Inventor Protection Act

Not long ago, I published an op-ed on Law360 titled Congress Shouldn’t Overturn EBay Patent Injunction Standard.  In the course of the op-ed, I noted two pending bills (the STRONGER Patent Act and the Restoring America's Leadership in Innovation Act) which, if enacted, would to some degree overturn the Supreme Court decision (eBay) holding that the decision whether or not to enter an injunction is discretionary.  Although I have been critical of some aspects of the eBay decision as it has been implemented, on balance I firmly believe that it has done more good than harm, and that any proposals to return to a system of near-automatic injunctions would be a bad idea.

Anyway, I somehow managed to miss another pending bill, the Inventor Protection Act, filed in July by Congressman Dana Rohrabacher and discussed recently on IPWatchdog.  The bill would amend the Patent Act by defining an "inventor-owned patent" as "a patent held entirely by the inventor of the claimed invention," and conferring various protections upon inventor-owned patents, including (1) forbidding the USPTO from reexamining, reviewing, or otherwise making "a determination about the validity of an inventor-owned patent unless voluntarily agreed to by the inventor"; (2) allowing inventors to file suit for the infringement of inventor-owned patents in any judicial district in which "the defendant is subject to the court's personal jurisdiction or where the defendant has committed an act of infringement, regardless of whether the defendant has a regular and established place of business in such district," thus overruling TC Heartland as it applies to inventor-owned patents (hello, forum shopping!); (3) forbidding transfers of such actions "to another district for convenience without consent of the inventor"; and (4) promising an expedited trial and limitations on discovery.  Most relevant for purposes of this blog, however, are the proposed changes to the law of remedies.  These would include not only restoring the presumption of irreparable harm (which could be overcome by clear and convincing evidence), but also permitting the inventor to opt for "simplified damages" in lieu of (nonsimplified, everyday) damages under section 284.  Here's what the bill says:

If a request for relief under this subsection is made, the following provisions apply:

“(A) IN GENERAL.—Upon a finding of infringement, the court shall award damages equal to the sum of—

“(i) the greater of—

“(I) the total profits attributable to the infringing party’s use of the patented invention; or

“(II) 25 percent of the sales attributable to the infringing party’s use of the patented invention; and

“(ii) any interest and costs as fixed by the court.

“(B) INFRINGEMENT FOUND WILLFUL.—

“(i) TREBLE DAMAGES AVAILABLE.—If the court finds the infringement to be willful, the court may award damages equal to no more than three times the amount of any damages found in subparagraph (A), but shall not include any royalty payments.

“(ii) PRESUMPTION OF WILLFULNESS.—Infringement shall be presumed willful if the infringing party is an expert in the field of the invention.

“(C) ATTORNEYS FEES.—If an inventor successfully brings a claim for infringement of their inventor-owned patent, the court shall award the inventor any amount of their attorneys fees that exceeds 10 percent of the amount of any damages the court awards to the inventor.”

This just boggles the mind.  Although, as I have written elsewhere on several occasions, there is a theoretical argument to be made in favor of requiring an intentional infringer to disgorge its profits attributable to the infringement (that is, the profit it earned above what it would have earned from the use of the next-best available noninfringing alternative), perhaps as an alternative to enhanced damages, I don't think it makes sense as a remedy for infringement generally due to its potential overdeterrent effect.  And as the above text indicates, the bill contemplates that courts could award disgorgement and still award (up to) treble damages for willful infringement (and there would be that "presumption of willfulness" where the defendant "in an expert in the field of invention").  And why award, as an alternative to disgorgement, 25% of the sales (revenue?) attributable to the infringing party's use of the patented invention?  What's so magic about 25%?  Would any of this be tied into the economic value of the invention, that is, the value to the user over and above the value the infringer would have accrued from using the next-best noninfringing alternative?  

More to the point, have any of the sponsors of this bill thought at all about the rent-seeking and gaming that would ensue from enacting a class of protections solely for the benefit of inventor-owned patents?  Or about how any of this would affect consumers?  

I certainly understand that patent litigation (including, most definitely, the damages portion of trial) can be enormously expensive, and that there may be benefits in considering reforms that would simplify some aspects of it, particularly when the stakes are comparatively small.  (I talk about some of this stuff in my Patent Damages Heuristics paper; and I would suggest in addition that reforms such as creating a small(er)-claims-type court patterned after the Intellectual Property Enterprise Court in the U.K. might be worth considering.)  But the proposals floated in the Inventor Protection Act strike me as rather poorly thought out.  Fortunately, I can't imagine that this bill stands much of a chance of passing . . .  

"Patent Wars" on Sale

Amazon Prime is now offering my book Patent Wars:  How Patents Impact Our Daily Lives for sale for $17.39 $11.55 (down from the list price of $34.95).  Get your copy here.

 

Georgetown-Berkeley Conference on Patent Law and Policy

Georgetown Law's Institute for Technology Policy and the Berkeley Center for Law & Technology will be putting on the Tenth Annual Conference on the Role of the Courts in Patent Law and Policy, at Georgetown Law's Washington campus on Friday, November 16.  I will be participating in a panel on remedies.  Keynote speakers will be Federal Circuit Judge Alan Lourie and USPTO Director Andre Iancu.  Registration is available here.  Here is the schedule:

8:30 – 9:00 AM

Continental Breakfast

9:00 – 9:10 AM

Welcome

Alexandra Givens, Executive Director, Institute for Technology Law & Policy at Georgetown Law

Professor John Thomas, Georgetown Law

9:10 – 9:40 AM

Opening Keynote

The Honorable Alan Lourie, Judge, U.S. Court of Appeals for the Federal Circuit

9:45 – 11:00 AM

Panel 1: Developments in Case Management

Professor Peter Menell, Berkeley Law (moderator)

 The Honorable Leonard Stark, Chief Judge, U.S. District Court for the District of Delaware

The Honorable Cathy Ann Bencivengo, Judge, U.S. District Court for the Southern District of California

The Honorable Liam O'Grady, Judge, U.S. District Court for the Eastern District of Virginia

11:15 AM –12:30 PM

Panel 2: Developments at the PTAB and the ITC

Erika Arner, Finnegan LLP, President PTAB Bar Association (moderator)

Scott Boalick, Acting Chief Judge, Patent Trial and Appeals Board

Katherine Burke, Baker Botts LLP

Shamita Cummings, White & Case LLP

Suzanne Michel, Google

12:30 – 1:30 PM

Luncheon Keynote

The Honorable Andrei Iancu, 

Undersecretary of Commerce and Director of the U.S. Patent & Trademark Office

1:30 – 2:45 PM

Panel 3: Remedies

Professor Amy Landers, Drexel School of Law

Professor Tom Cotter, University of Minnesota School of Law

John Mancini, Mayer Brown

Kelsey Nix, Jones Day

Professor Sarah Wasserman Rajec, William & Mary School of Law

3:00 – 4:30 PM

Panel 4: Case Law in Review

Professor Jay Thomas, Georgetown Law (moderator)

Professor Jeff Leftsin, U.C. Hastings School of Law

Professor Mark Lemley, Stanford Law School

Professor Sapna Kumar, University of Houston Law Center

4:30 – 5:30 PM

Cocktail Reception

Law360 Piece on FRAND and Antitrust

I am happy to announce that on Monday Law360 will be publishing my analysis, titled FRAND and Antitrust:  Misconceptions Vs. Reality.  A copy is available here.

A Brief Analysis of the EWCA's Decision in Unwired Planet

As previously noted, the England and Wales Court of Appeal published its decision yesterday dismissing the appeal in Unwired Planet In'l Ltd. v. Huawei Techs. Co. (opinion by Lord Kitchin, joined by Lord Justice Floyd and Lady Justice Asplin).  Huawei did not appeal Mr. Justice Birss's method of calculating a FRAND royalty, so the three issues on appeal were whether Mr. Justice Birss erred (1) in concluding that a FRAND license would be global in scope; (2) in his interpretation of the "nondiscriminatory" aspect of the ETSI FRAND obligation; and (3) in concluding that Unwired Planet had not abused its dominant position, in violation of EU competition law, by instituting a proceeding for injunctive relief without following to the letter the steps set forth in the CJEU's 2015 decision in Huawei v. ZTE (e.g., "without giving any notice of which SEPs were said to be infringed or why, and without having made any licensing offer").

1.  As for the first issue, the court concludes that there was no error.  In particular, the court accepted Mr. Justice Birss's determination that a global agreement is consistent with industry practice, and that it would be inefficient (and conducive to holdout) for the parties to negotiate royalties on a country-by-country basis.  The court further concludes that awarding a global FRAND royalty does not violate comity--or unduly leverage the infringement of the two U.K. patents in suit that were expressly found to be valid and infringed--insofar as (1) Mr. Justice Birss was not adjudicating the validity and infringement of any foreign patents, but rather determining what the parties' obligations were under ETSI's FRAND obligation; (2) Huawei retained the ability to contest validity of any of these patents; and (3) Huawei did not have to accept the global FRAND resolution, but could instead choose to be bound by the U.K. injunction (applicable only within the U.K.) and continue litigating infringement and validity in other countries.

I'm inclined to think this is right--it doesn't seem very efficient to proceed on a country-by-country basis--though I do worry a bit about the potential for forum shopping/races to the courthouse.  Would it be better to have some sort of private institution for establishing global FRAND rates, as Jorge Contreras argues in a recent paper?  On the other hand, note that the court is not shutting the door on the possibility (in other cases) of staying or dismissing a request for a global FRAND agreement on the ground of forum non conveniens (though it says that in this case Huawei raised this objection too late, see para. 112). 

2.  One point on which the court disagrees with Mr. Justice Birss, though it winds up not mattering, is with regard to the question of whether there is one FRAND rate or a range.  The court concludes that FRAND is a range (see paras. 119-25), which I too think makes more sense.  

3.  On the nondiscrimination issue, the court finds no error in Mr. Justice Birss's view that a rate is FRAND if it is "generally nondiscriminatory," that is, if it is consistent with a fair and reasonable benchmark, even if some other licensees are offered a lower rate (unless the offer of a lower rate to some violates competition law, which was not the case here).  The court (and Mr. Justice Birss) rejected the "hard-edged nondiscrimination" principle, under which a rate is non-FRAND if does not treat all similarly situated licensees the same and there is no objective reason for the difference.  The court notes that its position on this issue differs from that of some decisions in Germany, China, and the U.S. (TCL v. Ericsson), but given the early stage in the evolution of this body of law it does not believe it should be bound by these other decisions.

4.  On the abuse of dominant position issue,  the court agrees with Mr. Justice Birss that the steps the CJEU established in Huawei v. ZTE issue constitute a "safe harbor" against a competition law violation.  They do not establish the only means by which a SEP owner who seeks an injunction can avoid liability for abusing its dominant position.  Thus, the fact that Unwired Planet did not follow the Huawei v. ZTE steps to a tee do not necessarily lead to the conclusion that Unwired Planet has violated competition law.  See paras. 251-85.

 

5. For other coverage, see the IAM Blog, IPKat (here and here), and Kluwer.  There are surely many more blog posts and papers to come . . . 

Federal Circuit Orders Sua Sponte Oral Argument in WesternGeco

In May I published a post titled Is WesternGeco Moot?, in which I wrote:

This morning the Federal Circuit published its opinion in WesternGeco LLC v. ION Geophysical Corp., affirming the PTAB's determination that certain claims of three WesternGeco patents are invalid.  On Twitter, Janice Mueller asks "Does this moot the Supreme Court’s pending consideration of offshore LP damages if the WG patents are gone??"  I think the answer is no, because if I understand the facts correctly there were four patents in suit in the infringement proceeding, all of which were found to be valid and infringed; and according to today's Federal Circuit's opinion (p.3 n.2) one of these four, U.S. Patent. No. 6,691,038, was "not at issue here," that is, in the appeal from the PTAB.  Also, although I have not immersed myself in the record of this case, I believe that one of the infringed claims of one of the instituted patents also was not an issue in the PTAB appeal (claim 23 of the '520 Patent).  So as long as some portion of the damages award could have been based on the infringement of these noninstituted claims, I think the Supreme Court still has jurisdiction (though I hasten to note that I am not an expert on federal jurisdiction).  

The Supreme Court issued its decision in the case in June, stating that 

Under the Patent Act, a company can be liable for patent infringement if it ships components of a patented invention overseas to be assembled there. See 35 U.S.C. § 271(f)(2). A patent owner who proves infringement under this provision is entitled to recover damages. § 284.The question in this case is whether these statutes allow the patent owner to recover for lost foreign profits. We hold that they do.

See my analysis here.

Last week,  the Federal Circuit issued the following order sua sponte:

Oral argument for these appeals is scheduled for November 16, 2018, at 10:00 a.m. in Courtroom 201. The parties shall notify the court via ECF by November 2, 2018, of the names of counsel who will present oral argument. At oral argument, counsel should be prepared to address the following questions:

(1) In view of this court’s affirmance of the invalidation of ’967 Claim 15, ’607 Claim 15, ’520 Claims 18 and 19 in inter partes review, WesternGeco LLC v. ION Geophysical Corp., 889 F.3d 1308 (Fed. Cir. 2018), is Claim 23 of U.S. Patent No. 7,293,520 the only claim that could support the lost profits award?

(2) In the event that all lost profits could not be awarded because ION and WesternGeco do not compete in the same market, would it be appropriate to apportion any award of lost profits attributable to the sale and use of the device of ’520 Claim 23 and profits attributable to other, nonpatented, aspects of survey services?

(Hat tip to Dmitri Karshtedt for passing this along.)  Here is a link to the '520 Patent, and here is a link to '038.  Claim 18 of '520, from which Claim 23 depends, reads: 

An apparatus comprising:
(a) an array of streamers each having a plurality of streamer positioning devices there along;
(b) a control system configured to use a control mode selected from a feather angle mode, a turn control mode, a streamer separation mode, and two or more of these modes.

Claim 23 reads:

The apparatus of claim 18 wherein the towing comprises ending one pass, turning a towing vessel having the streamers attached thereto while throwing out the streamers before beginning another pass, with the control mode in the turn control mode during the turning and throwing out.

Here is claim 14 of '038, which is the one found valid and infringed:

A seismic streamer array tracking and positioning system comprising:
a towing vessel for towing a seismic array;
a seismic streamer array comprising a plurality of seismic streamers;
an active streamer positioning device (ASPD) attached to each seismic streamer for positioning each seismic streamer;
a master controller for issuing vertical and horizontal positioning commands to each ASPD for maintaining a specified array geometry;
an environmental sensor for sensing environmental factors which influence the towed path of the towed array;
a tracking system for tracking the streamer horizontal and vertical positions versus time during a seismic data acquisition run;
an array geometry tracking system for tracking the array geometry versus time during a seismic data acquisition run, wherein the master controller compares the vertical and horizontal positions of the streamers versus time and the array geometry versus time to desired streamer positions and array geometry versus time and issues positioning commands to the ASPDs to maintain the desired streamer positions and array geometry versus time.

I'd have to delve more deeply into the facts and the record to hazard a guess as to why the court doesn't mention '038, or to predict how the Federal Circuit will rule.  Any ideas, readers?

FTC Hearings on Competition and Consumer Protection

As mentioned before, the Federal Trade Commission is in the process of holding a series of Hearings on Competition and Consumer Protection in the 21st Century.  I spoke on a panel on Innovation and IP Policy this morning.  Sessions continue this afternoon and tomorrow. You can catch the hearings on a live webcast, and after 24 hours you can view a replay.