Quintuple Damages in South Korea

As readers may be aware, China’s IP laws now authorize up to quintuple damages for the intentional or malicious infringement of IP rights that causes serious consequences.  I was not aware until just recently, however, that South Korea enacted similar legislation last year, applicable to patents (and, by extension, to utility models and plant variety rights) and to trade secrets.  The relevant provision of the patent act is section 128(8), and the current text (in Korean) can be found at https://wipolex-resources-eu-central-1-358922420655.s3.amazonaws.com/edocs/lexdocs/laws/ko/kr/kr332ko_1.pdf.  For further discussion, there are several English-language discussions by Korean IP practitioners, including here, here, and here.  Enhanced damages remain out of bounds in Japan, however, while to my knowledge Taiwan so far has stuck with at most treble damages enhancements for certain IP rights, including patents.  

In other (albeit somewhat related) news, I am pleased to note that I have now turned in the manuscripts of my two pending book projects, Wrongful Patent Assertion:  A Comparative Law and Economics Analysis, and Remedies in Intellectual Property Law (the former to OUP, the latter to Elgar).  I now plan to take a work and blogging break for the next two weeks, with the blog resuming on or about July 7.  

Korea Patent Court Approves Award of Extraterritorial Damages

Professor Chaho Jung has shared with me an interesting decision, the Judgment of Jan. 18, 2024, 2021Na1787 (Korea Pat. Ct.).  The decision has at least two holdings of particular interest to the subject matter of this blog.  First, to estimate the profits derived from the sale of the defendant’s product, in the absence of evidence provided by the defendant, the court calculated a contribution margin using (I'm quoting Professor Jung here and below) “the variable cost-to-sales ratio for the ‘medical substances and pharmaceutical products’ sector, as analyzed in the Bank of Korea’s Corporate Management Analysis, which is based on corporate income tax return data provided by the National Tax Service.”  Second, the court holds that “[a]s long as there is an act of patent infringement within the country, the patent holder is entitled to compensation for damages that have a sufficient causal relationship with the infringement, and such damages are not necessarily limited to those that occurred domestically.”  This second holding, if affirmed on appeal (I understand the case is pending before the Korean Supreme Court), would seem to align Korean practice with last year's decision of the German BGH, Judgment of May 7, 2024, X ZR 104/22—Verdampfungstrockneranlage (see previous discussion on this blog here).  The overall award is for over 12 billion won (about $9 million), plus interest.   

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!

 

  

Two Recent Articles on Injunctions

1.  Burton Ong and Marissa Chok have published Patent injunctions, standard essential patents and patents essential to de facto standards: European, German and Korean perspectives, 43 EIPR 417-31 (2021).  Here is the abstract:

Patent injunctions against unlicensed defendants who implement a patented technology standard may produce exclusionary effects that are anti-competitive. Should it make a difference whether the patent in question (1) involves a technology standard developed under the auspices of a standard-setting organisation (i.e. a standard essential patent or SEP); or (2) covers an invention that is incorporated into technology standard without going through this standard-setting process (i.e. a patent that is essential to a de facto standard or "de facto essential patent")? The potential anti-competitive effects are the same in both categories of patents, yet the legal frameworks of jurisdictions that have considered these legal issues appear to differentiate between them. This article examines the validity of distinguishing between these two groups of patented standards, using examples from various jurisdictions to illustrate the bifurcated approach that has been taken towards placing limitations on the patent holder’s freedom to seek injunctive relief. 

2.  Peicheng Wu and Charlie Xiao-chuan Weng have published Old wine in a new bottle? Assessing the injunction remedy for intellectual property disputes in China, 11 Queen Mary Intellectual Property Law Journal 295-313 (2021).  Here is the abstract:

The landmark eBay case in the US has noticeably influenced Chinese judicial practices concerning intellectual property injunctions. The injunctive relief in intellectual property infringement cases in China has witnessed a change from a traditional automatic-granting approach to a more equitable approach. However, there are still some issues, namely: the standards of awarding injunctive relief in intellectual property cases are unclear; the civil law tradition and procedure can create issues when applying for injunctions; and the scope of the injunction could be disproportionate in certain cases. In order to address these concerns, China needs to publish judicial interpretations to clarify that the eBay test can be applied to both preliminary injunctions and permanent injunctions. China should further polish up its civil procedure legislation to enable a permanent injunction to be effective immediately, even at the first instance, and to allow the parties to an intellectual property contract to have agreements on conditions of applying for injunctive relief. Additionally, Chinese courts should adopt a proportionate method in determining cases regarding intellectual property injunctions. 

FRAND News

1.  I previously noted Alex Woolgar's IPKat post on the Karlsruhe OLG's October 30 decision in Philips v. Wiko.  More recently,  Hetti Hilge discusses the case on the Kluwer Patent Blog in her post titled Another German FRAND Ruling-OLD Karlsruhe, Judgment of 30 October 2019, 6 U 183/16 (Philips v Wiko).  Although the two posts necessarily cover a lot of the same territory, Ms. Hilge's post also states that the Karlsruhe court allowed the patent owner to obtain information on the defendant's costs and profits, "in direct opposition to the judgment of the OLG Duesseldorf according to which an SEP holder who has not (yet) complied with its FRAND obligations cannot request more than a FRAND royalty as damages (and not, e.g., infringer’s profits) so that information on cost and profits is not required."

2.  While we await the U.K. Supreme Court's decision in Unwired Planet and Conversant, Bloomberg News has reported that InterDigital recently filed an infringement action against Huawei in the U.K., asking the court to determine either that its offer to Huawei was FRAND or to set a global FRAND rate.  According to the article, Huawei had previously filed its own action against InterDigital in Shenzhen, asserting that InterDigital's offer to license its SEPs was not FRAND.  (For InterDigital's announcement, see here.)  Can yet another antisuit (anti-antisuit) injunction be far behind?

3. On JUVE Patent, Konstanze Richter recently published an article titled Focus on France in Philips and TCL FRAND Battle, discussing litigation brought by Philips against TCL in England and by TCL against Philips and ETSI in France.  According to the article, "TCL is challenging whether the UK court has the jurisdiction to rule on the FRAND issue. The company argues that, as the European Telecommunication Standards Institute is based in the south of France, the French courts have jurisdiction. TCL therefore filed a counterclaim at the Tribunal de Grande Instance in Paris in February. This was an attempt to clarify the FRAND licence issue at the French court."  A hearing took place in Paris last week, and a decision on whether to allow the matter to proceed is expected in February.

4.  Matthieu Dhenne has published an article titled Calculation of FRAND Royalties:  An Overview of Practices Around the World, 41 EIPR 755 (2019).  The abstract states that "This article aims to give an overview of the methods of calculating FRAND royalties applied by the jurisdictions all around the world."  The article discusses the various methodologies courts have used to determine the FRAND rate (hypothetical negotiation, comparables, top-down, incremental value, and bottom-up, as well as differing views within the E.U. concerning what information the patent owner must produce to comply with Huawei v. ZTE.  In addition, the author discusses issues relating to the royalty base and apportionment (EMVR, SSPPU).

5.  As reported on IP Watchdog and Bloomberg, entities including Apple and Ford Motor have sent a letter to U.S. Secretary of Commerce Wilbur Ross and USPTO Director Andre Iancu, urging the USPTO to keep in place the USDOJ/USPTO 2013 Policy Statement on Remedies for the Standards-Essential Patents Subject to Voluntary F/RAND Commitments.  As I have previously stated, I agree that the 2013 Policy Statement is sound (a sentiment also shared by Professor Michael Carrier, see here), and have criticized Antitrust chief Makan Delrahim's decision a year ago to withdraw from it.

6.  Last but not least, here is Qualcomm's reply brief in FTC v. Qualcomm, filed last Friday.

New Papers, Posts on FRAND, SEP Issues

1.  King Fung Tsang and Jyh-An Lee have posted on ssrn a paper titled Unfriendly Choice of Law in FRAND , 59 Va. J. Int'l L. 220 (2019).  Here is a link to the paper, and here is the abstract:

Standards are technical specifications providing a common design for products or processes to function compatibly with others. Standards are pervasive in various communications and platform technologies since they facilitate interoperability between different products. These technical standards inevitably cover a large number of patented technologies standard implementers must use, which are referred to as standard-essential patents (SEPs). SEPs are normally subject to fair, reasonable, and non-discriminatory (FRAND) terms based on SEP holders’ declarations made to voluntary associations known as standard-setting organizations (SSOs) or standards-development organizations (SDOs). In recent years, the increasing use of standards and SEPs has led to an increased number of lawsuits relevant to the interpretation and enforcement of FRAND terms. As a result, legal issues surrounding FRAND have become a subject of litigation and academic debate. This Article is an endeavor to fill the gap in academic literature on the choice-of-law issues relating to FRAND. It seeks to provide readers with a deeper understanding of the choice-of-law issues as revealed by key judicial precedents around the world. Ultimately, this research attempts to suggest practical solutions that may mitigate, if not resolve, the choice-of-law issues.

2. On a somewhat related note, Léon Dijkman published a post on IPKat titled How and where may implementers sue for FRAND-licences, discussing a recent decision of the Patents Court for England and Wales dismissing a claim brought by Vestel Elektronik Saneyi on jurisdictional grounds. 

3.  Jay Kesan and Carol Hayes have posted a paper titled Standard Setting Organizations and FRAND Licensing, Competition Policy and Intellectual Property in Today's Global Economy (Robert D. Anderson, Nuno Pires De Carvalho and Antony Taubman eds., Cambridge Univ. Press, 2020) (forthcoming).  Here is a link, and here is the abstract:

This chapter reviews the law and policy relating to Standard Setting Organizations (SSOs) and the FRAND commitment. To improve interoperability, we need technology standards, and to create them, we need industry members to work together in standard-setting organizations (SSOs). To ensure that the technology standards can be broadly adopted, the SSOs often need patent owners to promise to make standard-essential patents (SEPs) available to all manufacturers for a fair, reasonable, and non-discriminatory (FRAND) royalty.

The legal effect of such FRAND commitments is not yet settled, leading to a considerable amount of litigation in the United States and around the world. This lack of clarity is especially problematic when the dispute is international because jurisdictions may view these commitments very differently.

There are many issues relating to FRAND commitments, including: (1) what makes a patent 'essential' to a standard; (2) whether the FRAND obligation transfers to subsequent assignees of the patent; (3) whether FRAND commitments should apply to patents acquired after making the FRAND commitment (i.e., after-acquired patents); (4) whether nonmembers of the SSO should have the same standing as SSO members to enforce FRAND commitments; and (5) whether the FRAND commitment should impact remedies available in patent litigation, either from the perspective of the patent owner or the beneficiary of the FRAND commitment. As the law surrounding FRAND commitments develops, the legal community should be wary of abuses on both sides. While patent owners should not be permitted to abuse the added leverage that owning a SEP provides, the FRAND commitment must not be abused by standard adopters who take advantage of the fact that a SEP owner cannot simply deny a license.

To be meaningful, a FRAND commitment should be enforceable against a SEP owner’s successor-in-interest, and injunctions for SEP infringement should be issued under limited circumstances. Ultimately, policy concerns require the balancing of many different interests in order to ensure a healthy market for technology. 

Two Papers on Damages Apportionment

1.  As readers of this blog may already be aware, last week Bernard Chao posted an essay on Patently-O titled Implementing Apportionment.  The essay takes as its starting point the pending cert petition in Time Warner Cable, Inc. v. Sprint Communications Co., L.P., in which the petitioner is trying to overturn a patent damages award in the amount of $139 million.  (For my post on the Federal Circuit decision, see here.  The Scotus Blog page for the case is here.  A Law360 article also discusses Intel's amicus brief in the case.)  Professor Chao's thoughtful analysis notes that there are no easy solutions to the problem of apportioning the value attributable to the patented feature of a complex product, but along the way discusses conjoint analysis, the top-down approach, and other matters.  Definitely worth a read!

2.  Axel Gautier and Nicolas Petit have published a paper titled The Smallest Salable Patent Practicing Unit and Component Licensing:  Why $1 Is Not $1, 15 J. Compet. L. & Econ. 690 (2019).  Here is a link to the paper, and here is the abstract: 

The smallest salable patent pricing unit (SSPPU) is a valuation method used as a preliminary step toward the calculation of fair, reasonable, and nondiscriminatory royalties for licenses over standard-essential patents (SEPs). Under SSPPU, royalties should reflect the value added to the smallest salable component implementing the patented invention. In this paper, we discuss policy-making proposals to convert SSPPU into a pricing rule that not only assists the assessment of SEPs’ added value but also forces the specification of royalties terms as a share of component costs in SEP licensing negotiations. We call this new rule SSPPU+ and we show that it distorts the distribution of surplus between SEP owners and implementers by laying down a revenue cap on standardized technologies. Therefore, a change in the royalty basis is not neutral and $1 is not $1. Furthermore, SSPPU+ imposes uniform pricing of SEPs across different industries and does not allow SEP owners to take advantage of complementarities between technologies. This pleads against a generalization of SSPPU+ at early standardization and negotiation stages.

Update (September 26, 2019):  On FOSS Patents, Florian Mueller has published an interesting post on Time Warner v. Sprint.

New Papers on FRAND, SEP Issues, Part 1

1.  Liyang Hou and Mengchi Tian have posted a paper titled IPR Protection and Antitrust Regulation of SEPs in China.  Here is a link, and here is the abstract:

This chapter explores the practice of IPR protection and antitrust regulation of standard essential patents (SEPs) in China and discusses whether the licensing of SEPs should be regulated in a way different from other patent cases. With regard to IPR protection, the Chinese judiciary has actively taken a role in patent infringement trials. Differences are observed in SEP infringement lawsuits as compared to ordinary patent cases in terms of non-infringement defense, counter-injunction defense, and damages. In relation to antitrust regulation, the Chinese competition agencies and the courts have mainly focused on price-related abuses and SEP-related merger review, and paid particular attention to the possibility of SEP holders leveraging, tying SEPs with non-SEPs, and charging high royalty fees. Since SEPs have raised a different issue than other types of IPRs, a delicate balance between protecting the private interest of the SEP holders and the public interest of standardization will have to be re-struck.

Hat tip to Danny Sokol for first mentioning this article on the Antitrust & Competition Policy Blog.

2.  Juan Martinez has published a paper titled FRAND as Access to All versus License to All in the July 2019 issue of GRUR Int (pp. 630-40).  Here is the abstract:

In the last few decades, cellular standardised technology has experienced an impressive (r)evolution.  This is mainly due to the success of open standardisation marked by the commitment of some companies to contribute their best innovative technologies to standards and to make them accessible to all on Fair, Reasonable, and Non-Discriminatory (FRAND) terms and conditions.  Recently, a discussion has emerged on whether such commitment implies that the patent holder has an obligation to license everyone across the supply chain ('license to all') or whether he is only obliged to offer everyone access to its standard essential patents through licences with end user devices ('access to all').  Also discussed is whether a requirement to grant a licence at all levels of the supply chain is legally and practically possible.  This paper will analyse the commercial licensing practice in the Information and Communication Technology field, the economic efficiencies of such licensing approaches, as well as the legal and practical implications of each of them.    

3.  Also appearing in the July 2019 issue of GRUR Int. (pp. 658-60) is an article by Franziska Kurz, Hanno Magnus, and David Berger, titled Enforcing Patents Smoothly:  From Automatic Injunctions to Proportionate Remedies.  Tagungsbericht über die Veranstaltung am 22.3.2019 an der Friedrich-Alexander-Universität Erlangen-Nürnberg, a report (in German) on the March 22 conference on injunctions held at Friedrich-Alexander-Universität.  Readers may recall that I participated in this conference, and also in one two weeks later at Ludwig Maximilian University in Munich, which resulted in this paper to be published in a forthcoming issue of  Zeitschrift für Geistiges Eigentum/Intellectual Property Journal.  For discussion elsewhere of the Erlangen conference, see here. 

4.  Finally, I would note that over the weekend Florian Mueller published a post on FOSS Patents thoroughly discussing the recent briefing on the question of whether to grant a stay pending appeal in FTC v. Qualcomm. 

New Book: Patent Law Injunctions

Wolters Kluwer recently published a new book, titled Patent Law Injunctions and edited by Rafal Sikorski.  (Professor Sikorski is also one of several co-authors of two chapters in the forthcoming edited volume Patent Remedies and Complex Products:  Toward a Global Consensus (Brad Biddle, Jorge L. Contreras, Brian J. Love & Norman V. Siebrasse eds., Cambridge Univ. Press), which I have mentioned before (see here, with links to drafts of all of the chapters).)  Here is a link to the website, and here is the book description:

Patent Law Injunctions is a comparative work on injunctive relief in patent law in major jurisdictions around the world. It contains an extensive analysis of the United States, the European Union (EU), selected EU Member States (Germany, France, the Netherlands, Belgium, the United Kingdom and Poland), China, India, Japan and South Korea. It covers both preliminary (interim) and permanent injunctions. In numerous jurisdictions, courts have realized that injunctive relief should not be available automatically in case of patent infringement. Particularly in the wake of the US Supreme Court decision in eBay v. MercExchange, it has become clear that granting an injunction may in some cases enable abuse by patent holders in order to obtain royalties exceeding significantly the value of the patent-protected invention or that it may be manifestly against the public interest.

What’s in this book:

Recognizing that patent disputes have become truly global disputes and responding to the growing need to provide a comprehensive and flexible framework for the application of injunctive relief, twelve patent law experts, both academics and well-known practitioners familiar with practice in their particular jurisdictions, offer analyses of such elements of patent law injunctions as the following:

access to SEPs;

operations of patent assertion entities;

trolls and patent privateers;

equitable nature of injunctive relief as a source of flexibility;

abuse of right and competition law defences to injunctive relief as sources of flexibility;

analysis of EU instruments that could be used in the interpretation of Member State implementing laws;

conditions for the application of tools such as equity, competition law or general doctrines such as abuse of rights;

circumstances when injunctions should be denied to patentees even though a valid patent was infringed;

complex products cases where patents protect minor parts of the technologies; and

advantages and disadvantages of various approaches to injunctive relief.

A proposal for an optimal model of granting injunctions is also included.

How this will help you:

Given that there is a growing consensus as to the circumstances in which injunctions should be available to the patentees and the circumstances when injunctions should be denied, a comprehensive analysis of the various legal doctrines that justify a more flexible approach towards injunctive relief is warranted. This book will give patent law practitioners and in-house counsel the opportunity to draw from the experience of other jurisdictions where courts faced similar problems. Policymakers, patent office officials, academics and researchers in intellectual property law will also welcome this approach.

Authors of the individual chapters include several people I've mentioned on this blog before, including Professor Sikorski, Jorge Contreras, Trevor Cook, Amandine Léonard, Yogesh Pai (whose chapter can be viewed on ssrn here), and Christoph Rademacher, as well as Piotr Andrzejewski, Matt Heckman, Yoonhee Kim, Arno Riße, Piotr Ruchala, Hui Jin Yang, and Liguo Zhang.

 Update:  Professor Contreras's paper is also available on ssrn, here.