Snowplows and iPhones: What Do They Have in Common?
When Douglas Dynamics was decided last week, it seemed like a snoozer at first. But upon closer reading, there's actually an interesting discussion about injuncitons and what constitutes irreparable injury.
DD designed a snowplow that revolutionized the detachable snowplow industry. Their mount was simple, could be detached without disassembling everything, and the mount -- which remains on the truck -- didn't protrude awkwardly (and unsafely) past the bumper. A detachable plow also means less wear-and-tear on the truck's suspension.
Then Buyers Products came along with a cheaper version and snatched up 5% of the market share.
Did they infringe? There's much discussion of indirect mounting, direct mounting, A-frames, and subframes, but in the end, yes, the Federal Circuit held that some patents were violated.
That's not the important part. The important part is the discussion of injunctions.
The lower court denied an injunction because it held that Douglas could not show irreparable injury. After all, evidence showed that not only did Douglas' market share increase by 1% in the year after Buyers entered the market, but there was also indication that customers willing to buy a Douglas plow would not purchase the cheaper Buyers plow as a substitute.
However, maintaining profit in the face of competition does not alone rebut irreparable injury. "Irreparable injury encompasses different types of losses that are often difficult to quantify, including lost sales and erosion in reputation and brand distinction."
With irreparable injury established, the Federal Circuit reversed the lower court and granted the permanent injunction to Douglas.
What does this have to do with iPhones?
The most notable thing to happen in the opinion was the non-mention of the "causal nexus" standard. That standard, applied in the Apple v. Samsung case by the lower court, required proof that irreparable harm is directly attributable to the infringements.
The speculative mention of "erosion in reputation and brand distinction" certainly doesn't sound like "directly attributable" harm and indeed, Apple has already picked up on the conspicuous absence of the "causal nexus" standard. Thanks to Foss Patents, which has a great write-up on all of the parallels between Douglas and Apple, we have a copy of a letter sent by Apple to the Federal Circuit earlier this week, urging the court to apply its own precedent from Douglas to the present case.
The most applicable quote:
While the general public certainly enjoys lower prices, cheap copies of patented inventions have the effect of inhibiting innovation and incentive. This detrimental effect, coupled with the public's general interest in the judicial protection of property rights in inventive technology, outweighs any interest the public has in purchasing cheaper infringing products.
Does this mean the Apple decision has already been made? The similarities in the cases (components of a product infringed, rather than the whole; no "causal nexus" requirement; permanent injunction granted against cheaper competition that may not have directly harmed patentee but quickly established significant market share; harm to brand "distinction") are certainly intriguing.
- Douglas Dynamics v. Buyers Products (Federal Circuit Court of Appeals)
- Federal Circuit Reverses Another Apple Samsung Injunction (FindLaw's Federal Circuit Blog)
- Fed Circuit Seals the Deal in Apple Samsung Doc Appeal (FindLaw's Federal Circuit Blog)
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