Monday, February 20, 2017

IP Chat Channel Webinar on Enhanced Damages

On Thursday, February 23, 2017, at 2 p.m. Eastern Time the IP Chat Channel will broadcast a webinar titled Willfulness, Enhanced Damages, and Opinions of Counsel Since Halo.   Here is a link to the website, if you're interested in registering, and here is a description:  
It's been more than six months since the U.S. Supreme Court's Halo decision lowered the bar for proving willful infringement, and this boon for plaintiffs is quickly changing trial strategy. Our panel of experienced litigators will begin by examining how courts post-Halo have decided the sufficiency of pleading for enhanced damages at the motion-to-dismiss stage. Then the panel will consider the factors that have most strongly influenced recent district court decisions to enhance - or not enhance - damages, including notice by the patent owner (cases such as CH2O and Finjan), copying (Westerbeke, Imperium, and PPC),and opinions of counsel (Dominion, Presidio, and Boston University). A favorably timed opinion of counsel can prove successful in warding off a finding of willfulness, but defendants need to consider the effect of an opinion of counsel on attorney-client privilege. 
Panelists will be Natalie Hanlon Lee, Christopher Marchese, and Michael Zeliger.

Thursday, February 16, 2017

Stays Pending Design-Around in Germany?

The question of whether, in a case in which the patent owner prevails on liability, the court should consider "staying" an injunction for a period of time, rather than denying the injunction altogether, to enable the infringer to design around the patented invention is one that has received some attention in the U.S. scholarship and case law.  In some respects it's an attractive option, since it reduces the risk that an infringer under threat of an injunction will agree to a royalty that reflects holdup value, while also reducing the potential harm to the patent incentive scheme that may result if the court were to enter a permanent ongoing royalty that inaccurately reflects the value of the invention.  (When U.S. courts choose this option, they typically award a temporary or "sunset" ongoing royalty that lasts only for the design-around period.  Unfortunately, the rate for these ongoing royalties is frequently higher than the prejudgment royalty rate--which makes little economic sense, see discussion here--but at least when the court is only staying the injunction the impact of such an error is temporary.)

For the most part, courts outside the United States still tend to view awards of injunctive relief to the prevailing patent owner as more-or-less automatic (as did U.S. law, prior to eBay) other than in SEP/FRAND cases.  Moreover, a May 2016 decision of the German Bundesgerichtshof (BGH, or Federal Supreme Court) suggests that German courts aren't very receptive to  the stay-pending-design-around idea either.  (Hat tip to Norman Siebrasse, who called to my attention Jochen Buehling's discussion of this case last month on the Kluwer IP Blog.)  The case is the Judgment of 10 May 2016, X ZR 114/13 (Wärmetauscher, or "Heat Exchanger"), available in the original German here.  The patent in suit claims a heating system for vehicles, and the principal issue before the BGH was whether the defendants' products infringed.  The courts of first and second instance held that they did not, but the BGH reversed, and most of the decision discusses the appropriate principles of claim construction leading to this result.

Of interest to remedies mavens, however, is the court's discussion of the defendants' alternative request for an Aufbrauchfrist (a term that Dr. Buehling nicely translates as "transition period") to enable them to sell off their stock and fill orders that had been placed up until the reversal on appeal.  If I'm understanding this correctly, the BGH holds that the granting of such a transition period can only be granted when, in consideration of the interests of the patent owner and the infringer, the immediate enforcement of the injunction would result in a disproportionate and undue hardhip and thus would be in bad faith (para. 41a).  The court further states that the issue of whether such a transition period would ever be available in a patent case hadn't come before the high court before, but that the legal literature had proposed that a court could consider granting such a transition period on a case-by-case basis, taking into account all of the participants' interests; the infringer's good or bad faith; whether the patented invention formed just a small but functionally necessary component of a complex product; and whether an unpatented or licensed product could be substituted within a reasonable time. The court also doesn't see anything in TRIPs article 30 (which permits "limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties"), or in article 3 of the EC Enforcement Directive ("Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. . . .  Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse."), that would require the more liberal granting of transition periods.

Applying these rules here, although the infringing subject matter comprised only a single element of a component (a vehicle seat) in a complex product (a vehicle), it wasn't an essential feature, and it wasn't shown that the defendants lacked alternatives or that an injunction would cause undue hardship.  Nor did it matter that the courts of first and second instance though the products were noninfringing.  

Based on the above discussion, as I understand it the court doesn't contemplate that a transition period could be accompanied by an interim royalty.  Rather, it would simply be an exception to the patent owner's exclusive rights, and barring some exceptional circumstances a German court won't grant it.  

Tuesday, February 14, 2017

New Dutch FRAND Case

On the EPLaw Blog today, Maurits Westerik has a write-up on a judgment published last Friday by the District Court of the Hague in Archos S.A. v. Koninklijke Philips N.V.  According to the post, the court concluded that the evidence did not show that the offer made by Philips was non-FRAND and that Archos's own offer was.  In particular, the court rejected Archos's arguments that Philips acted improperly by seeking to license its UMTS and LTE patent portfolios together, and that Philips's offer overestimated the share and quality of Philips's patents to the UMTS standard.  The post also links to the judgment itself, but most of it is in Dutch, which I can't read.  It would be great to have a translation into English, to help in better understanding some of the specifics.  

Monday, February 13, 2017

Canada's Federal Court of Appeal Reaffirms Relevance of Noninfringing Alternatives

The decision is Apotex Inc. v. ADIR, 2017 FCA 23 (Feb. 2, 2017).  Norman Siebrasse, who brought the case to my attention, has two more comprehensive write-ups on Sufficient Description, here and here.  The basic story is that in 2008 the district court found Apotex liable for the infringing manufacture and sale of perindropil tablets covered by Canadian Patent No. 1,341,196 (a finding later affirmed on appeal); and in 2016 it awarded an accounting (disgorgement) of the defendant's profits earned attributable to (1) sales in the domestic Canadian market and (2) sales to Apotex's U.K. and Australian affiliates for distribution in the U.K. and Australia.  Apotex didn't dispute that there were no noninfringing alternatives available for supply in the Canadian market, and thus that it was liable for all of the profit derived from domestic sales of the drug.  But it argued that there were noninfringing alternatives available for the export market--namely, that it could have arranged to have perindropil manufactured by companies in countries other than Canada in which the drug is not patented or the patent has been invalidated, and then distributed to the U.K. and Australian affiliates.  In 2015, the Federal Court (trial court) held, however, that the existence of such noninfringing alternatives was legally irrelevant--distinguishing the Canadian Supreme Court's decision in Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, on its facts--and that in any event the evidence did not show that Apotex could have arranged for the supply of noninfringing perindropil to the export market.  

On the legal issue, the Federal Court of Appeals reversed, reading Schmeiser (correctly, in my view) as standing for the proposition that noninfringing alternatives are indeed relevant.  In this regard, the court noted the Supreme Court's extensive discussion in Schmeiser of Professor Siebrasse's article A Remedial Benefit-Based Approach to the Innocent-User Problem in the Patenting of Higher Life Forms (2003) 20 C.I.P.R. 79, which argues in favor of the relevance of noninfringing alternatives.  (I'm happy to say that the appellate court also cited my book as persuasive authority that this rule makes sense as an economic proposition.)  Canadian therefore appears to be consistent with the long-standing U.S. recognition of the relevance of noninfringing alternatives, and at odds with the British approach as evidenced in cases such as United Horse-Shoe and Celanese.  On the facts, the court remands the case for the trial court to consider whether certain foreign companies could have supplied sufficient quantities of noninfringing perindropil to Apotex affiliates in the U.K. and Australian markets.  The court rejects Apotex's argument, however, that some of the profits it earned on foreign sales were for indemnity and legal services provided to its affiliates and not attributable to the drug itself.

It's an interesting question whether, in the U.S., the patent owner would be entitled to damages relating to products supplied to a foreign market under these circumstances, assuming there were no noninfringing alternative.  Probably not, I'd think; see, e.g, some of my previous blog posts and the sources cited therein, here, here, and here.  Would the availability of the disgorgement remedy, which U.S. patent law doesn't make available other than for design patent infringement, make a difference?

Finally, for another recent Canadian case addressing the topic of noninfringing alterantives (finding that there weren't any during the period in question), see Professor Siebrasse's February 3 blog post on Frac Shack Inc. v. AFD Petroleum Ltd.

Thursday, February 9, 2017

UT Patent Damages Conference Part 2, February 17-18

As I mentioned last month, the University of Texas School of Law will be hosting Part 2 of the Conference on Patent Damages ("PatDam 2") on February 17-18, 2017 in Austin.  (Part 1 was held in June 2016.  Here is a link to the webpage from which you can download the papers from that conference.)  Information on PatDam 2 is available from the Review of Litigation's website, here; below is the schedule as of January 24, 2017.    I'm certainly looking forward to the conference; as you can see below, I'll be commenting on a paper on enhanced damages. 

Friday, February 17, 2017

8:50-9 Welcome
9-10:20 Paper Session 1
10:20-10:40 Break
10:40-12 Paper Session 2
12-1:40 pm Lunch at Texas Law with Judges’ Panel
1:40-2 Break
2-3:20 Paper Session 3
3:20-3:40 Break
3:40-5 Paper Session 4
6-9 Reception and Dinner with In-House Counsel Panel

Saturday, February 18, 2017

8:50-9 Opening Remarks for Day 2
9-10:20 Paper Session 5
10:20-10:40 Break
10:40-12 Paper Session 6
12-1:40 pm Lunch at Texas Law with Economic/Damages Experts’ Panel

This course has been approved for Minimum Continuing Legal Education credit by the State Bar of Texas Committee on MCLE in the amount of 8.00 credit hours, of which 0.00 hours are ethics.

The conference is supported by a fund at the University of Texas School of Law created through a gift from Intel Corporation. Papers from the conference will appear in the Texas Intellectual Property Law Journal and The Review of Litigation.

Composition of Panels

Judges’ Panel

Chief Judge Colleen McMahon (SDNY)
Judge Marilyn Huff (SD Cal)
Judge Sue Robinson (D Del)
Judge Lee Yeakel (WD Tex)
Moderator: Hilda Galvan (Jones Day–Dallas)

In-House Counsel Panel

Vanessa Bailey (Intel)
Ron Epstein (Epicenter)
Anthony Peterman (Dell–Austin)
Dan Sharp (UT-Austin)
Jennifer Wuamett (NXP–Austin)
Moderator: Justin Nelson (Susman Godfrey–Austin)

Economic/Damages Experts’ Panel

David Abrams (Penn Law & Wharton)
Elizabeth (Liz) Bailey (UC Berkeley Business)
John C. Jarosz (Analysis Group–Washington, DC)
James R. Kearl (BYU Economics)
Shirley Webster (Ocean Tomo–Houston)
Moderator: Michael Risch (Villanova Law)

Paper Session 1: Apportionment and Patent Damages

Moderator: Sapna Kumar (Houston Law)

Design Patent Remedies

o Presenter: Mark Janis (Indiana Bloomington Law)
o Commentator: Pamela Samuelson (Berkeley Law)

Apportionment and Reasonable Royalties

o Presenter: Anne Layne-Farrar (Charles River Associates)
o Commentator: David Adelman (Texas Law)

Paper Session 2: Guidance and Discretion

Moderator: Kevin Meek (Baker Botts)

Jury Instructions for Patent Damages (by Bill Lee (WilmerHale) & Doug Melamed (Stanford Law))

o Presenter: Jorge Contreras (Utah Law)
o Commentator: Bernard Chao (Denver Law)

Discretion and Patent Remedies
o Presenter: John Golden (Texas Law)
o Commentator: Rebecca Eisenberg (Michigan Law)

Paper Session 3: Damages for Deterrence?

Moderator: Marketa Trimble (UNLV Law)

Damages as Injunction Substitute

o Presenter: Dan Burk (UC Irvine Law)
o Commentator: Samuel Bray (UCLA Law)

Judicial Reasoning for Enhanced Damages
o Presenter: Karen Sandrik (Willamette Law)
o Commentator: Tom Cotter (Minnesota Law)

Paper Session 4: Circularity in Patent Valuation?

Moderator: Sarah Burstein (Oklahoma Law)

The Circularity Story for Reasonable Royalties
o Presenter: Oskar Liivak (Cornell Law)
o Commentator: Oren Bracha (Texas Law)

Patent Valuation and Taxation
o Presenters: Jennifer Blouin (Penn Wharton) & Melissa Wasserman (Texas Law)
o Commentator: Susan Morse (Texas Law)

Paper Session 5: New Approaches to Calculating Patent Damages

Moderator: Saurabh Vishnubhakat (Texas A&M Law)

Cost-Plus Patent Damages: An Economic Analysis
o Presenter: Michael Abramowicz (George Washington Law)
o Commentator: Sarah Wasserman Rajec (William & Mary Law)

Adjusting Patent Damages for Non-Patent Incentives
o Presenter: Lisa Ouellette (Stanford Law)
o Commentator: Glynn Lunney (Texas A&M Law)

Paper Session 6: Norms and Boundaries for Patent Damages

Moderator: Tun-Jen Chiang (George Mason Law)

Factoring Pain and Suffering into Patent Damages
o Presenter: Ronen Avraham (Texas Law)
o Commentator: Wendy Gordon (Boston University Law)

Normative Aims and the Assessment of Patent Damages
o Presenter: Peter Lee (UC Davis Law)
o Commentator: Robert Bone (Texas Law)

Tuesday, February 7, 2017

Federal Circuit Remands Apple v. Samsung Design Patent Damages Issues to Judge Koh

Here's the per curiam opinion, which states in relevant part "On remand, the trial court should consider the parties’ arguments in light of the trial record and determine what additional proceedings, if any, are needed. If the court determines that a new damages trial is necessary, it will have the opportunity to set forth a test for identifying the relevant article of manufacture for purposes of § 289, and to apply that test to this case."  For previous blog posts on this case, see, e.g., here.  I also participated in an IP Chat Channel webinar on the issue a few weeks ago, which (if you missed it but are interested in hearing it) you can still register to listen to, here.

Interesting IPKat Post on NDAs in German SEP Litigation

Available here.  Apparently the new procedures permitted by the Higher Regional Court of Düsseldorf will make it easier than it has been up to now in Germany for the owners of FRAND-committed SEPs to disclose to defendants and intervenors the licenses they have granted to others, for the purpose of substantiating that their offers are FRAND, without having to worry so much about the individuals to whom the information is disclosed disseminating the information more broadly.