Criminal Contempt in Munich

Florian Mueller has published a post on ip fray concerning a December 10 decision of the Munich I Regional Court, ordering the general manager of a patent infringement defendant to be imprisoned for one month, following the defendant’s alleged failure to comply with an Auskunft (essentially, an order for the provision of information that will be relevant to assessing damages) and a previously-imposed contempt fine of €15,000.  According to ip fray, the order likely will be stayed pending appeal (and, to be sure, may induce compliance with the Auskunft in the interim). 

To my knowledge, resort to contempt proceedings is not all that common either in Germany or the U.S.—and this use of criminal contempt is, according to ip fray, unprecedented in Germany (and would be unavailable in the UPC).  (For a good discussion of contempt proceedings in U.S. patent cases, see my former student Nina Elder’s article The Contours of Contempt in Patent Law After TiVo, Inc. v. EchoStar Corp.: An Empirical Study, 25 Minnesota Journal of Law, Science & Technology 145 (2023), previously noted on this blog here.  She describes criminal contempt in U.S. patent cases as "nearly non-existent," id. at 147 n.18 (citing John M. Golden, Injunctions as More (or Less) than “Off Switches”: Patent-Infringement Injunctions’ Scope, 90 Tex. L. Rev. 1399, 1409–10 (2012).)  On a related note, which I discuss in chapter 6 of my forthcoming book Remedies in Intellectual Property Law, the U.S. does not impose criminal sanctions for patent infringement itself—although many other countries do, at least in principle.  (Germany is one, though in practice German prosecutors rarely if ever file charges for patent infringement.)  The criminal prosecution of IP infringement may be most common in certain Asian jurisdictions, as discussed by a group of authors (Masabumi Suzuki, Su-Hua Lee, Byungil Kim, Xiuqin Lin, Prashant Reddy, Heng Gee Lim, Jyh-An Lee, and Kung-Chung Liu) in a chapter titled Civil Follow Criminal or Criminal Follow Civil Procedure as Models to Deal with IP Infringement: Asian vis-à-vis Western Approaches, in Kreation Innovation Märkte - Creation Innovation Markets:  Festschrift Reto M. Hilty 663 (Florent Thouvenin, Alexander Peukert, Thomas Jaeger & Christophe Geiger eds., Springer 2024), previously noted on this blog here—but the only jurisdiction discussed in that chapter that appears to make extensive use of criminal prosecution for patent infringement appears to be Japan.  (The TRIPS Agreement, for its part, only requires criminal sanctions for “wilful trademark counterfeiting or copyright piracy on a commercial scale,” and in most places I am aware of criminal sanctions are generally reserved for copyright and trademark infringement, and for trade secret misappropriation.)  Among the reasons for some Asian jurisdictions’ more extensive use of criminal law are, according to Suzuki et al., the perceived need for additional deterrence, in view of the practical difficulty of obtaining preliminary injunctions, enforcing permanent injunctions, and/or obtaining fully compensatory damages awards; and, relatedly, the ability of civil litigants to file criminal complaints as a means for obtaining discovery.  (For other useful sources of information on criminal IP law, see, e.g., Eldar Haber,  Criminal Copyright (Cambridge Univ. Press 2018), and other sources cited in chapter 6 of my book.)

Anyway, the German court’s resort to criminal contempt certainly is notable—and, somewhat paradoxically perhaps, contrasts with Japan, where--despite the country's heavier reliance on criminal law generally--Professor Suzuki writes that courts do not order criminal contempt for failure to comply with injunctions.  As for Germany, however, I wonder if we will see more of this, as a deterrent to perceived non-compliance with court orders?

Suzuki et al. on Criminal Penalties for IP Infringement in Asia

            For the most part, criminal law does not play a large role in the enforcement of patent rights, although TRIPS article 61 does require that member states make available criminal penalties for “wilful trademark counterfeiting or copyright piracy on a commercial scale”; some free trade agreements extend the obligation to criminalize IP infringement a bit further (e.g., to anti-circumvention measures); and in some places, including the U.S., criminal penalties sometimes are imposed for trade secret misappropriation.  Some countries, moreover, make all or most types of IP infringement at least potentially subject to criminal penalties, although the criminal prosecution of patent infringement isn’t very common (though it does happen from time to time).

Anyway, I’m finishing up work on my book Remedies in Intellectual Property Law, and the last chapter deals with, among other things, criminal enforcement, so I though I would call readers’ attention to a paper that addresses the criminal enforcement of IP rights in the leading Asian jurisdictions.  The authors are Masabumi Suzuki, Su-Hua Lee, Byungil Kim, Xiuqin Lin, Prashant Reddy, Heng Gee Lim, Jyh-An Lee, and Kung-Chung Liu, and the paper is  titled Civil Follow Criminal or Criminal Follow Civil Procedure as Models to Deal with IP Infringement: Asian vis-à-vis Western Approaches, in Kreation Innovation Märkte - Creation Innovation Markets:  Festschrift Reto M. Hilty 663 (Florent Thouvenin, Alexander Peukert, Thomas Jaeger & Christophe Geiger eds., Springer 2024).  Here is a link to the ssrn version, and here is the abstract:

Art. 61 of the TRIPS Agreement of the World Trade Organization (WTO) requires members to provide criminal punishment at least for willful trademark counterfeiting and copyright piracy on a commercial scale. Sweeping criminalization of IP infringement can be observed in the West typified by Germany and many major Asian jurisdictions. However, in practice, there has been relatively rare criminal prosecution of IP infringement in the West, whereas criminal prosecution of IP infringement, excluding patent infringement, is not uncommon or even common in the seven selected Asian jurisdictions. Why is there such a difference? and what effects does it have on the overall development of IP laws in those Asian jurisdictions? These two questions among others are what this article strives to answer. It will first survey the Asian IP landscape, in the order of the introduction of IP laws into the civil law jurisdictions (Japan, Taiwan, Korea, and China), and into common law jurisdictions (India, Malaysia, and Hong Kong) respectively (2). It will then examine German experiences (3), followed by comparative study and policy analysis (4), and end with some suggestions (5).

Highly recommended!

 

  

From Around the Blogs

1. On Law360, David Kappos and Jonathan Barnett published an article titled Enhanced Damages Necessary in No-Injunction Patent System.  The authors argue that Congress amend the Patent Act to provide that, in any case in which the patent owner prevails but the court denies an injunction, the "court must grant a multiplier," up to treble damages.  The article appears to be a shorter version of a paper they posted on ssrn last year, which I blogged about at some length here.  

2.  Enrico Bonadio published a post on the Kluwer Patent Blog titled How to Avoid Jurisdictional Clashes on Standard Essential Patents—A Short Summary of Some Proposals.  The post discusses various proposals—including the establishment of an international tribunal, an international convention setting forth best practices, or the use of SSO choice-of-law rules—for adjudicating global FRAND disputes.  Nice overview of some competing ideas. 

3. Also on the Kluwer Patent Blog, Rik Lambers published a post on the titled πάντα ῥεῖ.  (The title comes from Heraclitus, and means “Everything flows.”).  The post discusses a recent decision of the Court of Appeals of the Hague, Novartis v. Pharmathen, mostly affirming a lower court decision granting a cross-border injunction.  The court held that the defendant, Pharmathen Global, as a controlling parent company, was a direct infringer of the patent in suit and that the Dutch court could enjoin it from infringing throughout the E.U., including in Greece (where an earlier motion for a preliminary injunction, directed against the Greek subsidiary, had been denied).  The court could not enjoin the Greek subsidiary or direct the parent to instruct the sub not to infringe, but the author describes this as a Pyrrhic victory for the defendants.  

Also of relevance to cross-border injunctions are several posts discussing a 2022 decision by France’s Cour de cassation, Hutchinson v. Tyron, finding that article 8.1 of the Brussels Regulation (Recast) and article 14 of the French Civil Code authorized a French court to assert jurisdiction over parties who were infringing the national portions of a European Patent in France, Germany, and the U.K.  For discussion, see posts by Matthieu Dhenne and by the HoygRokh Moneiger firm, and an article by Anne-Catherine Chiariny titled Contentieux transfrontière en contrefaçon: competence extraterritoriale du juge français!, in the December 2022 issue of Propriété Industrielle,

4. Aparajita Lath published a post on SpicyIP titled Bill to decriminalise IP offences misses the mark and dilutes significant provisions.  The post criticizes, among other things, a bill that would remove criminal penalties for false statements to the Copyright Office (while leaving intact a provision that permits copyright infringement generally to be prosecuted as a criminal offense, without distinguishing ordinary infringement from piracy; would reduce the penalties for failure to work one's patent; and that would increase the penalties for false patent marking tenfold (leading, the author states, to “disproportionately large penalties”).  Thankfully, the America Invents Act put an end to the U.S. experiment (from 2009-11) with disproportionately large penalties for false patent marking, as I have previously noted here. 

Also on SpicyIP is a post by Prahash Gour titled Delhi High Court Imposes Costs worth INR 2 Cr. for Disobeying Interim Injunction. 2 Crore is equal to about US$250,000.  The court found the defendant in contempt of an injunction ordering it not to sell the accused pharmaceutical product.  The author states, however, that "the court has not elaborated on the reasoning as to how it fixed INR 2 Crore as the costs in the present matter, which could have been a good guiding principle for the courts in the future.

5. Florian Mueller published a post on FOSS Patents titled Burgeoning IP and antitrust jurisdiction: Brazil's Superior Court of Justice allowed Ericsson to enforce preliminary injunction against Apple over FRAND-pledged standard-essential patent.  In addition to discussing the Ericsson/Apple case referenced in the title, the post also mentions some other patent and tech matters in Brazil.  

6. Giulia Pasqualetto published a post on the EPLaw Blog titled IT – Court of Appeal decision touches on filing new prior art documents / generic decision for damage compensation.  The post discusses a decision of the Court of Appeal of Milan, in which the author states the court held that the court of first instance should have granted the plaintiff's request for an order that the defendant provide information relevant to the plaintiff's damages.  In a case like this, where "the court lack[s] the evidence necessary to quantify the damage,"  it is appropriate to issue "a generic decision for damage compensation" accompanied by an order "that the proceedings continue to gather the evidence necessary to quantify the damage suffered" by th plaintiff.    

Two Articles of Interest in China Patents & Trademarks No. 1, 2022

China Patents and Trademarks magazine has a couple of articles that may be of interest to readers of this blog.  I hope they may be available on the magazine's website at some point.

The first is by Zhang Weijun, Zhuang Yuqing, and Jia Shiqi, and is titled On the System Arrangement Regarding IP Infringement Penalties-Comments on Application of Punitive Damages (English-language translation at pp. 11-20).  This is an interesting paper, and it goes beyond discussing punitive damages as such by also addressing topics such as whether any damages liability is desirable in cases of innocent infringement, or in cases in which a defendant makes an infringing product but does not sell it (the latter being an issue I too discuss in a forthcoming paper); royalty multipliers (permitted under Chinese IP law and in certain bodies of IP law elsewhere); statutory damages (which are available in China for patent infringement); awards of the infringer's profits; injunctions as providing greater deterrence than damages; and criminal penalties and fines.  As the authors rightly note, "Although each country may not necessarily provide punitive damages due to its jurisprudential logic and legal traditions, different punitive factors undoubtedly have 'hidden' in various legal systems."  The article concludes by discussing punitive damages for IP infringement under Chinese law, which now permits them in all types of IP cases (from one to five times actual damages).  They note the practical difficulties that arise when evidence on actual damages is not readily available, and note that interpretations of the new Patent Act appear to permit courts to use multiplied royalties as the base for punitive damages.  This practice seems like a bit of bootstrapping--or, as the authors put it, "superimposed" punishment.  They disapprove of it.      

The second is by Andy Sun and is titled Can Suppression of Litigation Rights Be a Good Way to Ban Litigation? (English-language translation at pp. 79-90).  The article briefly discusses a 2018 case in which a Chinese court found two defendants liable for "patent extortion."  The case achieved some notoriety at the time, including an article on Patently-O by Yang Yu and Jorge Contreras.  Most of the article, however, focuses on anti- and anti-antisuit injunctions, including an extended discussion of the Chinese cases from 2020 and 2021 and the Munich court's practice, under which seeking (or even not adequately disclaiming an intent to seek) an ASI in another country may render an implementer an unwilling licensee.  I agree with the author that, in general, courts should enter antisuit injunctions only in rare circumstances (he favorably cites Judge Robart's decision to do so in Microsoft v. Motorola as one such circumstance), though I would take issue with a few points made in the article (whether it's a matter of the original or the translation, I don't know).  First, he states that the U.K. Supreme Court in Unwired Planet held that it could grant an antisuit injunction for the patent in that case, but I don't think it did (as I recall, that was an issue that came up in the trial court in one of the joined cases, though at the end of the day no such injunction was entered).  Second, the author discusses three proposals found in the E.U.'s  Group of Experts on Licensing and Valuation of Standard Essential Patents ‘SEPs Expert Group’ - full contribution., specifically proposals 62, 63, and 64 (which would permit, inter alia, enhanced royalties to be assessed against an unwilling licensee and discounted royalties where it is the licensor who is at fault).  He states that the group "recommends" these three proposals, but under the group's voting procedure I'm not sure any of the proposals were, literally, recommended (see p.18 of the report for discussion), though each of these three did earn over three out of five stars.  Third, the author states that in Optis Wireless Technology, LLC v. Apple Inc., Case No. 2:19-cv-00066-JRG (E.D. Texas 2019), the court entered a "holding that the litigation [between these parties] in the United Kingdom was seriously defective and the judgment made should not be completely accepted."  I'm not sure what he is referring to, in particular since the U.K. litigation he references is from 2021.  Perhaps I am misunderstanding something.  

From Around the Blogs: News on Remedies from Around the World

With the ongoing catastrophes in Afghanistan, Haiti and, with COVID resurging, other places around the world, blogging about patent remedies right now seems a bit trivial.  Nevertheless, here's what I've got this morning.

1.  The National Bureau of Asian Research published Mark Cohen's article titled The Criminal Bias in U.S. Intellectual Property Diplomacy, which Professor Cohen also discusses on his China IPR blog here.  Here is the abstract:

Mark Cohen argues that a lack of balance created by an excessive focus in trade diplomacy on criminal remedies can manifest itself as a “bias” that disadvantages the leading role played by civil remedies in actual enforcement. He concludes that this appears to be the current situation in the United States with respect to the protection of intellectual property (IP) and warns of the risks of unbalanced trade diplomacy.

Although the thesis is not limited to U.S.-China relations, the article principally focuses on the concern that, in China in particular, "[p]ublicly oriented patent enforcement"--such as China's "publicly enforced administrative patent cases, which now outnumber civil cases"--"risks overwhelming the private, more market-oriented civil system and could be used disproportionately against foreigners."

2. Norman Siebrasse published a short post on Sufficient Description discussing a Canadian decision on compound interest, titled Presumption that Marginal Rate of Return Equals Average Rate of Return.  In the decision at issue, the court employed such a presumption, which Professor Siebrasse notes is incorrect as a matter of financial logic for reasons he has previously addressed here.

3.  Germany either has or soon will officially enact the amendments to the Patent Act that the German parliament approved a few weeks ago.  The amendment codifies judicial discretion to stay injunctions in some instances.  on FOSS Patents, Florian Mueller argues that it won't accomplish anything other than increased costs.  For a more favorable interpretation, see Léon Dijkman's post on IPKat, Amendment of German patent law: small step or giant leap for proportionality? 

4. Also on IPKat, there is a coauthored post titled Keeping Up with Belgian Patent Litigation: Year Case Law Review 2020.  Of relevance to patent remedies, in one of the cases discussed the Brussels Court of Appeal is said to have concluded, in effect, that until the Belgian legislature amends the law regarding reimbursement of attorneys' fees, prevailing parties in patent cases can recover no more than the statutory maximum of €39,000.  As the authors note, this appears to be in default of Belgium's obligations under E.U. law as decided in the CJEU's United Video Properties decision (previously discussed on this blog here).     

5. On the EPLaw Blog, Emma Irwin and Katie Cambrook published a post titled UK-Dr Reddy's Laboratories and Others v. Warner-Lambert, discussing a recent decision of the Patents Court setting out the terms of the relevant counterfactuals to use in an upcoming trial for damages against drug companies for patent assertion resulting in unwarranted exclusion from the market for pregalabin drugs.  I may have more to say about this one, as it relates to one of my ongoing projects (on wrongful patent assertion) in an upcoming post.   

6. On Law360, Dave Simpson has an article on a Texas jury's award of $300 million in favor of Optis against Apple in a damages retrial Judge Gilstrap had ordered earlier this year after expressing "serious doubs" about the $506 million verdict originally entered in this 4G SEP case.

7. On SpicyIP, Nikhil Purohit published an article titled FMC Receives Injunction for Chlorantraniliprole: Coverage-Disclosure, Anticipation, and Issues That Remained Unaddressed.  The post discusses a recent decision of the Delhi High Court awarding an interim injunction, and criticizes the court for discussing only one of the interim injunction factors (prima facie case) in depth and the others (balance of conveniences, irreparable harm, public interest) only cursorily or not at all.