News on Enhanced Damages in the U.S.

1.  Jeremy Taylor, Sarah Guske, and Wayne Stacy recently published an article on Law360 titled The New Reality of Patent Trials Post-Halo.  According to the authors, in the wake of the Supreme Court's 2016 Halo decision "juries now find infringement much more often when willfulness is tried to the jury," and there is "a strong correlation  between the two causes of action . . . . juries seem to run the two findings together."  Further, while "juries found infringement in roughly half of all trials" pre-Halo, post-Halo "infringement findings jumped to 77 percent when willful infringement and infringement were tried together."  In addition, post-Halo "juries found willful infringement 74 percent of the time overall, and almost 90 percent of the time when the same jury found all asserted claims infringed."  The correlation disappears, however, "when infringement and willfulness are decided separately . . . or when a jury finds only some claims infringed . . . ."  The authors don't state how many cases their analysis is based on or whether their findings are statistically significant, but if they hold out this seems pretty disturbing to me (though perhaps not surprising).  

The authors also state that courts across the country have begun using the jury instructions developed in Polara Engineering, Inc. v. Campbell Co., Case No. 8:13:cv:00007 (C.D. Cal. June 29, 2016).  Here is a link to those instructions, number 56 of which address wilfulness, and here is the text of a version of them that is now included in the Federal Circuit Bar Association's Model Patent Jury Instruction B.3.10:

In this case, [patent holder] argues both that [alleged infringer] infringed and, further, that [alleged infringer] infringed willfully. If you have decided that [alleged infringer] has infringed, you must go on and address the additional issue of whether or not this infringement was willful. Willfulness requires you to determine whether [patent holder] proved that it is more likely than not that the infringement by [alleged infringer] was especially worthy of punishment. You may not determine that the infringement was willful just because [alleged infringer] knew of the [ ] patent and infringed it. Instead, willful infringement is reserved for only the most egregious behavior, such as where the infringement is malicious, deliberate, consciously wrongful, or done in bad faith.

To determine whether [alleged infringer] acted willfully, consider all facts. These may include, but are not limited, to:

(1) Whether or not [alleged infringer] acted consistently with the standards of behavior for its industry;

(2) Whether or not [alleged infringer] intentionally copied a product of [patent holder] that is covered by the [ ] patent;

(3) Whether or not [alleged infringer] reasonably believed it did not infringe or that the patent was invalid;

(4) Whether or not [alleged infringer] made a good-faith effort to avoid infringing the [ ] patent, for example, whether [alleged infringer] attempted to design around the [ ] patent; and (5) Whether or not [alleged infringer] tried to cover up its infringement.

[Give this instruction only if [alleged infringer] relies upon an opinion of counsel as a defense to an allegation of willful infringement:

[Alleged infringer] argues it did not act willfully because it relied on a legal opinion that advised [alleged infringer] either (1) that the [product] [method] did not infringe the [ ] patent or (2) that the [ ] patent was invalid [or unenforceable]. You must evaluate whether the opinion was of a quality that reliance on its conclusions was reasonable.]

2.  The blogs have also noted some recent significant cases on willfulness and/or enhanced damages, including the $130 million enhancement awarded in Alfred E. Mann Fdn. v. Cochlear Corp. (write-ups available on IP Watchdog and Law360); the trial judge's reaffirmation that Briggs & Stratton willfully infringed Exmark's patent in Exmark Mfg. Co. v. Briggs & Stratton Corp. following a remand from the Federal Circuit (write-up on Law360); a recent award of double damages (amounting to just under $12 million) in Fitness Anywhere LLC v. WOSS Enterprises (write-up on IP Watchdog); a recent finding of wilfulness in Bio-Rad Labs., Inc. v. 10X Genomics, Inc., which could lead to an enhancement of an actual damages award in the amount of $24 million (write-up on IP Watchdog); and the Federal Circuit's affirmance without opinion in Stryker v. Zimmer (write-up on Patently-O).

From Around the Blogs Part 2: FRAND Issues in China, Preliminary Injunctions in Spain and Ukraine

1.  On the IAM Blog, Jill Ge recently published a post titled How a Chinese Court Would Have Decided the Unwired Planet Appeal.  Ms. Ge concludes that (1) as in Unwired Planet, "it is probable that Chinese courts can adjudicate a global FRAND licence"; (2) unlike Unwired Planet, Chinese courts would probably adopt the hard-edged non-discrimination principle (which is what the EWCA thought too); and (3) Chinese courts "would consider the parties' negotiation behaviours as well as the reasonableness of the offers made during negotiation," as reflected for example in the Shenzhen court's recent Huawei v. Samsung decision. 

(Interestingly, Justice Carr of the Patent Court for England and Wales had concluded in April 2018 that Chinese courts can't set a global FRAND rate.  See the write-up on IPKat here.  Interesting.)

Also of interest on IAM is an opinion piece by Jonathan Stroud titled It's Time to Sort Out the Connected Car Disconnect, discussing some recent FRAND-related developments as they relate to connected cars.  Both pieces are highly recommended.

2.  On the Kluwer Patent Blog, Miguel Montañá published a post titled Court of Appeal of Barcelona revisits to what extent validity may be analysed in preliminary injunction proceedings.  According to the post, in the mid-2000s judges of the Commercial Courts of Barcelona had largely come around to the view that, on a motion for a preliminary injunction, courts could not "examine validity in depth," but rather that validity should be presumed absent "very robust indicia," presented by the opposing party, supporting invalidity.  More recent decisions, however, had departed from this practice and began "holding profound validity discussions," involving expert testimony and cross-examination.  According to the author, however, an October 2018 decision of the Court of Appeal concluded that the court of first instance's analysis of validity was excessive, potentially displacing the analysis that would take place in the main proceedings.  To the same effect is a discussion of an April 2018 decision of the same court, as described in a post on Kluwer by Adrian Crespo.  According to the author, this decision too "clarifies that, while validity may be discussed, the analysis should not reach the same level of depth as in the main proceedings."

3.  And again on Kluwer, here is a post by Ilarion Tomarov titled Ukraine:  Interim Injunctions in Pharma Cases, discussing a decision of the Ukrainian Supreme Court in Merck Sharp & Dohme Corp. v. Aurobindo Pharma Ltd.  I won't try to summarize the post here, but the upshot is that the court appears to be more favorable towards allowing patent owners to obtain interim injunctions, particularly where a refusal to grant such relief would mean that the patent owner, if successful at trial, would face "considerable expenses to remove from the market and . . . destroy the infringing products."

My Law360 Article on Makan Delrahim's December 7 Speech

Here is a link to the article, titled DOJ Speech May Leave SEP Implementers In Dire Straits.

IP Chat Channel Webinar on Enforcing Patents Globally

On Thursday, December 13, from 2-3 p.m. Eastern Time, the IP Chat Channel will be hosting a webinar titled Enforcing Patents: Global Strategies and Tactics.  Here is a link, and here is the description:

Considering the invalidation risk of AIA post-grant proceedings, the uncertainty about patent eligibility after the Alice and Mayo U.S. Supreme Court decisions, as well as the difficulty in getting an injunction after eBay, many experts have concluded that successfully enforcing a patent in the U.S. is a much harder task than it was a dozen years ago.

Some patent owners with international patent portfolios have decided to litigate in other countries which they see as more patent friendly, instead of, or in addition to, pursuing litigation the U.S. This shift has seemingly contributed to a documented spike in patent cases filed in EU countries, most of them in Germany.

This webinar features a U.S.-based IP executive who has carried out a successful patent enforcement campaign in Europe, a litigator based in Silicon Valley with experience in European courts on behalf of U.S. clients, and a leading German patent litigator with many multinational clients. Drawing on their first-hand experiences, they will discuss:

• The decisions necessary before launching foreign litigation
• Important differences between legal systems
• Using foreign litigation to encourage global settlement
• The reality of what it takes to enforce an injunction in Germany
• Whether European decisions make any impact on U.S. courts
• The risk that foreign litigation could backfire in the U.S.

Speakers:

• Steven Carlson, Robins Kaplan LLP 
• Johannes Heselberger, Bardehle Pagenberg Partnerschaft MbB
• Boris Teksler, Conversant Intellectual Property Management Inc.

Breaking News: USDOJ Pulls Out of the 2013 USDOJ/USPTO Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments

Here is a link to USDOJ Antitrust Chief Makan Delrahim's speech today in Palo Alto, California, announcing the withdrawal.  Here is a copy of the Policy Statement, which is still available on the USPTO's website (but not the DOJ's), and here is backup copy I just made, in case it goes missing from USPTO's website.  

I will have more to say about this before long.  For now, Ill just say that I don't think the withdrawal is a good idea . . . .

Update:  On Friday night, Law360 published a short write-up on Mr. Delrahim's speech, and I will be publishing an analysis on Law360 myself in a few days.  I'll provide a link when it is available.

From Around the Blogs Part 1: Damages in Canada, Spain, Taiwan, and the U.S.

1.  On the Sufficient Description blog, Norman Siebrasse has posted a four-part series (here, here, here, and here) on a recent decision of Canada's Court of Appeal, Apotex Inc. v. Eli Lilly & Co.  The decision holds, among other things, that (1) in assessing patent damages a court must consider whether an alleged noninfringing alternative (the existence of which would reduce the amount of damages) was objectively economically viable (thus rendering irrelevant Apotex's assertion that, but-for the infringement, it would have turned to an alternative that was unprofitable); (2) where, as here, use of the asserted noninfringing alternative would have infringed another of the plaintiff's patents, it would not have been an available alternative; and (3) compound interest is available as a "head of damages," but that there is no presumption in favor of its use.  Professor Siebrasse has some insightful observations about the first two of these holdings in particular.

2.  On the Kluwer Patent Blog, Miguel Montañá published a post titled Damages may be considered proven when the facts speak for themselves.  The post discusses a July 2018 decision of the Barcelona Court of Appeal holding that in some instances the "facts speak for themselves," that is, "the existence of damages if intrinsic to the nature of the infringement and does not require special proof."  If I understand correctly, however, the patent owner would still bear the burden of coming forward with evidence as to the amount of its injury, even if the fact of injury is presumed.  Apparently the facts of this particular case showed that the plaintiff was in negotiations with a customer when the defendant supplied that customer with an infringing product.

On a personal note, I will be speaking at one or two forums in Barcelona in late March 2019.  I'm looking forward to returning to one of my favorite cities.

3.  On the IAM Blog, Yulan Kuo published a post titled Taiwan Supreme Court Issues Decision on Unfair Enrichment in Patent Infringement Case.  According to the author, in Koninklijke Philips NV v. Gigastorage Corp. the court reversed the Taiwan IP Court's award of NT$1 billion for unjust enrichment and remanded for further consideration in light of various factors.  If I understand correctly, the court also wants the lower court to consider whether delay in enforcing one's rights might reduce the award, even if the statute of limitations has expired (compare with the U.S. Supreme Court's view in SCA Hygiene).  On a personal note here, I may be visiting Taiwan in the fall of 2019, so perhaps I will have an opportunity to discuss this case then. 

4.  On IP Watchdog, Mark Pedigo published a post titled Use of the Book of Wisdom in Reasonable Royalties, recapping the relevant Federal Circuit and lower court decisions permitting (or not) the use of information post-dating the date of the first infringement, for purposes of calculating reasonable royalties.  Mr. Pedigo concludes that "[u]se and acceptance of the book of wisdom can be relevant and useful, but it is not always allowed by the courts."

For some papers I have coauthored arguing that courts should be more open to the admissibility of such evidence, see here and here.

Some New Papers, Posts on FRAND Issues (Part 3)

1. Richard Stern has published a paper titled TCL v Ericsson:  US Court Determines Top-Down FRAND Royalty Rate for SEPs and Insists on Similar Percentage-of-Sale-Price Payments for High and Low Priced Devices, 40 E.I.P.R. 557-69  (2018).  Here is the abstract:

In TCL v Ericsson a district court issued a second major US FRAND judgment endorsing the "top-down" methodology and rejecting the "bottom-up" methodology for determining SEP royalties. The court also required substantially equal percentage-of-sales-price royalty payments for large and small competitors, and for upmarket and downmarket sellers alike, to satisfy FRAND’s nondiscrimination requirement. The court’s top-down approach may neutralise a trend among owners of large SEP portfolios to split up and diffuse their SEPs among many "privateers" in order to inflate total royalty payments. 

2. Gregory J. Werden and Luke M. Froeb have posted a paper on ssrn titled Why Patent Hold-Up Does Not Violate Antitrust Law.  Here is  a link, and here is the abstract:

Owners of standard essential patents (SEPs) are cast as villains for engaging in “patent hold-up,” i.e., taking advantage of the fact that they negotiate royalties with implementer-licensees that already have made sunk investments in the standard. In contrast to “patent ambush,” patent hold-up involves no standard-setting misconduct or harm to any competitive process, and thus cannot violate antitrust law. Commentators taking a contrary positions confuse the ends of antitrust law with its means. Antitrust law promotes consumer welfare only by protecting competition. Casting aside this core principle would expose business decisions, including ordinary price setting, to judicial oversight. Commitments made by SEP owners in the standard-setting process, however, should be enforced, and they are enforced. Without an antitrust cause of action, implementers invoke the powers of the courts to resolve royalty disputes over SEPs.

3. Kelce Wilson has posted a paper on ssrn titled Designing a Standard Essential Patent (SEP) Program, 53 les Nouvelles 202 (Sept. 2018).  Here is a link, and here is the abstract:

Standard Essential Patents (SEPs) are a unique form of intellectual property rights (IPR), due to various considerations that can notably impact their value and usage options. Some of these considerations include:
1. Potentially simplified infringement case, when litigated;
2. Easily-detectable potential infringement, to facilitate drafting claim charts prior to litigation discovery;
3. Readily-identifiable potential infringers, to facilitate identifying targets for an enforcement program;
4. Possibly global licensee pool, to financially incentivize multi-national prosecution;
5. Potentially limited enforcement options, such as a potential unavailability of an injunction;
6. Potentially limited royalty rates, due to (fair) reasonable and non-discriminatory ((F)RAND) limitations; and
7. Affirmative commitments to license SEPs on FRAND terms in some standards setting organizations (SSOs).
8. Disclosure obligations of related patents and applications in some SSOs.
Some helpful, excellent articles explain advantages for organizations in certain industries pursuing SEPs as part of a patent portfolio. Described herein are some issues to consider when designing a SEP program for patent portfolio growth.

4.  Also of interest are recent posts (1) by Raymond Millen and Jan Schnitzer on the IAM Blog titled The EPO should rule on SEPs, say top European auto patent players (more specifically, the proposal is for the EPO to decide on whether patents declared essential are in fact essential; the EPO wouldn't be making FRAND determinations); and (2) on the IPKat and World Intellectual Property Review, both discussing a recent session at AIPPI 2018 titled Standard Essential Patents--Maximizing Value Before Enforcement.