IP Chat Channel Webinar on Enforcing IP at Trade Shows

I should have mentioned this earlier, but today at 2 p.m. Eastern time the IP Chat Channel will be presenting a webinar titled Trade Shows: IP Rights Enforcement in the U.S. and Internationally.  Here is a link, and here is the description:

Live trade shows are thriving, even in this age of digital marketing — and even for intangible products.  In fact, a poll of marketing professionals at a recent leading IT trade fair for cloud computing, AI, and blockchain illustrated their strong belief that trade shows still are cost-effective at generating leads and/or increasing brand awareness.
But trade shows can also be places where IP right holders frequently discover that their IP rights are being infringed.  Moreover, standing disputes can escalate, because IP owners have an opportunity to interact with alleged infringers on the exhibitors’ floor.
This webinar will give a global perspective on enforcing IP at trade shows, including trademarks, trade dress, design patents, and utility patents, as well as address the U.S. landscape related to these issues.  The panel includes a law professor who has done extensive research and analysis of the remedies available worldwide for infringement at trade shows, a law firm attorney who has won a number of temporary restraining orders from U.S. courts requiring the immediate removal of infringing exhibits, and an in-house patent counsel with experience dealing with infringers and counterfeiters at trade shows.  They will discuss:

• Obtaining an TRO post-eBay, now that U.S. courts may no longer presume the existence of irreparable harm in patent infringement cases
• The proper preparation before a trade show that will strengthen an IP owner’s legal case and allow rapid enforcement
• When it is necessary to alert the local U.S. Attorney and the best ways to work with law enforcement
• What kind of recourse is available at trade fairs in other countries that often host trade fairs
• The pros & cons of ADR mechanisms recently established by some trade fair organizers
• The opposite side of the coin for trade show exhibitors: What to do if a competitor files an action against your company

Speakers:

• Scott Markow, Stanley Black & Decker Inc.
• Michael McCue, Lewis Roca Rothgerber Christie LLP
• Prof. Marketa Trimble, University of Nevada Law School

This was also the topic of Professor Trimble's recent conference at UNLV, at which I too participated.

As for me, on Friday, I will be a panelist for a session on patent remedies at the Tenth Annual Conference on the Role of the Courts in Patent Law and Policy, at Georgetown Law's Washington campus (see here).  I believe I will mostly be addressing FRAND issues.

Two New Papers by Koren Wong-Ervin

1.  Koren Wong-Ervin and Georgios Effraimidis have posted a paper on ssrn titled Recommendations Following the FTC’s October 2018 Hearings on IP and Innovation.  Here is a link to the paper, and here is the abstract:

On October 23-24, 2018, the U.S. Federal Trade Commission (FTC) held hearings on intellectual property (IP) and innovation as part of its broader ongoing hearings on Competition and Consumer Protection in the 21st Century. The hearings focused on the role of IP protection in promoting innovation, as well as the foundational question of whether the FTC (and the government more broadly) should play a role in advancing or supporting innovation and, if so, what role. The Commission is seeking further public input through its consultation process on this important (and commendable) inquiry, including asking whether the FTC currently uses its enforcement and policy authority to advance innovation, and what factors it should consider in attempting to achieve this objective. The hearings also included sessions on the role of IP in business and investment decisions, emerging trends in patent quality and litigation, and industry and economic perspectives on current U.S. IP and innovation policy.

This short article summarizes some of the major themes from these hearings and provides an economic and legal analysis of the relevant testimony. We conclude with recommendations for the FTC to consider when evaluating possible future enforcement and policy work in this area. Our recommendations focus primarily on certain concerning positions taken in the Commission’s 2003 and 2011 IP Reports, namely with respect to patent quality and the recommendation that courts adopt an ex-ante incremental value approach when calculating patent damages.

2.  Ms. Wong-Ervin also has posted a paper titled The 2018 FTC Hearings on IP & Innovation: Key Testimony, Economic Learnings, and Recommendations for Further Study.  Here is a link, and here is the abstract:

This Article provides a summary of some of the key testimony from the U.S. Federal Trade Commission’s October 23-24, 2018 hearings on intellectual property (IP) and innovation, followed by insights from the economics literature and recommendations for future study. Covered topics include: the role and importance of IP rights in promoting innovation; the role of IP in business and investment decisions, including data on recent investment trends; and effects of recent patent law reforms, including U.S. Supreme Court decisions restricting patent eligible subject matter (2012 Mayo and 2014 Alice decisions) and weakening patentees’ ability to obtain injunctive relief (2006 eBay decision); the high invalidity rate of patents following the 2011 American Invents Act and its creation of post-grant challenges through the Patent Trial and Appeal Board (PTAB); and the general trend towards lower patent damages awards. Key testimony covered includes remarks by the Commissioner for Patents at the U.S. Patent and Trademark Office, the Acting Chief Judge of the PTAB, investors and other industry participants, and leading academics.  

For video of the aforementioned hearings, at which I was one of the participants, see here. 

Canadian Government Proposes That FRAND Commitments Should Bind Subsequent Assignees

Hat tip to Norman Siebrasse for calling to my attention a series of amendments to Canada's Patent Act proposed by the Government of Canada as part of a budget bill introduced in the House of Commons on October 29.  If you access the bill and scroll down to Division 7, titled "Intellectual Property Strategy," you will find the proposed amendments under Subdivision A.  Regarding standard-essential patents, the bill would add two new provisions, sections 52.1 and 52.2, to the Patent Act, as follows:

Subsequent patentee or holder bound

52.‍1 (1) A licensing commitment in respect of a standard-essential patent that binds the patentee, binds any subsequent patentee and any holder of any certificate of supplementary protection that sets out that patent.

Subsequent holder bound

(2) If a certificate of supplementary protection sets out a standard-essential patent, a licensing commitment that binds the holder of that certificate of supplementary protection, binds any subsequent holder of the certificate of supplementary protection.

Application

(3) Subsections (1) and (2) apply despite any other Act of Parliament and any decision or order made under such an Act.

Regulations

52.‍2 The Governor in Council may make regulations, for the purposes of section 52.‍1, respecting what constitutes, or does not constitute, a licensing commitment or a standard-essential patent.

The bill also would, among other things, add new provisions permitting the use of prosecution history "[i]n any action or proceeding respecting a patent," authorizing the regulation of demand letters, and establishing a statutory experimental use defense.

Judge Koh Grants Partial Summary Judgment to the FTC

Earlier today, in the FTC's lawsuit against Qualcomm, Judge Lucy Koh granted the FTC's motion for partial summary judgment on the issue of whether Qualcomm is obligated, as a matter of California contract law, to license its SEPs to rival chip makers on FRAND terms, in accordance with  the TIA and ATIS IPR policies.  Opinion here.  From the opinion:

For all of the above reasons, the Court agrees with the FTC that as a matter of law, the TIA and ATIS IPR policies both require Qualcomm to license its SEPs to modem chip suppliers. Because “after considering the language of the contract and any admissible extrinsic evidence, the meaning of the contract is unambiguous,” the Court GRANTS the FTC’s motion for partial summary judgment (p.25).

This doesn't necessarily mean that the FTC will prevail in proving that Qualcomm's conduct violates U.S. antitrust law, but the holding that Qualcomm was contractually obligated to license these rivals helps the FTC's case.

Some New Papers, Posts on FRAND Issues (Part 1)

1.  Justus Baron has posted a paper on ssrn titled Counting Standard Contributions to Measure the Value of Patent Portfolios-A Tale of Apples and Oranges.  Here is a link to the paper, and here is the abstract:

Measuring the value of portfolios of Standard-Essential Patents (SEP) is a difficult and controversial exercise. It has recently been suggested to use counts of technical contributions to Standard Development Organizations (SDO) as an indicator of the share of the value of a standard created by an SEP holder. Analyzing a comprehensive database of contributions to the Third Generation Partnership Project (3GPP), I find that contributions are highly heterogeneous in technical significance, outcome, and impact. The standardization process is not intended to screen contributions for value or significance. Against this background, contribution counts are not a suitable basis for apportioning the value of a standard between different SEP holders. The measure is prone to be easily manipulated. Furthermore, apportioning royalty payments by contribution counts would exacerbate commercial considerations and opportunistic strategies, which could hamper or even derail the technical work of SDO working groups.

2. Wenwei Guan has posted an abstract of a paper on ssrn, titled Diversified FRAND Enforcement and TRIPS Integrity, 17(1) World Trade Review 91 (2018).  Here is the abstract:

As an integral part of the WTO trading regime and in line with the international trend of antitrust control, TRIPS harmonized intellectual property protection with competition in mind. However, diverse national FRAND enforcement practices that take either a contractual or an antitrust approach challenge TRIPS integrity. While personal property recognition for SEPs lends constitutional support to the contractual approach to FRAND enforcement, private property's in-built limitation warrants a balance with the antitrust approach for needs from others. A critical examination of the TRIPS conclusion and the analytical structure of TRIPS provisions reveal that TRIPS obligation against anticompetitive practices is imperative. The imbalance of harmonized TRIPS with un-harmonized FRAND practices reflects TRIPS birth defect and challenges TRIPS integrity. To improve balance of rights and obligations in international trade and to ensure innovation and technology dissemination that is conducive to social and economic welfare, the paper calls for a contract–antitrust balanced approach to FRAND enforcement and the resumption of WTO's competition negotiations.

3. Daryl Lim has posted Third Post:  Standard Essential Patents on Daryl Lim's Blog, in which he discussed some of his previous work on the topic and also calls attention to two other recent papers which I had not yet seen, Michael Carrier's DOJ Giving Cover to Monopolizing Firms That Breach Antitrust Rules (an op-ed published in The Hill), and Elizabeth A.N. Haas's National Law Review article DOJ and FTC Signal Shifts in Antitrust Enforcement of Standard Essential Patents.

4. Renato Nazzini has posted a paper on ssrn titled FRAND-Encumbered Patents, Injunctions and Level Discrimination: What Next in the Interface between IP Rights and Competition Law?, 40 World Competition 213 (2017).  Here is a link, and here is the abstract:

Standards are of fundamental importance in our economy and competition law has an important role to play in ensuring that standard setting procedures are not distorted so as to result in negative effects on technological progress and social welfare. The Court of Justice in Huawei ruled on the circumstances in which the seeking of an injunction or a product recall by the holder of a standard essential patent (‘SEP’) may be an abuse of dominance under Article 102 TFEU. However, Huawei left many questions unanswered. One of them is whether the practice known as level discrimination is compatible with EU competition law. Level discrimination occurs when the holder of a SEP, having made a FRAND commitment, decides to license only undertakings at a given level of the supply chain, typically, the end-product manufacturers, rather than the component manufacturers. The economic and policy arguments for and against level discrimination are finely balanced and it may not be obvious whether this practice is likely to cause competitive harm if the SEP holder does not enforce the SEP against the component manufacturers who operate without a licence. However, as a matter of law, it appears that a refusal to license component manufacturers has the potential to exclude them from the market and, if the SEP holder made a FRAND commitment, such a refusal to licence may well be abusive, at least when the SEP holder is a vertically integrated undertaking. For non-practising entities, a first-principle analysis appears to point to the same conclusion. Both in the case of practising and non-practising entities, the abuse would be exclusionary. Somewhat paradoxically, the prohibition of abusive discrimination under Article 102(c) has no role to play in the competition law assessment of level discrimination.

Two New Papers by Jorge Contreras

1.  Jorge Contreras has posted a paper on ssrn titled Taking it to the Limit: Shifting U.S. Antitrust Policy Toward Standards Development, Minnesota L. Rev. Headnotes (2018, forthcoming).  Here is a link, and here is the abstract:

In November 2017, U.S. Assistant Attorney General Makan Delrahim, chief of the Department of Justice (DOJ) Antitrust Division, gave a speech at University of Southern California provocatively entitled “Take it to the Limit: Respecting Innovation Incentives in the Application of Antitrust Law”. In this speech, Mr. Delrahim announced a new DOJ policy approach to the antitrust analysis of collaborative standard setting and standards-development organizations (SDOs) -- the trade associations and other groups in which industry participants cooperate to develop interoperability standards such as Wi-Fi, Bluetooth, 4G and 5G, USB and the like. He explained that the DOJ had “strayed too far” in its focus on single firm conduct concerning standards, particularly the assertion of patents essential to the implementation of standards in technology products (“standards-essential patents” or “SEPs”), and that antitrust authorities should be more concerned with potential collusion by competitors within SDOs (i.e., an apparent shift in doctrinal focus from unilateral conduct under Section 2 of the Sherman Act to concerted action under Section 1 of the Sherman Act). One commentator described the DOJ policy shift announced by Mr. Delrahim as “a 180 degree turn” on SEP issues. The new policy also seems to put the enforcement priorities of the Antitrust Division at odds with those of the other principal U.S. antitrust enforcement agency, the Federal Trade Commission (FTC) and jeopardizes reliance of a long line of DOJ Business Review Letters outlining acceptable approaches to conduct such as forming patent pools. This article analyzes the contours of the emerging divide among U.S. antitrust agencies, as well as reactions to the “Take it to the Limit Speech” by industry, academics and Mr. Delrahim’s subsequent public statements.

2.  Professor Contreras also has posted a paper titled Global Rate-Setting:  A Solution for Standards-Essential Patents?, forthcoming in the Washington Law Review.  Here is a link, and here is the abstract:

The commitment to license patents that are essential to technical interoperability standards on terms that are fair, reasonable and non-discriminatory (FRAND) is a fundamental mechanism that enables standards to be developed collaboratively by groups of competitors. Yet disagreements over FRAND royalty rates continue to bedevil participants in global technology markets. Allegations of opportunistic hold-up and hold-out continue to arise, spurring competition authorities to investigate and intervene in private standard-setting. And litigation regarding compliance with FRAND commitments has led an increasing number of courts around the world to adjudicate FRAND royalty rates, often on a global basis, but using very different methodologies and doctrinal approaches. The issues affecting the FRAND licensing system can be summarized as deficiencies in transparency, consistency and comprehensiveness. Together, these issues reduce the overall fairness and accuracy of the system and result in excess administrative and transactional costs. This article, for the first time, lays out a roadmap for the establishment of an expert FRAND rate-setting tribunal that promotes the tripartite goals of transparency, consistency and comprehensiveness. This tribunal is modelled on the U.S. Copyright Royalty Board and similar rate-setting agencies, though it is envisioned not as a governmental body, but an international non-governmental organization. It is hoped that such a tribunal will bring greater predictability and stability to the technology development ecosystem while reducing inefficient litigation.

Inventor Protection Act

Not long ago, I published an op-ed on Law360 titled Congress Shouldn’t Overturn EBay Patent Injunction Standard.  In the course of the op-ed, I noted two pending bills (the STRONGER Patent Act and the Restoring America's Leadership in Innovation Act) which, if enacted, would to some degree overturn the Supreme Court decision (eBay) holding that the decision whether or not to enter an injunction is discretionary.  Although I have been critical of some aspects of the eBay decision as it has been implemented, on balance I firmly believe that it has done more good than harm, and that any proposals to return to a system of near-automatic injunctions would be a bad idea.

Anyway, I somehow managed to miss another pending bill, the Inventor Protection Act, filed in July by Congressman Dana Rohrabacher and discussed recently on IPWatchdog.  The bill would amend the Patent Act by defining an "inventor-owned patent" as "a patent held entirely by the inventor of the claimed invention," and conferring various protections upon inventor-owned patents, including (1) forbidding the USPTO from reexamining, reviewing, or otherwise making "a determination about the validity of an inventor-owned patent unless voluntarily agreed to by the inventor"; (2) allowing inventors to file suit for the infringement of inventor-owned patents in any judicial district in which "the defendant is subject to the court's personal jurisdiction or where the defendant has committed an act of infringement, regardless of whether the defendant has a regular and established place of business in such district," thus overruling TC Heartland as it applies to inventor-owned patents (hello, forum shopping!); (3) forbidding transfers of such actions "to another district for convenience without consent of the inventor"; and (4) promising an expedited trial and limitations on discovery.  Most relevant for purposes of this blog, however, are the proposed changes to the law of remedies.  These would include not only restoring the presumption of irreparable harm (which could be overcome by clear and convincing evidence), but also permitting the inventor to opt for "simplified damages" in lieu of (nonsimplified, everyday) damages under section 284.  Here's what the bill says:

If a request for relief under this subsection is made, the following provisions apply:

“(A) IN GENERAL.—Upon a finding of infringement, the court shall award damages equal to the sum of—

“(i) the greater of—

“(I) the total profits attributable to the infringing party’s use of the patented invention; or

“(II) 25 percent of the sales attributable to the infringing party’s use of the patented invention; and

“(ii) any interest and costs as fixed by the court.

“(B) INFRINGEMENT FOUND WILLFUL.—

“(i) TREBLE DAMAGES AVAILABLE.—If the court finds the infringement to be willful, the court may award damages equal to no more than three times the amount of any damages found in subparagraph (A), but shall not include any royalty payments.

“(ii) PRESUMPTION OF WILLFULNESS.—Infringement shall be presumed willful if the infringing party is an expert in the field of the invention.

“(C) ATTORNEYS FEES.—If an inventor successfully brings a claim for infringement of their inventor-owned patent, the court shall award the inventor any amount of their attorneys fees that exceeds 10 percent of the amount of any damages the court awards to the inventor.”

This just boggles the mind.  Although, as I have written elsewhere on several occasions, there is a theoretical argument to be made in favor of requiring an intentional infringer to disgorge its profits attributable to the infringement (that is, the profit it earned above what it would have earned from the use of the next-best available noninfringing alternative), perhaps as an alternative to enhanced damages, I don't think it makes sense as a remedy for infringement generally due to its potential overdeterrent effect.  And as the above text indicates, the bill contemplates that courts could award disgorgement and still award (up to) treble damages for willful infringement (and there would be that "presumption of willfulness" where the defendant "in an expert in the field of invention").  And why award, as an alternative to disgorgement, 25% of the sales (revenue?) attributable to the infringing party's use of the patented invention?  What's so magic about 25%?  Would any of this be tied into the economic value of the invention, that is, the value to the user over and above the value the infringer would have accrued from using the next-best noninfringing alternative?  

More to the point, have any of the sponsors of this bill thought at all about the rent-seeking and gaming that would ensue from enacting a class of protections solely for the benefit of inventor-owned patents?  Or about how any of this would affect consumers?  

I certainly understand that patent litigation (including, most definitely, the damages portion of trial) can be enormously expensive, and that there may be benefits in considering reforms that would simplify some aspects of it, particularly when the stakes are comparatively small.  (I talk about some of this stuff in my Patent Damages Heuristics paper; and I would suggest in addition that reforms such as creating a small(er)-claims-type court patterned after the Intellectual Property Enterprise Court in the U.K. might be worth considering.)  But the proposals floated in the Inventor Protection Act strike me as rather poorly thought out.  Fortunately, I can't imagine that this bill stands much of a chance of passing . . .