News on SEPs from Around the Blogs

1.  Rien Boekstra has published a post on the Kluwer Patent Blog titled NL – Sisvel v. Xiaomi – PI based on SEP denied, discussing a recent decision of the Hague Court of Appeal affirming the denial to Sisvel of a preliminary injunction against Xiaomi for the alleged infringement of two FRAND-committed SEPs.  According to the post, the court weighed the competing interests--including the fact that the plaintiff is a nonpracticing entity--and concluded that the balance of interests weighed in favor of denying the injunction, even if one were to assume that the patents in suit were valid and infringed; and that article 9 of the EC Intellectual Property Rights Enforcement Directive "is subject to the fundamental principles of EU law, including the principle of proportionality."  Mathieu Klos also has an article on JUVE Patent, titled Court of Appeal rules Xiaomi may continue to sell products in the Netherlands.

2.  IPWatchdog and Law360 both recently published posts commending the DOJ, USPTO, and NIST Policy Statement on Injunctions and SEPs.  The first, by Robert Stoll, is titled The New U.S. Essential Patents Statement – Safeguarding the Integrity of the Patent System.  The second, by Theodore Stevenson, Nicholas Mathews, and Patrick Pijls, is titled New US Policy on SEP Remedies Restores Critical Balance.  As readers of this blog are aware, I disagree with these views, and would note once again that (fortunately, in my view) the policy statement does not have the force of law.  For previous discussion, see here, here, here, and here.

Augenstein on the German UPC Decision

Hat tip to Benjamin Rätz, who passed along a detailed analysis of the German Constitutional Court's UPC decision by Dr. Christof Augenstein, titled Will the Unified Patent Court be established?  The analysis is also available on this webpage, which links to an English-language translations of the majority decision and the dissent.  For previous discussion on this blog, see here and here.

Marshall on Unjustified Threats

From time to time I have blogged about how different legal systems regulate the wrongful assertion of patent rights:  by means of competition law (e.g., claims for monopolization by means of asserting fraudulently procured patents, or by sham litigation; abuse of dominant position); unfair competition law (e.g., claims for commercial disparagement, that is, misrepresenting noninfringing goods as infringing, or for false patent marking); remedies law (e.g., compensation for a wrongly issued preliminary or permanent injunction); other doctrines sounding in tort, equity, or general civil law (abuse of process, malicious prosecution, abuse of right, the various types of fraud, equitable defenses such as estoppel, etc.).  About six years ago it occurred to me that a book-length treatment of the comparative law and policy of wrongful enforcement would be an interesting project, but I've continued to put it aside while I've worked on other things.  Maybe this will be the year I at least start putting together some sort of detailed proposal on the topic, now that I've gotten some of the other books and papers I wanted to write out of the way.  In any event, these musings are prompted by an interesting paper just published by Joshua Marshall, Unjustified Threats as a Cause of Action, 42 E.I.P.R. 150 (2020).  Here is the abstract:

This article seeks to categorise unjustified threats as a cause of action. Hitherto, unjustified threats have been treated as tortious and the threat-maker deemed a legal wrongdoer. This article argues that orthodox principles of tort law cut against the unjustified threats regime. It is suggested that it is more analytically attractive to treat the regime as a form of estoppel or as a sui generis cause of action.

As explained by Mr. Marshall, under English law liability for making an unjustified or groundless threat to sue a secondary infringer hinges on, among other things, whether the express or implied representation that the recipient of the threat was infringing is wrong, not on whether it is reasonable; in addition, there is no liability if the threat is followed by the filing of an actual infringement suit against the recipient, before the recipient asserts a claim for unjustified threat.  The claim also doesn't apply if the threat is made to the primary infringer (and if I understand correctly, in this context the primary infringer would be the manufacturer of the infringing goods, while a secondary infringer would be a user or reseller).  So described, the cause of action (if that's what it is) does sound rather odd, and perhaps prone to unintended consequences (e.g., sue first, negotiate later).  Anyway, Mr. Marshall's paper makes for interesting reading, and as stated above causes me think that the time may be ripe for an extended analysis of the various ways the law might regulate wrongful enforcement; the various interests at stake; and the potential remedies.

From Around the Blogs: More Reactions to the German UPC Decision

As I noted last Friday, the German Constitutional Court has invalidated the German law approving the Unified Patent Court, on the ground that the law needed 2/3 approval of a quorum of the German Bundestag.  Here is an English-language press release from the court itself, and here are some more reactions from around the blogosphere:

1.  On IPKat, Léon Dijkman published a post titled Willem Hoyng: today's decision sets back UPC at least five years.

2.  On JUVE Patent, Mathieu Klos published a post titled Dark day for UPC: Europe reacts to surprise judgment.

3. Striking a more optimistic note, on FOSS Patents Florian Mueller published a post titled Practitioners and companies far from giving up on Unified Patent Court -- intergovernmental renegotiation will open door to improvements.

4. The Kluwer Patent Blog has published four posts, titled Federal Constitutional Court voids the German UPCA Ratification Law; The German Law Ratifying the Agreement on a Unified Patent Court is Void; Reactions to ruling FCC in case Unified Patent Court: ‘positive’ and ‘great disappointment’; and What is behind the FCC Judgment?

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In other IP-related news, the U.S. Supreme Court today held in Allen v. Cooper that Congress lacked the authority to abrogate state sovereign immunity for copyright infringement.  Justice Kagan wrote the opinion.  I may have more to say about this decision in due time, particularly Justice Thomas's concurring opinion relating to whether IP rights are property.  In addition, the Federal Circuit denied a petition for rehearing en banc in Arthrex, over some dissenting opinions.  See here; for previous discussion on this blog, see here.

Breaking News: German Constitutional Court Declares Law Approving UPC Void

Hat tip to Martin Stierle, who forwarded me a copy of the decision declaring the German law approving the Unified Patent Court void (here).  I've only skimmed the first couple of pages myself thus far, but there is further coverage on JUVE Patent (which explains that because law would have resulted in a change to the German constitution, it needed a 2/3 vote of a quorum in the German Bundestag; the law passed unanimously, but there wasn't a quorum), IPKat, IP Watchdog, and Bloomberg.  According to JUVE, it may be possible to obtain the needed vote when the Bundestag can meet again, but raising a quorum under present circumstances (coronavirus) would be a challenge.  Looks like there is a dissenting opinion, which I understand is permissible for the Constitutional Court in Germany, by three of the judges.  Recall that the U.K. a few weeks ago announced it would not go forward with the UPC post-Brexit.

From Around the Blogs, Part 2

1.  On Law360, Charlotte Jacobsen, Filko Prugo, and Ryan Sullivan published an article titled Does Willful Blindness Beget Enhanced Patent Damages?  The article notes that, under the Federal Circuit's January 2020 decision in Eko Brands LLC v. Adrian Rivera Maynez Enterprises Inc., the trier of fact determines whether the infringement was "willful," a concept that "requires a jury to find no more than deliberate or intentional infringement."  Citing that case, the authors then state that if the jury finds the infringement to have been willful, then "the court must consider whether the infringer's conduct was egregious and worthy of punishment."  The question the authors address is whether "willful blindness" can substitute for knowledge of the patent.  They review the district court cases that have discussed this topic, and which have concluded that an allegation of willful blindness is sufficient to get past a motion to dismiss a request for enhanced damages.  As the authors note, however, the courts so far have not addressed whether willful blindness is enough to demonstrate egregiousness.  The authors conclude with a couple of best practices for patent litigators who have to grapple with these issues.

I may seek permission to include this article in the next revision of my patent damages casebook; it's quite informative. 

For previous discussion of the willful blindness issue on this blog, see here and here. 

2.  IPWatchdog published an interesting pair of articles taking opposite positions on whether eBay should be overruled.  Arguing in favor was IPWatchdog founder Gene Quinn (see here); arguing against, Evan Langdon (see here).    

3.  On the Kluwer Patent Blog, Anders Valentin published a post titled The Danish Maritime and Commercial High Court dismisses claim regarding preliminary injunction with extraterritorial effect.  As the author states, "the decision shows that there are strict criteria [that] must be met in order to obtain a preliminary injunction with extraterritorial effect."  For previous discussion of cross-border preliminary injunctions within the E.U., see, e.g., here; see also my comparative patent remedies book at p.253

Federal Circuit Affirms Dismissal of First-Filed Declaratory Judgment Action

The case is Communications Test Design, Inc. v. Contec, LLC, opinion by Judge O'Malley.  The patent owner, Contec, based in New York, initiated communications with Communications Test Design, Inc. (CDTI), based in Pennsylvania, regarding the possible infringement of two Contec patents.  As described in the opinion:

In September 2018, Contec’s counsel sent a letter to CTDI stating that “the parties’ extrajudicial process for obtaining information about CTDI’s systems, without the full discovery obligations that would be imposed during litigation, has proved unsatisfactory.” . . . The letter asked CTDI to indicate, by September 19, 2018, whether it was willing to “discuss potential terms for a patent license agreement.” . . . Contec warned that, if it did not receive such confirmation, it would sue for patent infringement. . . . Contec attached to its letter a draft of its proposed complaint. . . .

On September 19—Contec’s stated deadline—Jerry Parsons, CTDI’s Chairman and chief executive officer (CEO), spoke on the phone with Hari Pillai, Contec’s CEO, about a possible license for Contec’s patents. During that conversation, Pillai proposed initial terms, and the executives agreed to talk again on September 24, when Parsons would make a counterproposal. . . .

Later that same day, CTDI’s counsel sent an email to Contec’s counsel, confirming that “CTDI will consider potential terms as requested in your most recent letter.” . . .

On September 21—two days after accepting Contec’s request to discuss licensing terms—CTDI filed a declaratory judgment action in Pennsylvania. . . . 

On September 24—the day the CEOs were scheduled to talk—CTDI’s counsel emailed Contec’s counsel a copy of the declaratory judgment complaint. Counsel stated that official service would be held for a period of time to allow further discussion between the executives.

Contec thereafter filed its infringement action in federal district court in New York, and moved to dismiss the declaratory judgment action in Pennsylvania.  The Pennsylvania court dismissed the action, and CDTI appealed.

The Federal Circuit affirms, stating:

When one of two competing suits in a first-to-file analysis is a declaratory judgment action, district courts enjoy a “double dose” of discretion: discretion to decline to exercise jurisdiction over a declaratory judgment action and discretion when considering and applying the first-to-file rule
and its equitable exceptions. . . .

Here, the district court carefully considered the record of the parties’ dispute, up to and including the competing filings, and concluded that several factors warranted departure from the first-to-file rule. Specifically, the court found that: (1) CTDI filed its declaratory judgment complaint in anticipation of Contec’s patent infringement complaint; (2) CTDI’s suit interfered with ongoing negotiations between the parties and did not serve the objectives of the Declaratory Judgment Act; and (3) on balance, the Northern District of New York is a more convenient forum. As explained below, we find no abuse of discretion in the district court’s analysis.

Reviewing the record, the court further finds that a remand for an evidentiary hearing is not warranted.