Tuesday, September 22, 2020

My Law360 Article on Unwired Planet

Law360 has published my article, titled UK Top Court Ruling May Be Problematic For Global SEP Suits.  It is available on Law360's website, as well as here.

Monday, September 21, 2020

From Around the Blogs

1.  On Bloomberg Law, Perry Cooper published an article titled Six Recent Decisions Show Fees More Obtainable, discussing some recent Federal Circuit cases on fees.  For previous discussion on this blog of these cases, see here, here, here, here, and here. She also published an article titled Arctic Cat Wants Justices to Eye Who Bears Onus of Patent Notice, discussing a cert petition recently filed regarding patent marking (see also item 3 below).  For previous discussion of this case on this blog, see here.

2.  On IPKat, Dr. Lisa Schneider published Keeping up with German patent litigation: Half-year case law review 2020.  The article discusses the proposed amendment to the German Patent Act (see item 4 below), Sisvel v. Haier, and some recent cases on preliminary injunctions.

3. On IPWatchdog, Eileen McDermott published an article titled Packet Intelligence Asks CAFC to Rehear Panel Analysis on Patent Marking Under Arctic Cat.  As the title indicates, patent owner Packet Intelligence argues that the Federal Circuit's interpretation of the U.S. patent marking statute is unsound.  For the record, I don't have a firm opinion about the merits of the legal issues involved (about the burden of proof, and whether licensees must comply with the requirement).  But I have long been of the view that it's dumb to condition the patent owner's ability to obtain the full measure of its damages on the owner (or its licensee) complying with the technicalities of the patent marking law.  For previous discussion of the case on this blog, see here.

4. On JUVE Patents, Mathier Klos published an article titled German Industry Remains a Battlefield Over Automatic Injunctions.  The article discusses the debate over the second draft of an amendment that would expressly introduce the proportionality concept into article 139 of the German Patent Act.

5.  On the EPLaw, Tobias Wuttke published an article titled DE-Divisional Game, discussing (and linking to a slightly longer discussion about) a recent decision of the Munich court holding that "abandoning patents and patent applications may amount to unfair competition, if the proprietor unduly exploits the German bifurcated system, in particular the complex interplay between the invalidity proceedings at the Federal Patents Court and the EPO on the one hand and the German litigation trial courts on the other hand."  If I understand correctly, the concern is that an owner whose patent has survived an opposition, but who fears a reversal on appeal, may wish to abandon the patent pending that appeal, while asserting a patent from the same family in infringement litigation--hoping that the first instance decision upholding validity of the abandoned patent will suffice for purposes of obtaining a preliminary injunction.  The author argues that the result is inspired by the U.K. courts' use of "Arrow" declarations.

6. On Law360, Tiffany Hu published an article titled Justices Asked to Ax 'Unprecedented' Ban in Software Fight.  The article discusses a cert petition filed by World Programming Ltd., a U.K. firm, challenging the Fourth Circuit's entry of an injunction forbidding WPL from selling products in the U.S. until it pays a $79 million judgment to its adversary, SAS.  The lower court also enjoined WPL from enforcing a U.K. ruling that refused to enforce 2/3 of the judgment because of its punitive nature.  This is not a patent case, but it seems relevant to the ongoing debate over antisuit injunctions. Copy of the cert petition here.

Also on Law360, Ryan Davis published an article titled High Court Told $268M Hearing Aid Patent Award Flouts Law, discussing a cert petition recently filed in Cochlear Corp. v. Alfred E. Mann Fdn., addressing several damages questions, including  reasonable royalties, the book of wisdom, and apportionment.

Friday, September 18, 2020

Rest in Peace, Justice Ginsburg

Sad beyond words to hear that Justice Ruth Bader Ginsburg has died.

 Ruth Bader Ginsburg 2016 portrait.jpg

Update:  Here is a video of Justice Ginsburg at the University of Minnesota Law School in 2014.

Recent Commentaries on Major FRAND Cases

As previously noted, I recently published an essay titled Two Errors in the Ninth Circuit's Qualcomm Opinion, 2020 Patently-O L.J. 1.  For some other recent commentary on recent FRAND disputes, see the following.

On Qualcomm:

Daniel P. Culley, Jessica Hollis, David H. Herrington, Alexandra Theobald & Maurits Dolmans,    Our Analysis of the Ninth Circuit Panel Decision Reversing FTC v. Qualcomm, Cleary Gottlieb, Aug. 27, 2020.

On Unwired Planet:

Roya Ghafele, UK Ruling Shows Global SEP Enforcement Dilemma, Law360, Sept. 2, 2020.

Roya Ghafele, , Kluwer Patent Blog, Sept. 9, 2020

Roya Ghafele, The UK's Need to Protect Its Position at Home and Abroad:  A Commentary on the UK Supreme Court Ruling in the Conversant Cases, IP Watchdog, Sept. 11, 2020

Matthie Klos, The global SEP race, JUVE Patent, Sept. 3, 2020; and Josh Landau, Unwired Planet Decision May Lead To Crossed Wires On SEP Royalties, Patent Progress, Sept. 4, 2020.  

On Sisvel v. Haier:

Maurits Dolmans, John Messent, Daniel P. Culley, Romina Polley, Elisabeth Macher & Nicole Rothe,  German Federal Court of Justice FRAND Judgment in Sisvel v. Haier, Cleary Gottlieb, July 23, 2020. 

Wednesday, September 16, 2020

Contreras on Antisuit Injunctions

Jorge Contreras has posted a paper on ssrn titled It’s Anti-Suit Injunctions All The Way Down – The Strange New Realities of International Litigation Over Standards-Essential Patents, IP Litigator, 26(4):1-7 (July/August 2020).  Here is a link to the paper, and here is the abstract:
Today’s markets for technology products — from smartphones to home appliances to automobiles — are inherently global. This is especially true of products that embody technical standards — protocols like 5G, Wi-Fi, Bluetooth and USB that are covered by hundreds, thousands, or tens of thousands of patents (so-called “standards-essential patents” or “SEPs”). Given the global scope and size of these markets, it is not surprising that patent litigation over standardized products is often conducted on a global scale. This article looks at an increasingly important aspect of these global standards wars: the ability of a court in one jurisdiction to prevent a party from pursuing litigation in another jurisdiction using a procedural mechanism called the anti-suit injunction (ASI). To complicate matters further, a litigant may also petition a court in one jurisdiction to prevent a party from seeking an ASI in another jurisdiction — the so-called anti-anti-suit injunction (AASI). And, curiouser still, litigants have recently re-invigorated the anti-anti-anti-suit injunction (AAASI), a procedural move that seeks to prevent a litigant from obtaining an AASI to block another litigant from requesting an ASI. If there is no theoretical limit to the procedural machinations to which parties can go in such disputes, it may, indeed, be injunctions “all the way down”.
Relatedly, JUVE Patents and IAM have reported that the People's Supreme Court of China has entered an antisuit injunction forbidding Conversant from enforcing an injunction against Huawei in Germany.

Monday, September 14, 2020

Halo Seeks to Recover Extraterritorial Damages from Pulse

Some readers may be aware that I've been working on a paper titled Extraterritorial Damages in Patent Law.  I haven't posted it yet on ssrn, but the basic argument is that, both as a matter of legal doctrine (post-WesternGeco v. ION) and as a matter of policy, where an act of domestic patent infringement is (1) the cause-in-fact and (2) the proximate cause of extraterritorial losses to the plaintiff (or benefits to the defendant), the patent owner should be able to recover damages for those extraterritorial losses, as long as courts avoid awarding duplicative recoveries for the same loss.  I suspect that many U.S. academics may disagree with me on this, but my proposal is consistent with the (albeit limited) case law on this topic from other countries, and I am reasonably confident that my arguments are logically sound.

Anyway, I mention this now because an article recently published on Law360 alerted me to a motion recently filed by Halo Electronics, Inc. to recover damages for lost foreign profits.  (And yes, this is the same Halo v. Pulse litigation that was before the Supreme Court in 2016 on the issue of enhanced damages).  If I am understanding the argument correctly, Halo's contention is that Pulse engaged in pre-infringement negotiations and other conduct in the U.S., which then resulted in the foreign manufacture and sale of equipment that incorporated Halo's U.S. patented technology, some of which equipment was subsequently imported into the U.S. for sale here.  Halo has already been compensated for the losses stemming from the infringing imports into, and sales within, the U.S., and now seeks to recover additional damages for the foreign sales.

Again, assuming I am understanding the facts correctly, the court should deny the motion.  What Halo appears to be arguing is that pre-infringement conduct in the U.S. caused both the foreign manufacture/sales and the subsequent domestic imports/sales--not that the domestic imports/sales caused the foreign manufacture/sales.  Given the timing of events as set forth in the motion, Halo cannot argue that the importation into the U.S. was the cause-in-fact, proximate cause, or any sort of cause of the foreign sales.  (An event at time t cannot cause an event at time t-1, last time I checked--at least not outside the realm of quantum physics, and even there it's sketchy.)  To allow Halo to recover the additional damages it is now seeking would be a violation of the general principle that patents are territorial, and is by no means a reasonable interpretation of WesternGeco.

One possible caveat, though:  maybe Halo is arguing that there was some infringing activity in the U.S.--not just pre-infringement conduct--that preceded, and enabled, the foreign manufacture and sales.  There are a few hints of this in the motion (e.g., at p.11, which refers to Pulse "sending product samples to Cisco for pre-approval").  If that is the case, then the question would be whether this domestic infringing activity was both the cause-in-fact and proximate cause of the subsequent foreign manufacture and sales; if so, damages for the foreign activity may be appropriate.  If, however, the argument is that the pre-infringement conduct in the U.S. caused the foreign manufacture and sales, which in turn resulted in the importation of some infringing products into the U.S., I don't see how the domestic infringement in any sense caused the foreign activity, and no damages for that foreign activity should be awarded.  It's not enough that they are in some sense related, or had a common cause.

For Pulse's response, and Halo's reply, see here and here.  For another recent Law360 article relevant to this topic, see Jenny Colgate & Sheena Wang, Foreign Patent Damages Recovery 2 Years After WesternGeco, which discusses some of the (still fairly sparse) post-WesternGeco case law.

Thursday, September 10, 2020

Antitrust Division Issues Supplement to 2015 IEEE Business Review Letter

Readers may recall that in February 2015 IEEE issued a revised IPR Policy that, among other things, stated that a FRAND commitment signifies  "that reasonable terms and conditions, including without compensation or under Reasonable Rates, are sufficient compensation for a license to use those Essential Patent Claims and precludes seeking, or seeking to enforce, a Prohibitive Order except as provided in this policy."  (For previous discussion of the revised policy on this blog, see herehere, here, here, here, and here.)  Adoption of the policy was preceded by a February 2, 2015 Business Review Letter from Renata Hesse, Acting Assistant U.S. Attorney General, to Michael Lindsay, which stated that the DOJ did "not intend presently to challenge the Update if it goes into effect." 
On Thursday, the Antitrust Division issued a new letter, from Assistant Attorney General Makan Delrahim to Sophia Muirhead of IEEE, purporting to "supplement, update, and append" the 2015 letter.  Today's letter does not expressly state that DOJ intends to challenge the IEEE's 2015 policy.  But it is consistent with Mr. Delrahim's many other pronouncements favoring SEP owners over implementers, emphasizing "holdout" and deemphasizing "holdup," and cautioning SSOs that attempts to constrain SEP owners may put the SSOs themselves in peril of antitrust liability.  (For previous discussion by me regarding some of Delrahim's previous statements on these topics, see here, here, here, and here.)

The new letter begins by stating, correctly, that the 2015 letter was not an "endorsement," as such, of the IEEE policy revision, but only (as noted above) a statement that the DOJ wasn't planning to challenge it.  To the extent the 2015 Letter has been characterized as an "endorsement," then, Delrahim may be correct in stating that that has been an overstatement.  Of greater concern, however, is his second stated reason for issuing the new letter, namely "to align the now outdated analysis in the 2015 Letter with current U.S. law and policy" (p.1).  In particular, Delrahim asserts the following, all of which are (in my view) much more of an overstatement than the overstatement he claims to be correcting:

1.  "The 2015 Letter has proven incorrect . . . in anticipating that 'hold-up' would be a competitive problem. Rather, concerns over hold-up as a real-world competition problem have largely dissipated" (p.4).  Rather, "[t]here continues to be little evidence that hold up is a significant problem (much less a competition concern)" (id. n.18),  In fact, the theory of patent holdup is firmly grounded in mainstream economics, as Erik Hovenkamp, Norman Siebrasse, and I demonstrate here.  Moreover, as Mark Lemley and Carl Shapiro demonstrate here, while may be impossible to quantify the social losses caused by holdup, the studies that purport to debunk the holdup theory are themselves full of holes.  Finally, while Delrahim cites the recent Ninth Circuit decision in Qualcomm in support of his not-a-competition-law-issue point, there are decisions from other courts (e.g., the Third Circuit in Broadcom) that take a different view. 

2. Delrahim cites his "New Madison" speech in stating that "the Department observed the serious harm to innovation that could arise from limiting injunctive relief" (p.5), and later states that "[d]enying essential patent holders access to injunctive relief has the potential to lessen returns for inventors and thereby to harm incentives for future innovation" (p.6).  I think a better word than "observed," in the first statement, would be "assumed," since (contrary to the second statement) the empirical evidence, to my knowledge, hasn't shown any negative impact from the limitations on injunctive relief resulting from the Supreme Court's eBay decision.  (See my discussion from one year ago on this topic, here, at p.3 n.12).

3. At the bottom of page 5, Delrahim refers to the "consensus view in the United States that seeking an injunction is an 'exclusive right' conferred by the U.S. Constitution."  The Supreme Court clearly didn't perceive any such "consensus" in eBay, however, and as I have noted elsewhere, Congress didn’t expressly authorize the federal courts to grant injunctions in patent infringement actions until 1819.

4.  Delrahim states that "The 2015 Letter focused on the risk of so-called 'hold up' by patent-holders without considering the possibility of 'hold out' by patent implementers or the Policy's effect on patent holders' innovation incentives.  Yet studies and analyses conducted in the intervening years about hold out have confirmed that these are serious concerns, as well" (p.8).  In support, he cites two law review articles, but none of the commentary, including the two articles cited above and work by Jorge Contreras, taking precisely the opposite view.  

Elsewhere in the letter Delrahim talks about FRAND disputes being "essentially contractual disputes" (p.4), and states that "parties should be given flexibility to fashion licenses that reward and encourage innovation" (p.8); but apparently concepts like flexibility and freedom of contract have their limits, when their exercise conflicts with the division's ideological positions.  Delrahim also states that, since IEEE's policy has gone into effect, "negative assurances--those in which a technology contributor declines to give a RAND assurance--have increased significantly" (p.9).  I would have thought that someone who believes in free markets would conclude that, if a private entity adopts a policy that turns out badly, that entity should have to suffer the consequences, rather than needing the guiding hand of the Antitrust Division to save it from itself.  Or could this be a not-to-subtle hint that, if Donald Trump wins re-election, IEEE could find itself in the agency's cross-hairs?

Update:  Also of possible interest, and in a similar vein, are remarks Mr. Delrahim delivered at the LeadershIP Virtual Series on September 10, titled Broke. . . but Not No More: Opening Remarks--Innovation Policy and the Role of Standards, IP, and Antitrust.