A Recent Australian Decision on Awards of Profits

The decision, dated November 18, 2022, is Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited (No 3) [2022] FCA 1373 (Nicholas J).  It follows an earlier decision finding the patent in suit (Australian Patent No 754689) valid and infringed, and it’s fairly lengthy.  I’ll try to explain the gist of it here, but may return to some of the finer or more fact-specific points in future posts.

The case involves electronic gaming machines (EGMs) having three principal components:  a cabinet, a platform, and games (para. 57).  Representative claim 1 of the ‘689 Patent reads as follows:

            A random prize awarding feature to selectively provide a feature outcome on a gaming console, the console being arranged to offer a feature outcome when a game has achieved a trigger condition, the console including trigger means arranged to test for the trigger condition and to initiate the feature outcome when the trigger condition occurs, the trigger condition being determined by an event having a probability related to desired average turnover between successive occurrences of the trigger conditions on the console.

The court interprets the “substance of the invention” to comprise “a random prize awarding feature with the proportional trigger” (para. 173).  The defendant Konami infringed by (1) selling 6,931 EGMs on which infringing games were installed; (2) selling “4,647 conversions for the installation of an infringing game on an existing EGM”; and (3) making 7,380 “no charge conversions” (NCCs).  The plaintiff sought an award of the defendant’s profits on the infringing sales, and damages in the form of a royalty for the NCCs.

Most of the decision relates to the award of profits.  Long story short, the plaintiff argued that it was entitled to Konami’s entire profit on these sales, on the authority of Australian and English decisions holding that “the infringer cannot avoid accounting for profits by relying on the existence of possible non-infringing alternatives that might have been used” (para. 108, citing Celanese International v BP Chemicals [1999] RPC 203 (Laddie J); the leading Australian decision, also discussed at length, is Dart Industries Inc v The Decor Corporation Pty Ltd (1993) 179 CLR 101).  Readers of the blog and my other work may recall that I have criticized this rule on many occasions, e.g., at pp. 200-06 of my book, discussing Dart and Celanese.  What’s interesting here, however, is that the court, while adhering to these precedents, nevertheless does take noninfringing alternatives into account in what it refers to as a second stage of the analysis, relating to apportionment. 

On this latter issue, the court reads the relevant precedents as also standing for the proposition that that “the plaintiff could not recover profits which were not properly attributable to the use of the plaintiff’s invention” (para. 109), though “apportionment would be inappropriate where, without the infringement, the infringing articles would not have existed, or where the invention was an essential ingredient in the creation of the infringer’s whole product” (para. 116).  In particular, the court considers noninfringing alternatives to be relevant where apportionment is necessary to avoid unjustly penalizing the defendant.  Here are the key passages:

            119    In 2004 the Canadian Supreme Court in Monsanto Canada Inc. v. Schmeiser [2004] 1 SCR 902 held that a patentee is only entitled to that portion of an infringer’s profit which is attributable to the appropriation of the patented invention. The Court held that a comparison must be made between the infringer’s profit attributable to its use of the invention and its profit had it used the best non-infringing option available. This approach, which measures profits by reference to non-infringing alternatives, does not reflect the law in either Australia or the United Kingdom. However, it has been suggested that this approach may be justified not on the basis that the defendant’s profits correspond to the difference between those made supplying the infringing product and a product that was non-infringing, but on the basis that a consideration of non-infringing options will provide a useful measure with which to apportion profit between that which is attributable to the use of the invention and that which is not. On that analysis, any consideration of non-infringing alternatives, is only relevant when the court is required to assess what part of the infringer’s profits are attributable to the infringer’s appropriation of the invention. In those circumstances, the use of the term “non-infringing alternative” is referring to a non-infringing course of action that can assist in identifying the value of the relevant appropriation. . . .

 

            181    It is useful to consider that discussion of the principles in the context of the facts in Dart and a hypothetical example. On the findings of fact made in Dart none of the claimed profits would have been made but for the respondents’ use of the patented invention. That is because, on the primary judge’s findings, the existence of the patented feature was essential to the making of any sale. The retailers to whom the product was supplied would never have purchased them had they not included the press button seal. But there may be cases in which, even if it is established that the profit would not have been made but for the use of the patented invention, some part of the profit made is shown to have no reasonable connection with the act of infringement. It is at this stage of the analysis that the onus moves to the infringer. . . .

 

            183    Properly understood, Aristocrat’s argument is not that the relevant EGMs and conversion kits would have been manufactured or supplied by Konami without any feature game, but they would not have been manufactured and supplied with a non-infringing feature game. The argument therefore calls for a counterfactual analysis which involves determining whether there was any market for the relevant EGMs and conversion kits had they incorporated a non-infringing feature game that did not use the 689 trigger. Put another way, and adopting the language used by the Full Court in Dart at 408, was it the feature game incorporating the 689 trigger that created the market for the relevant EGMs and conversion kits manufactured and supplied by Konami?

 

            184    With regard to the counterfactual analysis, Aristocrat submitted that apportionment was not available because the existence or otherwise of alternative products (i.e. the counterfactual) is not relevant to apportionment. I do not accept that submission. As I have stated above, the availability of non-infringing alternative products is not relevant when determining whether apportionment is available. However, the existence of non-infringing alternative products may assist in ascertaining the extent of the profits made by the respondent as a result of its use of the patented invention when apportioning the profits.

 

            185    The profits recoverable on an account of profits are not measured by reference to the difference between the profit actually made by the infringer as a result of its infringement and the profit it would have made had it adopted a non-infringing alternative. That proposition is well settled and is not disputed by Konami. It does not suggest that the profits to be awarded to Aristocrat should be calculated in that manner. However, if apportionment is appropriate then the availability of non-infringing alternatives, and the cost of adopting them, may be relevant in determining the value that should be attributed to the invention that was wrongfully appropriated by the infringer.

 

            186    In the hypothetical example of the braking system in the motor vehicle considered in Dart, it may be appropriate in determining what value to put on the braking system relative to the motor vehicle as a whole to have regard to other non-infringing alternatives that might have been used in place of the infringing braking system. In that situation, if the invention was shown to offer little benefit over other systems available at similar cost, it may be open to the Court to conclude that only a small proportion of the profits made on the sale of the vehicle should be attributed to the wrongful appropriation of the invention. Conversely, if the infringing system was shown to possess significant advantages over such alternatives, or where the system otherwise added significantly to the attractiveness of the vehicle to potential purchasers, then this is a matter that would be taken into account when determining how to apportion the profits made on the sale of the motor vehicle.

Applying these principles to the facts, the court concludes, for reasons I will not recap here, that 35% of Konami’s profit on the infringing sales were attributable to the infringing “prize awarding feature with the proportional trigger” (see paras. 188-290).  The court then goes on to deduct, inter alia, the allocable fixed costs that Konami would have incurred from selling non-infringing products:

            373    I do not regard this as a case in which the alternative products would have generated a much smaller amount of revenue than the infringing products: cf. Kettle at 469. On the contrary, I am satisfied that had Konami used a different trigger in the 689 Games it would more likely than not have achieved sales not vastly different from those made using the proportional trigger. However, in circumstances where the proportional trigger had advantages over other triggers which, all other things being equal, may have led at least some venues not to purchase the alternative product, I think it is appropriate to make an adjustment in Aristocrat’s favour with the aim of ensuring that Konami accounts for the full profit it derived by selling the infringing products. Although the very large adjustment suggested by Aristocrat is not warranted, I do think that some meaningful adjustment is necessary which allows for the possibility that some not insignificant proportion of the sales actually made would not have been made if a different trigger had been used. In all the circumstances I am satisfied that it would be appropriate to reduce the overhead attributable to the infringing products by 20%.

Finally—and skipping over some details that are not essential to the purposes of the present post—the court, having considered the purportedly comparable licenses submitted by the parties, awards a royalty of $1,000 per unit for the NCCs (para. 562).  It declines to award enhanced damages, finding, inter alia, that the infringement was not “flagrant” (para. 571).  The total award, as determined at a follow-up order dated December 15, 2022, comes to $16,248,116 in profits, plus an additional $11,642,730 in interest; and $4,995,000 in damages plus another $3,014,008 in interest.

Anyway, though I will continue to mull over the implications of this decision in the coming weeks, I think the court ultimately arrives at the correct conclusion—that noninfringing alternatives are relevant to apportionment—while still adhering (as I assume it must) to the rule that “[t]he profits recoverable on an account of profits are not measured by reference to the difference between the profit actually made by the infringer as a result of its infringement and the profit it would have made had it adopted a non-infringing alternative.”  The only problem, as I see it, is that these two principles are contradictory.  As I wrote in 2013 (see my book, pp. 199-200):

            . . . suppose that Firm B earns a profit of $10,000 from sales of a gizmo that comprises ten components, one of which (Component #5) infringes Firm A’s patent. The issue for the court is to determine how much of the $10,000 profit is attributable to Component #5. The correct economic answer to this question is the difference between the $10,000 profit Firm B actually earned and the profit Firm B would have earned had it not infringed. . . . [F]rom an economic perspective the correct way to go about estimating the profit Firm B would have earned had it not infringed would be to estimate Firm B’s profit had it resorted to the next-best alternative to Component #5—call it “Component #5A.” . . .

 

            Seen in this light, it is not clear how a court could both apportion the contribution of the infringing feature to a firm’s profits and ignore the existence of noninfringing alternatives. To ignore the existence of noninfringing alternatives in effect means that the court assumes, in the example above, that Component #5 is irreplaceable. If Component #5 were both irreplaceable and necessary to the functioning of gizmos, however, then absent the infringement Firm B would have sold no gizmos and rightly should disgorge the entire $10,000 profit; there should be no apportionment. . . . If, on the other hand, a gizmo that simply lacks Component #5 is both functional and marketable, one could try to estimate the profit Firm B would have earned from selling such gizmos and subtract that figure from $10,000. In principle, though, this simply means that the court is assuming that a gizmo without any counterpart to Component #5—rather than a gizmo containing Component #5A—is the next-best alternative to an end product including Component #5. Properly understood, then, apportionment and the relevance of noninfringing alternatives are inseparable concepts. Any attempt to apportion profits by, say, some estimate of the feature’s relative importance to the marketability of the end product, will necessarily imply something about the next-best noninfringing alternative, whether the analyst is aware of this implication or not.

One caveat I would make to the above today is that in some cases multiple components may all be essential to sales of the end product.  In cases involving standard-essential patents, for example, the end product may be unmarketable unless it incorporates all of the relevant SEPs, but you wouldn’t say that all of the profit the defendant earned from the sale of the end product is attributable to any one single SEP; and of course the royalty due for the infringement of any one SEP should be only a fraction of that profit, though determining exactly what that fraction is can be a difficult undertaking.  See, e.g., Norman V. Siebrasse & Thomas F. Cotter, The Value of the Standard, 101 Minn. L. Rev. 1159, 1198-1228 (2017).  In any event, if I’m understanding the facts of the present case correctly, the court actually did assume that, but for the infringement, the defendant would have sold a (slightly smaller) quantity of products incorporating some (not specifically identified) noninfringing Component #5A; and the outcome overall, assuming the correctness of the court’s factual analysis, is consistent with my view that you can’t do apportionment without, explicitly or implicitly, taking noninfringing alternatives into account.  With that, I wholeheartedly agree, though it would be nice if we didn’t have to go through so many unnecessary doctrinal hurdles to reach that result.    

Sung on Liability for Wrongly Issued Preliminary Injunctions

Although this article came out in 2015, I just recently learned of it.  The author is Professor Huang-Chih Sung of National Chengchi University in Taipei, where I taught last December, and the article is titled Patentee's Liability for Wrongful Preliminary Injunction-Case Studies in China and Taiwan, 34 Biotechnology Law Report 133-151 (2015).  The article provides a good overview of the standards for determining whether a patentee is liable to an accused infringer, if the former obtains a preliminary injunction but (for example) the patent is later invalidated or found not to infringe.  The title mentions China and Taiwan, but the article also briefly discusses the relevant provisions under TRIPS and has a fairly extensive discussion of U.S. law as well.  The bottom line, at least as of 2015, is that it is more difficult for the wrongly-excluded defendant to obtain compensation under Taiwanese law than under either U.S. or Chinese law, and the author advocates some reforms.  Highly recommended.

For recent discussion on this blog of compensation for wrongly-issued injunctions in Australia, France, and the E.U., see here and here.  

From Around the Blogs

1.  On Sufficient Description, Norman Siebrasse has published two posts (here and here) discussing a decision of Canada's Federal Court in Fluid Energy Group Ltd. v. Exaltexx Inc., [2020] FC 81.  The decision awarded Exaltexx a preliminary injunction prohibiting Fluid from threatening to bring infringement actions against end users of Exaltexx's "safe acid" products.  According to Professor Siebrasse, the decision provides a good overview of both the law of preliminary injunctions and of product disparagement under Canadian law.  On the latter issue, the court distinguishes between "informative" and "threatening" cease and desist letters, with the latter posing a risk that the recipient will comply with the sender's demands simply to avoid litigation.

2.  Matt Swinn has published a post on IPKat titled Australian government fails to recoup clopidogrel costs from Sanofi.  The post discusses a recent decision from the Federal Court of Australia,  Commonwealth of Australia v. Sanofi [2020] FCA 543, dismissing a claim made by the Australian government for compensation from the drug maker Sanofi.  Under Australia's Pharmaceutical Benefits Scheme, the government subsidized the price paid for Sanofi's Plavix drug.  Sanofi had obtained an interlocutory injunction restraining Apotex from entering the market with its generic version of the drug.  The relevant patent was later revoked, however, and Sanofi and Apotex settled Apotex's claim for compensation.  The government also sought compensation, but it was unable to prove that (1) Apotex would have entered the market at risk and applied to list its generic product, and (2) the government's loss was caused by the interlocutory injunction.   

3.  On Law360, Laurie Stempler and Dominic Persechini have published the first two of a three-part series on How Licensing Affects Patent Damages Apportionment (here and here).  The series proposes "best practices for considering the apportionment aspect of prior license agreements in a reasonable royalty analysis," with the first two installments discussing legal and economic considerations and providing advice relating to discovery and preparation of expert testimony.

4.  Also on Law360, Gregory Williams and Dominique Carroll published an article titled High Court TM Profit Ruling May Not Wreak Havoc in 3rd Circ.  The authors predict that the Supreme Court's recent decision in Romag (of which I have been highly critical, see here) "likely will not lead to a flood of meritless trademark infringement litigation or a significant increase in the frequency of the awarding of the infringers' profits to prevailing plaintiffs in trademark infringement litigation," at least not within the Third Circuit.

AIPPI: Quantification of Monetary Relief

The AIPPI World Congress will be meeting October 13-17 in Sydney.  (Webpage here.)  One session on Monday, October 16 will be on injunctions in pharmaceutical patent cases, and another on Tuesday, October 17 is titled "How Much for Your FRAND?"  Perhaps of most interest to readers of this blog, however, there will be a Study Committee Meeting on Saturday, October 14 titled "Quantification of Monetary Relief" and on Sunday, October 15 a "Plenary Session for proposed Resolution (4) - Quantification of monetary relief."  The description of the October 14 session is as follows:

In litigation concerning infringement of IP rights, monetary relief in the form of damages is commonly requested by the IP rights holder. It is generally accepted that this relief should at a minimum be adequate to compensate for the loss suffered by the rights holder and deter further infringement. In practice, few cases proceed beyond a determination of liability and courts are asked to determine the quantum of damages relatively infrequently.  However, if a case does proceed to that stage, it may in practice be difficult to obtain economic evidence regarding infringement, and to estimate the appropriate quantum of damages to be awarded within the factual matrix of the dispute before the court.  For example, where permanent price erosion has occurred, or other irreparable harm has occurred, the relevant quantum of damages can be very difficult to determine.  Predictable and logical rules for quantification are desirable as this allows the parties to have a reasonably clear idea of the likely quantum of damage, which may in turn encourage early settlement.  Otherwise, the amount of any damages award may vary significantly from one country to another, irrespective of the size of the market. Reports have been received from a number of National and Regional Groups on the issue of quantification, and the objective is to synthesise a number of common rules on the quantification of monetary relief that could be applied in a uniform way, promoting legal certainty. 

It will be interesting to see what resolution comes out of the meeting.  The individual country reports prepared in advance of the meeting--forty of them, ranging alphabetically from Argentina to Vietnam--are available here.  (I haven't read many of them yet myself.)  The Japan report is also available in the July 2017 issue of AIPPI-Journal of the Japanese Group of AIPPI (pp. 217-28), and the Germany report in the August-September 2017 issue of GRUR-Int. (pp. 736-43).

Two Recent Damages Decisions from Australia

These have both been covered by John Collins on the Kluwer Patent Blog (here and here), so I'll be fairly brief.  In the first decision, Bayer Aktiengesellschaft v. Generic Health Py Ltd [2017] FCA 250, the Federal (trial) Court awarded Bayer Aus$25 million in lost profits against a generic drug manufacturer that had introduced an infringing oral contraceptive product (marketed under the brand name "Isabelle").  Bayer started selling its patented contraceptive under the brand name "Yasmin" in 2002.  (In 2008, it began to reduce production of Yasmin in favor of a product marketed under the name "Yaz," which has a lower dosage of ethinylestradiol.)  In 2012, Generic Health began selling the bioequivalent generic version of "Yasmin," under the brand name "Isabelle."  Bayer sued for infringement, but it also applied for permission to amend its patent.  Later in 2012, the court allowed the amendments (which related to, among other things, dosage and composition).  In 2014, the court ordered Generic Health to cease selling "Isabelle," and a week later Bayer began selling its own generic version of Yasmin under the brand name "Petibelle."  Bayer sought damages for lost profits on lost sales of Yasmin due to (1) sales lost to Generic Health's Isabelle from 2012-14, and (2) Bayer's own sales of Petibelle, which sold for a lower price than Yasmin but which Bayer claimed it would not have introduced but for the introduction of Generic Health's product.  The defendant argued, first, that under section 115(1) of the Australian Patent Act Bayer couldn't recover damages for the period of time preceding its amendment of the patent, which states that "Where a complete specification is amended after becoming open to public inspection, damages shall not be awarded, and an order shall not be made for an account of profits, in respect of any infringement of the patent before the date of the decision or order allowing or directing the amendment: (a)  unless the court is satisfied that the specification without the amendment was framed in good faith and with reasonable skill and knowledge; or (b)  if the claim of the specification that was infringed is a claim mentioned under subsection 114(1)."  Upon reviewing the evidence, the court concluded that "Bayer has discharged its onus of proving that the unamended claims and specification as a whole were framed in good faith and reasonable skill and knowledge" (para. 186).  Second, Generic Health argued that Bayer hadn't lost one sale for every sale of Isabelle, but upon review of the evidence the court concluded that Bayer had proven that it had.  Third, Generic Health argued that Bayer couldn't recover the losses caused by its own introduction of a generic version of Yasmin, but the court disagreed, concluding that "but for the infringement, Bayer would not have introduced the lower priced Petibelle" (para. 310).  "Bayer's concern was that Isabelle had disrupted the market possibly introducing a price sensitivity that would not have existed but for Isabelle" (para. 300).  Finally, the court agreed with Bayer's expert on the issue of the deductible costs ("costings"), and held that Bayer was entitled to prejudgment interest based on its pre-, not post-, tax damages.

The other case is Coretell Pty Ltd v Australian Mud Company Pty Ltd [2017] FCAFC 54.  The principal remedies issue of interest is whether the owner of an "innovation patent"--Australia's version of a utility model--can recover damages for the period of time prior to the innovation patent being "certified."  As I mentioned in another recent post, in countries that offer utility model protection applications are examined for compliance with formalities, after which the utility model is granted; but if the applicant seeks to enforce the utility model in court, she will either first have to submit it to a full-blown substantive examination or at the very least its validity will be subject to third-party challenge.  For discussion in my book, see pp. 16-17, 172, 237-38, 301, 338-41, 363-64.  Anyway, under the Australian system (which was amended in 2001, prior to which Australian utility models were called "petty patents") the innovation patent is granted after a formal examination but is not enforceable unless and until it is "certified" by the Commissioner of Patents, following a substantive examination.  The ultimate holding of the court in Coretell (in another opinion by Justice Jagot) is that there is no remedy for the infringement of an innovation patent prior to grant (and subject to certification), even though, as in many countries, the owner of a standard patent can sometimes recover damages for unauthorized pre-grant use, as in the Canadian Dow v. Nova case (see here and here).

CRA Report to the European Commission on SEP Licensing

Last month the European Commission published a study, prepared by Pierre Régibeau, Raphaël De Coninck, and Hanz Zengler of Charles River Associates (CRA) titled Transparency, Predictability, and Efficiency of SSO-based Standardization and SEP Licensing:  A Report for the European Commission, available here.  (Hat tip to Jorge Contreras for calling this to my attention.)  From the Commission's news release on the report:

In December 2016, the European Commission published a study assessing issues and solutions related to standard essential patents (SEPs) and the standardisation process.

The analysis builds on a previous report on patents and standards (PDF, 580kB) prepared for the Commission and on the responses to a public consultation on patents and standards in 2015. The analysis also covers standardisation challenges in the Internet of Things industries.

The report presents the costs and benefits of practical solutions to facilitate an efficient standardisation process and SEP licensing. Concrete recommendations are offered on different issues such as FRAND terms, over-declaration, essentiality checks, conflict resolution process and increasing transparency.

This study is part of the Commission's work to build an intellectual property rights framework enabling easy and fair access to SEPs, as described in the 2016 Communication, ICT Standardisation Priorities for the Digital Single Market.

Its results will be used to assess the interplay between standardisation and patents in the EU Single Market.

The report makes for important reading for anyone interested in SEPs, SSOs, and FRAND issues.  It provides an extensive discussion of, among other things, the economics of holdup, holdout, and royalty caps.  It also makes a number of recommendations (mostly directed at SSOs themselves) that need to be taken seriously, including requiring SSO members to make ex ante (that is, pre-standard adoption) "negative disclosures" of patents they do not intend to license on FRAND terms; introducing the random testing of declared-essential patents, to get a sense of what percentage actually are essential; and the imposition of aggregate royalty caps.  I'm inclined to think the last two proposals in particular have merit, not least because they would help in generating information that could be used in cases in which courts or arbitration panels are called upon to award FRAND royalties (see my paper on Patent Damages Heuristics, pages 44-46, as well as the CRA report p.87.) I'm also inclined to agree with the authors' recommendation against mandating the use of the "smallest tradable component" (a/k/a "smallest salable patent practicing unit," or "SSPPU") as the royalty base for SEP licensing.  Perhaps most interesting is the recommendation that "One should also consider stipulating that – in the spirit of Huawei a licensee could not be found to be 'unwilling' if the licensor insists on including a confidentiality requirement in the proposed 'full' contract that is supposed to discharge him of its FRAND obligations. Such a policy would appear useful in order to enforce the 'ND' part of FRAND" (p.88).  I kind of like the idea, but I imagine it would meet with stiff resistance from some quarters.

Some New Books Relevant to Patent Enforcement

1.  Mark J. Davison, Ann L. Monotti, and Leanne Wiseman have published Australian Intellectual Property Law (Cambridge Univ. Press, 3d ed. 2016) (webpage here).  Pages 647-49 provide a brief overview of patent remedies, as well as a discussion of noninfringement declarations and actions for unjustified threats.  I'm particularly interested in the discussion of noninfringement declarations.  Amendments to the Australian statute that permits these actions became effective in April 2013 (as I noted would be the case in my book, at p.212 n.160, which came out just before the amendment entered into force).  My book missed a 2008 case, however, that the authors describe as having construed the predecessor statute narrowly.  They note that the current version of the law makes it easier to bring these actions and allows for applicants to seek a declaration of invalidity as well.

2.  Fabian Gäßler has published a book titled Enforcing and Trading Patents:  Evidence for Europe (Springer Gabler 2015), with a foreword by Dietmar Harhoff (webpage here).  The three principal chapters discuss forum shopping; Germany's bifurcated patent litigation system; and patent transfers.  I haven't reviewed this very carefully yet, but from a cursory look it appears to present an interesting mix of  theory and empirical analysis that may prove quite useful for researchers.

3.  Éditions Bruylant has published a book titled Antitrust Between EU Law and National Law:  XI Conference, which is a collection of papers presented at a 2014 conference held in Treviso, Italy (webpage here).  Three of the papers deal with SEPs and FRAND issues (pre-Huawei v. ZTE, however).  They are (1) Marina Tavassi, Standard, IP rights, and competition:  balance or conflict?; (2) Matthew Heim, The Process of Standardisation and Antitust Theory; and (3) Jean-Yves Art, Competition and Intellectual Property:  Friends or Foes--the case of standard essential patents.   This last paper discusses, among other things, Microsoft v. Motorola.

U.S. Federal Circuit Affirms Dismissal of False Patent Marking Claim for Lack of Competitive Injury

Until not too long ago, § 292 of the U.S. Patent Act read as follows:

(a) . . . Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented for the purpose of deceiving the public; or

Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public--

Shall be fined not more than $500 for every such offense.

(b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.

The provision was rarely used until the Federal Circuit, in a trilogy of cases decided in 2009-10, held that (1) the statute “requires the penalty to be imposed on a per article basis,” in other words, that “each article that is falsely marked with intent to deceive constitutes an offense under 35 U.S.C. § 292,” Forest Group v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009); (2) marking with an expired patent number could violate the statute, Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010); and anyone had standing to assert a false marking claim, Stauffer v. Brooks Bros., 619 F.3d 1321 (Fed. Cir. 2010).  In the wake of these cases, plaintiffs filed several hundred false marking claims over the course of a few months, but the trend came to an abrupt halt when Congress passed the America Invents Act in September 2011.  Section 16(b) of the AIA (1) amends § 292(a) to permit only the United States to file suit for the statutory fine; (2) amends § 292(b) to permit other persons to sue only if they have “suffered a competitive injury as a result of a violation of this section,” and to recover only “damages adequate to compensate for the injury”; and (3) adds a new provision, § 292(c), which states “The marking of a product, in a manner described in subsection (a), with matter relating to a patent that covered that product but has expired is not a violation of this section.”  These changes went into effective on September 16, 2011, and apply retroactively.  See AIA §§ 16(a)(2), 16(b)(4).  The Federal Circuit has held that the retroactivity provision is constitutional.  See Brooks v. Dunlop Mfg. Inc., 702 F.3d 624 (Fed. Cir. 2012).

This morning the Federal Circuit addressed the competitive injury requirement of amended § 292 in Sukumar v. Nautilus, Inc. (available here).  The plaintiff filed the action in 2010 and the district court in 2012 found that (p.3):

eight of the twenty-four patents marked on the 2006 Nitro Plus Biceps Curl, the 2007 Nitro V-Triceps Extension, the 2008 F2 Lat Pulldown, the 2008 Studio Pec Fly, the 2009 One Triceps Press, and the 2009 XPLoad Compound Row did not cover the machines. In addition, eight of the sixteen patents marked on the 2006 Nautilus Commercial Series E916 Elliptical, 2006 Nautilus Commercial Series EV 916 Elliptical, and 2006 StairMaster StepMill 7000PT were found to not cover the machines.

In 2013, however, the district court granted summary judgment for the defendant on the ground that evidence did not create a genuine issue of material fact on the issue of competitive injury.  In this morning's opinion, authored by Chief Judge Prost and joined by Judges Newman and Reyna, the Federal Circuit addresses the requirements for showing competitive injury under § 292.

First, the court holds that actual competition between the plaintiff and defendant is not always required.  Instead, based on its review of (1) the plain meaning of the term, (2) the legislative history, (3) the analogous “antitrust injury” doctrine, and (4) public policy, the court concludes that “a potential competitor may suffer competitive injury if it has attempted to enter the market. An attempt is made up of two components: (1) intent to enter the market with a reasonable possibility of success, and (2) an action to enter the market” (p.6).  (In a footnote at the end of the preceding sentence, the court also notes that in order to recover the plaintiff must show causation.)  Second, however, the court holds that

it is equally clear that the amended statute does not confer standing upon any entity that claims a subjective intent to compete. Rather, § 292 limits standing to entities that have “suffered a competitive injury as a result of a violation of [section 292(a)].” A potential competitor can only suffer a competitive injury if it engages in competition. Dreaming of an idea but never attempting to put it into practice is insufficient. Otherwise, market entry is too speculative and, thus, competition cannot be harmed by the false marking. Likewise, sometimes a falsely marked product is also properly marked with other patents. In that case, a potential competitor must show that the falsely marked patents deterred market entry, but that—for some reason—the properly marked patents did not deter market entry. Therefore, an injury is only a “competitive injury” if it results from competition, and a potential competitor is engaged in competition if it has attempted to enter the market, which includes intent to enter the market and action to enter the market. And, for the sake of completeness, an entity has standing under § 292(b) if it can demonstrate competitive injury that was caused by the alleged false marking (pp. 9-10).

Applying this test, and viewing the evidence in the light most favorable to the plaintiff, the court affirms the grant of summary judgment in favor of the defendant, stating that “even if [plaintiff] subjectively intended to enter the market for fitness machines, he took insufficient action to pursue that intent” (p.13).

For discussion of false marking laws in other countries, see Masako Kikuchi, The Thread of False Marketing , 5 J. Intell. Prop. L. & Prac. 803 (2010); Johnathon E. Liddicoat & Dianne Nicol, Re-evaluating False Patent Marking in Australia, 22 Journal of Law, Information and Science 128 (2013) (available here).   See also my book, pages 185, 309 n.94, 354 n.90, 370.

News from Australia on Preliminary Injunctions, False Patent Marking

1. Andrew Mullane, Craig Humphris and Todd Shand have published Interlocutory injunction applications in Australia in 10 Journal of Intellectual Property Law and Practice 170 (2015), available here.  Here is the abstract:

In Australia, patentees can apply to the court for an interlocutory injunction to prevent a competitor entering the market before the court finally determines whether the patentee's rights would be infringed. An interlocutory injunction will be awarded if (a) the patentee has a prima facie infringement case and (b) the balance of convenience favours the injunction. In practice, unless the infringement case is particularly weak, or the invalidity case almost irresistible, a prima facie case will invariably be established. As a consequence, most interlocutory injunction applications are decided on the balance of convenience.

Assessing the balance of convenience entails a complex task of weighing all the surrounding factors to determine whether granting the interlocutory injunction is in the interests of justice. While the relevant circumstances are specific to each case, a number of common factors arise in most interlocutory injunction applications, such as the extent and nature of the parties' respective potential loss, the patentee's prospects of establishing infringement and the respondent's awareness of the patentee's rights before it sought to enter the market. When contesting an interlocutory injunction application, a party's litigation strategy must pay close regard to these factors to maximise their prospects of success.

A review of recent patent interlocutory injunction applications shows that a high proportion of interlocutory injunctions are granted. This is primarily a function of the test applied by the court. It appears that a respondent must establish that there are exceptional circumstances in order to avoid the grant of an interlocutory injunction.

I found this article to be something of an eye-opener.  In my book (p.178), I cite an article by Charles Lawson, The interlocutory injunction dilemma in patent infringement and invalidity disputes, 21 AIPJ 73 (2010), which argues that Australian courts in recent years have become more lenient toward patent plaintiffs.  The above article would appear consistent with this thesis (though we are dealing with a relatively small sample).  According to Mullane et al., "The court will grant an interlocutory injunction against a respondent if it is satisfied that: (a) the patentee has a prima facie infringement case and (b) the balance of convenience lies with granting the injunction" (p.171).  Thus, although some decisions had required the plaintiff to show irreparable harm, "Samsung Electronics Co Ltd v Apple Inc clarified the test by confirming that the risk of the patentee suffering irreparable harm forms part of the balance of convenience enquiry, rather than being its own separate facet" (id.).  (I would note, however, that the November 30, 2011 Samsung case is an intermediate appellate decision, not a decision of the Australian High Court.)  The authors further assert that "unless the infringement case is particularly weak, or the invalidity case is almost irresistible, the court will simply acknowledge that both positions are arguable, and find that the patentee has established a prima facie case. It is consequently rare for the court to find that a patentee has not established a prima facie case, and most applications are decided on the balance of convenience" (id.).  Most importantly:

Generally speaking, patentees have enjoyed a high degree of success in seeking interlocutory injunctions. Annex 1 summarises the interlocutory injunction applications relating to patent rights which have been decided since 2009. In that time, 18 cases have come before the court, with 13 being granted and five being refused (where a first instance decision was appealed, the first instance decision has been excluded from this calculation).

2.  Johnathon E. Liddicoat and Dianne Nicol published a paper in 2013 that only recently has come to my attention, titled Re-evaluating False Patent Marking in Australia, 22 Journal of Law, Information and Science 128 (2013).  Here is a link to the paper, and here is the abstract:

False patent marking has come to prominence in intellectual property circles due to a recent boom and bust cycle of litigation in the US. This article examines this cycle and its ancient roots from an Australian perspective. In the absence of false patent marking data in Australia, this article uses the causative legal mechanisms of the US cycle to conduct a natural experiment on Australian false patent marking provisions. This natural experiment gives insight into the likely prevalence and potential effects of false patent marking in Australia.

Consideration is also given to the harms created by false patent marking. Previous analyses discussed in this article posit that false patent marking negatively affects competitive markets and consumers. However, it is argued that from a realistic commercialisation and consumer perspective, these harms may be exaggerated.

An analysis of the utility of Australian false patent marking laws is also undertaken, based on the evidence at hand and comparative legal reasoning. This analysis indicates that deficiencies in Australia’s false patent marking provisions do exist. A call is made for further empirical research into the incidence and effects of false patent marking in Australia; it is possible that costs created by false patent marking are not being recognised. However, since no empirical or recent anecdotal data indicates false patent marking presents a serious issue, and Australian provisions comply with basal aspects of what has been described as an ‘optimal’ enforcement system, no major reforms are suggested at this stage. Minor amendments are recommended to simplify the enforcement of the current provisions and improve trust in the patent system. It is further recommended that a watching brief is kept on this area of patent practice.

Canadian Court Rejects the Principle that Non-Infringing Alternatives Limit the Recovery of Lost Profits

One of the recurring issues in patent enforcement is the following.  Suppose that P makes and sells products embodying its patented invention X.  D makes and sells products that infringe the patent.  P sues D and requests a judgment for lost profits on the sales it lost to D.  D responds with evidence that there is a nonpatented noninfringing alternative to X--call it Y--that D could have made and sold instead of X, and that consumers would have considered Y to be a perfect substitute for X.  Is X entitled to lost profits nonetheless, on the theory that regardless of what would have happened in the "but for" world--the world in which D used the noninfringing alternative--in the real world X lost sales, and hence profits, as a result of having to compete with X's infringing products?  Or should X recover no lost profits because in that but-for world it would have lost just as many sales and just as much profit as it did in the real world?  (To think of it another way, if the economic value of a technology is its value in comparison with alternatives, and if Y is a perfect substitute for X, then X has no economic value over the nonpatented alternative, and P should recover nothing.)  As I explain in my book, different patent systems answer these questions in different ways.  The general rule in the U.S., dating all the way back to the nineteenth century, is that under the circumstances described above the patent owner should recover no lost profits (see pp. 111-12).  On the other hand, a nineteenth century decision from the U.K., United Horse-Shoe & Nail Co. v. John Stewart & Co. (1888) L.R. 13 App. Case 401 (H.L.), takes precisely the opposite view, and courts within the U.K.--as well as some in Canada and Australia--have followed United Horse Shoe ever since (see pp. 187-91).  Also lining up with the U.K. on this issue are, possibly, Germany and Japan (see pp. 263-64, 314), while the French cases appear more consistent with the U.S. rule (see p. 265).  And of course there can be numerous variations of the above hypothetical:  for example, maybe Y is an imperfect substitute that would have appealed to some but not all of D's clientele; maybe Y itself was a patented alternative, which complicates matters; maybe D would have sold just as many products using Y but would have done so at higher cost, in which case even under the U.S./French rule it seems that P should be entitled to a nonnegligible reasonable royalty; and so on.  My own view, as expressed in my book, on this blog, and elsewhere, is that from an economic standpoint the rule followed in the U.S. and France is correct, and that United Horse-Shoe was wrongly decided.

Anyway, Professor Norman Siebrasse recently called my attention to a Canadian trial court decision, Eli Lilly & Co. v. Apotex Inc., 2014 FC 1254 (Jan. 23, 2015), that lines up with United Horse-Shoe  on this issue.  (It doesn't appear to be up yet on the Federal Court's website, but here is a link to my copy of the decision.)  Professor Siebrasse will be posting a more detailed discussion of the case on his Sufficient Description Blog in the near future--a different write-up by Jennifer Wilkie and Adam Heckman has already appeared on the Gowlings firm's website here--and I needn't repeat here the arguments I've made in the past in support of my view.  I would note two things, however.  First, Apotex cited one of my blog posts in support of its position that the court should take noninfringing alternatives into account, and the court in turn cited that post in paragraphs 25 and 54-56.  So while the court rejected my view, this marks (to my knowledge) the first time the blog has been cited in a judicial decision.  (Not sure if I should be happy or sad, though!)  Second, if I'm reading the opinion correctly, after rejecting the argument that noninfringing alternatives which the defendant didn't but could have used are relevant for purposes of calculating lost profits, the court goes on to award Lilly lost profits covering a subsequent period of time in which Apotex was using a purported noninfringing alternative, on the ground that but for the initial infringement Apotex wouldn't have been in the market at that point at all.  This seems to me to be a sort of springboard damages theory, but (with respect) I'm inclined to think it only compounds the error of ignoring noninfringing alternatives to award lost profits during a period of time in which the defendant was in reality--not just hypothetically--using the noninfringing alternative.

I wonder if an appeal will be taken, and if so what the Court of Appeals' take on this issue will be?     

Declaratory Judgments in Germany; More on Hot-Tubbing in the U.K.

1.  Tobias Wuttke recently published a post on the EPLaw Patent Blog, and Heike Alps a post on the Kluwer Patent Blog, discussing a March 20, 2014 Decision of the Oberlandesgericht Düsseldorf (Case No. I-2 W 8/14) (available here).  The decision discusses the circumstances under which a person may bring an action for a declaratory judgment of noninfringement under German law.  By way of introduction, I briefly discuss the German law of declaratory judgments of noninfringement at p.281 of my book (citations omitted):

German law . . . does not necessarily require the potential declaratory judgment plaintiff to notify the patentee in advance, though it does require the plaintiff to demonstrate some sort of concrete interest (Feststellungsinteresse), such as a warning letter from the patentee. Actions for declaratory judgments nevertheless are rare in Germany, amounting (according to one estimate) to less than 1 percent of all patent litigation. Moreover, if the patentee thereafter commences an infringement proceeding, the declaratory judgment action normally will be dismissed.

The March 20, 2014 Decision involved a case in which the owner of a European Patent filed a claim for infringement of the Turkish portion of the patent in Turkey.  The plaintiff in that case had neither commenced nor explicitly threatened an action in Germany.  In response to a letter from the infringement defendant, the patent owner had merely stated that at that point in time (July 26, 2012) it could see no basis for opining about a possible future action or for investing time and money in retaining a German attorney to examine and evaluate an abstract question of infringement (Decision para. 1(b)).  Although an implicit or tacit allegation of infringement can suffice--and the two posts explain in detail the conditions the court believes would and would not be sufficient to establish an implicit allegation enabling the potential defendant to assert a claim for a declaratory judgment--the facts here weren't adequate to make out such an allegation on the part of the patent owner.

2.  I've previously mentioned the "hot tubbing" procedure that courts in the U.K. and Australia sometimes use for the presentation of expert testimony on damages or other issues (see here and here).  Two more articles on the subject that have come to my attention are Michael Dempsey, Two timing, Solicitors Journal, Feb. 28, 2011, and Edward Powell, In the hot seat, Solicitors Journal, Feb. 28, 2012.  According to Dempsey, "[i]f you want to see [hot tubbing] in practice the place to be is the Technology and Construction Court (CC) where a recently revised guide embraced hot tubbing."  Here is a link to the current (April 30, 2014) Guide, which at p.54 (section 13.8.2) states 

there are a number of possible ways of presenting evidence including . . . [f]or the experts for all parties to be called to give concurrent evidence, colloquially referred to as “hot-tubbing”. When this method is adopted there is generally a need for experts to be cross-examined on general matters and key issues before they are invited to give evidence concurrently on particular issues. Procedures vary but, for instance, a party may ask its expert to explain his or her view on an issue, then ask the other party’s expert for his or her view on that issue and then return to that party’s expert for a comment on that view. Alternatively, or in addition, questions may be asked by the judge or the experts themselves may each ask the other questions. The process is often most useful where there are a large number of items to be dealt with and the procedure allows the court to have the evidence on each item dealt with on the same occasion rather than having the evidence divided with the inability to have each expert’s views expressed clearly. Frequently, it allows the extent of agreement and reason for disagreement to be seen more clearly. The giving of concurrent evidence may be consented to by the parties and the judge will consider whether, in the absence of consent, any modification is required to the procedure for giving concurrent evidence set out in the CPR (at PD35, paragraph 11).

FRAND Developments, Part 2

Here are some more recent papers on FRAND:

1.  By way of the Antitrust & Competition Policy Blog, I learned last week of a 298-page report published in May 2014 by George Addy and Erika Douglas of the Canadian firm Davies Ward Phillips & Vineberg titled Trolls, Hopping, Ambush and Hold-Up:  Emerging International Approaches to the Intersection of Competition and Patent Law Regimes.  Here is the abstract, from the firm's website:

Worldwide, regulators and courts are increasingly engaged in the complex legal and policy issues at the intersection of competition and patent regimes. Trolls, Hopping, Ambush and Hold-up: Emerging International Approaches to the Intersection of Competition and Patent Law surveys the state of play in major jurisdictions on four rapidly evolving issues at the forefront of this global debate: reverse payment settlements, standard-setting/FRAND licensing commitments, patent assertion entities and product hopping. The report, commissioned by Industry Canada, provides an in-depth survey of legal and policy developments in Canada, the U.S., Europe, Australia and the U.K., and considers the potential implications for Canadian competition law and patent rights.

2.  The Antitrust & Competition Policy Blog also announced the publication of GCR's European Antitrust Review 2015.  At least a couple of the papers discuss FRAND/SEP issues among other matters, including this one by Elena Cortés, Adam Dawson & Catriona Hatton (IP and Antitrust); this one by Laurent Godfroid and Stéphane Hautbourg (Telecoms and Media); and this one by Nadine Herrmann (Germany:  IP and Antitrust).

3.  Joanna Tsai and Federal Trade Commissioner Joshua D. Wright have posted a paper on ssrn titled Standard Setting, Intellectual Property Rights, and the Role of Antitrust in Regulating Incomplete Contracts.  Here is the paper, and here is the abstract:

A large and growing number of regulators and academics, while recognizing the benefits of standardization, view skeptically the role standard setting organizations (SSOs) play in facilitating standardization and commercialization of intellectual property rights (IPRs). Competition agencies and commentators suggest specific changes to current SSO IPR policies to reduce incompleteness and favor an expanded role for antitrust law in deterring patent holdup. These criticisms and policy proposals are based upon the premise that the incompleteness of SSO contracts is inefficient and the result of market failure rather than an efficient outcome reflecting the costs and benefits of adding greater specificity to SSO contracts and emerging from a competitive contracting environment. We explore conceptually and empirically that presumption. We also document and analyze changes to eleven SSO IPR policies over time. We find that SSOs and their IPR policies appear to be responsive to changes in perceived patent holdup risks and other factors. We find the SSOs’ responses to these changes are varied across SSOs, and that contractual incompleteness and ambiguity for certain terms persist both across SSOs and over time, despite many revisions and improvements to IPR policies. We interpret this evidence as consistent with a competitive contracting process. We conclude by exploring the implications of these findings for identifying the appropriate role of antitrust law in governing ex post opportunism in the SSO setting.

4.  Madhur Singh published an article titled Indian Draft Policy to Set Time Limit on Essential Telecom IP Licensing Talks in the August 18 Bloomberg BNA World Intellectual Property Report (link here, behind a paywall).  According to the article, on July 17 the Telecommunications Standards Development Society, India (TSDSI), "a public-private organization that establishes and implements standards for the telcommunications industry in India," discussed a draft policy under which negotiations relating to the FRAND licensing of SEPs should take place within a "'reasonable' time limit" of 6-12 months, during which period "none of the parties involved is to resort to any legal recourse such as injunctions."  The draft  policy is not yet available to the public.

5.  Tyrone Berger has posted the following abstract on ssrn of a paper to be published in the Australian Intellectual Property Journal: 

This paper investigates some key problems surrounding patented standards and technological standardisation. It surveys two emerging conflicts, namely patent hold-up and patent ambush, in light of potential anticompetitive conduct by industry participants in the development of a technical standard. A paired relationship is fostered when proprietary rights, such as patents, are adopted in a standard. For example, when new knowledge is generated through research and development, it is captured and widely distributed to the market, via standards, ensuring equal access to the new technology. However, a key concern is that this consensus-based practice may provide companies with a degree of market power, which if left unchecked, can result in higher licensing fees and a loss in consumer welfare. At the same time, Standard-Setting Organisations seek to reconcile their policy objectives of knowledge diffusion and technical performance, with the risks of patent hold-up and excessive royalties. Given the imprecise nature of these choices, this author argues that it is more accurate to characterise this situation as a ‘search for co-existence.’

Expert Testimony and Patent Damages: Could "Hot-Tubbing" Be the Answer?

As most readers of this blog are probably aware by now, in April the U.S. Court of Appeals for the Federal Circuit reversed several of Judge Richard Posner's evidentiary rulings in Apple v. Motorola.  As I noted in the post I published shortly after the appellate court's decision came out, I wasn't all that surprised that the Federal Circuit took issue with some of Judge Posner's analysis, such as his exclusion of the testimony of one of Apple's damages experts on the ground that the expert had obtained information about the identity of a noninfringing alternative from another person associated with Apple.  To be sure, in an ideal world, a person trying to determine the objective value of an asset might be expected to seek information from a disinterested source; and Professor David McGowan, for one, has published a vigorous defense of Judge Posner's analysis on the Patently-O Blog.  Nevertheless, Judge Posner's attempt to turn this ideal into a rule of law struck may people as going beyond what the Federal Rules of Evidence at present contemplate; and, as stated, I wasn't surprised by this particular result of the appeal.  (For further analysis of the Federal Circuit opinion, see also Professor Michael Carrier's short article in the May 30, 2014 issue of Bloomberg BNA's Patent, Trademark & Copyright Law Daily, titled Apple v. Motorola:  Five Lessons for Judges in Admitting Expert Testimony, available here behind a paywall.)

The problem of having nonspecialist judges and, even more so, juries resolve technologically or economically complex factual issues has, of course, been with us for a very long time.  Judge Learned Hand, for example, lamented this phenomenon in his 1911 opinion in Parke-Davis & Co. v. H.K. Mulford & Co.,  Nowadays, although the parties make extensive use of their own expert witnesses, U.S. courts also may appoint their own experts under Federal Rule of Evidence 706.  Nevertheless, the procedure is infrequently used, though Judge Posner, for one, has on occasion made use of it.  J. Gregory Sidak, who has served as a court-appointed expert for Judge Posner, has written on the topic here; and the use of court-appointed experts is observed more frequently in some other countries, as I discuss in my book pp.228 n.37, 233 n.61, 297, 312.

Anyway, in this vein, a reader asked me a few weeks ago if I knew anything about an Australian procedure known as "hot-tubbing," and sent along a link to an article by Antonia Crooke and Louise Mallon titled Hot -tub:  Lessons from Australia.  The article describes the technique as developed in Australia, and its recent introduction into U.K. procedure:

Hot-tubbing is intended to focus on the areas of disagreement between the experts, as identified in the experts' joint statement. Where it is ordered, the procedure envisaged is as follows. Experts prepare and exchange their written reports in the normal way and meet with their opposite number to discuss their reports and prepare the joint statement, which identifies where they agree and disagree. The areas of disagreement identified in the joint statement are then used to form the basis of the agenda for the "hot-tub", which is prepared and agreed by the parties. This is provided to the judge in advance of the trial. The experts are then sworn in together at the trial and the judge initiates the discussion by asking each expert for their views. There will also be an opportunity for the experts to present and answer questions of each other. Counsel may then ask questions of each of the experts. At the end, the judge will summarise the experts' different positions on the issues and ask them to confirm or correct that summary. . . .

When concurrent evidence was first introduced as the norm in New South Wales there was some scepticism within the legal profession as to how successful it would be. However, while there are pros and cons to having experts give their evidence concurrently, the general view now is that it is a superior technique for getting to the heart of the issues in dispute and ensuring that each expert has an equal opportunity to give their evidence on those issues.

With the assistance of the University of Minnesota's Legal Research Center I have begun gathering together additional materials on the subject.  Pending completion of my review of these materials, I'll just list them here, and would appreciate hearing from readers who are aware of other materials--or who have experience with, or opinions on, the use of the procedure, particularly as it relates to patent matters (especially patent damages, to the extent it has been or could be used in that context).  I gather from some of the materials below that the procedure also has been used in Canada--and at least on a few occasions, in the U.S., which surprised me.  

Ken Anderson & Tracy Ayoderle, Note, Hot-Tubbing in Canadian Patent Litigation:  A Preliminary Assessment, 24 Intellectual Property Journal 203 (2012).

Derek Baigent, Hot tubbing expert witnesses--lessons from Australia pre-Jackson, LexisNexis, Mar. 27, 2013. 

Paul Barry, Time to take the plunge?, www.journalonline.co.uk, Jan. 2011.

Sean Brannigan, 'Hot tubbing'--practical considerations, 5 Construction Law International 18 (2010). 

Martin Burns, In it together, www.newlawjournal.co.uk, Apr. 4, 2014.

Gary Edmond, Merton and the Hot Tub:  Scientific Conventions and Expert Evidence in Australian Civil Procedure, 72 Law & Contemporary Problems 159 (2009).

John Emmerig et al., Room in American Courts for an Australian Hot Tub?, JonesDay, Apr. 2013.

Graham Hain, Jackson & "hot tubbing", www.newlawjournal.co.uk, Feb. 26, 2010.

Dame Hazel Genn, Getting to the truth:  experts and judges in the "hot tub", 32 Civil Justice Quarterly 275 (2013).

James Green, Apotex Inc v. AstraZeneca inc.:  IP Experts Take the Plunge into the Hot Tub, 2012 European Intellectual Property Law Journal 874 (2012).

Steven Rares, Using the "Hot Tub"--How Concurrent Expert Evidence Aiuds Understanding Issues, available at http://www.fedcourt.gov.au/__data/assets/rtf_file/0004/21469/Rares-J-20100823.rtf.

Elizabeth Reifert, Comment, Getting into the Hot Tub:  How the United States Could Benefit from Australia's Concept of "Hot Tubbing" Expert Witnesses, 89 U. Detroit Mercy L. Rev. 103 (2011).

Mark Solon, Experts in Hot Water:  Is expert witness hot-tubbing the future?, New Law Journal 874, June 29, 2012. 

Mark Solon, In hot water?, newlawjournal.co.uk, Jan. 25, 2013.

Mark Summerfield, Federal Court Conducts Markman-Style Hearing in Hot Tub:  Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [2012] FCA 467 (9 May 2012), Patentology Blog, May 12, 2012.

Lisa C. Wood,  Experts Only:  Out of the Hot Tub and into the Joint Conference, Antitrust, Fall 2007, at 89.

Lisa C. Wood, Experts in the Tub, Antitrust, Summer 2007, at 95.