Monday, September 15, 2014

Blind, Bekkers et al. on Patents and Standards

I mentioned a couple of weeks ago the publication of an by Knut Blind and Tim Pohlmann titled Patente und Standards:  Offenlegung, Lizenzen, Patentstreitigkeiten und rechtspolitische Diskussionen ("Patents and Standards:  Disclosure, Licenses, Patent Disputes, and Legal Policy Discussions") in the August 2014 issue of GRUR (pp. 713-19).  The paper summarizes, among other things, some of the results of a 2011 report coauthored by Professor Blind, Rudi Bekkers, Yann Dietrich, Eric Iversen, Florian Köhler, Benoît Müller, Professor Pohlmann, Stein Smeets, and Jurgen Verweijen, titled Study on the Interplay between Standards and Intellectual Property Rights (IPRs):  Tender No ENTR/09/015 (OJEU S136 of 18/07/2009):  Final Report.  Some of the readers of this blog may already be familiar with this body of research, but for those who are not and who want to read the full report (or who don't have easy access to GRUR, or don't read German) can download the report here.  According to the executive summary:
. . . the European Commission announced in the Communication COM(2008) 133 "Towards an increased contribution from standardisation to innovation” supported by Council Conclusions to “launch a fact-finding study to analyse the interplay of IPR and standards.” Consequently, the study has to produce an up to date and quantitative picture of the interplay between IPRs and standards. Starting from a literature survey, this study implemented a multidimensional approach based on an analysis of IPR databases of important international and European SSOs and consortia, interviews with various stakeholders located all over the world, and an international survey among standards producing and standards implementing companies. In addition, we investigated the IPR policies of more than 20 SSOs and reviewed case law, industry views and trends.
The report sets out a wealth of empirical information. Chapter 3 ("Quantitative Study of Essentially-claimed Patents"), for example, reports the number of total patents claimed (declared essential) as of February 1, 2010, for eleven leading SSOs (Table 3-2, p.34); total patents claimed per standard for all standard with ten or more claimed US or EPO patents (Table 3-3, pp. 36-37); total patents claimed by firms (Table 3-6, pp. 42-43); and R&D intensity and expenditure levels per company (Figures 3-9, and 3-10, pp. 48-49, which show that "companies that own essential IPR pursue a tremendous amount of R&D not only in shares of their turnover but also in total volumes").  

Chapter 4 (titled "Identification and Analysis of Stakeholder Views"), "presents the findings of a series of interviews with the industry conducted on the basis of a detailed format with topics and questions . . . . In total 15 firms were interviewed," namely Alcatel-Lucent, Cisco, Ericsson, Harting, Hitachi, IBM, Infineon, Microsoft, Mitsubishi, Nanotron, Nokia, Philips, Qualcomm, Siemens, Toshiba," and one industry expert, Eric Stasik (pp. 60-61).  Interviewees believe "there is a large amount of over-claiming" (p.63), for various reasons, and report typical aggregate licensing fees for mobile devices ranging from 4% (for GSM with corss-licensing) to 12% (for GSM & UMTS with no cross-licensing), "expressed as a percentage of the wholesale value of the terminal" (p.70; see also GRUR article p.714).  (Note:  this is considerably lower than the 30% estimated in the Armstrong, Mueller & Syrett paper I blogged about here.)  Chapter 4 also reports findings from a survey of "practicioners who are experts on the subject of standards and their interplay with IPR," consisting of 
more than 140 answers collected by directly addressing companies declaring essential patents identified via the database analysis (see Chapter 3) and standards implementors using membership information of international, European and various national standardisation bodies in Europe. . . .  The response covers almost 30% of the top 100 essential patent owning companies ranked to the number of owned patents included in standards. Having a high share of responses from companies owning a great number of essential patents generates results that cover almost 70% of all essential patents that could be identified. Consequently, we have a representative sample of companies owning essential IPRs. The sample of the companies implementing standards, but not owning essential IPRs is a random sample of companies, but likely to be biased towards companies experiencing the relevance of IPRs in standards. Due to the rather low response to the open survey of standards implementors, the majority of companies‟ experiences obviously little relevance of IPRs in standards for their companies (p.87).  
Chapter 4 includes figures (some of which are reproduced and translated into German in the GRUR article) illustrating the respondents' views as to such matters as the relative importance of various reasons for owning SEPs, mechanisms for gaining access to them, the impact of SEPs on the standardization process and on R&D, and so on.  Figure 4-6, which shows the respondents' "assessment of licensing rates by percentiles for patents and essential IPRs for the product market in question by percentage of respondents" (p.91), indicates that the majority believe that aggregate royalties are in the 20% or lower range--although there are some outliers, and "IPR owners are very uncertain in their estimations of license fees" (pp. 91-92 & Figure 4-7).  Figure 4-13 reports that survey respondents view "the presence of third-party non-producing entities" as relatively undesirable but fairly likely to happen (pp. 97-98).

Chapter 5 notes a point that I think is self-evident but nevertheless to document, namely that "Whereas especially standards implementers favour further clarifying SSO IPR policies concepts and terms such as “(F)RAND” or “essential”, others observe that in practice it is more often than not impossible to determine IPR licensing terms and conditions before a standard is sufficiently developed and implementation conditions are known" (p.115).  Annex III provides summaries of statistics reported elsewhere on numbers of patent cases in the EU and the US, win rates, and so on, as of 2010, as well as an original analysis of cases to which Nokia was a party. 

Altogether, this is a useful body of empirical information on SEPs.          

Thursday, September 11, 2014

Today's Hearing Before the CJEU in Huawei v. ZTE

As I reported yesterday, today is the day the Court of Justice for the European Union (CJEU) had scheduled for its long-awaited hearing in Huawei Technologies Co. Ltd v ZTE Corp., Case C-170/13, on the issue of whether or under what conditions a court may order injunctive relief for the infringement of a FRAND-encumbered standard essential patent (SEP).  So far the only write-up on today's hearing that I've been able to find online is this one in the German-language online publication JUVE.  According to the article, the Court didn't give a clear inclination of its views during today's hearing, though following the hearing several observers suggested that the Court could concretely define the conditions for an abuse of market position and that the conditions for obtaining an injunction in SEP cases could be made more onerous than under the 2008 German Orange-Book-Standard framework. (For more on the Orange-Book-Standard, see my book pp. 245-48 and my blog post from August 5, 2013.)  Both the Orange-Book-Standard framework and the European Commission's more recent pronouncements in the Samsung and Motorola cases are under scrutiny in the present case.  However, today's proceedings did not touch very deeply on the subject of when an implementer should be considered a willing licensee. The Advocate General's opinion is scheduled to be presented on November 20.  

Wednesday, September 10, 2014

Hearing Before the CJEU on FRAND/SEPs Scheduled for Tomorrow

Tomorrow the Court of Justice for the European Union will hold a long-awaited hearing in Huawei Technologies Co. Ltd v ZTE Corp., Case C-170/13, on the issue of whether or under what conditions a court may order injunctive relief for the infringement of a FRAND-encumbered standard essential patent.  Here is a link to the CJEU's schedule for tomorrow, and here is the court's home page for this case (no documents up yet, though).  As set forth in the Official Journal of the European Union of July 27, 2013, under the title "Request for a preliminary ruling from the Landgericht Düsseldorf (Germany) lodged on 5 April 2013 — Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH," here is the English translation of the questions referred to the court:
1. Does the proprietor of a standard-essential patent who informs a standardisation body that he is willing to grant any third party a licence on fair, reasonable and non-discriminatory terms abuse his dominant market position if he brings an action for an injunction against a patent infringer although the infringer has declared that he is willing to negotiate concerning such a licence?
or
is an abuse of the dominant market position to be presumed only where the infringer has submitted to the proprietor of a standard-essential patent an acceptable, unconditional offer to conclude a licensing agreement which the patentee cannot refuse without unfairly impeding the infringer or breaching the prohibition of discrimination, and the infringer fulfils his contractual obligations for acts of use already performed in anticipation of the licence to be granted?
2. If abuse of a dominant market position is already to be presumed as a consequence of the infringer’s willingness to negotiate:
Does Article 102 TFEU lay down particular qualitative and/or time requirements in relation to the willingness to negotiate? In particular, can willingness to negotiate be presumed where the patent infringer has merely stated (orally) in a general way that that he is prepared to enter into negotiations, or must the infringer already have entered into negotiations by, for example, submitting specific conditions upon which he is prepared to conclude a licensing agreement?
3. If the submission of an acceptable, unconditional offer to conclude a licensing agreement is a prerequisite for abuse of a dominant market position:
Does Article 102 TFEU lay down particular qualitative and/or time requirements in relation to that offer? Must the offer contain all the provisions which are normally included in licensing agreements in the field of technology in question? In particular, may the offer be made subject to the condition that the standard-essential patent is actually used and/or is shown to be valid?
4. If the fulfilment of the infringer’s obligations arising from the licence that is to be granted is a prerequisite for the abuse of a dominant market position:
Does Article 102 TFEU lay down particular requirements with regard to those acts of fulfilment? Is the infringer particularly required to render an account for past acts of use and/or to pay royalties? May an obligation to pay royalties be discharged, if necessary, by depositing a security?
5. Do the conditions under which the abuse of a dominant position by the proprietor of a standard-essential patent is to be presumed apply also to an action on the ground of other claims (for rendering of accounts, recall of products, damages) arising from a patent infringement?
As soon as I have any further information, I will pass it along.  For readers not familiar with the court's procedures, here is a link to a handy publication published by the court itself, titled The Court of Justice:  Composition, Jurisdiction and Procedures. 

By way of comparison, here is a link to the European Commission's Prohibition Decision of April 29, 2014 (published on July 9) in Case AT.39985 - Motorola - Enforcement of GPRS Standard Essential Patents; and here is a link to the Commission's Commitments Decision of April 29, 2014 (published on May 13) in Case AT.39939 - Samsung - Enforcement of UMTS Standard Essential Patents.

Tuesday, September 9, 2014

Some Initial Thoughts on the Japanese IP High Court's Apple/Samsung Judgments

As I mentioned yesterday, Japan's IP High Court has now published English-language translations of its May 2014 judgments in the Japanese Apple/Samsung FRAND dispute.  By way of background, in 2007 Samsung declared Japanese Patent No. 4642898 (a "method and apparatus for transmitting/receiving packet data using a predefined length indicator in a mobile communication system") as likely to be essential to the practice of the UMTS standard, and indicated its willingness to license the patent on FRAND terms.  In 2012, Samsung alleged that certain Apple devices infringed the patent and moved for a preliminary injunction in two separate proceedings.  Apple filed its own action for a declaratory judgment.  In 2013, the Tokyo District Court held that Samsung had abused its right by seeking a preliminary injunction and was barred not only from injunctive relief but also from receiving damages, even in the amount of a FRAND royalty.  In May 2014, a Grand Panel of the IP High Court affirmed the finding that Samsung had abused its right but held that Apple was liable for the amount of a FRAND royalty, which the court fixed at ¥ 9,950,000, or a little under U.S. $100,000.  (For my previous posts on the case, see here and here.) 

What follows are some key points from the Grand Panel's judgments, and my (very preliminary, somewhat hastily put-together, and therefore to be taken with a grain of salt) thoughts regarding them:

1.  First, in the appeals from the district court rulings denying Samsung's requests for a preliminary injunction (Case Nos. 2013 (Ra) 10007 and 10008), the IP High Court states (in identical language found at pp. 24-25 of these judgments):
It is considered extremely difficult for a standard user to obtain the licenses in advance, after confirming whether each of such large number of patents is essential or not. Therefore, if the patentee is unconditionally allowed to seek an injunction based on the Standard Essential Patent, the use of the UMTS standard would become  practically impossible. Such situation would have a negative impact on the dissemination of the UMTS standard and run counter to the purpose of the ETSI IPR Policy aimed at the harmonization and dissemination of the communication standards. Further, if such situation arises, the general public would be unable to enjoy a variety of benefits which would be available if the harmonization and dissemination of communication standards was achieved.
In relation to a Standard Essential Patent, it is not appropriate to allow a party who made a FRAND declaration to exercise the right to seek an injunction based on the patent right against a party willing to obtain a license under the FRAND Terms.
. . . Meanwhile, the injunction should be allowed against a party engaged in manufacturing, sales, etc. of an UMTS standard-compliant product without any intention of receiving a FRAND license, as such party with no intention of obtaining a FRAND license is not considered to comply with the standards relying upon the FRAND declaration, and the patentee would not be adequately protected if the exercise of right to seek an injunction even against such parties is restricted. Nevertheless, as allowing the patentee to exercise the right to seek an injunction involves potential adverse effects as mentioned above, scrutiny shall be made before determining that the prospective licensee has no intention of receiving a FRAND license.
. . . Considering the totality of the above circumstances, the exercise of the right to seek an injunction based on the Patent Right by the appellant who made the FRAND Declaration would constitute the abuse of right (Article 1, paragraph (3) of the Civil Code) and therefore is not allowed, if the appellee successfully alleges and proves the fact of the appellant having made the FRAND Declaration and the appellee's intention of receiving a FRAND license.  
Reviewing the evidence before it, the court then concludes that Apple was a willing licensee and that Samsung, as a result, was not entitled to an injunction.  I haven't yet focused very carefully on the court's discussion of the evidence concerning the parties' negotiations, but in general (as I have written about ad nauseam by now) I think the court's approach is correct, as a matter of policy:  that is, that a FRAND commitment deprives the patent owner of the right to obtain an injunction, unless the licensee is the one that is abusing the process (though I still haven't quite thought through my own views as to what that latter condition means or should mean).  I think the Japanese court's approach, though, is closer in spirit to the U.S. approach under eBay (though I recognize that abuse of right is a distinct doctrine in its own right) than to the European Commission and German approaches of addressing the issue through the lens of competition law.  (Of course, abuse of right is also a potentially applicable doctrine in other civil law countries, and has been applied in the FRAND context in an Apple/Samsung dispute in the Netherlands (see my post here).

2.  In the appeal from Apple's action for a declaratory judgment (Case No.  2013 (Ne) 10043), the court concludes that, under French law (which governs as a result of the ESTI IPR Policy) the FRAND declaration did not form a license agreement (pp. 111-15).  I'm hardly an expert on French contract law, but my initial reaction is that this result is not surprising; I believe it would come out the same way under German law, and that (so far) the U.S. has been an outlier in concluding, in some instances, that FRAND declarations do give rise to enforceable contract rights.

3.  The court also concludes, contrary to the district court, that Samsung is entitled to a FRAND royalty--or, more precisely, that, "the appellant's exercise of the right to seek damages for Products 2 and 4 based on the Patent Right constitutes the abuse of right to the extent exceeding the amount of the FRAND royalty, but not to the extent of the amount of the FRAND royalty."  As I stated in one of my earlier posts, this clearly seems right as a matter of policy:  depriving Samsung (or any SEP owner) of even a FRAND royalty would seem grossly unfair and would risk deterring firms from participating in SSOs and from engaging in the optimal level of R&D.  (The court agrees; see p.122.)  Nevertheless, the court hedges a bit by suggesting that there could be exceptions in either direction--that is, that an SEP owner could be denied a FRAND royalty under "special circumstances" in which it would be "extremely unfair" to award such a royalty, or that an SEP owner could demand royalties in excess of FRAND under "special circumstances, such as that the prospective licensee has no intention of receiving a FRAND license" (pp. 123-24).  In any event, no such special circumstances existed in the present case.   

4.  On the amount of the FRAND royalty, here is the court's general methodology (pp. 132-33):
First, among the total sales turnover of Products 2 and 4 [the iPhone 4 and the iPad Wi-Fi+3G model, respectively], the percentage of the contribution of the compliance with the UMTS standard should be calculated ((3)A. below). Next, among the contribution ratio of the compliance with the UMTS standard, the contribution ratio of the Patent should be calculated ((3)B. below). For the purpose of the calculation of the contribution of the Patent among the contribution of the compliance with the UMTS standard, in order to prevent an excessively high royalty in aggregate, the calculation method should be such that the amount of royalty for the entire essential patent pool does not exceed a certain ratio ((3)B.(A) below). In this court case, as the specific details of other essential patents are unknown, the amount of FRAND royalty should be based on the division by the number of UMTS standard essential patents ((3)B.(B) below).
Unfortunately, the court redacts the percentage it concludes is reasonable for the contribution ratio of the compliance with the UMTS standard, although it does tell us that many other factors contribute to the turnover for these products.  It also tells us that the maximum "aggregate royalty rates for the entire UMTS standard" should not exceed "5% of the contribution ratio of the compliance with the UMTS standard to the sales turnover of Products 2 and 4" (p.136).  The court then observes that
The UMTS standard includes a large number of essential patents in addition to the Patent, and the UMTS standard cannot be implemented by the Patent alone. Therefore, it would be necessary to consider the degree of contribution of the Patent to the UMTS standard, in relation to other essential patents patented in Japan. . . .  [T]he technical contribution of the Patent to the UMTS standard is not significantly high.  Also, no evidence has been submitted which proves that the contribution of the Patent to the UMTS standard is higher than other essential patents. . . .  Based on the above, it is reasonable to determine, based on the evidence submitted in this court action, that the contribution of the Patent to the UMTS standard is equivalent to other essential patents.
Accordingly, given that the contribution by the Patent and other essential patents to the UMTS standard are equivalent, the amount of the FRAND royalty for the Patent shall be calculated by dividing the amount of royalty by the number of all UMTS standard essential patents.
The distribution of royalty to licensors in the patent pool is generally calculated by dividing the amount of royalty by the number of patents, without regard to the technical value of individual patents. The "W-CDMA patent platform" for the UMTS standard has also adopted such method of dividing the royalty amount by the number of patents. Calculation of the amount of the FRAND royalty by dividing the amount of royalty by the number of the UMTS essential patents is consistent with such practice in patent pools. (pp.136-37).
Based on this methodology, the court comes up with a royalty of ¥ 9,239,308 for the iPhone 4 and of ¥ 716,546 for the iPad, for a total of ¥ 9,955,854.  This strikes me as likely to be undercompensatory, though perhaps it's just a lack of proof that leads to the result the court reaches.  Nevertheless, I would expect a patent pool rate to be lower than a FRAND rate (as Judge Robart found in Microsoft v. Motorola, see my post here), and I generally would not approve of calculating FRAND royalties using the typical patent pool methodology of dividing up some aggregate value by the number of patents; different patents likely have different values, even if in the pool context transactions costs may dictate not bothering to take those differences into account.   I also question the assumption that aggregate royalties for the UMTS standard necessarily should be capped at 5% of the value of the contribution of that standard, which (whatever that contribution value is) must be less than 5% of the value of the end products--though the court does tell us that "both appellant and the appellee have submitted their respective allegations on the premise of the aggregate royalty cap of 5%" and "many owners of the UMTS standard essential patents support the 5% aggregate royalty cap with a view to prevent the aggregate royalty from being excessively high" (pp. 136-37).  (Of course, the topic of whether or how potential royalty stacking should affect the calculation of a FRAND royalty is itself quite an interesting, and complex, issue.  For some thoughts of mine, see here.)

5.  Finally, the court expressed thanks for the third-party submissions it solicited earlier this year on the question of "whether an owner of a patent essential for a standard developed by a standardization body, for which a (F)RAND declaration (a declaration to grant a license under (fair), reasonable and non-discriminatory conditions) is made, should be restricted from exercising the right to seek an injunction or the right to seek damages" (p.139; see my post here).  Specifically:
These opinions are valuable and useful references that helped the court make an appropriate judgment from a broad perspective, and we hereby express our profound gratitude to all the parties who kindly made great efforts to submit their opinions.   
I thought this was a very gracious ending to a judgment that, whether one agrees with it in all of its respects or not, appears to me to be quite thoughtful and must have been quite a laborious undertaking to draft in such a short time.
 

Monday, September 8, 2014

Breaking News: Japan's IP High Court Publishes English-Language Translations of Its Samsung v. Apple FRAND Judgments

On May 16, 2014, a Grand Panel of Japan's IP High Court affirmed a lower court ruling that Samsung engaged in an abuse of right in its negotiations with Apple over the licensing of a FRAND-encumbered standard-essential patent and therefore was not entitled to a preliminary injunction.  The High Court reversed the lower court's decision, however, that Samsung's abuse of right also deprived it of the ability to recover damages, and awarded  Samsung ¥ 9,950,000.  (For previous coverage on this blog, see here and here.  Technically, there were three related lower court rulings and three IP High Court judgments.)  The text of the IP High Court's judgments has been available, in Japanese, on the High Court's website for some time.  As promised, the court has now published the long-awaited English-language translations of its summaries of its judgments (here, here, and here); the full text of its judgments (here, here, and here); and the lower ruling rulings (here, here and here).  I haven't made my way through all of this material yet--there's quite a lot of it--but I probably will have something to say about it in due time.  In the meantime, readers who want to read the materials for themselves can download them from the links above. 

Also of interest is this recently-published article on the case by Takanori Abe, in Managing IP.

Monday Miscellany: New Treatise on Global Patent Litigation, Kühnen on EU Border Measures, and More


1.  Bloomberg BNA has published a new treatise by Michael C. Elmer and C. Gregory Gramenopoulos titled Global Patent Litigation:  How and Where to Win.  Here is a link to the website.  According to the description:
    Global Patent Litigation: How and Where to Win is a comprehensive treatise that will assist multi-national companies and their counsel in answering critical questions for implementing an effective global patent litigation strategy. This is the first text on global patent litigation to provide a unique combination of law, strategies, tools and objective matrices for addressing and quantifying the costs, risks and benefits of patent litigation in 16 countries or jurisdictions. . . .
    The new treatise also includes chapters for 16 individual countries, covering each nation’s court structure, as well as main characteristics of patent litigation; infringement conditions and defenses; evidentiary process; preliminary injunction; remedies and damages; compensation of costs; border enforcement; and specific details.
Our library just recently acquired a copy, and I haven't looked it over very carefully yet, but I did cite some of Michael Elmer's previous research on win rates and such in my book.  I also have used the Darts-IP service the authors use, thanks to a complementary subscription from the provider.

2.  Dr. Thomas Kühnen, a presiding judge of the Oberlandesgericht Düsseldorf, has published a paper in the September issue of GRUR (pp. 811-26) titled Die Haftung wegen unberechtigter oder zu Unrecht unterbliebener Grenzbeschlagnahme nach der VO (EU) Nr. 608/2013 (Teil 1) ("Liability for unauthorized or unenforced border measures under Regulation (EU) No. 608/2013, Part 1").  For a bit of background, the aforementioned regulation is Regulation (EU) No 608/213 of the European Parliamanet and of the Council of 12 June 2013 concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No 1383/2003.  Articles 27 and 28 read as follows:
    Article 27
    Liability of the customs authorities
    Without prejudice to national law, the decision granting an application shall not entitle the holder of that decision to compensation in the event that goods suspected of infringing an intellectual property right are not detected by a customs office and are released, or no action is taken to detain them.
    Article 28
    Liability of the holder of the decision
    Where a procedure duly initiated pursuant to this Regulation is discontinued owing to an act or omission on the part of the holder of the decision, where samples taken pursuant to Article 19(2) are either not returned or are damaged and beyond use owing to an act or omission on the part of the holder of the decision, or where the goods in question are subsequently found not to infringe an intellectual property right, the holder of the decision shall be liable towards any holder of the goods or declarant, who has suffered damage in that regard, in accordance with specific applicable legislation.
Here is my translation of the abstract of Dr. Kühnen's article:
    Border measures are directed against goods that are suspected of infringing an intellectual property right.  Subsequently it may turn out that there actually was no infringement, in which case the commercial consequences for the victim of the unauthorized seizure can be grave.  On the other hand, the IP owner also can suffer injury to its property, if the Customs Authorities do not take objectively reasonable measures and thus allow, to the detriment of the IP owner, competition from infringing products.  This essay attempts the first systematic analysis of the liability problem.  Part 1 addresses the liability of Customs Authorities.  Part 2 follows up with the liability of movants and of persons entitled to dispose of the property.  
I haven't read the article in full yet and may have more to say about when I have done so.

3. Tyler Dutton has published a student comment in the Emory International Law Review titled Jurisdictional Battles in Both European Union Cross-Border Injunctions and United States Anti-Suit Injunctions.  Here is a link to the paper.  From the Introduction:
    The Apple and Samsung litigation has resulted in more than twenty-two patent cases in six EU member states: twelve in Germany, two in the Netherlands, two in France, two in Italy, three in Spain, and one in the United Kingdom. Although the disputes involve the same technologies, Apple and Samsung must litigate the issue in each country because patent rights can only be enforced within the country that granted the patent. Patent battles, such as those between Apple and Samsung, require a patent owner “to pursue duplicative litigation on a ‘nation-by-nation’ basis, incurring significant costs and draining valuable judicial resources.” This Comment investigates a method courts have used to consolidate patent litigation—the cross-border injunction.
4.  Giordana Mahn has published a student comment in the Loyola University Chicago Law Journal titled Keeping Trolls Out of Courts and Out of Pocket: Expanding the Inequitable Conduct Doctrine.  Here is a link to the paper, and here is the abstract:
    Patent Asserting Entities (“PAEs”), often compared with the mythological troll who lurks under a bridge it did not build, demanding payment from anybody who wants to pass, are criticized for their business model as a type of “holdup” on innovation. They wait until a practicing entity infringes, then demand payment for technology that they did not create. Their critics charge PAEs with stifling innovation, crippling research and development, and chilling healthy competition. And although the courts, Congress, and government agencies identified PAEs as an issue since their recent emergence, current patent laws are ill-suited to limit PAE litigation and combat trolling tactics. Taking advantage of the weaknesses in the United States patent system, PAEs command the attention of alleged infringers as a serious threat to product companies and startups.
    This Comment distinguishes PAEs from Non-Practicing Entities (“NPEs”), focuses on PAEs and their effect on innovation and the public, explains that PAEs are more harmful to public interest and rightly deserve their “troll” moniker, and suggests a solution to limiting their influence. With public interest as the underlying factor, this Comment proposes an affirmative defense—a combination of ideas and themes inherent in patent law with existing doctrines—to extinguish exclusive rights of PAEs by expanding the current definition of inequitable conduct.
5.  Finally, this doesn't concern patent law as such, but in view of my mention last week of a couple of papers on criminal sanctions for IP infringement some readers also may find Thomas Dubuisson's 2012 paper When the World Wide Web Becomes the World Wild Web: PIPA, SOPA, OPEN Act, CISPA and the 'Internet Revolution' of interest as well.  Here is a link to the paper, and here is the abstract:
    It is not a secret anymore: digital technology is transforming copyright, for better and for worse. Infringement is widespread and this situation needs to change. An attempt has already been made in the past. In 1998, congressional enactment of the “anti-circumventions” provisions of the Digital Millennium Copyright Act (DMCA) was a remarkably forward-looking effort to stop copyright infringers and balancing interests of intellectual property (IP) holders and potential innovators. Since then, the Internet has evolved. The creation of a DMCA II was welcome. Instead of going through this “safe” next step, the United States Congress has embarked on a particularly slippery slope. As a result, bills are so repressive today and they may dictate the way the next technologies are going to operate, in whole or in part. The current reality that laws are incapable of catching the development of new technologies, based on the American comedy-drama film “Catch Me If You Can”, is perhaps not a fiction anymore. But not at any price, especially when it affects the Internet democracy.
    In fact, the creation of a global legal framework for intellectual property right protection, particularly for (digital) copyright, needs to meet at least three challenges: the fact that laws change, that laws differ between countries, and that laws are open to interpretation. More precisely, cyberspace “demands a new understanding of how regulation works. It compels us to look beyond the traditional lawyer’s scope – beyond laws, or even norms. It requires a broader account of “regulation”, and most importantly, the regulation of a newly salient regulator.” SOPA and PIPA demonstrate how difficult it is for an established democracy to protect both intellectual property and the fight for the intellectual freedom on the Internet.
    This research paper will be devised in five parts. The first part will analyze the legal issues of these controversial bills and more precisely the sections concerning copyright infringement. The second part will address how the OPEN Act might be a respectable middle in comparison to SOPA and PIPA and what are the legal solutions proposed in this bill. The third part briefly concerns the new method to prevent cyber-attacks, through CISPA, with its impact on intellectual property rights. The fourth part will discuss the recent developments in Europe with ACTA, namely the issues concerning the European ratification and the future of ACTA in the world. Finally, the fifth part will be devoted to the online and offline Internet revolution/Internet blackout that occurred in January and February 2012.   

Thursday, September 4, 2014

Declaratory Judgments in Germany; More on Hot-Tubbing in the U.K.

1.  Tobias Wuttke recently published a post on the EPLaw Patent Blog, and Heike Alps a post on the Kluwer Patent Blog, discussing a March 20, 2014 Decision of the Oberlandesgericht Düsseldorf (Case No. I-2 W 8/14) (available here).  The decision discusses the circumstances under which a person may bring an action for a declaratory judgment of noninfringement under German law.  By way of introduction, I briefly discuss the German law of declaratory judgments of noninfringement at p.281 of my book (citations omitted):
German law . . . does not necessarily require the potential declaratory judgment plaintiff to notify the patentee in advance, though it does require the plaintiff to demonstrate some sort of concrete interest (Feststellungsinteresse), such as a warning letter from the patentee. Actions for declaratory judgments nevertheless are rare in Germany, amounting (according to one estimate) to less than 1 percent of all patent litigation. Moreover, if the patentee thereafter commences an infringement proceeding, the declaratory judgment action normally will be dismissed.
The March 20, 2014 Decision involved a case in which the owner of a European Patent filed a claim for infringement of the Turkish portion of the patent in Turkey.  The plaintiff in that case had neither commenced nor explicitly threatened an action in Germany.  In response to a letter from the infringement defendant, the patent owner had merely stated that at that point in time (July 26, 2012) it could see no basis for opining about a possible future action or for investing time and money in retaining a German attorney to examine and evaluate an abstract question of infringement (Decision para. 1(b)).  Although an implicit or tacit allegation of infringement can suffice--and the two posts explain in detail the conditions the court believes would and would not be sufficient to establish an implicit allegation enabling the potential defendant to assert a claim for a declaratory judgment--the facts here weren't adequate to make out such an allegation on the part of the patent owner.

2.  I've previously mentioned the "hot tubbing" procedure that courts in the U.K. and Australia sometimes use for the presentation of expert testimony on damages or other issues (see here and here).  Two more articles on the subject that have come to my attention are Michael Dempsey, Two timing, Solicitors Journal, Feb. 28, 2011, and Edward Powell, In the hot seat, Solicitors Journal, Feb. 28, 2012.  According to Dempsey, "[i]f you want to see [hot tubbing] in practice the place to be is the Technology and Construction Court (CC) where a recently revised guide embraced hot tubbing."  Here is a link to the current (April 30, 2014) Guide, which at p.54 (section 13.8.2) states 
there are a number of possible ways of presenting evidence including . . . [f]or the experts for all parties to be called to give concurrent evidence, colloquially referred to as “hot-tubbing”. When this method is adopted there is generally a need for experts to be cross-examined on general matters and key issues before they are invited to give evidence concurrently on particular issues. Procedures vary but, for instance, a party may ask its expert to explain his or her view on an issue, then ask the other party’s expert for his or her view on that issue and then return to that party’s expert for a comment on that view. Alternatively, or in addition, questions may be asked by the judge or the experts themselves may each ask the other questions. The process is often most useful where there are a large number of items to be dealt with and the procedure allows the court to have the evidence on each item dealt with on the same occasion rather than having the evidence divided with the inability to have each expert’s views expressed clearly. Frequently, it allows the extent of agreement and reason for disagreement to be seen more clearly. The giving of concurrent evidence may be consented to by the parties and the judge will consider whether, in the absence of consent, any modification is required to the procedure for giving concurrent evidence set out in the CPR (at PD35, paragraph 11).