Apple Inc. v. Samsung Electronics Co.

Apple v. Samsung, decided October 7th, 2016. Sitting en banc, the Federal Circuit — in an opinion by Judge Moore — reinstated a jury verdict that a divided panel had thrown out. By a vote of eight to three, the court held that the panel had exceeded the appellate role: it had reversed the jury's factual findings without reviewing them for substantial evidence. Reviewed under the right standard, the court concluded, the verdict stood. Here's the brief.

The case is one chapter of the smartphone patent war between Apple and Samsung. Three Apple utility patents were at issue: the '647 patent, which detects structures like phone numbers in text and links actions to them — the "quick links" feature; the '721 patent, covering slide-to-unlock; and the '172 patent, covering autocorrect suggestions.

After a thirteen-day trial in the Northern District of California, before Judge Koh, the jury found the '647 patent infringed, and found the '721 and '172 patents not invalid — that is, not obvious. The district court denied Samsung's motions for judgment as a matter of law and entered judgment for Apple.

Samsung appealed. In February 2016, a divided panel reversed — finding non-infringement on the '647 patent and holding the '721 and '172 patents obvious. Apple petitioned for rehearing en banc. Its petition focused on the '647 patent, arguing that the panel had used dictionary and encyclopedia entries outside the trial record to give the claim term "analyzer server" a narrower meaning than the one the parties had agreed to — and that the panel had reweighed nearly every jury finding that favored Apple. The full court granted the petition.

The question the en banc court set for itself was not what the law of obviousness should be. It was about the appellate court's own function — what an appeals court may do with a jury's factual findings.

The governing framework is deferential. Obviousness under Section 103 is a legal conclusion built on underlying facts — the scope of the prior art, the motivation to combine references, and the objective indicia, or secondary considerations, such as copying, commercial success, industry praise, and long-felt need. Those underlying findings are questions of fact. On appeal from a jury verdict, the court reviews them only for substantial evidence — whether a reasonable mind could accept the evidence as adequate, viewing it in the light most favorable to the verdict. Only the ultimate legal question of obviousness is reviewed without deference.

Applying that framework, the majority concluded the panel had gone wrong at the threshold.

Reviewing those findings under the correct standard, the majority found record evidence to support each one.

On the '721 slide-to-unlock patent, the majority stressed the strength of the secondary considerations.

The majority was careful about what the case was not. No party, it noted, had asked the court to change the law of obviousness; the court said it had applied existing law to the facts, and had presumed the jury resolved the underlying factual disputes in favor of its verdict.

The decision drew three dissents. Chief Judge Prost, and Judges Dyk and Reyna, argued that the court should not have taken the case en banc without further briefing, and that the majority had misapplied both the substantial-evidence standard and the Supreme Court's obviousness cases — finding support in the record where, in their view, there was none, and elevating secondary considerations beyond their traditional role. Judge Reyna wrote that the court had granted review simply because it disagreed with the panel's result. Judge Hughes concurred in the result without opinion.

Apple v. Samsung stands less for any new rule of obviousness than for a rule about appellate review. The Federal Circuit reaffirmed that when a jury has made factual findings — on motivation to combine, on the objective indicia — an appeals court must review those findings for substantial evidence, on the record the parties made, and may not substitute its own view or reach outside that record. The majority cast the case as an ordinary application of existing law; the dissents saw a substantive shift dressed as procedure. That disagreement — over how much deference a cold appellate record owes a jury — is what the decision is remembered for.

Apple Inc. v. Samsung Electronics Co., 839 F.3d 1034, Federal Circuit, en banc, decided October 7th, 2016. I'm John Goodhue. Thanks for watching.