Apple Inc. v Samsung Electronics Co. Limited

JUDGE: BENNETT J DATE: 13 OCTOBER 2011 PLACE: 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] Legal Principles TO BE APPLIED [20] Prima facie case [21] ASSESSMENT OF WHETHER THERE IS A PRIMA CASE FOR INFRINGEMENT OF THE INTERLOCUTORY PATENTS [37] The Touch Screen Patent [37] Infringement of claim 6 [40] Novelty of claim 6 [59] The Leeper Article [61] The Capacitance Integer [65] The Multiple Touch Integer [72] Consideration [74] The Mulligan Patent [76] Samsung's contentions [78] Apple's contentions [83] Consideration [86] The Heuristics Patent [89] Apple's contentions [101] Samsung's contentions [110] Consideration [121] Balance of Convenience [128] Significant detriment [149] Consideration of Apple's detriment [149] Consideration of Samsung's detriment [162] Comparison of detriment [174] Appropriateness of damages as a remedy [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 the Apple Harm and the Samsung Harm [198] Diminution of the benefit to be obtained by final relief [203] Apple [204] Samsung [208] Comparison [213] Is there a status quo in the Australian tablet market that requires preservation? [214] Did Apple delay? [219] Did Samsung proceed with its "eyes wide open"? [226] Strength of prima facie case [238] Conclusion on balance of convenience [240] Conclusion [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.

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 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 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 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 187 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 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. The First Presentation states that XXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX The First Presentation XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX The First Presentation then states XXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 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 forty-five (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 Synaptics discloses an LCD based touch screen with capacitive touch detection. The reference to 'detecting the presence of multiple fingers' in Leeper is a reference to the added capacitance to more traces resulting from the contact of multiple fingers at the same location, rather than multiple touches at distinct locations. This is clear from the opening words of the relevant sentence in the passage below, which refers to computing finger presence by changes in trace array capacitances. Apple: NO Synaptics has a transparent capacitive sensing medium. "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." "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 188, Section 4 Page 187, Section 1. The two scenarios described above clearly relate to detection of a change in contact or touch area in respect of a single contact, which varies with number of fingers or finger pressure, as opposed to the detection of multiple touches at distinct locations. "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." This is further borne out in section 3 at page 188 where it is stated: Page 188, Section 4. "Synaptics cPad device driver reliably discriminates between intentional touches and inadvertent contact." The Synaptics touch screen is capable of detecting multiple touches at distinct locations. This is clearly achieved by way of discrimination in touch area, as described above. "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." Page 188, Section 4. 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 space that can be measured by the controlling circuitry. ..Because the sensor is detecting change in a trace's capacitance to free space..", the sensor employs self-capacitance. There is a further reference in section 5 to "minimizing transcapacitance and maximizing sensor performance". This clearly teaches away from a mutual or trancapacitance arrangement.

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 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. Mulligan is a "whole of contents" reference under Section 7(1)(c) and paragraph (b)(ii) of the definition of "prior art base" in the Dictionary in Sch 1 to the Patents Act. The usual rules as to clarity of disclosure to the skilled addressee apply but, in addition, it must be possible to draft a notional claim (assuming there is not an actual claim to the relevant subject matter) that is fairly based on the disclosure of the prior specification relied upon: E I Du Pont de Nemours & Co v ICI Chemicals & Polymers Ltd (2005) 66 IPR 462 ; [2005] FCA 892 at [80]-[84] (E I Du Pont) per Emmett J, referred to in Danisco A/S and Another v Novozymes A/S and Another (No 2) - (2011) 91 IPR 209 at 278 per Bennett J. Apple: NO "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. There is no real and reasonably clear disclosure of 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 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." The passage that Samsung relies upon is as follows- which for multiple touch recognition effectively amounts to the underlined portion: Page 5, line 15 to 21 and "Each sensor layer could provide more detailed information, including the touch location in both directions. This extra information could greatly improve multiple touch rejection, or, conversely, to enable multiple touch recognition. "The top layer of the lattice touch-sensing element 230 is the first sensor layer 240. The first sensor layer 240 includes a plurality of capacitive touch-sensitive sensor bars 270 arranged substantially parallel to each other in a unidirectional manner. For instance, a two-layer touch sensor could be used in combination with a gaming application that allowed two players to simultaneously touch the touch sensor. In addition, the improved performance of a dual-layer double-end-connected design would allow weaker signals to be accurately detected, such as those experienced by users wearing gloves or the like." They are preferably constructed of indium tin oxide (ITO) for optical transparency," The underlined portion reflects a mere desideratum. No details are provided as to how the transparent capacitive sensing medium is 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. Page 5, lines 28 to 31. Mulligan also discloses that the touch panel is arranged to detect multiple touches or near touches that occur at the same time and at distinct locations on the plane of the touch panel. "Each sensor layer could provide more detailed information, including the touch location in both directions. This extra information could greatly improve multiple touch rejection, or, conversely, to enable multiple touch recognition. For instance, a two-layer touch sensor could be used in combination with a gaming application that allowed two players to simultaneously touch the touch sensor. In addition, the improved performance of a dual-layer double-end-connected design would allow weaker signals to be accurately detected, such as those experienced by users wearing gloves or the like." Page 8, line 27 to page 9, line 2 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.