Tuesday, January 28, 2025

My Lecture Next Week in Munich on Extraterritorial Damages

This coming weekend I leave for a 10-day trip to Munich.  The primary purpose of the trip is to do some research at the Max Planck Institute in connection with my two pending book projects (Wrongful Patent Assertion:  A Comparative Law and Economics Analysis, under contract with OUP, and Remedies in Intellectual Property Law, under contract with Elgar).  I also am looking forward to catching up with several friends, acquaintances, and colleagues from the world of German IP law.  In addition, I will be giving a lecture at Ludwig-Maximilians-Universität next Wednesday, February 5, at 6:30 p.m. titled “Extraterritorial Damages.”  Here is a brief description:

As a general rule, intellectual property (IP) rights are territorial in nature. Subject to some possible exceptions, acts committed abroad do not violate domestic IP laws. In recent years, however, global commerce has brought to the forefront the question of whether the territoriality principle altogether precludes domestic courts from awarding damages for extraterritorial losses.

 

Professor Cotter will explore this issue based on decisions from the US, the UK, Canada, Japan, and Germany and review the evolving law, as well as some yet-to-be-resolved questions, concerning awards of extraterritorial damages for patent, copyright, trademark, and trade secret infringement. He will conclude with some thoughts on the related issue of whether courts should award global FRAND royalties in disputes involving SEPs.

More information can be found on the website of CIPLITEC (The Center for Law, Information and Technology), here.  

During the duration of my stay in Germany, I probably will take a break from blogging, unless something extremely important happens that I simply have to write about.  I expect to publish at least one more post this week, however, before leaving.   

Monday, January 27, 2025

Amicus Briefs in Support of EcoFactor; Two Cert. Petitions in Cases Involving Questions of Extraterritorial Damages

As previously noted, the Federal Circuit will be rehearing en banc EcoFactor, Inc. v. Google LLC, on the question of “the district court’s adherence to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), in its allowance of testimony from EcoFactor’s damages expert assigning a per-unit royalty rate to the three licenses in evidence in this case.”  An earlier post linked to Google’s brief and the amicus briefs filed in support of Google (one of which I joined).  EcoFactor’s corrected brief and three amicus briefs in support of EcoFactor are now available on Pacer as well.  Here they are, below.  If any more come in, or if any of the below are replaced with corrected copies, I will add them to the list:

PLAINTIFF-APPELLEE ECOFACTOR, INC.’S CORRECTED NON-CONFIDENTIAL EN BANC RESPONSE BRIEF

EN BANC REHEARING BRIEF OF AMICUS CURIAE ALLIANCE OF U.S. STARTUPS & INVENTORS FOR JOBS (“USIJ”) IN SUPPORT OF APPELLEE, ECOFACTOR

BRIEF OF THE NEW CIVIL LIBERTIES ALLIANCE AS AMICUS CURIAE IN SUPPORT OF PLAINTIFF-APPELLEE

BRIEF FOR PROFESSOR MICHAEL RISCH AND THE GROUP OF INTERESTED PRACTITIONERS AS AMICUS CURIAE IN SUPPORT OF ECOFACTOR

The New Civil Liberties Alliance brief is limited to arguing that Judge Pauline Newman should be part of the en banc panel.

While on the topic of briefs, I should note as well that the plaintiff in Brumfield v. IBG has filed a cert. petition with the U.S. Supreme Court.  Brumfield is a case in which the Federal Circuit concluded that U.S. courts may award damages for losses suffered abroad by reason of conduct occurring within the United States in violation of 35 U.S.C. § 271(a)—but on the facts of the case, concluded that the plaintiff hadn’t proven any such damages (see discussion here).  The cert. petition mostly focuses on other issues, however, though it does argue that “after ruling in [original plaintiff] TT’s favor that TT could obtain damages based on foreign conduct for infringement under 35 U.S.C. § 271(a), the Federal Circuit raised and decided the issue of causation (i.e., whether there was a 'casual connection' between infringement under § 271(a) and the 'foreign conduct for which proposal seeks royalty damages.' (Pet. App. 52a). This issue was never argued by the parties or decided by the district court below. (CAFC App. 18-20). By deciding it for the first time on appeal, the Federal Circuit denied TT’s due process rights to be heard” (p.39).  The responsive brief is due on March 20.  And while on the topic of extraterritorial damages and cert. petitions, Hytera has filed a cert. petition in a case in which the Seventh Circuit held that the federal Defend Trade Secrets Act (DTSA) extends civil liability for extraterritorial trade secret misappropriation, where "an act in furtherance of the offense was committed in the United States.Hytera disagrees with the lower court’s interpretation of the quoted language, arguing that the statutory term “offense” means “criminal offense,” not “civil offense,” such that extraterritorial liability extends only to criminal trade secret misappropriation in violation of the Economic Espionage Act.  The question presented is “Does the private right of action for trade secret misappropriation created by the Defend Trade Secrets Act of 2016 rebut the presumption against extraterritorial application of U.S. law?"  A response is due February 10. 

I will be discussing both Brumfield and Hytera in my lecture at Ludwig Maximillians University in Munich next week.  More information forthcoming tomorrow.

Thursday, January 23, 2025

Cotter on Wrongful Patent Assertion and Disproportionality

I have a new paper up on SSRN, titled Wrongfulness as Disproportionality: Toward a Law-and-Economics Approach to Wrongful Patent Assertion, in Proportionality in Intellectual Property Law (Christopher Heath & Anselm Kamperman Sanders eds., Wolters Kluwer, forthcoming)).  Here is a link, and here is the abstract:

Nations throughout the world employ a variety of legal doctrines, including antitrust law, unfair competition law, and the abuse of rights doctrine, among others, to impose consequences for what can be characterized as the wrongful enforcement or assertion of patent rights.  The present essay—to be published in an edited volume of papers presented at the 20th IEEM Intellectual Property Seminar, held in Macau S.A.R. in November 2024 and titled “Proportionality in Intellectual Property Law”—explores how the concept of proportionality might help to inform what constitutes the wrongful assertion of patent rights, with examples drawn from my pending (and more comprehensive) book project, titled Wrongful Patent Assertion:  A Comparative Law and Economics Analysis, under contract with Oxford University Press.  My thesis here is that the various doctrines that constrain the enforcement or threatened enforcement of patent rights can be viewed as efforts to ensure that the effect of the enforcement or threatened enforcement is proportionate to some normative goal.  More specifically, I argue that a necessary (but not, in every context, sufficient) condition for characterizing an assertion of patent rights as wrongful is that the assertion enables the patent owner to obtain benefits or inflict harms that are disproportionate in view of (1) the ex ante or ex post incremental economic value of the patent to the accused infringer; (2) the ex ante probabilistic term of protection of the patent; or (3) the likelihood that immunizing an assertion of the type at issue would undermine the purposes of the patent system or other substantial social interests.  Conceptualizing proportionality in the above sense might provide some guidance in helping to ensure that the legal regulation of patent assertion aligns with broader policy objectives and is consistent with the public interest.

Comments welcome.

Tuesday, January 21, 2025

EU Requests WTO Consultation with China Regarding Global FRAND Royalties

I just read about this on ip fray.  Yesterday, the EU’s Permanent Representative to the WTO send a Request for Consultations to the Permanent Representation of the PRC.  (There is also a press release, here.)  The letter notes that Chinese courts have taken on “the authority to determine, without the consent of both parties, worldwide licensing conditions, and in particular royalty rates, for portfolios of standard essential patents (SEPs) which include non-Chinese SEPs,” and that “[i]n accordance with China’s law, a legally effective decision determining such conditions is binding on both parties and is enforceable in China including with respect to the non-Chinese SEPs.”  In this regard, the letter references the late 2023 decision of the Chongqing First Intermediate People’s Court in OPPO v. Nokia (previously noted on this blog here and here). 

The letter makes two principal legal claims.  The first is that the “measure at issue adversely affect[s] the protection and enforcement of intellectual property rights,” in violation of article 4bis of the Paris Convention (as incorporated into TRIPS under TRIPS article 2.1) and TRIPS articles 1(1) (first sentence), 28(1), and 28(2).  By way of reference, article 4bis of the Paris Convention, titled “Patents:  Independence of Patents Obtained for the Same Invention in Different Countries,” states in paragraph 1 that “Patents applied for in the various countries of the Union by nationals of countries of the Union shall be independent of patents obtained for the same invention in other countries, whether members of the Union or not.”  The first sentence of article 1(1) of TRIPS states that “Members shall give effect to the provisions of this Agreement. Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement.”   TRIPS article 28(1) states that “[a] patent shall confer on its owner the following exclusive rights:  (a)  where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing . . .  for these purposes that product; (b) where the subject matter of a patent is a process, to prevent third parties not having the owner’s consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process.”  Article 28(2) states that “[p]atent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.”  The gist of this set of claims, set forth in six numbered paragraphs in the letter, is that China’s “measure” has the effect of interfering with parties’ ability to start or continue litigation, or owner’s ability to exercise their exclusive rights, in other member states.  The invocation of TRIPS articles 1(1) and 28 dovetails with some aspects of the WTO proceeding the EU initiated in 2022, which is still pending and was prompted by the flurry of antisuit injunctions Chinese courts issued in 2020.

The other claim is that China has failed to comply with its obligations under TRIPS article 63(3).  Article 63 is titled “Transparency,” and the first sentence of paragraph 1 (which paragraph is referenced in paragraph 3) states that “Laws and regulations, and final judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of this Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published, or where such publication is not practicable made publicly available, in a national language, in such a manner as to enable governments and right holders to become acquainted with them.”  Paragraph 3 then states “Each Member shall be prepared to supply, in response to a written request from another Member, information of the sort referred to in paragraph 1. A Member, having reason to believe that a specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual property rights affects its rights under this Agreement, may also request in writing to be given access to or be informed in sufficient detail of such specific judicial decisions or administrative rulings or bilateral agreements.”  The letter states that the EU requested that China supply the OPPO v. Nokia decision in December 2023, but that China’s response to that request was inconsistent with article 63(3), second sentence.  The EU made analogous claims in the WTO proceeding initiated in 2022.

International trade lawyers may have a better sense that I do how this is likely to play out.  As an initial take, I'll just note a few brief observations.  First, it is interesting to consider whether the EU’s argument, if accepted, would impact the UK’s practice of setting global FRAND rates--though perhaps the UK practice can be distinguished insofar as the English courts offer the infringer a choice of either being enjoined from practicing the infringed patents in the UK, or accepting a court-determined global FRAND license; I’m not sure that the Chinese measure at issue offers a similar option (whatever its value may be) of being enjoined in China and thus not being subject to a court-determined global license.  Also, when the UK courts started setting global terms in 2017 in Unwired Planet, this was seen as being favorable to SEP owners, or at least more favorable than proceeding on a country-by-country basis, which Mr. Justice Birss (as he then was) referred to as “madness”--though in light of the last couple of UK-determined FRAND licenses in Optis v. Apple and InterDigital v. Lenovo, as well as the fall 2024 decision in Panasonic v. Xiaomi, it may seem that the UK approach is actually not such a bad deal for implementers, all things considered.  More favorable to SEP owners is the possibility of getting a relatively quick injunction from a court in Germany or the UPC, which as Olivia Rafferty points out in her ip fray post often compels a global settlement.  Second, it’s also interesting to consider the impact of a WTO ruling on the EC’s own draft SEP Regulation, which would have conciliators make nonbinding global FRAND determinations “unless otherwise specified by the parties in case both parties agree to the FRAND determination or by the party that requested the continuation of the FRAND determination,” and would permit SEP owners to agree to global royalty caps.  Finally, the press release alleges that the Chinese practice "pressures innovative European high-tech companies into lowering their rates on a worldwide basis, thus giving Chinese manufacturers cheaper access to those European technologies unfairly," and the letter states that the EU "reserves the right to raise additional measures and claims . . . regarding the above matters."

Tuesday, January 14, 2025

Review of FRAND: German Case Law and Global Developments

The January 2025 issues of Concurrences includes a very engaging review of FRAND:  German Case Law and Global Perspectives (Elgar Intellectual Property Law and Practice Series, 2024), the recent volume I was happy to contribute to, and edit, with Peter Picht and Erik Habich.  The author of the review (available in French and in English) is Rebekka Flamind, University of Paris I Panthéon-Sorbonne.  She provides a detailed overview of the book, concluding that it "stands out . . . for its depth of analysis and unique approach," and offers "an invaluable comparative perspective" that "[l]awyers, clients and academics alike will find . . . indispensable . . . for understanding not only the German approach, but also the global context of FRAND litigation. It is an essential reference work for all those involved in the field."

I also learned something it seems I should have known previously, but didn't:  that the French acronym for standard-essential patent is BEN (for brevets essentiels à une norme).