IP Chat Channel Webinar on Willfulness and Enhanced Damages

Next Tuesday, June 26, from 2-3 p.m. Eastern Time the IP Chat Channel will be presenting a webinar titled Willfulness Since Halo.  I will be one of the speakers.  Here is a link, and here is the description: 

Enhanced damages for patent infringement no longer is a rarity in the two years since the Supreme Court lowered the bar for alleging and proving willfulness in its Halo decision. In just the last few months, Illinois federal judge Harry Leinenweber raised Chamberlain's $3.8 million trial verdict to $11.4 million after finding the conduct of a rival garage door opener maker to be egregious. In May Texas federal Judge Rodney Gilstrap found deliberate copying of a Whirlpool water filter design and awarded Whirlpool Corp. $3.8 million in enhanced damages on a $7.6 million verdict.

In this webinar, our expert panel will describe winning corporate strategy and litigation tactics in this new environment. Two of the panelists are litigators with recent courtroom successes involving willfulness issues -- and the third is a leading academic expert on patent law and damages. They will analyze recent case law at both district courts and Federal Circuit and describe:

• Current pleading standards for willfulness, including proving knowledge of the patent or willful blindness and the impact of letters of counsel

• The effect of Halo on the availability of pre- suit and post-suit willfulness and the impact of the timing of the notice of infringement

• The relevance of the Read factors (Read Corp. v. Portec, Inc., Fed. Cir. 1992) for egregious behavior in light of the fact that enhancement needn't always follow a finding of willfulness.

Panelists

Thomas Cotter is the Briggs and Morgan Professor of Law at the University of Minnesota School of Law in Minneapolis. Prior to joining academia, he clerked for the Hon. Lawrence Pierce, U.S. Court of Appeals for the Second Circuit, and worked in private practice. He is the author of the blog Comparative Patent Remedies and of a book of the same name(Oxford U. Press, 2013). Richard Megley is a founding partner of Lee Sheikh Megley & Haan, a Chicago IP litigation firm that launched in 2015. All the founders previously worked at Niro, Haller & Niro. Rich has won large damages and royalties for patent plaintiffs, and has led licensing campaigns that have brought in revenues of more than $75 million. This spring he succeeded in fending off enhanced damages at the Federal Circuit for client Drgem Corp., despite a jury finding of willfulness. Kathi Vidal is a patent litigator and the managing partner of the Silicon Valley office of Winston & Strawn. She has first-chaired many high-stakes litigations involving high tech companies. Earlier in her career, she worked as a systems and software design engineer at GE. This spring she won a jury verdict of willfulness for client Chamberlain Group in the Northern District of Illinois and enhanced treble damages from the judge.

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PwC 2018 Patent Litigation Study Is Out

Link here.  This year's study--titled simply 2018 Patent Litigation Study--is authored by Landan Ansell, Ronen Arad, Doug Branch, HyeYun Lee, Adil Pasha, and Paul Robinson, and it reports the following findings, among others, relating to U.S. patent litigation.  The study is based on decisions PwC identified as "final decisions at summary judgment and trial recorded in two Lexis Advance databases, US District Court Cases and Jury Verdicts and Settlements, as well as in corresponding docket entries from LexisNexis CourtLink" (p.18).  "Median damages have been adjusted for inflation to 2017 US dollars" (p.18).

1.  Using an October 1-September 30 year, patent cases filed were at their lowest level since 2011 (at approximately 4,000), while patent grants attained an all-time high of approximately 350,000 (p.2).

2.  The median damages award from 1998-2017 has been $5.9 million.  The median award in 2017 was $10.2 million (compared with $6.1 million in 2016), and $6.0 million for the period 2013-17 (p.5).  (If you're interested in comparing with previous years, see my posts discussing PwC's 2017, 2016, 2015, and 2014 studies.  For my discussion of Lex Machina's 2017 Patent Litigation Year in Review, see here.) The report also states, however, that "[m]edian damages have been trending upward for the last 20 years when summary and default judgments are excluded," with a median of $9.2 million for 2013-17 (p.5).  The median award in jury trials from 2013-17 was $10.2 million, compared with $1.9 in bench trials (undoubtedly some self-selection going on here, though), and among practicing entities reasonable royalties continue to account for the majority of awards (60% reasonable royalties only, 19% lost profits only, and the remained a combination of both, for the years 2008-17) (p.6).  NPEs have achieved higher median damages awards from 2013-17 ($14.8 million, versus $4.2 million for practicing entities) (p.9).  Among NPEs, universities and nonprofits do best, with a median award of $16.6 million from 1998-2017 (compared with $11.8 million for "company" NPEs and $7.1 million for individuals) (p.10).

3.  The overall success rate for practicing entities from 1998-2017 is 37%, and for NPEs 25%.  For cases decided pretrial, practicing entities had a 16% success rate and NPEs a 6% success rate, whereas for cases ending with a trial the rates are similar (66% for practicing and 62% for nonpracticing entities) (p.8). From 2013-17, patent owners fared better with juries than with bench trials (74% versus 52% success rates) (p.7), with NPEs doing substantially worse in bench trials (36% success versus 54% for practicing entities; success rates before juries are comparable, at 72% and 76%, respectively) (p.8).  Among NPEs, universities have the highest overall success rate (47%, compared with 31% for companies and 18% for individuals) (p.10).

4.  The District of Delaware has overtaken the Eastern District of Texas as the leading venue for patent infringement actions (pp. 14-15).

5.  The study reports that "the likelihood of a willful infringement finding increased after Halo v. Pulse"--the Supreme Court's June 13, 2016 decision that makes it somewhat easier for the trier of fact to conclude that the infringement was willful, and therefore potentially deserving of an award of enhanced damages--but that "the average enhancement multiplier declined" from 2.1 to 2.5 times the actual damages (p.17).  The report doesn't specify the time frame it is using, however, though I would guess that if the study's statistics go through the end of September 30, 2017, it's describing cases decided from the date of Halo through that date, and for a comparable period preceding Halo.  In any event, the number of requests hasn't gone up a lot (from 42 to 46), but the percentage finding willfulness has increased from 36% to 54%, which would translate into an increase of 15 to 25 cases.  But again, the average enhancement has actually gone down a bit (p.17).

Yelderman on Proximate and Geographic Limitations on Patent Damages

StephenYelderman has posted a paper on ssrn titled Proximate v. Geographic Limits on Patent Damages, 7 IP Theory (2018)  Here is a link, and here is the abstract:

The exclusive rights of a U.S. patent are limited in two important ways. First, a patent has a technical scope—only the products and methods set out in the patent’s claims may constitute infringement. Second, a patent has a geographic scope—making, using, or selling the products or methods described in the patent’s claims will only constitute infringement if that activity takes place in the United States. These boundaries are foundational features of the patent system: there can be no liability for U.S. patent infringement without an act that falls within both the technical and geographic scope of the patent.

Once liability has been established and a court’s attention turns to remedies, the continued relevance of these boundaries is not so clear. If all the infringing activity and all the resulting harm are within the technical and geographic scope of the patent, there is no problem. But, sometimes, activities within the technical and geographic scope of a patent cause harm to the patentee somewhere outside that scope. For example, a defendant’s infringing sales of a patented product may cause the patent holder to lose some sales of an unpatented product too. Or, as another example, a defendant’s infringing activity in the United States might cause a patent holder to lose sales somewhere else. Are these harms—to sales of a different product, or in a different country—cognizable for purposes of measuring the patent holder’s damages? Or do the basic limits on patent scope apply to questions of remedy just as they do to questions of liability?

This Essay argues that the same approach adopted at the edge of technical scope should apply at the geographic boundary as well. Specifically, patent holders should recover for the injuries actually and proximately caused by domestic acts of infringement, even if those injuries arise outside the technical or geographic scope of the patent. The Federal Circuit has correctly decided cases in which damages fall across the line of technical scope, but erred when it comes to damages that happen to cross a geographic boundary.

This short essay (12 pages) is definitively worth a read.  The analysis is reminiscent of the arguments Professor Yelderman made in his WesternGeco amicus brief, which I found persuasive (see discussion here).

Perhaps we'll be hearing from the Supreme Court on WesternGeco next week . . .

Some Interesting Policy Questions Posed by Recent French Damages Decision

The case is Hutchinson SA v. CF Gomma Barre Thomas SA, Cour de Cassation, ch. comm., Mar. 21, 2018, PIBD No. 1093, III, 290.  The case involves EP 0 6 910 481, for improvement in rods connection certain vibrating parts of vehicles to the bodies of such vehicles.  Hutchinson is the owner of the patent, which it exclusively licensed to co-plaintiff Paulstra SNC.  The court affirms a finding of liability with regard to certain products, but also affirms the denial of damages to Hutchinson on the ground that it did not substantiate its loss.  Hutchinson declined to offer evidence of the revenue it derives from Paulstra (which is an affiliated company of Hutchinson, as well as the latter's exclusive licensee), and of how much of this revenue is attributable to the patent in suit.  The court also concludes that a license negotiated, post-injunction, with (if I'm understanding this correctly) another (co-defendant) firm that took over the management of the defendant's affairs as a result of a reorganization, was not probative.  Finally, the court affirms a judgment of lost profits awarded to Paulstra, which apparently was based in part on the sales revenues earned by the defendants, on the ground that the resolution of this matter was within the discretion of the Court of Appeals.  

The case poses some interesting policy questions, in my view.  First, as I discuss here at pp. 19-20, as a matter of policy it isn't clear to me whether a court should do its best to award some sort of royalty when the parties' evidence falls short, or deny damages altogether.  The latter was Judge Posner's view in Apple v. Motorola, but the Federal Circuit thought otherwise; and this also appears to be the view among the German courts, which generally make an effort to award something by application of their “free discretion” (nach freier Überzeugung).  Second, on the issue of what damages to award the patentee/exclusive licensor, see this article by Mark Lemley, stating (at p. 673) that "In my view, a patentee who has granted an exclusive license should stand in the shoes of the exclusive licensee; if the exclusive licensee has lost profits because of infringement, those losses should be compensable in a suit by either or both parties, divided as per the agreement between them," but also noting that Federal Circuit case law appears to the contrary.  Third, without using the term "holdup," the court appears to recognize that a settlement entered into after entry of an injunction may not provide a good reflection of the value of the patented technology.  For previous discussion on this blog, see, e.g., here.  Finally, for discussion of whether the defendant's sales revenue can ever be a good-enough heuristic from which to infer the plaintiff's lost sales and hence lost profit, see again this article, at p.25.

From Around the Blogs: Damages in Canada and France, Injunctions in the U.K., and More

1.  On Sufficient Description, Norman Siebrasse has published a post titled Compound Interest is Here to Stay.  The post provides a detailed discussion of a recent Federal Court decision, Grenke v. DNOW Canada ULC, which (in addition to awarding compound interest, as per the the title of the post) addresses the calculation of lost profits and reasonable royalties, and denies a request for punitive damages.  Highly recommended. 

2.  On the EPLaw Blog, Pierre Véron has published a post titled FR – Novartis v. Teva / Valsartan – €13,000,000 advance on damages, discussing a recent case in which the Tribunal de grande instance de Paris awarded a preliminary injunction and €13,000,000 as an advance on damages.  M .Véron notes that "[t]his is probably the highest amount ever granted by a French court as an advance payment on damages in a patent infringement case," and provides a copy of the decision (in French) here.  Also on the EPLaw Blog recently, Olivia Henry published a post titled UK – Edwards Lifesciences v. Boston Scientific Scimed, about an English case staying an injunction, which also was recently discussed on IPKat and on this blog here.

3. On the IAM Blog, Timothy Au has published a post titled Fear about massive PAE litigation abuses in Europe is unfounded, new report concludes, discussing a  report authored by Igor Nikolic and published by the 4iP Council titled Are PAEs a Threat to Europe?  The abstract of the report itself reads as follows:

Patent Assertion Entities are often negatively portrayed as harmful “patent trolls” that engage in speculative and abusive patent litigation against manufacturing companies. Although mass PAE litigation has mainly been US phenomenon, a recent study indicated that PAEs are on the rise in Europe and a number of changes to the European patent and litigation system have been recommended. This paper provides a different perspective on PAEs. It will first show that not all PAEs engage in harmful activities and that most are in the legitimate business of patent licensing. Further, Europe has in place different patent and litigation incentives than the US, which effectively guard against any abusive patent litigation. Finally, the available evidence does not in fact show the presence of mass and harmful PAE litigation in Europe.

4.  On Patently-O, Dennis Crouch published a post on Huang v. Huawei, a nonprecential opinion handed down by the Federal Circuit last week affirming a grant of attorneys' fees against a pro se litigant.  This morning, by contrast, the Federal Circuit published a precedential opinion affirming a judgment denying attorneys' fees in Stone Basket Innovations, LLC v. Cook Med. LLC.  The opinion is fairly fact-specific, but basically holds that the district court did not abuse its discretion in denying fees in a case in which the patentee voluntarily dismissed its suit following institution of an IPR, and requested entry of an adverse judgment before the PTAB after the IPR was instituted.

"Patent Wars" Is Now Available on Kindle and Nook

My new book, "Patent Wars: How Patents Impact Our Daily Lives," is now available on Kindle and Nook.  Hardcover copies can be pre-ordered from Amazon, B&N, OUP, and other sources, and will be available on July 2.  Meanwhile, read it as an eBook, or view excerpts on Amazon's website. Reviews on Amazon and B&N are welcome; alternatively, anyone interested in writing a review for publication may request a review copy from OUP here.  For my author page on Amazon.com, click here.

 

From the back cover:

"Patent Wars is a big-picture look at how patents impact the cost and speed of technological innovation - and thus our everyday lives - written by a legal scholar who understands the patent regime down to its nitty-gritty details. Thomas Cotter weaves together compelling stories and sound economic reasoning for an enlightening introduction to some of patent law's most contentious and high-profile controversies." - Kevin Emerson Collins, Professor of Law, Washington University Law School

"Patent disputes increasingly dominate the news and affect our daily lives, from access to life saving drugs and diagnostic tests to battles over mobile phones and other vital platform technologies. Professor Thomas Cotter provides a sophisticated, balanced, and readable survey of the patent system that will illuminate patent specialists, scientists, engineers, students, and the general public alike. By demystifying the most salient patent controversies, Patent Wars offers valuable insights into the important roles that patents play in the Information Age." - Peter S. Menell, Koret Professor of Law and Director, Berkeley Center for Law & Technology, University of California-Berkeley

"The patent system touches almost every life in innumerable ways, yet it remains opaque and mysterious. Written by a renowned specialist in the intellectual property field, this book explains, in crystal clear language, both the basics of this system and the way it continues to impact crucial contemporary technologies, from DNA to cell phones. Thomas Edison famously invented (and patented) the light bulb, but after you have learned from the entertaining and deeply knowledgeable Professor Cotter, you will never again be in the dark when it comes to this most interesting and important part of the law." - Rob Merges, Professor of Law, University of California-Berkeley

JPO Guide to Licensing Negotiations Involving SEPs

As I mentioned on Wednesday, the JPO has now released its Guide to Licensing Negotiations Involving Standard Essential Patents.  I've read through the Guide, and in my view it succeeds, as its drafters intended, in presenting "a broad range of information and opinions" regarding SEP/FRAND negotiations, "identify[ing] the key issues, and present[ing] these in a balanced and straightforward manner" (p.48).  I don't have anything critical to add, other than that readers will find concise recitations of the leading arguments for and against the positions that have been asserted on all of the important issues (availability of injunctive relief, damages calculation methodology, etc.), with cites to the relevant cases from Japan, the U.S., and the E.U.