Friday, February 27, 2015

From Around the Blogs

1.  IPKat has two very interesting posts this morning, one on pending reforms to the law of "groundless threats" in the U.K. (a topic I previously mentioned on this blog here), and another on the possibility that smartphone wars may be brewing in China.

2.  The China-IPR Blog has a post on a draft Judicial Interpretation addressing the topic of preliminary injunctions in China.  For previous discussion on this blog on the topic of preliminary injunctions in China, see here, here, here, here, here, here, and here, as well as my book (pp. 351-52).      

3.  I mentioned the other day (here) that a Texas jury had awarded Smartflash a $530 million verdict against Apple.  Patently-O notes that the jury also found the infringement to be willful, which potentially could lead to an award of up to treble damages--though this is hardly automatic, and (who knows?) the law of willful infringement itself may be in flux (see discussion here).  Meanwhile, Smartflash has filed another suit against Apple (see here).  Smartflash also has claims pending against Samsung.

Thursday, February 26, 2015

Feldman & Lemley on Patent Licensing

Robin Feldman and Mark Lemley have posted a very interesting paper on ssrn titled Does Patent Licensing Mean Innovation?  Here is a link to the paper, and here is the abstract:
A commonly offered justification for patent trolls or non-practicing entities (NPEs) is that they serve as a middleman facilitating innovation, bringing new technology from inventors to those who can implement it. We survey those involved in patent licensing to see how often patent licenses actually led to innovation or technology transfer. We find that very few patent licenses from assertion actually lead to new innovation; most are simply about paying for the freedom to keep doing what the licensee was already doing. Surprisingly, this is true not only of NPE licenses but even of licenses from product-producing companies and universities. Our results cast significant doubt on one common justification for patent rights.
The authors are careful to note the limitations of their survey (sample size, response rate, etc.) and the need for more follow-up research.  They also note that their results do not demonstrate that universities are not engaged in technology transfer (e.g., through startups), and do not call into question the "classic justification for patents," i.e., "to allow practicing entities to exclude competitors from the marketplace"; and that their survey does not examine cross-licensing between competitors, or licensing initiated by a product company approaching a patent holder.  Nevertheless, as they state, the "preliminary picture" obtained from the survey does not support the hypothesis that patent owner-initiated licensing (whether by NPEs or not) spurs very much technology transfer.

If these results are generalizable and supported by further empirical evidence, the implications for patent law could be profound.  As for patent remedies in particular, one of the standard law-and-economics rationales for awarding injunctions is that injunctions (a "property rule," to use the Calabresi-Melamed terminology) encourage voluntary bargaining.  But if a wide swath of infringement arises from independent invention (which appears to be the case) and licensing does not lead to additional tech transfer, the virtues of voluntary bargaining in such cases seem elusive.  Perhaps one could argue as well (in the vein of Ted Sichelman) that in many cases damages in the form of reasonable royalties need not be fully compensatory--what a willing licensor and licensee would have agreed to ex ante--because such damages often constitute nothing more than a tax on innovation.  Nevertheless, the various possible critiques of such an argument (rule-of-law, courts cannot easily formulate a better alternative measure of damages, there are better ways to address the problem than through modifying damages law) may remain.  

Anyway, it's a very provocative paper, and one that will garner considerable attention in the weeks to come.

Wednesday, February 25, 2015

Texas Jury Awards $533 Million in Damages Against Apple

The plaintiff, a patent licensing company called Smartflash, alleged that Apple's iTunes software infringed three Smartflash patents.  Here are links to reports from The Verge, Reuters, Bloomberg Business, and Law360.  Presumably the next stage will be post-trial motions.

Hat tip to my student Susan Hahn for bringing this to my attention. 

Tuesday, February 24, 2015

Objective Reasonableness Remains Relevant Even After Octane Fitness

In Biax Corp. v. Nvidia Corp., a nonprecedential opinion published today (link here), the Federal Circuit reversed a judgment awarding attorneys' fees to the prevailing defendants.  In 2010, the district court entered claim construction orders concerning the patents in suit (which relate to parallel processing computer systems), and in 2012 it granted summary judgment of noninfringement to the defendants.  The Federal Circuit (in an earlier appeal) affirmed without opinion.  While that appeal was pending, the district court granted attorneys' fees to the defendants under 35 U.S.C. § 285 (exceptional case), under the then-prevailing Brooks Furniture standard (objective baselessness and subjective bad faith).  Specifically:
The district court found objective baselessness and bad faith (based on the continued assertion of an objectively baseless claim) and awarded fees for the period between Biax’s expert’s deposition and the district court’s summary judgment decision. The district court reasoned that its 2010 claim construction orders foreclosed Biax’s infringement contentions, but that Biax nonetheless continued to pursue litigation until the court issued its summary judgment order in 2012. Specifically, the district court found that Biax’s litigation position was objectively baseless because Biax “persistent[ly] disregard[ed] . . . the Court’s unambiguous statements in orders,” and that Biax “aggressively pursu[ed] this litigation [in the district court], even after the unequivocal statement of its own expert that defendants’ devices could not infringe the asserted patents . . . .” J.A. 13. On these findings, the district court awarded fees from the time Biax’s expert (supposedly) admitted that Biax had no infringement position under the district court’s claim construction orders to the time when the district court decided summary judgment.
The defendants also sought an award of fees against the plaintiff's trial counsel under 28 U.S.C. § 1927.  This latter statute reads "Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." The district court denied that request, however, on the ground that trial counsel "did not 'exceed[] the bounds of zealous advocacy.' J.A. 22."  

Biax appealed, and the defendants cross-appealed the denial of the § 1927 motion.  While the appeals were pending, the Supreme Court decided Octane Fitness and Highmark (for previous discussion on this blog, see here.)  Octane Fitness overruled the Brooks Furniture standard, which it viewed as "overly rigid," and held instead that "District courts may determine whether a case is 'exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances"; it also held that the standard of proof is preponderance of the evidence, not clear and convincing evidence.  Highmark further holds that the standard of appellate review is abuse of discretion. 

These changes notwithstanding, Judge Dyk (writing for the panel) observes that "objective reasonableness remains a relevant factor."  Reviewing the evidence, the court concludes that, even after the 2010 claim construction, the plaintiff had an objectively reasonable basis for pursuing its infringement theory, concluding among other things that "the district court misread the [plaintiff's] expert’s testimony" and that "the district court’s pre-summary judgment claim construction [did not] foreclose Biax’s infringement position."  As a result:
Because neither the expert testimony nor the claim construction orders foreclosed Biax’s position and there was nothing unreasonable about Biax’s infringement position, the basis for the district court’s award of fees no longer exists. Thus, even applying the deferential standard of review under Highmark, the district court’s fee award must be set aside. In some cases decided under the old Brooks Furniture standard, we have remanded for the district court to consider whether the case is “exceptional” in light of the new Octane Fitness standard. See, e.g., Checkpoint Sys., Inc. v. All-Tag Sec. S.A., 572 F. App’x 988 (Fed. Cir. 2014). A remand is not necessary here because neither the defendants nor the district court has suggested any basis for awarding fees other than the lack of objective reasonableness, and the resulting bad faith from continuing to litigate an objectively baseless position. Therefore, we reverse rather than vacate the fee award.
The court also affirmed the denial of fees under § 1927.

Monday, February 23, 2015

Larouche and Zingales on Injunctions and Standard Essential Patents

Pierre Larouche and Nicolo Zingales have published a paper titled Injunctive Relief in Disputes Related to Standard-Essential Patents: Time for the CJEU to Set Fair and Reasonable Presumptions in 10 European Competition Law Journal 551 (2014).  Here is a link to the paper (there is also a version on ssrn here), and here is the abstract:
Should injunctive relief be available to the holder of a Standard-Essential Patent (SEP) which committed to license on fair, reasonable and non-discriminatory (FRAND) terms, in order to prevent a third-party implementer from practicing a standard reading on that SEP, when that implementer is willing to take a license but the parties disagree on the terms of the license? This paper focuses on the peculiar European dimension of this debate. It examines how Directive 2004/48 on the enforcement of intellectual property rights, while topical, has been implemented and applied in diverging ways across leading Member States. EU competition law can be used fill in that harmonization gap. The paper reviews the recent Motorola and Samsung decisions of the Commission, and sets out the issues in Huawei v. ZTE, now pending before the Court of Justice of the European Union (CJEU). The CJEU should be aware of the broader role and impact of EU competition law in these matters, and should seek to use its impending judgment to set the right presumptions for the application of competition law in SEP disputes involving FRAND commitments. 
Although I ultimately disagree with some of the authors' conclusions (among them that holdup is "exceptional"), the paper is quite interesting, in particular for its discussion of the conditions for obtaining permanent and preliminary injunctions in England, Italy, France, Germany, and the Netherlands.  Given some differences among these jurisdictions regarding the conditions under which injunctive relief is appropriate, the authors argue that using European competition law to address the question of when SEP owners may seek injunctions may help to harmonize the approach to this question.  I'll have to give this some more thought; it is an issue that had not occurred to me in my previous musings on the advantages of applying competition law versus the law of patent remedies to this question.  

I also appreciate the authors' cite to this post from the blog (see p.573 n.108), although I think they may be confusing me with the eminent Professor Thomas Cottier, an international IP scholar at the University of Bern.  (It's happened before, and Professor Cottier is a highly esteemed scholar, so I don't mind.)  To date, I don't think I've been confused with this Thomas Cotter, who appears to be doing great work in biochemistry; or with this fellow, though I understand he's pretty funny.

Friday, February 20, 2015

Hoppe-Jänisch on Important German Patent Cases Since 2013 (Part 2)

I mentioned last month (here) that Daniel Hoppe-Jänisch had recently published an article titled Die Rechtsprechung der Instanzgerichte zum Patent- und Gebrauchsmusterrecht seit dem Jahr 2013 ("The Patent and Utility Model Case Law of the Lower Courts Since 2013") in the December 2014 issue of GRUR RR.  My previous post provided a brief overview of Mr. Hoppe-Jänisch's discussion of some recent German cases on injunctions and royalties, and stated that I might return to some of the other topics discussed in the paper in a future post.  (Since then, Mr. Hoppe-Jänisch has sent me an English-language version of the article, which I believe will be published sometime in the near future.  The quotes below are from this version of the paper.)

The portion of the paper on preliminary injunctions states, among other matters, that in pharmaceutical patent litigation German courts sometimes have "waived the requirement of a positive decision on the patent's validity as evidence for a sufficient legal validity," because of the "often . . . enormous damage the generics companies would cause if the patent would later be upheld."  (Recall that, in Germany,  infringement and validity are bifurcated, but that courts are hesitant to award preliminary injunctions absent some indication that the patent is valid.)  Nevertheless, according to Mr. Hoppe-Jänisch, the Düsseldorf District Court has indicated that such a waiver is not appropriate in other pharmaceutical patent cases--typically "the patent must have already survived opposition or nullity proceedings"--nor, according to a different case from that same court, is a waiver appropriate when the moving party asserts, as a basis for the preliminary injunction, only an unexamined utility model.

Another requirement for obtaining a preliminary injunction in Germany is urgency (Dringlichkeit).  One of the cases Mr. Hoppe-Jänisch discusses on urgency is a decision of the Hamburg District Court holding that the mere fact that a product has been advertised at a trade fair in another country is not sufficient to demonstrate an urgent need for a preliminary injunction in Germany.  (However, there is a split of opinion on this issue.) 

On the issue of stays, the Karlsruhe Oberlandesgericht held that a "qualified note" (qualifizierter Hinweis) or "interim assessment of the merits" from the Bundespatentgericht questioning the validity of the patent in suit usually leads to a stay of execution.  In addition, the Düsseldorf District Court in another case held that a "one product company" is not necessarily faced with irreversible harm (thus potentially justifying a stay under section 712 of the Civil Code), if there are alternative embodiments available to it. 

I'll provide more information on publication of the English-language version of the paper when it becomes available to me.  For previous discussion of preliminary injunctions in Germany on this blog, see here here, and here.

Wednesday, February 18, 2015

Nakamura on Patent Damages in Japan

Nodoka Nakamura has published a paper in the November 2014 issue of A.I.P.P.I.--Journal of the Japanese Group of AIPPI titled Recent Trends in Court Judgments Concerning Damages in Japanese Patent Infringement Litigations (pp.  389-410).  Ms. Nakamura ‘s study is based on her review of court judgments handed down from January 1, 2003 to January 30, 2014, and listed in the appendix to the article.  As such it provides a very useful  description of current Japanese case law relating to lost profits, infringers’ profits, and reasonable royalties.

As Ms. Nakamura explains, article 709 of the Japanese Civil Code article 709 provides a general right to recover compensatory damages for the violation of one’s rights, but in practice it is very difficult for patent owners successfully to invoke this provision.  (See also my book, pp.307-08, 310).  In response to this problem, the Patent Act itself includes article 102, paragraphs 1-3 of which in relevant part read as follows:

    (1) Where a patentee or an exclusive licensee claims against an infringer compensation for damage sustained as a result of the intentional or negligent infringement of the patent right or exclusive license, and the infringer assigned articles that composed the act of infringement, the amount of damage sustained by the patentee or the exclusive licensee may be presumed to be the amount of profit per unit of articles which would have been sold by the patentee or the exclusive licensee if there had been no such act of infringement, multiplied by the quantity (hereinafter referred to in this paragraph as the “assigned quantity”) of articles assigned by the infringer, the maximum of which shall be the amount attainable by the patentee or the exclusive licensee in light of the capability of the patentee or the exclusive licensee to work such articles; provided, however, that if any circumstances exist under which the patentee or the exclusive licensee would have been unable to sell the assigned quantity in whole or in part, the amount calculated as the number of articles not able to be sold due to such circumstances shall be deducted.
    (2) Where a patentee or an exclusive licensee claims against an infringer compensation for damage sustained as a result of the intentional or negligent infringement of the patent right or exclusive license, and the infringer earned profits from the act of infringement, the amount of profits earned by the infringer shall be presumed to be the amount of damage sustained by the patentee or exclusive licensee.
    (3) A patentee or an exclusive licensee may claim against an infringer compensation for damage sustained as a result of the intentional or negligent infringement of the patent right or exclusive license, by regarding the amount the patentee or exclusive licensee would have been entitled to receive for the working of the patented invention as the amount of damage sustained.
Thus, the first paragraph provides for the recovery of lost profits; the second for an award of the infringer’s profits (seen, however, as an alternative way of calculating the plaintiff’s actual loss); and the third for a reasonable royalty.

I recommend that readers interested in Japanese law take a look at the entire paper, but here are few highlights drawn from Ms. Nakamura’s discussion of the recent cases:

1.  In calculating lost profits under article 102(1), it is no longer the case that the patent owner must be selling products incorporating the patented technology.  Rather, it is sufficient if the patentee sells products that compete with the infringing products (see p.393; see also my book pp. 318, 324).  The paper also provides an overview of the case law on what costs should be deducted to determine the patentee’s profit margin (pp. 394-95).  In addition, as Ms. Nakamura discusses courts make may further deductions by taking into account whether there are circumstances suggesting that the patentee would not have made as many sales as the defendant, and the extent to which the patent contributes to the patentee’s profit margin (including “the technical significance of the invention” and “alternative technology”) (p.396).  In the majority of cases, these deductions amount to almost all (95-100%) or very little (1-20%), with “almost no court judgments where an intermediate value was used” (p.397).

2.  Courts consider similar factors in determining the defendant’s profit margin and the contribution of the invention to the defendant’s profits (pp. 398-401).  In addition, the recent case law holds that, as under article 102(1), damages under article 102(2) are available even if the patentee does not sell products embodying the patented technology, as long as the patentee sells products that compete with the infringing products (p.398; see also my previous discussion of this issue on this blog, here).

3.  In cases in which the patentee would not have made as many sales as the defendant made, Japanese courts have not awarded a reasonable royalty on the infringing sales that did not deprive the patentee of sales (pp.397, 401).  My own view is that this is not a sound economic result (see my book pp. 317-18); I still intend to do further research on how other countries handle this issue.  (in the U.S., the patentee could get a royalty on the infringing sales that did not displace its own sales.)

4.  Ms. Nakamura gives a good overview of the factors Japanese courts take into account in determining reasonable royalties (p.403), including some which appear to be of the “ex post” variety.  Interestingly, she concludes (p.404) that “there has not been a trend for the court to decide a higher royalty rate than those decided prior to” a 1999 statutory amendment that removed the word tsujono (“normally”) from what is now article 102(3).  For discussion in my book, see pp. 311, 321-22.          

Monday, February 16, 2015

Monday Miscellany: Saisies-Contrefaçon, Border Measures, Design Crime, and Noninfringing Alternatives

1.  Pierre Langlais and Deborah Dayan have published a paper titled Saisie-Contrefaçon:  points de vigilance -- Panorama de Jurisprudence (juin 2013 - septembre 2014) in the November 2014 issue of Propriété Industrielle at pages 8-13.  The abstract reads as follows (my translation from the French):
The saisie-contrefaçon is a fundamental method of proof in regard to infringement.  Because of its extraordinary character, the saisie-contrefaçon procedure is subject to strict rules, and decisions calling saisies into question are myriad.  2013 and 2014 have been richer still in teachings in this regard.  The retrospective table below has for its objective the presentation of a panorama of cases in order to call to the attention of litigants the different risks tied to the saisie-contrefaçon. 
2.  In the October issue of GRUR (pp. 921-24), Thomas Kühnen published  the second installement of his Die Haftung wegen unberechtigter oder zu Unrecht unterbliebener Grenzbeschlagnahme nach der VO (EU) Nr. 608/2013 ("Liability for unauthorized or unenforced border measures under Regulation (EU) No. 608/2013).  For my post on Part 1, see here.  Here is the abstract:
Border measures are directed against goods that are suspected of infringing an intellectual property right.  Subsequently it may turn out that there actually was no infringement, in which case the commercial consequences for the victim of the unauthorized seizure can be grave.  On the other hand, the IP owner also can suffer injury to its property, if the Customs Authorities do not take objectively reasonable measures and thus allow, to the detriment of the IP owner, competition from infringing products.  This essay attempts the first systematic analysis of the liability problem.  In connection with Part 1 (GRUR 2014, 811), which addresses the liability of Customs Authorities, Part 2 follows up with the liability of movants and of persons entitled to dispose of the property. 
3.      David Musker has published Design crime: back to the future or forwards to the past?, in 9 Journal of Intellectual Property Law & Practice No. 12, pp. 976-84 (2014).  Here is a link to the paper, and here is the abstract:
The Intellectual Property Act 2014 has controversially created new criminal offences, and magistrates will therefore find themselves dealing with design infringements.  This is not, however, the first time:  the magistrates' courts also had jurisdiction over registered design piracy between 1842 and 1883, and many of the concerns recently raised during passage of the Intellectual Property Act were played out before them.  This article examines some of the cases as reported through the eyes of the Victorian press.
Readers may recall that Professor Sarah Burstein published a guest post here on the new UK design crime law. 

4.  Finally, over at Sufficient Description Norman Siebrasse recently published two very good posts (here and here) relating to the relevance to patent damages of noninfringing alternatives, in the context of a critique of the recent Canadian case of Eli Lilly v. Apotex.  (I blogged about the case recently here.)  He also has a (more favorable) post on the Canadian court's handling of the compound interest issue here.

Thursday, February 12, 2015

Lincoln, Darwin, and Invention

Abraham Lincoln and Charles Darwin were both born on February 12, 1809.  In honor of their joint birthdays, last year on February 12 I published a post titled "Lincoln, Darwin, and Invention."  In case you're new to the blog and think this might be of interest, here's a link.

Wednesday, February 11, 2015

Should Licensees Have a Right to Recover Royalties Paid on a Patent That Is Later Found To Be Invalid or Not Infringed?

Before I begin this post, I'd like to take the opportunity to thank Professor Michael Grünberger and the University of Bayreuth for their hospitality in hosting the conference this past weekend on Intellectual Property and the Public Domain.  All of the presentations were outstanding, and it was great to meet and talk with some of the leading European IP scholars, judges, and students.  I believe that at least some of the presentations will form the basis for papers to be published in a future issue of Zeitschrift für Geistiges Eigentum (ZGE) / Intellectual Property Journal (IPJ).

On the first day of the conference, Professor Alexander Peukert of Goethe University gave a very interesting presentation on the public domain, toward the end of which he critiqued the default rule under which IP licensees have no right to recover royalties they paid prior to the invalidation of the IP right.  (This is the default rule, by the way, in the U.S.,  as well as in Germany, and Japan (see my book pp. 269, 331), and I would guess in many other countries as well.)  Professor Peukert critiqued the rule because in effect the licensee may wind up paying for something that was in the public domain.  In response, I suggested that his proposed elimination of the rule might make licensees worse off, because if licensees had an inalienable right to recover back those royalties they would in effect be shifting the risk of invalidity to licensors, and this in turn would provide licensors with an incentive to demand higher royalties to compensate for the added risk they (the licensors) would be taking on.  Professor Peukert then clarified that he had in mind only a switch of the default rule, so that the presumption would be that licensees get their royalties back, but the parties could alter this presumption by contract.  In his view, this would make licensees more conscious of the possibility that the IP might be invalid and, perhaps, less likely to license a right that may be invalid.

Perhaps he is right, but the Coase Theorem would suggest that the default rule is irrelevant if transaction costs are zero and there are no other bargaining obstacles.  Of course, transaction costs are rarely zero, so often the default rule does matter, but in this instance is there any reason to think that it would be more  difficult to contract for a right to recover back royalties under the current default rule, than it would be to contract away from this right under the proposed default rule?  I'm not sure it is.  I certainly wouldn't presume that licensees typically are the parties with weaker bargaining power, to the extent that matters; and I would think that before licensing an IP right one would give some thought as to whether it is likely valid and infringed.   (There may be certain predictable exceptions to this expectation, e.g., when PAEs approach small businesses and threaten to sue; but we can deal with that problem in other ways, I should think.) 

Another possible qualification of the Coase Theorem would arise when a party values having an entitlement more than she values acquiring it, that is, when there is an endowment effect present.  (An endowment effect is present when the amount one would be willing to accept to transfer an asset is greater than the amount one would be willing to pay to acquire it.  There's a large literature in behavioral law and economics on the topic.)  If licensees value having a right to get back their royalties more than they would pay to acquire such a right, the efficiency consequences of one default rule over the other are ambiguous.  But again it's not clear to me why we should assume that licensees (at least licensees that are corporate entities) would suffer from endowment effects; and even if they did, again at best I think all we can say is that the choice of default rule is unclear (though then I suppose one could use Professor Peukert's championing of the public domain as a tie-breaker).  Finally, if there are few bargaining obstacles and parties normally don't depart from the current default rule, that might suggest that by and large they prefer for licensees to bear the risk of noninfringement and invalidity (and to be compensated for this in the form of lower royalties) than the other way around, in which case a switch of default rules itself would lead to needless transaction costs to bargain around it.

For these reasons, I'm not convinced by the proposal that the default rule should change, though I'm open to argument that the default rule at issue is "stickier" than I imagine.  In any event, I thank Professor Peukert for having stimulated thought on an interesting topic--one that is reminiscent in some ways of the current debate in the U.S. over whether a contract to pay post-termination royalties should be unenforceable per se (see most recent blog post here).  Another related topic, which I discuss briefly in my book, is whether licensees should be able to contract away their right not to challenge patent validity and infringement.  I used to think the answer was yes, but I am somewhat more skeptical now of my earlier position because of the potential effect on third parties if the party with the greatest incentive to challenge validity bargains away that right.  Finally, to the extent that a real-world licensee bears a risk that an infringer does not--that she will have to pay for the prejudgment use of an IP right that is subsequently invalidated--reasonable royalty damages should, in this regard, be appropriately higher than real-world licensing fees (as is sometimes the case in Germany and France, for this very reason; see also my paper with Norman Siebrasse, where we discuss the relevance of risk shifting to the calculation of reasonable royalties.) 

Finally, since I mentioned the endowment effect above, I should note the following quote from (arguably) Bayreuth's third-most famous one-time resident (after Wagner and Liszt), the nineteenth century writer Jean Paul, which I noticed in the hotel restaurant (which had a string of his quotes above the breakfast bar):
Der Besitz macht uns nicht halb so glücklich, wie uns der Verlust unglücklich macht.
I'd translate this as "Ownership makes us not half so happy, as loss makes us unhappy."  A better description of the endowment effect would be hard to come by.  So it appears that Jean Paul anticipated the behavioral law and economists by at least a century and a half! 

Tuesday, February 10, 2015

Qualcomm Settles Antitrust/Patent Royalty Dispute with China for $975 million

Readers may already have read about this news, which broke yesterday, but here is the story from today's Wall Street Journal, Reuters, and Bloomberg Business.

In other news, here's an article by Ryan Davis in Law360 about the recent IEEE FRAND policy change.

Monday, February 9, 2015

Impact of IEEE SEP Policy Change

There's been some discussion today of the IEEE's new policy for standard essential patents (SEPs), under which a FRAND commitment made to the IEEE will now signify "that reasonable terms and conditions, including without compensation or under Reasonable Rates, are sufficient compensation for a license to use those Essential Patent Claims and precludes seeking, or seeking to enforce, a Prohibitive Order except as provided in this policy."  My initial thought is that the language about prohibitive orders (injunctions and exclusion orders) isn't likely to change much in the U.S., where courts more likely than not will deny injunctions for the infringement of SEPs anyway under the eBay standard.  As for other countries, my recollection is that European commentators have expressed doubts whether FRAND commitments are enforceable contracts (under German law, at any rate), and most countries still grant injunctions more or less as a matter of course unless the patent owner's request for an injunction constitutes either a violation of competition law (at issue now before the CJEU in the Huawei case) or an abuse of right (as found by the Japanese IP High Court in Samsung v. Apple, see blog post here).  If the CJEU adopts AG Wathelet's competition law analysis in Huawei (see blog post here), however, maybe the IEEE's new policy won't change matters much in Europe either, though it seems to me that there still might be room for discussion whether the other requirements for showing abuse of dominant position will necessarily always be satisfied if the patent is standard-essential.  And of course if you figure you can't get an injunction in the U.S. you may wind up agreeing to a global royalty which moots the issue of trying to get an injunction anywhere else.  Nevertheless, I wonder whether the policy change leaves open the possibility that an SEP owner could seek an injunction in violation of the policy and wind up obtaining the injunction anyway, if the requirements for showing a competition law violation are not all present--or would seeking the injunction necessarily amount to an abuse of right?  I hope that someone better versed than I in the civil law's abuse of right doctrine will take this matter up in the coming weeks . .  .

For my previous posts on the new IEEE policy, see herehere, here, here, and hereSee also coverage today in the Wall Street Journal and (behind a paywall) Bloomberg BNA Patent, Trademark & Copyright Daily

Thursday, February 5, 2015

Petitioner's brief and amicus briefs filed in Kimble v. Marvel Enterprises

Readers may recall that the U.S. Supreme Court recently granted certiorari in Kimble v. Marvel Enterprises, to decide whether or not to overrule Brulotte v. Thys, a 1964 decision holding that postexpiration patent royalties are per se unlawful.  (For previous blog posts on the matter, see here, here and here.)  The petitioner's brief has now been filed and is available here.  The Center for Intellectual Property Research of the Indiana University Maurer School of Law has filed an amicus brief in support of the petitioner (which I joined), and it is available here.  Several other amicus briefs have been filed, expressing a variety of views.  Other briefs in support of petitioners are from Biotime, Inc.; Intellectual Property Owners AssociationMemorial Sloan Kettering Cancer Center et alNYIPLA; and the University of Massachusetts Biologic Labs. In support of neither party are the briefs filed by AIPLA (which however argues against overruling Brulotte); the Bar of the City of New York (but arguing in favor of overruling); Professor Robin Feldman et al. (arguing for modification of the Brulotte standard); the Intellectual Property Law Association of Chicago (arguing in favor of overruling); and the Licensing Executives Society (U.S.A. and Canada), Inc. (arguing for modification of the current application of the rule).  I understand that the Solicitor General's brief and at least one other amicus brief supporting the respondents' position will be forthcoming in March.

Wednesday, February 4, 2015

Some Upcoming Events on Patent Remedies and Other Topics

1.  I will speaking on patent remedies at two upcoming events.  First, on Tuesday, March 3, at 3 p.m. I will be presenting a 90 minute talk at Robins Kaplan LLP in Minneapolis titled "The Changing Landscape of Patent Damages."  The event is not listed yet on the firm's website but should be shortly.   Here is the description:
Over the past decade, eight-, nine- and even ten-figure damages awards have become a recurring feature in U.S. patent litigation.  At the same time, the law of patent damages itself has undergone a sea change as a result of Supreme Court and Federal Circuit case law, while Congress, the Federal Trade Commission, and other bodies all have considered or advocated further  reforms.  During this 75-minute CLE, Professor Thomas F. Cotter will focus on cutting-edge damages issues including: (1) the different methodologies courts use for determining lost profits; (2) changes to the law of reasonable royalties, including use of the entire market value rule, the 25% rule of thumb, and the ‘book of wisdom’; the “hypothetical bargain” versus the analytical approach for calculating royalties; and the admissibility of expert testimony based on methodologies such as the Nash Bargaining Solution and conjoint analysis; (3) awards of ongoing royalties when courts deny injunctive relief post-eBay; (4) awards of fair, reasonable, and nondiscriminatory (FRAND) royalties for the infringement of standard-essential patents; (5) awards of infringers’ profits as a remedy for design patent infringement (Apple v. Samsung); and (6) recent changes (and prospects for further changes) to the standards for recovery of attorneys’ fees and enhanced damages for willful infringement
Second, on Friday, March 20 I will be presenting a 6 1/2 hour (yes, you read that correctly) CLE at the University of Minnesota Law School titled "Patent Remedies and Patent Assertion Entities."  Here is a link to information on the entire CLE series.  Here is the description of my talk:
This course will provide a comprehensive guide both to the fast-changing law of patent remedies (injunctions, damages, and declaratory judgments) and to possible legislative and judicial responses to patent assertion entities (PAEs), companies that sometimes pejoratively are referred to as ‘patent trolls.’  The morning session will cover recent changes to the law of preliminary and permanent injunctions in the wake of eBay v. MercExchange, including Federal Circuit case law on irreparable harm, substantial merit, and causal nexus; whether PAEs, owners of standard-essential patents (SEPs), and other entities are now effectively precluded from obtaining injunctive relief; how courts determine ongoing royalties when they deny injunctions; and the availability of exclusion orders before the International Trade Commission.  In addition, it will cover the law of patent damages, including lost profits and reasonable royalties, with discussion focusing on matters such as use of the entire market value rule and the ‘book of wisdom’; the hypothetical bargain versus the analytical approach for calculating royalties; and the admissibility of expert testimony based on methodologies such as the Nash Bargaining Solution and conjoint analysis.  The afternoon session will cover accountings of infringers’ profits as a remedy for design patent infringement; the Supreme Court’s recent decisions on, and possible legislative changes to, the law on recovery of attorneys’ fees; developments in the law of enhanced damages for willful infringement; awards of prejudgment interest; and the law of declaratory judgments as reflected in the Supreme Court’s recent decisions in MedImmune and Medtronic.  Finally, the session will conclude with an overview of the theoretical and empirical evidence for and against charges that are sometimes leveled against PAEs, as well as various possible claims that might be brought against these entities under unfair competition, antitrust, consumer protection, or newly enacted state or federal laws.  Throughout, the course will focus principally on U.S. law but also, given the global nature of many patent disputes in the modern world, will highlight instances in which the law of other major patent systems is similar or different.
2.  I also will be speaking at three other upcoming events that are not limited to patent remedies (though two of the three will touch on the subject, among others).  First, this coming Friday (February 7) I will be presenting "Legal Pragmatism and Intellectual Property" at a conference at the University of Bayreuth, which I previously mentioned here.  Second, on Tuesday, February 10 I will be participating in an ABA IP Roundtable at the Briggs and Morgan firm in Minneapolis on "The 3D Revolution:  IP Issues Arising from the Proliferation of 3D Printing."  Information is available here.  Third, on Friday, February 27 I will be on a panel titled "The Rule of Reason After Actavis" at the University of San Francisco School of Law's conference "After Actavis:  Litigating Reverse Payment Cases."  Here is a link.  

It's going to be a busy couple of months!  As always, I hope some of my readers will be able to attend these events--I'm always happy to meet you.

3.  The ABA Section of Intellectual Property Law is sponsoring a couple of upcoming remedies-related events as well.  First, it is a cosponsor of a February 17 webinar titled "Attorney's Fees, Costs and Other Fee-Shifting Measures in Patent and Trademark Litigation."  Information is available here.  Speakers include Kara Fussner, Naomi Jane Gray, Jared Egan Hedman, and Andrew Williams.  Here is the description: 
This program will provide you with an understanding of the different means by which attorney's fees and costs can be recovered in patent and trademark lawsuits. It will also include discussion on how the standards for recovering such fees and costs have changed in light of recent Supreme Court cases, often referred to as Octane Fitness and Highmark, and examples of recent motions for attorney's fees in the district courts. The panel will offer practical considerations for seeking and defeating motions for such fees and costs, and whether such fees can be imposed on an attorney.
Second, the ABA IPL Section is holding its 30th Annual Intellectual Property Conference in Bethesda, Maryland, from March 25-27 (link here).  Among the many programs on patents, copyrights, and trademarks is one on Thursday, March 26 at 3:30 titled "Modern Approaches to Calculating Reasonable Royalty Damages," which is described as follows:
The Federal Circuit is fundamentally transforming patent damages. Old rules of determining a reasonable royalty are being upended, as the Federal Circuit has increasingly scrutinized methods used for the calculation and the evidence relied on at trial, and is therefore establishing new rules. Patent owners and accused infringers alike need to incorporate the Federal Circuit’s guidance into litigation strategies going forward. This program will shed light on how to present reasonable royalty damages theories at the district court and appellate stages of litigation.
Speakers are Matthew Blackburn, Andrew Carter, William Choi, and Gregory Pinsonneault.  Also of particular interest to readers of this blog may be two other sessions, the first being a Wednesday, March 25 session at 1 p.m. titled "Smartphones and the Patent Battleground:  Is Peace at Hand?"  Here's the description:
The smartphone wars continue to rage around the world, in and out of court. Patent portfolios, used offensively and defensively, are increasingly involved in smartphone skirmishes. The skirmishes’ outcomes fundamentally impact the national and international mobile device landscapes. Has the world as we know it ended? Or will the combatants fight back to the pre-smartphone wars status  quo? The discussion among expert panelists will revolve around these and similar questions, dissecting recent developments in the global smartphone wars, assessing combatants’ grand strategies and tactics, and analyzing the wars’ possible outcomes and impact to industry.
Speakers incolude Deanna Tanner Okun, Hon. Theodore Essez, Kirti Gupta, David Long, and Richard Taffet.  Second, there is a Friday, March 27 session at 3:30 p.m. titled "Hot Topics in Antitrust/IP," which is described as follows:
This program will cover the fundamentals of current hot topics in the Antitrust/IP intersection. Recent antitrust mergers involving technology companies and conduct cases will be reviewed. Specific topics will include reverse payments, pay for delay, SEPs, the FTC PAE study and other related topics.
Speakers include Jorge Contreras, Rosanna Lipscomb, Michael McFalls, Suzanne Munck, and Scott Sher.