In the long-running patent battle between Apple and Samsung, the Second Circuit recently issued its verdict on the appeal of the original case (5:12-cv-00630-LHK) that resulted in a big cash award for Apple, but not the permanent injunction Apple had also wanted. In order to obtain that injunction, Apple needed to show irreparable harm. The district court did not believe that the conjoint analysis results that were the basis for the damages award were sufficient to show irreparable harm. The appeals court disagreed.
The majority opinion in the appeal stated that “district court therefore erred as a matter of law when it required Apple to show that the infringing features were the reason why consumers purchased the accused products. Apple does not need to establish that these features are the reason customers bought Samsung phones instead of Apple phones—it is enough that Apple has shown that these features were related to infringement and were important to customers when they were examining their phone choices.”
The court went on to directly reference Applied Marketing Science (AMS) Co-founder Dr. John Hauser’s conjoint analysis survey results which established that “consumers would not have purchased a Samsung phone if it lacked the patented features, that they valued these features, and that they were willing to pay considerably more for a phone that contained these features.”
Although conjoint analysis has been used in other cases, this is the first time that an appeals court has held that the technique can be used to show irreparable harm by measuring the value to customers of a feature of a product enabled by an infringed patent. Because it is unusual for a single feature to be the only reason for purchasing a product—particularly one like a smartphone with hundreds of features—we can expect to see more applications of conjoint analysis in patent damages cases.