Comments on India's DIPP Paper on SEPs and FRAND

Recently I published a post linking to the India Department of Industrial Policy and Promotion (DIPP) Discussion Paper on Standard Essential Patents and Their Availability on FRAND Terms (available here) and the comments submitted by the the Global Antitrust Institute, George Mason University School of Law, on the India Department of Industrial Policy and Promotion's Discussion Paper on Standard Essential Patents (available here).  Some of the other comments that were received prior to the April 22 deadline are available on the Centre for Internet and Society website here, and I understand that others may yet be added.  The ones available thus far include:

Comments of the Centre for Internet and Society (CIS), India;

Comments by Professor Jorge Contreras (who brought this collection of comments to my attention); 

Joint Comments by the American Bar Association Sections on Antitrust Law, Intellectual Property Law, International Law, and Science and Technology Law; and

Comments of CMAI-TEMA (Communication Multimedia and Infrastructure Association of India - Telecom Equipment Manufacturers Association of India).

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In other news, the U.S. Court of Appeals for the Federal Circuit today denied a petition for a writ of mandamus in In re T.C. Heartland LLC, a case in which the petitioner challenged the Federal Circuit's long-standing interpretation of the federal patent venue statute.  Though not directly related to patent damages, the court's interpretation makes it very easy for patent plaintiffs to engage in forum shopping, which is a major reason why so many U.S. patent actions are filed in the Eastern District of Texas or (as here) the District of Delaware.  I'd expect a petition for rehearing en banc or cert petition.

Two New Papers on Postexpiration Royalties

1.  Wei-Lin Wang has published an article titled A Study on the Legality of Royalty Collection Clauses after Expiration of Patent Rights, 15 J. Marshall Review of Intellectual Property Law 213 (2016).  Here is a link to the article, and here is the abstract:

Whether a contract clause may permit a patent owner to continuously collect royalty payments from a licensee after the expiration of its patent rights is a highly controversial issue in practice. Some believe that because patent rights are a kind of monopoly granted by the government, it shall not be extended after expiration; otherwise, it shall be regarded as patent misuse and/or unfair competition as the case may be. Nonetheless, others believe that this kind of clause is actually beneficial to a licensee because the licensee is allowed to make royalty payments throughout the whole patent term and even after expiration, which is helpful in terms of innovation. Regarding such debate, the Supreme Court of the United States adopts the view of the former, strongly opposing the collection of royalties after a patent’s expiration. Recently in Kimble v. Marvel, the Supreme Court reviewed this issue all over again. The Supreme Court reasoned that, although its former judgment might have certain flaws, there are no special justifiable reasons to correct such former judgment, and according to the doctrine of stare decisis, a court must abide by its former judgment in order to maintain the reliability of judicial decisions. The Supreme Court leaves such issues to the hand of Congress, waiting for future amendments to the law. Hence, this issue has not yet been settled and needs further clarification by the judicial and legislative branches of the United States. The author believes that such clauses might be simultaneously good and bad for innovation and economic efficiency depending upon the circumstances and, therefore, the correct approach is to examine such clauses based on the “rule of reason” principle. The author offers suggestions regarding this issue after comparing different views and approaches adopted by the relevant authorities of the United States and Taiwan.

Note that, although the abstract refers to "relevant authorities of the United States and Taiwan," I don't see anything in the article referencing Taiwanese authorities.

 

2.  Richard H. Stern has published an article titled Kimble:  Patent Misuse Through the Lens of Patent Policy, Not Antitrust Policy, 38 European Intellectual Property Review 182 (2016).  (For those of you with Westlaw accounts, this journal is available on Westlaw under "International Materials > European Union > European Union Journals".)  Here is the abstract:

In its first important patent misuse decision in more than four decades, the Kimble case, the US Supreme Court rejected several decades of efforts in the Federal Circuit and other lower courts to limit the scope of the patent misuse doctrine. That doctrinal counter-movement had sought to confine assertion of a misuse defence to cases where the practice challenged as misuse had severe anti-competitive effects in a relevant market that were comparable to those required to support a conclusion of antitrust violation. In addition, the Federal Circuit had carved out of the misuse and exhaustion doctrines all "conditional" sales by patentees (sales that the patentee had made subject to conditions such as limitations on use), drastically curtailing the application of those doctrines. Yet the Supreme Court had, early in the 20th century, held that patentees could not lawfully impose conditions on products they sold, expressly overruling cases upholding that practice. In its Kimble decision, the Supreme Court rejected the application of antitrust policies to the analysis of patent misuse. Misuse is based on patent policy, the Kimble court held, not antitrust policy, and it seeks to further the accomplishment of goals of the patent system, not those of the antitrust laws. Kimble thus calls for a return to the patent misuse doctrines that the Supreme Court declared during the first half of the 20th century and a rejection of the later contrary movement in the last part of the 20th century. The reasoning of the court not only rejects any requirement of anti-competitive market effects for making a misuse holding, but it undercuts any use of "conditional" sales for imposing restrictions.

I'd note only that the Federal Circuit's recently-decided en banc decision in Lexmark Int'l, Inc. v. Impression Products, Inc. (see my post here) doesn't read Kimble or other Supreme Court case law as preventing conditional sales (a possibility Mr. Stern himself foresaw, see p.189).  There is a cert petition pending in that case, though.  For my own (negative) view of Kimble, see my post here.

Patent Remedies at the ALEA Annual Meeting

The American Law & Economics Association will hold its annual meeting at Harvard Law School May 20-21.  Information is available here, and the program here.  Norman Siebrasse and I will be presenting our paper The Value of the Standard, which I have previously mentioned on the blog here.  In addition, Erik Hovenkamp will be presenting a paper titled A Broader Look at Patent Royalties and Antitrust, which I mentioned on the blog here, and Mengxi Zhang will be presenting his paper Optimal Remedies for Patent Infringement (coauthored with Keith Hylton), which I mentioned on the blog here.  There also will be several other papers dealing with various aspects of intellectual property law, among other fields, in what looks to be a very stimulating conference.  I'm looking forward to it.

In other news, the U.S. Supreme Court today hears oral argument in Kirtsaeng v. John Wiley & Sons, Inc., on the question of the appropriate standard for awarding the prevailing party its attorneys' fees in copyright cases; and in Cuozzo Speed Technologies, LLC v. Lee, on issues relating to inter partes review.  Ronald Mann has a nice write-up on each of these cases over at Scotus Blog (see here and here).

Patent Remedies at the Upcoming AIPLA Spring Meeting

The American Intellectual Property Law Association (AIPLA) will be holding its spring meeting in Minneapolis from May 18-20 (information available here).  Of particular interest to readers of this blog:  on Thursday, May 19, at 2 p.m. there will be a session titled "Litigation:  The New Era of Patent Litigation:  Recent Developments in Damages and Discovery," featuring individual presentations on "Sanctions After Recent Amendments to the Federal Rules," "The Practicalities of Proving Patent Damages Given Changes in Case Law," and "Trends in Willfulness and Fee Petitions."  (I wonder if the Supreme Court will have decided Halo and Stryker by then?)  At the same time this session is going on, I will be speaking on another panel (which I also commend to your attention!), on copyright's fair use defense; and a third panel will be addressing "Patent Litigation: Sinking Ships and Rising Seas."  There's also a session on Wednesday, May 18, on patent licensing, and of course several other panels on a wide range of IP topics.

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While on the subject of conferences, as noted earlier this week next Tuesday, April 26, from 8:30 a.m. to 1:00 p.m. the University of Minnesota Law School will be hosting its Fifth Annual Patent Symposium, cosponsored by Briggs and Morgan P.A., on the subject "Keeping Up With Patent Remedies:  What You Need to Know About Injunctions and Damages in Patent Infringement Cases."  This event is free.  Hope to see some of you there.

A Recent German Case on Urgency and Preliminary Injunctions

Several of the German decisions I've blogged about over the past three years have focused on the question of whether the party moving for a preliminary injunction has acted with the requisite "urgency" (Dringlichkeit) (see here, here, here, and here).  A recent addition to the mix is the Judgment of the Karlsruhe Oberlandesgericht of Sept. 23, 2015, 6 U 52/15, reported in the December 2015 issue GRUR-RR at pp. 509-12 under the title “Voraussetzungen für eine einstweilige Verfügung in Patentsachen") (Conditions for a Preliminary Injunction in Patent Cases).  The facts, a little complicated, are as follows.  Plaintiff is the owner of European Patent 2,295,299B1 for "[a] kit for inflating and repairing inflatable articles."  A company (designated "X" in the judgment) filed a postgrant opposition, which the EPO rejected on April 30, 2014.  This decision was affirmed on appeal on July 1, 2015.  The patent owner also commenced infringement proceedings against X, prevailing before both the district court and (on November 12, 2014) the court of appeals.  It was only during this appeal that the patent owner added a claim (successfully) for infringement of EP 2,295,299B1, pursuant to article 145 of the German Patent Act (stating that "Any person who has brought an action pursuant to section 139 may bring a further action against the defendant for the same or the same kind of act by virtue of another patent only where he was, through no fault of his own, not in the position to also assert this patent in earlier proceedings").  Meanwhile, the patent owner had become aware in May 2014 that a sister company of X was distributing this same accused product in Germany, but it held off sending a warning letter until November 26, 2014, that is, shortly after the appellate court's decision in the case against X.  The sister company rejected the warning on December 5, 2014, and as a result the patent owner filed a motion for a preliminary injunction that same day and sued the sister company for infringement on January 9, 2015.  The district court granted the preliminary injunction, and the sister company/defendant appealed.

On appeal, the court affirmed, rejecting the defendant's argument that the patent owner had not acted with the requisite urgency by waiting until December 2014, seven months after learning that the defendant was selling the accused product, to move for a preliminary injunction.  The patent owner had filed its motion within a month of learning that the defendant was not planning to pull the product from the market notwithstanding the infringement judgment against its sister X.  Had it proceeded earlier, its litigation risk would have been greater, and had it sought to join the defendant in the proceeding against X in which the claim was widened to include EP 2,295,299B1 the additional time saving would have been minimal.

Upcoming Patent Damages Event in Minneapolis

On Tuesday, April 26, the University of Minnesota Law School will be hosting its Fifth Annual Patent Symposium, cosponsored by Briggs and Morgan P.A., from 8:30 a.m.-1:00 p.m.  This year's topic is "Keeping Up With Patent Remedies:  What You Need to Know About Injunctions and Damages in Patent Infringement Cases."  I'll be leading things off with an overview of injunctions and damages; topics to be covered will include, among others, the pending Supreme Court cases on attorneys' fees and design patent damages.  More information is available here and here.  The event is free, so if you're in the Twin Cities area next Tuesday, please stop by.

Interesting IPKat Blog Post on U.S. Hearings on the ITC

Yesterday the IPKat Blog published a very interesting post on Thursday's hearing before the U.S. House of Representatives' Courts, Intellectual Property and the Internet Subcommittee on a bill that might make it somewhat more difficult for nonpracticing entities to proceed with investigations before the International Trade Commission (ITC).  (For readers who aren't familiar with the ITC, it's a federal agency that can investigate and adjudicate complaints involving allegedly infringing imports into the United States.  A majority of ITC investigations run parallel with patent infringement litigation in U.S. district courts; but unlike the district courts the ITC is not bound by the eBay decision, and a form of injunctive relief known as an exclusion order is the remedy the ITC usually enters with respect to infringing merchandise.)  The post has links to the various witness statements--including one filed by Professor Fiona Scott Morton asserting that "the availability of exclusion orders from the U.S. International Trade Commission (“ITC”) in cases in which an injunction would not be granted by Federal courts runs contrary to the public interest by allowing patent assertion entities (“PAEs”) to forum-shop and earn supracompetitive royalties"--and to the video of the entire proceeding (which I have not watched yet).  According to the author of the post, the subcommittee seems to favor reining in the ITC, perhaps beyond the limited steps contemplated by the draft bill that was the ostensible subject of the hearing.  For what it's worth, my own view is that the U.S. probably could do without this parallel forum for adjudicating IP disputes, as discussed here.  

Though not related to patent remedies, IPKat also has an interesting post on a recent Bloomberg.com article arguing that employee noncompete agreements inhibit innovation, which makes for an interesting compare-and-contrast with a recent paper by Barnett and Sichelman that Professor Michael Risch recently discussed on the Written Description Blog.

Wong-Ervin, Ginsburg, Kobayashi & Wright on FRAND in India

I've previously mentioned on this blog the comments submitted by Professor Joshua Wright and Judge Douglas Ginsburg on the Japan Fair Trade Commission's draft partial amendments to its Guidelines for the Use of Intellectual Property Under the Antimonopoly Act (see here) and on the Canadian Competition Bureau's Draft IP Enforcement Guidelines (see here).  In addition, in recent months Professor Wright and Judge Ginsburg, along with Professors Bruce Kobayashi and Koren Wong-Ervin, have published comments on similar proposals floated by competition authorities in China and South Korea (see here).  The quartet's most recent paper, Comment of the Global Antitrust Institute, George Mason University School of Law, on the India Department of Industrial Policy and Promotion's Discussion Paper on Standard Essential Patents (available here) makes some of the same points as in the above submissions in urging the Indian authority not to, among other things, equate an SEP holder's seeking of injunctive relief with an antitrust violation or to set royalty prices.   

The submission was in response to the India Department of Industrial Policy and Promotion (DIPP) Discussion Paper on Standard Essential Patents and Their Availability on FRAND Terms, which is available here.  The last date for submissions is April 22.   

Update:  Judge Ginsburg and Professors Kobayashi, Wong-Ervin, and Wright also have published a couple of short papers in CPI Antitrust Chronicle and available on ssrn presenting many of the arguments made in their country-specific comments.  See The Troubling Use of Antitrust to Regulate FRAND Licensing and 'Excessive Royalty' Prohibitions and the Dangers of Punishing Vigorous Competition and Harming Incentives to Innovate 
.

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In other news regarding patent remedies in India, Sandeep Rathod has posted a paper on ssrn titled Injunctions in Indian Pharmaceutical Patent Infringement Actions: Some Observations.  Here is a link, and here is the abstract:

India’s most recent tryst with pharmaceutical product patents is eleven years old. These years have seen a number of pharmaceutical patent infringement actions/suits brought on by patentees, though many of these litigations are pending final judgment as they have not yet completed trial due to various factors. The focus of the pharmaceutical patent owners/ holders (patentees) in the initial stage is clearly to secure an immediate, interim injunction against the defendants. The present article focuses only on this initial stage – i.e. the practice of interim injunctions within the domain of pharmaceutical patent infringement suits - and based on the author’s experience and review of the information available in public domain for these litigations, makes the following observations:

a) Obtaining an order of interim injunction in a pharmaceutical patent suit is not difficult for the patent owner. Indian Courts have in fact, granted interim injunctions in a majority of pharmaceutical patent infringement suits;

b) A large majority of injunction requests are filed by the patentees as ex-parte and are quia-timet in nature. The defendant may not get an adequate opportunity to present its defense before the grant of such injunctions;

c) While arguably, patent infringement suits can be filed in a host of District and High Courts, it would appear that patent owners prefer to initiate their suits and corresponding injunction requests only before the High Court of Delhi;

d) Undertakings for non-commercialisation given by generic companies also act/stand on same footing as injunctions; and

e) India will see more pharmaceutical patent infringement suits- including cases where IP owning generic companies file suits against other generic companies.

Statutory Damages

One way of dealing with the inherent uncertainty of calculating compensatory or restitutionary damages is to authorize courts to award so-called "statutory" damages within some pre-established range.  To my knowledge, however, few countries authorize statutory damages for patent infringement; China and Russia are the only two I am aware of (see posts here, here, here, and here).  Regarding China in particular, as I have previously written:

As discussed in my book, statutory damages appear to the most popular damages remedy for patent infringement in China, even though the amounts that can be awarded are relatively low; 1,000,000 yuan equals only about $160,000 (U.S.).  Among the relevant factors that Chinese courts take into account are “the infringer’s state of mind; the effect, manner, and duration of the use; the value, function, and materiality of the patent, including the availability of competing products; and the cost incurred in responding to the infringement.”  Id. at 359 (citing Jingjing Cao, Die Durchsetzung von Patenten in China 178–80 (2010); Cheng Miao et al., Theory and Practice Related to Patent Infringement Damages, China Pats. & Trademarks, 2009, no. 4, at 17–18).

More common is the practice of several countries (including the United States) of awarding statutory damages for copyright infringement.  In the U.S., subject to certain conditions the court--actually the jury, if there is one, since the Supreme Court in Feltner v. Columbia Pictures held that this is a jury issue--may award damages ranging from $750 to $30,000 for each work infringed.  (The figure can be lowered to $200 in certain (rare) cases involving innocent infringement, or increased to $150,000 for willful infringement.)  Recently, the U.S. Copyright Office published a White Paper making various recommendations relating to (among other matters) statutory damages.  With regard to statutory damages, the Office recommends (1) "incorporating into the statute a list of factors for courts and juries to consider when determining the amount of a statutory damages award"; (2) "changes to the copyright notice provisions that would expand eligibility for the lower 'innocent infringement' statutory damages awards"; and (3) "that, in cases involving non-willful secondary liability for online services offering a large number of works, courts be given discretion to assess statutory damages other than on a strict per-work basis" (p.85).  The proposed statutory factors would be:

(1) The plaintiff’s revenues lost and the difficulty of proving damages.
(2) The defendant’s expenses saved, profits reaped, and other benefits from the infringement.
(3) The need to deter future infringements.
(4) The defendant’s financial situation.
(5) The value or nature of the work infringed.
(6) The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.
(7) In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.
(8) The defendant’s state of mind, including whether the defendant was a willful or innocent infringer.
(9) In the case of willful infringement, whether it is appropriate to punish the defendant and if so, the amount of damages that would result in an appropriate punishment (pp. 87-88).

I suppose that this might be an improvement over the current practice of having no statutory factors, but I'm still not sure that statutory damages are, at the end of the day, desirable.  Is it really that difficult to calculate actual harm?  Will copyright cases become mired in a multifactor test that calls to mind certain portions of patent law's Georgia-Pacific  (for reasonable royalties) and Read v. Portec (for enhanced damages) factors?  

Still and all, the question of what to do when the evidence of actual damages or defendant's gain is deficient is not an easy one.  U.S. patent law arguably requires a court to award some reasonable royalty unless the patent has no economic value, and when the parties' evidence is lacking the court may just have to muddle through (see my post on Apple v. Motorola here).  This is a topic I hope to address in some forthcoming work.  I'm not inclined to think that statutory damages are the answer in patent law (even if, maybe, they are acceptable in copyright), though it may be worthwhile that some countries are experimenting with them.  Perhaps others can learn from their experience. 

Interesting Weekend Posts on Damages on FOSS Patents, Sufficient Description

1.  At FOSS Patents, Florian Mueller published an interesting post on Saturday on the Oracle v. Google copyright damages matter pending before U.S. District Judge Alsup in the Northern District of California.  Though it's a copyright case, the resolution of the damages issues should be of interest to patent scholars as well.  According to the post, "Oracle . . . argues that a disgorgement analysis should not consider non-infringing alternatives ("NIAs")."  Although I don't study copyright damages as much as I used to, and would like to review whatever authority Oracles and/or the court cites in favor of this position (something I haven't done yet), that's not my understanding of the applicable law--though it is the Federal Circuit's current understanding in U.S. design patent law, pending Supreme Court review in Samsung v. Apple, where the relevant statutory language can be read as entitling the plaintiff to recover the defendant's total profit from sales of infringing goods.  In any event, I heartily agree with Mr. Mueller that as a matter of policy such a rule is misguided.

2.  At Sufficient Description, Norman Siebrasse published a post on TearLab Corp. v. I-Med Pharma Inc., 2016 FC 350, a recent Canadian decision in which a court denied a preliminary injunction on the ground that, inter alia, that the "mere difficulty of calculating damages does not constitute irreparable harm."  Professor Siebrasse argues that "that there are practical reasons why evidence of the accuracy of damages assessment is unlikely to be forthcoming" at the preliminary injunction stage, and that requiring too strict a showing of irreparability might put patent owners in a bind if, eventually, they wind up trying to prove their damages at trial.  These are valid points that deserve further consideration.  For what it's worth, I'd inclined to think that mere difficulty in calculating damages that are in principle calculable normally shouldn't count as "irreparable harm"; damages are often difficult to calculate, and there's always going to be a risk of error.  Rather, "irreparable harm" could rest on the likelihood of incurring categories of harm that tend towards being inherently incalculable, such as interim losses of market share that might be hard to make up for ex post or losses of consumer goodwill.  (And I note that the plaintiff did allege these harms as well, though apparently the evidence of their existence or incalculability didn't move the judge on the record presented, see opinion para. 35.)  But I need to think about these matters further.

New German FRAND Decision

A copy of the judgment in the original German is here, and an English translation of the FRAND portions (provided by Cordula Tellmann-Schumacher of Arnold-Ruess) is here.  (Thank you to Ms. Tellmann-Schumacher for providing this to me, and to Norman Siebrasse for alerting me to the judgment which I understand was discussed at the Fordham IP Law Conference last Friday.)   I understand that the patent owner is St. Lawrence (an NPE that was also the plaintiff in another German FRAND-related proceeding against Deutsche Telekom, see discussion here and here).  I'll want to reread this material more carefully, but here are the highlights I've gleaned from a quick reading this morning.

The Landgericht Düsseldorf grants an injunction, holding that the plaintiff's initial offer was FRAND and that the defendant did not respond in a timely fashion as required under Huawei v. ZTE.  In particular, the court holds:

1.  That the notice given by the plaintiff was timely (see pp. 5-10 of the English-language version).

2.  "Defendant did not declare in good time that it intends to take a FRAND license to the patent in suit," having waited five months to respond (pp. 10-12).

3.  Plaintiff made a FRAND-compliant offer, which the court infers largely by way of comparison with comparable licenses (pp. 12-21).   The fact that it was an offer for a global portfolio license is consistent with the comparables. The court states:

Hence, comparable licensing agreements represent an important indicator of the adequacy of the license terms offered, provided it is not found that these have been concluded only under the pressure of a claim for injunctive relief. . . .   

The same applies to the scope of the license: If the patentee has already granted licenses to the SEP offered or the SEP portfolio offered for similar products, this suggests that this collection of protective rights is equitable and therefore also to be accepted by patent users (Kühnen, op. cit., margin no. E.328). For the question of whether a – possibly global – portfolio license complies with FRAND requirements,the industry practice is particularly relevant. . . .   

Moreover, the terms of the license offered were FRAND:  

Plaintiff is offering Defendant and Intervenor each a license to its entire AMR-WB patent portfolio, which provides for a quota license fee of USD 0.26 per mobile phone that implements the AMR-WB standard and is manufactured or sold in a country where a licensed patent is in force. . . .    

According to its unchallenged submission, the license offers of Plaintiff (including to Intervenor) are based on standard royalty rates of Plaintiff and its parent company available on the Internet (Exhibit A-K62), where the specific royalty rates being offered are even slightly lower than the standard rates specified. The latter were in turn based on royalty rates that were demanded by [Y] in the licensing of the portfolio containing the patent in suit before it was transferred to Plaintiff (cf. Exhibit A-K63 for the royalties demanded by [Y]).    Plaintiff has submitted an anonymized list of licensees (Exhibit A-K65) and offered to submit the complete anonymized license agreements as well upon judicial notice.

The list contains a total of 12 licensees, which is a relatively high number that gives rise to a correspondingly strong indication as to the adequacy of the license terms. Six of the licensees are software or service providers and/or hardware manufacturers. According to the table, these should all pay the standard royalties according to the table of Plaintiff (Exhibit A-K62). These license agreements have a comparatively lower indicative value, as it is unclear whether royalties were (also) paid here for mobile phones.

The remaining six licensees are mobile phone manufacturers, which pay between USD 0.20 and USD 0.40 per piece (manufactured mobile phone), partly in the form of a lump sum, partly as ongoing royalties. The licensees of the patent in suit indisputably include the companies [B], [I], [G], [D], [C] und [E]. Furthermore, the company [GG] possessed a license via the SIPRO pool. This is not precluded by the fact that [BB (O)] is currently taking action against [GG] under the parallel protective rights to the present patent in suit, as pointed out by Defendant in the disallowed pleading of 4 February 2016. This does not allow the conclusion that a license did not exist in the past; rather, it seems plausible that a previous license agreement has now ended – such as due to the passage of time or termination.

Circling back to the question of whether these licenses were negotiated under the threat of an injunction, the court says no; further, "Defendant and Intervenor have not presented sufficient facts that would allow the expert evidence offered for the fact that 'the license fee offered by Plaintiff in the amount of USD 0.26 per mobile phone cannot be viewed as FRAND' to be taken."  The court rejects the argument that the offered rate was not FRAND because it was higher than the SIPRO pool rate, and it concludes that reference to the comparables and pool rates provided a sufficient basis for calculating a FRAND royalty here.

4. The defendant didn't make a FRAND counteroffer (pp. 21-22).  The court therefore leaves open the difficult question of exactly what happens when a FRAND counteroffer is made (p.22):

Since no FRAND-compliant counteroffer of Defendant has been submitted, no decision is necessary as to whether the antitrust compulsory license objection can be successfully raised if Plaintiff has made an identifiably FRAND-compliant offer for licensing the relevant SEP. If this is the case, it could be argued that an abuse of a dominant position is ruled out and the proprietor of the SEP has already fulfilled its antitrust obligations by offering FRAND-compliant licensing. However, under para. 54 of the CJEU judgment, "pursuant to Art. 102 TFEU the proprietor of the patent is obliged only to grant a license on FRAND terms." It is therefore questionable whether there is an obligation to negotiate with the patent users within a range of possible FRAND licensing terms. On the other hand, in the operative provisions and in para. 65, the CJEU clearly presumes the possibility of a counteroffer after the proprietor of the SEP has first made a (FRAND) offer (thus also Kühnen, op. cit., margin no. E.304). Ultimately, this question, as already mentioned, may remain open here.

5. The court also rejects arguments that the offer made to the Intervenor was not FRAND, and that the Intervenor's counteroffer was FRAND (pp. 23-33).  

Update:  I should note that the defendant in the case is a provider of mobile telephone services that sells phones made by the intervenor.  See the full text German judgment pp.11-12, as well as the English-language version p.33.

From Around the Blogs: News from Canada, the EU, and Spain

1.  On Sufficient Description, Norman Siebrasse has a short post on a recent Canadian decision, Gilead Sciences, Inc v Teva Canada Ltd 2016 FC 336, involving an application for a quia timet (preliminary) injunction against a generic drug firm's introduction of an allegedly infringing drug.   In large part the dispute centered on whether the moving party could show "imminent" harm, even though the introduction of the generic drug to the market likely would not occur for 22 months. The court nevertheless refused to dismiss the request for a quit timet injunction, concluding (as Professor Siebrasse describes it) that "Imminence is not directly relevant, but only in so far as it affects the probability of the future event. This implies that 'imminence' is not to be judged solely temporally, but in a balance with other evidence of the likelihood of the future event. By the same token, 'temporal imminence appears to be a subordinate consideration in a case where the likelihood of future harm appears high' [11]."  This is an interesting case from a theoretical perspective--the whole field of preliminary injunctions is in my view undertheorized and understudied--as well as from a comparative perspective.  Several of the German decisions I've blogged about over the past three years, for example, have centered on the analogous but perhaps not identical requirement of "urgency" (Dringlichkeit); for discussion, see here, here, here, and here.

2.  IPKat has had two interesting remedies-related posts this past week.  The first, from this past Tuesday, discusses AG Campos Sánchez-Bordona's opinion in United Video Properties, Inc v Telenet NV, C-57/15, on the question of whether Belgian civil procedure law, which caps the recovery of attorneys' fees awarded to the successful party in litigation and awards expenses for expert opinions only when the other party is at fault, is consistent with article 14 of the 2004 Enforcement Directive, which states that "Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this."  In the AG's view, the attorneys' fee cap is permitted but the fault requirement for expert expenses is not.  The second, published yesterday, notes the upcoming deadline for submitting public comments to the European Commission on the functioning of the Enforcement Directive in the online environment (further explanation from the Commission here).

3.  EPLaw published a post a few weeks back on Gamesa v. Wobben, a case from the Provincial Court of Appeals of Barcelona from January 14, 2016, in which the court reversed a judgment of infringement in a case involving what the author believes was probably the largest patent damages award in Spanish history (€7.7 million).  The appellate judgment is available here, and an English-language summary here, but as the summary notes since the matter was reversed on the merits the appellate judgment doesn't shed any light on the damages issues in the case.   In addition, an EPLaw post from November and an IPKat post from January both discuss Spain's new patent law (which will enter into force on April 1, 2017), which is said to include some new provisions relating to damages and will permit the use of protective letters--a topic that has been the subject of some previous discussion on this blog (see here and here).  Here is a link to the new Spanish law; it looks like protective writs (escritos preventivos) are covered by article 132.

U.S. Supreme Court Schedules Briefing in Samsung v. Apple Design Patent Damages Case

As noted here last month, the U.S. Supreme Court has granted cert to consider the following question in Samsung Electronics Co. v. Apple, Inc.:

Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

As reported on Scotus Blog, by order entered yesterday Samsung has until June 1, 2016 to file its brief and joint appendix, and Apple until July 29 to file its response.  Under Supreme Court Rule 25.3, Samsung would then have 30 days--until August 29, under Supreme Court Rule 30, if I'm adding this up correctly--to file its reply brief.  Looks like it will be a busy summer for the litigants and amici. 

Oral argument has not yet been scheduled, but I imagine it will be held sometime in October or November after the Court returns from its summer recess.  For now, at least, it seems likely that the Court will still consist of only eight, not the full complement of nine, justices.   

Lichtman on Delay and Patent Remedies

Recently on the Written Description Blog, Professor Camilla Alexandra Hrdy published a post about a new draft paper by Professor Doug Lichtman titled Patient Patents:  Can Certain Types of Patent Litigation Be Beneficially Delayed?, available here.  Here is the abstract:

There was a time when patent cases would routinely end with the relevant court granting an injunction against future infringement. Today, however, injunctions are increasingly rare, and courts instead are allowing adjudged infringers to continue to use patented technologies, subject to an obligation to pay a court determined forward-looking royalty for any future use. A vast literature already exists thinking about this change; but that literature has missed one important implication: patent litigation can now be beneficially slowed. The intuition is simple. One reason why courts used to race to the finish was because they wanted to minimize the importance of their own damages calculations. Courts had no choice but to calculate damages for infringement that already occurred; but, the faster the case, the sooner the injunction, and thus the sooner that the litigants would be the ones negotiating about the future, setting prices and establishing terms. With injunctions now increasingly off the table, however, a court's attempted quantification remains important no matter when the case ends. Before the verdict, the court's influence is relevant under the banner of backward-looking patent damages. After the verdict, the court's influence is relevant in the form of court-determined forward-looking royalties. The end of the case thus no longer represents a significant reduction in the importance of the court's economic understandings. As a result, there is less of a reason to race through patent litigation, and thus a real opportunity for courts to slow down and in various ways increase the accuracy of their important work. 

Like Professor Hrdy, I think this is a very interesting paper; Professor Lichtman makes a number of insightful points about the social benefits and costs of injunctions, the extreme difficulty of accurately calculating patent damages, and (the most provocative part) the potential benefits of delay in terms of enabling better information to be developed and allowing more time for parallel validity proceedings to run their course. 

The paper makes me think about the FRAND-centered debate over patent holdup (where the patent owner armed with an injunction can extract royalties based in part on the implementer's sunk/switching costs) versus what has come to be known as patent holdout (where the implementer tries to derive some benefit by refusing to negotiate in good faith).  As for the latter, the concern is that implementers will be better off delaying matters rather than accepting a FRAND-range offer if they know that the damages ultimately awarded will not be fully compensatory; this may be a serious risk if, for example, calculation methods are inaccurate, or attorneys’ fees are not fully recoverable, or (as is the case in some countries) compound interest is not awarded.  (As Professor Lichtman notes, among the costs of delay are the time value of money.)  To my mind, there typically are good reasons to deny injunctions in FRAND (and some other) cases, but it would be beneficial if legislators and courts simultaneously strove to ensure that implementers cannot unfairly benefit from delay as well, for example by making compound interest the norm even in countries that traditionally have shied away from it.