Friday, April 11, 2014

Some recent scholarship on patent remedies, FRAND

Here are some recent papers I have come across that may be of interest.  I have not yet read any of these in their entirety myself, so I may have more to say about some of them at another time.  Readers can decide from the abstracts if they want to beat me to the punch.   

1.  Professors Benjamin M. Cole, Brent J. Horton & Ryan Vacca have just published Food for Thought:  Genetically Modified Seeds as De Facto Standard Essential Patents in 85 University of Colorado Law Review 313 (2014).  Here is the abstract:
For several years, courts have improperly calculated damages in cases involving the unlicensed use of genetically modified (GM) seed technology. In particular, when courts determine patent damages based on the hypothetical negotiation method, they err in exaggerating these damages to a point where no rational negotiator would agree. In response, we propose a limited affirmative defense of an implied license due to the patent's status as a de facto standard-essential patent. To be classified as a de facto standard-essential patent, the farmer must prove three elements that reflect the peculiarities of GM seeds used in farming: (1) dominance, (2) impracticability, and (3) necessary to fulfill a basic human need, such as for use as food. Based on the approaches used by courts and standard setting organizations in licensing standard-essential patents in technological fields such as cell phones and software, designation of some GM seeds as standard-essential patents allows the courts to imply a license from patentees to farmers on reasonable and non-discriminatory (RAND) terms. Doing so shifts the case from a tort-based patent infringement suit to a breach of contract dispute and alters the damages regime from one based in compensation, deterrence, and punishment (a tort approach) to one based solely in compensation (a contractual approach). As a result of this novel proposal, the damages calculations in these suits return to economic reality.
It appears that a version of the paper is up on ssrn, and the full text can be downloaded from Westlaw.  It doesn't appear to be up yet on the University of Colorado Law Review's website, though I imagine it will be shortly.
2.  Professor David O. Taylor has a paper up on ssrn titled Using Reasonable Royalties to Value Patented Technologies, available here.  Here is the abstract:
In the last several years, commentators have expressed serious concerns with the state of the law governing awards of reasonable royalties as damages in patent infringement cases. Given these concerns, the proper assessment of royalties has been a recent, frequent topic for debate among economists and legal scholars. At the same time, all three branches of the federal government have studied ways to improve the law governing reasonable royalties. In this Article, I focus on the effort to ensure that courts efficiently and accurately award reasonable royalties by emphasizing a fundamental principle: reasonable royalties should value patented technology rather than rights associated with patent ownership. This fundamental principle explains the course of the common law governing the method for calculating reasonable royalties, comports with the public policies identified by courts as guiding the award of reasonable royalties, and, moreover, if fully adopted has significant benefits. I therefore consider several reforms that would focus the law governing reasonable royalty determinations on the value of patented technology, and I highlight several open questions related to full adoption of this fundamental principle.

Professor Taylor presented this paper at the recent PatCon 4 conference, and I am looking forward to reading the paper.

3. Dr. Peter Picht has published a paper titled Standardsetzung und Patentmissbrauch--Schlagkraft und Entwicklungsbedarf des europäischen Kartellrechts ("Standard Setting and Patent Abuse--Effective Potential and the Need for Development of European Competition Law") in 1/2014 GRUR Int. 1.  Here is the abstract (my translation from the German):
Since patent law is not yet in a position to effectively hinder the abuse of standard essential patents, an active competition law enforcement is necessary at present to address such cases.  "Exceptional circumstances", which justify an article 102-based interference with the licensing behavior of patent owners, are present if the welfare-enhancing functions of standardization--namely the selection function, the access function, and the collective use function--are impaired.  In accordance with this rule, the patent owner engages in abusive conduct if he completely refuses a license or demands non-FRAND licensing conditions, after he has failed to disclose his protected right during the standardization process or has made a FRAND licensing commitment.  If the licensing behavior of the patent owner is abusive, so is the patent owner's attempt to enforce his strategy by means of an injunction.  It is not a condition for an accusation of abuse that the respective SSO rules impose relevant behavioral conditions or that the patent owner was a participant in the standardization process.  The behavioral conditions that arise out of article 102 apply not only to the original patent owner, but also to a subsequent transferee.  In a patent infringement suit, a standard user can in particular derive a competition law-based compulsory licensing objection from the abusive behavior of the patentee.  The compulsory licensing mechanism as conceived by the BGH in Orange Book must however be remade, because in its present state it is contrary to European law.  Finally, analysis of the types of cases reveals a gap in competition protection through article 102.  This leads to the consideration, whether the market power requirement should be abandoned for the use of this standard.

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