 23 leverage against competitors to the iPhone”); “The Colbert Report,” Sept. 18, 2012; Raustiala & Sprigman, “Apple vs. Samsung: Is Copying Theft or Innovation?”, Los Angeles Times, Sept. 4, 24 2012 (“Does anyone own the rectangle? Should anyone own the rectangle?”); Editorial, “Apple’s Courtroom Win Reveals Deeper Woes in U.S. Patents,” Boston Globe, Sept. 4, 2012. All are attached as Exhibit 1 to the concurrently-filed Declaration of John Pierce (“Pierce Decl.”). 25 2 In violation of this Court’s Order (Dkt. 1945), Apple has submitted over 40 pages of 26 declarations used “as a vehicle for circumventing the Court’s page limits.” Id. Pursuant to this Court’s October 9, 2012 Order (Dkt. 2038) and L.R. 7-3(a), Samsung thus moves to strike the 27 following: Crouse Decl., ¶¶ 2 and 4 (from 1:13 to 1:14); Musika Decl. ¶¶ 7, 10-28, 31-60; Robinson Decl., ¶¶ 34-36, 38-40, and 42; Schiller Decl., ¶¶ 3-10, 13, 15 (from 5:21 to 5:26); and 28 Winer Decl., ¶¶ 7-14. 02198.51855/5003337.14 -1- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page11 of 44
1 that: (1) it has suffered an irreparable injury; (2) legal remedies, such as money damages are 2 inadequate compensation; (3) the balance of hardships warrants an injunction; and (4) the public 3 interest would not be disserved by an injunction.” ActiveVideo Networks, Inc. v. Verizon 4 Communications, Inc., ___ F.3d __, 2012 WL 3636908, at *21 (Fed. Cir. Aug. 24, 2012) (citing 5 eBay, 547 U.S. at 391). These factors should be applied with an awareness of the “danger that 6 Apple’s goal in obtaining an injunction is harassment of its bitter rival” for anticompetitive 7 purposes, Apple, Inc. v. Motorola, Inc., __ F.Supp.2d __, 2012 WL 2376664, at *20 (N.D. Ill. June 8 22, 2012) (Posner, J.) (“Motorola”), and with the recognition that Apple has already benefitted 9 from an enormous (and excessive) verdict and that Samsung has either redesigned or stopped 10 selling virtually every product found to infringe.
11 A. Apple Has Not Shown That It Will Suffer Irreparable Harm From Samsung’s 12 Use of Its Claimed Intellectual Property 13 Irreparable harm may not be presumed based on an infringement finding; instead, Apple 14 “must make a clear showing that it is at risk of irreparable harm, which entails showing a 15 likelihood of substantial and immediate irreparable injury.” Apple II, 2012 WL 4820601 at *2. 16 “But in cases such as this—where the accused product includes many features of which only one 17 (or a small minority) infringe—a finding that the patentee will be at risk of irreparable harm does 18 not alone justify injunctive relief.” Id. “Rather, the patentee must also establish that the harm is 19 sufficiently related to the infringement”—which requires a showing “that a sufficiently strong
20 causal nexus relates the alleged harm to the alleged infringement.” Id. “It is not enough for the 21 patentee to establish some insubstantial connection between the alleged harm and the infringement 22 and check the causal nexus requirement off the list.” Id. at *3. Nor is the requirement satisfied 23 “simply because removing an allegedly infringing component would leave a particular feature, 24 application, or device less valued or inoperable.” Id. at *4. “The patentee must rather show that 25 the infringing feature drives consumer demand for the accused product.” Id. at *3. 26 27 28 02198.51855/5003337.14 -2- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page12 of 44
1 Apple must make this causal showing—which it fails even to acknowledge3—separately 2 for each item of intellectual property at issue. See Apple, Inc. v. Samsung Elecs. Co., Ltd., 678 3 F.3d 1314, 1323-28 (Fed. Cir. 2012) (considering separately whether Apple had proved a causal 4 nexus for ‘381 and D’677 patents); Apple, Inc. v. Samsung Elecs. Co., No. 12-cv-630, Dkt. 221, at 5 78-93 (“Apple II Dkt. 221”) (considering separately whether Apple had proved a causal nexus for 6 each of four patents); Motorola, 2012 WL 2376664, at *19 (denying permanent injunction after 7 considering patents individually where Apple did “not indicate that infringement of these claims” 8 caused its claimed irreparable harms) (emphasis in original). Apple seeks a separately 9 enforceable injunction against infringement of each feature of each individual claimed patent and 10 right, but fails to justify that request as to each claimed patent and right individually, opting 11 instead for a blunderbuss approach that relies on the alleged “combined effects of Samsung’s 12 infringement and dilution” (Mot. at 9) and the sort of generalized arguments that the Federal 13 Circuit rejected in Apple II. This does not meet Apple’s burden.
14 1. Apple Has Not Shown Irreparable Harm From Design Patent 15 Infringement 16 This Court held previously that Apple failed to demonstrate a nexus between Samsung’s 17 alleged use of the D’677 patent and Apple’s claimed harms of lost customers and lost market 18 share. Dkt. 452 at 34. The Federal Circuit upheld this finding and ruled it applies equally to the 19 D’087 patent. Apple, 678 F.3d at 1324-27. Both this Court and the Federal Circuit placed
20 weight on evidence that “design was not a determinative factor in consumer decisionmaking” for 21 smartphones, id. at 1324, and this Court explained that “even if ‘design’ matters to a new 22 smartphone purchaser,” Apple failed to show demand was tied to the D’677, which is limited to 23 portions of a device’s front face. Dkt. 452 at 33-34; accord Apple, 678 F.3d at 1325-27. 24 Apple offers neither evidence nor argument to justify a different conclusion now. 25 3 26 Apple states that “no authority in the permanent injunction context requir[es] a causal nexus” between the alleged wrongdoing and the claimed irreparable harm, Mot. at 2, but makes no 27 argument that principles of causation that are fundamental when considering interim relief become irrelevant when permanent relief is sought. There is no support for any such position, and it is 28 fundamentally inconsistent with eBay and Apple II. 02198.51855/5003337.14 -3- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page13 of 44
1 Instead, it rehashes the same points this Court and the Federal Circuit already rejected. 2 Compare, e.g., Mot. at 7 (arguing for permanent injunction because “80% of iPhone purchasers 3 identify ‘attractive appearance and design’” as important and “up to 40% of customers” identified 4 “exterior design” as a purchasing factor) with Dkt. 452 at 34 (this Court denying preliminary 5 injunction as to design patent despite evidence that “design is one of six factors that influence a 6 person’s decision to buy a particular smartphone” and “82% of iPhone purchasers find ‘attractive 7 appearance/design’” important). For the same reasons as before, and for additional reasons, 8 Apple has not established irreparable harm tied to the design patents asserted here.
9 (a) Apple Overstates The Importance Of Design In Purchasing 10 First, while Apple argues that it advertises the design of its products and customers care 11 about the “style” of their smartphones, Mot. at 7, the evidence shows—as the Court found 12 before—that sales of iPhones rise with the release of new products, suggesting “the driver in 13 consumer demand may be the novelty of the product, and not necessarily the design.” Dkt. 452 14 at 34. The success of the iPhone 5, which sold five million units in the first three days, confirms 15 this (Pierce Decl., Ex. 2), as does the fact that sales spikes occur with new products even when 16 their design does not change. Wagner Decl., Ex. 54. 17 Survey evidence equally refutes Apple’s claims. Apple’s own survey demonstrated that 18 only 1% of iPhone users and 4% of all respondents listed “design/color” as their reason for 19 purchasing, DX 592.023, and appearance and design came in eighth when domestic iPhone buyers
20 ranked features and attributes by importance, behind ease of use, service and support, trust Apple 21 brand, quality of apps, battery life, value for price paid and quantity of apps. Pierce Decl. Ex. 5 22 at APLNDC-Y0000027523; PX146.5. The same holds true for Android purchasing decisions; in 23 a January 2011 study, Apple recognized that 24
25 DX572.026; DX572.082 (top three reasons domestic 26 consumers purchase Android phones are desire to stay with current cell provider, trust in Google 27 brand, and preference for larger screens); RT 873:6-12 (consumers desire large screens for their 28 functionality). Consumers purchase Android phones for many reasons unrelated to design, 02198.51855/5003337.14 -4- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page14 of 44
1 DX572.027-28. Apple overlooks the non-design 2 factors that affect consumer choice in these complex technology products. “In this light, the 3 causal link between the alleged infringement and consumer demand for the [accused products] is 4 too tenuous to support a finding of irreparable harm.” Apple II, 2012 WL 4820601 at *5.
5 (b) Apple Has Not Shown That Its Patented Designs Drive Demand 6 Having failed to establish that design even generally is a significant driver of purchasing 7 decisions, Apple provides no evidence that the specific design patents at issue drive consumer 8 demand, as required. Apple II, 2012 WL 4820601 at *3 (“patentee must rather show that the 9 infringing feature drives consumer demand for the accused product”) (emphasis added). Apple’s 10 alleged proof that “design matters” says nothing about whether Samsung’s purported use of the 11 patents in suit drives demand for Samsung’s products. As the Court has explained, mere proof 12 that “‘design’ matters” does not establish a causal link between the use of a design patent and 13 claimed harms. Dkt. 452 at 34. Apple offers no evidence establishing that critical link. 14 Because Apple’s design patents cover only portions of the devices at issue, the need for 15 patent-specific proof of causation is particularly crucial. See eBay v. MercExchange, LLC, 547 16 U.S. 388, 396-97 (2006) (Kennedy, J., concurring) (“When the patented invention is but a small 17 component of the product the companies seek to produce and the threat of injunction is employed 18 simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for 19 the infringement and an injunction may not serve the public interest.”). The D’677 patent covers
20 only one exterior face, and does not claim even the entirety of that face (it excludes the home 21 button, for example). Dkt. 1893 at 59 (Instruction No. 43). The D’087 adds a bezel, but like 22 the D’677 covers far less than the complete design for any product. Id. The D’305 relates only 23 to a single page of icons in a graphical user interface, which falls far short of the complete design 24 for any Apple product, id. at 60, and even Apple concedes that Samsung did not use the D’305 as 25 claimed since nearly every icon in Samsung’s phones differs substantially from the D’305 icons. 26 RT 1426:14-1435:24 (Kare). As this Court has recognized, “even if ‘design’ matters to a new 27 smartphone purchaser, it is not clear how much design of the front face of the phone matters to 28 that same purchaser.” Dkt. 452 at 34; see also Apple, 678 F.3d at 1321 (noting this Court’s 02198.51855/5003337.14 -5- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page15 of 44
1 reliance on “fact that Apple’s patents do not claim the entire article of manufacture”). Apple 2 offers no evidence that Samsung’s alleged use of the designs at issue drives demand, and fails 3 even to acknowledge the limited scope of the patents in suit. This is fatal under Apple II, 2012 4 WL 4820601, at *3. 5 In any case, even if there were proof of such a causal connection, there is no proof that 6 Samsung’s infringement of protectable aspects of Apple’s designs had any effect on Apple’s 7 market share. Functional and structural components of a design are not protectable, Richardson 8 v. Stanley Works, Inc., 597 F.3d 1288, 1293 (Fed. Cir. 2010); Lee v. Dayton-Hudson, 838 F.2d 9 1186, 1188 (Fed. Cir. 1988), and Apple conceded at trial that many elements of its designs fall 10 into these categories. Dkt. 1990-03 at 5 (non-ornamental features of D’677 and D’087 include 11 form that is rectangular with curved corners; flat, clear, large screens; size that can be handheld; 12 speakers near the top; opaque borders and bezel); id. at 6 (non-ornamental features of D’305 13 include use of pictures and images as “visual shorthand” to communicate information, and
14 inclusion of sufficient space to allow for finger-operation).4 Samsung, like the rest of the world, 15 is entitled to compete with Apple by incorporating unprotected features into its products. Bonito 16 Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 159-60 (1989). To show that an 17 injunction is needed to avoid irreparable harm, however, Apple must but cannot show that 18 Samsung’s infringement of protectable features of Apple’s designs is causing such harm. .
19 (c) Changes To Apple’s Offerings Defeat Irreparable Harm 20 Apple admits it no longer sells the iPhone 3 and 3GS. Schiller Decl. ¶ 15. Because 21 those are the only later-generation products that Apple has claimed embody the D’087 (RT 22 1022:23-1024:10 (Bressler)), Apple no longer practices that patent. It is also clear that Apple is 23 no longer practicing the D’305. While Apple has argued that the iPhone 4 also embodies the 24 D’305 (RT 1369:1-14), the testimony that the D’305 was designed to have the appearance of a 25 “missing row” of icons (Dkt. 1090-1 at 14; Pierce Decl. Ex. 42) and the undisputed fact that the
26 4 Indeed, at the announcement of the iPhone 5, and in subsequent television ads, Apple touted 27 the dimensions of the user interface as being optimally designed for control by the user’s thumb— including the phone’s being only four icons wide, like the D’305 patent. See, e.g., Pierce Decl. 28 Exs. 46-47. 02198.51855/5003337.14 -6- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page16 of 44
1 iPhone 4 does not incorporate such a “missing row” (JX1003) shows that the iPhone 4 does not 2 practice the D’305 patent. And it is plain that Apple’s current screen differs from the D’305 in 3 many other respects. 4 That Apple no longer practices the patents undermines its claim of irreparable harm. See 5 High Tech Med. Instrumentation, Inc. v. New Image Indus., Inc., 49 F.3d 1551, 1556 (Fed Cir. 6 1995) (failure to practice an invention is “a significant factor” in the irreparable harm calculus). 7 Apple must show that ongoing infringement of these design patents will cause irreparable harm, 8 Hynix Semiconductor Inc. v. Rambus Inc., 609 F. Supp. 2d 951, 968 (N.D. Cal. 2009), yet 9 nowhere does it explain, let alone prove, how it purportedly is losing market share from 10 infringement of patents it no longer practices. 11 As Apple has not shown that any ongoing infringement of Apple’s design patents will 12 cause irreparable harm, its motion as to these patents and the Samsung phones found to infringe 13 them should be denied.5
14 2. Apple Has Not Shown Irreparable Harm From Trade Dress Dilution 15 Apple’s trade dress arguments fare no better. Citing the dilution statute, Apple argues 16 that it need not show irreparable harm to obtain an injunction for dilution. Mot. at 6. But the 17 statute makes clear that injunctive relief is “subject to the principles of equity,” 15 U.S.C. § 18 1125(c), and post-eBay authorities applying the similar provision for trademark infringement (15
19 U.S.C. § 1116(a)) apply equitable principles when considering injunction motions.6 Apple must 20 prove irreparable harm on its dilution claim, and fails to do so. 21 First, Apple’s claims of irreparable harm from dilution fail for the reasons shown above. 22 Apple’s generic claim that “design matters” to consumers makes no showing that demand is 23 5 24 The Samsung products at issue here are: Capitvate; Continuum; Droid Charge; Epic 4G; Fascinate; Galaxy S i9000; Galaxy S 4G; Galaxy S II (AT&T); Galaxy S II (i9100); Galaxy S II 25 (T-Mobile); Galaxy S II (Epic 4G Touch); Galaxy S II (Skyrocket); Galaxy S Showcase (i500); Gem; Indulge; Infuse 4G; Mesmerize; and Vibrant. 6 26 Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 33-34 (1st Cir. 2011); AFL Telecommunications LLC v. SurplusEZ.com, Inc., 2011 WL 5547855, at *3 (D. Ariz. 27 2011) (rejecting presumption of irreparable harm in post-eBay trademark case); Magna-RX, Inc. v. Holley, No. 05-3545, 2008 WL 5068977, at *4 (D. Ariz. Nov. 25, 2008) (applying eBay to 28 trademark case). 02198.51855/5003337.14 -7- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page17 of 44
1 driven by its claimed trade dress, which incorporates less than the entirety of its actual products. 2 PDX 26.18; Dkt. 75 at ¶¶ 49, 59 & Ex. 16. Apple also has made no effort to show that the 3 source-identifying attributes of its trade dress drive demand, yet those attributes are all that trade 4 dress law protects. Inwood Labs, Inc. v. Ives Labs, Inc., 456 U.S. 844, 851 n.11 (1982). In 5 short, Apple offers no evidence that there is a causal connection between the alleged dilution of 6 the source-identifying attributes of its trade dress and its claimed harms. To the contrary, 7 Apple’s expert Dr. Winer affirmatively conceded at trial that there was no actual harm to Apple 8 stemming from Samsung’s alleged use of any Apple trade dress.7
9 Second, Apple no longer practices its claimed trade dress, which dooms its request for an 10 injunction. The only products that Apple claims once practiced the trade dress at issue—the 11 Unregistered iPhone 3G Trade Dress and Registered iPhone Trade Dress—are the now- 12 discontinued iPhone 3G and 3GS. Dkt. 75 at ¶¶ 58 & 60. Apple’s discontinuance of these 13 products eliminates any possibility of irreparable harm from dilution, for dilution requires proof 14 that “the capacity of the [plaintiff’s] mark to identify and distinguish goods or services sold by 15 [plaintiff] has been lessened.” Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 16 1012 (9th Cir. 2004). Any future lessening of the capacity of Apple’s trade dress to identify 17 goods that Apple sells will result from Apple’s decision to no longer sell goods that use its trade 18 dress, not from Samsung’s purported use of a similar dress. That Apple has unilaterally decided 19 not to sell products incorporating its trade dress is fatal to its request for prospective relief.
20 Recognizing this, Apple argues that its current product offerings, like the iPhone 4S, 21 “incorporate many elements of the trade dress found to be diluted.” Mot. at 6. This ignores that 22 the jury found this “Unregistered Combination iPhone Trade Dress” that Apple claims its current
23 offerings embody is unprotectable. Dkt. 1931 at 10; Dkt. 75 at ¶¶ 62, 64. This finding is 24 binding, Los Angeles Police Protective League v. Gates, 995 F.2d 1469, 1473 (9th Cir. 1993)
25 7 While Winer now claims that Samsung’s “similar-looking smartphones . . . mudd[y] the 26 distinctiveness cues,” “reduce[] the strength of Apple’s brand,” and will decrease Apple’s sales, Winer Decl., ¶¶ 7, 10, he admitted at trial that he has “no empirical evidence to show that 27 Samsung’s actions have diluted Apple’s brand” or that “Apple has actually lost any market share,” and he could not “quantify the number of purchasers who bought a Samsung device in lieu of 28 buying an Apple device.” RT 1534:14-23; see also 4/27/2012 Winer Depo. at 344 (same). 02198.51855/5003337.14 -8- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page18 of 44
1 (court sitting in equity bound by jury’s findings), and it means that this unprotected trade dress 2 lawfully may be used by the world at large. See TrafFix Devices, Inc. v. Marketing Displays, 3 Inc., 532 U.S. 23, 29 (2001) (“Trade dress protection must subsist with the recognition that in 4 many instances there is no prohibition against copying goods and products. In general, unless an 5 intellectual property right such as a patent or copyright protects an item, it will be subject to 6 copying.”). Any similarities between the products Apple sells now and those it has discontinued 7 are immaterial. No injunction can prohibit Samsung or anyone else from practicing that 8 supposed trade dress. 9 That Apple offers iPhone 3G or 3GS phones as replacements, or that such products remain 10 available from third parties, does not establish that Apple will suffer irreparable harm as to a trade 11 dress that it no longer uses in the marketplace. Apple offers no evidence and no authority that 12 offering “replacement phones” supports draconian injunctive relief. Ferrari S.p.A. Esercizio 13 Fabbriche Automobili e Corse v. McBurnie, No. 86-1812, 11 U.S.P.Q. 2d 1843, 1848-49 (S.D. 14 Cal. May 26, 1989), on which Apple relies, addressed whether the defendant established the 15 affirmative defense of abandonment. Apple thus erroneously conflates the substantive trademark 16 issue of abandonment with the wholly different irreparable harm requirement for an injunction,
17 which is not met here even if Apple has not abandoned trade dress.8 Moreover, Ferrari continued 18 to sell replacement parts for its discontinued line of cars and thus continued to commercially 19 exploit the mark at issue, id. at 1848-49, which Apple does not claim here. Its expert, Dr. Winer,
20 ignores that Apple no longer sells the iPhone 3G or 3GS, which further renders his newly found 21 opinions both inconsistent with his prior testimony and simply not credible. F.T.C. v. Whole 22 Foods Market, Inc., 548 F.3d 1028, 1040-41 (D.C. Cir. 2008) (discrediting expert opinion 23 inconsistent with prior report and testimony). 24 Finally, as explained below, Samsung has discontinued the only products the jury found 25 8 26 While Samsung need not make any such showing, Apple’s discontinuance of its trade dress does constitute abandonment. See Hiland Potato Chip Co. v. Culbro Snack Foods, Inc., 720 F.2d 27 981, 984 (8th Cir. 1983) (resale of returned potato chips held not sufficient use to avoid abandonment of trademark); Kusek v. Family Circle, 894 F. Supp. 522, 532-33 (D. Mass. 1995) 28 (production and sale of back issues of magazine not sufficient to avoid abandonment). 02198.51855/5003337.14 -9- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page19 of 44
1 diluted Apple’s trade dress. This Court should not issue a permanent injunction on Apple’s 2 product-configuration dilution claim after Apple has discontinued the trade dress and Samsung has 3 discontinued the products found to infringe
4 3. Apple Has Not Shown Irreparable Harm From Utility Patent 5 Infringement 6 Apple sought a preliminary injunction as to only one of the utility patents in this case, the 7 ‘381 patent. In rejecting that request, the Court recognized that “the fact that the ‘381 patent is 8 but one patent utilized in the accused products . . . weighs against a finding of irreparable harm” 9 because Apple failed to show that purchasing decisions were based on the snap-back feature 10 claimed by that patent. Dkt. 452 at 63-64. The Federal Circuit affirmed this ruling, Apple, 678 11 F.3d at 1327-28, and it continues to apply now. The Federal Circuit also recently held that Apple 12 failed to establish the requisite causal nexus for the universal search apparatus claimed in the ‘604 13 patent, Apple II, 2012 WL 4820601 at *2-5, and the same reasoning likewise forecloses a finding 14 of nexus for the two additional utility patents now at issue. Because a smartphone or tablet is 15 “comprised of a multitude of different features,” Apple’s burden of proof is high. Apple II, Dkt. 16 221 at 79; see Apple II, 2012 WL 4820601 at *2; Motorola, 2012 WL 2376664, at *21 (“The 17 notion that these minor-seeming infringements have cost Apple market share and consumer 18 goodwill is implausible”). As Apple offers no evidence that Samsung’s use of the discrete patent 19 drives consumer demand, it has not met its burden.
20 (a) Apple Has Not Shown That Its Features Patents Drive 21 Consumer Demand 22 Apple’s patents cover narrow features. Apple concedes that the ‘381 patent does not 23 cover the general concept of bounce on a touchscreen, but is limited to a bounce effect occurring 24 at the edge of the document. RT 1782:14-1783:20, 1746:3-1747:15 (Balakrishnan). The ‘163 25 patent similarly does not cover double tapping to zoom or recentering generally, but requires a 26 second gesture after the user is already zoomed in to recenter on another box of content. RT 27 1840:4-14, 1878:22-1879:20 (Singh). This patent is so limited that Apple’s infringement 28 analysis was restricted to a single program (browser) on a single web page (nytimes.com), and 02198.51855/5003337.14 -10- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page20 of 44
1 Apple’s expert admitted the patent does not apply at all to “mobile websites”—web pages 2 specifically designed for viewing on a small screen device. RT 1904:17-1907:16. The ‘915 3 patent similarly does not encompass the concepts of “scrolling” or “a gesture, a scale, a zoom, or 4 detecting those.” RT 1855:25-1856:2, 1856:21-1857:1 (Singh). It is limited to source code that 5 distinguishes between a single input point and multiple input points, and performing a scroll or 6 zoom on that basis. RT 1857:13-24 (describing “all-important test in the claim”); 1818:10-22. 7 Apple offers no evidence that these specific, narrow features cause consumers to purchase 8 Samsung’s accused products. Instead, Apple conflates these features with general concepts like 9 “ease of use” and “fun” and argues that ease of use drives demand. Mot. at 8. This approach is 10 precisely what the Federal Circuit rejected in Apple II. Apple can claim no patent on “fun” and 11 no monopoly over “ease of use,” which is why its burden is to show that the specific patent 12 features at issue, and not their claimed overarching effects, are causally linked to Apple’s alleged 13 harms. Apple II, 2012 WL 4820601 at *4 (“To establish a sufficiently strong causal nexus, 14 Apple must show that consumers buy the Galaxy Nexus because it is equipped with the apparatus 15 claimed in the ‘604 patent – not because it can search in general, and not even because it has 16 unified search”); Motorola, 2012 WL 2376664, at *19 (similar: “The ‘263 patent in issue in this 17 litigation is not a claim to a monopoly on streaming video!”). As this Court ruled in Apple II— 18 rejecting Apple’s claims of irreparable harm from ostensible infringement of its ‘647 (links for 19 structures), ‘721 (slide to unlock) and ‘172 (word recommendations)—Apple must “disaggregate
20 what ‘ease of use’ features drive consumer decisions” and show that the patents in issue claim 21 features that do so. Apple II, Dkt. 221 at 85-93. The iPhone has “innumerable” features, id. at 22 87-88, which Apple claims all “contribute to ease of use.” Pierce Decl. Ex. 11 [4/4/12 Sinclair 23 Tr. at 52:2-8]. Apple has made no showing that the specific features at issue here “would drive 24 sales if sold by [themselves].” Apple II, 2012 WL 4820601 at *5. 25 Moreover, even Apple’s generalized evidence that “ease of use” drives demand shows no 26 such thing. Schiller Decl., ¶ 12. In the survey Apple cites, ten out of thirteen factors were rated 27 “important” by iPhone consumers, making the importance of any one factor indeterminate. PX 28 146.5. When Apple studied what caused consumers to purchase Android devices instead of 02198.51855/5003337.14 -11- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page21 of 44
1 iPhones, . Apple also cites a 2 GravityTank study which states the iPhone is easy to use and describes zooming and scrolling as 3 “fun” and “magic,” Mot. at 8 (citing PX36.24, PX36.21), but “zooming” and “scrolling” were in 4 existence well before the ‘915 patent and are not exclusively owned by Apple. RT 1856:21- 5 1857:12 (Singh). Once again, Apple misapprehends the limited nature of its monopoly under its 6 patents, and fails to provide evidence linking Samsung’s purported infringement of that limited 7 monopoly right to Apple’s claims of irreparable losses.9
8 (b) “Copying” Does Not Demonstrate a Nexus 9 Recognizing that it lacks proof of nexus, Apple claims that the accused features must drive 10 demand because Samsung “copied” them. This Court has rejected this argument, previously 11 holding that similar evidence is “probative of the fact that both Apple and Samsung value the 12 functionality claimed by” the asserted patent, but does not “demonstrate that the [patented 13 technology] drives consumer demand.” Apple II, Dkt. 221 at 86. And the Federal Circuit has 14 explained that “the relevant inquiry focuses on the objective reasons as to why the patentee lost 15 sales, not on the infringer’s subjective beliefs as to why it gained them (or would be likely to gain 16 them).” Apple, 678 F.3d at 1328; see also Apple II, 2012 WL 4820601, at *4-5. 17 Further, Apple’s “copying” argument has no evidentiary support. Apple cites PX46.66, 18 but this document calls only for a “fun visual effect,” not one that is covered by ‘381. Likewise, 19 PX57.15-20 relates to a multitude of visual effects that have no bearing on the ‘381 patent;
20 PX195.1 indicates that Samsung “did not release” the bounce algorithm discussed in that 21 document; Exhibit 31 to the Robinson Declaration contains repeated statements that “the Bounce 22 effect has no emotional impact,” confirming that bouncing behavior does not inherently create 23 “fun”; PX38.24 discusses double-tap to zoom and two-level zooming, not the recentering behavior 24 covered by ‘163; and PX44.58 is ambiguous as to whether it even addresses the ‘163, and gives no 25 9 26 Apple also cites Mr. Schiller’s broad claim that “ease of use” is important to customers, which is immaterial here for the same reasons above, and Apple executive Scott Forstall’s 27 speculation that “[the ‘163 patent], I think, enables you to have a, a dramatically better experience browsing the web,” Mot. at 8 (citing PDX10.2 and RT 751-759). Such speculation by an Apple 28 executive does not support a request for a permanent injunction. 02198.51855/5003337.14 -12- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page22 of 44
1 support to the claim that this patent drives sales. Apple offers no “copying” evidence regarding 2 ‘915 at all. Apple’s evidence shows at most that Samsung engaged in the type of competitive 3 analysis that Apple too routinely practices. RT 760:19-776:8 (Forstall); RT 532:8-536:25 4 (Stringer); RT 2838:9-2842:11 (Howarth). It does not even begin to show that consumer 5 purchases were driven by the patented features.
6 (c) Dr. Hauser’s Survey Results Do Not Show Consumer Demand 7 Apple relies (Mot. at 9) on Dr. Hauser’s survey results to show consumer demand for the 8 features claimed in its three utility patents. Yet these surveys do not address consumer demand 9 for smartphones and tablets equipped with those features. See Wind Decl., ¶¶13-14, 40-45, 74; 10 Sukumar Decl., ¶¶4-6, 19, filed concurrently. In the real world, consumers choose among several 11 brands of smartphones and tablets and may ultimately choose to make no purchase at all; Dr. 12 Hauser’s survey forced respondents to select a Samsung device and excluded the option of 13 selecting another brand—or no device at all. Wind Decl. ¶¶14, 28-31, 33, 40-45, 66-67; Sukumar 14 Decl., ¶6. By design, therefore, his survey could only produce estimates of intra-brand “price 15 premiums,” i.e., amounts consumers would pay for additional features on a Samsung device, 16 which says nothing about whether consumers buy Samsung devices because they have certain 17 features. Wind Decl., ¶¶13-14, 32-45; Sukumar Decl., ¶¶4-6, 19. Moreover, fundamental flaws 18 in methodology biased Dr. Hauser’s price premium estimates, rendering them unreliable. Wind 19 Decl.¶¶15-17, 21-39, 46-74; Sukumar Decl. ¶¶3, 7-19. In the real world, consumers selecting
20 between smartphones or tablets base their decisions on a subset of features, and those features do 21 not include those claimed in the utility patents at issue here. See Erdem Decl., ¶¶16, 25-62.
22 4. There Is No Basis For Apple’s Claimed Irreparable Harm 23 Because “[t]his record does not permit the inference that the allegedly infringing features 24 of [the accused products] drive consumer demand[,]” there is no need for the Court to consider 25 “Apple’s allegations of irreparable harm.” Apple II, 2012 WL 4820601 at *5. But there is no 26 basis for those allegations either, particularly given that Samsung has discontinued all but three of 27 the 26 products that are the subject of Apple’s motion. By the time the Court hears this motion, 28 Samsung will only be selling 02198.51855/5003337.14 -13- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page23 of 44
1 Decl. of Hee-chan Choi at ¶¶ 2-9 and Exh. 1; Decl. of Corey Kerstetter, 2 ¶¶2-13 and Exh. 1; Decl. of David Kim, ¶¶2-4. None of these products was found to dilute
3 Apple’s trade dress, and none was found to infringe the D’087, D’305, or the ‘381 patent.10 And 4 while the Galaxy SII (T-Mobile)—and only that product—was found to infringe the ‘163 and ‘915 5 patents, Samsung has implemented non-infringing design-arounds. Gray Decl., ¶¶11-55; Choi
6 Decl., ¶¶13-19, 22; Decl. of Tim Rowden, ¶¶3-7.11 With respect to the design patents, the black 7 models of the three remaining Galaxy S II products were found to infringe only the D’677 8 patent. Samsung is discontinuing the version of the Galaxy S II (Skyrocket) with a black front 9 mask color 10 which does not infringe D’677. Choi Decl., ¶20; Kerstetter Decl., ¶8, Lucente Decl., ¶¶12- 11 21. Kerstetter Decl., ¶8. The 12 discontinuance and redesign of the accused products defeats the claim that Apple will be 13 irreparably harmed absent an injunction. Hynix Semi. Inc. v. Rambus Inc., 609 F. Supp. 2d 951, 14 968 (N.D. Cal. 2009); Nichia Corp. v. Seoul Semi. Ltd., 2008 WL 346416, at *1-2 (N.D. Cal. Feb. 15 7, 2008); see also TiVo, Inc. v. Echostar Corp., 646 F.3d 869, 881 (Fed. Cir. 2007). 16 Apple’s claim of harm from lost market share, downstream sales, and impact on its 17 ecosystem suffers from numerous additional flaws. Its attempt to extend its claim of harm to 18 markets and products not covered by the patents or trade dress at issue here (Mot. at 4-5) is an 19 improper effort to “leverage its patent for competitive gain beyond that which the inventive
20 contribution and value of the patent warrant” (Apple II, 2012 WL 4820601 at *2), and cannot be 21 squared with Apple II’s causal nexus requirements. Apple has not even attempted to (nor could 22 10 Samsung introduced a blue glow design-around to the ‘381 patent in early 2012. Van Dam 23 Decl. ¶¶24-31; Choi Decl., ¶¶10-12. The parties’ experts agree that this design-around does not infringe. Van Dam Decl. ¶¶32-34. 24 11 The new source code no longer contains “instructions for, in response to detecting the second 25 gesture, translating the structured electronic document so that the second box is substantially centered on the touch screen display” as required by claim 50 of the ‘163 patent. Gray Decl. 26 ¶¶51-55. Now the product either does nothing (single tap) or zooms out (double tap) in response to the second gesture. Id. ¶52. Likewise, the new code no longer performs the “quintessential 27 test” of “distinguishing between a single input point . . . that is interpreted as the scroll operation and two or more input points . . . that are interpreted as the gesture operation” as required by claim 28 8 of the ‘915 patent. Id. ¶¶31-44; RT 1822:22-1826:22 (Singh testimony). 02198.51855/5003337.14 -14- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page24 of 44
1 it) show that consumers’ purchase decisions in other markets or for other products are driven by 2 the specific features of its patents or trade dress. Moreover, Apple and Samsung do not compete 3 in a two-player smartphone or tablet market, but rather face competition from other manufacturers, 4 which collectively enjoy a 43.4% share of the North American smartphone market. Wagner 5 Decl., ¶146. Apple also overstates the competition between the parties by ignoring the fact that 6 they use different operating systems, which is a critical factor for consumers, by relying on market 7 share figures for all of Samsung’s products instead of the market share for the specific products 8 Apple seeks to enjoin, and by wrongly assuming that the purchasing behavior of late adopters of 9 smartphone technology will be the same as early adopters. Id., ¶¶120-23, 160-181. Apple’s 10 strong iPad and iPhone 4, 4S, and 5 sales also refute any claim of lost market share due to the 11 alleged infringement by the accused products. Id., ¶¶124-144.
12 B. Apple Has Not Shown That Monetary Remedies Are Inadequate 13 Apple bears the burden of providing at least “[s]ome evidence and reasoned analysis” to 14 demonstrate the inadequacy of monetary damages to compensate its alleged harms. Apple II, 15 Dkt. 221 at 73; see also Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 723 F. Supp. 2d 16 1284, 1338 (S.D. Cal. 2010). There is no presumption that money damages would be inadequate. 17 High Tech Med. Instrumentation, 49 F.3d at 1557. Neither lost market share nor damage to 18 goodwill is necessarily irreparable. Automated Merch. Sys, Inc. v. Crace Co., 357 F. App’x 297, 19 301 (Fed. Cir. 2009) (lost market share not necessarily irreparable); Dexter 345 Inc. v. Cuomo, 663
20 F.3d 59, 63 (2d Cir. 2011) (same, loss of goodwill). Nevertheless, Apple has not shown that any 21 injuries it will suffer cannot be fully compensated by monetary remedies, or that Samsung is 22 unable to satisfy a money judgment. Motorola, 2012 WL 2376664 at *14 (“There is no question 23 of collectability in this case, a common reason why a damages remedy is inadequate. Both 24 parties have deep pockets”); ActiveVideo, 2012 WL 3636908, at *24 (similar). 25 At Apple’s urging, the jury awarded Apple monetary remedies and calculated specific 26 amounts. Because Apple has discontinued products embodying its patents and because Samsung 27 will have ceased any infringing activity by the time that the Court rules on this motion, no further 28 relief will be necessary. But even if further relief were proper, the jury’s award confirms that any 02198.51855/5003337.14 -15- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page25 of 44
1 purported future harms can be remedied through a monetary award. See Innogenetics, N.V. v. 2 Abbott Labs., 512 F.3d 1363, 1380-81 (Fed. Cir. 2008) (no irreparable harm where jury awarded 3 damages requested by patentee); Conceptus, Inc. v. Hologic, Inc., No. 09-2280, 2012 WL 44064 at 4 * 2 (N.D. Cal. Jan. 9, 2012) (jury damages award shows damages reparable). 5 Apple has not shown, in particular, why any harm could not be compensated by an 6 ongoing royalty, which courts increasingly have ordered “as a substitute for an injunction against 7 infringement.” Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 670 F.3d 1171, 8 1192 (Fed. Cir. 2012) (proper to award ongoing royalty instead of permanent injunction), vacated 9 in part on other grounds, 682 F.3d 1003 (Fed. Cir. 2012); Motorola, 2012 WL 2376664, at *16 - 10 17 (similar); Ricoh Co. v. Quanta Computer, Inc., 2010 WL 1607908, at *4 (W.D. Wis. April 19, 11 2010) (“plaintiff has failed to show that the public interest would be better served through an 12 injunction rather than a compulsory license.”). An ongoing royalty in lieu of injunction is 13 especially appropriate in a case like this where the patented features are but a small component of 14 the overall product. See Pierce Decl., Ex. 44 (“more than 250,000 active patents relevant to 15 today’s smartphones”). This Court has previously “take[n] to heart Justice Kennedy’s 16 admonition that ‘[w]hen the patented invention is but a small component of the product the 17 companies seek to produce . . . legal damages may well be sufficient to compensate for the 18 infringement,’” and should do so here as well. Apple II, Dkt. 221 at 98 (quoting eBay); see 19 Motorola, 2012 WL 2376664 at *16-17 (discussing Justice Kennedy’s admonition as applied to
20 smartphone case).12 Rather than impose an injunction, the Court should, at most, direct the 21 parties to negotiate an ongoing royalty. See Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 22 1315 (Fed. Cir. 2007) (“In most cases, where the district court determines that a permanent 23 injunction is not warranted, the district court may wish to allow the parties to negotiate a license 24 amongst themselves regarding future use of a patented invention before imposing an ongoing 25 royalty.”). 26 12 27 See also Soverain Software LLC v. Newegg Inc, 836 F. Supp. 2d 462, 482 (E.D. Tex. 2010) (denying injunction where infringing feature was small part of defendant’s system); Techs., Inc. v. 28 Microsoft Corp., 434 F. Supp. 2d 437, 441, 2006 (E.D. Tex. 2006) (similar). 02198.51855/5003337.14 -16- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page26 of 44
1 Apple asserts that denial of an injunction would amount to a compulsory license (Mot. at 2 10), but that is not true in light of Samsung’s discontinuance of its products and design-arounds. 3 Moreover, an injunction may not issue merely because a patentee refuses to offer a license. 4 Presidio, 723 F. Supp. 2d at 1338-39. And in any event, Apple has shown a willingness to 5 license both utility and design patents in the past, including patents at issue in this litigation and 6 similar ones. For example, 7 8 9 Apple’s Boris Teksler confirmed that Apple licenses its intellectual property, including the 10 technology and designs that Apple considers a “unique user experience I.P.” RT 1957: 3-9; 11 1972:18-24. And prior to filing this suit, Apple offered Samsung a “royalty-bearing license” to 12 manufacture the products that Apple said “embrace[d] and imitate[d] Apple’s iPhone archetype,” 13 including “Android-based full touch screen devices” that Apple now seeks to enjoin. DX 586 at 14 17; see RT 1971:4-1972:17 (Apple offered to “provide Samsung with a number of options for 15 obtaining a cost-effective license to our patent portfolio,” without carving out any patents that it 16 was refusing to license). This evidence weighs against any finding that monetary relief is 17 inadequate, for it demonstrates that Apple is willing to forego exclusivity in exchange for 18 monetary compensation. Apple II, Dkt. 221 at 96; Dkt. 452 at 64 (Apple’s licenses of ‘381 patent 19 weigh against injunction); see Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1328 (Fed. Cir.
20 2008), High Tech Med., 49 F.3d at 1557; Advanced Cardiovascular Sys. v. Medtronic, Inc., 2008 21 U.S. Dist. LEXIS 88892 (N.D. Cal. Oct. 21, 2008).
22 C. The Balance Of Hardships Favors Samsung 23 “An injunction that imposes greater costs on the defendant than it confers benefits on the 24 plaintiff reduces net social welfare. That is the insight behind the ‘balance of hardships’ 25 component of the eBay standard for injunctive relief in patent cases.” Motorola, 2012 WL 26 2376664, at *21. Apple will not suffer in the absence of an injunction. It no longer offers the 27 iPhone 3G and 3GS, and it does not argue that its recent sales of the iPhone 5 were negatively 28 affected by Samsung’s limited sales of the accused products. To the extent that there is any 02198.51855/5003337.14 -17- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page27 of 44
1 ongoing infringement, the availability of a reasonable royalty weighs against Apple. See 2 Motorola, 2012 WL 2376664, at *19 (availability of royalty “is germane to the ‘balance of 3 hardships’ component of eBay’s test for whether to grant an injunction”). 4 In contrast, an injunction would impose severe hardship on Samsung by disrupting its 5 relationships with carriers who may be selling pre-existing stock and with customers who may still 6 be using the accused products, see Paice LLC v. Toyota Motor Corp., 2006 U.S. Dist. LEXIS 7 61600, at *16-17 (E.D. Tex. Aug. 16, 2006) (“enjoining [defendant’s] sales will likely interrupt 8 not only Defendants’ business but that of related businesses, such as dealers and suppliers . . . 9 [and] will damage their reputation”), and by creating paralyzing uncertainty as to the future steps 10 Apple might take seeking to enforce an injunction against as yet unaccused products and features. 11 See Motorola, 2012 WL 2376664, at *20 (relying on possibility that “Apple will sue Motorola 12 alleging that the redesigned phones still infringe its patents, just as it is [doing in the ITC]”); see 13 also Accentra, Inc. v. Staples, Inc., 2011 WL 7563039, at *30 (C.D. Cal. Dec. 19, 2011) (rejecting 14 “position that an injunction should issue because [it] will have little negative impact on” the 15 defendant if the defendant does not “infringe in the future” because eBay rejects such a ‘better-
16 safe-than-sorry’ approach.”).13 In fact, Apple previously abused the short-lived Galaxy Tab 10.1 17 preliminary injunction by falsely claiming without legal basis that third-party carriers were bound 18 by it and that it extended to wholly unspecified tablet computer products. See Dkt. 1943 at 2.
19 D. An Injunction Would Not Be In The Public Interest 20 Apple bears the burden of showing that an injunction is in the public interest, Stormans, 21 Inc. v. Selecky, 586 F.3d 1109, 1139 (9th Cir. 2009), a burden that is especially great because the 22 first three eBay factors favor Samsung. Soverain, 836 F. Supp. 2d at 482. Both “the harm that 23 an injunction might cause to consumers who can no longer buy preferred products because their 24 sales have been enjoined, and the cost to the judiciary as well as to the parties of administering an 25 injunction” should be considered. Motorola, 2012 WL 2376664, at *20. The only public
26 13 Apple asserts that the jury’s finding of willful infringement obviates the need to balance 27 hardships. Mot. at 10. It cites no post-eBay case that has so held. More recent decision are to the contrary. See, e.g., In re Renard, 451 B.R. 12, 23 (Bankr. C.D. Cal. 2011) (rejecting 28 argument against balancing of hardships in case involving intentional conduct). 02198.51855/5003337.14 -18- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page28 of 44
1 interest cited by Apple—preserving rights of patent holders—cannot alone justify injunctive relief 2 because such interests “are always present in a patent case!” Presidio, 723 F. Supp. 2d at 1339; 3 Belden Techs. Inc. v. Superior Essex Comms. LP, 802 F. Supp. 2d 555, 579 (D. Del. 2011) (same). 4 While Apple identifies no compelling public interest favoring an injunction here, the 5 public has an overwhelming interest in preventing one company from having a monopoly over 6 basic elements of smartphone design such as a rectangular shape with rounded corners. Even 7 though the patents at issue are but “small component[s] of the product” and Apple no longer 8 practices the only trade dress the jury found protectable, an injunction would have a significant 9 impact on competition in the smartphone market. Motorola, 2012 WL 2376664, at *20 (“the 10 harm that an injunction might cause to consumers who can no longer buy preferred products 11 because their sales have been enjoined” weighs against entry of injunction). This litigation is 12 part of Apple’s campaign against makers of Android devices, which provide free, opensource 13 mobile software that any developer can use to create applications for mobile devices and that any 14 handset manufacturer can install on a device. Dkt. 179-44 at 5. This Court should not deprive 15 consumers of choice by granting the broad, vague injunction that Apple seeks. 16 An injunction would also be disruptive for third parties, such as suppliers, retailers, 17 carriers, and their customers. Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 704 (Fed. Cir. 18 2008); Fractus, S.A. v. Samsung Elecs. Co., Ltd., No. 6:09-cv-203, 2012 WL 2505741 at *45 19 (E.D. Tex. June 28, 012). Indeed, Apple’s inability to supply all consumers with the iPhone
20 strongly weighs against the broad injunction it seeks. See Tate Access Floors v. Interface 21 Architectural Res., Inc., 132 F. Supp. 2d 365, 377 (D. Md. 2001) (considering patentee’s 22 manufacturing capacity). Demand for the iPhone 5 exceeded initial supply, and labor disputes at 23 Foxconn, Apple’s supplier, caused at least two production stoppages in September and October.14
24 These shortages are likely to continue as Apple releases the iPhone 5 to additional countries 25 (including 70 in December alone) and carriers around the world; and the Wall Street Journal 26 14 See Poonima Gupta & Jennifer Saba, Apple Sells Over 5 Million iPhone 5, Supply 27 Constraints Loom, Reuters, Sept. 24, 2012 (Pierce Decl., Ex. 16); Foxconn Labor Disputes Disrupt iPhone Output for 2nd Time, Bloomberg News, Oct. 7, 2012 (Pierce Decl., Ex. 17). 28 02198.51855/5003337.14 -19- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page29 of 44
1 reports that NAND memory shortages may lead to further constraints on Apple’s output.15 The 2 public interest will be harmed by diminishing consumer access to competing smartphones under 3 these circumstances. 4 Finally, the broad and vaguely worded injunction that Apple requests would also impose a 5 significant administrative burden on this Court, for there can be no doubt that Apple will 6 aggressively seek to extend it to non-accused products. This further weighs against Apple’s 7 motion. See Motorola, 2012 WL 2376664, at *20 (denying motion for permanent injunction in 8 part based on “the cost to the judiciary as well as to the parties of administering an injunction”).
9 E. Apple’s Proposed Injunction Is Vague, Overbroad And Otherwise Improper 10 No injunction should issue; if any will, the language that Apple seeks should be rejected. 11 Rule 65(d) requires that an injunction “(A) state the reasons why it issued; (B) state its terms 12 specifically; and (C) describe in reasonable detail—not by referring to the complaint or other 13 document—the act or acts restrained or required.” Fed. R. Civ. P. 65(d)(1); Schmidt v. Lessard, 14 414 U.S. 473, 476 (1974). Apple’s broad, vague injunction violates these principles. 15 First, the language of Apple’s proposed injunction is improper because it extends generally 16 to unspecified violations of the law and would broadly and vaguely cover unidentified “other
17 products.” Dkt. 1987 at 2.16 This language is an invitation to endless litigation, against the 18 backdrop of the “deadly” threat of the contempt power, as well as to overbroad, anti-competitive 19 threats by Apple against third parties as Apple sought to do in the past. Int’l Longshoremen’s
20 Ass’n v. Philadelphia Marine Trade Ass’n, 389 U.S. 64, 76 (1967); see Forest Labs., Inc. v. Ivax 21 Pharms., Inc., 501 F.3d 1263, 1272 (Fed. Cir. 2007) (finding injunction overbroad and modifying 22 it “to delete the language ‘any products that infringe the ‘712 patent, including . . . .’”). 23 Second, the injunction proposed by Apple wrongly extends to a “feature or features not 24 more than colorably different” from “any of the infringing feature or features in any of the 25 15 Yun-Hee Kim, Why There May Be an iPhone 5 Shortage, Wall Street Journal, Oct. 8, 2012 26 (Pierce Decl., Ex. 18). 16 27 Apple’s proposed injunction improperly lists the “Galaxy S,” the “Galaxy S II (i9000)” and the “Infuse,” when the correct product names are Galaxy S (i9000), Galaxy S II (i9100) and Infuse 28 4G respectively. 02198.51855/5003337.14 -20- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page30 of 44
1 Infringing Products.” Dkt. 1987 at 2. Apple’s focus on specific “features” of its design patents 2 ignores that many of those features are functional and structural, and therefore are not protectable. 3 See supra Section I.A; Dkt. 1990-3 at 7-10. Apple cannot obtain an injunction against use of 4 features that are free for the world to use. Bonito Boats, 489 U.S. at 159-60. Moreover, 5 Apple’s demand that Samsung be prohibited from using undefined “features” is inconsistent with 6 Apple’s refrain during trial that the test is whether an accused product shares the same overall 7 visual impression as the patented designs. RT 1348:8-17; 1374:6-1375:15; 1376:19-1377:8. 8 The jury made particular findings, rejecting, for example, Apple’s allegations that specific 9 products infringed the D’087 and D’677 patents or else diluted Apple’s trade dress. Dkt. 1931. 10 The “colorably different” standard that Apple seeks to rely on would allow Apple to seek 11 contempt violations for the very sorts of “features,” or equivalent ones, that the jury itself found to 12 be non-infringing or non-diluting. Apple’s request for a broad injunction against unspecified 13 products and unprotected features should be denied. See Motorola, 2012 WL 2376664, at *20 14 (“The danger that Apple’s goal in obtaining an injunction is harassment of its bitter rival, requiring 15 particularly watchful supervision by the court should it issue an injunction, is suggested by the fact 16 that . . . it wants to forego [a royalty revenue stream] in favor of imposing costs and litigation 17 burdens on its adversary”).
18 F. Apple Should Post Security to Protect Samsung From A Wrongful Injunction 19 Apple should be required to post a bond to protect Samsung’s interests if any injunction is
20 overturned on appeal. The Court has power to grant an injunction upon “the principles of equity 21 and upon such terms as the court may deem reasonable.” 15 U.S.C. § 1116(a), 35 U.S.C. § 283. 22 An injunction bond is necessary to protect Samsung from the financial consequences of Apple’s 23 sweeping proposed injunction, should Samsung be wrongfully enjoined. If a bond does not issue 24 now, Samsung may have no recourse for the damages it sustains from a wrongful injunction, 25 making the requirement of a substantial bond critical. W.R. Grace & Co. v. Local Union 759, 26 461 U.S. 757, 770 (1983); Buddy Sys., Inc. v. Exer-Genie, Inc., 545 F.2d 1164, 1167 (9th Cir. 27 1976). 28 When setting the amount of an injunction bond, district courts should err on the high side. 02198.51855/5003337.14 -21- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page31 of 44
1 Apple II, Dkt. 221 at 100 (citing Mead Johnson & Co. v. Abbott Labs., 201 F.3d 883, 888 (7th Cir. 2 2000)). Courts may consider (1) lost profits, (2) out-of pocket expenses related to promotion of 3 the defendant’s infringing products; (3) damage to the defendant’s reputation; and (4) expenses 4 associated with the recall of the infringing products. Cybermedia, Inc. v. Symantec Corp., 19 F. 5 Supp. 2d 1070, 1079-80 (N.D. Cal. 1998). Samsung estimates that over the course of roughly 6 11.2 months—the median time from docketing to disposition in 2011 in the Federal Circuit-- 7 8 9 (http://www.cafc.uscourts.gov/images/stories/the- 10 court/statistics/Median_Disp_Time_table_02-11.pdf). Accordingly, in the event the court issues 11 an injunction covering these non-infringing products, a bond of at least $32,550,725 should be 12 required. Wagner Decl., ¶¶229-232.
13 II. THE COURT SHOULD NOT ENHANCE THE JURY’S DAMAGES VERDICTS 14 As Samsung explained in its JMOL, the jury’s damages award already goes too far; that 15 award should be reduced, not enhanced—much less by the $535 million Apple seeks. There is 16 no dispute that an award of infringer’s profits under Section 289 cannot be enhanced, and it is 17 apparent that the vast bulk of the jury’s award—a full $948,278,061—reflects disgorgement of 18 Samsung’s profits (whether from products found to infringe Apple’s design patents, or in the case 19 of the Galaxy Prevail, a utility patent that cannot be the basis for such an award). See Dkt. 1990-
20 20 (Wagner JMOL Decl.) at ¶ 17. Thus, only $101,145,479 of the total award could even 21 conceivably be subject to enhancement, making Apple’s request for more than five times that 22 plainly excessive. 23 As a matter of law, Apple has failed to establish the prerequisites for enhancement: 24 Apple has not offered clear and convincing evidence of willfulness, as required, nor demonstrated 25 that additional damages would recompense Apple for any actual harm not accounted for by the 26 jury. To the extent enhancement is a matter of discretion, the Court should exercise its discretion 27 not to enhance the jury’s award any further. 28 02198.51855/5003337.14 -22- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page32 of 44
1 A. Nearly $950 Million Of The Jury’s Award Represents Disgorgement Of 2 Infringer’s Profits That Is Not Subject To Enhancement 3 Under 35 U.S.C. § 289, infringement of a design patent is subject to a special measure of 4 damages—infringer’s profits—not otherwise available in a patent case. The trade-off for a 5 plaintiff’s claiming infringer’s profits is relinquishing any right to seek enhancements. 35 U.S.C. 6 § 289 (patentee “shall not twice recover the profit made from the infringement”); Catalina 7 Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277, 1290-92 (Fed. Cir. 2002) (election to recover 8 defendant’s profits under Section 289 bars any further recovery on same sales); Braun Inc. v. 9 Dynamics Corp. of America, 975 F.2d 815, 283-84 (Fed. Cir. 1992) (Section 289 “insure[s] that a 10 patentee not recover both the profit of an infringer and some additional damage remedy from the 11 same infringer”). Apple concedes that the Court “cannot treble amounts for which the sole basis 12 for the award was disgorgement of Samsung’s profits under section 289.” Mot. at 28. In this
13 case, fully $948,278,061 of the award represents supposed infringer’s profits, awarded per Apple’s 14 requested jury instruction and verdict form. Dkt. 1694 at 147; Dkt. 1903 at 72; Dkt. 1990-3 at 15 17-18.
16 1. Products Found To Infringe Design Patents But Not Dilute Trade Dress 17 The jury found that 11 Samsung products infringe one or more design patents and do not
18 dilute Apple’s trade dress.17 As to each of these, the jury awarded exactly 40% of Apple’s 19 calculation of Samsung’s profits, which shows that the jury’s awards for these products were made
20 under Section 289. See Dkt. 1990-20, ¶ 20. Indeed, the jury could have arrived at these awards 21 only pursuant to Section 289, for the jury’s awards for these products – which together total 22 $599,859,395 (id.)—exceed the amount Apple requested under Section 284 for its own alleged 23 lost profits. See PX25A1.4 (seeking $333,365,673 in lost profits for the 11 products found to
24 infringe only Apple’s design patents). Therefore, $599,859,395 of the jury’s award cannot be 25 enhanced as a matter of law—a fact that Apple appears not to dispute. 26
27 17 The Captivate, Continuum, Droid Charge, Epic 4G, Galaxy S II (AT&T), Galaxy S II (T- 28 Mobile), Galaxy S II (Epic 4G Touch), Galaxy S II (Skyrocket), Gem, Indulge, and Infuse 4G. 02198.51855/5003337.14 -23- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page33 of 44
1 2. Products Found To Infringe Design Patents And Dilute Trade Dress 2 The jury awarded damages on five products found to infringe one or more design patents
3 and also dilute Apple’s trade dress.18 As to each, the jury awarded Apple the same 40% of 4 Apple’s calculation of Samsung’s profits (a total of $290,551,283), plus the amount of lost profits 5 claimed by Apple (a total of $91,132,279), for a total award of $381,683,562. Dkt. 1990-20, ¶13. 6 Apple argues for enhancement of the total award on these products by positing that the jury 7 awarded these damages under the Lanham Act. Mot. at 25. But none of these damages, and
8 certainly not the $290,551,283 representing infringer’s profits, may be enhanced. 9 First, Apple is wrong that Samsung “bear[s] the burden of any uncertainty” as to whether 10 the jury’s award was made under Section 289 or the Lanham Act. Mot. at 30. “The 11 jurisprudence . . . uniformly requires clear and convincing evidence in support of increased 12 damages,” and it is the moving party that must produce such evidence. Shatterproof Glass Corp. 13 v. Libbey-Owens Ford Co., 758 F.2d 613, 628 (Fed. Cir. 1985); see Bard Peripheral Vascular, 14 Inc. v. W.L. Gore & Assocs., 682 F.3d 1003, 1005 (Fed. Cir. 2012); Monolithic Power Sys., Inc. v. 15 O2 Micro Int’l Ltd., 2010 WL 583960 (N.D. Cal. Feb. 16, 2010); Saint-Gobain Autover USA, Inc. 16 v. Xinyi Glass N. Am., Inc., 707 F. Supp. 2d 737, 753 (N.D. Ohio 2010), as corrected (Apr. 13, 17 2010). Apple offers no authority for its claim that ambiguity in a jury verdict permits special 18 judicial enhancement, and the law is to the contrary. See Arnott v. Am. Oil Co., 609 F.2d 873, 19 888-89 (8th Cir. 1979) (“[i]t would be purely speculative to assume that the entire general verdict
20 of $100,000 was awarded as damages resulting from violation of the antitrust laws” that were 21 subject to trebling rather that other violations that were not); Wilson v. Burlington Northern 22 Railroad, 803 F.2d 563, 567–68 (10th Cir. 1986) (McKay, J., concurring) (“Since we are here 23 faced with a general verdict not properly segregated into its component parts [of actual economic 24 loss and non-economic damages], that task is now impossible. Plaintiff failed to timely present 25 the matter based on sound testimony and proper instructions or interrogatories and must bear the 26 burden of that failure.”); Mandile v. Clark Material Handling Co., 303 F. Supp. 2d 531, 536 27 18 28 The Fascinate, Galaxy S 4G, Galaxy S Showcase (i500), Mesmerize, and Vibrant. 02198.51855/5003337.14 -24- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page34 of 44
1 (D.N.J. 2004) aff’d, 131 F. App’x 836 (3d Cir. 2005) (rejecting prejudgment interest where 2 plaintiff did not request discrete verdicts segregating losses).19
3 Second, Apple alone is to blame for any ambiguity in the jury’s verdict. Samsung 4 requested a verdict form that would have required more specificity in the jury’s findings; Apple 5 tactically resisted Samsung’s proposed verdict form as “way too specific” and requested a single 6 damages figure for each product. RT 3852:24-3856:10; see also RT 3764:1-6, 3813:14-3814:25 7 (noting Apple’s failure to elect a single damages theory). As the party bearing the burden here, 8 and having created the claimed ambiguity, Apple cannot now use that claimed ambiguity to 9 circumvent the statutory bar against enhancements of infringer’s profits. 10 Third, there in fact is no ambiguity here, as the jury uniformly awarded 40% of Samsung’s 11 profits as calculated by Mr. Musika as to every product found to infringe a design patent, whether 12 those products were found only to infringe design patents or both infringe design patents and also 13 dilute trade dress. As to the products that diluted trade dress, the jury then added sums reflecting 14 Apple’s lost profits. See Dkt. 1990-20, ¶¶12-13. Only that $91,132,279 consisting of Apple’s 15 profits might under any circumstances (and not these) fall outside Section 289’s ban on 16 enhancement for infringers’ profits. 17 Finally, having elected to seek parallel recoveries on the same bucket of products pursuant 18 to Section 289 and the Lanham Act, Apple cannot seek enhancement of any portion of the 19 resulting award, including the $91,132,279. The Federal Circuit has rebuffed efforts by patent-
20 holders who try to recover beyond the limits of Section 289 by claiming parallel intellectual
21 19 Ignoring on point authority, Apple cites three cases that address uncertainty in the dollar 22 amount of the underlying damages award, not whether the award is eligible for enhancement. E.g., Kaufman Co., Inc. v. Lantech, Inc., 926 F.2d 1136, 1141 (Fed. Cir. 1991) (“Any doubts 23 regarding the calculatory precision of the damage amount must be resolved against the infringer.”) (emphasis added); see also Ryco, Inc. v. Ag-Bag Corp., 857 F.2d 1418, 1428 (Fed. Cir. 1998) 24 (damages award cannot be “speculative” but need not be calculated with “unerring precision”). Such cases speak to a district court’s exercise of discretion in arriving at statutorily authorized 25 damages “as a matter of just and reasonable inference,” without resort to “mere speculation or guess,” Paper Converting Machine Co. v. Magna Graphics Corp., 745 F.2d 11, 22 (Fed. Cir. 26 1984). None of these cases even purports to address the distinct legal issues involved in enforcing the statutory line separating those damages eligible for special enhancement from those 27 that are ineligible, let alone ambiguity that was sown by the party seeking enhancement. Cf. Arnott, 609 F.2d at 888-89 (reversing trebling where general verdict did not differentiate antitrust 28 theory from others that might have grounded the award). 02198.51855/5003337.14 -25- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page35 of 44
1 property rights have been violated based on “the same set of operative facts.” Aero Prods. Int’l, 2 Inc. v. Intex Recreation Corp., 466 F.3d 1000, 1016-17 (Fed. Cir. 2006) (plaintiff who recovers 3 under the Patent Act cannot further recover under the Lanham Act); see Catalina Lighting, 295 4 F.3d at 1290-1292 (profits recovery under Section 289 bars further recovery on the same sales 5 despite overlapping protection of utility as well as design patents). Catalina Lighting and Aero 6 Products prohibit Apple from obtaining any enhancement atop the award it has collected under 7 Section 289 by pursuing parallel recovery under the Lanham Act based on the same core of
8 operative facts.20 Although Apple protests that Samsung’s “infringement caused more than one 9 type of harm to Apple” (Mot. at 30), the same was true in both Catalina Lighting and Aero 10 Products. 11 The only case Apple cites in support of its demand for parallel enhancement is an 12 unpublished district court decision, enhancing a Lanham Act award that ostensibly overlapped 13 with a far smaller amount of profits separately awarded under Section 289. Victor Stanley Inc. v. 14 Creative Pipe Inc., No. 06-2662, 2011 WL 4596043 (D. Md. Sept. 30, 2011). After a bench trial, 15 the court awarded $1,150,750 in Lanham Act profits for “reverse passing off,” which the court 16 enhanced by 50%. Id. at *11-12. The court also awarded, but did not enhance, $35,137 in 17 profits under Section 289 for design patent infringement. Id. at *20. Notably, the Lanham Act 18 violation and design patent infringement in Victor Stanley involved entirely distinct facts— 19 defendant’s passing off plaintiff’s technical drawings as its own, and defendant’s sale of a product
20 infringing plaintiff’s design patent. Thus, the theories of recovery in Victor Stanley were not
21 20 Still more unsupportable is Apple’s suggestion that its same requested enhancement might 22 follow under the Patent Act, Section 284. Despite its plain statement specifying that it “requests an enhancement of $135 million under the Patent Act and $400 million under the Lanham Act,” 23 (Mot. at 11), with the former computation limited to products found to infringe utility patents not subject to Section 289, Apple then shifts gears to argue the Court could “justify the full $535 24 million enhancement based on the Patent Act alone.” (Mot. at 29.) Without offering any explanation, much less plausible explanation, of how more than $10 million of the amount the jury 25 awarded for infringement of Apple’s patents might arise outside Section 289, Apple is barreling headlong into Section 289’s prohibition against enhancement. Moreover, assuming arguendo 26 that overlapping theories of recovery pose ambiguity in the verdict form, that alone would rule out enhancement. See Arnott. 609 F.2d at 888-89. Finally, Apple is at best attempting to do 27 precisely what Catalina Lighting and Aero Products foreclose—namely, to circumvent the limits Section 289 imposes upon recovery by invoking Section 284 and separate intellectual property 28 rights in parallel. 02198.51855/5003337.14 -26- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page36 of 44
1 coextensive and interchangeable, as is true here and was true in Catalina Lighting and Aero 2 Products. Perhaps as a result, Victor Stanley addressed no objection and offered no analysis with 3 respect to Section 289’s prohibition, Braun, Catalina Lighting, or Aero Products. In sum, Victor 4 Stanley does not illuminate, much less commend, a path towards Apple’s requested enhancement.
5 3. Products Found To Infringe Only Utility Patents 6 The jury found that seven Samsung products infringe only utility patents. For one of 7 those, the Galaxy Prevail, the jury awarded $57,867,383—exactly 40% of Samsung’s profits for 8 that product, as calculated by Mr. Musika. Dkt. 1990-3 at 18, 26; PX25A1.4; Dkt. 1990-20 at 9 ¶15. This award (comprising all but some $10 million of the total award for products found to 10 infringe utility patents) undoubtedly represents Samsung’s profits, because Apple’s claimed lost 11 profits for the Prevail as calculated by Mr. Musika were limited to $8.5 million. PX25A1.4. 12 But disgorgement of an infringer’s profits is peculiar to Section 289; the award must be remitted, 13 and it certainly is not subject to enhancement.
14 B. Apple’s Requested Enhancement Is Unavailable Under The Lanham Act 15 Even apart from the bar on Apple’s efforts at dual recovery, the award of $91,132,279 in 16 Apple’s lost profits (for trade dress dilution) under the Lanham Act should be further reduced by 17 $70,034,295 (see Dkt. 1990-3 at 17-18), leaving $20,097,984 in Apple’s lost profits as the 18 maximum potentially eligible for enhancement under the Lanham Act. Even this amount, 19 however, should not be enhanced. Because the Lanham Act “expressly forbid[s] the award of
20 damages to punish an infringer,” any enhancement must be limited “to ensur[ing] that the plaintiff 21 receives compensation.” Skydive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105, 1108 (9th Cir. 22 2012) (citation omitted); see also Jurgens v. McKasy, 927 F.2d 1552, 1564 (Fed. Cir. 1991); 23 ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 970 (D.C. Cir. 1990). Only if the 24 requested enhancement serves to compensate Apple for actual harm in excess of the jury’s award 25 might it be permissible. ALPO Petfoods, Inc. v. Ralston Purina Co., 997 F.2d 949, 955 (D.C. 26 Cir. 1993); Vanwyk Textile Sys., B.V. v. Zimmer Mach. Am., Inc., 994 F. Supp. at 379-81 27 (W.D.N.C. 1997). Here, Apple makes no such showing. 28 02198.51855/5003337.14 -27- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page37 of 44
1 1. Apple’s Claim Of Uncompensated Injury Is Unsupported 2 Apple maintains that the jury’s award is too parsimonious to compensate it for what it 3 characterizes as incalculable injuries to its brand image and lost downstream sales of later 4 generation iPhones and tag-along products. Mot. at 6, 26. As to brand dilution, Apple
5 identifies no evidence that would justify finding the jury’s calculation inadequate.21 See Vanwyk, 6 994 F. Supp. at 380-381. As to any lost sales, Apple argues those “cannot be quantified with 7 reasonable certainty,” Mot. at 5, and does not even try to quantify them, for instance, by 8 specifying what its claimed profit margins would have been. See id. In fact, far from 9 undercompensating, the jury’s award already gives Apple a windfall, as discussed in Samsung’s 10 JMOL. First, the jury awarded all of Samsung’s profits, without apportionment, although there 11 was no evidence suggesting that the entire sales value of Samsung’s products is attributable to 12 their outer casings and GUI. See Dkt. 1990-3 at 18. Second, the jury failed to deduct 13 Samsung’s expenses, resulting in an award that exceeds the actual profits Samsung derived from 14 its allegedly diluting sales. Id. at 19. Third, the jury based its award on an incorrect notice
15 date.22 It follows that the award of damages for trade-dress dilution should be reduced rather 16 than enhanced.
17 2. Apple’s Calculation Is Flawed and Arbitrary 18 Even if the verdict had not properly compensated Apple, Apple makes no showing that its
19 21 This absence of proof distinguishes this case from those cited by Apple, where a plaintiff 20 provided substantial, concrete evidence of its actual harm, thereby enabling determination that such harm exceeded the damages awarded. See Binder v. Disability Group, 772 F. Supp. 2d 21 1172, 1181-84 (C.D. Cal. 2011) (surveys and testimony from consumers showing deception); Taco Cabana, 932 F.2d at 1126-1127 (expert’s damages model valuing preempted competition at 22 $4.4 million). Similarly, in La Quinta Corp. v. Heartland Properties LLC, 603 F.3d 327, 343 (6th Cir. 2010), the award of royalties was limited by the parties’ license agreement, affording no 23 prospect of recompense for the plaintiff’s lost “ability to control its brand image.” By contrast, Apple’s expert expressly disclaimed any evidence that Samsung’s conduct actually harmed 24 Apple’s brand or caused any other loss to Apple, RT 1534:14-17; 1534:22-1535:11, and his post- trial declaration identifies harm merely “[a]s a conceptual matter” at best. Dkt. 1986, ¶ 8. 22 25 As discussed in Samsung’s motion for judgment as a matter of law, the record does not show that Samsung had actual notice of Apple’s trade dress or selected its designs in order to willfully 26 trade on its goodwill. See Dkt. 2013 at 15-16, 23-25. Because willfulness is prerequisite to any recovery for dilution under Section 1117(a), enhancement requires a heightened showing of 27 willfulness—otherwise, there would be no distinction between the proof required to award regular damages and that required to enhance them. Samsung has already submitted, and respectfully 28 reiterates, that requisite proof of willfulness is lacking. See id. 02198.51855/5003337.14 -28- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page38 of 44
1 requested enhancements are calibrated to accomplish that purpose. Apple’s new expert, Ms. 2 Robinson, opines that, but for Samsung’s unlawful conduct, Apple would have sold 2.1 million 3 additional units, but neither Apple nor Ms. Robinson attempts to show that these units were not 4 already accounted for in the jury’s verdict awarding damages for the 13.9 million units that 5 Robinson says Samsung would not have sold absent the infringement or dilution. Just as Mr. 6 Musika acknowledged the need to ensure against any double counting (RT 2048:21-2050:15), the 7 Lanham Act bars “double recovery” of “both plaintiff’s lost profits and disgorgement of 8 defendant’s profits” on the same sale. Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 9 1010 (9th Cir. 1994). Yet Apple’s new expert does not even attempt to account for this problem. 10 In addition, Ms. Robinson’s request for additional lost profits further compounds the flaws 11 identified in Samsung’s Rule 50 motion. Dkt. 1990-3 at 20-25. First, Ms. Robinson arrived at 12 her calculations using IDC market-share data that includes all Samsung smartphones, without 13 attempting to identify what percentage of Samsung’s increased market share is attributable 14 specifically to the diluting products. Robinson Decl. at ¶ 27. Second, Ms. Robinson simply 15 assumes that, but for the diluting phones, Samsung’s market share would have remained at 5%, 16 without addressing—much less denying—that non-infringing products could predictably make 17 their own contributions to Samsung’s increase in market share. Compare id. at ¶ 26 with, e.g., 18 Dkt. 1931 at 5-7, 10-11 (products found non-infringing). Third, Ms. Robinson calculates that 19 Apple would have made an additional 2.1 million sales based on the quantity sold of all
20 “infringing and diluting” products, not just the diluting phones, see Robinson Decl. at ¶ 27, but 21 fails to explain why lost sales caused by other products—including 11 products explicitly found 22 not to dilute Apple trade dress—should support Lanham Act enhancement for these five. 23 Finally, Ms. Robinson ignores key factors that Mr. Musika recognized as critical to proper 24 analysis. She does not account for constraints on Apple’s capacity to make additional sales. Cf. 25 RT 2085:10-2086:3. Her Mor-Flo analysis does not account for consumer’s carrier preferences 26 and the unavailability of Apple’s products through numerous carriers during the relevant time 27 period. Cf. RT 2096:24-2097:5; 2123:5-18. Nor does she heed Federal Circuit precedent 28 requiring that she account for the possibility of design-arounds. Cf. RT 2123:17-24; PX25.2 02198.51855/5003337.14 -29- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page39 of 44
1 (limiting lost-profits analysis to 8 months).23 2 As numerous courts and commentators have observed, proper application of the Lanham 3 Act “becomes complicated when the concept of blurring is applied to competing similar products.” 4 I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 49 (1st Cir. 1998); 4 McCarthy on Trademarks 5 and Unfair Competition § 24:102 (4th ed.) (noting complications “if antidilution law was applied 6 to give exclusive rights to a product shape”). Contrary to Apple’s assertion that its alleged injury 7 “is exactly why Congress authorized judicial enhancement for trade dress dilution,” see Dkt. 1982- 8 1 at 26, there is “doubt that Congress intended the reach of the dilution concept under the FTDA to 9 extend this far . . .” I.P. Lund, 163 F.3d at 50. Product design is particularly far removed from 10 the purpose of anti-dilution laws, especially where a direct competitor allegedly diluted without 11 creating likelihood of confusion. Id. at 48. To enhance a monetary award for trade-dress 12 dilution of such magnitude and novelty, atop a parallel monetary award for design-patent 13 infringement, based on little more than pure speculation, would exceed anything Congress 14 contemplated in Section 1125(c).
15 C. Apple Is Not Entitled To Enhancement Based On Utility Patent Infringement 16 Although Apple claims some $68 million as the baseline for potential utility patent 17 enhancement, most of this consists of the $57,867,383 that the jury awarded specifically for the 18 Galaxy Prevail, which represents Samsung’s profits and is not subject to enhancement. Of the 19 jury’s award for the products found to infringe only utility patents, $10,013,200 might arguably be
20 subject to enhancement under Section 284—$9,180,124 of which represents Apple’s royalties for 21 the Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform, and $833,076 of which 22 represents the award for the Galaxy Tab 10.1 (WiFi). See Dkt. 1931 at 16. Samsung has 23 already noted the absence of record support for finding willfulness that is prerequisite to any 24 23 25 In an effort to find some alternative basis for its request, Apple conjures other amounts totaling $400 million. Mot. at 26-27. For example, $400 million represents 40% of Mr. Denison’s 26 estimation of STA’s total annual advertising budget; and $400 million roughly approximates Apple’s advertising expenditures over four arbitrarily chosen years. Neither fact has anything to 27 do with the proper measure of any allegedly uncompensated harm to Apple, nor does Apple’s reference to Samsung’s gross profits and revenues—across all Samsung subsidiaries and all 28 Samsung products, many of which are not in any way implicated here. 02198.51855/5003337.14 -30- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page40 of 44
1 enhancement. See Dkt 1988 at 8-10; Dkt. 1990-3 at 15-16. This includes a threshold showing 2 that Samsung’s infringement was objectively willful, In re Seagate Techs., LLC., 497 F.3d 1360, 3 1371 (Fed. Cir. 2007), a demanding standard that excludes instances where “a ‘reasonable litigant 4 could realistically expect’ [its] defenses to succeed.” Bard Peripheral Vascular v. WL Gore & 5 Associates, 682 F.3d 1003 (Fed. Cir. 2012); see iLOR LLC v. Google, Inc., 631 F.3d 1372, 1378 6 (Fed. Cir. 2011). Here, Apple fails to show that Samsung’s defenses to Apple’s patents, 7 particularly as to the utility patents’ likely invalidity, were unreasonable. 8 Moreover, because Section 284 speaks in discretionary terms, finding willfulness is 9 necessary but not sufficient to enhance. See Mentor H/S, Inc. v. Medical Device Alliance, Inc., 10 244 F.3d 1365, 1380 (Fed. Cir. 2001); Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed Cir. 11 1992) (finding of willfulness “does not mandate that damages be enhanced, much less mandate 12 treble damages.”); Modine Mfg. Co. v. Allen Group. Inc., 917 F.2d 538, 543 (Fed. Cir. 1990). 13 Accordingly, courts frequently deny enhancement despite finding willfulness. See, e.g., Funai 14 Elec. Co., Ltd. v. Daewoo Elec. Corp., 593 F. Supp. 2d 1088 (N.D. Cal. 2009), aff’d 616 F.3d 15 1357 (Fed. Cir. 2010); Brooktree Corp. v. Adv. Micro Devices, Inc., 977 F.2d 1555, 1581-82 (Fed. 16 Cir. 1992); Modine Mfg, 917 F.2d at 543. The “paramount determination” is the “egregiousness 17 of the defendant’s conduct based on all the facts and circumstances.” Read, 970 F.2d at 826.
18 Supposed Evidence of Copying. Apple’s purported evidence of deliberate copying 19 amounts to far less than it claims. See Creative Internet Advertising Corp. v. Yahoo! Inc., 689 F. 20 Supp. 2d 858, 863-64. (E.D. Tex. 2010) (evidence supporting strong inference of copying still did 21 not demonstrate deliberate copying under Read); Judkins v. HT Window Fashions Corp., 704 F. 22 Supp. 2d 470 (W.D. Pa. 2010); Hako-Med USA, Inc. v. Axiom Worldwide, Inc., 2009 WL 23 3064800, at *6 (M.D. Fla. Sept. 22, 2009). Most of the documents cited by Apple show 24 comparative analysis or benchmarking of competitor products that is typical of all companies, 25 including Apple. See, e.g., DX687; DX717. Certain documents, like PX34, are not even from 26 the business unit that designs and develops Samsung’s products; rather, they come from the 27 division that manufactures components for Apple, and merely identify iPhone-related issues that 28 may affect manufacturing trends. And much of what Apple cites as evidence of alleged copying 02198.51855/5003337.14 -31- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page41 of 44
1 relates to Apple’s hardware and GUI design patents (Mot. at 16-17 (citing PX3, PX6, PX40, RT 2 2530:10-2531)); awards relating to these patents are not subject to enhancement. Finally, to the 3 extent design-related documents may be relevant, whereas the jury was not permitted to consider 4 evidence that Samsung’s smartphone designs date back to 2006, before the iPhone’s 5 announcement and release (Dkt. 1970 at 11-18 (detailing Samsung’s prior smartphone 6 development efforts); Dkt. 1970-26 (Samsung’s Korean Patent No. 30-0452985, covering 7 independently developed designs)), the Court should account for these documents as undermining 8 the copying allegations. See Advanced Cardiovascular Inc. v. Medtronic, Inc., 265 F.3d 1294, 9 1311 (Fed. Cir. 2001); Judkins, 704 F. Supp. 2d at 483.
10 Absence of Notice/Bad Faith. With the possible exception of the ‘381 patent, Samsung 11 did not receive any specific notice of the patents and accused products before Apple filed suit. 12 PX52; RT 1964:20-1968:11 (Mr. Teksler admitting that other utility and design patents and trade 13 dress were not identified or mentioned in Apple’s 2010 presentation to Samsung). Even as to the 14 ‘381 patent, the parties’ first meeting took place months—–not years–—before suit was initiated. 15 These facts differentiate this case from those enhancing damages against infringers who were 16 “repeatedly notified that their products infringed on Plaintiff’s patents” but “continued to engage 17 in their tortious conduct over the course of a number of years.” Wordtech Sys., Inc. v. Integrated 18 Network Solutions, Inc., 2009 WL 113771, at *2 (E.D. Cal. 2009). 19 Apple is wrong to accuse Samsung of litigation misconduct as a basis for enhancement.
20 Mot. at 19-22. The alleged copying documents Apple cites did not correlate with the patents and 21 features at issue here, and were produced beginning in December 2011 and all turned over before 22 discovery closed. See Dkt. 1992 at ¶7. Apple’s argument that Samsung was sanctioned ignores 23 this Court’s finding that “discovery sanctions are litigation related conduct, which does not serve 24 as the main basis for a willful infringement finding.” Dkt. 1267 at 5. Apple also ignores that 25 Judge Grewal made no finding that Samsung acted in bad faith, and in two instances expressly 26 found that Apple failed to show bad faith. Dkt. 880 at 15; Dkt. 898 at 6. Prior imposition of 27 sanctions, unadorned by any finding of bad faith, should not be “double counted” as grounds for 28 still more and harsher sanctions. See Funai, 593 F. Supp. 2d at 1115; Mass Engineered Design, 02198.51855/5003337.14 -32- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page42 of 44
1 Inc. v. Ergotron, 663 F. Supp. 2d 361, 391-92 (E.D. Tex. 2009). Similarly, in relying on 2 Samsung’s release of excluded evidence, Apple ignores that (i) the Court has already denied 3 Apple’s motion for sanctions based on this very conduct (RT 574:4-9); (ii) the Court polled the 4 jurors and concluded that the publication of evidence had no effect (RT 578:10-590:16); and (iii) 5 in all events, the evidence in question had previously been publicly filed and discussed at length in 6 open court and resulting media coverage. Dkt. 1533.24
7 Apple also ignores the many instances where it was found to have delayed and obstructed 8 Samsung’s discovery, necessitating multiple successful motions to compel (Dkt. Nos. 233, 292, 9 398, 536, 673 at 15-23, 821), motions to enforce (Dkt. Nos. 673 at 23-28, 867, 1213), and motions 10 for sanctions (Dkt. Nos. 1144, 1213). Kowalski, 2009 WL 855976, at *2 (factor is neutral where 11 both parties were responsible for impeding discovery). Indeed, this Court on multiple occasions 12 criticized Apple for litigation misconduct. See, e.g., Dkt 404, Tr. 63:13-22 (Court criticizing 13 Apple counsel’s instructions to witnesses during depositions); Dkt. 1164, Tr. 145:7-146:15; 147:4- 14 20 (expressing frustration with Apple’s refusal to schedule depositions requested by Samsung); 15 148:3-10 (expressing frustration at how Apple “stiffed [Samsung] on transcripts”)). In addition, 16 Apple obstructed discovery by 17 18
19 See Pierce Decl. Exs. 22-44; Dkt. 2042
20 at 3, n.1.
21 Samsung’s Finances Do Not Warrant Enhancement. While a company’s finances can 22 be mitigating to avoid crippling its business, the opposite is not true. Power Integrations, Inc. v. 23 Fairchild Semiconductor Inc., 762 F. Supp. 2d 710, 722 (D. Del. 2011) (citing cases).
24 Samsung Had Reasonable Defenses. This Court repeatedly noted that neither party was 25 24 26 As to witness lists, the Court ordered both parties, not just Samsung, to reduce the number of witnesses on their respective lists to 50 live witnesses and 45 deposition designations. Dkt. 1267 27 at 2; Dkt. 1272 (July 18 Tr.) at 18:13-23 (describing both parties’ lists as “not realistic”). Nor was Samsung’s Appendix to its revised witness list improper. The document’s title makes clear 28 that it was intended simply to preserve appellate recourse. Dkt. 1278 at 20. 02198.51855/5003337.14 -33- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page43 of 44
1 assured of victory and both faced exposure. See RT 2660:25-2661:15 (Court noting there were 2 “risks here for both sides”). This Court similarly recognized that Samsung’s infringement of the 3 D’087 and D’677 patents was a “close question.” Dkt. 452, at 26, 27, 37, 38. The jury found 4 that a claimed Apple trade dress was not protectable, two of Apple’s four asserted trade dresses 5 were not diluted or infringed, the D’889 patent was not infringed; and the majority of accused 6 Samsung products did not infringe the D’087. Dkt. 1931 at 6, 7, 10. The persistence of 7 substantial questions of validity, infringement and enforceability through trial indicates closeness 8 that weighs against enhancement. See Judkins, 704 F. Supp. 2d at 481; Telecordia v. Cisco, 592 9 F. Supp. 2d 727 (D. Del. 2009). Nor do the jury’s ultimate findings of infringement make 10 Samsung’s defenses unreasonable. See, e.g., DePuy Spine, Inc. v. Medtronic Sofamor Danek, 11 Inc., 567 F.3d 1314, 1337 (Fed. Cir. 2009) (“The mere fact that the jury ultimately found 12 equivalence does not diminish the difficulty of their task . . . .”); Spine Solutions v. Medtronic 13 Sofamor Danek USA, 620 F.3d 1305, 1319-20 (granting JMOL of no willfulness based on a 14 “reasonable” obviousness defense, despite “substantial evidence to support the jury’s implicit 15 finding” of nonobviousness).
16 The Duration Of Infringement Does Not Support Enhancement. Apple argues that 17 Samsung has been infringing for “more than two years since being notified of its infringement” 18 (Mot. at 22), but that claim is based solely on the ‘381 patent, which was first presented some 19 months (August 2010), not years, before suit was filed. PX 52.14. And as Apple is aware, 20 Samsung has long since designed around the ‘381 and ‘163 patents. Apple’s other patents were 21 not asserted until this litigation began in April 2011. Moreover, Apple did not accuse the Galaxy 22 SII devices of infringing Apple’s design patents until March 4, 2012. See Dkt. 1185-3, at 10-13.
23 Samsung’s Intent and Remedial Action Weigh Against Enhancement. Samsung will by 24 the time of the hearing have either designed around or discontinued the products found to infringe. 25 Prior to the verdict, Samsung believed in good faith that Apple’s patents were invalid and not 26 infringed. See Kowalski, 2009 WL 855976, at *3. Only a specific intent to harm Apple, 27 beyond simply gaining market share through vigorous competition, would support enhancement. 28 See Power Integrations, 762 F. Supp. 2d at 724; Baden Sports, Inc. v. Kabushiki Kaisha Molten, 02198.51855/5003337.14 -34- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054 Filed10/19/12 Page44 of 44
1 2007 WL 2790777 (W.D. Wash. 2007), at *5. This requires showing that Samsung had a 2 “specific intent to steal” from Apple as opposed to a “sincere belief” in “a legitimate argument that 3 [it] was acting lawfully.” Mass Engineered, 633 F. Supp. 2d at 391. Yet the documents Apple 4 cites show nothing more than robust competition or, as even Apple puts it, desire to “go head to 5 head with Apple in [the smartphone] market.” Mot. at 23.
6 Samsung Has Not Attempted To Conceal Misconduct. Apple’s claim that Samsung 7 attempted to conceal its misconduct does not square with its repeated claims that Samsung has 8 “flooded the market” with “millions” of copycat products. Mot. at 13, 25. Moreover, Samsung 9 obtained its own smartphone and tablet-design patents in full public view, citing certain Apple 10 patents in applying for its design patents and obtaining patents over them. Dkt. 1970 at 8-10. 11 Whatever Apple’s complaints about Samsung’s conduct, that conduct was anything but concealed. 12 In sum, the Read factors, if reached, weigh against any enhancement as to the $10,013,200 13 that is even arguably eligible for enhancement under the Patent Act. And the remaining 14 $91,132,279 of the award that Apple might try to spotlight as an eligible baseline for 15 enhancement, specifically under the Lanham Act, is of a piece—either insusceptible to or else 16 undeserving of any enhancement for the reasons stated above. 17
18 DATED: October 19, 2012 QUINN EMANUEL URQUHART & SULLIVAN, LLP 19 By /s/ Susan R. Estrich 20 Charles K. Verhoeven Kathleen M. Sullivan 21 Kevin P.B. Johnson Victoria F. Maroulis 22 Susan R. Estrich Michael T. Zeller 23 Attorneys for SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS AMERICA, 24 INC., and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC 25 26 27 28 02198.51855/5003337.14 -35- Case No. 11-cv-01846-LHK SAMSUNG’S OPPOSITION TO APPLE’S MOTION FOR A PERMANENT INJUNCTION AND DAMAGES ENHANCEMENT Case5:11-cv-01846-LHK Document2054-1 Filed10/19/12 Page1 of 37
1 QUINN EMANUEL URQUHART & SULLIVAN, LLP Charles K. Verhoeven (Cal. Bar No. 170151) [email protected] 50 California Street, 22nd Floor San Francisco, California 94111 Telephone: (415) 875-6600 Facsimile: (415) 875-6700 Kevin P.B. Johnson (Cal. Bar No. 177129) [email protected] Victoria F. Maroulis (Cal. Bar No. 202603) [email protected] 555 Twin Dolphin Drive 5th Floor Redwood Shores, California 94065 Telephone: (650) 801-5000 Facsimile: (650) 801-5100 Michael T. Zeller (Cal. Bar No. 196417) [email protected] 865 S. Figueroa St., 10th Floor Los Angeles, California 90017 Telephone: (213) 443-3000 Facsimile: (213) 443-3100 Attorneys for SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS AMERICA, INC. and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION APPLE INC., a California corporation, CASE NO. 11-cv-01846-LHK
Plaintiff, DECLARATION OF TÜLIN ERDEM IN SUPPORT OF SAMSUNG’S OPPOSITION vs. TO APPLE’S MOTION FOR A PERMANENT INJUNCTION SAMSUNG ELECTRONICS CO., LTD., a Korean business entity; SAMSUNG ELECTRONICS AMERICA, INC., a New FILED UNDER SEAL York corporation; SAMSUNG HIGHLYPUBLIC CONFIDENTIAL- REDACTED TELECOMMUNICATIONS AMERICA, ATTORNEYS’VERSION EYES ONLY LLC, a Delaware limited liability company, Defendants. Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page2 of 37
1 I, TÜLIN ERDEM, declare as follows:
I. QUALIFICATIONS AND STATEMENT OF ASSIGNMENT A. Qualifications 1. I am the Leonard N. Stern Professor of Business Administration and Professor of Marketing at the Stern School of Business, New York University. I previously served as the Co- Director of the Center for Digital Economy Research and the Director of the Stern Center for Measurable Marketing. 2. Before joining the Stern School of Business in 2006, I was the E.T. Grether Professor of Business Administration and Marketing at the Haas School of Business, University of California at Berkeley. I joined the Haas School of Business in 1993 and served as the Associate Dean for Academic Affairs and the Marketing Group Chair, the Ph.D. Director at the Haas School of Business and the Chair of the campus-wide Committee on Research (COR) at the University of California, Berkeley. I was also the Berkeley representative at the University of California system-wide Committee on Research. 3. I hold a BA from Business Administration, with a major in marketing and minors in economics and statistics, from the University of Alberta. My research interests include advertising, brand management and equity, consumer behavior and choice, decision-making under uncertainty, econometric modeling, marketing mix effectiveness, marketing research and pricing. I have published several papers in
top field journals and have received best paper awards, as well as major research grants, including two major National Science Foundation (NSF) grants. 4. I served as the editor-in-chief of the Journal of Marketing Research, the preeminent academic journal of the American Marketing Association, which publishes work on consumer behavior, marketing science models, marketing strategy and marketing research methodologies. I also served as an Area Editor at Marketing Science and Associate Editor at Quantitative Marketing and Economics and the Journal of Consumer Research. I serve as an editorial board member of many scholarly journals, including Journal of Consumer Research, Journal of the Academy of -2- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page3 of 37
1 Marketing Science, Marketing Letters and International Journal of Research in Marketing. I also was the President of the INFORMS Marketing Society (ISMS). 5. As a professor, I have taught branding, brand and product management, marketing management and international marketing in undergraduate, MBA and executive education programs. I also have taught doctoral seminars on consumer choice modeling and empirical modeling. 6. From 2008 to 2012, I was an Academic Partner at Prophet, a branding and marketing consultancy firm. 7. A complete list of my publications, honors, awards and professional activities is provided in my CV, attached in Exhibit 1.
B. Assignment 8. I have been retained by Quinn Emanuel Urquhart & Sullivan, LLP on behalf of Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC (collectively, “Samsung”) in this matter to provide this declaration and, if needed, testimony relating to Apple, Inc.’s (“Apple”) request for a permanent injunction that would exclude a number of Samsung smartphones and tablets from the U.S. market due, in part, to the alleged infringement of three utility patents owned by Apple. The three utility patents at issue in this proceeding are: (1) United States Patent No. 7,844,915 (“the ’915 patent”); (2) United States Patent No. 7,864,163 (“the ’163 patent”); and (3) United States Patent No.
7,469,381 (“the ’381 patent”). 9. My assignment is to explain, based on my expertise and the materials that I have reviewed, consumer decision-making in connection with the purchase of complex devices containing numerous, multi-level features/attributes (e.g., a smartphone or tablet). I will explain, based on my expertise and the materials I have reviewed, the kinds of features/attributes that drive consumer demand in the smartphone and tablet markets. Specifically, I have been asked to focus on whether the Apple utility patents at issue in its permanent injunction motion (the ‘915, the ‘163 and the ‘381 patents) drive consumer demand for Samsung smartphones and tablets when compared to non-infringing alternatives to those patents. -3- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page4 of 37
1 10. Counsel has provided me with the descriptions/animations of Apple’s three utility patents used by Professor John R. Hauser in his conjoint analysis.1 Counsel also has provided me with a Galaxy SII Epic 4G Touch device so that I can examine the design-arounds on the ‘381 and ‘163 patents. Based on this and the other materials provided, I was asked to determine what conclusions I can reach regarding the likely effect (if any) on consumer decision-making of products being offered with the functionalities included in Prof. Hauser’s survey as opposed to the design-around functionalities. 11. In connection with the assignment, I will assume that Prof. Hauser’s representation of the Apple patents in his survey is accurate (although I understand that Samsung disputes this). I will rely on the information and descriptions contained in the declarations of Mr. Stephen Gray and Dr. Andries van Dam as accurate reflections of Samsung’s preferred non-infringing alternatives. 12. In preparing this report, I have reviewed documents produced by both Samsung and Apple, as well as the testimony of certain Apple witnesses. A list of materials that I relied upon in reaching my conclusions is provided in Exhibit 2. 13. At any hearing on this motion, I expect to use exhibits in support of my testimony consisting of documents produced during discovery of this case, or excerpts or enlargements of them. I also expect to prepare and use demonstrative exhibits to help me to explain opinions that are contained in this declaration. In the event I am provided with additional relevant materials, I
reserve the right to supplement this declaration with additional conclusions, bases, and/or supporting material. 14. I am compensated at my standard rate of $900 per hour, plus expenses, for my work in this case. The opinions I express in no way are contingent on the compensation I will receive.
II. OVERVIEW OF OPINION 15. In forming my opinions, 1 Expert Report of John R. Hauser, March 22, 2012 (“Hauser Report”). -4- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page5 of 37
1 a. I have applied well-accepted and published theories and conceptual frameworks in marketing (such as conceptual frameworks of consumer decision-making). b. I have relied upon Apple and Samsung internal marketing research documents, other marketing materials produced in this case, as well as my own background research about the industry and industry reports, to apply these frameworks to the facts at issue in the case. 16. Based on my expertise in consumer decision-making and choice, as well as the materials I reviewed, my opinions can be outlined as follows: i. Smartphones and tablets incorporate numerous features/attributes, each of which consists of many sub-features and/or contributing elements. ii. In making purchase decisions concerning smartphones and tablets, consumers base their decisions on only a subset of all of the available features/attributes (rather than the set of all features/attributes and sub-features). The relevant set of determinative features/attributes and the manner in which they are weighed vary across consumers. In considering the purchase of a smartphone or tablet, consumers do not separately evaluate each sub-feature. iii. Apple’s utility patents at issue in its motion (the ‘915, the ‘163 and the ‘381 patents) relate to three functionalities that are properly considered a subset (or “sub-
feature”) of a main feature/attribute of a smartphone or tablet. iv. The functionalities embodied in these three patents are not independently or separately considered in consumer purchase decisions and do not drive consumer demand for Samsung smartphones and tablets. iv. From the consumer’s perspective, the functionalities provided by design- arounds that are available to Samsung for the functionalities embodied by the patents at issue perform the relevant functions in ways that are indiscernible or minimally discernible to the end consumer compared to the use of the patents at issue. Given that these three functionalities do not drive consumer demand, -5- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page6 of 37
1 different (and minor) variations of how these functionalities are offered (i.e., as implemented through available design-arounds) cannot be expected drive consumer demand either.
III. PATENTS-AT-ISSUE A. ’915 Patent 17. Issued on November 30, 2010, the ‘915 patent is entitled “Application Programming Interfaces for Scrolling Operations.”2 Based on my review of the Declaration of Stephen Gray dated October 18, 2012, I understand that the ‘915 patent covers a specific technique for distinguishing between scrolling and zooming operations on a touchscreen device, and the technique requires a specific test to be performed in the Android software. For example, scrolling moves the content on the touchscreen the same direction the user moves her finger, and zooming makes the content smaller or larger depending on whether a user moves her fingers closer together or farther apart. It is my understanding that Apple has accused the Web Browser application in Samsung’s smartphones/tablets of infringement. 18. It is my understanding that Samsung’s software has been modified to remove the specific test required by the ’915 patent. The design-around software uses a different technique to allow for scrolling and zooming operations. Although the software has been changed, I understand from the Gray Declaration that the user experience remains essentially the same. That is, a user will still be able to scroll with a single finger and zoom with two fingers using the
design-around software.
B. ’163 Patent 19. Issued on January 4, 2011, the ‘163 patent is entitled, “Portable Electronic Device, Method, and Graphical User Interface for Displaying Structured Electronic Documents.”3
20. Based on my review of the Gray Declaration, I understand that the ‘163 patent covers the following two steps. First, a user taps (or double taps) on a first box of content on a
2 U.S. Patent 7,844,915. 3 U.S. Patent 7,864,163. -6- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page7 of 37
1 touchscreen (e.g., an article on the New York Times webpage). In response, the first box of content is enlarged and substantially centered on the touchscreen. Second, after the first box of content has been enlarged and centered, the user taps (or double taps) on a second box of content (e.g., a second article that appears below the first article on the New York Times webpage). In response, the second box of content is substantially centered on the touchscreen. It is my understanding that Apple has accused the Web Browser application in Samsung’s smartphones/tablets of infringement. 21. I understand from the Gray Declaration that Samsung has implemented a design- around to avoid the practice of the ‘163 patent. Under the design-around, when a user single taps on the second box, nothing happens. If the user double taps on the second box, the entire webpage zooms out. In both cases, the second box is not substantially centered on the touchscreen as a result of the second tap/double tap. In preparing this declaration, I used a smartphone that included this design-around functionality.
C. ’381 Patent 22. Issued on December 23, 2008, the ‘381 patent is entitled, “List Scrolling and Document Translation, Scaling, and Rotation on a Touch-Screen Display.”4 23. Based on my review of the Declaration of Andries van Dam dated October 18, 2012, I understand that '381 patent claims a snap-back functionality where, if the user translates an electronic document beyond the edge of that document, an area beyond that edge will be
displayed. When the user lifts her finger from the touch screen, the document will snap back, such that no area beyond the edge of the document remains in view. It is my understanding that Apple has accused the Gallery, Web Browser and Contacts applications in Samsung’s smartphones/tablets of infringement. 24. I understand from the van Dam Declaration that the “blue glow” feature designs around the ‘381 patent. Under this design-around, when the user scrolls to the edge of a document, the document comes to a stop and a blue glow animation appears near the edge of the 4 U.S. Patent 7,469,381. -7- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page8 of 37
1 document. An area beyond the edge of the document never appears. When the user lifts her finger, the blue glow disappears. In preparing this declaration, I used a smartphone that included this design-around functionality.
IV. CONCEPTUAL FRAMEWORK A. Product Features, Attributes and Benefits 25. Products can be conceptualized as bundles of attributes (alternately called features) that provide benefits or costs (such as price) to consumers.5 Benefits associated with those attributes sought by consumers could be functional (e.g., acceleration in a car), emotional/experiential (e.g., how driving a certain brand of car can make the driver feel excited and exhilarated) and/or self-expressive/symbolic (e.g., one consumer may express her frugality or patriotism by owning a Saturn; another consumer may express her being hip and well-to-do by owning a BMW).6 26. Some attributes (such as quality) are vertically differentiated rather than being horizontally differentiated. Vertical attributes of products are ones that consumers would prefer more of, ceteris paribus (that is, keeping everything else constant). For example, keeping everything else including price constant, people would prefer higher quality over lower quality. This is not true for horizontally differentiated product attributes. Some people may prefer butter with popcorn, some may not; some may prefer one color over another.7 27. A “brand” is defined as “a name, term, sign, symbol, or design, or combination of
them, which is intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.”8 Brand franchise9 refers to consumer loyalty
5 Lancaster, Kelvin (1966), “A New Approach to Consumer Theory,” Journal of Political Economy, 74, 132-157. 6 Aaker, David A. (1991). Managing Brand Equity. New York: The Free Press. 7 Tirole, J. (1990). The Theory of Industrial Organization. Cambridge, MA: MIT Press. 8 Kotler, Philip (1997). Marketing Management. New Jersey: Prentice Hall, p.443. 9 Franchise also has a specific meaning in channels and distribution. It refers to the arrangement between a brand name manufacturer and a wholesaler or retailer that gives the wholesaler or retailer the exclusive right to sell the brand manufacturer's product in a specific territory. This arrangement is usually established by contractual agreement over a period of time. -8- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page9 of 37
1 toward a brand. All the products sold under the same brand name, that is, products that share the same “umbrella brand,”10 are part of a brand’s franchise since consumer loyalty is geared towards all the products under the same brand name.
B. Consumer Decision Processes & Purchase Behavior 28. Consumer decision processes in regard to consumer purchases or choices are typically conceptualized to have five steps: need arousal, information search, evaluation, purchase and post-purchase.11 Factors such as the degree of involvement, the type of product, and past experience affect whether certain steps are skipped or how important each step is in the decision-making process. To give an extreme example, in impulse purchases, a consumer may jump from need arousal to purchase. 29. Consumers may use multiple information sources: individual marketing mix elements of a firm (e.g., advertising), brands, their own past experiences, word of mouth, salespeople, third-party information providers, etc. 30. Consumers evaluate products to form perceptions about product attributes and benefits, as well as to formulate their preferences. Consumers develop perceptions about the levels of attributes, which are weighted according to their preferences (that is, importance weights attached to perceived attribute levels). For example, a consumer may attach a higher importance weight to the cavity-fighting attribute of a toothpaste than to the teeth whitening attribute. Likewise, some consumers may attach a high importance weight to (i.e., have a preference for) the
“organic” attribute of food products, while other consumers may not. The evaluation of the choice alternative, or the utility consumers derive from that choice alternative, is the sum of these perceptions weighted by their relative importance (importance weights). 10 For example, Gucci (e.g., hand bags, fashion eye glasses, watches), Dove (soap, moisturizer, liquid dishwashing detergent), and Oral-B (toothpaste, toothbrush, mouthwash, dental floss) are umbrella brands. See Erdem, Tülin (1998), “An Empirical Analysis of Umbrella Branding,” Journal of Marketing Research, 35 (3), 339-351. 11 Lilien, Gary L. Philip Kotler and K. Sridhar Moorthy (1992), Marketing Models, New Jersey: Prentice Hall. -9- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page10 of 37
1 31. Consumers face multiple decisions in the purchase process. Besides the general decisions of whether to buy, when to buy, and where to buy, there are also decisions such as how much to buy (in frequently purchased product categories), which platform to buy (Windows vs. Apple in PCs, or Apple IOS vs. Android in smartphones), and which features/attributes to consider in forming overall evaluations about options. As a practical matter, some of these decisions can be made simultaneously and others sequentially. 32. Not all consumers approach purchase decisions in the same manner, and different consumers may follow different sequences in making purchase decisions. For example, a Samsung marketing research document indicates that 55 percent of Samsung consumers and 35 percent of Apple consumers select the wireless service provider first and the mobile phone model second, while 32 percent of Samsung consumers and 24 percent of Apple consumers select the provider and phone simultaneously, and the remaining select the phone first and the provider second.12 33. In practice, consumers facing complex decision tasks often use heuristics to save on costs of thinking (information processing costs).13 For example, if there are many choices to consider, they may first eliminate options using disjunctive rules (e.g., to exclude from consideration any tablet that costs more than $300). Furthermore, if a product has multiple features/attributes, consumers may focus only on a subset of features/attributes to evaluate and compare options, and research has shown that consumers may consider a smaller subset of options
when the number of choices increases. For example, in one leading article, Payne (1976) asked
his subjects to choose among two, six or twelve hypothetical apartments.14 Information was available about each apartment with respect to either four, eight or twelve features/attributes of the apartments such as rent, cleanliness, landlord attitude, noise level, etc. As the numberof
12 “Attitudes and Usage of Smartphone owners,” Hall & Partners (SAMNDCA00252685- 775, at 760). 13 Shugan, Steven (1980), “The Cost of Thinking,” The Journal of Consumer Research, Vol. 7(2), 99-111. 14 Payne, J.W. (1976), ”Task Complexity and Contingent Processing in Decision-Making: An Information Search and Protocol Analysis,” Organizational Behavior and Human Performance, 16, 366-387. -10- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page11 of 37
1 alternatives and/or the number of features/attributes increased, the subjects were progressively less thorough in their inspections. Payne’s results illustrate a commonly observed characteristic of representation and evaluation of alternatives. They appear to include remarkably few of the alternatives’ aspects and features/attributes. One explanation of this phenomenon is that people have limited cognitive capacity, and the use of heuristics and selective consideration of features/attributes simplifies decision-making processes.15
V. ANALYSIS OF SMARTPHONE AND TABLET PURCHASE DECISION-MAKING 34. Both smartphones and tablets are used in different contexts such as text messaging, e-mailing, viewing/editing documents, and listening to music. For example, the Yankee Group Samsung Strategy Session document16 identified “key” usage contexts for smartphones to be: performing banking transactions, transferring money to friends or family, receiving or redeeming coupons, mobile internet shopping, downloading graphics/logos/wallpapers, downloading ring backs, downloading ring tones, receiving text alerts, posting/uploading photos to web, accessing online community or social networking, locating points of interest, obtaining driving directions (Location-based/GPS services), accessing and browsing of the internet, watching live TV, watching video clips, listening to downloaded or sideloaded music, listening to streaming music, downloading music, playing games, downloading games, taking pictures, participating/voting in contests or polls, using “push to talk” (walkie talkie), instant messaging, accessing e-mail, video messaging, picture messaging/MMS and text messaging/SMS.
35. Similarly, there are many activities corresponding to different usage contexts in tablets, including:
15 Yates, Frank, J. (1990). Judgment and Decision-Making. New Jersey: Prentice Hall. 16 Yankee Group Samsung Strategy Session (SAMNDCA00250503-557, at 519). -11- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page12 of 37
1 .17 36. Given the wide variety of uses, smartphones and tablets incorporate a very large set of features/attributes to deliver the benefits and functionalities consumers seek.
A. Main Features/Attributes of Smartphones and Tablets 37. Both Apple and Samsung internal documents identify many main features/attributes that may play a role in consumer decision-making concerning smartphones and tablets. 38. With regard to smartphones, a recent iPhone Buyer Survey identified the following features/attributes that are considered by consumers when choosing an iPhone: .18 A Hall & Partners Study conducted for Samsung likewise lists many features/attributes, each with multiple levels or sub-features such as voice features (including speakerphone, voice dialing, memo), digital photography capabilities (including digital camcorder, live TV, video call, video share...), MP3 player functionality (including direct download, sideload), text messaging options (including multimedia, IM, Voice, T9 function), and many others.19 39. Similarly, many features/attributes contribute to consumer purchase decisions for
tablets. According to Apple’s iPad Tracking Study, the list of top features/attributes prompting acquisition of tablets in the US include
19 “Attitudes and Usage of Smartphone owners,” Hall & Partners (SAMNDCA00252685- 775, at 719-746). 20 “Q1 FY11 iPad Tracking Study” (APLNDC-Y0000023730-907, at 816). -12- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page13 of 37
1 Another Apple document reported that
1. Defining and Identifying Main Features/Attributes 40. The identification and definition of the full set of features/attributes for smartphones and tablets are subject to some degree of ambiguity and subjectivity, because there is no objective or universal set of features/attributes against which all smartphones and tablets are evaluated. Given the ambiguities inherent in delineating relevant features/attributes, it can be difficult to even provide a comprehensive list of features/attributes considered by consumers in making purchase decisions. 41. Thus, even if one could compile a comprehensive list of features/attributes, it is likely that the various features/attribute descriptions would be ambiguous and have different meanings to different individuals or in different contexts. For example, the term “ease of use” refers to the ease of use associated with keyboard and buttons in some documents,23 and the ease of use associated with Internet features in others.24 As a result, even a comprehensive list will likely have ambiguities. 42. A further complication in evaluating the importance of specific features/attributes to consumer decision-making concerning smartphones and tablets is the fact that the complexity and sheer number of features/attributes incorporated into smartphones and tablets mean it is not
uncommon for consumers to not even know whether they have a certain feature/attribute. For example, the same smartphone survey conducted for Samsung referenced above notes that 30 23 “Attitudes and Usage of Smartphone owners,” Hall & Partners (SAMNDCA00252685- 775, at 750). 24 “2009 Wireless Consumer Smartphone Satisfaction Study Volume 1,” J.D. Power and Associates (SAMNDCA00190144-243, at 195). -13- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page14 of 37
1 percent of consumers surveyed did not know if their smartphone had a T9 function (a type of predictive texting).25
2. Main Features/Attributes Consist of Many Sub-Features and Functionalities 43. One of the main reasons that defining and characterizing the main features/attributes of smartphones and tablets are difficult stems from the fact that each main feature/attribute is really a combination of multiple sub-features and capabilities. 44. For example, Apple’s iPhone Product Marketing Manager Steven Sinclair testified at his deposition that “[t]here are a lot of features that contribute to ease of use, and if not done correctly, those features can detract from ease of use;”26 “I don’t believe we’ve broken down features in a way that tie directly to ease of use;”27 and “All of the features contribute to ease of use.”28 45. Due to these circumstances, companies selling complex devices such as smartphones and tablets use general descriptions to refer to groups of features/attributes, and the combination of sub-features therein, in most of their consumer research. Apple, for example, uses the following as descriptions of groups of attributes in its surveys and research of consumer preferences for iPhone attributes: easy to use, service and support, (Trust) Apple brand, quality of apps, battery life, value for price paid, quantity of apps, attractive appearance and design, ability to sync iPhone content, camera with LED flash, retina display, HD video recording and FaceTime video calling.29 46. Consequently, the consumer research available from Apple and Samsung has been conducted in such a manner that it will rarely (if ever) be possible to link a specific patent of the types at issue here to a feature/attribute contained in their consumer research, especially in a 25 “Attitudes and Usage of Smartphone owners,” Hall & Partners (SAMNDCA00252685- 775, at 729). 26 Deposition of Steven Sinclair, April 4, 2012 (“Sinclair Deposition”), at p. 59. 27 Sinclair Deposition, at p. 47. 28 Sinclair Deposition, at p. 52. 29 “iPhone Buyer Survey Q3 FY11” (APLNDC-Y0000027506-599, at 523). -14- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page15 of 37
1 manner that would reasonably permit one to conclude that the patent was having an impact on consumer demand.
B. Consumers Do Not Consider All Main Features/Attributes in Making Purchase Decisions 47. Academic literature recognizes that in complex decision environments consumers’ focus on a limited set of attributes for comparative purposes when making purchase decisions. For example, consumers cannot take into consideration all features/attributes when they are so numerous, as they are in smartphones and tablets (as described above). 48. Given the many features/attributes of smartphones and tablets, main purchase drivers are often centered on main benefit groups. For example, Apple internal consumer research suggests that the reasons for purchasing an iPhone are focused on
49. Apple’s documents reflect Apple’s recognition that consumers ignore the majority of features/attributes. Indeed, Apple’s surveys do not even test a majority of them. For example, when comparing consumer preferences for different attributes of the iPhone 4,
. Nor should they be mentioned because, as discussed above (and as implicitly recognized by Apple’s market research), they will have no impact on consumer decision-making. -15- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page16 of 37
1 50. Surveys also reflect that there are differences in importance weights (preferences for) attached to features/attributes among different phone users. For example, one Samsung survey notes that iPhone owners put more importance on the brand of the smartphone than owners of other brands of smartphones.33
C. Consumers Do Not Base Purchase Decisions on Functionalities Associated with the Patents at Issue 51. The utility functions covered by the ‘915, the ‘163 and the ‘381 patents are very specific and do not belong to the main set of features/attributes that I describe above as driving consumer decision-making. They may be a part of a main feature/attribute such as “ease of use,” along with numerous other sub-features, but there are simply too many sub-features in these complex devices for consumers to evaluate each one separately and consider them as a factor in their decision-making. 52. The Apple and Samsung internal materials I have reviewed do not attempt to directly study the effect of such narrowly defined utility functions on consumer choice (and, hence, demand). I have reviewed the conjoint study conducted by Apple’s expert witness Dr. Hauser, which purports to be directed at the functions at issue here. I understand that Samsung retained Dr. Yoram (“Jerry”) Wind to comment specifically on the conjoint study conducted by Dr. Hauser. I have reviewed Dr. Wind’s declaration. I do not believe that Dr. Hauser’s reported results accurately reflect consumer decision-making in the selection of smartphones or tablets. 53. I understand that Apple’s expert witness Terry Musika cited the “Browser Zooming Methods UX Exploration Study”34 as evidence of the importance of the features embodied by the ‘915, ‘163 and ‘381 user interface patents (which are only a few of the many sub-features of features or attributes like ease of use or touchscreen).35 However, Mr. Musika’s reliance on this evidence is misplaced for a number of reasons. First, this document is only even arguably relevant 33 “Attitudes and Usage of Smartphone owners,” Hall & Partners (SAMNDCA00252685- 775, at 760). 34 PX38 (“Browser Zooming Methods UX Exploration Study”, April 17, 2009, SAMNDCA11104115-139 at 133). 35 Declaration of Terry Musika in Support of Apple’s Motion for Permanent Injunction, August 29, 2012. -16- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page17 of 37
1 to the ‘163 patent—it does not relate to the other two patents. Second, these were very small sample size studies (e.g., 8 out of 9 respondents preferred the double-tap zooming). Third, the Browser Zooming Methods UX Exploration Study explicitly noted that the data and interpretations were qualitative and no statistical analysis was done.36 “Impromptu” samples were used, and these samples were drawn from messaging device usability studies that did not correspond to mobile internet users.37 Fourth, there were no working prototypes (“[p]aper prototyping has limitation on expression of dynamic interaction of zooming concepts”38). Finally, it is my understanding, based on the Gray Declaration, that the ‘163 patent is narrower than “double tap to zoom.” 54. Mr. Musika also cited the 2010 “Behold3 Usability Evaluation Results Report” that found “iPhone: Generates fun for the user with a visual element that seems to bounce… Direction for improvement: Provide a fun visual effect when dragging a web page.” 39 This report identified 75 issues associated with different features/sub-features. This particular “visual fun element” was one of the 75+ issues noted.40 55. In his declaration, Mr. Musika refers to third-party reports that note a better browsing experience on the iPhone compared to Samsung. Mr. Musika, for example, quotes a Gravity Tank report saying that the iPhone is “sexy to use….[Consumers’] experience is almost cinematic. Fun. Gestures like two fingered pinch and flick add a game-like quality to interaction… Whimsical. Lists bounce, icons flitter….”41
56. “Having fun” while using a device could be one of the experiential attributes of a product (although none of the consumer studies looked at a “fun” attribute in smartphones).
36 PX38 (“Browser Zooming Methods UX Exploration Study,” April 17, 2009 (SAMNDCA11104115-139, at 120). 37 PX38 (“Browser Zooming Methods UX Exploration Study,” April 17, 2009 (SAMNDCA11104115-139, at 120). 38 PX38 (“Browser Zooming Methods UX Exploration Study,” April 17, 2009 (SAMNDCA11104115-139, at 120). 39 PX46 (“Behold3 Usability Evaluation Results,” at SAMNDCA00508336-441, at 383). 40 PX46 (“Behold3 Usability Evaluation Results,” at SAMNDCA00508336-441). 41 Musika Declaration, at Exhibit 51. -17- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page18 of 37
1 However, any such attribute, especially in categories that involve complex devices, is, for practical purposes, composed of so many dimensions that it is impossible to talk about the individual sub- dimensions of “Apple iPhone is fun” or “Apple is fun” or to meaningfully link any of the functionalities covered by the patents at issue to this experience. Apple may have a “fun” association with consumers due to many different influences, including advertising campaigns. 57. In light of the foregoing, none of the evidence cited by Mr. Musika provides a meaningful link between the practice of the specific patents at issue and consumer purchase decisions. 58. Based on all the materials I reviewed, I do not find any credible evidence that the Apple utility patents at issue here drive consumer demand for Samsung smartphones and tablets. Indeed, these patents do not even qualify to be a “feature/attribute” (such as “size/weight,” “connectivity,” etc.) upon which consumers evaluate these products in purchase decisions. These are only three of the innumerable sub-features that are associated with the broader attributes, such as ease of use or ease of navigation using a touchscreen, that market research tests. I conclude that consumers base their decisions on a subset of main features/attributes (rather than the set of all features and sub-features) in smartphone and tablet markets, and that the utility patents at issue in Apple’s permanent injunction motion (the ‘915, the ‘163 and the ‘381 patents) do not drive consumer demand for Samsung smartphones or tablets.
D. Samsung Design-Around for the Patented Inventions Would Effectively Neutralize Any Demand Effects Relating to the Patents-at-Issue 59. As explained above, smartphones and tablets have too many sub-features such as the ones embodied by the ‘915, ‘163 and ‘381 user interface patents for the functionality covered by these specific patents to be drivers of consumer demand. However, for purposes of discussion, let us assume that consumers are aware of and distinctly form perceptions of these three sub- features. If these sub-features did significantly contribute to, for example, overall ease of use perceptions, we would expect to observe higher ratings of features/attributes such as ease of navigating the phone using touchscreen associated with Samsung phones accused of infringing -18- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page19 of 37
1 versus those that are not accused of infringing. Third-party research42 shows that the ease of touchscreen navigation, as well as overall ease of use, was rated by consumers slightly better for Samsung Behold II, Moment and Instinct models, which were not accused of infringing, than for Epic 4G, which was accused of infringing the ’163, ’381 and ’915 patents.43 This is inconsistent with the idea that these patents drive demand for the accused products. 60. As described above, I have reviewed information regarding the design-arounds for the products accused of infringing the ’163, ’381 and ’915 patents. As part of my assignment, I was provided a Samsung Galaxy II Epic 4G Touch (Sprint) that allowed me to “experience” any potential differences between a Samsung smartphone with ’163 and ’381 design-around functionalities versus the functionalities depicted in the videos used by Dr. Hauser. I also own an iPhone 4S. 61. Based on my review of the Gray and van Dam Declarations, I understand that the design-arounds are aimed to fulfill the functions performed by the utility patents at issue. In the case of the ’915 patent, I understand a user will still be able to scroll using a single finger and zoom using two fingers using the design-around software. In the case of the ’163 and ’381 patents, the differences in user experience between the design-arounds (as described in paragraphs 21 and 24, respectively) and the patented attributes are minor. I am unaware of any consumer studies aiming to measure consumer sentiments in regard to different ways of providing the same type of these functionalities, that is, “snap-back” vs. “blue glow” and “double tap to zoom (and
center)” vs. “double tap to zoom out the whole page, without the second box being centered substantially.” However, as described above these three functionalities do not drive consumer demand; different variations of how these functionalities are offered cannot drive consumer demand either. 42 “2011 Wireless Smartphone Satisfaction Study,” J.D. Powers and Associates (SAMNDCA10246338-445 at 445). 43 The model that faired best among the eight listed in the study was the Vibrant. The Vibrant was accused of infringing all three patents at issue, but I understand that it was found not to infringe the ’163 patent at trial. It is worth noting that this model rated better on many non- touchscreen related features, too. -19- Case No. 11-cv-01846-LHK DECLARATION OF TÜLIN ERDEM Case5:11-cv-01846-LHKHighly Document2054-1 Confidential – Attorneys’ Filed10/19/12 Eyes Only Page20 of 37
1 62. As I have previously described in paragraph 25 of this report, features/attributes offer benefits (or costs as in the case of price) to consumers. The patented functionalities and the Samsung design-arounds are geared towards providing consumers essentially the same benefits and similarly contribute to the overall user experience. Because the patents at issue (and their associated design-arounds) are a tiny set of all features/attributes that contribute to the benefit of a desirable user experience, whatever minor differences exist between them are highly unlikely to affect any consumer’s decision-making.
I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.
Executed on October 19, 2012 at New York, New York. By Tülin Erdem
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EXHIBIT 1 CURRICULUM VITAE
Tülin Erdem Leonard N. Stern Professor of Business and Professor of Marketing
Leonard N. Stern School of Business New York University 913 Tisch Hall, 40 West Fourth Street New York, New York 10012-1126 Tel: 212 998 0404, Fax: 212 995 4006 E-mail: [email protected]
EDUCATION
1993 Ph.D. Business Administration (major: Marketing), University of Alberta 1989 ABD Economics, University of Alberta 1987 M.A. Economics, University of Alberta 1986 B.A.
ACADEMIC POSITIONS
2006-present Leonard N. Stern Professor of Business and Professor of Marketing Stern School of Business, New York University 2003-2006 E.T. Grether Professor of Business Administration and Marketing Haas School of Business, University of California at Berkeley 1998-2003 Associate Professor (with tenure) Haas School of Business, University of California at Berkeley 1993-1998 Assistant Professor Haas School of Business, University of California at Berkeley 1989-1993 Graduate Assistant Faculty of Business, University of Alberta 1986-1989 Research/ Teaching Assistant Department of Economics, University of Alberta
AWARDS, HONORS, GRANTS
2008 Finalist, John D.C. Little Best Paper Award 2007-8 Outstanding Reviewer Award, Journal of Marketing 2003 Finalist, William O’Dell Best Paper Award 1998-2002 National Science Foundation (NSF) grant, SBR-9812067, $ 178,000.00 1998 AMA Doctoral Consortium Faculty Fellow (also in 2000, 2007-12) 1998 Finalist, Paul Green Best Paper Award 1996 Winner of John D.C. Little Best Paper Award 1996 Winner of Frank M. Bass Best Dissertation Paper Award 1995-7 National Science Foundation (NSF) grant SBR-9511280, $ 100,000.00 Case5:11-cv-01846-LHK Document2054-1 Filed10/19/12 Page22 of 37
1994-5 Junior Faculty Research Grant, University of California, Berkeley 1994 Regents' Junior Faculty Fellowship, University of California, Berkeley 1993 Co-winner of the AMA John A. Howard Doctoral Dissertation Award 1993 Recipient of the Gold Medal of the Governor General of Canada, awarded for academic excellence at the graduate level at Canadian Universities 1992 AMA Doctoral Consortium Fellow 1990-2 Domtar Ph.D. Fellowship, Faculty of Business, University of Alberta
PROFESSIONAL ACTIVITIES
Affiliations: American Economic Association, American Marketing Association, Association for Consumer Research, Econometric Society, Institute for Operations Research and the Management Sciences, Minnesota Supercomputer Institute
Advisory Council: Journal of Marketing Research (2012-present)
Editor-in-Chief: Journal of Marketing Research (2009-2012)
Area Editor: Marketing Science (2002-2009)
Associate Editor: Quantitative Marketing and Economics (2003-present)
Associate Editor: Journal of Consumer Research (2005-2009)
Editorial Board Member: Academy of Marketing Science (2006-present), International Journal of Research in Marketing (1996-present), Journal of Consumer Research (2011-present), Journal of Marketing (2003-present), Journal of Marketing Research (1998-2009), Marketing Letters (1996-present), Marketing Science (1997-2009)
Ad-hoc Reviewer: ACR, AMA John A. Howard Doctoral Dissertation, American Economic Review, Association for Consumer Research, California Management Review, International Economic Review, Journal of Applied Econometrics, Journal of Business and Economic Statistics, Journal of Econometrics, Journal of Agricultural and Resource Economics, Journal of Economic Psychology, Journal of Retailing and Consumer Services, OMEGA, Management Science, Marketing Science Institute, NSF, Psychometrica, Review of Economics and Statistics
President-Elect: ISMS, INFORMS Society of Marketing Science (2004, 2005)
President: ISMS, INFORMS Society of Marketing Science (2006, 2007)
Past-President: ISMS, INFORMS Society of Marketing Science (2008, 2009)
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Conference Organizations:
Co-Cahir, 2013 Marketing Science Conference Co-Chair, 2010 Marketing Dynamics Conference Co-Chair of Program Committee, Cheung Kong GSB Marketing Research Forum, Beijing China, June 2009 Co-Chair, 2003 and 2008 QME (Quantitative Marketing and Economics) Conference Chair, Marketing Track, 2003 INFORMS International Meetings Co-Chair, 2001 Tri-Annual Invitational Choice Symposium Co-Chair, 1997 Marketing Science Conference
Member of the Steering Committee, 2004, 2007, 2010, 2013 Tri-Annual Invitational Choice Symposium Member of Advisory Committee, 2011 Marketing Dynamics Conference Member of Program Committee, 2006 Marketing Dynamics Conference Member of Program Committee, 2004, 2005, 2009 QME (Quantitative Marketing and Economics) Conference Member of Program Committee, 2005 ACR (Association for Consumer Research) Conference
RESEARCH
Interests
Advertising and Pricing, Brand Equity, Branding Strategies, Econometric Modeling, Individual Decision-Making and Choice, Marketing Science Models of Consumer Behavior and Marketing Mix Strategy, Product Management and Strategy.
Refereed Publications
Erdem, Tülin and Sue Ryung Chang (2012), “A Cross-Category and Cross-Country Analysis of Umbrella Branding for National and Store Brands,” Special 40th Anniversary issue of Journal of the Academy of Marketing Science 40 (1), 86-101.
Shachar, Ron, Tülin Erdem, Gavan Fitzsimons, Keisha Wells (2011), “Brands: The Opiate of the Non-Religious Masses?“ Marketing Science 30, 92-110.
Erdem, Tülin, Michael Katz and Baohong Sun (2010) “A Simple Test for Distinguishing between Internal Reference Price Theories,” Quantitative Marketing and Economics 8, 303-332.
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Yang, Sha, Yi Zhao, Tülin Erdem, Ying Zhao (2010), “Modeling the Intra-Household Behavioral Interaction,” Journal of Marketing Research, 47 (3), 470-484.
Ching, Andrew, Tülin Erdem and Michael Keane (2009), “The Price Consideration Model of Brand Choice,” Journal of Applied Econometrics 24, 3 (March-April), 393-420.
Erdem, Tülin, Michael Keane and Baohong Sun (2008), “A Dynamic Model of Brand Choice When Price and Advertising Signal Product Quality,” Marketing Science, 27 (6), 1111-1125. (Finalist for the Little Best Paper award).
Erdem, Tülin, Michael Keane and Baohong Sun (2008), “Advertising and Consumer Price Sensitivity in Experience Goods Markets,” Quantitative Marketing and Economics, 6 (2), 139-176.
Bronnenberg, Bart, Jean Pierre Dubé, Carl Mela, Paulo Albuquerque, Tülin Erdem, Brett Gordon, Dominique Hanssens, Guenter Hitsch, Han Hong, Baohong Sun (2008), “Measuring Long Run Marketing Effects and their Implications for Long Run Marketing Decisions,” Marketing Letters, 19(3), 367-82.
Swait, Joffre and Tülin Erdem (2007) “Characterizing Brand Effects on Choice Set Formation and Preference Discrimination under Uncertainty,” Marketing Science 26 (5), 679-697.
Chintagunta, Pradeep, Tülin Erdem, Peter Rossi and Michel Wedel (2006), “Structural Modeling In Marketing: Review and Assessment,” Marketing Science, 25 (6) 604-616.
Erdem, Tülin, Joffre Swait and Ana Valenzuela (2006), “Brands as Signals: A Cross- Country Validation Study,” Journal of Marketing, 70 (1), 34-49.
Erdem, Tülin, Kannan Srinivasan, Wilfred Amaldoss, Patrick Bajari, Hai Che, Teck Ho, Wes Hutchinson, Michael Katz, Michael Keane, Bob Meyer and Peter Reiss (2005), “Theory Driven Choice Models,” Marketing Letters, 16 (3), 225-237.
Erdem, Tülin, Michael P. Keane, T. Sabri Öncü and Judi Strebel (2005), “Learning About Computers: An Analysis of Information Search and Technology Choice,” Quantitative Marketing and Economics 3 (3), 207-246.
Strebel, Judi, Tülin Erdem and Joffre Swait (2004), “Consumer Search in High Technology Markets: Exploring the Use of Traditional Information Channels,” Journal of Consumer Psychology 14, 96-103.
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Erdem, Tülin and Joffre Swait (2004), “Brand Credibility and its Role in Brand Choice and Consideration,” Journal of Consumer Research 31 (1), 191-199.
Erdem, Tülin, Ying Zhao and Ana Valenzuela (2004), “Performance of Store Brands: A Cross-Country Analysis of Consumer Store Brand Preferences, Perceptions and Risk,” Journal of Marketing Research, 41 (1), 86-100.
Erdem, Tülin, Susumu Imai and Michael Keane (2003), “A Model of Consumer Brand and Quantity Choice Dynamics under Price Uncertainty,” Quantitative Marketing and Economics, 1 (1), 5-64. (Lead article.)
Erdem, Tülin and Baohong Sun (2002), “An Empirical Investigation of Spillover Effects of Marketing Mix Strategy in Umbrella Branding,” Journal of Marketing Research, 39 (4), 408-420.
Swait, Joffre and Tülin Erdem (2002), “The Effects of Temporal Consistency of Sales Promotions and Availability on Consumer Choice Behavior,” Journal of Marketing Research, 34 (3), 304-320.
Erdem, Tülin, Joffre Swait and Jordan Louviere (2002), “The Impact of Brand Credibility on Consumer Price Sensitivities across Multiple Product Categories,” International Journal of Research in Marketing, 19 (1), 1-19 (lead article).
Erdem, Tülin, Glenn Mayhew and Baohong Sun (2001), “Understanding the Reference Price Sensitive Shopper: A Within and Cross-Category Analysis,” Journal of Marketing Research, 38 (4), 445-457.
Erdem, Tülin and Baohong Sun (2001), “Testing for Choice Dynamics in Panel Data,” Journal of Business and Economic Statistics, 19 (2), 142-152.
Erdem, Tülin, Joffre Swait, Susan Broniarczyk, Dipankar Chakravarti, Jean-Noel Kapferer, Michael Keane, John Roberts, Jan-Benedict Steenkamp and Florian Zettelmeyer (1999), “Brand Equity, Consumer Learning and Choice,” Marketing Letters, 10 (3) 301-318.
Erdem, Tülin and Russell Winer (1999), “Econometric Modeling of Competition: A Multi-Category Choice-Based Mapping Approach,” Journal of Econometrics, 89, 159-175.
Erdem, Tülin, Michael P. Keane and Baohong Sun (1999), “Missing Price and Coupon Availability Data in Scanner Panels: Correcting for the Self-Selection Bias in he Choice Model Parameters,” Journal of Econometrics, 89, 177-196.
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Erdem, Tülin (1998), “An Empirical Analysis of Umbrella Branding,” Journal of Marketing Research, 35 (3), 339-351 (finalist for Paul Green best paper award).
Erdem, Tülin and Joffre Swait (1998), “Brand Equity as a Signaling Phenomenon,” Journal of Consumer Psychology,7 (2), 131-157.
Meyer, Bob, Tülin Erdem, Fred Feinberg, Itzhak Gilboa, Wes Hutchinson, Aradhna Krishna, Steve Lippman, Carl Mela, Amit Pazgal, Drazen Prelec and Joel Steckel (1997), “Dynamic Influences on Individual Choice Behavior,” Marketing Letters,8 (3), 349-360.
Erdem, Tülin (1996), “A Dynamic Analysis of Market Structure based on Panel Data,” Marketing Science, 15 (4), 359-378.
Erdem, Tülin and Michael P. Keane (1996), “Decision-Making under Uncertainty: Capturing Dynamic Choice Processes in Turbulent Consumer Goods Markets,” Marketing Science, 15 (1), 1-20 (lead article).
Finn, Adam and Tülin Erdem (1995), “Economic Impact of Tourists Visiting a Mega- Multi Mall,” Tourism Management, 16 (5), 367-373.
Winer, Russell, Randolph E. Bucklin, John Deighton, Tülin Erdem, Peter Fader, J. Jeffrey Inman, Hotaka Katahira, Katherine N. Lemon and Andrew Mitchell (1994), “When Worlds Collide: The Implications of Panel Data-based Choice Models for Consumer Behavior,” Marketing Letters, 5 (4), 383-394.
Swait, Joffre, Tülin Erdem, Jordan J. Louviere and Chris Dubelaar (1993), "The Equalization Price: A Measure of Consumer-perceived Brand Equity,” International Journal of Research in Marketing, 10 (special issue on Brand Equity), 23-45.
Other Publications
Erdem, Tülin and Joffre Swait, “Branding and Brand Equity Models,” in The History of Marketing Science, eds. Scott Neslin and Russell Winer. Now Publishers Inc., forthcoming.
Erdem, Tülin (2010), “State of the Journal”, Editorial in Journal of Marketing Research, 47 (6), 997.
Erdem, Tülin (2010), “Spanning the Boundaries”, Editorial in Journal of Marketing Research, 47 (1), 1-2.
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Erdem, Tülin and Joffre Swait (2010), “Utility-Based Models of Brand Equity,” in Brands and Brand Management: Contemporary Research, 207-229, eds. Rohini Ahluwalia, Mike Houston and Barbara Loken. Routledge, New York.
Rangaswamy, Arvind, James J. Cochran, Tülin Erdem, John R. Hauser, Robert J. Meyer (2008), “Editor-in-Chief Search Committee Report: The Digital Future is Now,” Marketing Science, Editorial, 27,1, 1-3.
Erdem, Tülin and Russell Winer (2002), “A Brief History of Choice Modeling in Marketing,” Marketing Letters, 13 (3), 157-162 (special issue based on the 5th Invitational Choice Symposium, guest editors T. Erdem and R. Winer).
Working Papers
Cutright, Keisha, Tülin Erdem, Gavan Fitzsimmons and Ron Shachar (2012), “Finding Brands and Losing your Religion?”
Ching, Andrew, Tülin Erdem and Michael Keane (2012), “Learning Models: An Assessment of Progress, Challenges and New Developments.”
Che, Hai, Tülin Erdem and Sabri Öncü (2012), “Consumer Learning and Evolution of Consumer Brand Preferences.”
Yang, Sha, Yi Zhao, Tülin Erdem and Daeyoung Koh (2012), "Modeling Consumer Choice with Dyadic Learning and Information Sharing: An Intra-household Analysis."
Swait, Joffre, Tülin Erdem and Tom Peters (2011), “Shocks to Brand Equity: An Information Economics Perspective on the US Auto Industry 2006-2010.”
Shacham, Rachel, Peter Golder and Tülin Erdem (2011), “A Cigarette, a Six Pack or Porn? The Complementarity of Vices.”
Ching, Andrew, Tülin Erdem and Michael Keane (2010), “How Much Do Consumers Know About the Quality of Products? Evidence from the Diaper Market.”
Erdem, Tülin , Joffre Swait and Ana Valenzuela (2010) “Economic Development and Brand Credibility.”
Guo, Liang and Tülin Erdem (2005) “Measuring Usage Flexibility in Wireless Tariff Choice.”
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Invited Presentations