A federal judge ruled late Monday that Samsung could continue to sell smartphones that were ruled to have infringed Apple's patents.
The eight Samsung phones involved in the case, including the popular Galaxy S II, will not be taken off store shelves because there is no evidence that customers were specifically seeking out the features that Samsung copied, the judge indicated.
In August, a jury found that Apple should be awarded more than $1 billion in damages for Samsung's copying of both the design and software features of the iPhone. But U.S. District Judge Lucy Koh said Monday that Apple had not proved a connection between the patent infringement and a loss of iPhone sales.
"Obviously, this is a serious and surprising set-back for Apple and its legal team," said Michael Kasdan, a partner at Amster Rothstein & Ebenstein. "it is extremely unusual in competitor vs. competitor cases for the patentee not to be granted an injunction. Apple will surely appeal."
Apple had claimed that the harm caused by Samsung was "irreparable," noting that the iPhone had lost market share. Apple also said that future iPhone sales would be fewer in number, and that its ecosystem of devices and software like the iPad, Mac and iTunes were also damaged. Judge Koh wasn't buying it.
"While Apple has presented evidence that design, as a general matter, is important to consumers more broadly, Apple simply has not established a sufficient causal nexus between infringement of its design patents and irreparable harm," Judge Koh wrote in her order. "Though evidence that Samsung attempted to copy certain Apple features may offer some limited support for Apple's theory, it does not establish that those features actually drove consumer demand."
The ruling is a major setback for Apple, which hoped to ban eight of the 21 devices found to have infringed its patents and also add Samsung's latest gadgets to the injunction. That includes the mega-popular Samsung Galaxy S III smartphone, which had outsold Apple's iPhone as recently as September. Many of the devices that Apple wanted taken off store shelves are still on the market, but they are all more than a year old -- ancient by smartphone standards.
In August, a California jury issued what amounted to a worst-case scenario for Samsung. The jury found Samsung had infringed several of its patents, including software features like double-tap zooming and scrolling, as well as design features that included hardware style or icon setup. Judge Koh has not yet ruled on other important post-trial proceedings, including whether all of the $1 billion award should be upheld. She must also decide if Samsung's copying was intentional. In that case, damages could be tripled.
Judge Koh did issue a separate ruling on Monday that denied Samsung's request for a new trial based on its claims of juror misconduct. Samsung had claimed that the jury foreman Velvin Hogan had been prejudiced against the company, because he had been sued by Seagate, his former employer. Samsung became the largest investor in Seagate after selling a division to the hard drive maker. in 2011.
"It was always a true uphill battle for Samsung, given the standards for showing that a new trial was warranted," said Kasdan.
Separately, Samsung announced on Tuesday that it was dropping lawsuits against Apple in Europe.
Investors seemed pleased by that development. Shares of Apple, which have plunged more than 26% since hitting an all-time high in September, rose more than 1% in premarket trading Tuesday.