Since there appears to be some confusion about what this means, I'll try and shed some light on it.
The first thing to understand is this is not an appeal involving the whole case. It's an appeal of the district court's decision to grant Apple a preliminary injunction ("the sales ban"). A preliminary injunction is a legal remedy where the defendant is enjoined (prevented) from engaging in some allegedly harmful conduct before the case is decided on the merits. A judge has the power to grant preliminary injunctions because in some cases, by the time a decision is reached the harm might have already been done. E.g. if you're complaining that some company is illegally dumping nuclear waste onto your property every week, you don't want the dumping to continue while the court decides whether it's legal. In that case, the judge has the discretion to grant you a preliminary injunction, which basically "freezes the status quo" pending the resolution of the case. Note a preliminary injunction will often involve some sort of bond requirement, requiring the plaintiff to post bond to compensate the defendant for any losses arising from the injunction in case the defendant wins.
The judge has discretion to grant a preliminary injunction, but is supposed to only do it when there would otherwise be "irreparable harm." This is what the appeal is about. The court said that the trial judge abused her discretion in granting the preliminary injunction because Apple had not proven irreparable harm. Apple claimed that they would lose market share if shipments were allowed to continue, and that was irreparable harm. What the court said was that unless Apple could prove that there was a "causal nexus" between Samsung infringing the patent and people buying Galaxy Nexus phones, there was no irreparable harm because of lost market share. In other words, Apple had to prove that people were buying Galaxy Nexus phones only because of the infringing patent. It wasn't sufficient to prove, for the purposes of evaluating irreparable harm, whether Samsung's infringement simply made the product more attractive than it would otherwise be.
Incidentally, the "abuse of discretion" language has a very specific meaning. It doesn't mean the judge didn't have the power to grant the injunction. Rather, it means the judge didn't grant the injunction on proper grounds. Generally, appeals courts do not review decisions wholesale ("de novo"). Instead, they give the trial judge a lot of latitude. The amount of latitude depends on the specific type of decision. Decisions that involve "judgment calls" about the sufficiency of evidence are given much more latitude than decisions that involve say an interpretation of statutory language. "Abuse of discretion" is a standard of reviewing a lower court decision that basically means the lower court decision will stand unless the appeals court decides that it was totally in left field. In this case, the appeals court said that granting the injunction was an abuse of discretion because the judge granted the injunction despite Apple's evidence being wholly insufficient to meet the legal requirements for granting the preliminary injunction. It wasn't just a difference in judgment where the appeals court thought the evidence was insufficient to establish irreparable harm but could see how the trial court thought it was sufficient. If that had been the case, the appeals court would have let the decision stand. Instead, the appeals court could see no way to justify the finding of irreparable harm.
> a preliminary injunction will often involve some sort of bond requirement
So depending on how large that is, it can say a bit about how serious Apple is about this stuff (or how deep their pockets are, maybe)? For anybody who's curious, like I was, the bond amount was $95,637,141.60 (~$95.6 million) [1]. Is Samsung now entitled to get some of that because of the unjustified preliminary junction? Or only if they win?
I would guess that because the appeals court decided that granting the injunction was decided by the judge on improper grounds, Apple doesn't have to lose the bond amount. Apple's claims were not proven wrong, but the judge made the wrong decision based on Apple's claims.
I can't talk about this case specifically for various legal reasons, but:
In general these bonds are exactly to pay for lost sales due to a preliminary injunction that wasn't deserved. The injunction does not even become effective until the bond is posted.
The only case you wouldn't recover is if the injunction wasn't upheld but you lost the lawsuit anyway, and even then, it depends on what "lost" means.
This should be rare, since injunctions take into account "likelihood of success on the merits".
Additionally, if you win, it doesn't even matter whether the injunction was deserved at the time, you can still recover on the bond because you were enjoined from doing something you had the right to be doing.
As for whether it matters if it was the judges fault or Apple's fault: For patent cases like this, there are no grounds for reversing a preliminary injunction except deciding it was an abuse of discretion (since that is the standard of review for this kind of injunction). So all reversals are because it was granted improperly by the judge.
Actually proving irreparable damage should be the status quo before any such injunctions happen. I feel that these injunctions are granted far too easily. Isn't the injunction supposed to happen only if they cause "irreparable" damage to the other party if they keep being sold?
Plus, there needs to be made a clear distinction between that flavor of "irreparable damage" and "competition". Say that one company does indeed infringe on another's patent, but it's a pretty non-important patent (like that bounce-effect one). And say that the device is very popular because it's a great overall device for many other reasons other than that small piece of technology. And say that this device is so popular that it does indeed create lower sales for the other device.
Could the other company prove "irreparable damage" and ban the product from the market, when 99.99% of the reason it lost sales was because of competition, and that it was a better device (or had better marketing) ? Such a device should never be banned from the market based on a trivial patent, even if the patent is "valid".
That is precisely what is the case. Proving irreparable damage is one of the necessary preconditions to obtaining a preliminary injunction. And irreparable damage is distinguished from competition. You cannot prove irreparable damage from lost sales with an unimportant patent--it has to be so central that people buy the product because of the infringed patent.
That's basically exactly what this decision says. The judge shouldn't have granted the preliminary injunction because Apple didn't prove irreparable damage, and Apple didn't prove irreparable damage because they didn't show that the infringed patent is what caused people to buy the Galaxy Nexus.
The first thing to understand is this is not an appeal involving the whole case. It's an appeal of the district court's decision to grant Apple a preliminary injunction ("the sales ban"). A preliminary injunction is a legal remedy where the defendant is enjoined (prevented) from engaging in some allegedly harmful conduct before the case is decided on the merits. A judge has the power to grant preliminary injunctions because in some cases, by the time a decision is reached the harm might have already been done. E.g. if you're complaining that some company is illegally dumping nuclear waste onto your property every week, you don't want the dumping to continue while the court decides whether it's legal. In that case, the judge has the discretion to grant you a preliminary injunction, which basically "freezes the status quo" pending the resolution of the case. Note a preliminary injunction will often involve some sort of bond requirement, requiring the plaintiff to post bond to compensate the defendant for any losses arising from the injunction in case the defendant wins.
The judge has discretion to grant a preliminary injunction, but is supposed to only do it when there would otherwise be "irreparable harm." This is what the appeal is about. The court said that the trial judge abused her discretion in granting the preliminary injunction because Apple had not proven irreparable harm. Apple claimed that they would lose market share if shipments were allowed to continue, and that was irreparable harm. What the court said was that unless Apple could prove that there was a "causal nexus" between Samsung infringing the patent and people buying Galaxy Nexus phones, there was no irreparable harm because of lost market share. In other words, Apple had to prove that people were buying Galaxy Nexus phones only because of the infringing patent. It wasn't sufficient to prove, for the purposes of evaluating irreparable harm, whether Samsung's infringement simply made the product more attractive than it would otherwise be.
Incidentally, the "abuse of discretion" language has a very specific meaning. It doesn't mean the judge didn't have the power to grant the injunction. Rather, it means the judge didn't grant the injunction on proper grounds. Generally, appeals courts do not review decisions wholesale ("de novo"). Instead, they give the trial judge a lot of latitude. The amount of latitude depends on the specific type of decision. Decisions that involve "judgment calls" about the sufficiency of evidence are given much more latitude than decisions that involve say an interpretation of statutory language. "Abuse of discretion" is a standard of reviewing a lower court decision that basically means the lower court decision will stand unless the appeals court decides that it was totally in left field. In this case, the appeals court said that granting the injunction was an abuse of discretion because the judge granted the injunction despite Apple's evidence being wholly insufficient to meet the legal requirements for granting the preliminary injunction. It wasn't just a difference in judgment where the appeals court thought the evidence was insufficient to establish irreparable harm but could see how the trial court thought it was sufficient. If that had been the case, the appeals court would have let the decision stand. Instead, the appeals court could see no way to justify the finding of irreparable harm.