Friday, May 22, 2015

EWCA Affirms Record £27 Million Award for Wrongly Issued Interim Injunction

The judgment of the England and Wales Court of Appeal (EWCA) in AstaZeneca AB v. KRKA came down yesterday and is available here (hat tip to Norman Siebrasse for calling it to my attention).  Last year I mentioned the Patents Court decision from which this appeal arose (see here).  The issue is one of damages for a wrongly issued preliminary injunction.  As I noted in this 2013 blog post, in many countries (including all the member states of the E.U., who are bound by the 9(7) of the Enforcement Directive), when a preliminary injunction is granted but subsequently is revoked, or the defendant is found not to have infringed the IP right in suit, the defendant is entitled to compensation for the losses it suffers while the injunction is in place.  (By way of contrast, in the U.S. the defendant's damages are capped by the amount of the bond the plaintiff was required to post in order to obtain the injunction.)  Anyway, as I wrote last year, in January 2014 Patents Court Justice Sales     
went through a very careful analysis to determine the framework for awarding damages to KRKA from having its generic drug excluded from the market as a result of a preliminary injunction involving a patent that was later held not to infringe another generic manufacturer's drug.  As a result of the decision in this other case, the preliminary injunction against KRKA was lifted in July 2011; but it was still a couple of months before KRKA was able to enter the market, by which time (or shortly thereafter) there were other generic copies of the same drug on the market.  The court concluded that in the but-for world in which the preliminary injunction had not issued, KRKA would have enjoyed a first-mover advantage which is now lost, and should be compensated accordingly.  The court directed the two parties' experts to reach an agreement on the amount owed, following the court's discussion of the appropriate framework.
Ultimately the judge awarded damages in excess of £27 million, based on his conclusion that the defendants would have been able to establish a foothold by convincing national health service authorities in the U.K. to approve the switch to the generic version of the drug and to convince doctors to prescribe it, and thus would have enjoyed a temporary 80% market share (discounted by an 20% probability that this might not have happened).  Yesterday's opinion goes through Justice Sales's factual determinations and, ultimately, rejects all of AstraZeneca's challenges to them (including the challenge to the 20% discount, which AstraZeneca argued was arbitrary, see paras. 79-84).  According to the court, this "is said to be the largest award ever made by the Patents Court upon an inquiry of this kind" (para. 1).

There is also a write-up of the case on today's PatLit Blog.

Wednesday, May 20, 2015

New Translations of Japanese Apple v. Samsung Judgments

Japan's IP High Court has had English-language summaries and translations of its May 2014 judgments in the Samsung-Apple FRAND dispute up for some time now (see my post here for links).  In addition, Christopher Heath recently published a translation of key portions of the judgments in the February 2015 issue of IIC (the Max Planck Institute's International Review of Intellectual Property and Competition Law), available here and here.  In addition, the February 2015 issue of the German journal GRUR-Int. has translations into German by Atsuhiro Furuta (pages 142-47).

Monday, May 18, 2015

Federal Circuit Affirms Damages Awards for Design & Utility Patent Infringement in Apple v. Samsung

Here is a link to the Federal Circuit's opinion, and links to my previous blog posts may be found here, here, and here

The bottom line is that the court (1) reverses the finding that Apple's trade dress was nonfunctional and thus protectable (an important topic in trademark law which, however, I will not address here); (2) affirms the findings that Samsung infringed Apple's design and utility patents; and (3) affirms the damages awards predicated on the design and utility patent infringement, but not on the trade dress dilution (thus remanding "for immediate entry of final judgment on all damages awards not predicated on Apple's trade dress claims").  I'm not sure off the top of my head what portion of the nearly $1 billion this entails, though I would expect most of the damages award will remain in place for reasons which follow.

The main damages issues of interest relates to the award for design patent infringement.  Section 289 of the U.S. Patent Act reads as follows:
Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.
Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.
As I have written before, according to the Federal Circuit Congress included the words “total profit” when it revised the statute over one hundred years ago, expressly to overrule a Supreme Court case, Dobson v. Dornan, 118 U.S. 10 (1886), in which the Court had required the plaintiff to apportion the profit the defendant earned from the use of an infringing carpet design as opposed to the rest of the carpet (resulting, in that case, in only nominal damages).  See Trans-World Mfg. Corp. v. Al Nyman & Sons, Inc., 750 F.2d 1552, 1567 (Fed. Cir. 1984).  If this understanding is correct, it means that a court may award the defendant’s entire profit from the sale of design patent-infringing goods, even if the design patent in suit accounts for only a small portion of that profit.  Such a rule is indefensible as a matter of policy, and is not followed in trademark or copyright cases (or in other countries, where awards of infringers’ profits for utility patent infringement remains a viable remedy).   

As one who joined a law professor’s amicus brief arguing against applying § 289 in this fashion, I was hoping that the court might find a way out, based either on a causation rationale or by interpreting the words “article of manufacture” narrowly.  But it was not to be (though I wonder whether Samsung will find it worthwhile to try a cert. petition to the U.S. Supreme Court?).  Here is what the court says, in the opinion by Chief Judge Prost:
In reciting that an infringer “shall be liable to the owner to the extent of [the infringer’s] total profit,” Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.1 Several other courts also concluded that Section 289 authorizes such award of total profit. See Schnadig Corp. v. Gaines Mfg. Co., 620 F.2d 1166, 1171 (6th Cir. 1980); Henry Hanger & Display Fixture Corp. of Am. v. Sel-O-Rak Corp., 270 F.2d 635, 643-44 (5th Cir. 1959); Bergstrom v. Sears, Roebuck & Co., 496 F. Supp. 476, 495 (D. Minn. 1980). The clear statutory language prevents us from adopting a “causation” rule as Samsung urges.
Samsung continues its quest for apportionment by arguing, alternatively, that the profits awarded should have been limited to the infringing “article of manufacture,” not the entire infringing product. Samsung argues for limiting the profits awarded to “the portion of the product as sold that incorporates or embodies the subject matter of the patent.” Appellants’ Br. 38. Samsung contends that the Second Circuit had “allowed an award of infringer’s profits from the patented design of a piano case but not from the sale of the entire piano . . . .” Id. These Second Circuit opinions, however, addressed a factual situation where “[a] purchaser desiring a piano of a particular manufacturer may have the piano placed in any one of several cases dealt in by the maker.” Bush & Lane Piano Co. v. Becker Bros., 222 F. 902, 903 (2d Cir. 1915). That factual situation occurred in the context of the commercial practice in 1915 in which ordinary purchasers regarded a piano and a piano case as distinct articles of manufacture. The facts at hand are different. The innards of Samsung’s smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers. We thus do not agree with Samsung that these Second Circuit cases required the district court to limit the damages for design patent infringement in this case.
We agree with the district court that there was no legal error in the jury instruction on the design patent damages. Samsung does not argue a lack of substantial evidence to support the damages awards under the district court’s jury instruction. We therefore affirm the damages awarded for design patent infringements.
1/ Amici 27 Law Professors argues that an award of a defendant’s entire profits for design patent infringement makes no sense in the modern world. Those are policy arguments that should be directed to Congress. We are bound by what the statute says, irrespective of policy arguments that may be made against it.
I can’t say I’m greatly surprised that the court adhered to the district court’s interpretation of § 289, but I am disappointed.  As design patents become more important in U.S. law, I would hope that Congress, if not the courts, consider revising this rogue statute.

Fed Circuit Affirms in Part, Reverses in Part in Apple v Samsung Appeal

Here is a link to the opinion, courtesy of Bloomberg BNA's Patent, Trademark & Copyright Law Journal.  As of 9 a.m. Central Time, the opinion isn't up yet on the Federal Circuit's website, but it should be shortly.  From the text:
A jury found that Samsung infringed Apple’s design and utility patents and diluted Apple’s trade dresses. For the reasons that follow, we affirm the jury’s verdict on the design patent infringements, the validity of two utility patent claims, and the damages awarded for the design and utility patent infringements appealed by Samsung. However, we reverse the jury’s findings that the asserted trade dresses are protectable. We therefore vacate the jury’s damages awards against the Samsung products that were found liable for trade dress dilution and remand for further proceedings consistent with this opinion.
I haven't read the full opinion yet but will be blogging about it sometime today.

Friday, May 15, 2015

Sidak on the DOJ's Response to IEEE's New Patent Policy

J. Gregory Sidak has published a new paper titled The Antitrust Division's Devaluation of Standard-Essential Patents, 104 Georgetown Law Journal Online 48 (2015).   Here is a link to the paper, and here is the abstract:
The Institute of Electrical and Electronics Engineers (IEEE) is a standard-setting organization (SSO) whose standards incorporate technologies owned by many different holders of standard-essential patents (SEPs). The IEEE’s patent policy specifies the conditions under which an SEP holder voluntarily commits to license its SEPs on fair, reasonable, and nondiscriminatory (FRAND) terms. In February 2015, the IEEE became the first SSO to regulate the calculation of FRAND royalties. The IEEE made that transformative change with the encouragement and blessing of the Antitrust Division of the U.S. Department of Justice. The amendments purport to mitigate the risk of patent holdup and royalty stacking—theoretically and empirically disputed conjectures, which postulate that SEP holders routinely extract supracompetitive royalties from the implementers of a standard. In fact, the amendments broaden the binding provisions of the IEEE’s FRAND commitment, diminish the SEP holder’s ability to enforce its patent rights, and unambiguously lower the royalties that the SEP holder may charge a licensee. In its business review letter, the Antitrust Division commended the bylaw amendments for addressing the risk of patent holdup and royalty stacking without any analysis of whether those harms actually occur in the implementation of the IEEE’s standards (let alone occur so often as to raise a legitimate policy concern). At the same time, the Antitrust Division ignored the obvious, countervailing concern that the bylaw amendments facilitate collusion among implementers to suppress the royalties they pay for SEPs. The Antitrust Division exists not to orchestrate or cheerlead the coordinated action of buyers in a market to suppress prices. It exists to ensure that firms obey the antitrust laws. That duty required the Division to assess, with skepticism and scrupulous impartiality, the competitive implications of the coordinated action of a subset of members of the IEEE that would benefit from the SSO’s adoption of bylaw amendments having the purpose and effect of suppressing the FRAND royalties that this subset of members would pay to license standard-essential patents. The Division failed to discharge that duty.
For previous posts on this blog regarding the IEEE policy change from this past February, see here, herehere, here, here, and here.  I don't share Mr. Sidak's views, but it should be an interesting paper.

Wednesday, May 13, 2015

ALJ Essex Finds InterDigital Patents To Be Nonessential, Not Subject to FRAND Obligation

Here is a link to a write-up from yesterday's Essential Patents Blog, and here is a link to the public version of ALJ Essex's Initial Determination on Remand.  (See also this previous post, here.)  ALJ Essex specifically finds that the "public interest does not preclude issuance of an exclusion order."

New Edition of "Patent Enforcement Worldwide" Due Out in October

Here is the link to Hart Publishing Company's webpage for "Patent Enforcement Worldwide, Third Edition," edited by Christopher Heath, Anselm Kamperman Sanders, and Giovanni Casucci.  Here is the book description:
This book features 15 country reports on the patent enforcement practice of the world’s most litigated countries in Europe, Asia and the Americas. Litigation strategies for both right owners and alleged infringers are explained against the background of case law on: types of action, standing to sue, jurisdiction, obtaining evidence, provisional and final measures, trial practice, types of infringement, remedies and counterclaims, costs and issues of retrial, threats and wrongful enforcement. Special chapters cover the Trade-Related Aspects of Intellectual Property Agreement provisions on enforcement, enforcement issues in the European Community, international cross-border litigation and border measures.
The reports are written by patent practitioners or academic experts in the field, and the homogenous structure of the country reports allows for an easy identification of best practices and strategic considerations on the choice of jurisdiction.
I found the second edition, which came out in 2005, to be a very helpful resource in preparing my own book on comparative patent remedies, and I am very much looking forward to seeing the third edition in print.  I also played a small role in the new edition, by coauthoring with Christopher Heath the first chapter, titled "Comparative Overview and the TRIPs Enforcement Provisions."