England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
(HHJ BIRSS QC)
Neutral Citation Number: [2012] EWHC 2048 (Pat)

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/07/2012

LORD JUSTICE KITCHIN :

1. This is an application for a stay pending appeal of paragraph (3) of the order of HHJ Birss QC, sitting as a judge of the High Court, made in this action on 18th July 2012. More accurately perhaps, it is an appeal against the refusal by the judge to stay that paragraph of his order.
2. In September 2011, Samsung issued these proceedings seeking a declaration that particular tablet computers which it sells under the trade mark Galaxy do not infringe Apple's Registered Community Design No. 000181607-0001 ("the registered design"). Apple counterclaimed for infringement. The proceedings formed part of a worldwide dispute between Apple and Samsung concerning tablet computers and smartphones. It began in April 2011 and now includes actions in the United States, Germany, the Netherlands, Spain, France, Italy, Japan, Korea and Australia.
3. This action came on for trial before Judge Birss on 28th and 29th June 2012. In his judgment, dated 9 July 2012, the judge held that Samsung Tablets do not infringe Apple's registered design, concluding:

"They do not have the same understated and extreme simplicity which is possessed by the Apple design. They are not as cool. The overall impression produced is different."

4. Not surprisingly, this judgment has attracted a great deal of publicity, as I shall explain.
5. On 18 July 2012, a further hearing took place before the judge to determine the appropriate form of order. The judge made the declarations sought by Samsung and dismissed the counterclaim. These orders were entirely conventional.
6. However, Samsung sought two further orders. The first was an injunction restraining Apple from representing that the Samsung Tablets infringed the registered design. The second was an injunction requiring Apple to arrange for the publication of a notice on the homepage of its UK website, in three national newspapers, the Financial Times, the Daily Mail and The Guardian, and in two trade magazines, Mobile Magazine and T3 magazine.
7. The notice is in the following terms:

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

8. The judge declined to make the first of these two orders, but he acceded to the application in respect of the second and it is contained in paragraph (3) of his order. He directed that the notice should appear on the home page of Apple's UK website in a font size no smaller than Arial 11pt together with a hyperlink to the judgment and that the notice and the hyperlink should remain displayed for a period of six months. Further, the notice in the newspaper and trade magazines should be published in a font size no smaller than Arial 14pt and appear on a page earlier than page 6.
9. The judge gave Apple permission to appeal against all substantive parts of the order, including paragraph (3). He also refused a stay of paragraph (3) pending the appeal.
10. Apple now appeals against that refusal of a stay. Samsung resists the appeal and has offered a cross-undertaking in damages to compensate Apple in the event that the order is overturned on appeal and Apple can prove that it has suffered damage as a result of having complied with it.
11. The application for these further orders was accompanied by a witness statement of Mr. David Angus Stone, a partner in the firm of solicitors acting for Samsung, dated 16th July 2012, in which he explains that Apple has for some time asserted in various jurisdictions around the world that the Samsung Galaxy Tablets infringe the registered design and its foreign equivalents, that Samsung is infringing Apple's other intellectual property rights and that Samsung has engaged in blatant copying. In this connection he refers back to an earlier statement which he made on 6th February 2012 in which he refers to a report in the Daily Mail on 10th August 2011 that Apple spokesmen had said:

"This kind of blatant copying is wrong, and we need to protect Apple's intellectual property when companies steal our ideas'."

12. These statements by Apple have, he says, caused commercial harm to Samsung and generated a good deal of commercial uncertainty and that these are matters which have been recognised by the courts in this jurisdiction in expediting the trial of the action. Mr. Robert Howe QC, who has appeared on behalf of Samsung on this application, has taken us to aspects of that evidence which do appear at least arguably to suggest that for these reasons, perhaps amongst others, Samsung's sales have indeed suffered a significant decline. Moreover, Mr. Stone continues, since the decision of the 9th July 2012, Mr. Alan Healy has been reported as stating:

"'Apple declined to comment specifically on the judgment, but reiterated its earlier position in a statement:

'It's no coincidence that Samsung's latest products look a lot like the iPhone and iPad, from the shape of the hardware to the user interface and even the packaging. This kind of blatant copying is wrong, and as we've said many times before, we need to protect Apple's intellectual property when companies steal our ideas'."

13. Samsung contended before the judge that this statement amounted to another assertion by Apple that Samsung's tablets infringed the registered design and this statement having been made after judgment, it was appropriate and proportionate to grant an injunction to restrain the making of further statements and for an order requiring Apple to disseminate the judgment in order to prevent the court's declaratory order being frustrated.
14. The judge dealt first with the application for the injunction to restrain Apple from making further such statements. He considered he had jurisdiction to make an order under section 37(1) of the Senior Courts Act 1981, but declined to exercise that jurisdiction primarily because he took the view that Apple was entitled to its opinion that the judgment was not correct and that the injunction sought would constitute an unjustified interference with Apple's right to express that opinion publicly.
15. The judge then turned to the application for an order requiring Apple to disseminate the judgment in the manner I have described. He concluded that he also had jurisdiction to make this order under section 37 of the Senior Courts Act and then turned to the principles which should guide the exercise of his discretion. In this connection he referred to Article 15 of Council Directive 2004/48, the Enforcement Directive, as reflected in paragraph 26.2 of the Practice Direction supplementing CPR Part 63. This reads:

"Where the court finds that an intellectual property right has been infringed, the court may, at the request of the applicant, order appropriate measures for the dissemination and publication of the judgment to be taken at the expense of the infringer."

16. The judge recognised that this provision is concerned with a case where an intellectual property right has been infringed, but considered there is also a useful purpose in a clear public statement that a product alleged by a rights holder to infringe those rights does not infringe. He continued that the more frequently and the more loudly a rights holder has asserted infringement, the more useful it is to have a clear public statement to the contrary.
17. Against that he recognised that Samsung already had the benefit of a declaration of non-infringement. Nevertheless, and having regard to the assertions made by Apple and the damage they had caused to Samsung, the judge considered that overall fairness demanded that he should make the order sought.
18. Apple thereupon applied for and was granted permission to appeal against the order on the basis that such an order had not been made before and therefore raised a new point of law. Samsung did not object to the grant of permission, recognising it as a new form of order and that there is a clear public interest in the court looking at the issue. Nevertheless, it says that the jurisdictional basis for the order was clear and that to succeed on appeal Apple will have to demonstrate that the judge went so wrong in exercising his discretion that interference by this court is warranted.
19. Apple, on the other hand, proposes to contend that it has done nothing wrong in stating its view that Samsung has infringed its rights, that any damage Samsung is suffering is inherent in the appeal process and that the Enforcement Directive does not suggest that the European legislature intended all decisions of national courts should be publicised. It further argues that the policy of the Directive plainly does not extend to decisions following declarations of non-infringement. The European legislature could have applied the policy behind Article 15 to declarations of non-infringement but chose not to. For the UK unilaterally to apply Article 15 to declarations of non-infringement would create a lack of uniformity in the rules of enforcement as between the UK and the rest of the EU.
20. These are all matters for the substantive appeal and I need say no more about them. We are concerned only with the question of whether it was appropriate to grant a stay pending the appeal. Apple made an application for a stay which was dealt with in very short order. Following a submission from Mr. Hacon, appearing on behalf of Apple, to the effect that the refusal of a stay would render the appeal nugatory, the judge said:

"Let us deal with that. I do not need to hear from Miss Pickard. Mr. Hacon, I am not persuaded that any prejudice to your client is such as to justify staying this order pending the expedited appeal. It seems to me in the circumstances, and particularly bearing in mind the statements that your client has seen fit to make already post-judgment, that it is entirely fair that I should make this order. If you wish to seek a further stay, you will need to go to the Court of Appeal."

21. Matters have moved on since that hearing as elaborated in two witness statements filed on behalf of Apple. The first is a witness statement of Dr. Watts, a partner in the firm of solicitors acting for Apple, dated 23rd July 2012. He explains that the statement made by Mr. Healy, of which Samsung complains, is one behind which Apple stands and which it has consistently repeated since the commencement of the global dispute in April 2011. The statement is, he says, not talking about the judgment or even this case and concerns the whole global dispute. He continues it is a view which appears to be shared by some independent commentators and points in that regard to articles in the Financial Times on 8th July 2010 and PC World on 8th June 2011.
22. The second point he makes is that there has been a very great deal of press coverage of the judgment and that the press reports that included Apple's comments of which Samsung particularly complains make clear that the court has determined that Samsung does not infringe the registered design.
23. Third, and perhaps most importantly, he explains that the media coverage relating to the form of order has also been extraordinarily extensive and has focused not just on the judgment but also specifically upon that part of the order which requires Apple to place the notice on its UK home page and in national newspapers.
24. Comments have included the following:

"Apple must publicly admit that Samsung did not copy the iPad when designing its own tablets, a judge has ruled"; "Bad Apple! Tech giant ordered to publish notices and adverts admitting that Samsung did NOT 'copy' the designs for iPad"; and "Samsung bites Apple".

25. Dr. Watts continues that other comments identify how the order has already damaged Apple and will continue to do so, particularly if it comes into effect. For example, Gizmodo described the order as:

"Perhaps the most hilariously embarrassing thing a judge could order Apple to do" and "a shameful punishment".

Domain-b described the order as "humiliating" and "extremely embarrassing for Apple".

Geekosystem described the order as a "public embarrassment" for Apple.

A blogger on Computer World referred to it as a "public humiliation".

ReadWriteWeb called it "Apple's public shaming" and it continued:

"Essentially it is a form of public shaming. Apple now has to stand in the town square with a sandwich board over it claiming We were wrong. Samsung did not copy us. If this were 18th century England, the town folk would gather round and throw rotten fruit at the offender."

26. Finally, Bloomberg television reported the order as an "embarrassing mark of shame". There are many other such comments.
27. The second is a witness statement of Mr. Durward Sewell dated 22nd July 2012. He is Senior Vice President, General Counsel and Secretary of Apple and explains that Apple believes it will be able to substantiate its claims against Samsung, that it will show in litigation currently before the US courts that Samsung in fact copied Apple's products, that the Samsung Galaxy Tab 10.1 is currently the subject of an interim injunction granted by the District Court for the Northern District of California and that, in Germany, the Tab 10.1 and 8.9 are subject to an interim injunction pursuant to German unfair competition law.
28. Further, shortly before this hearing, it was drawn to our attention that, on 24th July 2012, the Higher Regional Court of Düsseldorf has granted an injunction in respect of the Tab 7.7.
29. Accordingly, although Apple recognises that it has lost at first instance in this jurisdiction, it says at least some decisions in other jurisdictions have gone in its favour.
30. Turning to the specific order the subject of this application, Mr. Sewell says that Apple prides itself on its ability to create innovative first-to-market products which are unique and market defining. He says that at the heart of Apple's ethos is its ability to distinguish and differentiate itself, its brand and products from those of its competitors.
31. It has spent many years creating and refining a brand identity extending from the design of its products through to the marketing of those products, including the look and feel of its website.
32. The home page of this website is, he continues, the first port of call for internet users and the most critical page from a marketing perspective. The order sought would compel Apple to place the statement on its homepage for a period of six months and do something utterly out of character and at odds with everything it has previously chosen to say. It will also disrupt Apple's ability to control its image, publicity and content and worse still, completely change the appearance of that website. All of this would distract consumers and inevitably cause unquantifiable and irreparable harm.
33. Mr. Sewell concludes that a website notice complying with the order would generate yet more coverage, emphasising the embarrassing and punitive effect of the order upon Apple and threatens an invidious and lasting damage to Apple's image and reputation of a sort that cannot be quantified. Around the world he says the order is being characterised as a requirement that Apple apologise for its actions, as if its defence of Samsung's claim has in some way been improper. Any such inference, he concludes, is extremely and irreparably damaging to Apple's reputation and brand.
34. The general principles which must guide the court in deciding whether or not to grant a stay pending appeal are well established. A successful litigant should not generally be deprived of the fruits of his victory unless there is a good reason to take this course. A stay is therefore the exception rather than the rule. Solid grounds must be put forward by the party seeking a stay and, if established, the court will then undertake a balancing exercise, weighing the risk of injustice to each side if a stay is or is not granted.
35. In assessing whether solid grounds have been shown, a highly relevant factor will be whether the refusal of the stay would render the appeal wholly or largely nugatory.
36. I turn then to apply these principles in the context of the present case. Lord Grabiner QC, who has appeared on this application on behalf of Apple, submits, and I accept, that, unless the stay is granted, an appeal against that part of the order which requires Apple to place notices in the five publications will be rendered valueless. As for that part of the order which requires Apple to place a notice on the home page of its UK website, this must remain displayed for six months. Enquiries made during the course of this application have revealed that this appeal, if expedited, as I believe it should be, can be heard in October. But, even so, I am satisfied the appeal will be rendered worthless in respect of that part of the six-month period which will have elapsed by the time judgment is given.
37. Further, it is, I think clear from the evidence that the judgment and the consequential order, including specifically paragraph (3), have attracted a great deal of media attention and have been widely publicised. Indeed, the judgment has already been the subject of articles in The Guardian, the Financial Times, MailOnline, T3 Magazine and Mobile Magazine, amongst many others, with the result that there is already a significant public awareness of Samsung's success.
38. Against this background, paragraph (3) of the order has been perceived by the media as a humiliation and a form of public shaming of Apple. I can well understand Mr. Sewell's concern that compliance by Apple with this order is likely to cause damage to Apple's reputation and goodwill and that such damage is likely to be unquantifiable and very difficult, if not impossible, to repair in the event that Apple prevails on the appeal.
39. Moreover, I am impressed by Mr. Sewell's evidence that Apple has developed a worldwide reputation for creating innovative market defining products and that the styling of its products and marketing materials form an essential element of the Apple brand. Mr. Sewell says, and for the purposes of this application I accept, that its home page is a primary point of contact with its customers in this jurisdiction. The notice which the order requires Apple to place on its home page would be of a significant size and, in my judgment, out of keeping with its image.
40. Further, I think it material that Apple has never mentioned a competitor company in its advertising and has never referred to the ongoing litigation in any form on its home page. I consider that there is a real risk that the significant change in appearance that would result from the inclusion of the notice would cause significant and lasting damage to Apple's image.
41. For all these reasons, I believe that Apple has shown solid grounds for a stay and a real risk of irremediable harm should it be refused.
42. I must also consider the risks inherent in refusing a stay. Mr. Howe has emphasised that the order was sought and granted on the basis that it would go some way to remedy the harm Samsung has suffered by Apple's repeated allegations that the Samsung tablets infringe its registered design. Further, Apple plainly intends to continue to assert that Samsung has copied Apple's designs and that it has infringed its intellectual property rights. There is, he submits, a real risk that, as with previous assertions, Apple's most recent statements will cause Samsung significant harm unless corrected in a short space of time.
43. I have no doubt that Samsung's concerns are entirely genuine, but I believe the risk of damage from Apple's continuing assertions in the relatively short period pending the appeal is substantially reduced by the enormous publicity that the judgment and order have already generated. Moreover, as Lord Grabiner submitted, Samsung can itself continue publicly to proclaim its success at the trial before Judge Birss.
44. Weighing all these matters together, I have no doubt that the risk of injustice inherent in the refusal of a stay is substantially greater than the risk of injustice inherent in granting a stay. Public humiliation formed no part of the judge's reasoning in deciding to make the order and I do not think it would be right to condemn Apple to such a fate before it has had an opportunity to argue its case on the appeal.
45. We have had the benefit of a considerable body of evidence which was not before the judge and which reveals the impact his order has already had and the damage it would cause if implemented pending appeal. I am, therefore, satisfied this is one of those cases where it is permissible to interfere with the exercise by a judge of his discretion.
46. For all these reasons, I would grant the stay sought pending the substantive appeal.

SIR ROBIN JACOB:

47. I agree. We are deciding this matter de novo rather than considering whether the judge exercised his discretion properly or improperly. We did so because we have lots of material which the judge simply did not have.
48. The jurisdiction to grant this order is itself in question and could be an important matter the subject of the appeal. Section 37 is said to be the basis, and not, as he apparently accepted correctly, the Enforcement Directive 2004/48/EC. Whether section 37 provides a freestanding power to grant an injunction of this sort is obviously an important and difficult question.
49. What I do note, however, is that looking at the Directive, the reason for the power to grant a publicity order in favour of a right holder is provided by the 27th Recital which reads as follows:

"To act as a supplementary deterrent to future infringers and to contribute to the awareness of the public at large, it is useful to publicise decisions in intellectual property cases."

50. If you take those two reasons as the basis for granting a publicity order, they do not apply here. We are not concerned at all with supplementary deterrent to future infringers. We are concerned with the worldwide battle between these two grown-up companies. As for contributing to the awareness of the public at large, it is difficult to imagine the cost of the publicity which this case has already had if it had been paid for.
51. One asks the question, is it useful to publicise the decision after what has happened in the press already, to which the answer is plain: not at all.
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