Wednesday, July 18, 2018

Love, Richardson, Oliver, and Costa on Brokered Patents

Brian J. Love, Kent Richardson, Erik Oliver, and Michael Costa have published a paper titled An Empirical Look at the “Brokered” Market for Patents, 83 Mo. L. Rev. 359.  Here is the abstract: 
We studied five years of data on patents listed and sold in the quasi-public “brokered” market. Our data covers almost 39,000 assets, an estimated eighty percent of all patents and applications offered for sale by patent brokers between 2012 and 2016. We provide statistics on the size and composition of the brokered market, including the types of buyers and sellers who participate in the market, the types of patents listed and sold on the market, and how market conditions have changed over time. We conclude with an analysis of what our data can tell us about how to accurately value technology, the costs and benefits of patent monetization, and the brokered market’s ability to measure the impact of changes to patent law.
The following observations relevant to damages can be found in the paper's Part V:  Analysis, at p.404:
First, our data strongly suggests that the brokered market for patents is primarily, and perhaps almost exclusively, a market for the transfer of potential legal liability, not a market for the transfer of technology. . . .
One important consequence of this conclusion is that prevailing prices in the brokered market may be of limited use for purposes of calculating damages in patent suits. While courts and commentators alike have called for the increased use of evidence derived from the market for “real world” patent transactions, . . . we are not convinced that data from the brokered market is a panacea for concerns about damages calculations. If we are correct that prices in the brokered market largely reflect buyers’ and sellers’ estimates of the litigation value of available assets, then brokered market data falls prey to the same “circularity” concerns that a long list of commentators has raised against undue reliance on prior license agreements. . . . True technology transfer, it would appear, remains hidden from public view even more so than the brokered market for “bare” patent transactions.

Monday, July 16, 2018

The Indian Philips Case

On Friday I mentioned Divij Joshi's Spicy IP post on Koninklijke Philips Electronics N.V. vs. Rajesh Bansal And Ors., a case decided by the Delhi High Court last Thursday.  The court awarded Philips actual and punitive damages for the infringement of a patent that the court finds to be essential to the DVD Forum Standard, and that is one of many patents included in a patent pool.  Focusing exclusively on the damages issues, here are the principal takeaways as I see them:

1.  If I understand correctly, it doesn't appear that there is a FRAND commitment as such, but the court says that according to plaintiff's counsel the pool royalty is determined on FRAND principles (para. 12.1).  Further, according to para. 13.1:
Case of the plaintiff is that the license rates offered by the plaintiff vary according to the cooperation and conduct of the licensee. In case an entity procures the license of the plaintiff’s essential patent then it is required to pay as per the FRAND rate also referred to as compliant rate. However, if a party has chosen to infringe the patent of the other party then such licensees are required to pay a slightly higher royalty rate for the period  which it had not secured license for the plaintiff’s concerned essential patent which is referred to as standard rate. According to the plaintiff despite defendants having infringed the plaintiff’s patent, the plaintiff claims license fee only on FRAND terms i.e. at compliant rate. As per the evidence of PW-1 the running royalty rates upto 27th May, 2010 were 4.58 and 3.175 USD for standard rate and compliant rate respectively whereas after 28th May, 2010 it was 2.50 and 1.90 USD for standard rate and compliant rate respectively.
The defendant, however, argues that these proposed rates are not FRAND:
The main challenge of the defendants is that royalty rates are not in compliance with the FRAND terms. As noted in the options given by the plaintiff to the defendants vide its letter Ex.PW-1/7A the defendants had the option of either taking joint licenses or the PHILIPS ONLY licenses and despite infringement the plaintiff has sought royalty only at FRAND rates, that is, USD 3.175 upto 27th May, 2010 and thereafter USD 1.90 and for the PHILIPS ONLY option. Thus it is not a case where patents of the all other patentees were pooled with that of Philips which were used in DVD Video player (para. 13.7).
If I'm understanding this correctly, then, the plaintiff proposed global royalty rates based on what it charges for the entirety of its pooled patents (rather than royalties just for the patent in suit), and the court adopts these proposed rates.  Whether the pool itself amounts to an abuse of dominant position would be an issue for, if anyone, the Competition Commission of India.  See para. 12.5 (". . . whether creating of a patent pool by the bigwigs of the industry getting together amounts to an anticompetitive practice being misuse of the dominant position cannot be decided in the present suit.").  The court also provides an extended excerpt from the U.S. Court of Appeals for the Federal Circuit's opinion in CSIRO v. Cisco (see previous write-up on this blog here), I believe to show that it is permissible to use the entire market value of the end product as the base where this is consistent (as here) with the parties' own prior negotiations.  (Use of the entire market value as the base is common with patent pools, to my knowledge.)  See paras. 13.9-13.10.

On balance, I concur with Mr. Joshi's assessment that this leaves a number of issues unresolved (though as he notes, the defendant offered no countervailing methodology).

2.  On punitive damages, the court (para. 13.11) quotes at length from 207 (2014) DLT 713 Hindustan Unilever Ltd. vs. Reckitt Benckiser India Limited, as setting forth the principles to follow in deciding whether to award punitive damages.  (Neither Hindustran Unilever  nor the cited cases are themselves patent cases, however).  Here is a portion of the quoted material:
"66. Rookes v. Barnard, [1964] 1 All ER 367, is the seminal authority of the House of Lords, on the issue of when punitive or exemplary (or sometimes alluded to as "aggravated") damages can be granted. The House defined three categories of case in which such damages might be awarded. These are: 
a. Oppressive, arbitrary or unconstitutional action any the servants of the government;
b. Wrongful conduct by the defendant which has been calculated by him for himself which may well exceed the compensation payable to the claimant; and
c. Any case where exemplary damages are authorised by the statute.
The later decision in Cassell & Co. Ltd. v. Broome, 1972 AC 1027, upheld the categories for which exemplary damages could be awarded, but made important clarificatory observations. Those relevant for the present purpose are reproduced below:
"A judge should first rule whether evidence exists which entitles a jury to find facts bringing a case within the relevant categories, and, if it does not, the question of exemplary damages should be withdrawn from the jury's consideration. Even if it is not withdrawn from the jury, the judge's task is not complete. He should remind the jury: (i) that the burden of proof rests on the plaintiff to establish the facts necessary to bring the case within the categories, (ii) That the mere fact that the case falls within the categories does not of itself entitle the jury to award damages purely exemplary in character. They can and should award nothing unless (iii) they are satisfied that the punitive or exemplary element is not sufficiently met within the figure which they have arrived at for the plaintiff's solatium in the sense I have explained and (iv) that, in assessing the total sum which the defendant should pay, the total figure awarded should be in substitution for and not in addition to the smaller figure which would have been treated as adequate solatium, that is to say, should be a round sum larger than the latter and satisfying the jury's idea of what the defendant ought to pay. (v) I would also deprecate, as did Lord Atkin in Ley v. Hamilton, 153 L.T 384 the use of the word "fine" in connection with the punitive or exemplary element in damages, where it is appropriate. Damages remain a civil, not a criminal, remedy, even where an exemplary award is appropriate, and juries should not be encouraged to lose sight of the fact that in making such an award they are putting money into a plaintiff's pocket, and not contributing to the rates, or to the revenues of central government" (emphasis supplied) . . . .
68. . . .  To award punitive damages, the courts should follow the categorization indicated in Rookes (supra) and further grant such damages only after being satisfied that the damages  awarded for the wrongdoing is inadequate in the circumstances, having regard to the three categories in Rookes and also following the five principles in Cassel. . . .
The court then concludes, without further discussion, that an appropriate punitive damages award is ₹5 lakhs (para. 13.13), which as I mentioned on Friday comes to a little over $US 7,000.  I think Mr. Joshi may be right when he asserts in his post that "the Court reproduced at length the law on punitive damages, as established in Hindustan Unilever, and expounded on the importance of not being arbitrary in the award of damages, then immediately proceeded to award an arbitrary Rs. 5 Lakh in punitive damages without taking into account any of the principles reproduced by it."

3.  Finally, no injunction is granted because the patent has now expired.

Friday, July 13, 2018

Delhi High Court Awards Royalty, Punitive Damages for Infringement of DVD SEP

The opinion, handed down yesterday, is Koninklijke Philips Electronics N.V. vs. Rajesh Bansal And Ors., and Divij Joshi has an informative write-up about it on Spicy IP.  I will probably have more to say about it myself next week after I've had a chance to read it carefully.  The damages portion of the opinion begins at p.39 and takes up the last third of the opinion.  Awards of punitive or enhanced damages outside the U.S. are unusual, though not unheard of in Commonwealth countries, and very unusual in SEP cases (I can think of only one U.S. case where they have been awarded to date); but the amount here, 5 Lakh (500,000 rupees) is equal to only a little over US$7,000.  No injunction is awarded because the patent has expired.

Thursday, July 12, 2018

Federal Circuit Reverses Damages Award Based on Entire Market Value Rule

The decision is Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., handed down last Tuesday, July 3.  Judge Dyk authored the majority opinion, joined by Judges Clevenger and Chen.  This case involves a different set of patents than the ones that were in suit in the 2013 appeal involving these two parties, which involved a question of damages for extraterritorial losses.  (The status of the holding in that case is in question after WesternGeco.)  The court affirms the judgment of infringement, but vacates a $139.8 million award for violating the entire market value rule.  From the opinion:
Undertaking an apportionment analysis where reasonable royalties are sought generally requires a determination of the royalty base to which the royalty rate will be applied. We have articulated that, where multicomponent products are accused of infringement, the royalty base should not be larger than the smallest salable unit embodying the patented invention. We have cautioned against reliance on use of the entire market value of a multi-component product that includes a patented component because it “cannot help but skew the damages horizon for the jury, regardless of the contribution of the patented component to this revenue.” Uniloc, 632 F.3d at 1320. . . . Even when a damages theory relies on the smallest salable unit as the basis for calculating the royalty, the patentee must estimate what portion of that smallest salable unit is attributable to the patented technology when the smallest salable unit itself contains several non-infringing features. VirnetX, 767 F.3d at 1327.
The damages verdict here rests on Power Integrations’ reliance on a demanding alternative to our general rule of apportionment, the entire market value rule. Id. “The entire market value rule allows for the recovery of damages based on the value of an entire apparatus containing several features, when the feature patented constitutes the basis for consumer demand.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009) . . . .
If the product has other valuable features that also contribute to driving consumer demand—patented or unpatented—then the damages for patent infringement must be apportioned to reflect only the value of the patented feature. This is so whenever the claimed feature does not define the entirety of the commercial product. In some circumstances, for example, where the other features  are simply generic and/or conventional and hence of little distinguishing character, it may be appropriate to use the entire value of the product because the patented feature accounts for almost all of the value of the product as a whole. See AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1338–40 (Fed. Cir. 2015).
Power Integrations’ royalty rate is premised on the ’079 patent’s frequency reduction feature as driving consumer demand for Fairchild’s controller chips. To support this contention, Power Integrations provided evidence that the ’079 patented frequency reduction feature was essential to many customers, as it allowed the products to meet the federal government’s Energy Star program. In addition, Power Integrations provided evidence that some customers asked for the ’079 feature, that products with the ’079 feature outsold other products, and that technical marketing materials promoted the ’079 feature. Both parties, however, agreed that the accused products contained other valuable features as well. Power Integrations presented no evidence about the effect of those features on consumer demand or the extent to which those features were responsible for the products’ value. Power Integrations did not seek a separate jury determination as to damages for infringement of the asserted claims of the ’908 patent, and it is clear that the jury calculated damages only for the ’079 patent. . . .
As LaserDynamics, Versata, and VirnetX held, the entire market value rule is appropriate only when the patented feature is the sole driver of customer demand or substantially creates the value of the component parts. LaserDynamics, 694 F.3d at 67; Versata, 717 F.3d at 1268; VirnetX, 767 F.3d at 1326. The burden of proof in this respect is on the patent holder. LaserDynamics, 694 F.3d at 67. The question is whether the accused product, compared to other products in the same field, has features that would cause consumers to purchase the products beyond the patented feature, i.e., valuable features. Where the accused infringer presents evidence that its accused product has other valuable features beyond the patented feature, the patent holder must establish that these features are not relevant to consumer choice. A patentee may do this by showing that the patented feature “alone motivates customers to purchase [the infringing product]” in the first place. See id. at 69. But when the product contains multiple valuable features, it is not enough to merely show that the patented feature is viewed as essential, that a product would not be commercially viable without the patented feature, or that consumers would not purchase the product without the patented feature. Id. at 68. When the product contains other valuable features, the patentee must prove that those other features did not influence purchasing decisions. 
Here, the power supply controllers had other valuable features, such as jittering. . . . There is no proof that these features, including jittering, did not affect consumer demand. Without such proof, Power Integrations did not meet its burden to show that the patented feature was the sole driver of consumer demand, i.e., that it alone motivated consumers to buy the accused products (pp. 19-23).
The result doesn't seem all that surprising to me.  (Whether it's right or wrong as a matter of policy is another matter.)  To be sure, the Federal Circuit has permitted some variations from the EMVR--for example, in CSIRO v. Cisco, where the court (in a bench trial) used the entire market value as the royalty base, because the parties themselves had done so during their own (unsuccessful) negotiations over a royalty; in Ericsson v. D-Link, where the court allowed the plaintiff's expert witness to base his opinion on comparables that used the entire market value as the base; and in Exmark, where the claim covered the end product as a whole (see discussion here).  But this case doesn't appear to have any of these distinguishing features, or at least there's no mention of any such features in the opinion.

Tuesday, July 10, 2018

Federal Circuit Affirms Finding of Willfulness, Remands on Enhancement

The decision, handed down this morning and authored by Judge Lourie (joined by Judges Dyk and Hughes) is Polara Engineering Inc v. Campbell Co.  The patent in suit, as described by the court, "relates to a two-wire control system for push-button crosswalk stations for a traffic-light controlled intersection with visual, audible, and tactile accessible signals" (p.3).  The court affirms a finding of liability, rejecting among other things Campbell's argument that the invention was in public use (rather than experimental use) more than one year prior to the filing date.  Since this blog focuses on the damages issues, however, I'll limit my discussion to the court's affirmance of the finding of willfulness and its decision to remand for further consideration on the question of a damages enhancement.

As for willfulness, the court concludes that there was substantial evidence that the defendant's pre-litigation conduct constituted willful infringement:
We agree with Polara that substantial evidence supports the jury’s finding of willful infringement. Based on the evidence adduced at trial, the jury reasonably could have found that Campbell intentionally copied the ’476 patent despite a significant known risk that its two-wire AAPS would infringe the ’476 patent. It is undisputed that Campbell was aware of the ’476 patent prior to developing its AAPS. Campbell’s president testified that Campbell developed its AAPS to compete with Polara’s Navigator-2, and that Campbell did not have a product that could compete with the Navigator-2 when Polara launched it in 2003. The jury also heard evidence that Campbell adopted a two-wire design for its AAPS despite being advised by University of Idaho counsel and its lead developer of “areas of potential conflict,” J.A. 2572–73, 2575, and “similarities,” J.A. 3362, with the ’476 patent. 
Campbell asserts that its reliance on competent opinion of counsel demonstrates its good faith belief that the ’476 patent was invalid or not infringed. Campbell has not pointed to any documentary or third-party evidence showing it received an opinion of counsel that the asserted claims of the ’476 patent are invalid and/or would not be infringed by its AAPS. To the extent Campbell relies on the testimony of its president that Campbell allegedly eventually received “a clean bill of health” from the University of Idaho and “got the go” from his own “IP attorneys,” J.A. 2574, the jury was entitled not to credit this testimony, see Harper, 533 F.3d at 1021 (“While the court must review the entire evidentiary record, it must . . . disregard all evidence favorable to the moving party that the jury is not required to believe.”).
The only written opinion of counsel Campbell received that it alleges shows its good faith only substantively discusses claim 11, which is not at issue in this case. . . . 
Moreover, Campbell’s contention that it “was not allowed to present its pre-litigation non-infringement defenses to the jury to refute willfulness,” Appellant Br. 53–54, is belied by the record. . . .
Additionally, Campbell waived its argument that the district court erred by presenting the jury with a verdict form that required a simple “yes” or “no” answer on the question of willfulness, rather than requiring the jury to specify the time period during which Campbell’s conduct was willful. While Campbell is correct that “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct,” Halo, 136 S. Ct. at 1933, Campbell did not object to the district court’s proposed verdict form on this basis, see Post-trial Motions Opinion, 237 F. Supp. 3d at 979. By not timely informing the district court that failing to adopt Campbell’s proposed verdict form would be “an error of law or abuse of discretion,” Campbell waived its objection to the verdict form. United States v. Parson Corp., 1 F.3d 944, 945 (9th Cir. 1993).
Similarly, Campbell waived its Seagate-based argument that the district court should have considered that Polara did not seek a preliminary injunction in its analysis by failing to raise it to the district court. . . . Moreover, the relied-upon language does not even apply to this situation because the jury’s finding of willful infringement was not “based solely on the infringer’s post-filing conduct.” Seagate, 497 F.3d at 1374. . . (pp. 22-24).
(Editorial note:  on the question of whether the failure to seek a preliminary injunction retains any relevance, post-Halo, to the issue of willfulness--the answer to which is, probably not--I would commend readers' attention to the discussion of this issue in Magistrate Judge Burke's recent opinion in Välinge Innovation AB v. Halstead New England Corp., Civil Action No. 1601082-LPS-CJB, 2018 WL 2411218 (D. Del. May 29, 2018).  This opinion also provides a nice summary of the views of various district courts on the relevance of post-litigation conduct to willfulness and enhanced damages, post-Halo.) 

Moving on enhanced damages, the Federal Circuit appears to want more in the way of an explanation of why the district court enhanced damages two and a half times:
Although “the district court is not required to discuss the Read factors,” Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017), it “is obligated to explain the basis for the [enhanced damages] award, particularly where the maximum amount is imposed,” Read, 970 F.2d at 828. . . . After Halo and under Read, the “closeness of the case” remains a relevant consideration for determining the appropriateness of enhancement. Here, the district court awarded almost the maximum amount of enhanced damages, but did not adequately explain its basis for doing so, and failed to even mention Campbell’s public use defense, which presented a close question in this case.
The district court referred to Campbell’s invalidity theories generally in the closeness of the case Read factor. In determining that this factor was “neutral,” the district court merely observed that “obviousness was a close call” and that the “other invalidity theories were weaker.” Post-trial Motions Opinion, 237 F. Supp. 3d at 993. This explanation is insufficient for us to determine why the court viewed this factor as “neutral.” The court’s use of the relative term “weaker” provides little insight because it did not explain its reasons for viewing the other defenses, especially public use, as comparatively “weaker.” We view the public use defense, which the court did not explicitly address, as a closer call than obviousness. Thus, to the extent the district court determined that the public use defense was weak in this case, the court clearly erred.
Accordingly, we vacate the award of enhanced damages and remand. . . . On remand, we instruct the district court to provide a more complete explanation, including a discussion of the public use defense, in exercising its discretion. We express no view on whether damages should be enhanced or, if so, by what amount (pp. 24-26).

Monday, July 9, 2018

Federal Circuit Issues Slightly Revised Version of TAOS v. Renesas Opinion

I blogged about this one on May 1, and devoted most of my discussion to the disgorgement of profits issue.  That opinion, however, also affirmed a judgment that the plaintiff TAOS could not recover patent damages for certain extraterritorial sales.  The defendant filed a petition for rehearing en banc, which the court today denies, but the court also issues an order and opinion modifying that portion of the original opinion that discussed extraterritorial damages--though not in any way that makes a difference to TAOS, which still loses on this argument.  Below is the relevant language from the original and the new opinions.  First, the original:
TAOS renews its argument on appeal, but it now relies, in large part, on trial testimony and trial exhibits, rather than the exhibits submitted at the summary judgment stage. Compare TAOS Br. 29–31 (citing primarily to joint appendix cites at numbers over 20000, corresponding to trial evidence), and TAOS Reply Br. 10–11 (same), with J.A. 14498–15702 (TAOS exhibits submitted in response to Intersil’s motion for summary judgment); see also TAOS Br. 89 (argument focuses on trial evidence). Such evidence, which was not before the district court on summary judgment, is not a proper ground for disturbing the summary judgment ruling. See Meyer Intellectual Props. Ltd. v. Bodum, Inc., 690 F.3d 1354, 1371 (Fed. Cir. 2012) (A party “cannot for the first time on appeal introduce deposition testimony that was not before the district court when it was deciding the motions for summary judgment.”). 
As for the evidence that may properly be considered, that evidence—of domestic negotiations and testing of some of Intersil’s products—does not demonstrate “substantial activities regarding sales” sufficient to raise a material dispute of fact as to sales or offers to sell in the United States. TAOS Reply Br. 10. . . .  
And the new opinion:
TAOS renews its argument on appeal, but it now relies, in large part, on trial testimony and trial exhibits, beyond the foregoing evidence. But even the additional evidence—e.g., of domestic negotiations and Intersil’s testing of some of Intersil’s products—does not demonstrate “substantial activities regarding sales” sufficient to raise a material dispute of fact as to sales or offers to sell in the United States. TAOS Reply Br. 10. . . .
So, that's it--no changes brought about the Supreme Court's recent WesternGeco opinion, or anything along those lines.

IP Chat Channel Webinar on Damages After WesternGeco

On Thursday, July 12, from 2-3 p.m. Eastern Time the IP Chat Channel will be presenting a webinar titled Damages After Western GecoImpact on Patent Litigation Strategy and Client CounselingHere is a link, and here is the description:
At the U.S. Supreme Court oral argument in Western Geco v. Ion, a case about expanding the damages for infringing a U.S. patent to include foreign lost profits, a heated and far-ranging debate ensued.  Earlier, some amici curiae had stressed the huge stakes at issue.  For instance, Fairchild Semiconductor joined forces with The Internet Association, arguing that allowing lost profits damages from outside the U.S. “would have negative fallout for economic policy, U.S. commerce, and foreign relations.”  Even the “threat [of such damages] would encourage important industries to relocate abroad,” they claimed.

In late June, the Court disposed of the matter with an opinion from Justice Thomas.  This webinar will focus on the impact of this decision on patent litigation strategy, as well as client counseling. The Court’s decision overturned decades of Federal Circuit precedent by holding that Western Geco’s award for lost profits was a permissible domestic application of § 284.  Our panel includes the chief IP counsel for a major multinational; the former head of patents at Microsoft who is now with a law firm where he focuses on strategic IP counseling, IP transactions, and license agreements; and a patent litigator who has been involved in these issues for years on behalf of a patent owner. They will discuss:

  • How Western Geco might impact decisions regarding the location of R&D, manufacturing, and contract signing.
  • The immediate and long term effects on litigation strategy for both plaintiffs and defendants.
  • Whether the impact will be limited to § 271(f)(2) cases or may be broader.
  • What kind of proof plaintiffs will need to bolster their claims for worldwide damages.
  • How the question of proximate cause “could limit or preclude damages in particular cases,” an issue the Court explicitly declined to address.

Speakers:  

  • Buckmaster de WolfGeneral Electric Company 
  • Bart Eppenauer, Shook, Hardy & Bacon LLP 
  • Blair Jacobs, Paul Hastings LLP

Saturday, June 30, 2018

Blogging Break

I will be taking a blogging break next week, July 2-6.  Meanwhile, take a look at my new book Patent Wars:  How Patents Impact Our Daily Lives, which comes out in hardcover on Monday, July 2, as well as my blog post about the book on the OUP Blog, which also goes live on Monday.   

Friday, June 29, 2018

Friday Miscellany: A $400 Million Verdict in Texas, Damages and Injunctions in China, and More

1.  Many readers probably are aware of this already, but two weeks ago a jury in the Eastern District of Texas returned a verdict in favor of KAIST IP against Samsung in the amount of $400 million.  The jury also concluded that Samsung willfully infringed, thus potentially opening the door to enhanced damages.  Story on Bloomberg News here, copy of the jury verdict here.

2.  On Trust in IP, Yangjin Li published a post titled Latest status and trend of patent litigations in China.  The post discusses a report prepared by IPHOUSE providing data on the number of patent cases filed in China, the duration of proceedings, and so on, and concludes with some statistics on damages:
Compared to the past, the damages awarded by the Chinese courts in patent infringement cases have increased significantly in the last few years. The report records a so far highest damage for patent infringement of over 80 million yuan (10.6 million Euro), which was ordered in 2017 in a case between Huawei and Samsung. However, according to the report, the average amount of damage awarded in all the patent civil cases with published decisions from 2013 to 2017 is still just about 102,000 yuan (13,500 Euro), wherein the average amount is about 443,000 yuan (58,700 Euro) if counting invention patents only.
One reason for the relatively low damages may be the fact that statutory damages have been awarded in most cases. As shown in the report, statutory damages have been awarded in 188 out of 227 top cases in Beijing, Shanghai and Guangdong. . . .
 Highly recommended.

3.  Also in this vein, Mark Cohen published a post on the China IPR Blog titled Reviewing the 2017 SPC Report on IPR Judicial Protection:  The Generalities and the Exceptions, summarizing the Supreme People's Court 2017 Report on the Situation Regarding Judicial Enforcement of IPR in China.  There were 16,010 first-instance patent cases filed in China in 2017 (presumably this includes not only invention patents but also utility models and design patents).  Interesting to hear that China is considering implementing a specialized IP appellate court.

4.  Clifford Chance's Global Intellectual Property Newsletter SEP/FRAND and Other IP Topics (Issue 06/18) is available here and contains articles by Claudia Milbradt titled Germany:  Update on the Latest Decisions by German Courts Regarding FRAND/SEP; by Miquel Montañá, titled Spain:  The Latest European Commission Guidance on FRAND Licensing of SEPs; and by Jill Ge, titled China:  Huawei v. Samsung--FRAND Litigation in China.

5.  Finally, for further commentary on the U.S. Supreme Court's WesternGeco opinion on damages and extraterritoriality, see these posts from Tim Holbrook, Michael Risch, Gene Quinn, and Gene & Renee Quinn.  The IP Chat Channel also will be hosting a webinar on the case soon; I'll provide details when I have them.  For my post on the case, see here.

Wednesday, June 27, 2018

Apple and Samsung Settle Their Design Patent Dispute

Here is a copy of the Joint Notice of Settlement and Stipulation of Dismissal with Prejudice, and here is a copy of the Proposed Order of Dismissal.  For discussion, see articles on Bloomberg, Law360, Reuters, and The Verge.

U.K. Update: Marshall on Accounts of Profits, Radcliffe on Awards of Costs

1.  Joshua Marshall has published an article titled Account of Profit for Infringement of Intellectual Property Rights, 40 EIPR 260 (2018).  Here is the abstract:
This article discusses the remedy of an account of profit awarded at the election of a claimant who successfully pleads infringement of their intellectual property rights. This article will sketch out the essential remedies available where intellectual property rights have been infringed and the fundamental differences between them. This article will then turn to consider the causes of action for which an account of profit is available and the relevant obligations and rights at play. This article then attempts to rationalise the remedy where intellectual property rights have been infringed. It is submitted that, in this context, the remedy is a personal, rather than proprietary, right to disgorge the profit made by the tortfeasor in committing the wrong. 
Mr. Marshall also has published a comment titled OOO Abbott v Design & Display Ltd:  Account of Profits for Patent Infringement, 40 EIPR 329-33.  Here is the abstract: 
In proceedings for patent infringement, once liability has been established a successful claimant will often be permitted to elect between compensatory damages or an account of the profits made by the defendant. The defendant need only account for net profits, not gross turnover, meaning that overheads should be deducted. This raises the question of what overheads can be  deducted and in what proportion. The court has grappled with these issues throughout these proceedings. After four years of litigation over the correct quantum of the remedy, the value of the defendant’s profit has been determined to be nil.
For previous discussion on this blog of earlier proceedings in this matter, see herehere, and here.
 

2.  Jonathan Radcliffe has published an article titled Unregistered Patent Transaction?  Even in Win, That'll Cost You in Bloomberg BNA's World Intellectual Property Report.  As in the U.S., a party to an assignment of patent rights may, but not is required, to record the assignment with the Patent Office.  There are some obvious third-party benefits, however, from knowing whether a patent initially granted to one person has been transferred to another; and so English law attempts to encourage the recordal of such a transfer by providing, in section 68 of the Patent Act, that:
Where by virtue of a transaction, instrument or event to which section 33 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent and the patent is subsequently infringed, before the transaction, instrument or event is registered, in proceedings for such an infringement, the court or comptroller shall not award him costs or expenses unless -
(a) the transaction, instrument or event is registered within the period of six months beginning with its date; or
(b) the court or the comptroller is satisfied that it was not practicable to register the transaction, instrument or event before the end of that period and that it was registered as soon as practicable thereafter.
Mr. Radcliffe discusses a recent case, L'Oreal v. RN Ventures, [2018] EWHC 391, in which the Patents Court awarded L'Oreal S.A. (the exclusive licensor) and L'Oreal U.K. (the exclusive licensee) only partial costs (covering the post-registration period) for not having recorded the license until after the two had filed suit for infringement. As Mr. Radcliffe notes, "This section now has judicial teeth."

Tuesday, June 26, 2018

Reminder: IP Chat Channel Webinar on Willfulness Later Today

Just a reminder that later today, 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.

Monday, June 25, 2018

Three New Papers on SEPs

1.  Peter Picht has posted a paper on ssrn titled FRAND Determination in TCL v. Ericsson and Unwired Planet v. Huawei:  Same Same but Different?Here is a link to the paper, and here is the abstract:
Unwired Planet/Huawei (UK) and TCL/Ericsson (US) are remarkable rulings on the FRAND-licensing of SEPs, not least because they tackle the task of a full-blown FRAND-royalty determination. Equally remarkable is a comparison between them since the two courts looked – it seems – at a similar set of facts but reached quite different results. The present paper focusses on a key reason for these differing outcomes, namely the courts’ treatment of “top-down” and “Comparables”, two core approaches in FRAND royalty calculation. It argues, i.a., that it creates more problems than solutions to treat the public announcement of royalty rates as a “pledge”; that FRAND commitments made under EU (Member State) law and regarding EU patents ought to be interpreted with a view to EU law; that the two courts interpret the “ND”-requirement differently; and that the weighing and adjusting of Comparables may be distortive. As to the relative importance of the calculation approaches, Comparables seem more relevant regarding the facts at issue.
2.  Kirti Gupta and Georgios Effraimidis have posted a paper on ssrn titled IEEE Patent Policy Revisions: An Empirical Examination of ImpactHere is  a link, and here is the abstract: 
In February 2015, the Institute of Electrical and Electronics Engineers-Standards Association (IEEE-SA) -- one of the largest Standards Development Organizations (SDOs) -- adopted highly controversial changes to its intellectual property rights (IPR) policy. Specifically, the IEEE-SA introduced a specific definition of Fair, Reasonable and Non-Discriminatory (FRAND) licensing terms. The updated policy rules and the position of the Department of Justice (DoJ) -- stated in a Business Review Letter (BRL) -- have attracted much discussion from academic scholars and industry practitioners.
The aim of this paper is to explore how the new patent policy has impacted different aspects of standards development within IEEE. Particularly, our analysis focuses on the IEEE 802 LAN/MAN Standards Committee (IEEE 802 LMSC), whose Working Groups (WGs) have been responsible for the design and development of widely used wireless technologies such as Wi-Fi and Ethernet. The first part of the analysis examines the submission pattern of Letters of Assurances (LoA), i.e., documents outlining the declaration of patents potentially essential to the standard (commonly referred to as Standard Essential Patents (SEPs)) and terms under which the submitter is willing to license its SEPs. We examine LoA submissions before and after the implementation of the new policy within the 802.11 WG, which covers the Wi-Fi technology. Next, we analyze how the comment resolution process (CRP), that is, the process of resolving comments made by 802.11 voters has changed after the policy update. More specifically, we investigate whether there is a delay in the approval process of 802.11 standards. Finally, we examine how the number of submitted Project Authorization Requests (PARs), or documents that trigger the development or revision of a standard by defining the scope and requirements for a new technical project across all IEEE 802 WGs, has changed after the policy update. PARs can be used as a proxy of new activity related to the development of standards.
The empirical findings suggest a decline in LoAs with several SEP holders reluctant to license under the new IPR policy terms. More importantly, uncertainty on implementers’ side has increased, as new standards have been approved under the presence of negative and/or missing LoAs, and other standards are being developed under this “mixed bag” of LoAs. The CRP analysis reveals that the first two rounds of the process last on average longer after the policy change. Such a finding implies that the 802.11 balloting process has become more time consuming, which in turn results in a (potential) delay of approval/publication of standards. We also find that the number of new projects initiated (or PARs) in the IP-intensive IEEE standards (namely the 802 WGs) have decreased, suggesting a potential slowdon of the growth rate of innovation after the policy change.
3.  J. Gregory Sidak has published a paper titled The FRAND Contract, 3 Criterion Journal on Innovation 1 (2018). Here is a link to the paper, and here is the abstract:
Government agencies in various countries have issued guidelines to facilitate private negotiation to license the use of standard-essential patents (SEPs) that a patent holder has voluntarily committed to a standard-setting organization (SSO) to offer to license on fair, reasonable, and nondiscriminatory (FRAND) terms (or on reasonable and nondiscriminatory (RAND) terms, as the case may be) to a third-party seeking to implement the standard. In effect, these jurisdictions are competing in a tournament of sorts to identify the best legal framework for resolving FRAND licensing disputes. A leading candidate is the existing body of U.S. contract law.
In this article, I examine the FRAND licensing of SEPs through the lens of U.S. contract law. I will eschew the phrase “FRAND commitment” in favor of the bulkier but more precise phrase “the FRAND contract between the SEP holder and the SSO.” That terminology helps to clarify that the license agreement potentially formed between the SEP holder and the implementer on FRAND terms is a separate, subsequent contract that is entirely distinct from the preexisting contract into which the SEP holder and the SSO have entered.
I begin by asking in Part I whether the FRAND contract is enforceable. U.S. courts have found that it is, yet commentators, courts, and other tribunals have flagged various theories of unenforceability when analyzing a FRAND commitment as a contract.
In Part II, I analyze the anatomy of the FRAND contract, as informed by first principles of U.S. contract law. Whether, with respect to a given implementer, a given SEP holder has discharged its FRAND duty to the SSO turns on whether the SEP holder has offered to license its SEPs to that implementer on FRAND terms. An implementer loses its rights as a third-party beneficiary of the SEP holder’s FRAND contract with the SSO if the third-party beneficiary rejects a FRAND offer or if it fails to accept that offer within a reasonable time. By underscoring the applicability of these fundamental principles of U.S. contract law, judges, arbitrators, and other decision makers would encourage both the SEP holder and the implementer to avoid dilatory tactics and orthogonal bargaining positions when negotiating license terms for the use of SEPs.
In Part III, I examine some of the frameworks that other countries have recently proposed for guiding negotiations for SEPs. Although these frameworks supposedly identify principles that would facilitate the license negotiation between an SEP holder and an implementer of an industry standard, they ignore the relevance of first principles of contract law. Instead, they try to reinvent the wheel—by fashioning a sui generis bargaining protocol for SEP license negotiations that ignores the transactional efficiency of preexisting contract principles of offer and acceptance. These proposals are unlikely to be more efficacious than U.S. contract jurisprudence in defining a clear protocol that encourages the expeditious execution of bilaterally negotiated FRAND licenses.
In Part IV, I offer preliminary observations on how a given SEP holder and a given implementer might agree to opt out of the FRAND contract so as to create a superior structure for concluding their bilateral negotiation of a license or, in the event of an impasse, for achieving a more expeditious and cost-effective resolution of their dispute.

Friday, June 22, 2018

WesternGeco v. ION: Analysis

Again, here is a link to the opinion (majority opinion by Justice Thomas; dissent filed by Justice Gorsuch, joined by Justice Breyer).  From the opinion:
Under the Patent Act, a company can be liable for patent infringement if it ships components of a patented invention overseas to be assembled there. See 35 U.S.C. § 271(f)(2). A patent owner who proves infringement under this provision is entitled to recover damages. § 284.The question in this case is whether these statutes allow the patent owner to recover for lost foreign profits. We hold that they do (p.1).
The majority opinion centers on the Supreme Court's extraterritoriality analysis, although it does also reiterate, as past decisions have done, that § 284 is intended to provide "full compensation" for the infringement.  (The Court expressly decides not to "address the extent to which other doctrines, such as proximate cause, could limit or preclude damages in particular cases" (p.9 n.3).  I expected the Court would address that issue, and I think it should have.)  Basically, the Court concludes that the conduct that § 271(f)(2) addresses is domestic, and thus that § 284 should be read as providing full compensation for that act of domestic infringement.  Here are some of the key excerpts from what is a fairly short opinion:
This Court has established a two-step framework for deciding questions of extraterritoriality. The first step asks “whether the presumption against extraterritoriality has been rebutted.” RJR Nabisco, Inc. v. European Community, 579 U. S. ___, ___ (2016) (slip op., at 9). It can be rebutted only if the text provides a “clear indication of an extraterritorial application.” Morrison v. National Australia Bank Ltd., 561 U.S. 247, 255 (2010). If the presumption against extraterritoriality has not been rebutted, the second step of our framework asks “whether the case involves a domestic application of the statute.” RJR Nabisco, 579 U.S., at ___ (slip op., at 9). Courts make this determination by identifying “the statute’s ‘focus’” and asking whether the conduct relevant to that focus occurred in United States territory. Ibid. If it did, then the case involves a permissible domestic application of the statute. See ibid.
We resolve this case at step two. While “it will usually be preferable” to begin with step one, courts have the discretion to begin at step two “in appropriate cases.” See id., at ___, n.5 (slip op., at 10, n.5) (citing Pearson v. Callahan, 555 U.S. 223, 236–243 (2009)). . . .
Under the second step of our framework, we must identify “the statute’s ‘focus.’” RJR Nabisco, supra, at ___ (slip op., at 9). The focus of a statute is “the objec[t] of [its] solicitude,” which can include the conduct it “seeks to ‘regulate,’” as well as the parties and interests it “seeks to ‘protec[t]’” or vindicate. Morrison, supra, at 267 (quoting Superintendent of Ins. of N. Y. v. Bankers Life & Casualty Co., 404 U.S. 6, 12, 10 (1971)). “If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application” of the statute, “even if other conduct occurred abroad.” RJR Nabisco, 579 U.S., at ___ (slip op., at 9). But if the relevant conduct occurred in another country, “then the case involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S.territory.” Ibid. . . .
Applying these principles here, we conclude that the conduct relevant to the statutory focus in this case is domestic. We begin with § 284. It provides a general damages remedy for the various types of patent infringement identified in the Patent Act. The portion of § 284 at issue here states that “the court shall award the claimant damages adequate to compensate for the infringement.” We conclude that “the infringement” is the focus of this statute. As this Court has explained, the “overriding purpose” of § 284 is to “affor[d] patent owners complete compensation” for infringements. General Motors Corp. v. Devex Corp., 461 U.S. 648, 655 (1983). “The question” posed by the statute is “‘how much ha[s] the Patent Holder. . . suffered by the infringement.’” Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 507 (1964). Accordingly, the infringement is plainly the focus of § 284.
But that observation does not fully resolve this case, as the Patent Act identifies several ways that a patent can be infringed. See § 271. To determine the focus of § 284 in a given case, we must look to the type of infringement that occurred. We thus turn to § 271(f)(2), which was the basis for WesternGeco’s infringement claim and the lost-profits damages that it received. . . .
Section 271(f)(2) focuses on domestic conduct. It provides that a company “shall be liable as an infringer” if it“supplies” certain components of a patented invention “in or from the United States” with the intent that they “will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.” The conduct that § 271(f)(2) regulates—i.e., its focus—is the domestic act of “suppl[ying] in or from the United States.” . . .
In sum, the focus of § 284, in a case involving infringement under § 271(f)(2), is on the act of exporting components from the United States. In other words, the domestic infringement is “the objec[t] of the statute’s solicitude” in this context. Morrison, 561 U. S., at 267. The conduct in this case that is relevant to that focus clearly occurred in the United States, as it was ION’s domestic act of supplying the components that infringed WesternGeco’s patents. Thus, the lost-profits damages that were awarded to WesternGeco were a domestic application of § 284 (pp. 5-8).
So, suppose we have a replay of Power Integrations or Carnegie-Mellon.  The infringing conduct at issue is a manufacture, use, or sale that occurs in the United States, in violation of § 271(a), but which triggers a chain of events resulting in (1) the U.S. patent owner losing a sale to the defendant in another country, or (2) the defendant obtaining higher profits on the sales it makes in another country.  Is the U.S. patent owner entitled to its lost profit in case (1), or a higher reasonable royalty in case (2), as long as the causal chain is not too remote--that is, as long as the sales the defendant made abroad were proximately caused by the infringement?  As I've noted previously, I've come around to the view that the answer is yes, and I'm inclined to read Justice Thomas's statements as quoted above as supporting that result.  He says that the "focus" of § 284 is "the infringement," and that § 284 is intended to provide "full compensation" for such infringement; and  § 271(a) defines infringement as the unauthorized domestic manufacture, sale, or use of the patented invention.  In other words, "the conduct relevant to" § 284's "focus" is domestic conduct, and as long as that is so § 284 provides for full compensation for the harm flowing from that domestic conduct (subject, surely, to normal proximate cause limitations, even if the Court stubbornly refuses to address that topic).  So there's no need to fret about whether whether the presumption against extraterritoriality applies, I guess.

In dissent, Justice Gorsuch actually agrees that "WesternGeco's lost profits claim does not offend the judicially created presumption against the extraterritorial application of statutes."  Nevertheless, he argues that the Patent Act itself does not "permit awards of this kind" because "[a] U.S. patent provides a lawful monopoly over the manufacture, use, and sale of an invention within this country only," and "WesternGeco seeks lost profits for use of its invention beyond our borders" (dissent p.1).  But I think Justice Thomas has the better of the argument here, when he states in the majority opinion that this "position wrongly conflates legal injury with the damages arising from that injury" (majority opinion p.9).  And I'm not convinced by Justice Gorsuch's parade of horribles, for example this:
Suppose a company develops a prototype microchip in a U.S. lab with the intention of manufacturing and selling the chip in a foreign country as part of a new smartphone. Suppose too that the chip infringes a U.S. patent and that the patent owner sells its own phone with its own chip overseas. Under the terms of the Patent Act, the developer commits an act of infringement by creating the prototype here, but the additional chips it makes and sells outside the United States do not qualify as infringement. Under WesternGeco’s approach, however, the patent owner could recover any profits it lost to that foreign competition—or even three times as much, see § 284—effectively giving the patent owner a monopoly over foreign markets through its U.S. patent. That’s a very odd role for U.S. patent law to play in foreign markets, as “foreign law alone, not United States law,” is supposed to govern the manufacture, use, and sale “of patented inventions in foreign countries.” Microsoft, supra, at 456 (dissent pp. 7-8).
I have a hard time imagining the initial act of manufacturing the infringing prototype in the U.S. as being the proximate cause of all of the infringer's sales abroad.  And what about the noninfringing alternative of manufacturing the prototype in a country where it isn't patented (a point the Solicitor General made in his brief, as I recall)?  That would seem to eliminate most of the damages resulting from the foreign sales, I should think.

Justice Gorsuch also worries that other countries will follow suit:
Worse yet, the tables easily could be turned. If our courts award compensation to U.S. patent owners for foreign uses where our patents don’t run, what happens when foreign courts return the favor? Suppose our hypothetical microchip developer infringed a foreign patent in the course of developing its new chip abroad, but then mass produced and sold the chip in the United States. A foreign court might reasonably hold the U.S. company liable for infringing the foreign patent in the foreign country. But if it followed WesternGeco’s theory, the court might then award monopoly rent damages reflecting a right to control the market for the chip in this country—even though the foreign patent lacks any legal force here (dissent p.8).
I suppose that's a risk--but for that matter, other countries could interpret their patents as having extraterritorial force altogether, if they wanted to.  But they won't.  If proximate cause and analysis of noninfringing alternatives would limit the damages available for most of the losses occurring outside the U.S., the practical consequences of WesternGeco won't be so far-reaching, and won't provoke such a far-reaching response from other countries. 

U.S. Supreme Court Reverses in WesternGeco

Opinion here.  I'll be back shortly with analysis.

Tuesday, June 19, 2018

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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Monday, June 18, 2018

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).

Friday, June 15, 2018

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 . . .

Wednesday, June 13, 2018

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.

Monday, June 11, 2018

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. LLCThe 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.