Tuesday, July 16, 2024

Patents Court Dismisses Tesla’s Request for a Declaratory Judgment of Global FRAND Terms

Here is the decision, Tesla, Inc. v. IDAC Holdings, Inc., [2024] EWHC 1816 (Ch.), by Mr. Justice Fancourt.  The court writes “The main claim . . . brought by Tesla in this action is for a declaration that the terms of the Avanci Licence are not FRAND, and a determination of what terms (in practice, what rate) for such a licence are FRAND. . . . The claim . . . is one for which there is no precedent, seeking declaratory FRAND relief to a licence of non-UK patents whose owners are non-UK companies and are not parties to the claim” (paras. 14, 23).  It’s not a particularly long decision, but it seems quite thorough, and I will need a little while to digest it.  I hope to have more to say about it soon.

Monday, July 15, 2024

Federal Circuit Affirms Preliminary Injunction

The case, decided this past Friday, is Natera, Inc. v. NeoGenomics Laboratories, Inc., precedential opinion by Chief Judge Moore, joined by Judges Taranto and Chen.  The parties, competitors in the market for oncology testing, both “manufacture products used for early detection of cancer relapse” (p.2).  The patentee’s product is called Signatera; the defendant’s, RaDaR.

Without going into more detail than is necessary for purposes of this short post, I will note, first, that the court affirms the district court’s finding of likelihood of success on the merits.  Specifically, the court rejects arguments that the district court erred “by not engaging in explicit claim construction,” noting among other things that the defendant raised this issue for the first time in its motion for a stay pending appeal, and concluding that the district court did not “implicitly construe the claims incorrectly” or err in finding that RaDaR performs the two essential steps of “tagging isolate cell free DNA” and “amplifying the tagged products” (pp. 7-8).  The court also rejects the defendant’s argument that “‘mere vulnerability’ of the patent to an invalidity challenge suffices to defeat a preliminary injunction” (pp. 8-9), and finds no clear error in the district court’s application of the obviousness subfactors of motivation to combine and reasonable expectation of success (pp. 9-12). 

Next, the court finds no error in the district court’s analysis of irreparable harm, rejecting the argument that the district court “endorse[d] a universal rule that irreparable harm is evident in any scenario of direct competition with an alleged infringer,” and noting instead that the district court considered that evidence along with evidence of the plaintiff’s unwillingness to license the patent in suit, and its “potential for lost biopharmaceutical partnerships, business relationships, clinical opportunities, and market share.” Regarding this last item in particular, the evidence suggests that “patients who begin using RaDaR now will likely not switch to Signatera in the future” (pp. 13-14).  Additionally, there was sufficient evidence of a causal nexus between the alleged infringement and the plaintiff’s harm.  On this issue, the defendants made an interesting, though unsuccessful, argument that the plaintiff’s harm related to an unclaimed feature of the patent in suit:  


            NeoGenomics argues the district court erred by considering the tumor-informed testing market because tumor-informed testing is not claimed in the ’035 patent. Because the district court tied Natera’s alleged harm to direct competition between Natera and NeoGenomics in the tumor-informed market, NeoGenomics argues the alleged harm is attributable to an unpatented feature and therefore lacks a causal nexus with the alleged infringement. . . .


            The district court did not legally err by considering tumor-informed testing in its irreparable harm analysis. The district court was presented with evidence that the ’035 patented method is tied to consumer demand for RaDaR. Natera argued that RaDaR’s driver of demand, highly sensitive tumor-informed testing, would be impossible to achieve without practicing the particular methods claimed in the ’035 patent. J.A. 920 (Pl.’s Prelim. Inj. Br.). Natera also presented evidence that the method claimed in the ’035 patent was critical to overcoming challenges associated with successfully amplifying and sequencing cfDNA in the claimed ctDNA context. . . . The district court did not err by crediting Natera’s argument that the allegedly infringing method is key to RaDaR’s tumor-informed testing (pp. 14-15).

The court also rejects the argument that Natera “unreasonably delayed in bringing suit” by waiting until seven months after the patent issued, noting that Natera was busy with other ongoing infringement litigation and that Natera brought suit “four days after RaDaR was approved for Medicare coverage and within four months of RaDaR becoming commercially available” (pp. 15-16).  (This would appear to be a distinction between U.S. law and the law of some other countries. Four months probably would be too long to satisfy the “urgency” requirement in Germany and the UPC.)

Finally, the court devotes several pages to the parties’ public interest arguments.  Without going into all the detail here, it was significant that the district court included several carve-outs for existing patients and research projects involving RaDaR; and although the defendant presented evidence suggesting that its product was technically superior, there was conflicting evidence on this point.  And the interest in patient choice, standing alone, does not preclude preliminary injunctive relief, because “[t]aken to its logical extent . . . [that] argument would preclude a preliminary injunction for any medical or healthcare-related product” (p.20).

Sunday, July 14, 2024

EWCA Adjusts FRAND Royalty Upwards from $0.24 to $0.30 Per Unit

As previously announced, on Friday the Court of Appeal for England and Wales published its decision in InterDigital Technology Corp. v. Lenovo Group Ltd.  The principal opinion is by Lord Justice Arnold, with short concurring opinions by Lord Justices Nugee and Birss.  In earlier proceedings before the Patents Court, Mr. Justice Mellor had awarded InterDigital a lump-sum royalty in the amount of $138.7 million, covering sales by Lenovo from January 1, 2007 through December 31, 2023, and later supplemented by interest in the amount of 4% compounded quarterly for a total of $184.9 million.  On appeal, InterDigital argues that the award should be much higher ($388.5 million + interest = $517.8 million total); and Lenovo argues that the amount should be $108.9 million total, covering sales only from August 27, 2013, and excluding interest.  The Court rejects Lenovo’s arguments and increases the base award, but only from $138.7 to $178.3 million.  Much of Lord Justice Arnold’s thorough and thoughtful opinion recounts the lower court decision.  For purposes of brevity, I will focus here on only the most essential points.

First, one of the issues before the trial court was whether InterDigital could recover past royalties only for the six-year statute of limitations period preceding the filing of the complaint (that’s where Lenovo’s August 27, 2013 date comes from).  Mr. Justice Mellor concluded that the answer was no, and the Court of Appeal affirms, stating that the statute of limitations has “no part to play in the assessment of FRAND terms,” for the reasons given by the lower court (para. 186).  In the court’s view, “[a]n implementer such as Lenovo requires a licence from the first day it implements the relevant standard(s)”; “a willing licensee would not sit back and wait for demands from SEP owners, but would pro-actively contact SEP owners . . .  and would put money aside for the payment of royalties. . . . It follows that an implementer should not be rewarded for delay, whether the delay is the fault of the implementer or not” (paras. 187, 189).  The Court rejects the argument that this “create[s] a perverse incentive for SEP owners to make excessive demands,” since they “can never get better than FRAND terms from the court”; and states that, to the contrary, applying the statute of limitations would “create[ ] an incentive for implementers to delay:  after six years, every day of delay [would be] a day’s lost royalties for the SEP owner” (paras. 192-193).  As I previously stated in my analysis of the trial court’s opinion, I think this is correct.

Second, for basically the same reasons, the Court concludes that the trial court had authority to order the implementer to pay interest, compounded, on the judgment:

           208. There are a number of different statutory bases for an award of interest, but it is common ground that none is applicable here. Interest is available in cases which lie within equity’s exclusive jurisdiction, but it is common ground that this is not such a case. The general rule of English common law is that the court has no power, in the absence of any agreement, to award interest as compensation for the late payment of a debt or damages: Sempra Metals Ltd v Inland Revenue Commissioners [2007] UKHL 34, [2008] 1 AC 561 at [5] (Lord Hope of Craighead). It is common ground that Lenovo has not agreed to pay interest on past sales.


           209. In the absence of any jurisdictional basis in statute, equity or contract, it is common ground that the power to award interest can only arise on the ground that this is what a willing licensor and a willing licensee would agree. Lenovo argues that the judge was wrong to hold that a willing licensor and a willing licensee would agree to the payment of interest. In my judgment the judge was correct for the reasons he gave in the FOO [form of order] judgment at [15]-[29] (paragraphs 162-165 above). . . .


           213. In my view the overriding consideration is that it is a very widely accepted principle that the timing of a payment of money should be economically neutral. As the judge noted, Messrs Bezant and Meyer agreed that the economically correct approach was to convert past royalties to present value using a relevant interest rate to reflect the time value of money. Furthermore, both Mr Bezant and Mr Meyer applied this principle when unpacking the Lenovo 7 by calculating the present value of future payments using an appropriate discount rate. Lenovo accepts that they were right to do this for future payments, but the logic is the same for past payments. As the judge noted, this was recognised by Lenovo’s own licensing expert Mr Djavaherian, who said in his second report that “[d]elay can generally be remedied financially via interest payments and the like”.

214. This principle is particularly applicable in the present context for the reasons I have discussed in relation to the issue of limitation, namely that (i) implementers need a licence from day 1, (ii) in principle terms should be agreed with effect from that date and (iii) there should be no incentive for implementers to delay. All of these factors point to the conclusion that a willing licensor and a willing licensee would agree to the payment of interest so as to ensure that the passage of time was cost-neutral to both sides.

The Court further concludes that the trial judge acted within the scope of his authority in awarding interest, setting the rate at 4% (which actually is lower than InterDigital’s borrowing costs over the relevant time period, see para. 221), and compounding it.  Again, I agree fully; as I have often stated, the correct application of the compensatory principle requires that courts take into account the time value of money.     

Third, the Court adjusts the royalty upwards, but not by as much as InterDigital was hoping for.  Mr. Justice Mellor had concluded that there should be a single rate to cover both past and future sales, and had relied on one single license, LG 2017, to calculate that rate.  The LG license had different rates for past and future sales, however, so the trial judge had applied a blended rate which Lenovo’s expert calculated to be $0.24 per unit.  This was then multiplied by 0.728 “to reflect the characteristics of Lenovo’s sales, resulting in a figure of $0.175 per unit” (para. 228).  Lord Justice Arnold perceives three flaws in the trial court’s reasoning:

            252. The first, and most important, flaw is that it is internally inconsistent. On the one hand, the judge was very clear that the heavy discounting for past sales which had been forced upon InterDigital and other SEP owners in their negotiations with implementers, including those leading to LG 2017, was not FRAND for the reasons I have discussed above. He was also clear that Lenovo could not benefit from these non-FRAND factors by relying upon the non-discrimination requirement of FRAND. On the other hand, he declined to make any correction at all to the blended rate per unit derived by Mr Meyer from LG 2017 in order to eliminate these non-FRAND factors when determining a FRAND rate for Lenovo.


            253. Thus the judge used the (surprisingly precise) blended rate per unit of $0.24 per unit which Mr Meyer derived from LG 2017. In order to arrive at a FRAND rate for Lenovo, the judge simply multiplied that figure by the (astonishingly precise) adjustment ratio of 0.728 to arrive at $0.175 per unit. It is implicit in this that the rate of $0.24 per unit was a FRAND rate for LG. Not only did the judge make no such finding in the main judgment, however, but also any such finding would have been difficult to reconcile with the judge’s findings I have summarised in paragraph 229 above. On the contrary, the judge specifically rejected the assumption in Lenovo’s argument that the Lenovo 7 were FRAND “in every particular” at [435] (paragraph 85 above). . . .


            272. The second flaw in the judge’s reasoning is that the judge was not justified in rejecting Mr Meyer’s allocation of the lump sum paid by LG between past sales and future sales for the reasons given by InterDigital (paragraphs 232-238 above). Lenovo’s seventh submission fails satisfactorily to answer those points. . . .


            275. The third flaw in the judge’s reasoning is that he seems to have lost sight of the points that (i) the court’s task is to estimate what rate would be FRAND for Lenovo, which is not a task that admits of the kind of mathematical precision which the judge applied, and (ii) a range of rates may be FRAND, and the SEP owner is only required to offer the FRAND rate most favourable to itself. . . .


            277. Although I have concluded that the judge was wrong not to make any correction for the non-FRAND factors he had identified, it does not begin to follow that he should have applied the future per unit rate of $0.61 derived from LG 2017 by Mr Meyer, as claimed by InterDigital. The fact that the rates for past sales in the Lenovo 7, and in particular LG 2017, were depressed by those non-FRAND factors, does not mean the rates for future sales were not inflated. On the contrary, the judge found that InterDigital had sought to increase its rates for future sales in order to compensate for the heavy discounts it had been forced to concede on past sales, and InterDigital does not challenge that finding. . . .


           279. In my view, the FRAND per unit rate for LG cannot exceed the figure of $[REDACTED] derived by Mr Meyer from Apple 2016. The judge considered that this represented an upper bound ([661], paragraph 110 above; [797], paragraph 138(iii) above). He also found that Apple occupied a unique status in a market ([661]). Neither of these findings has been directly challenged by InterDigital. Furthermore, I accept Lenovo’s point that the fact that all of the blended figures derived by Mr Meyer from the other PLAs in the Lenovo 7 are lower indicates that the rate for LG should be lower than the Apple rate, although I agree with InterDigital that this point cannot be taken too far once comparative volumes and the adjustments required are borne in mind. I also accept that the judge’s views as to the comparability of each of the other six PLAs should be taken into account even though he relied in the end only on LG 2017.


            280. Al l in all, I consider that the highest per unit rate for LG that can be justified as being FRAND is $0.30. I do not pretend this is a precise figure. It is not: it is an estimate. . . .


            282. Ground B [InterDigital’s argument concerning the adjustment ratio to be multiplied by the above rate] is consequential upon ground A. The adjustment ratio of 0.728 used by the judge was a blended past and future adjustment ratio calculated by Mr Meyer. Mr Meyer also calculated a corresponding future-only adjustment ratio of 0.803. InterDigital says that this figure should be used for the same reasons as the future-only per unit rate should be used.


           283. In my view the answer to this ground is the same as for ground A. InterDigital is justified in contending that a correction is required, but it does not follow that the future-only adjustment ratio should be used. The highest ratio that I consider that can be justified is 0.75. Again, this is not a precise figure, but an estimate.

Lord Justice Nugee expresses some reservations concerning InterDigital's appeal, but concurs in the judgment; and Lord Justice Birss concurs with some further explanation of why he agrees with Lord Justice Arnold’s resolution of the final rate.

Friday, July 12, 2024

EWCA Issues Decision in InterDigital v. Lenovo

The ip fray blog has a short post about the decision, in which the court adjusted the royalty owed by Lenovo from 17.5 cents per unit to 22.5 cents per unit--still far below what InterDigital was seeking.  Here is a link to the decision.  This was quick work, seeing how the hearing concluded only a month ago.  I hope to have more to say about the decision next week.  Here's a link to my post last year on the trial court decision.

Thursday, July 11, 2024

Two Recent Papers on Sham Litigation Antitrust Suits

Following up from my Monday post, below are two recent, quite interesting papers addressing the topic of sham litigation antitrust suits.

The first is by Nicholas Hakun and is titled Strategic Litigation and Antitrust Petitioning Immunity, 12 UC Irvine L. Rev. 865, 900 (2022).  Here is a link, and here is the abstract:

            The First Amendment allows a business to sue its competitor even if its goal is to destroy them. It should not, however, protect a lawsuit designed solely to inflict harm collateral to the proceedings. Unfortunately, courts routinely fail to distinguish legitimate suits from predatory shams and have no solution for the litigant whose claims simultaneously achieves both goals.

Sophisticated businesses are weaponizing litigation to inflict harm on their competitors and being rewarded with antitrust petitioning immunity thanks to the Noerr-Pennington doctrine. After decades of divergence between the courts and economists, the doctrine’s sham exception has been outsmarted. Economic analysis proves the sham exception is woefully underinclusive and that more complex predatory suits are being inappropriately immunized. The Third Circuit’s recent AbbVie decision highlights how the existing sham standard sometimes forces courts into anticompetitive outcomes. My proposal is an aggressive, economically robust solution to properly, and fairly, prosecute predatory litigation.

The second, available on ssrn, is by James C. Cooper and Emily Kral, and is titled Too Much Sham Pain.  Here is a link, and here is the abstract:

            The right to “petition the government for a redress of grievances” is vital to a functioning democracy. The preservation of competitive markets also provides tremendous benefits to consumers in the form of lower prices and increased quality. On occasion, however, these important values come into conflict when petitioning harms marketplace rivals. Recognizing this potential conflict, the Supreme Court fashioned the Noerr-Pennington doctrine, which immunizes from antitrust scrutiny legitimate attempts to influence all three branches of government. But so-called “sham” petitioning— engaging the judicial, executive, or legislative branch only as a subterfuge to gain market power via the collateral damage imposed on a rival rather than to vindicate First Amendment rights—can cause real pain for consumers. For example, drug companies have used Noerr to shield their attempts to exploit the Hatch-Waxman Act to impose higher drug prices on consumers through reverse settlements and improper Orange Book listings. In two important cases twenty years apart—California Motor Transport and Professional Real Estate Investors (PREI)—the Supreme Court fleshed out the sham exception but left some important ambiguities. Not surprisingly, the lack of clarity led to a circuit split: while all circuits agree that PREI is the correct standard when entertaining a single petition, they disagree over the standard for determining whether a pattern of petitions is a sham. In this paper, we argue that the two standards can coexist once one understands that the optimal standard for a sham must adjust to its informational environment. Employing error-cost analysis, we derive a likelihood ratio test for sham petitioning that takes into account the increased information that accompanies a larger number of petitions. We show that when there is a sufficiently large number of petitions, lowering the threshold showing for a sham can increase the accuracy of the sham test by dramatically increasing the statistical power of courts to detect sham petitioning (reduce type-II errors), while increasing the level of protection for First Amendment petitioning (reduce type-I errors). Accordingly, maintaining the stringent PREI standard when faced with multiple petitions merely squanders valuable information that could potentially save consumers from suffering the anticompetitive pain that comes with sham petitioning. Importantly, this test maintains a necessary objective component as commanded by PREI. If the test for a sham is too stringent, a substantial amount of anticompetitive behavior that does not vindicate First Amendment values may be immunized and go unaddressed. Thus, getting Noerr’s balance between First Amendment and competition values right is key to prevent consumers from suffering too much sham pain.

Monday, July 8, 2024

Sham Antitrust Litigation and Presidential Immunity

The past few weeks I’ve been working on the chapter of my book project on wrongful patent assertion that addresses the topic of sham (or predatory) litigation antitrust suits.  Often, though not inevitably, the allegedly sham or predatory litigation is an earlier patent infringement suit.  The theory is that sometimes an entity may be motivated to file such a suit not because it wants to win (though it probably wouldn’t mind that), but rather to put the target of the litigation, typically a competitor or potential competitor, at some disadvantage—perhaps to exclude or at least delay them from entering the plaintiff’s market, or otherwise to make them incur costs that will inhibit them from competing effectively.  In other words, the plaintiff’s motivation for suing is not, ultimately, to win—the expected damages or other legitimate benefits, multiplied by the probability of success, alone wouldn’t justify the suit—but to gain some collateral, anticompetitive benefit.  Interestingly, two people that one would not normally categorize as reckless antitrust interventionists, namely Robert Bork (in chapter 18 of his famous book The Antitrust Paradox) and Richard Posner (in one of his early opinions as a federal judge, Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466 (7th Cir. 1982)), both expressed the view that predatory litigation was a problem that antitrust needed to take seriously, because (among other things) it is relatively cheap compared to other types of predation such as predatory pricing, and because the burden of defending a suit can be asymmetric (particularly if the plaintiff is a monopolist and the defendant a prospective new entrant).*  On the other hand, inquiring into whether an entity that filed a previous lawsuit was primarily motivated by a legitimate desire to win, or by the hope that doing so would exclude the defendant regardless of outcome and thus enable the litigant to preserve its market power, is not an easy task.  Further, if the standard is too easy to meet, we run the risk of encouraging nuisance litigation brought by the entity that was the defendant in the earlier suit—so-called “sham-sham” suits, as Christopher Klein and Einer Elhauge have referred to them.  In short, as in other antitrust contexts, you want to figure out how to minimize the aggregate social costs resulting from false positives (wrongly condemning legitimate conduct), false negatives (wrongly exonerating anticompetitive conduct), and adjudication.  An additional wrinkle in relation to sham litigation antitrust suits, moreover, is that the U.S. (and other countries) place substantial weight on the individual’s right of access to the courts.  See U.S. Const. amend. I (“Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances.”).  The easier it is to plead and prove a sham litigation antitrust claim, the greater the risk of judicial error (wrongly condemning a lawsuit as predatory or sham), and thus the greater the risk that, ex ante, litigants will be unduly “chilled”—deterred from exercising their right to petition the government (here, the courts) for redress. 

Over the years, the U.S. Supreme Court has developed a body of law—referred to as Noerr-Pennington immunity, after two cases that established the doctrine in the 1960s—to determine under what circumstances the act of petitioning the government (which includes legislative, administrative, and judicial bodies) is immune from antitrust or other liability.  Most courts and commentators today view the Noerr-Pennington doctrine as grounded in the First Amendment provision cited above (though there remains a lively debate over whether that is the correct way to think about it); but the right is not absolute, and the Court has held in various contexts that a person alleging an antitrust violation premised on petitioning the government can overcome this constitutional immunity by showing that the petitioning was merely a “sham.”  If that showing is made, the antitrust defendant is stripped of its immunity from suit and the antitrust plaintiff can proceed with trying to prove that the sham petitioning enabled the antitrust defendant to acquire or maintain monopoly power.  Elaborating further on this point, in the context of an antitrust suit alleging monopolization by means of sham copyright litigation, the Supreme Court in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60-62, 65 (1993), held that to overcome the antitrust defendant’s Noerr-Pennington immunity the antitrust plaintiff must show both that the earlier suit was “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits,” and that it was subjectively motivated by the desire to “‘interfere directly with the business relationships of a competitor,’ . . . through the ‘use [of] the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon.”  To show that a lawsuit was objectively baseless, the antitrust plaintiff can show that it lacked probable cause, or perhaps that it was filed in violation of Rule 11 of the Federal Rules of Civil Procedure.  This is not impossible, but it is extremely hard to do, and as a result sham litigation antitrust claims rarely succeed—indeed, rarely even need to get to the second, subjective motivation, prong of the test announced in Professional Real Estate Investors.    

While I was in the middle of this project last week, the U.S. Supreme Court announced its opinion in Trump v. United States, addressing the U.S. president’s immunity from criminal prosecution for conduct committed while in office.  As most readers by now will be aware, the majority (6-3) holding is that the president is absolutely immune for conduct falling within the “core” of his official duties; presumptively immune from prosecution for conduct falling “within the outer perimeter of his official responsibility” (but this presumption can, somehow, be rebutted); and not immune from prosecution for “unofficial” acts.  I’m not a constitutional law scholar and, although I certainly have an opinion on the matter, am not going to weigh in on the merits here.  One thing that struck me, however, is the majority’s concession that it will sometimes be difficult to distinguish official from unofficial acts; but that, in making this determination, “courts may not inquire into the President’s motives” (p.18).  If I am understanding this correctly, then, conduct that is “objectively” within the president’s official duties therefore is immune from prosecution, even if the president wouldn’t have engaged in it absent a corrupt motive. 

Thinking about this in relation to the test described above for sham litigation antitrust claims, it’s clear that in both contexts the Court is willing to trade off (potentially) a good many false negatives to avoid as much as possible any risk of false positives or nuisance suits.  That’s obviously not how the Court would describe what it is doing in Trump v. United States, and of course the meaning of false positive is a bit different in the presidential immunity context.  Instead of meaning that the possibility of judicial error and nuisance suits might cause a litigant to refrain from filing a legitimate suit, here it means that the possibility of judicial error and nuisance suits may chill the president from, as the majority puts it, “taking the ‘bold and unhesitating action’ required of an independent Executive” (majority opinion, p.13).  To avoid these risks, we immunize the conduct at issue from liability, unless it is unofficial (Trump) or objectively baseless (Professional Real Estate Investors).  And only if the conduct is unofficial (Trump) or objectively baseless (Professional Real Estate Investors) would we proceed to consider subjective motivation, as the case might warrant.  (In a criminal prosecution, of course, subjective motivation normally would matter a lot.)

In both instances, people may have different views over whether the tradeoff the Court reached is, in fact, firmly rooted in the constitutional structure or text; and also whether, as a policy matter, that tradeoff is optimal.  What is clear is that, in both contexts, society potentially could pay a lot to avoid the chilling effects that are assumed to result from the possibility of false positives and nuisance suits.  And, of course, one downside to making these questions a matter of constitutional law is that we lose flexibility to adjust the balance later on, should we someday come to the conclusion that the tradeoff is off-kilter.       

* I should note, however, that some of what Bork had to say about predatory litigation in The Antitrust Paradox (pp. 358-59), and some passing remarks by Posner in his 2001 book Antitrust Law (pp. 259-60), can also be taken as advocating a restrained approach to sham litigation consistent with Professional Real Estate Investors’ focus on objective baselessness.

Wednesday, July 3, 2024

Contreras on the International Trade Commission

I am very pleased to announce that Professor Jorge Contreras is spending the 2024-25 academic term at the University of Minnesota Law School.  He will subbing for me in the fall, teaching Patents and Copyrights while I am on sabbatical, and then will remain here in the spring of 2025 during a term of leave from the University of Utah.

He recently posted a new paper on ssrn, which I previously read in draft, titled Reconsidering The Patent Jurisdiction of the International Trade Commission, 38 Harv. J.L. & Tech. __ (forthcoming).  The paper has already been noted on Law360 and on Bloomberg, but in case you haven’t seen it yet here is a link and here is the abstract:

            The International Trade Commission (ITC), established in 1916 to protect American markets from unfair foreign imports, has transformed into an alternative court for adjudicating patent infringement disputes, often between domestic companies. While the ITC can impose powerful exclusion orders barring the importation of foreign-manufactured goods into the U.S., it is not bound by judicial precedent concerning injunctive relief. What’s more, the ITC undertakes a duplicative infringement and invalidity analysis of asserted patents, often in parallel with district courts adjudicating the same disputes, with no estoppel effect. As a result, the ITC’s patent jurisdiction, as it has expanded over the years, substantially increases costs for parties and creates inefficiency and unpredictability in the patent enforcement system with little benefit other than the tactical litigation advantage it gives to patent asserters. Today, the ITC’s authority to issue exclusion orders enforced by Customs and Border Protection could easily be handed over to federal courts, as could the ITC’s in rem jurisdiction over infringing articles. Accordingly, it is time to renew calls to reconsider the ITC’s patent jurisdiction and possibly to eliminate it entirely.

I am inclined to agree with Professor Contreras’ analysis, for reasons I briefly touched on in this paper back in 2013.  

While on the topic of the ITC, I should also note the recent commentary considering whether the Supreme Court's recent overruling of Chevron will have any impact on the Commission.  For discussions, see, e.g., here, here, and here.