FEDERAL COURT OF AUSTRALIA

Apple Inc. v Samsung Electronics Co. Limited [2011] FCA 1164

SUMMARY

BENNETT J

13 OCTOBER 2011SYDNEY

SUMMARY

1 In accordance with the practice of the Federal Court in some cases of public

interest, importance or complexity, the following summary has been prepared to accompany the

publication of the Court’s reasons for judgment. This summary is intended to assist in

understanding the outcome of this proceeding and is by no means a complete statement of the

conclusions reached by the Court. The only authoritative statement of the Court’s reasons is

that contained in the published reasons for judgment which will be available on the internet at

http://www.fedcourt.gov.au/ together with this summary.

2 The respondents (Samsung) intend to launch in Australia a version of a tablet

device known as the Galaxy Tab 10.1 (the Australian Galaxy Tab 10.1). The applicants

(Apple) have brought proceedings alleging that the Australian Galaxy Tab 10.1 infringes

certain claims in 13 of Apple’s patents, will contravene certain provisions of the Australian

Consumer Law and will involve passing off of Apple’s iPad 2. Samsung denies these

allegations. It has filed a cross-claim seeking to revoke certain of the patent claims relied upon

by Apple and alleging that Apple has infringed certain patents held by Samsung.

3 When the matter is heard on a final basis, the decision to grant or refuse to grant

a permanent injunction restraining the sale of the Australian Galaxy Tab 10.1 will depend on a

determination of Apple and Samsung’s competing claims.

4 Apple seeks an interlocutory injunction restraining Samsung from releasing the

Australian Galaxy Tab 10.1 until Apple’s claims and Samsung’s cross-claim are heard on a

final basis (the interim injunction). Samsung argues that the interim injunction should not be

granted.

5 The primary issue with which this judgment is concerned is whether to grant the

interim injunction. Both parties expressly asked me not to come to a final decision in this

judgment, in part because of a desire to file further evidence. I have not done so.

6 As is commonly the case in applications for an interlocutory injunction, Apple

did not seek to rely on all of the claims it has made against Samsung. This does not prejudice

Apple’s right to rely on these claims at a final hearing.

7 In support of its claim for the interim injunction, Apple initially sought to rely

on the alleged infringement of five patents. Apple no longer seeks to rely on one of these

patents. Samsung has undertaken not to include the features of two of these patents in the

Australian Galaxy Tab 10.1 until a final judgment is delivered or a further order of the Court is

made. Accordingly, Apple’s claim for the interim injunction relates to the alleged infringement

of three claims of two patents:

• Claim 6 of Australian Standard Patent No 2005246219, entitled “Multipoint

touchscreen” (the Touch Screen Patent); and

• Claims 1 and 55 of Australian Standard Patent No 2007286532, entitled “Touch screen

device, method, and graphical user interface for determining commands by applying

heuristics” (the Heuristics Patent).

8 As set out by the High Court in Australian Broadcasting Corporation v O’Neill

(2006) 227 CLR 57, there are two main inquiries to undertake in determining whether to grant

an interim injunction.

9 The first inquiry is whether Apple has made out a “prima facie case” in the

sense that there is a probability that at a final hearing it will be entitled to relief. The

requirement of a “prima facie case” does not require Apple to show that it is more probable than

not that it will succeed at trial. Apple needs to show that it has a sufficient likelihood of

success.

10 The second inquiry, often referred to as the “balance of convenience”, involves a

consideration of whether the inconvenience or injury that Apple would be likely to suffer if an

injunction were refused outweighs or is outweighed by the inconvenience or injury which

Samsung will suffer if the injunction were granted.

11 The Court is required to determine whether to grant the interim injunction within

this legal framework.

12 As to the “prima facie case” inquiry, Apple has explained why it contends that

Samsung has infringed claims of each of the two patents. Samsung has explained why it

denies that the invention of those claims is present in the Australian Galaxy Tab 10.1. It has

also submitted that the claims of the Touch Screen Patent are revocable for want of novelty by

reason of two prior publications, which is relevant to Apple’s “prima facie case” for

infringement of that patent.

13 Despite the force of Samsung’s submissions, I have found that Apple has

established a “prima facie case” for the infringement of claims of both the Touch Screen Patent

and the Heuristics Patent within the O’Neill test. That is, it has established a probability, not

necessarily in a mathematical sense, that it will, on the present evidence, succeed at trial. That

evidence may be supplemented and further submissions advanced, which may explain why

neither party asked me to determine the questions finally.

14 As to the “balance of convenience” inquiry, the parties addressed me on many

different factors. In summary:

• I have found that the detriment to Apple from a refusal to grant the interim injunction

would be significant. So too would be the detriment to Samsung from a grant of the

interim injunction. I have weighed this factor evenly.

• I have found that damages would not be an adequate remedy for either party for the

detriment that they will experience from an adverse outcome. I have weighed this factor

evenly.

• Given that both parties agree that the Australian Galaxy Tab 10.1 would, like other

tablet devices, have a short life cycle, an adverse outcome for either party on the

application for the interim injunction would be equivalent to denying that party some

form of final relief to which it may be found, at the final hearing, to be entitled. In

Apple’s case, I have found that, if I were to refuse the interim injunction but Apple

were to prevail at a final hearing, by that time a final injunction would be of little

practical effect to Apple as the Australian Galaxy Tab 10.1 would be likely to have been

superseded by other Samsung products. This will effectively have deprived Apple of

its statutory rights to prevent the exploitation of a product that infringes the claims of

valid patents. In Samsung’s case, I have found that, if I were to grant the interim

injunction but Samsung were to prevail at a final hearing, by that time the product

would, as the evidence suggests, be “obsolete” and Samsung’s success in being able to

sell the Australian Galaxy Tab 10.1 would be of little practical effect. However, I have

found that Samsung’s unwillingness to be available for a limited early final hearing in

November 2011 contributed to this factor. Accordingly, I have weighed this factor in

Apple’s favour.

• I have given no weight to Apple’s argument that I should preserve what it describes as

the status quo in the Australian tablet market.

• I have found that Samsung’s allegations of delay by Apple in commencing proceedings

were not made out. I have given this factor no weight.

• I have found that from 15 April 2011, when Apple commenced proceedings involving

the Galaxy Tab 10.1 in the United States, Samsung proceeded with its “eyes wide

open” in respect of the launch of the Australian Galaxy Tab 10.1. I have weighed this

factor in favour of Apple, but I have given it slight weight.

• I have found that the existence of a “prima facie case” in respect of two separate,

registered patents strengthens Apple’s overall prima facie case for relief. I have

weighed this factor in favour of Apple.

15 Although I have found that the “balance of convenience” was almost evenly

weighted, there were several factors which favour Apple. Accordingly, I have concluded that

the “balance of convenience” falls in Apple’s favour.

16 Overall, considering that Apple has established a “prima facie case” with respect

to two separate patents and that the “balance of convenience” is marginally in its favour, I am

satisfied that it is appropriate to grant the interim injunction. I propose, again, to give the parties

the opportunity of an early final hearing this year on the issues presented in this application,

without prejudice to their rights to a later final hearing on all other issues.

FEDERAL COURT OF AUSTRALIA

Apple Inc. v Samsung Electronics Co. Limited [2011] FCA 1164

Citation: Apple Inc. v Samsung Electronics Co. Limited [2011] FCA 1164

Parties: APPLE INC. and APPLE PTY LIMITEDACN 002 510 054 v SAMSUNG ELECTRONICS CO. LIMITED and SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED ACN 002 915 648

File number: NSD 1243 of 2011

Judge: BENNETT J

Date of judgment: 13 October 2011

Catchwords: PATENTS – application for interlocutory injunction restraining launch of respondents’ product – alleged infringement of two patents – cross-claim for invalidity of one of the patents

PRACTICE AND PROCEDURE – alleged infringement of patents – application for interlocutory injunction restraining launch of respondents’ product – whether prima facie case – relevance of cross-claim for invalidity of patents to assessment of prima facie case

PRACTICE AND PROCEDURE – application for interlocutory injunction – balance of convenience – relevance of parties’ willingness to move for early final hearing – whether significant detriment – whether damages are an adequate remedy – whether interlocutory relief equivalent to final relief – relevance of preservation of status quo – delay – relevance of “eyes wide open” – strength of prima facie case

Legislation: Patents Act 1990 (Cth) ss 13(1), 18(1)(b)(i)

Cases cited: Alphapharm Pty Ltd v Wyeth (2009) 82 IPR 71 followedAmerican Cyanamid v Ethicon Ltd [1975] AC 396 citedAppleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 citedAustralian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 appliedBeecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623 applied/distinguishedBeecham Group PLC v Colgate-Palmolive Pty Ltd (2004) 64 IPR 45 referred toDudgeon v Thomson (1874) 30 LT 244 citedF Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 referred toGenRx Pty Ltd v Sanofi-Aventis (2007) 73 IPR 502 appliedInterpharma Pty Ltd v Commissioner of Patents (2008) 79 IPR 261 appliedMartin Engineering Co v Trison Holdings Pty Ltd (1988) 81 ALR 543 followedMerck and Co Inc v GenRx Pty Ltd (2006) 70 IPR 286 citedPharmacia Italia SpA v Interpharma Pty Ltd (2005) 67 IPR 397 citedSigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (2009) 81 IPR 339 appliedSmith & Nephew Pty Ltd v Wake Forest University Health Sciences (2009) 82 IPR 467 appliedTidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 appliedWelch Perrin and Company Pty Ltd v Worrel (1961) 106 CLR 588 cited

Date of hearing: 26, 29, 30 September and 4 October 2011

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 245

Counsel for the Applicants: Mr S Burley SC with Mr C Moore and Mr A Fox

Solicitor for the Applicants: Freehills

Counsel for the Respondents: Mr D Catterns QC with Mr N Young QC and Mr N Murray

Solicitor for the Respondents: Blake Dawson

IN THE FEDERAL COURT OF AUSTRALIANEW SOUTH WALES DISTRICT REGISTRYGENERAL DIVISION NSD 1243 OF 2011

BETWEEN: APPLE INC.

First Applicant

APPLE PTY LIMITED ACN 002 510 054Second Applicant

AND: SAMSUNG ELECTRONICS CO. LIMITEDFirst Respondent

SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED ACN 002 915 648Second Respondent

JUDGE: BENNETT JDATE OF ORDER: 13 OCTOBER 2011 WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The reasons for judgment are to remain confidential, in accordance with the existing

confidentiality regime in these proceedings, until further order.

2. The parties are to email proposed orders and any proposed redactions of the reasons for

judgment to the Associate to Bennett J by 9 a.m. on 14 October 2011.

3. The matter be stood over to 11 a.m. on 14 October 2011.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.IN THE FEDERAL COURT OF AUSTRALIANEW SOUTH WALES DISTRICT REGISTRYGENERAL DIVISION NSD 1243 of 2011

BETWEEN: APPLE INC.

First Applicant

APPLE PTY LIMITED ACN 002 510 054Second Applicant

AND: SAMSUNG ELECTRONICS CO. LIMITEDFirst Respondent

SAMSUNG ELECTRONICS AUSTRALIA PTY LIMITED ACN 002 915 648Second Respondent

JUDGE: BENNETT JDATE: 13 OCTOBER 2011PLACE: SYDNEY

REASONS FOR JUDGMENT

1 The first applicant, Apple Inc, is a developer, producer and supplier of

computers, consumer electronics, operating systems and application software, including, in

particular, mobile phones and tablet computers. The second applicant, Apple Australia Pty

Limited, is its Australian subsidiary. I will refer to the applicants, together, as Apple.

2 The first respondent, Samsung Electronics Co Limited, manufactures a range of

consumer products, including mobile phones and tablet computers. The second respondent,

Samsung Electronics Australia Pty Limited, is its Australian subsidiary. I will refer to the

respondents, together, as Samsung.

3 Apple markets and sells a tablet computer known as the iPad. The first

generation version of the iPad was first promoted and sold in Australia in May 2010. The

second generation version (iPad 2) was released in Australia on 25 March 2011.

4 The iPad uses an operating system known as “iOS” (the iOS platform). An

“operating system” is software, consisting of programs and data, that runs on electronic devices

such as tablets, smartphones and computers. The iOS platform is proprietary to Apple and is

only available for use by Apple or under licence from Apple, which means that it only supports

Apps for Apple devices. The iOS platform is also used by other Apple products, specifically,

the “iPhone” and the “iPod touch”.

5 Samsung proposes to launch in Australia a tablet computer known as the

Galaxy Tab 10.1 (the Australian Galaxy Tab 10.1). The parties agree that, amongst other

sales channels, Samsung intends to sell the Australian Galaxy Tab 10.1 through sales channels

operated by the telecommunications carriers Optus and Vodafone, including their retail outlets,

websites and telephone sales teams.

6 The Australian Galaxy Tab 10.1 uses an operating system known as

“Android” (the Android platform). Unlike the iOS platform, the Android platform is “open

source”, which means that it is used by many manufacturers and supports Apps made by many

manufacturers and developers.

7 Apple alleges that the importation, sale and promotion of the Australian Galaxy

Tab 10.1 will infringe certain claims in 13 of its patents. If so, the Australian Galaxy Tab 10.1

infringes Apple’s exclusive rights to exploit its inventions granted in s 13(1) of the Patents Act

1990 (Cth) (the Act). Apple also alleges that the Australian Galaxy Tab 10.1 will contravene

certain provisions of the Australian Consumer Law (ACL) and will involve passing off of the

iPad 2. In general, Samsung denies that the device will infringe Apple’s patents and denies any

contravention of the ACL or passing off of the iPad 2. In addition, Samsung has filed a cross-

claim seeking the revocation of certain of the patent claims relied upon by Apple and alleging

that Apple has infringed certain patents held by Samsung Electronics Co Limited.

8 Apple seeks interlocutory orders restraining the importation, promotion,

offering for supply, supply, offering for sale and sale of the Australian Galaxy Tab 10.1

pending the final hearing of this matter. The issue currently before the Court is whether to

grant Apple’s claim for interlocutory relief.

9 Apple initially sought to rely on the infringement of five patents to support its

claim for interlocutory relief. Apple no longer seeks to rely on Australian Innovation Patent No

2008100011. Samsung has undertaken not to include the features of Australian Standard

Patent No 2008258177 or those of Australian Standard Patent No 2009208103, as identified in

Apple’s statement of facts and contentions, in the Australian Galaxy Tab 10.1 until the

determination of this proceeding or further order of the Court (the Undertakings).

10 Apple’s claim for interlocutory relief relates to the claimed infringement of

certain claims of two patents:

• Claim 6 of Australian Standard Patent No 2005246219, entitled “Multipoint

touchscreen” (the Touch Screen Patent); and

• Claims 1 and 55 of Australian Standard Patent No 2007286532, entitled “Touch screen

device, method, and graphical user interface for determining commands by applying

heuristics” (the Heuristics Patent);

(together, the Interlocutory Patents).

11 Samsung does not accept that the Australian Galaxy Tab 10.1 will infringe the

claims of the Interlocutory Patents. For the purposes of the interlocutory application, Samsung

relies on the invalidity of claims 1 and 55 of the Touch Screen Patent on the ground of want of

novelty (s 18(1)(b)(i) of the Act). Samsung accepts, for the purposes of the interlocutory

application only, that if there is infringement, there is a prima facie case that the requirements of

s 117(2)(b) of the Act will be satisfied.

12 These reasons are structured as follows:

BACKGROUND TO THE INTERLOCUTORY APPLICATION[13]

L E G A L P R I N C I P L E S T O B E A P P L I E D[20]

P r i m a f a c i e c a s e[21]

ASSESSMENT OF WHETHER THERE IS A PRIMA CASE FOR I N FR I N GE ME N T OF T HE I N T E R L OC U T OR Y PA T E N T S

[37]

T h e T o u c h S c r e e n P a t e n t[37]

I n f r i n g e m e n t o f c l a i m 6[40]

N o v e l t y o f c l a i m 6[59]

T h e L e e p e r A r t i c l e[61]

T h e C a p a c i t a n c e I n t e g e r[65]

T h e M u l t i p l e T o u c h I n t e g e r[72]

C o n s i d e r a t i o n[74]

T h e M u l l i g a n P a t e n t[76]

S a m s u n g ’ s c o n t e n t i o n s[78]

A p p l e ’ s c o n t e n t i o n s[83]

C o n s i d e r a t i o n[86]

T h e H e u r i s t i c s P a t e n t[89]

A p p l e ’ s c o n t e n t i o n s[101]

S a m s u n g ’ s c o n t e n t i o n s[110]

C o n s i d e r a t i o n[121]

B A L A N C E O F C O N V E N I E N C E[128]

S i g n i f i c a n t d e t r i m e n t[149]

C o n s i d e r a t i o n o f A p p l e ’ s d e t r i m e n t[149]

C o n s i d e r a t i o n o f S a m s u n g ’ s d e t r i m e n t[162]

C o m p a r i s o n o f d e t r i m e n t[174]

A p p r o p r i a t e n e s s o f d a m a g e s a s a r e m e d y[178]

Appropriateness of damages as a remedy for the Apple Harm[181]

Appropriateness of damages as a remedy for the Samsung Harm[195]

Comparison of the extent to which damages are an inadequate remedy for t h e A p p l e H a r m a n d t h e S a m s u n g H a r m

[198]

D imin u t ion of th e b en ef it to b e ob tain ed b y f in al relief[203]

A p p l e[204]

S a m s u n g[208]

C o m p a r i s o n[213]

Is there a status quo in the Australian tablet market that requires p r e s e r v a t i o n ?

[214]

D i d A p p l e d e l a y ?[219]

D i d S a m s u n g p r o c e e d w i t h i t s “ e y e s w i d e o p e n ” ?[226]

S t r e n g t h o f p r i m a f a c i e c a s e[238]

C o n c l u s i o n o n b a l a n c e o f c o n v e n i e n c e[240]

C O N C L U S I O N[244]

BACKGROUND TO THE INTERLOCUTORY APPLICATION

13 On 28 July 2011, the Court made ex parte orders allowing the short service and

substituted service of Samsung Electronics Co Limited. Apple’s originating application sought

interlocutory orders restraining the launch in Australia of the Galaxy Tab 10.1. The originating

application made reference to 10 patents, including the Touch Screen Patent but not the

Heuristics Patent. It did not stipulate which of those 10 patents were relevant for Apple’s claim

for interlocutory relief.

14 On 1 August 2011, Samsung informed the Court that the version of the Galaxy

Tab 10.1 which Apple sought to restrain from launch in Australia was not the version that

Samsung proposed to launch in Australia. On that occasion, Samsung provided undertakings

to the Court that prevented it from selling this earlier version of the Galaxy Tab 10.1. The

undertakings also required Samsung to provide Apple’s solicitors with samples of the

Australian Galaxy Tab 10.1 for the purpose of review and analysis at least 7 days prior to the

date of intended distribution to sales channels. This occurred on 25 August 2011.

15 At a directions hearing on 29 August 2011, the Court listed Apple’s

interlocutory application for hearing on 26 and 29 September 2011. On that occasion, counsel

for Samsung indicated to the Court that Samsung did not intend to launch the Australian

Galaxy Tab 10.1 prior to 30 September 2011.

16 On 2 September 2011, Apple filed a document entitled “List of Patents and

Claims Infringed by the Australian Galaxy Tab 10.1 Product (for Interlocutory Hearing)”,

which listed five patents, including the Heuristics Patent and the Touch Screen Patent. The

document also listed the claims relied upon for the interlocutory hearing, although these were

greater in number than the claims the subject of the present application.

17 On 29 September 2011, counsel for Samsung proffered an undertaking that

Samsung would not launch the Australian Galaxy Tab 10.1 until after the Court delivered

judgment on Apple’s claim for interlocutory relief.

18 The hearing of the interlocutory application took place on 26, 29, 30 September

and 4 October.

19 Both parties have proceeded on the basis that there should be no final

determination of any contested issue in the proceedings. There are contested facts, in the sense

of the context of the disclosures of the Interlocutory Patents and of the prior publications relied

on for anticipation. Each of the parties is likely to wish to adduce further evidence and make

additional submissions, in particular on questions of the validity of the Touch Screen Patent.

LEGAL PRINCIPLES TO BE APPLIED

20 The parties agree that the relevant considerations in determining whether to grant

an interlocutory injunction are as set out by Gummow and Hayne JJ in Australian

Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], quoting Beecham Group Ltd

v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623 (per Kitto, Taylor, Menzies

and Owen JJ):

The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief… The second inquiry is… whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

Prima facie case

21 It is made clear in O’Neill that a prima facie case is one in which there is a

probability that at trial the applicant will be held entitled to relief. The inquiry of whether there

exists a “prima facie case” does not require Apple to show that it is more probable than not that

it will succeed at trial. In O’Neill, Gummow and Hayne JJ said at [65] that ‘it is sufficient that

the plaintiff show a sufficient likelihood of success to justify in the circumstances the

preservation of the status quo pending the trial’. Their Honours observed, quoting Beecham at

622, that ‘how strong the probability needs to be depends, no doubt, upon the nature of the

rights [the plaintiff] asserts and the practical consequences likely to flow from the order he

seeks’. Their Honours emphasised at [71] that this is the “governing consideration”. This is

particularly relevant where the grant or refusal of an interlocutory injunction would, in effect,

dispose of the action finally in favour of whichever party succeeds on that application (at [72]),

which both Apple and Samsung contend is the case here.

22 The parties agree that the principles outlined in O’Neill are to be applied in

determining whether there is a prima facie case. However, bearing in mind that Samsung has

filed a cross-claim alleging, inter alia, the invalidity of the Touch Screen Patent, the parties are

in dispute as to the relevance of the existence and strength of the case for invalidity of the

Touch Screen Patent to the assessment of the likelihood of Apple being successful at a final

hearing in its case on infringement of that patent.

23 Samsung relies on statements made by the High Court in Beecham, which

concerned an application for an interlocutory injunction in a patent case. Their Honours said at

623:

[Whether the plaintiff has made out a prima facie entitlement to relief] in the present case is not complicated by the special considerations which generally arise in a patent action where there is a substantial issue to be tried as to the validity of the patent. In such an action the plaintiff's prima facie case must be a strong one so far as the question of validity is concerned, for he asserts a monopoly and must give more proof of the right he claims than is afforded by the mere granting of the patent… The general practice in that kind of case has long been to refuse an interlocutory injunction unless either the patent has already been judicially held to be valid or it has stood unchallenged for a long period… Even if the patent is an old one — which for this purpose is generally taken to mean more than six years old — it has been said that an interlocutory injunction will generally be refused provided that the defendant shows by evidence "some ground" for supposing that he has a chance of successfully disputing the validity of the patent at the trial… This should be read, however, with Sir George Jessel's statement in Dudgeon v Thomson (1874) 30 LT 244 which divides into three classes the cases in which an injunction may be granted before the hearing in such a case. They are: (1) cases where the patent is an old one and the patentee has been in long and undisturbed enjoyment of it; (2) cases where its validity has been established elsewhere and the court sees no reason to doubt the propriety of the result; and (3) cases where the conduct of the defendant is such as to enable the court to say that, as against the defendant himself, there is no reason to doubt the validity of the patent.

24 Samsung contends that Beecham establishes the proposition that where, on an

application for an interlocutory injunction, the question of the validity of the patent has been

strongly put in issue, the patentee must give ‘more proof of the right he claims than is afforded

by the mere granting of the patent’ (at 622).

25 However, as noted by Jagot J in Alphapharm Pty Ltd v Wyeth (2009) 82 IPR 71

at [34], this aspect of Beecham was distinguished by Gummow J in Martin Engineering Co v

Trison Holdings Pty Ltd (1988) 81 ALR 543. Justice Gummow observed at 549 that the cases

referred to in Beecham were under older United Kingdom legislation in which the standards of

validity required to obtain the registration of a patent were not as stringent as the Australian

standards and concluded at 550 that the law on interlocutory relief in patent cases had since

been brought into line with changes in the underlying substantive law.

26 Justice Jagot noted in Alphapharm at [36] that Gummow J’s analysis in Martin

Engineering has been applied by Moore J in Merck and Co Inc v GenRx Pty Ltd (2006) 70 IPR

286, Gyles J in GenRx Pty Ltd v Sanofi-Aventis (2007) 73 IPR 502, Jessup J in Interpharma

Pty Ltd v Commissioner of Patents (2008) 79 IPR 261 and Sundberg J in Sigma

Pharmaceuticals (Australia) Pty Ltd v Wyeth (2009) 81 IPR 339. It is worth noting that, in

GenRX, Gyles J observed at [5] that any reaffirmation of Beecham following O’Neill lies in its

explanation of what is involved in establishing a prima facie case, rather than any consideration

of the application of these principles to patent infringement.

27 Faced with this difficulty, Samsung points to observations made by Emmett J in

F Hoffman-La Roche AG v New England Biolabs Inc (2000) 99 FCR 56 at [48]-[57], which,

Samsung contends, stand for the propositions that, first, the Patent Office test for acceptance

and grant of a patent is well short of the stringency suggested in Martin Engineering and,

secondly, the mere fact that a patent is granted, even over opposition, is no guarantee of its

validity. A similar submission was considered by Gyles J in GenRX. His Honour stated at [5]

that he did not necessarily agree with Hoffman-La Roche but said that, in any event, Hoffman-

La Roche does not detract from the proposition that the Commissioner is charged with the

responsibility of examining the validity of a patent before grant, including any relevant question

of lack of novelty.

28 Prima facie, Apple’s granted patents are valid by reason of their grant and

registration. This presumption can be overcome by establishing that the patent is not valid, for

example for want of novelty, as is asserted in this application for the claim of the Touch Screen

Patent relied on for infringement. Samsung effectively submits that the presumption should be

disregarded because a patent is only rejected for grant if it is shown during the course of

examination that it is “practically certain” that the patent is invalid (Hoffman-La Roche). I

accept, of course, that the mere grant of a patent is not sufficient of itself to maintain validity

where that is challenged, but there is a degree of stringency specified in the Act which is also

relevant (Martin Engineering at 549-550). Examination, the opportunity for opposition and

then the grant and registration of that granted patent are part of a system whereby a granted

patent is prima facie evidence of validity. That presumption can be displaced but it should not

be ignored where the patentee applies for an injunction to restrain exploitation of the invention

the subject of the patent. That is part of the nature of the patent right and forms part of a

patentee’s prima facie case.

29 As in O’Neill¸ which was a defamation case, ‘there is no doubt about the legal

right which [Apple] seeks to vindicate in the action, although the existence of that right is

disputed’ (at [2] per Gleeson CJ and Crennan J). Apple’s case is for infringement of a valid

patent. Apple will ultimately have to succeed both on infringement and validity. Where both

infringement and validity are in contest, if mathematical probability of success were the sole

criterion, Apple would need to show a greater probability of succeeding on each of those issues

in order to demonstrate a probability of success given that it is necessary to succeed on both.

However, it is made clear in O’Neill, in particular by reference to Beecham, that, in the case of a

granted patent, other factors arise which may affect the strength of probability that it is

necessary to establish. Justices Gummow and Hayne at [68] cited the remarks of Lord Diplock

in American Cyanamid v Ethicon Ltd [1975] AC 396 to the effect that it was not necessary to

demonstrate more than a 50 per cent chance of ultimate success in order to establish a prima

facie case of patent infringement. Further, their Honours observed at [69] that Beecham and

American Cyanamid were both patent infringement cases. Their Honours also noted that, in

Beecham, Kitto J stated that it was not necessary for a plaintiff to show that it was more

probable than not that it would succeed at trial.

30 Apple submits that, as considerable significance is to be attributed to the grant of

a patent, it is for Samsung to show that invalidity is a triable question. Apple contends that, if a

patentee is able to show that there is a prima facie case of patent infringement, then the existence

of a triable question on validity is unlikely to displace that prima facie case. In Interpharma,

Jessup J concluded that each of the bases of invalidity relied upon in that case was not

sufficiently strong as to require the conclusion that there was no prima facie case of

infringement. Apple relies on the following statement of Jessup J at [17]:

In a patent case, the fact of registration constitutes prima facie evidence of validity… It has been said that it is for the respondent to show that want of validity is a triable question... This seems clear enough, but, in my opinion, the analysis needs to be taken a step further. Is it sufficient that the respondent does show a triable question on validity? In my view, if that is as far as the respondent goes, then, assuming always that the applicant has shown a triable issue on infringement, absent questions of validity, the conclusion would remain that the latter had a triable question. That is to say, as a matter of analysis, unless the case for invalidity is sufficiently strong (at the provisional level) to qualify the conclusion that, overall, the applicant has a serious question, or a probability of success, the court should move to consider the adequacy of damages, the balance of convenience and other discretionary matters. It is the applicant’s title to interlocutory relief which is under consideration, and the bottom-line question, as it were, is whether the applicant has a serious question, or a probability of success, not whether the respondent does in relation to some point of defence raised or foreshadowed.

31 This statement was adopted by Sundberg J in Sigma at [16]. In Alphapharm,

Jagot J considered the competing forces of [17] of Interpharma and the passage in Beecham

which I cited at [23] above. After noting that this aspect of the approach in Beecham had been

‘consistently distinguished’, her Honour adopted the approach in Interpharma (at [37]).

32 I will adopt the approach set out in [17] of Interpharma, not only for reasons of

comity but also because, with respect, I agree with it.

33 Justice Jessup concluded that, as a matter of analysis, it is the applicant’s

entitlement to interlocutory relief that is under consideration and that, where the applicant has

shown a probability of success, in the relevant sense, on infringement, questions of validity

need to be sufficiently strong to qualify the conclusion that an applicant has passed that hurdle.

The Court should then, his Honour said, move to consider the adequacy of damages, balance of

convenience and other discretionary matters. As expressed in [17], his Honour was

considering invalidity as a defence and that it was for a respondent to show that it was a triable

question. His Honour did not make specific reference to the fact that an applicant must

establish infringement of a valid claim. However, it is clear, in my opinion, that Jessup J had

that clearly in mind, having noted at the commencement of [17] that registration of the patent is

prima facie evidence of validity. His Honour was not, as I read his reasons, stating a universal

“test” that a triable issue of invalidity that is not “sufficiently strong” is always insufficient to

overcome a prima facie case on infringement. However, to the extent that his Honour was

saying that it is necessary to assess the strength of each of the infringement and validity cases

bearing in mind that the applicant has a registered patent, then such an approach is apposite

where those matters are in issue. This applies both to the establishment of a prima facie case

and to circumstances relevant to the question whether it is in the interests of justice to make the

interlocutory order sought.

34 This case is not the same as Smith & Nephew Pty Ltd v Wake Forest University

Health Sciences (2009) 82 IPR 467, in which the parties agreed that if the claim relied on for

infringement was, as a matter of construction, characterised as a mere collocation rather than as

a combination, the claim was invalid and no serious question of infringement would arise. In

that case, the parties accepted that the Full Court was able to determine that question without

resort to the evidence of a skilled reader. Construction was wholly determined by looking at

the “language in the claims” to determine whether one of the integers of the claim, the bag in

which the apparatus was packaged, interacted with the other integers such as to be part of a true

combination (at [35]). The Full Court did so, found that it had been demonstrated that the claim

was invalid, and accordingly, no serious question of infringement arose.

35 In this case, the asserted invalidity does not depend simply on the “language of

the claim”. Here, the asserted invalidity concerns the understanding of the claim by a skilled

reader and the nature of the disclosure of two prior publications to such a skilled reader. Those

matters are not agreed.

36 In my view, if Apple establishes a prima facie case of infringement in the

O’Neill sense, having already established a prima facie case of validity by reason of registration

of the patents, it will be necessary to ascertain whether Samsung’s case on invalidity is

sufficiently strong such that, if the evidence remains as it is, there is no longer a sufficient

likelihood that at trial Apple will be entitled to relief for infringement of valid patent claims so

as to justify the maintenance of the status quo. That would require Samsung to be restrained

from selling the Australian Galaxy Tab 10.1.

ASSESSMENT OF WHETHER THERE IS A PRIMA CASE FOR INFRINGEMENT OF THE INTERLOCUTORY PATENTS

The Touch Screen Patent

37 The specification of the Touch Screen Patent explains that there are several types

of touch screen technologies including resistive, capacitive, infra-red, surface acoustic wave,

electro-magnetic and near-field imaging. In capacitive technologies, the touch panel is coated

with a material that stores electrical charge. When the panel is touched, a small amount of

charge is drawn to the point of contact. Circuits located at each corner of the panel measure the

charge and send the information to the controller for processing. One problem identified in the

background of the invention is that all the existing technologies were only capable of reporting

a single point, even when multiple objects are placed on the sensing surface. As the

specification states, existing technologies lacked the ability to track multiple points of contact

simultaneously. This problem arises particularly in tablet PCs when one hand is used to hold

the tablet and the other is used to generate touch events.

38 Following correspondence with the Commissioner of Patents on 30 January

2009 referring, inter alia, to a prior art reference nominated as D1 (US Patent No 5825352 to

Bisset et al), Apple’s patent attorneys proposed amendments to, relevantly, claim 6 and to the

consistory clause for that claim in the body of the specification. Claim 6 is the claim relied on

for infringement.

39 Two substantive amendments were made, including the addition of the last

integer of claim 6, as emphasised (the Dispose Integer):

A touch panel having a transparent capacitive sensing medium configured to detect multiple touches or near touches that occur at a same time and at distinct locations in a plane of the touch panel and to produce distinct signals representative of a location of the touches on the plane of the touch panel for each of the multiple touches, the transparent capacitive sensing medium comprising:

a first layer having a plurality of lines that are electrically isolated from one another and formed from a transparent conductive material; and

a second layer spatially separated from the first layer and having a plurality of lines that are electrically isolated from one another and formed from a transparent conductive material, the second conductive lines being positioned transverse to the first conductive lines, the intersection of transverse lines being positioned at different locations in the plane of the touch panel, each of the conductive lines being operatively coupled to capacitive monitoring circuitry,

wherein the first layer and the second layer are disposed on two sides of an optically transmissive member.

Infringement of claim 6

40 Samsung denies infringement of the Touch Screen Patent. Relevantly, it

contends that the Australian Galaxy Tab 10.1 does not include a touch panel having, among

other things, a first layer of conductive lines and a second layer of conductive lines, wherein the

first layer is disposed on the first side of an optically transmissive member and the second layer

is disposed on the second side of the same optically transmissive layer. Samsung says that this

is the requirement of, and an essential integer of, claim 6 of the Touch Screen Patent.

41 The construction of the claim is a matter for the Court, putting itself in the

position of the skilled reader in the art as at the priority date.

42 Apple adduced evidence from Professor Cairns, an Associate Professor in

Mechanical and Aerospace Engineering. Professor Cairns does not understand there to be any

technical meaning for the word “dispose” in the context of the claim.

43 Apple submits that, in the Dispose Integer, ‘disposed’ refers to the relative

placement of the layers, not to the methods of their manufacture. Apple says that it is used in

the sense of “positioned”, which is supported by use of the word in the specification. It points

out that the word ‘disposed’, as relevantly defined in the Macquarie Dictionary (3rd ed,

Macquarie, 2003), means ‘to put in a particular or the proper order or arrangement; adjust

by arranging the parts’.

44 Apple contends that the words ‘disposed on two sides of an optically

transmissive member’ should not be read down to mean “directly applied to” the optically

transmissive member. Apple says that the specification does not support this. Apple contends

that to add such a requirement to the Dispose Integer as Samsung does in its construction, or to

restrict the method of manufacture of the layers, would be to apply a gloss, impermissibly, to

the meaning of the claim which is not justified (Welch Perrin and Company Pty Ltd v Worrel

(1961) 106 CLR 588 at 610).

45 Apple submits that claim 6 encompasses a first layer placed on the side of an

optically transmissive member and a second layer placed on the side of a second optically

transmissive member. That is, there may be more than one optically transmissive layer that is

part of the optically transmissive member.

46 Apple further submits that the Dispose Integer also encompasses the two layers

being present on opposite sides of, but not directly applied to, the optically transmissive

member; that is, there may be an additional layer between one of the layers and the optically

transmissive member.

47 Apple contends that an optically transmissive member does not equate to an

optically transmissive layer or a layer of optically transmissive material. That is, the optically

transmissive member may be made up of more than one optically transmissive layers or

substrates. Apple points out that the two layers of the Australian Galaxy Tab 10.1, XXXXX

XXXXXXXX, are both optically active and together form an optically transmissive member.

Apple says that it must follow that the first and second layers of the Australian Galaxy Tab

10.1 are disposed on two sides of an optically transmissive member, XXXXXXXXXXXXX

XXXXXXXXXXXXX.

48 Samsung contends that the Dispose Integer requires that the first and second

layer be disposed or placed on the opposite sides of the same optically transmissive member.

That is, that the Dispose Integer is limited to the situation where a single optically clear

substrate has conductive coating directly applied to each side of that single substrate.

49 The Dispose Integer requires that the layers are disposed on two sides of ‘an

optically transmissive member’. This is consistent with a single optically transmissive layer.

However, Apple draws attention to the whole of the specification and draws support for a

broader interpretation of the Dispose Integer by reference, in particular, to figure 10 of the

Touch Screen Patent. That figure depicts a first and second layer not applied to the two sides of

the same optically transmissive layer but encompassing the ‘sandwich’, that is, a multi-substrate

structure, which the parties agree is the structure of the Australian Galaxy Tab 10.1.

50 Apple says that, together, these layers constitute an optically transmissive

member. Samsung counters this by referring not only to the singular reference to member but

also to the asserted use of the word “dispose” to refer to the way in which the layers are

applied. The question between the parties is whether ‘disposed on two sides of an optically

transmissive member’ allows the two layers to be located on either side of the member that

could be made up of any number of optically transmissive layers.

51 Samsung draws attention to certain parts of the specification. They are (with my

emphasis added):

• ‘In most cases, the electrode layer… is disposed on a glass member… using suitable

transparent conductive material and patterning techniques such as ITO and printing.’

ITO is the transparent conductive material and printing is a patterning technique.

• ‘Although the electrode layer… is typically patterned on the glass member… it should

be noted that in some cases it may be alternatively or additionally patterned on the

protective cover sheet.’

• ‘The lines… are generally disposed on one or more optical transmissive members…

formed from a clear material such as glass or plastic. By way of example, the lines…

may be placed on opposing sides of the same member… or they may be placed on

different members… The lines… may be placed on the member… using any suitable

patterning technique including, for example, deposition, etching, printing and the like.’

• ‘The lines in order to form semi-transparent conductors on glass, film or plastic, may

be patterned with an ITO material. This is generally accomplished by depositing an

ITO layer over the substrate surface and then by etching away portions of the ITO

layer in order to form the lines.’

• ‘The sensor layer is typically disposed on the glass member… using suitable

transparent conductive materials and patterning techniques. In some cases, it may be

necessary to coat the sensor layer… with material of similar refractive index to

improve the visual appearance, i.e., make more uniform.’

• ‘The touch screen… also includes a transparent driving layer… that is positioned over

a second glass member… The second glass member… is positioned over the first

glass member… The sensing layer… is therefore sandwiched between the first and

second glass members.’

• ‘Like the sensing layer… the driving layer… is disposed on the glass member using

suitable materials and patterning techniques.’

• ‘Although the sensing layer is typically patterned on the first glass member, it should

be noted that in some cases it may be alternatively or additionally patterned on the

second glass member.’

Samsung relies upon these parts of the specification to link the disposition with the means of its

application on either side of a single optically active member such as glass.

52 Samsung says that the Touch Screen Patent describes and distinguishes between

two different arrangements:

1. the screen where the two layers are respectively disposed on two different transparent

conductive materials; and

2. a screen where the two layers are disposed on the same glass member.

53 In support of its construction, Samsung adduced evidence from Mr Phares, an

electrical engineer and consultant in the field of touch screens. He says that, in his opinion,

claim 6 claims a device comprising a single optically clear substrate with patterned, transparent

conductive coatings directly applied to each side of the single substrate, as the two essential

functional layers of the transparent capacitive sensing medium.

54 It is not clear, however, that Mr Phares’ evidence was directed to how a skilled

reader would read the Touch Screen Patent. He explains that his own opinion was affected by

his view that double-sided direct coating of a single optically clear substrate is the most efficient

way to produce a “stack” of functional layers, and that magnetron sputtering of ITO, a direct

method of producing a transparent conductive coating, is the preferred and commercially most

refined method for producing such coatings today. He says that he believes that Apple

intended to claim in claim 6 a single optically clear substrate with conductive coatings directly

applied to each side of the single substrate.

55 However, an efficient or commercially beneficial manufacturing process is not

part of the specification or of the claims. Apple may have claimed a form of touch screen for

reasons unknown to Mr Phares. Mr Phares’ opinion is based, at least in part, on his own

understanding of manufacturing and commercial matters. It has not been shown that these

factors brought to bear by Mr Phares on his construction of the claim have any relevance to its

proper construction. It is not apparent that he has construed the claim as the Court must do.

56 Further, in coming to his conclusion, Mr Phares says that if a multi-substrate

structure was contemplated by Apple, it would likely have been disclosed in the specification,

which it was not. Apple points out that figure 10 of the Touch Screen Patent discloses such a

multi-substrate structure.

57 Apple’s submission, in summary, is that:

• Samsung’s construction should be rejected.

• In any event, the structure of the touch screen of the Australian Galaxy Tab 10.1 comes

within Samsung’s restrictive interpretation of Claim 1, in that the first and second layers

are directly applied to an optically transmissive member.

• To the extent that Samsung relies upon a construction based upon the whole of the

Touch Screen Patent to submit that claim 6 was clearly intended to encompass only a

single optically clear substrate with conductive coatings directly applied to each side of

the single substrate, figure 10 of the specification, which describes a multi-substrate

structure, argues against such a narrow compass.

• The matters on which Samsung relies in the body of the specification could, in each

case, be said to be non-restrictive, as suggested by words such as ‘typically’, ‘includes’,

‘alternatively’, ‘additionally’, ‘generally’ and ‘in most cases’.

58 Apple’s construction is that claim 6 is not restricted to a claim whereby the first

layer of conductive lines and the second layer of conductive lines are disposed on the first and

second sides of the same optically transmissive member. Taking all of the above matters into

account, Apple has made out a prima facie case for infringement on the basis that, if Apple’s

construction is accepted, claim 6 is infringed by the Australian Galaxy Tab 10.1.

Novelty of claim 6

59 In the alternative to its contentions as to the Dispose Integer, Samsung submits

that, if claim 6 is construed in the manner proposed by Apple, it is invalid for want of novelty.

Samsung’s primary support for this contention is a prior publication entitled “Integration of a

Clear Capacitive Touch Screen with a 1/8-VGA FSTN-LCD to form and LCD-based Touch-

Pad” by AK Leeper (the Leeper Article). Samsung also relies on an international patent, WO

2004/061808, the inventors of which are Mulligan et al (the Mulligan Patent).

60 The comments of the parties as to the relevant disclosures for the purpose of the

interlocutory application of the Leeper Article and the Mulligan Patent are attached as Annexure

A to these reasons.

The Leeper Article

61 There is no dispute that the Leeper Article constitutes a prior publication for the

purposes of an assessment of novelty. Samsung points to the passage in the Leeper Article that

says:

The Synaptics ClearPad is based on the same principles of operation as a standard Synaptics TouchPad… The touch sensor is comprised of two arrays of sensor traces perpendicular to one another, separated by an insulating material, and covered by insulating surface material. To form a clear sensor, the traces are made of a clear conductor such as indium tin oxide (ITO) and the insulation layers consist of optically clear adhesives and clear polyethylene terephthalate (PET), a plastic resin and a form of polyester. Each trace possesses a capacitance to free space that can be measured by the controlling circuitry.

62 Samsung contends that this passage, together with the figure that accompanies

it, makes it clear that each layer is disposed on a different optically transmissive member in the

same sandwich formation as that encompassed within Apple’s construction of claim 6.

63 For the purpose of the interlocutory application, Apple did not make

submissions as to whether or not the Dispose Integer, on its construction, is disclosed in the

Leeper Article. For present purposes, it can be accepted that it is. Rather, the argument centred

on whether certain other integers of claim 6 are disclosed in the Leeper Article, in particular:

• ‘A touch panel having a transparent capacitive sensing medium configured to detect

multiple touches or near touches that occur at a same time and at distinct locations in a

plane of the touch panel’ (the Capacitance Integer); and

• ‘To produce distinct signals representative of a location of the touches on the plane of

the touch panel for each of the multiple touches’ (the Multiple Touch Integer).

64 Samsung contends that the Capacitance Integer and the Multiple Touch Integer

are disclosed in the Leeper Article. Apple says that they are not. If Apple is correct, then the

Leeper Article would not anticipate claim 6 of the Touch Screen Patent, as it would not have

disclosed all of the essential integers of that claim.

The Capacitance Integer

65 Apple relies on Mr Phares’ evidence. Mr Phares points out that commercially

available touch screens operate on many different physical principles. He differentiates

between “resistive” touch screens and “capacitive” or “surface capacitive” (also known as

SCAP) touch screens, as distinct from the “transparent capacitive sensing medium” of the

Touch Screen Patent. Mr Phares describes another type of capacitive touch screen called

“projected capacitive” (also known as PCAP) which, he says, is a popular name for the touch

technology described and claimed in the Touch Screen Patent.

66 Mr Phares defines “capacitance” as the ability of electrical conductors in

proximity to each other to store electrical charge. He says that projected capacitive touch

screens are quite different from the similarly named surface capacitive type. According to Mr

Phares, self capacitance means the capacitance of a given electrode to a common reference

point; the self capacitance sensing type is thus made up of a large array of individual sensing

nodes. Mr Phares says that touch detection and location is thus performed by touching the

array in some location with one or more fingers, or with conductive styli of a particular type.

67 On the other hand, mutual capacitance touch screens are constructed with

electrode arrays similar to those described in the Touch Screen Patent. Mr Phares explains that:

The most common arrangement is in an array of separated electrodes, parallel to one axis of the display in one plane and a similar array orthogonal to the first array in a second plane. The two planes are separated by a small distance – usually less than 1 mm. In a mutual capacitance type touchscreen, touch detection and location is performed by measuring the capacitance between a first electrode in the first plane and all the electrodes in the second plane, one at a time; this is followed by a similar sequence between the second electrode in the first plane and all of the electrodes in the second plane. This process continues until the capacitance between every electrode in the first plane and every electrode in the second plane has been measured.

68 Samsung points out that claim 6 does not require mutual capacitance in terms.

Mr Phares says that mutual capacitance touch screens are ‘constructed with electrode arrays

similar to those described in the [Touch Screen Patent]’ and that the intersections in that patent

are ‘the capacitive sensing nodes of the mutual capacitance type’. He notes that the Touch

Screen Patent includes some claims which relate to self capacitance and some which relate to

mutual capacitance. He notes that the specification of the Touch Screen Patent teaches various

methods to implement the two functional layers necessary for a transparent capacitive sensing

medium. He says that, in his view, ‘claims 6, 7 and 8 of the [Touch Screen Patent] relate to the

second type of capacitive touchscreen’, that is, the mutual capacitance type.

69 The Leeper Article states that:

Each trace possesses a capacitance to free space that can be measured by the controlling circuitry. When a finger is touching the top surface, it is very close (about 0.2 mm) to the sensor traces. The presence of a finger changes the capacitance of the nearest traces by about 10%.

70 Another reference to capacitance is:

Because finger presence is computed by changes in trace array capacitances, the controller is capable of computing finger pressure as an increase in the finger contact area (thereby adding capacitance to more traces), as well as detecting the presence of multiple fingers.

71 Accepting for present purposes that the skilled reader understands claim 6 to

refer to mutual capacitance, Apple contends that Samsung has not established that the Leeper

article discloses the same integer. Apple submits that Samsung has not established any more

than what it describes as “a 50/50 chance” of the Leeper Article disclosing the Capacitance

Integer.

The Multiple Touch Integer

72 Apple raises other aspects of the Leeper Article which it says reinforce a

conclusion that it is not concerned with multiple touches or near touches of the screen at distinct

locations of the plane as required by claim 6, but rather concerns and discloses finger pressure

by one or more fingers in a contact area. Apple submits that the Leeper Article does not

disclose the “distinct feature” of the Multiple Touch Integer.

73 Samsung points to the statement in the Leeper Article that ‘the controller is

capable of computing finger pressure as an increase in the finger contact area (thereby adding

capacitance to more traces), as well as detecting the presence of multiple fingers’. Samsung

also relies upon the statement that ‘each trace possesses a capacitance to free space that can be

measured by the controlling circuitry’. Samsung points out that this is not limited to any

particular location and so the function of measuring capacitance, as measured by the controlling

circuitry, is not limited to multiple fingers on one spot. The Leeper Article states that ‘the

presence of a finger changes the capacitance of the nearest traces by about 10%’. Samsung

says that there is an unqualified disclosure of the detection of the presence of multiple fingers,

which is not necessarily limited to multiple fingers causing a finger pressure increase as

submitted by Apple. Rather, Samsung says, the Leeper Article describes a system where the

controlling circuitry can measure capacitance traces from each trace and the capacitance of the

nearest trace is changed by about 10% by the presence of a finger. It follows, according to

Samsung that, read in context, the detection of the presence of multiple fingers embraces both

those fingers at a distinct location and where they are confined to a single location.

Consideration

74 The evidence available to understand the disclosures of claim 6 and the Leeper

Article is not complete. From Mr Phares’ affidavit, it is not clear whether the person of

ordinary skill would necessarily read claim 6 as requiring mutual capacitance. There is no

evidence from Mr Phares or any skilled reader as to the disclosures of the Leeper Article. The

competing submissions of the parties suggest that they do not agree on the disclosures. If

Apple is correct, the Leeper Article does not constitute an anticipation of claim 6. If Samsung

is correct, claim 6 is invalid for want of novelty. Both parties have advanced cogent

submissions in support of their respective positions.

75 Samsung has established a prima facie case for the want of novelty of claim 6 of

the Touch Screen Patent. However, within the analysis referred to at [32]-[36] above,

Samsung’s case on invalidity by reason of the disclosures in the Leeper Article does not alter

the conclusion that Apple has a prima facie case for relief for infringement of claim 6 within the

test in O’Neill.

The Mulligan Patent

76 The parties agree that the Mulligan Patent is to be understood as a “whole of

contents document” as part of the “prior art base” within the meaning of paragraph (b)(ii) in

Schedule 1 of the Act. That part of the definition states that “prior art base” means:

in relation to deciding whether an invention is or is not novel:

(ii) information contained in a published specification filed in respect of a complete application where:

(A) if the information is, or were to be, the subject of a claim of the specification, the claim has, or would have, a priority date earlier than that of the claim under consideration; and

(B) the specification was published after the priority date of the claim under consideration; and

(C) the information was contained in the specification on its filing date and when it was published.

77 Under existing authority (E I Du Pont de Nemours & Co v ICI Chemicals &

Polymers Ltd (2005) 66 IPR 462), Samsung needs to demonstrate, in accordance with (b)(ii) of

the definition of “prior art base”, that the information is, or could be, the subject of a claim of

the Mulligan Patent. This claim would then prior claim the subject matter of claim 6 and render

it lacking in novelty. Apple relies on the necessity of such a notional claim being fairly based

on the specification of the Mulligan Patent.

Samsung’s contentions

78 Samsung points out that the specification of the Mulligan Patent describes that

the invention:

…is directed to a touch-sensing system for detecting a position of a touch on a touch-sensitive surface. The touch sensing system comprises at least two layers of unidirectional capacitive sensor bars where each sensor bar is electrically connected at one or both ends to a lead line. According to one example, the other end of the sensor bar may be left open, which enables the area on that side of the touch sensor to be as small as possible. In another example, one or more layers may be connected at both ends so that weaker touches or multiple touches may be sensed.

79 Samsung also points out that the abstract of the Mulligan Patent states that:

The lattice touch-sensing system may include two capacitive sensing layers, separated by an insulating material, where each layer consists of substantially parallel conducting elements, and the conducting elements of the two sensing layers are substantially orthogonal to each other.

80 Samsung submits that the above passages of the specification, together with the

diagrams, clearly indicate two layers separated by an optically transmissive layer. Samsung

says that this is a disclosure of the Dispose Integer, elaborated within the specification. The

specification also describes the capacity of coupling between the touching object and the sensor

bars, enabling the controller accurately to determine the touched bars on each sensing layer by

determining which bar on each sensor layer has the highest signal. The specification states:

Alternatively, electrically connecting to both ends of the sensor bars could be used for the recognition of multiple touches. Recognition of multiple touches could be used in a gaming application, for example. In another alternative, electrically connecting both ends of the sensor bar could be used in the rejection of multiple touches.

This, Samsung says, is a disclosure of the Capacitance Integer.

81 Samsung relies on claim 6 of the Mulligan Patent to prior claim. That claim is

to:

The touch-sensitive screen of Claim 1, wherein each of the second ends of the first set of sensor bars are connected to the first set of lead lines, and the second ends of the second set of sensor bars are connected to the second set of lead lines.

82 That, Samsung says, is an arrangement that enlivens the multiple touch

functionality, which means that the Multiple Touch Integer is thereby disclosed in the Mulligan

Patent.

Apple’s contentions

83 Apple says that it has not presently been made clear that claim 6 of the Mulligan

Patent fulfils the requirement of information that forms part of the prior art base for the

purposes of novelty and that no notional claim has yet been advanced.

84 Apple submits that the Mulligan Patent does not constitute a disclosure of the

essential integers of claim 6 of the Touch Screen Patent. In relation to the Multiple Touch

Integer, Apple says that there is no disclosure or clear and unmistakable directions in the

Mulligan Patent as to how multiple touches at different points can be achieved. Apple relies

upon the part of the specification of the Mulligan Patent that talks in terms of the more detailed

information from each sensor layer which ‘could greatly improve multiple touch rejection, or

conversely, to enable multiple touch rejection’ and the reference to the touch sensitive screen

operating in response to a touch by “an object or a finger”, with the result that ‘the object or the

finger becomes capacitively coupled to both energized sensor bars, producing a response

signal’.

85 Apple points out that claim 6 of the Mulligan Patent does not include integers

which clearly indicate the Multiple Touch Integer. Accordingly, Apple submits that Samsung

has not pointed to sufficient disclosure in the Mulligan Patent to constitute an anticipation of

claim 6 of the Touch Screen Patent.

Consideration

86 The parties are clearly at issue over the disclosures of the Mulligan Patent and

the extent to which that patent can constitute part of the prior art base for the purpose of

establishing want of novelty of claim 6 of the Touch Screen Patent. Again, cogent submissions

have been advanced by each party in reliance on certain disclosures of the Mulligan Patent, in

the context of that patent as a whole.

87 Again, there is no evidence from any skilled reader as to the disclosures of the

Mulligan Patent. Samsung contends that no such evidence is necessary and that the disclosures

are clearly present and are sufficient to equate to the essential integers of claim 6 of the Touch

Screen Patent.

88 The same conclusion as that reached for the Leeper Article applies.

The Heuristics Patent

89 The title of the Heuristics Patent is “Touch screen device, method, and graphical

user interface for determining commands by Applying Heuristics”. The Heuristics Patent was

filed on 6 September 2007 and claims priority from a US patent filed on 6 September 2006.

90 In support of its application for an interlocutory injunction, Apple contends that

claims 1 and 55 of the Heuristics Patent are infringed by the Australian Galaxy Tab 10.1. The

parties’ submissions concentrated on claim 1.

91 Samsung denies infringement of claims 1 and 55 of the Heuristics Patent.

Samsung also contends that the Heuristics Patent is invalid, but as it does not rely on that

invalidity in this application, that is not to be taken into account for the purposes of an

assessment of a prima facie case of infringement, in accordance with the analysis above.

92 The field of the invention of the Heuristics Patent relates to electronic devices

with touch screen displays that apply heuristics to detect user gestures on a touch screen display

to determine commands. It does not seem to be in issue that the term heuristics refers to

strategies that use imprecise or approximate computation; here, providing precise output by

interpreting imprecise inputs. Both parties cite the explanation by Professor Cockburn, who is

a Professor in Computer Science and Software Engineering and from whom Apple adduced

evidence in the proceedings. Professor Cockburn explains that:

‘Heuristics’, as used in the context of programming, refers generally to strategies for imprecise or approximate computation. One form of heuristics involves providing precise output by interpreting imprecise inputs. Normally, computer

programs perform computations by generating precise outcomes from precise input. However, where the input data is imprecise, heuristics can be applied to provide a solution for interpreting such data by executing one or more programs (each containing a precise set of instructions) to analyse such data.

…

As used in the Heuristics Patent, which relates to electronic devices with touch screen displays, the term ‘heuristics’ refers to a strategy or strategies for interpreting the particular command which a user intended to execute, based on the user’s touch gesture (where a gesture could include one or more finger contacts). For example, heuristics may be used to determine whether a user who makes an ‘off-vertical’ swipe intended to make a vertical scroll or a 2-D translation. A user’s touch gestures are always, at least to some extent, ambiguous; a perfect vertical scrolling gesture would require the movement of the user’s finger to be in a perfectly vertical direction for the correct length (and perhaps also at the correct speed). However, a user will in practice never execute a gesture with such precision. Using heuristics, the device may, for example, be able to recognise a range of ‘near-vertical’ movements, covering a range of angles, as a vertical scroll, rather than a 2-D translation, by stipulating conditions within the relevant program(s) for what movements will be interpreted as a vertical scroll and what will be interpreted as a 2-D translation.

93 The Heuristics Patent sets out the background to the claimed invention.

Generally speaking, the context is described as follows:

As portable electronic devices become more compact, and the number of functions performed by a given device increase, it has become a significant challenge to design a user interface that allows users to easily interact with a multifunction device.

94 The specification describes the previous use of more pushbuttons or complex

menu systems to allow a user to access, store and manipulate data and then details the

disadvantages of such solutions. The specification continues:

To avoid problems associated with pushbuttons and complex menu systems, portable electronic devices may use touch screen displays that detect user gestures on the touch screen and translate detected gestures into commands to be performed. However, user gestures may be imprecise; a particular gesture may only roughly correspond to a desired command. Other devices with touch screen displays, such as desktop computers with touch screen displays, also may have difficulties translating imprecise gestures into desired commands.

Accordingly, there is a need for touch-screen-display electronic devices with more transparent and intuitive user interfaces for translating imprecise user gestures into precise, intended commands that are easy to use, configure, and/or adapt.

95 The specification then explains that in a device with a touch screen that has a

graphical user interface (GUI), the user may interact with the GUI primarily through finger

contact and gestures on the touch screen.

96 Generally, the specification describes embodiments that deal with the fact that

the gesture of the user may not be perfectly vertical or perfectly horizontal. The specification,

broadly speaking, describes the difference between the situations in which:

• the gesture is perfectly vertical or perfectly horizontal, with the result that the webpage

scrolls one-dimensionally upward or sidewards in a vertical or horizontal direction

respectively;

• the gesture moves upwards or sidewards, non-perfectly vertically or horizontally, with

the result that the webpage scrolls vertically or horizontally respectively; and

• the gesture moves upwards or sidewards, non-perfectly vertically or horizontally, with

the result that the webpage may scroll two-dimensionally, that is, with simultaneous

movement in both vertical and horizontal directions.

97 It is clearly recognised in the specification that a variety of gestures may be

utilised by the person onto the touch screen. It is explained that, in some embodiments,

heuristics are used to translate imprecise finger gestures into actions desired by the user. The

specification describes the working of the heuristic in terms of a gesture within a pre-

determined angle of being perfectly vertical, by which the webpage will scroll one-

dimensionally upward in the vertical direction. That angle is exemplified at 27 degrees. The

same angle applies to gestures that are within a pre-determined angle of being perfectly

horizontal.

98 Claim 1 of the Heuristics Patent is:

A computer-implemented method, comprising:

at a computing device with a touch screen display,

detecting one or more finger contacts with the touch screen display,

applying one or more heuristics to the one or more finger contacts to

determine a command for the device; and

processing the command;

wherein the one or more heuristics perform the functions of:

determining that the one or more finger contacts correspond to a one-dimensional vertical screen scrolling command rather than a two-dimensional screen translation command, based on an angle of movement of the one or more finger contacts with respect to the touch screen display; and

determining that the one or more finger contacts correspond to a two-dimensional screen translation command rather than a one-dimensional screen translation command, based on an angle of movement of the one or more finger contacts with respect to the touch screen display.

My emphasis denotes the Angle of Movement Integer.

99 Claim 55 is:

A computer-implemented method of any one of claims 1 to 26, wherein

the one or more finger contacts correspond to a finger gesture with an initial movement and a subsequent movement, and wherein

the function of determining that the one or more finger contacts correspond to a one-dimensional vertical screen scrolling command rather than a two-dimensional screen translation command includes identifying the entire finger gesture as the one-dimensional vertical screen scrolling command and basing the determination on the angle of movement of the initial movement of the finger gesture, and wherein

the function of determining that the one or more finger contacts correspond to a two-dimensional screen translation command rather than a one-dimensional vertical screen scrolling command includes identifying the entire finger gesture as the two-dimensional screen translation command and basing the determination on the angle of movement of the initial movement of the finger gesture.

100 There are two issues regarding claim 1 for the purposes of this interlocutory

injunction and Apple’s case on infringement. They are:

• the construction of claim 1 and whether the Angle of Movement Integer qualifies the

determination or implementation by the heuristic, or the command of the use; and

• whether the Australian Galaxy Tab 10.1 infringes claim 1 on either construction.

Apple’s contentions

101 Apple says that claim 1 is to a method implemented by a computer which detects

one or more finger contacts with the touch screen by applying one or more heuristics to the

finger contacts to determine and process a command. The key feature in issue is the nature of

the heuristic. Apple advances the construction of claim 1 that the heuristic is to determine

whether the finger contact corresponds to a one-dimensional vertical command rather than a

two-dimensional command and that such determination is based on an angle of the movement

of the finger contact on the touch screen display. That is, Apple says that the function of the

heuristic is to determine what the movement of the finger means in terms of a one-dimensional

or two-dimensional translation command. Apple contends that the claim is to a strategy for

responding to imprecise gestures. It is not, Apple emphasises, a claim to a computer program

and the claim is not concerned with the exact manner in which the underlying software is

implemented to achieve the purpose. Apple says that the invention is to a method in which a

heuristic performs the function of determining whether the finger contacts correspond to a

vertical scrolling command or a two-dimensional translation command and that the Heuristics

Patent is not concerned with the way in which the heuristic does so.

102 On Apple’s construction, the heuristic’s response is to the sliding movement of

a finger on the screen at an angle which will determine the location of the finger, T2, being a

second touch point at a predetermined time interval after T1, the first touch point. The angle of

the movement from T1 to T2 on the touch screen is the determining factor which is used by the

heuristic to formulate a command for the device. That is, claim 1 is concerned with a computer-

implemented method in which the heuristic interprets a user’s intention to perform a vertical

scroll or a two-dimensional translation, whereby the intention is expressed by a predominantly

vertical or diagonal angular finger movement on the touch screen. Apple says that the heuristic

does not calculate an angle but interprets the user’s intention to perform a vertical scroll

command or a translation command based on the angle of the user’s finger movement on the

touch screen.

103 While Samsung points to the description in the specification of particular angles,

Apple says that these are only possibilities and that there is no requirement in claim 1 that the

heuristic itself calculate an angle in, or as part of, an algorithm used to make the relevant

determination.

104 As Apple puts it, it is the initial movement of the finger in a diagonal that is

tracked and it is that sliding movement that determines the location of T2, which depends upon

the angle of movement of the finger on the touch screen display compared to a vertical or

horizontal line or, Apple says, a channel that forms the basis for the heuristic. Apple submits

that there is a distinction made in the claim and in the Heuristics Patent as a whole between, on

the one hand, the user’s gesture and the interpretation of a gesture and, on the other hand, the

underlying software.

105 Apple states emphatically that the claim is not to an integer that requires the

heuristic or the computer program to measure the angle of movement of the finger. The

Heuristics Patent, Apple says, is all about how the user interacts with the touch screen. The

invention is an interaction on an intuitive basis between the person manipulating the touch

screen and an angle gesture which is converted into a precise command of one form or another.

106 Apple says that, in operation, an initial finger gesture is made which continues

beyond T2 and that the determination of vertical or two-dimensional scrolling is made in a

manner which can broadly be described as one in which the heuristic performs the function of

determining whether the user intended to perform a vertical scrolling command or a two-

dimensional translation command, which command is based on the angle of the user’s finger

movement on the touch screen. It says that claim 55 makes it clear that it is the entire finger

gesture that is then identified in accordance with that determination of initial finger movement.

Apple says that the Australian Galaxy Tab 10.1 demonstrates continued vertical scrolling

irrespective of changes in horizontal co-ordinates as the finger is moved or, alternatively,

demonstrates continued execution of a two-dimensional translation function based upon the

initial movement of the finger.

107 Apple emphasises that an assessment should be made of normal use by a

consumer and not by an artificial analysis involving an abnormally slow movement. Apple

says that the analysis should reflect typical user input which involves executing, scrolling or

translation commands at normal speeds of movement and at substantially vertical, horizontal or

diagonal angles that allow the user’s intention to be correctly interpreted.

108 Apple says that the heuristic performs the function of dealing with two forms of

action which form the integers of the claim. The first way is a gesture that is based on the angle

of movement of one or more finger contacts and the second is determining what that command

is to be interpreted as, based on determination of whether the one or more finger contacts

correspond to a one-dimensional vertical screen scrolling command. The focus of the claim,

Apple says, is what the user is doing and the translating of that into a command. If the

movement goes off-vertical on an angle, it remains a one-dimensional command until the finger

movement gets to a certain angle and then it turns into a two-dimensional command. It is to

that, Apple says, that the claim is directed. The heuristic takes an imprecise gesture and makes

it into a precise response. It responds to the result of the movement which, in turn, is based on

an angle of movement for one or more finger contacts.

109 Apple relies on this reading of the claim by Professor Cockburn, who says that,

in his opinion, the claims do not restrict how heuristics are applied to those finger contacts to

determine whether the finger contacts correspond to a two-dimensional scrolling or a two-

dimensional translation command. Apple’s submission is that the Heuristics Patent and claim 1

are directed towards the context of gestures being interpreted; the software mechanism, as

opposed to the command, is irrelevant to the claim.

Samsung’s contentions

110 Samsung contends that it does not infringe claim 1 because the Australian

Galaxy Tab 10.1 does not possess the Angle of Movement Integer. Samsung’s submissions

centre on its construction of claim 1. Samsung’s submissions did not advance a case of non-

infringement if Apple’s construction were correct.

111 Samsung’s construction of claim 1 is that it requires the heuristic to be based on

the angle of the gesture. Samsung submits that it is ‘clear beyond argument’ that on a proper

construction, the Heuristics Patent describes a computer-implemented method in a computing

device where a heuristic is applied to a finger contact to determine a command and the

determination of that command is based on an angle of movement. Accordingly, Samsung

contends that claim 1 requires the determination by the heuristic to be based on the angle of

movement of the finger controls.

112 If Samsung’s interpretation is correct, it says that there is no infringement by the

Australian Galaxy Tab 10.1 on the basis that the determination in the Australian Galaxy Tab

10.1 is not implemented based on an angle of movement of the one or more finger contacts.

Samsung contends that the scrolling method of the Australian Galaxy Tab 10.1 does not

measure angles or use angles in its determination of whether the user’s command is a one-

dimensional scrolling command or a two-dimensional translation command. Rather,

Samsung’s scrolling method compares the positions of the user’s contact points on the touch

panel relative to two channels on the touch panel.

113 In its submissions advancing its own construction of claim 1, Samsung

emphasises the characteristics of the heuristic. That characterisation is of a one-dimensional

vertical screen scrolling command based on an angle of movement of the one or more finger

contacts with respect to the touch screen display.

114 Samsung relies upon the following statement of Professor Cockburn:

Using heuristics, the device may, for example, be able to recognise a range of ‘near vertical’ movements, covering a range of angles, as a vertical scroll, rather than a 2-D translation, by stipulating conditions within the relevant program(s) for what movements will be interpreted as a vertical scroll and what will be interpreted as a 2-D translation.

115 Samsung points out that Professor Cockburn says that the claims of the

Heuristics Patent are not limited to any particular heuristic.

116 Samsung also relies on four paragraphs of the specification as the only teaching

in the Heuristics Patent of the heuristic being based on an angle of movement. The Heuristics

Patent describes the pre-determined angle and, in the context of two-dimensional translation, a

pre-defined range of angles. Samsung submits that Apple’s construction gives the Angle of

Movement Integer no work to do. Rather, Samsung says, the manner in which the heuristic

determines the command is based on an angle and that is the subject matter of the claim.

117 In essence, Samsung’s defence to infringement is that the Samsung method sets

up two channels and determines one-dimensional or two-dimensional outcomes by presence or

absence within the channel.

118 Samsung relies on evidence adduced from Mr Lee, a software engineer in the

employ of Samsung Electronics Co Limited. Mr Lee’s evidence is that the method in the

Australian Galaxy Tab 10.1 operates by identifying the location of contact points relative to two

dynamically generated channels and, based on this location, a number of conditions are used to

determine the direction of scrolling or the translation of the touch screen interface. It is the

location of the second touch point that is compared to two orthogonal X and Y channels

previously generated around the first touch point. The method is terminated when a user

removes his or her finger from contacting the touch screen or when the method itself reaches a

terminating condition.

119 Samsung says that the scroll and command in the Australian Galaxy Tab 10.1

are not implemented according to the method of the claims in that they are not based on the

angle of movement, which means that the Angle of Movement Integer is not present. Samsung

says that the angle of movement between the first and second touch point is not calculated.

This is the case whether the wording is “based on the angle of movement” or “based on an

angle of movement”. Samsung rejects Professor Cockburn’s evidence that he would regard the

method of the Australian Galaxy Tab 10.1 as still based on the angle.

120 That is, Samsung says that the heuristic of the Australian Galaxy Tab 10.1

determines the command and it determines that command based on location, not based on angle.

Samsung contends that the scrolling method of the Australian Galaxy Tab 10.1 does not

measure or use angles in its determination of whether the user’s command is a one-dimensional

scrolling command or a two-dimensional translation command. Rather, as Samsung’s scrolling

method compares the positions of the user’s contact points on the touch panel relative to two

channels on the touch panel, this means that the movement of the finger from the first contact

point T1 on the same angle of movement may result in vertical scrolling or two-dimensional

translation. Samsung says that the heuristic of the Heuristics Patent would only recognise one

possible result as each movement is on the same angle relative to the first touch point T1. On

this basis, Samsung contends, the Australian Galaxy Tab 10.1 does not infringe the claim.

Consideration

121 On one contention, advanced by Apple, the function of the heuristic is to

determine that the finger contacts correspond to a one-dimensional scrolling command, where

the command is based on an angle of movement of the finger on the touch screen. The

heuristic, whatever it consists of, responds to or is invoked by the command of the finger

movement; that is, the way that the user moves his or her finger on the touch screen from T1 to

T2.

122 The alternative construction is that the heuristic performs the function of

determining that the finger contacts correspond to a one-dimensional command and that

determination is based on an angle of movement of the finger on the touch screen. On this

construction, the determination of one-dimensional or two-dimensional scrolling is based on the

angle between T1 and T2. Samsung relies on this construction and emphasises that the claim

requires that the heuristic determine whether to implement a one-dimensional or two-

dimensional command based on the angle of movement of the finger. Samsung points to the

reference to 27 degrees in the specification to construe ‘based on an angle’ to mean that there

must be a specified angle that commands the heuristic.

123 One example of the different way in which the parties construe claim 1 is

Samsung’s submission on the evidence of Apple’s witness, Professor Cockburn, the only

witness who gives evidence relevant to construction as a skilled reader. While construction is a

matter for the Court, both parties rely on his evidence as supportive of the different

constructions advanced. Professor Cockburn says, after considering the Australian Galaxy Tab

10.1, that it is ‘another way to implement the relevant heuristic’. He explains it further:

I would still regard this implementation as determining whether the finger contacts correspond to a 1-D scrolling or 2-D translation command based on the angle of the user’s finger movements on the touch screen display.

124 Samsung complains that Professor Cockburn does not explain why this is so. It

seems to me that Professor Cockburn’s statement does not clarify or resolve the difference in

construction.

125 The question of construction that arises is whether the phrase ‘based on an

angle of movement of the one or more finger contacts with respect to the touch screen display’

qualifies the determination by the heuristic or the command of the user. It seems to me, based

on the evidence presently adduced and the submissions advanced, that, while Samsung’s

construction has force and may ultimately be successful, both constructions can be said to be

open. Samsung has not submitted that it does not infringe claim 1 if that claim bears the

construction for which Apple contends.

126 No additional submissions on non-infringement were directed to claim 55.

127 Neither party has asked me to determine this question on a final basis. Indeed,

my proposal to do so was rejected. It may well be that further evidence by a skilled reader and

a more detailed consideration of the Heuristics Patent will assist. In any event, for the purposes

of this interlocutory application, Apple has made out a prima facie case for infringement within

the meaning in O’Neill. On the present evidence, if Apple’s construction prevails, the

Australian Galaxy Tab 10.1 will infringe claim 1.

BALANCE OF CONVENIENCE

128 The second inquiry in the present application involves a consideration of

whether the inconvenience or injury that Apple would be likely to suffer if an injunction were

refused outweighs or is outweighed by the inconvenience or injury which Samsung would be

likely to suffer if the injunction were granted.

129 As Jessup J observed in Interpharma at [16], as the decision to grant

interlocutory relief is discretionary, the Court will, in considering the balance of convenience,

generally take into account every circumstance that has the rational capacity to assist in

answering the question whether it would be in the interests of justice to do so. This includes

the strength of the prima facie case, taking into account the issues of infringement and

invalidity.

130 For the purposes of consideration of the balance of convenience, the parties

agree that:

• at present, Apple has the Australian tablet market “virtually to itself”;

• the Australian Galaxy Tab 10.1 would be a “formidable player” in the Australian tablet

market;

• at least initially, the aim of the launch of the Australian Galaxy Tab 10.1 is to establish a

market in the Android platform; and

• at least initially, the growth of the market in the Android platform would largely be at

the expense of Apple.

131 As a preliminary matter, I wish to make some observations on the fact that both

parties, in their submissions on the balance of convenience, made repeated criticisms of the

other for making assertions not supported by any evidence. In circumstances where it may not

have been possible to support such assertions by evidence readily at the parties’ disposal,

especially given the rapidly changing nature of the tablet market, and considering the exigencies

of an interlocutory application and the substantial amount of evidence that was placed before the

Court, my view is that, where appropriate, a failure to adduce admissible evidence as to a factor

that has a basis in logic or generally accepted market dynamics is not necessarily to be held

against the party accused of lacking an evidentiary basis for that assertion. The same does not

apply to a fact generally in issue or to the assessment of whether there is a prima facie case, or

to matters notified to the parties as being matters that I could not accept as assertion made by

counsel unsupported by evidence.

132 It is convenient to divide the balance of convenience arguments put forward by

the parties as follows:

• the significance of the detriment;

• whether damages are an adequate remedy;

• whether, as a result of the short life cycle of tablet devices, injunctive relief is equivalent

to final relief;

• the preservation of the status quo in the Australian tablet market;

• whether Samsung proceeded with its “eyes wide open”;

• whether there was relevant delay by Apple and, if so, the consequences of such delay;

and

• the strength of Apple’s prima facie case.

133 Even though I reach conclusions based on each issue, it goes without saying

that some of these issues are more important to my assessment of the balance of convenience

than others. That is, I do not attribute equal weight to each factor.

134 Before turning to these issues, it is appropriate to make some general comments

on the matter of an early final hearing of some or all of the issues in these proceedings and its

relevance to the assessment of the balance of convenience. It is to be recalled that the

interlocutory application is limited, based on the asserted infringement of three claims of two

patents, one of which is said to be invalid for want of novelty arising from anticipation by either

one of two prior publications. There has already been evidence filed and submissions made.

Both parties reserve the right to file additional evidence and make additional submissions on

these issues.

135 On 26 September 2011, the first day of the interlocutory hearing, the Court

raised the possibility of an early final hearing in November 2011 in relation to these limited

aspects of Apple’s patent infringement case and Samsung’s invalidity case, to be without

prejudice to each party’s right to pursue remaining aspects of its case at a later time and on the

understanding that judgment would be delivered as soon as possible, preferably before the end

of 2011. This was suggested on the bases that:

• the balance of convenience issues on both sides were persuasive;

• the balance of convenience issues were premised on the existence of substantial delays,

whereas an early final hearing would provide the advantage of reaching an outcome

expeditiously;

• the determination of the matter is of considerable urgency for both sides; and

• an earlier final hearing would allow for an earlier assessment of the parties’ rights and

could thereby reduce the complexity of and quantum of damage.

136 Apple indicated that it was prepared to move for a final hearing based upon the

Interlocutory Patents (which, at that point, included an additional patent subsequently the

subject of one of the Undertakings). Samsung indicated that it was not prepared to move for a

final hearing on this basis.

137 On 27 September 2011, Samsung filed a brief submission outlining the reasons

for its unwillingness to proceed to an early final hearing. This was supplemented by further

submissions from counsel on 29 September 2011, the second day of the interlocutory hearing.

In summary, Samsung’s reasons were that:

• An early final hearing would further delay entry into the market without judicial

determination of even a prima facie case. In this regard, Samsung pointed to the

evidence of Mr McGee, the Vice President of the Telecommunications Division of

Samsung Electronics Australia Pty Limited, which was to the effect that further harm

would be suffered by the further delay of the launch of the Australian Galaxy Tab 10.1,

particularly in relation to its availability as part of the Christmas 2011 campaigns of

various retailers and operators (the Christmas Campaigns).

• As Samsung had prepared its case on a confined basis to meet the exigencies of an

interlocutory application it would, on a final basis, wish to adduce further evidence on

lack of inventive step and conduct further prior art searches for the purposes of its

cross-claim for revocation of the Interlocutory Patents. This would take a substantial

amount of time.

• Samsung would be deprived of its choice of counsel.

• The Court should not permit Apple to split its claims for final relief by raising separate

questions.

138 On 30 September 2011, the third day of hearing, there was further discussion

between the Court and the parties on the issue of an early final hearing. In particular, these

discussions concerned Samsung’s reluctance to commit to an early final hearing. That

afternoon, Samsung handed to both the Court and Apple proposed short minutes of order to the

effect that:

• issues of the alleged infringement of the Heuristics Patent, the alleged infringement of

the Touch Screen Patent and the alleged invalidity of the Touch Screen Patent be

determined at an early hearing separately and before other issues in the proceeding;

• Apple’s application for interlocutory relief be dismissed; and

• Samsung be released from its undertaking not to launch the Australian Galaxy Tab

10.1;

(the Samsung Proposal).

139 On 4 October 2011, the fourth and final day of hearing, Apple indicated that it

had rejected the Samsung Proposal on the basis that it did not accept Samsung’s request for a

discharge of interlocutory orders pending the determination of the final hearing. Both parties

said that they had been unable to reach agreement on an early final hearing and were a

considerable distance apart in trying to formulate a basis allowing for one to take place.

Counsel for Samsung indicated that, even in the event that I granted an interlocutory injunction,

Samsung would not be pressing for an urgent final hearing and would not be ready for a final

hearing on the Interlocutory Patents before March 2012.

140 The issue of whether and on what terms an early final hearing could be set

down was intensely debated. In their final submissions, the parties addressed the relevance of

this chain of events to an assessment of the balance of convenience.

141 Samsung says that it was prepared to pursue an early final hearing on the

‘trimmed down basis’ that was offered to Apple in the Samsung Proposal as this was to

Samsung’s commercial advantage. Samsung contends that the Australian Galaxy Tab 10.1

will, in a commercial sense, be ‘dead by March 2012 or some time shortly thereafter’. That is,

Samsung says that the Australian Galaxy Tab 10.1 will already be “dead” by or shortly after the

time Samsung will be available for final hearing on the Interlocutory Patents. Indeed, Samsung

says that in order for an early final hearing to be of any commercial advantage to Samsung and

to warrant the prejudice that it would necessarily suffer by accepting an earlier hearing,

judgment in an early final hearing would have to be delivered by mid-October 2011. That is

clearly impossible. Although Samsung says that the commercial value of the Australian Galaxy

Tab 10.1 would ‘largely disappear’ if it cannot be launched by mid-October 2011, it does not

go so far as to say that the Australian Galaxy Tab 10.1 would not be launched at all in such

circumstances.

142 Samsung submits that the fact that it has taken this position on an early final

hearing does not constitute a factor to be weighed in the balance of convenience.

143 Apple submits that its willingness and Samsung’s unwillingness to move

quickly for an early final hearing is significant for the assessment of the balance of

convenience. Overall, Apple contends that, if the matter were truly urgent from Samsung’s

perspective, Samsung could have moved very swiftly to an early final hearing, removing much

of the commercial impact on Samsung. Apple relies on the Samsung Proposal as indicating

that Samsung could be ready for an early limited final hearing as there envisaged. Apple says

that Samsung’s decision not to be available to conduct an early final hearing is merely tactical.

144 While Samsung asserted a general inability to be ready for an early hearing, this

amounted to a general assertion unsupported by sufficient evidence. Samsung adduced no

evidence prior to the hearing to support the proposition that an early final hearing would be

untenable or that it could not be ready for a limited final hearing prior to March 2012. Despite

the Court repeatedly stating on 30 September 2011 that there was no evidence to this effect and

that evidence was needed to support the assertion, none was adduced. This is particularly

telling in circumstances where other evidence indicates, as I detail in my consideration of the

issue of “eyes wide open” below, that Samsung was aware of the possibility of patent

infringement proceedings being brought in Australia well before Apple initiated them.

145 I am well aware that the preparation of patent cases is complex and time-

consuming. However, the evidence necessary for an early final hearing as proposed by the

Court could be limited. Relevant evidence on the construction of the claims of the Interlocutory

Patents and the disclosure of any prior publications for the purposes of novelty is necessarily

restricted, the determination being for the Court. Some has already been filed in this

application.

146 Further, although under the Samsung Proposal Samsung’s level of

preparedness for an early final hearing may not have been at its optimum, the fact that the

Samsung Proposal was made indicates that Samsung could be ready an early final hearing on

the issues raised in this application. While these issues do not extend to infringement of other

claims or to invalidity other than as based on two prior publications for the Touch Screen

Patent, it would provide finality on at least these aspects and enable a better assessment of an

entitlement to any further interlocutory relief. In circumstances where Samsung relies on the

limited commercial life of the Australian Galaxy Tab 10.1 and its need to enter the market as

soon as possible, its position on an early final hearing is relevant to the balance of convenience,

but is not determinative of it. I deal with this further in the sub-section below entitled

“Diminution of the benefit to be obtained by final relief”.

147 In assessing the balance of convenience, Apple urges the Court to proceed on

the footing that the balance of convenience must be assessed for the period between now and

the time that an early final hearing could have taken place, on the basis that any delay after that

time and any consequences of that delay stem from Samsung’s refusal to accept an early final

hearing. I do not accept this submission. The balance of convenience must, as Samsung

submits, be assessed based on the period that the interlocutory order will be operative. The

interlocutory order will operate until final orders are made. This is the period to which the vast

majority of the evidence and submissions of both parties was addressed.

148 I now turn to consider the factors that affect the balance of convenience,

including the practical consequences likely to flow from an interlocutory order or the absence of

one. It is necessary to make it clear that any restraining order would be limited to the non-

infringement of the specific claims said to be infringed: claim 6 of the Touch Screen Patent and

claims 1 and 55 of the Heuristics Patent.

Significant detriment

Consideration of Apple’s detriment

149 Apple identifies the harm that it will suffer if Samsung is not restrained from

launching the Australian Galaxy Tab 10.1 on an interlocutory basis but Apple eventually

prevails at a final hearing (the Apple Harm). Apple relies on the evidence of Mr Small, the

marketing director of Apple Pty Limited and Mr Lutton, who was Chief Patent Counsel at

Apple Inc prior to July 2011 and is currently a Senior Director of Apple Inc.

150 Apple submits that the evidence demonstrates that at least a significant portion

of the sales of the Australian Galaxy Tab 10.1 will be at the expense of the iPad 2.

151 Apple also contends that the Apple Harm involves longer term impacts on

Apple, in that Australian Galaxy Tab 10.1 customers, having made an investment in the

Android platform, are more likely to remain with the “Android ecosystem”. Apple relies on the

evidence of Messrs Small and Lutton to the effect that the Apple Harm would include a loss of:

• sales of applications from the Apple Apps store;

• sales of accessories and directly related Apple products;

• licensing revenue from third parties for MFi (Made for iPod/iPhone/iPad), which is a

licensing program to develop electronic accessories that connect to the iPod, iPhone and

iPad;

• sales of future Apple products;

• income to third party developers of Apps for the Apple Apps store;

• momentum in the development of the iPad and iPhone Apps;

• revenue from iTunes;

• revenue from iAd; and

• damage to Apple’s goodwill.

152 Samsung submits that the Apple Harm is limited to damage to Apple arising

from the features of the Australian Galaxy Tab 10.1 which Apple alleges infringe the

Interlocutory Patents (the Allegedly Infringing Features). Samsung says there is no nexus

between the Allegedly Infringing Features and Apple’s case as to the Apple Harm, which,

Samsung contends, relates to damage that flows from the functionality, “look and feel” and

hardware of the Australian Galaxy Tab 10.1 and is in no way related to any harm that may be

attributable to Apple as a result of the Allegedly Infringing Features. In effect, Samsung

submits that Apple is presently seeking to enforce the wrong rights.

153 If this submission were to be accepted, it follows that the converse would be

true. That is, consideration of the damage to Samsung would only involve giving weight to the

damage that Samsung would suffer by not being able to exploit the Interlocutory Patents. In

effect, consideration of the damage to Samsung would not involve factors such as the loss of

any market share and an early mover advantage in the Android market arising from an inability

to launch the Australian Galaxy Tab 10.1. It would instead involve the cost, delay and

inconvenience associated with modifying the Australian Galaxy Tab 10.1 to ensure that it did

not possess the Allegedly Infringing Features.

154 Samsung did not make submissions nor did it adduce evidence in relation to its

own detriment on this basis. Neither did Apple.

155 In any event, I do not accept Samsung’s submission. There is no legal basis for

doing so. Under the Act, a patentee has an exclusive right to exploit a patented invention. The

Allegedly Infringing Features are part of the Australian Galaxy Tab 10.1. The Australian

Galaxy Tab 10.1 is the vehicle by which the Allegedly Infringing Features allegedly exploit the

Interlocutory Patents. The Australian Galaxy Tab 10.1 is the product by which Samsung

allegedly exploits the inventions of the Interlocutory Patents. There is no evidence to the effect

that the Allegedly Infringing Features can, practically, be considered apart from their presence

in the Australian Galaxy Tab 10.1. The Apple Harm is, therefore, to be assessed as the loss

and damage arising from the Australian Galaxy Tab 10.1 as a whole.

156 The parties agree that, at least initially, the aim of the launch of the Australian

Galaxy Tab 10.1 is to grow an Android market which will be largely at the expense of Apple.

It follows as a matter of logic that the Apple Harm would include, as Mr Small says, ‘a loss of

sales in Australia for Apple’s iPad 2 and a slower rate of sales in Australia than would

otherwise be the case’.

157 Samsung submits that some elements of the Apple Harm, including any loss in

relation to the “Apple ecosystem”, are ‘far-fetched’ and must be supported by evidence.

158 I accept the unchallenged evidence of Messrs Small and Lutton (as outlined at

[151] above) on the more indirect components of the Apple Harm. The evidence indicates that

the iPad 2 is part of an Apple ecosystem which relies on what is referred to as the “halo effect”,

that is, that consumers who have a positive experience with one Apple product are more likely

to buy another Apple product. Considering its physical similarities to the iPad 2, I accept Mr

Small’s unchallenged evidence that the launch of the Australian Galaxy Tab 10.1 would

damage Apple’s reputation for distinctiveness in functionality and design of consumer

electronic products. I also accept the unchallenged evidence or Messrs Small and Lutton that if,

as a result of the launch of the Australian Galaxy Tab 10.1, fewer consumers (in a relative

sense) are purchasing the iPad 2 (which the parties agree is, at least initially, the aim of the

Australian Galaxy Tab 10.1), the consequences of this will flow through the Apple ecosystem

to cause harm to related Apple products and the Apple brand, including by way of effects

arising from the adjustment of the behaviour of third parties, such as authorised resellers and

App developers.

159 Apple says that this detriment is difficult to support with evidence. In view of

the evidence about the Apple ecosystem, I am inclined to accept, as a matter of logic, that

greater sales of a product using the rival Android platform will result in a relative reduction in

purchases of other Apple products and services and there will be reduced incentive for

developers to develop Apple apps rather than Android apps.

160 Samsung contends that the Apple Harm still does not demonstrate significant

detriment to Apple. It points to sales data from Australia and the United States, which it says

show that entry of Samsung’s tablet products in these markets has not affected the growth of

Apple’s sales of the iPad range in that those sales have still increased. However, even if I were

to accept these data at face value and even if I was of the view that I could infer from these data

that there would be an upward trend in sales of the iPad 2 following the launch of the

Australian Galaxy Tab 10.1, this would not necessarily mean that there would be an absence of

significant detriment to Apple. An absolute increase in iPad 2 sales volumes may arise in

circumstances where Apple has a decreasing market share in a tablet market that is rapidly

increasing in size. Counsel for Samsung accepted this. In these circumstances, the Apple

Harm attributable to a loss of market share would still be a significant detriment to Apple

notwithstanding any increase in its iPad 2 sales volumes.

161 I am satisfied that the evidence establishes that the Apple Harm would involve

significant detriment to Apple.

Consideration of Samsung’s detriment

162 Samsung identifies the harm it will suffer if it is restrained from launching the

Australian Galaxy Tab 10.1 on an interlocutory basis but eventually prevails at a final hearing

(the Samsung Harm).

163 Samsung relies on the evidence of Mr McGee. Mr McGee says that the

Samsung Harm includes lost sales of, and profit from, the Australian Galaxy Tab 10.1.

164 In addition, Mr McGee says that the Samsung Harm would include loss of

Samsung’s position as an early mover in the Android tablet market, loss of consumer

perception that Samsung is an innovator and developer of benchmark products in the Android

tablet market, damage to its relationship with potential distributors, retailers and providers of

content and damage to its reputation with preferred distributors, retailers and consumers.

165 Mr McGee also gives evidence that, if Samsung is not permitted to launch the

Australian Galaxy Tab 10.1 by mid-October 2011, Samsung will, by that time, already have

lost the opportunity for the Australian Galaxy Tab 10.1 to be represented in the Christmas

Campaigns, which will lead to ‘unquestionably significant’ damage as, in Mr McGee’s

experience, sales of technological products grow significantly each Christmas period.

166 Mr McGee was cross-examined on the timing of the launch of an Australian

Galaxy Tab 10.1 without the features the subject of the Undertakings. Mr McGee says that it is

only once the Court refuses Apple’s requested interlocutory injunction that he would be

advised when Samsung is able to launch the Australian Galaxy Tab 10.1. Mr McGee says that

‘the time it takes from a factory to start to produce the device for [Samsung] to get [the

Australian Galaxy Tab 10.1] into the marketplace’ would be a minimum of seven days.

However, Mr McGee also says that he is unable to say how long it would take to remove the

features the subject of the Undertakings from the Australian Galaxy Tab 10.1.

167 Apple submits that, as the issue of when the Australian Galaxy Tab 10.1

without the features the subject of the Undertakings can be launched has been left open, it

should not be assumed that the Australian Galaxy Tab 10.1 could be launched immediately.

This uncertainty must, Apple says, be borne in mind in an assessment of the immediate, short

and medium-term aspects of the Samsung Harm.

168 Drawing Mr McGee’s evidence and Apple’s submission together, Apple

apparently contends that the assessment of the Samsung Harm should not include consideration

of the damage Samsung would suffer from the Australian Galaxy Tab 10.1 being excluded

from the Christmas Campaigns. This seems to rely on a factual finding or the drawing of an

inference, sought by Apple, that Samsung would not be able to launch the Galaxy Tab 10.1 by

mid-October 2011 (that is, in time for the Christmas Campaigns), even if an interlocutory

injunction were refused. This is in part because that time will nearly have passed by the time

these reasons are given and Samsung would not be able to manufacture and launch an

Australian Galaxy Tab 10.1 modified to give effect to the Undertakings within that time. I

accept, based on Mr McGee’s inability to answer how long it will take to remove the features

the subject of the Undertaking from the Australian Galaxy Tab 10.1, that it is unclear when

Samsung would be able to launch the Australian Galaxy Tab 10.1. However, I do not accept,

without more detailed explanation, that “mid-October 2011” acts as a sharp cut-off period

following which the Australian Galaxy Tab 10.1 would be totally excluded from the Christmas

Campaigns, notwithstanding Mr McGee’s broad and unchallenged assertions to this effect.

There is no evidentiary basis for applying such a final cut-off date. There is no evidence from

the kinds of operators or retailers referred to generally by Mr McGee.

169 It follows that my consideration of the Samsung Harm includes the immediate,

short and medium-term aspects of the Samsung Harm, including the effect of the Australian

Galaxy Tab 10.1 being excluded from the Christmas Campaigns.

170 Nevertheless, Apple says that the Samsung Harm is based on an assumption

that no final hearing will occur for another 12 months by which time, Samsung alleges, the

Australian Galaxy Tab 10.1 will be obsolete. Apple contends that this assessment is

inappropriate. Apple submits that the Samsung Harm only involves the delay of the launch of a

product which has not yet been launched. Apple says that:

• There is little if any evidence of the impact on Samsung from any short-term restraint.

• Samsung’s feared loss of a “first mover” advantage is entirely speculative. There is no

evidence of any other comparable product about to be launched in the Australian tablet

market which would affect the commercial success of the launch of the Australian

Galaxy Tab 10.1 if delayed for a moderate period.

171 As to the first bullet point, this is premised on the assumption that there is an

early final hearing. Even if the hearing were to take place in March 2012, this would not be a

“short-term restraint”. I accept that the Samsung Harm in such circumstances would likely

involve far more than the mere delay of the launch of the Australian Galaxy Tab 10.1. As to

the second bullet point, I repeat my observation about evidentiary deficiencies at [131] above.

172 I accept Mr McGee’s evidence on the Samsung Harm. It is obvious that an

inability to launch the Australian Galaxy Tab 10.1 pending a final outcome at least 5 or 6

months away will lead to a loss in sales of the product. I also accept that an inability to sell the

product within that time frame will lead to the consequences for Samsung’s brand identified at

[164] above.

173 The evidence establishes that the Samsung Harm involves significant detriment

to Samsung.

Comparison of detriment

174 As defined earlier, the Apple Harm is the harm Apple will suffer if Samsung is

not restrained from launching the Australian Galaxy Tab 10.1 on an interlocutory basis but

Apple eventually prevails at a final hearing, while the Samsung Harm is the harm Samsung will

suffer if it is restrained from launching the Australian Galaxy Tab 10.1 on an interlocutory

basis but eventually prevails at a final hearing

175 It is clear from the evidence that both the Apple Harm and the Samsung Harm

involve significant detriment to Apple and Samsung respectively. Once this threshold has been

reached, it is not practicable on the evidence available for the Court to attempt to engage in a

quantitative or qualitative assessment of which detriment is greater. Both parties have identified

a range of harmful factors, many of which are peculiar to their position in the Australian tablet

market or their own form of “ecosystem”.

176 Considering that this is an urgent interlocutory application, part of the evidence

is, by its nature, opinion. The witnesses have not been challenged on their ability to give an

opinion. I accept those conclusions as far as they go for the reasons given earlier. However,

there is still little or no underlying factual material to enable a detailed comparative analysis.

177 Therefore, this factor favours neither party in my overall assessment of the

balance of convenience. For present purposes, I accept that the detriment to Apple does not

outweigh the detriment to Samsung (and, of course, vice versa).

Appropriateness of damages as a remedy

178 I will consider this factor as part of my assessment of the balance of

convenience, although I note that in some cases it has been considered separately.

179 Both parties have provided an undertaking to the Court that if they are

successful on an interlocutory basis but unsuccessful on a final basis, they will pay damages to

the other party. It is not in dispute that each party has sufficient resources to pay these

damages.

180 Apple submits that damages would not be an appropriate form of compensation

for the Apple Harm, which it contends would be more difficult to quantify than the Samsung

Harm. On the other hand, Samsung submits that damages would not be an appropriate form of

compensation for the Samsung Harm, which it contends would be more difficult to quantify

than the Apple Harm.

Appropriateness of damages as a remedy for the Apple Harm

181 Apple submits that calculating the lost sales of the iPad 2 and associated

products from the introduction of the Australian Galaxy Tab 10.1 would be ‘effectively

impossible’. This is said to be because actual sales of the iPad 2 and associated products in the

period up to the launch of the Australian Galaxy Tab 10.1 do not represent a reliable guide for

future sales in the absence of competition from the Australian Galaxy Tab 10.1. Apple points

out that demand in the tablet market may itself be growing substantially. In addition, Apple

says that a calculation of its losses from the other sources of revenue identified at [151] above,

that is, on the Apple ecosystem, will be ‘fraught with difficulty’ and ‘virtually impossible’ in the

absence of a stable long-term sales trend and in a tablet market that is rapidly changing and

displaying significant category growth.

182 Samsung contends that damages are an adequate remedy for the Apple Harm. It

relies on three main submissions to this effect.

183 First, it points to evidence of negotiations during the latter half of 2010 between

Apple Inc and Samsung Electronics Co Limited in which licensing arrangements relating to

Apple Inc’s patents were discussed (the Negotiations). In particular, Samsung relies on the

following aspects of a presentation concerning Samsung’s alleged use of Apple patents in its

Smartphones (the First Presentation) and a presentation entitled XXXXXXXXXXXXXXX

XXXXXX (the Second Presentation), both of which were prepared by Apple in the course

of the Negotiations (together, the Presentations):

• the statement in the First Presentation that XXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXX

•

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

X

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXX

• the use of the header XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX in

the Second Presentation, XXXXXXXXXXXXXXXXXXXXXXXXX.

184 Samsung submits that Apple’s willingness to license its patents during the

course of the Negotiations indicates that it can value and put a price on the exploitation of its

patent rights, with the consequence that damages would be an adequate remedy for the Apple

Harm.

185 Mr Lutton was cross-examined about the the Presentations and the

Negotiations. Mr Lutton says that Apple Inc’s core message in the Negotiations was that

Samsung Electronics Co Limited was copying Apple Inc’s products and that this ‘had to stop’.

The Negotiations concerned Apple’s intellectual property more broadly and was not limited to

its patents or the US equivalents of the Interlocutory Patents. Mr Lutton says that, as Samsung

Electronics Co Limited was a valued partner of Apple Inc and as coexistence in the consumer

electronics market was important to Apple, Apple Inc was willing to discuss the concept of

possible licences. However, he emphasises that such discussion was part of the broader

discussion of a framework by which Samsung Electronics Co Limited could continue to sell its

products with some elements of Apple Inc’s intellectual property, such as some “lower level

patents”, available to them but would cease copying the features and functionality of Apple

Inc’s products, and the iPad in particular.

186

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

187

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXX

188 The content of the Presentations, relied upon by Samsung, is put into context by

Mr Lutton’s evidence. In light of Mr Lutton’s evidence as a whole, I do not accept that Apple

was prepared to, or accepted that, Samsung could pay a licence fee for the Australian Galaxy

Tab 10.1 in its present form, and with its present functionalities. Accordingly, I am not

prepared to draw an inference from the Negotiations or the Presentations that Apple considers

or considered damages to be an adequate remedy for the Apple Harm.

189 Secondly, Samsung submits that the Apple Harm can be quantified in a large

part by the keeping of an account of Samsung’s sales and the application of a notional licence

fee to each sale of the Australian Galaxy Tab 10.1. However, this fails to take account of the

following matters:

• In addition to a direct taking of the iPad 2 market, the Australian Galaxy Tab 10.1 will,

Samsung says, grow the market in the Android platform. The effect on such a market

is greater if a “formidable player” like the Australian Galaxy Tab 10.1 enters the market.

• By the time of a final hearing, the Australian Galaxy Tab 10.1 will likely be replaced by

another Samsung tablet operating on the Android platform, for which the Australian

Galaxy Tab 10.1 will provide a springboard.

• The entry and success of the Australian Galaxy Tab 10.1 in the Android market may

increase consumer support for other current or future players in the Android market,

which will further diminish Apple’s overall market share.

• Each of these factors will affect not only sales of the iPad 2 but also the other products

and services within the Apple ecosystem.

• The diminution of Apple’s market share will, in turn, affect Apple’s reputation, brand

and goodwill.

190 Further, the Presentations cannot be taken to indicate that a notional licence fee

is an appropriate quantification of the damage arising from the Apple Harm.

191 Thirdly, Samsung says that Apple has adduced no evidence of the alleged

inadequacy of, and the alleged inability to quantify, damages for the Apple Harm. Samsung

submits that Apple’s evidence rises no higher than mere assertion. Given that the Galaxy Tab

10.1 is sold in many countries overseas, Samsung says that Apple could readily obtain

information as to the damages attributable to the Apple Harm.

192 In response, Apple points out that, as the Galaxy Tab 10.1 has only recently

been launched in other jurisdictions, no inference can be drawn from the failure by Apple to

lead evidence on the impact of sales of the Galaxy Tab 10.1 in these other jurisdictions.

193 My view is that even if these data were available, they would not necessarily be

of assistance given the obvious difficulties in using such data to quantify the plethora of factors

that form part of the Apple Harm in the Australian market. Further, as the Galaxy Tab 10.1 has

only recently become available in other jurisdictions, such data would not allow for the

assessment of the full range of the Apple Harm in Australia, many components of which are

long-term in nature. Samsung’s submission also overlooks the fact that many of the indirect

aspects of the Apple Harm are inherently difficult to quantify, irrespective of the presence of

sales data.

194 I accept that damages would be an inadequate remedy for the Apple Harm.

Appropriateness of damages as a remedy for the Samsung Harm

195 Samsung says that the calculation of its damage from the Samsung Harm will be

‘completely hypothetical and imprecise’. It points to evidence, by way of submission, from

Mr Samuel, a chartered accountant, that the quantification of the Samsung Harm would require

estimation of lost profits on the Australian Galaxy Tab 10.1, sales of products made in

conjunction with the Australian Galaxy Tab 10.1 and “springboard sales” of the Australian

Galaxy Tab 10.1 lost after the date of a final decision, despite the absence of any trading (and

therefore the absence of any accounting records) relating to the Australian Galaxy Tab 10.1 or

its associated products during the period of restraint.

196 Some of these factors mirror those relied on by Apple. Despite the absence of

detailed submissions by Samsung as to matters such as damage to its brand and its relationship

with suppliers, I accept that there are inherent difficulties in calculating the Samsung Harm in

circumstances where the Australian Galaxy Tab 10.1 may never be launched in Australia

because it is rendered “obsolete”. Even if it is launched, damages calculations will be affected

by the complexities associated with transposing sales from one time period to another in a

rapidly changing, seasonal market. Another complication involves Samsung’s position in a

newly emerging market for products using the Android platform. Further, some elements of

the Samsung Harm, such as damage to its relationship with suppliers and loss of its reputation

as an innovator in the Android market, are inherently difficult if not impossible to quantify.

197 I accept that damages would be an inadequate remedy for the Samsung Harm.

Comparison of the extent to which damages are an inadequate remedy for the Apple Harm and the Samsung Harm

198 Samsung points to Mr Samuel’s opinion that the Apple Harm could be

quantified more easily than the Samsung Harm. Mr Samuel concludes that:

[The Samsung Harm] would be the most difficult to quantify with precision, and therefore the most time consuming and costly circumstance, as the Hypothetical Sales Samsung would have made absent the restraint is less able to be estimated with precision than the Hypothetical Sales Apple would have made absent the infringement.

199 In response, Apple says that Mr Samuel’s evidence is based on erroneous

assumptions and definitions and is therefore incoherent and unhelpful. For example, Apple

says that Mr Samuel’s method of projecting the impact of the Apple Harm ignores the problem

that there are likely to be no clear sales trends or causal relationships evident in circumstances

where noise in the underlying data may exceed the size of the impact of the Australian Galaxy

Tab 10.1, for example, if Samsung captures a 10% market share but iPad 2 sales vary by

20-30% per month.

200 Apple contends that the quantification of the Samsung Harm is easier than the

quantification of the Apple Harm. Apple emphasises that, as there is no evidence of any other

product ready to launch in the Android market, this is not a complicating factor to be taken into

account. Apple recognises that calculation of the damages attributable to the Samsung Harm

would be difficult, given the complexities associated with transposing sales from one time

period to another. However, Apple says that the sales of the Australian Galaxy Tab 10.1 upon

its launch, if Samsung is finally successful, would provide at least some guide to the likely

sales following an imminent launch of the Australian Galaxy Tab 10.1; this, Apple submits, is

easier to calculate than the impact on Apple should its existing trade be disrupted by a

significant launch followed by a withdrawal if Apple is finally successful.

201 I have already accepted that damages would be an inadequate remedy for each of

the Apple Harm and the Samsung Harm. It is not practicable for the Court to engage in an

assessment of which is more difficult to quantify on the existing evidence and in circumstances

where both the Apple Harm and the Samsung Harm involve a myriad of harmful factors, the

quantification of which is:

• inherently difficult for some of the more indirect factors;

• hampered by the need to rely on a series of hypothetical calculations and assumptions in

the absence of relevant data; and

• constrained by “noise” in the limited data that do (or, by the relevant time, would) exist.

202 Therefore, I assess the factor of whether damages are an appropriate remedy as

favouring neither party in my overall assessment of the balance of convenience.

Diminution of the benefit to be obtained by final relief

203 The parties agree that tablet products have a short life cycle. For example, the

iPad was first promoted and sold in Australia in May 2010 and the iPad 2 was released in

March 2011. Both parties contend that, as a result of this short life cycle, an adverse

interlocutory verdict would be tantamount to determining the matter on a final basis.

Apple

204 The parties seem to agree, and I accept, that the Australian Galaxy Tab 10.1 has

a short and limited cycle. Apple submits that in the absence of an early final hearing, the

Court’s refusal to grant an interlocutory injunction would permit Samsung to obtain the full

commercial benefit from the Australian Galaxy Tab 10.1 over the lifetime of the product. I

accept that, if Apple were granted a permanent injunction for the Australian Galaxy Tab 10.1 at

a final hearing some time next year in circumstances where the Australian Galaxy Tab 10.1 is

available for purchase in the Australian market in the intervening period, this final injunction

would be of little practical consequence to Apple. The parties seem to accept that by such time,

the Australian Galaxy Tab 10.1 may already have been, or would at least be close to being,

superseded by a later Samsung tablet device.

205 Therefore, refusal to grant an interlocutory injunction would, Apple says, be

equivalent to determining the matter against Apple on a final basis. Further, and importantly,

Apple points out that, if the Interlocutory Patents are valid and infringed and subject to a right

to unquantifiable damages, this would have the effect of negating its rights under the Act to

prevent exploitation of an infringing product. That would mean that its statutory rights,

predicated on its publication of its inventions and the grant of valid patents, would be put at

nought. A refusal to grant an interlocutory injunction of the Australian Galaxy Tab 10.1 would

be akin to determining the matter against Apple on a final basis.

206 The extent to which this is so depends on when a later final hearing could be set

down. Apple contends that if a final hearing is available this year as proposed, it would not

necessarily have been denied the practical benefit to be obtained in seeking final injunctive

relief. I agree.

207 Although Apple’s acceptance of the Samsung Proposal would have alleviated

the extent of the detriment asserted by Apple, its rejection of the Samsung Proposal cannot be

held against it in this respect. The Samsung Proposal would have enabled Samsung to market

and sell the Australian Galaxy Tab 10.1 in the period before an early final hearing and would

thereby still have involved a negation of Apple’s rights under the Act. Acceptance of the

Samsung Proposal would still have had an irreversible effect on Apple’s rights and would not

have alleviated a large part of the Apple Harm.

Samsung

208 Samsung submits that in light of the rapid development and short life cycle of

products in the tablet market, an interlocutory injunction would have the effect of a final

injunction, as the Australian Galaxy Tab 10.1 will be overtaken by later products by the time

that a final hearing is determined.

209 Samsung points to Mr McGee’s evidence to the effect that tablet manufacturers

compete based on a product cycle model. Mr McGee says that it is critical that a tablet device is

released as early as possible within its intended product cycle as it will only be “new” for a

defined time. Mr McGee says that manufacturers have different product cycles in order

potentially to achieve competitive advantages by setting a particular release date within a

product cycle relative to key sales periods and the product cycles of its competitors.

210 I have already accepted that the Australian Galaxy Tab 10.1 has a short and

limited life cycle. Bearing this in mind, together with the fact that a final hearing would not be

before March 2012 (and may, in fact, be later) and considering Mr McGee’s evidence that:

… if Samsung is restrained from entering the tablet market until a final hearing… it would effectively be a final result for Samsung, because it will not be able to launch the [Australian] Galaxy Tab 10.1 at all as there would be no commercial utility in any such launch… The product will not attract any consumer interest in six months’ time, let alone a year’s time. It will be obsolete…

it follows that if I were to grant an interlocutory injunction that restrained the sale of the

Australian Galaxy Tab 10.1, this would, to a large extent, be akin to determining the matter

against Samsung on a final basis.

211 Again, the extent to which this is so depends on when a later final hearing could

be set down.

212 The above analysis is predicated on the assumption that there is a later final

hearing date. An assessment of this element of the balance of convenience also involves

consideration of Samsung’s unwillingness to accept an early final hearing. It is this

unwillingness that affects whether injunctive relief concerning the Australian Galaxy Tab 10.1

may, in practical terms, amount to final relief against Samsung. I attribute some weight to this.

Samsung could have alleviated this factor by adapting its approach to this litigation and moving

on the basis of an early final hearing on the separate questions set out in the Samsung Proposal.

While a separate determination of infringement of the presently asserted claims and a limited

determination of the validity of the Interlocutory Patents is not ideal, it would alleviate the extent

of the detriment asserted by Samsung if Samsung were to be successful.

Comparison

213 In the assessment of the balance of convenience, I weigh this factor in Apple’s

favour.

Is there a status quo in the Australian tablet market that requires preservation?

214 Apple submits that the preservation of the status quo is the preferred course

where the proposed trade is a new one and the applicant has an established trade. Apple

identifies the status quo in the Australian tablet market as being that Apple has a relatively

longstanding and established trade in the iPad, including the iPad 2, while Samsung has no

trade at all in the Australian Galaxy Tab 10.1. Apple says that Samsung seeks, in effect, to

begin a new trade in Australia. Apple contends that, in these circumstances, the longstanding

policy of maintaining the status quo should be applied with Samsung being kept ‘at bay until a

decision has been reached as to whether the invasion is lawful or not’ (Pharmacia Italia SpA v

Interpharma Pty Ltd (2005) 67 IPR 397 at [52], citing Beecham at 627; and Appleton Papers

Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 at 219).

215 Samsung submits, and I accept, that Apple has misconceived the nature of the

status quo in the Australian tablet market. It is not in dispute that Apple has an established

trade in the Australian tablet market. However, there is a dispute as to whether the Australian

Galaxy Tab 10.1 represents “a new trade in Australia”. The evidence indicates that:

• Samsung first entered the Australian tablet market on or about 8 November 2010

through its release of the Galaxy Tab 7.

• Samsung released the Galaxy Tab 10.1v in Australia on 9 May 2011.

• Both the Galaxy Tab 7 and the Galaxy Tab 10.1v use the Android platform.

• Since November 2010, Samsung has held some market share in the Australian tablet

market.

216 As Samsung has already entered the Australian tablet market based on the

Android platform and has, to a small degree, captured market share in doing so, it cannot be

said that the Australian Galaxy Tab 10.1 represents a “new trade in Australia”.

217 The confidential sales data of the parties indicate that the more accurate view of

the status quo in the Australian tablet market is that Apple is an established player with

dominant market share and Samsung, along with several other companies, is a relatively new

entrant holding a minimal market share (the Tablet Market Status Quo). I do not attribute

any weight to the preservation of the Tablet Market Status Quo as a separate factor, as the

effects of a failure to preserve the Tablet Market Status Quo are subsumed within my earlier

consideration of whether the Apple Harm involves significant detriment to Apple.

218 Samsung also submits that the preservation of the status quo is the consequence

of an interlocutory injunction and that it is not to be taken as a factor in determining whether an

interlocutory injunction should be granted. There is no legal rule, Samsung says, that creates

some form of special protection for an incumbent trader. In view of my conclusion on the lack

of weight to be attributed to the Tablet Market Status Quo, it is unnecessary to consider this

submission.

Did Apple delay?

219 Samsung submits that Apple has delayed in:

• enforcing its Interlocutory Patents in Australia by acquiescing to Samsung’s sale in the

Australian markets of earlier products including the Galaxy Tab 10.1v and Galaxy Tab

7 tablets, as well as the Galaxy S Smartphone. Samsung says that ‘there is no doubt’

that these prior products possess the Allegedly Infringing Features; and

• enforcing its Interlocutory Patents against third party manufacturers of tablets on the

Android platform, all of which, Samsung says, have the same functionality as the

Galaxy Tab 10.1.

220 Samsung submits that these delays indicate that Apple is prepared to see what

damage it might suffer from the sale of competing products before taking action and that the

Court should draw the inference that Apple is not overly concerned about patent infringement

or any potential damage arising from such alleged infringement. Accordingly, Samsung

contends, Apple’s delay is an important factor in the Court’s assessment of the balance of

convenience.

221 Apple submits that:

• there is no expert evidence or evidence from an officer of Samsung that any other tablet

on the market contains the same features of the Australian Galaxy Tab 10.1;

• there is no evidence that the hardware of the Galaxy Tab 7 or the Galaxy Tab 10.1v is

the same as that of the Australian Galaxy Tab 10.1; and

• Samsung has not, in its submissions on delay, been able to point to a commercially

successful product that has had a significant impact in the marketplace. That is, any

non-Apple tablets that exist or have existed in the tablet market are of little commercial

significance. In this regard, Apple relies on Mr Small’s evidence that although there

have been other non-Apple tablets available in the tablet market, they have had a less

appealing “look and feel” and overall user experience.

222 In my view, the fact that Apple has not brought proceedings enforcing its

Interlocutory Patents against Samsung or other third party tablet manufacturers is not relevant.

As there is insufficient evidence concerning third party tablets, there is no basis from which to

draw an inference about Apple’s failure to bring proceedings against third party manufacturers.

Although there is more evidence concerning the Galaxy Tab 7 and the Galaxy Tab 10.1v, the

same applies. I cannot draw inferences as to whether these products would have infringed

Apple Inc’s patent rights on some impressionistic basis.

223 In any event, even if there were sufficient evidence of Apple’s failure to bring

proceedings against other tablet products from which to draw inferences, these inferences,

although possibly relevant to other balance of convenience considerations such as whether

Samsung acted with “eyes wide open” or whether damages are an adequate remedy for Apple,

would not be relevant to a consideration of delay. The relevant delay would need to be in

relation to the Australian Galaxy Tab 10.1.

224 In this regard, Samsung contends that Apple has delayed in notifying Samsung

of its concerns that the Galaxy Tab 10.1 allegedly infringed Apple’s Australian patents in

circumstances where the existence of the Galaxy Tab 10.1 was public knowledge since March

2011. I do not accept this. The evidence indicates that Apple initiated proceedings in Australia

before an Australian launch date for the Galaxy Tab 10.1 had been set.

225 There has been no relevant delay in Apple seeking to restrain the launch of the

Galaxy Tab 10.1 in Australia (when Apple’s understanding was that the Galaxy Tab 10.1 was

the form of the device be released in the Australian market), or of the Australian Galaxy Tab

10.1. It follows that delay is not a factor to be weighed in my assessment of the balance of

convenience.

Did Samsung proceed with its “eyes wide open”?

226 In Beecham Group PLC v Colgate-Palmolive Pty Ltd (2004) 64 IPR 45, the

applicants sought an interlocutory injunction for an alleged trade mark infringement. In

assessing the balance of convenience, Tamberlin J found at [17] that it was significant that the

respondent had ‘embarked on its marketing project well aware of the obvious risk it was

running in the face of’ the trademark. Recent cases such as Sigma v Wyeth and Interpharma

indicate that a consideration of whether the allegedly infringing party had its “eyes wide open”

in the course of its actions is a relevant factor in assessing the balance of convenience in patent

proceedings involving an interlocutory injunction. For example, in Interpharma, Jessup J

stated at [78]:

I am not disposed to allow [the alleged infringer] to rely on its own ignorance as leading to a situation in which it would now be commercially inconvenienced were it to be subject to an interlocutory restraint of the kind that the [patentees] seek.

227 In Smith & Nephew, the Full Court stated at [52] that the fact that an alleged

infringer is prepared to take the risk of being restrained with its “eyes wide open” ‘should not

be elevated beyond being a factor in the assessment of the many factors relevant to whether to

grant an injunction’.

228 Apple says that Samsung developed the Galaxy Tab 10.1 and took a deliberate

commercial decision to proceed with the development and launch of the Galaxy Tab 10.1 in

Australia, notwithstanding both the existence of Apple’s Australian patents and notice being

given to Samsung that Apple relied upon its patent rights generally. That is, Apple contends

that it may reasonably be inferred that Samsung undertook commercial preparations to launch a

version of the Galaxy Tab 10.1 in Australia with full knowledge of the fact that Apple had and

asserted patent rights. Apple submits that as Samsung’s approach would appear to be a

deliberate decision for tactical reasons, Samsung incurred “set up” and preparation costs despite

being ‘well aware of the risk that they may be wasted’ (Sigma v Wyeth at [66]).

229 Apple submits that Samsung has had time to “clear away” the patents with

which it was concerned, but chose not to adopt this course. This is not relevant. As the Full

Court stated in Smith & Nephew at [52]:

[I]t would be an error in considering whether the grant of an interlocutory injunction, in the context of an infringement claim, where the validity of the patent is in issue, to impose on a person who seeks to launch an alleged infringing product, an obligation to “clear the way” by revoking the patent.

230 Samsung admits that it was aware that Apple would rely on its patent rights but

contends that such awareness was in the context that Apple had asserted that ‘something else

had better happen’ rather than any assertion that legal proceedings would be initiated. In this

regard, Samsung relies on the fact that Apple had taken no action against other Samsung or

third party tablet devices, which, Samsung alleges, possess the same Allegedly Infringing

Features as the Australian Galaxy Tab 10.1.

231 The evidence, in summary, is as follows:

• The Touch Screen Patent claims a priority date of 6 May 2004 and was first published

on 1 December 2005.

• The Heuristics Patent claims a priority date of 6 September 2006 and was first

published on 3 April 2008.

• Samsung knew as early as July 2010 that Apple had concerns that Samsung’s Galaxy

products allegedly infringed Apple’s intellectual property rights.

• The Negotiations, which occurred in the second half of 2010, did not lead to a

resolution of Apple’s concerns.

• T h e F i r s t P r e s e n t a t i o n s t a t e s t h a t

X X X X X X X X X X X X X X X X X X X X X X X X X X X X X

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

• T h e F i r s t P r e s e n t a t i o n

X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

• T h e F i r s t P r e s e n t a t i o n t h e n s t a t e s

X X X X X X X X X X X X X X X X X X X X X X X X X X X X X

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXX

• Samsung first entered the Australian tablet market on or about 8 November 2010

through its release of the Galaxy Tab 7. No proceedings were brought by Apple in

respect of the Galaxy Tab 7.

• On 22 March 2011, Samsung announced internationally the intended release of the

Galaxy Tab 10.1.

• On 15 April 2011, Apple Inc commenced proceedings in the United States in respect of

the Galaxy Tab 10.1.

• Samsung released the Galaxy Tab 10.1v in Australia on 9 May 2011. No proceedings

were brought by Apple in respect of the Galaxy Tab 10.1v.

• In June 2011, the US version of the Galaxy Tab 10.1 was made available for sale in the

USA.

• In June 2011, proceedings in respect of the Galaxy Tab 10.1 were commenced in

Germany, Japan, Korea and the Netherlands.

• Apple filed a Notice of Motion on 1 July 2011 for a preliminary injunction in the

United States proceedings in respect of the Galaxy Tab 10.1.

• The application was filed in Australia on 28 July 2011 and amended on 6 September

2011. The originating application asserted infringement of 10 patents, including the

Touch Screen Patent but not including the Heuristics Patent. It also asserted passing off

and breaches of ss 18 and 29(1)(a), (g) and (h) of the ACL.

• Mr McGee says that following the commencement of the proceedings in Australia,

Samsung modified the Galaxy Tab 10.1 to be launched in Australia so that there was no

suggestion that the product performed the methods claimed in the patents asserted by

Apple in its original application.

• On 2 September 2011, Apple filed a “List of Patents and Claims Infringed by the

Australian Galaxy Tab 10.1 Product (for Interlocutory Hearing)”. This document listed

five patents, including the Heuristics Patent and the Touch Screen Patent. The claims

listed for each of the Heuristics Patent and the Touch Screen Patent were far broader

than the limited claims over which the parties ran the interlocutory case.

232 The relevant period for consideration of whether Samsung had its “eyes wide

open” must be prior to 28 July 2011 because:

• there can be no dispute, at least in relation to the litigation itself (if not the specific

patents asserted) that Samsung would have had its “eyes wide open” at this point and

that, in taking any steps after 28 July 2011 towards the launch of the Australian Galaxy

Tab 10.1, it was fully apprised of the risk in doing so;

• even though Samsung made changes to the Galaxy Tab 10.1 following 28 July 2011,

this was within a framework in which the proceedings had already commenced; and

• other than delay, Samsung does not seem to rely on any damage for the purposes of the

Samsung Harm from its actions after 28 July 2011. For example, Samsung does not

rely on the potential wastage of the costs of the modifications of the Australian Galaxy

Tab 10.1.

233 I am of the view that Samsung had been put on notice in the latter half of 2010

that Apple intended to enforce its patent rights as a result of the Negotiations and the

Presentations. However, I do not accept that this notice is sufficient to make a finding that

Samsung acted with its “eyes wide open” in respect of the launch of an Australian version of

the Galaxy Tab 10.1 prior to 15 April 2011, the date on which Apple Inc commenced

proceedings in the United States in respect of the Galaxy Tab 10.1.

234 Further, given the “thicket of patents” Apple pointed to in the Negotiations and

the considerable volume of Apple patents in existence (Apple is said to own at least 339

Australian patent and patent applications), I do not give any weight to the assertion that

Samsung had its “eyes wide open” in relation to the Interlocutory Patents in a specific sense in

the relevant pre-28 July 2011 period.

235 However, I accept that from 15 April 2011 Samsung knew or should have

known of the likelihood that Apple would intend to pursue its intellectual property rights,

including its patent rights, in respect of the launch of the Galaxy Tab 10.1 in Australia. I accept

that from 15 April 2011 Samsung proceeded to make preparations for the launch of the Galaxy

Tab 10.1 in Australia with its “eyes wide open” to the impending commencement of legal

proceedings in Australia, although not necessarily with respect to the detail of these

proceedings. The evidence suggests that Samsung chose to do nothing about this until Apple

commenced proceedings on 28 July 2011.

236 The weight to be attributed to this finding is affected by placing it in context.

Part of Samsung’s decision to proceed with its “eyes wide open” was, it seems to me, driven

by the nature of tablet devices, in particular their short life cycle. In some cases, it may be held

against the alleged infringer that, at the point at which the alleged infringer’s “eyes” became

“wide open”, the alleged infringer should have delayed making preparations to launch its

product and the failure to do so means that the alleged infringer brought much of the detriment

relied on for the purposes of the assessment of the balance convenience upon itself. This is not

such a case. The evidence indicates that much of the Samsung Harm is, in essence, as a result

of further delays in the launch of the Australian Galaxy Tab 10.1. Accordingly, if Samsung

were to have delayed making preparations to launch the Galaxy Tab 10.1 in Australia once its

“eyes” became “wide open”, this would not have alleviated the Samsung Harm. The opposite

can in fact be said: if Samsung had delayed making preparations to launch the Galaxy Tab 10.1

in Australia once its “eyes” became “wide open”, this would have resulted in Samsung

experiencing a significant proportion of the Samsung Harm which it is now attempting so

vehemently to avoid.

237 Accordingly, although the issue of “eyes wide open” is a factor to be weighed

against Samsung in the assessment of the balance of convenience, I attribute minimal weight to

it.

Strength of prima facie case

238 As Sundberg J put it in Sigma at [15], the issue of whether there exists a prima

facie case should not be considered in isolation from the balance of convenience. The apparent

strength of the parties’ substantive case is often an important consideration to be weighed in the

balance of convenience (Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 at 416;

Interpharma at [16]; Sigma at [15]).

239 Recognising that any order must relate only to the specific infringements

alleged, an overall assessment of Apple’s prima facie case for relief is strengthened by the fact

that I have found that it has a prima face case for relief in respect of two separate, registered

patents. Accordingly, I weigh this factor in favour of Apple.

Conclusion on balance of convenience

240 The balance of convenience is almost evenly weighted. I have found that the

detriment to both parties from an adverse outcome would be significant. For both parties,

damages would be an inadequate remedy for the detriment they will suffer.

241 However, there are several balance of convenience factors that favour Apple.

These factors are, perhaps, not to be given weight to the same extent as factors such as the

detriment and inadequacy of damages to both parties, but they are nonetheless important

factors. They are as follows:

• An interlocutory injunction may, in practical terms, amount to final relief for both

parties. However, I give some weight to Samsung’s unwillingness to accept an early

hearing date, which would have reduced this effect.

• I give some weight, albeit minimal, to my conclusion that from 15 April 2011 Samsung

proceeded with preparations to launch the Galaxy Tab 10.1 in Australia with its “eyes

wide open”.

• Apple’s prima facie case is strengthened by the fact that I have found that it has a prima

face case in respect of two separate, registered patents. I give some weight to this.

242 I have not given any weight to factors such as delay and the preservation of the

status quo.

243 Accordingly, in my view, the balance of convenience tilts in Apple’s favour.

That is, Apple’s inconvenience or injury from the refusal of an injunction of the Australian

Galaxy Tab 10.1 marginally outweighs the inconvenience or injury Samsung would suffer if an

injunction were granted.

CONCLUSION

244 Apple has established a prima facie case for an entitlement to relief on the

Heuristics Patent. Even though Samsung has established a prima facie case for the invalidity of

the Touch Screen Patent, Apple has also established a prima facie case for an entitlement to

relief on the Touch Screen Patent. The balance of convenience tilts in Apple’s favour. I am

satisfied, within the test in O’Neill, that it is appropriate to restrain the launch of the Australian

Galaxy Tab 10.1.

245 I will hear from the parties as to the appropriate orders to be made.

I certify that the preceding two hundred and for ty-f ive (245) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated: 13 October 2011

ANNEXURE A

INVALIDITY TABLE FOR AU 2005246219 – Leeper Article (“Leeper”)

29 September 2011

Noting the Respondent has filed no expert evidence, and for the purposes of the hearing of this interlocutory application only, Apple provides the following chart:

Integer

Claim 6 Disclosed in Synaptics

Respondents’ Comments Applicants’ Comments

6.1 A touch panel having a transparent capacitive sensing medium configured to detect multiple touches or near touches that occur at a same time and at distinct locations in a plane of the touch panel

Samsung: YES

Apple: NO

Synaptics discloses an LCD based touch screen with capacitive touch detection.

Synaptics has a transparent capacitive sensing medium.

“The clear and thin sensing surface allows Synaptics proven capacitive touch sensing technology to be placed upon any surface without impacting the view-ability of the underlying component. Capacitive finger sensing is far more sensitive than all other transparent membrane touch technologies.”

Page 187, Section 1.

“To form a clear sensor, the traces are made of a clear conductor such as indium tin oxide (ITO) and the insulation layers consist of optically clear adhesives and clear polyethylene terephthalate (PET), a plastic resin and a form of polyester.”

Page 188, Section 4.

The Synaptics touch screen is capable of detecting multiple touches at distinct locations.

“Because finger presence is computed by changes in trace array capacitances, the controller is capable of computing finger pressure as an

6.1A and to produce distinct signals representative of a location of the touches on the plane on the touch panel for each of the multiple touches,

Apple: NO [Feature not addressed] This integer has not been identified by Samsung in their claim chart. The integer requires (in conjunction with the previous integer) that for each of the multiple touches or near touches that occur at a same time and at distinct locations in a plane of the touch panel, distinct signals representative of the location of the touch are produced.

As the only disclosure of multiple touches in Leeper is in relation to multiple fingers at the same location resulting in a single larger area touch, rather than multiple touches at distinct locations, this integer is clearly not present in Leeper.

Claim 6 describes a touch screen that involves mutual capacitance (see para 23 and 26 of Phares affidavit, and T72:13-20). Mutual capacitive touch screens, such as the one described in claim 6, are capable of detecting multiple touches occurring on the touch screen and producing distinct signals representative of the location for each touch (ie at the corresponding sensing line or node(s) at that location).

Leeper does not describe a mutual capacitive touch screen nor teach anything regarding the production of distinct signals representative of a location of the touches on the plane of the touch panel for each of the multiple touches.

Rather,as is clear from section 4, where it is noted that;

“Each trace possesses a capacitance to free

AU 2005246219 (with regards to AU 2003291378 (Mulligan))

29 September 2011

Noting that the Respondent has filed no expert evidence, and for the purposes of the hearing of this interlocutory application only, Apple provides the following chart:

Integer

Claim 6 Disclosed in AU 2003291378 (Mulligan)

Respondents’ Comments

Applicants’ Comments

6.1 A touch panel having a transparent capacitive sensing medium configured to detect multiple touches or near touches that occur at a same time and at distinct locations in a plane of the touch panel

Samsung: YES

Apple: NO

Mulligan discloses a transparent touch panel which includes a capacitive sensing medium. According to Mulligan, the capacitive sensing medium may include a plurality of layers which may be made with transparent materials so as to allow light to pass through, thereby rendering the touch panel suitable for use with electronic displays.

“Touch-sensitive screen 210 is made up of a series of layers laminated together. In this embodiment, touch-sensitive screen 210 includes a touch pane 220 and a lattice touch-sensing element 230. The lattice touch-sensing element 230 includes a first sensor layer 240, a second sensor layer 260, and an intermediate dielectric layer 250 disposed between the first sensor layer 240 and the second sensor layer 260.

The touch pane 220 is the uppermost layer of the touch-sensitive screen 210. The touch pane 220 may be made of an optically clear substance.”

Page 5, line 15 to 21 and

“The top layer of the lattice touch-sensing element

6.1A and to produce distinct signals representative of a location of the touches on the plane on the touch panel for each of the multiple touches,

Apple: NO [Feature not addressed] This integer was not identified by Samsung in their claim chart. The integer requires (in conjunction with the previous integer) that for each of the multiple touches or near touches that occur at a same time and at distinct locations in a plane of the touch panel, distinct signals representative of the location of the touch are produced.

On the assumption that the above italicized extract is similarly being relied upon, there is nothing in this extract which would provide a real and reasonably clear disclosure of this integer, and consequently fair basis for a claim including this integer.

Claim 6 describes a mutual capacitive touch screen (see para 23 and 26 of Phares affidavit, and T72:13-20). Mutual capacitive touch screens with the claimed structure are configured to detect multiple touches occurring on the touch screen and producing distinct signals representative of the location for each touch (ie at the corresponding sensing line or node(s) at that location).

Nowhere in Mulligan is there disclosed a mutual capacitive touch screen.