Global War of the Tablets: UK Battle of the Stay

No surrender to a publicity notice!

The worldwide dispute between Apple and Samsung continues to rage. The iPhone 5 has been added to what appears to be a never-ending arsenal of litigation material and American Judge Koh lifted a sales injunction against Samsung's Galaxy Tab 10.1 in Apple Inc v. Samsung Electronics Co Ltd. et al., C 11-1846 pending the resolution of post-trial motions. However, this Kat would like to consider one of the smaller battles in this world war of intellectual property right enforcement and infringement that took place in the UK in July, when the Court of Appeal in Samsung Electronics (UK) Ltd v Apple Inc. [2012] EWCA Civ 1223 stayed an order that Apple publish a publicity notice pending a substantive appeal. Although most Kat's won't need reminding, the order was made by Judge Birss following one of the first substantive rulings in the global litigation, which found that Samsung Tablets do not infringe Apple's registered design, broadly (and rather famously) on the grounds that the Samsung gadgets 'do not have the same understated and extreme simplicity which is possessed by the Apple design. They are not as cool. The overall impression produced is different'. Guest Kat Darren Smyth's analysis of the case can be read here.

On 18th July 2012, Judge Birss determined the appropriate form of order following the judgment. Although he declined to make an order restraining Apple from representing that the Samsung Tablets infringed the registered design, he acceded to Samsung's request for an unconventional injunction requiring Apple to arrange a publication notice on the homepage of its UK website, in national newspapers (the Financial Times, the Daily Mail and The Guardian) and trade magazines (Mobile Magazine and T3) in the following terms:

'On 9th July 2012 the High Court of Justice of England & Wales ruled that Samsung Electronic (UK) Limited's Galaxy Tablet Computers, namely the Galaxy Tab 10.1, Tab 8.9 and Tab 7.7 do not infringe Apple's registered design No. 00181607-0001. A copy of the full judgment of the High Court is available via the following link: [2012] EWHC 1882 (Pat)'

Such an order had not been made before, being based on an expansive interpretation of art. 15, Council Directive 2004/48 on the enforcement of intellectual property rights (as reflected in para. 26.2, Practice Direction supplementing CPR Part 6) relating to publicity measures, which provides that the court may order for the dissemination and publication of the judgment to be taken at the expense of the infringer. Although that article applies to a case where an intellectual property right has been infringed, the court found that it had a useful purpose for cases where a product alleged to infringe had not. Also, the more frequently and loudly a rights holder had asserted infringement, the more useful it was to have a clear public statement to the contrary. As such, overall fairness demanded that it be made. On the basis of this unusual order Apple was granted permission to appeal, the outcome of which is eagerly awaited.

The Court of Appeal judgment which is the subject of this post arose in relation to the refusal to grant a stay of the contested order pending the substantive appeal. Apple claimed that by complying with the order it would suffer unquantifiable and irreparable harm/invidious and lasting damage to its image, brand and reputation. Not only would it require the company to do something completely out of character and at odds with its public stance, it would also disrupt Apple's ability to control its image, publicity and content thereby distracting consumers. Further, a website notice complying with the order would generate yet more coverage, emphasising the embarrassing and punitive effect of the order upon Apple.

The Court granted the stay pending the substantive appeal and found that the well established general principles which guide the court in deciding whether or not to grant a stay pending appeal had been satisfied. Although a stay was the exception rather than the rule, Apple had put forward solid grounds, which included the highly relevant factor that a refusal would render the appeal wholly or largely nugatory. Further, the balancing exercise required to be undertaken by the court, based on established solid grounds weighing the risk of injustice to each side if a stay is or is not granted, fell in Apple's favour: the risk of inherent injustice in the refusal of a stay was substantially greater than the risk of injustice inherent in granting a stay. It was agreed that the judgment had already been widely publicised and that the order had been perceived by the media as 'a humiliation and a form of public shaming of Apple' (at [38]). Public humiliation had formed no part of Judge Birss's reasoning and 'it was not right to condemn Apple to such a fate' before it had an opportunity to argue its case on appeal. It was also found material that requiring the notice to be placed on Apple's homepage constituted 'a real risk that the significant change in appearance that would result from the inclusion of the notice would cause significant and lasting damage to Apple's image' (at [40]). Although Samsung's concerns that Apple's repeated allegations that the Samsung tablets infringe its registered design were found entirely genuine, the risk of damage was 'substantially reduced by the enormous publicity that the judgment and order have already generated' (at [43]), and in any event, Samsung itself could continue to publicly proclaim its success at the trial before Judge Birss. 

Sir Robin Jacob agreed and encapsulated the issue in one pithy statement:

'One asks the question, is it useful to publicise the decision after what has happened in the press already, to which the answer is plain: not at all' (at [51])

He also noted, obiter, that there was no legal basis that justified the order. Recital 27 of Directive 2004/48/EC provides that the reason for the power to grant such an injunction in favour of a right holder is 'to act as a supplementary deterrent to future infringers and to contribute to the awareness of the public at large, it is useful to publicise decisions in intellectual property cases', which was not what the court was concerned with in this litigation. On the contrary, the court was 'concerned with the worldwide battle between these two grown-up companies' (at [50]).

The Battle of the Stay was therefore won by Apple, but the war is yet to be decided (hopefully in Merpel's and the IPKat's lifetime). This Kat is looking forward to the judgment in the substantive appeal. The policy considerations behind Judge Birss's order appear sound, but a strict application of the law may not offer the same result. Would any of the IPKat readers like to gaze into their crystal balls and hazard a prediction?

Afro-IP blogger Kingsley Egbuonu on a stay of CTM proceedings in Starbucks (UK) Ltd v British Sky Broadcasting Group Plc & Others [2012] EWHC 1842 (Ch) for the IPKat here.