Friday, March 30, 2018

Some New Papers on Royalties, SEPs

1.  Michael Risch has published a paper titled (Un)Reasonable Royalties, 98 Boston University Law Review 187 (2018).  Here is a link to the paper, and here is the abstract:
Though reasonable royalty damages are ubiquitous in patent litigation, they are only a hundred years old. But in that time they have become deeply misunderstood. This Article returns to the development and origins of reasonable royalties, exploring both why and how courts originally assessed them.
It then turns a harsh eye toward all that we think we know about reasonable royalties. No current belief is safe from criticism, from easy targets such as the twenty-five percent “rule of thumb” to fundamental dogma such as the hypothetical negotiation. In short, this Article concludes that we are doing it wrong, and have been for some time.
This Article is agnostic as to outcome; departure from traditional methods can and has led to both overcompensation and undercompensation. But it challenges those who support departure from historic norms—all while citing cases from the same period—to justify new rules, many of which fail any economic justification.
2.  Tim Simcoe and Mark Lemley have posted a paper on ssrn titled How Essential Are Standard-Essential Patents?  Here is a link, and here is the abstract:
Courts, commentators, and companies have devoted enormous time and energy to the problem of standard-essential patents (SEPs) – patents that cover (or at least are claimed to cover) industry standards. With billions of dollars at stake, there has been a great deal of litigation and even more lobbying and writing about problems such as how if at all standard-setting organizations (SSOs) should limit enforcement of patent rights, whether a promise to license SEPs on fair, reasonable, and non-discriminatory (FRAND) terms is enforceable in court or in arbitration, what a FRAND royalty is, and whether a refusal to comply with a FRAND commitment violates the antitrust laws.
In this study, we explore what happens when SEPs go to court. What we found surprised us. We expected that proving infringement of a SEP would be easy – they are, after all, supposed to be essential – but that the breadth of the patents might make them invalid. In fact, the evidence shows the opposite. SEPs are more likely to be held valid than a matched set of litigated non-SEP patents, but they are significantly less likely to be infringed. Standard-essential patents, then, don’t seem to be all that essential, at least when they make it to court. 
At least part of the explanation for this surprising result comes from another one of our findings: many SEPs asserted in court are asserted by non-practicing entities (NPEs), also known as patent trolls. NPEs do much worse in court, even when they assert SEPs. And the fact that they have acquired a large number of the SEPs enforced in court may bring the overall win rate down significantly.
Our results have interesting implications for the policy debates over both SEPs and NPEs. Standard-essential patents may not be so essential after all, perhaps because companies tend to err on the size of over-disclosing patents that may or may not be essential. The failure of NPEs to win cases even with what seem like they should be a strong set of patents raises interesting questions about the role of NPEs in patent law and the policy efforts to curb patent litigation abuse. 
3.  Dan Spulber has posted a paper on ssrn titled Finding Reasonable Royalty Damages: A Contract Approach to Patent InfringementHere's a link, and here's the abstract:
The article introduces a contract approach to patent infringement and develops a methodology for finding reasonable royalty damages. The contract approach complements approaches based on property and tort, thus providing a more complete understanding of damages. The article argues that the patent infringement case should specify an informed contract. The informed contract improves estimation of damages by taking into account information revealed during the period of infringement. The article introduces a market value method for calculating reasonable royalty damages based on patent transfer prices. The contract approach helps calculate reasonable royalty damages based on royalties in comparable patent licenses. The contract approach addresses various controversies over reasonable royalty damages.

Wednesday, March 28, 2018

95 Theses on Stays in Patent Cases

This has to be one of the more creative ideas for an article on patents in recent memory:  Malte Köllner, Eric Sergehaert and Mihnea Hanganu’s 95 Thesen zur Aussetzung (“95 Theses on Stays”), in the January 2018 issue of Mitteilungen der deutschen Patentanwälten (pp. 8-15).  By way of background, in Germany infringement and validity proceedings are bifurcated (the so-called Trennungsprinzip), and thus a court may find a patent infringed while an invalidation proceeding takes its more leisurely course through the European or German Patent Office.  Courts sometimes stay the infringement proceeding or the enforceability of the judgment pending an invalidation proceeding, but to my knowledge they usually don't.  As I noted in my book (p.229 n.45):
Stays pending the resolution of an invalidity proceeding are possible, but are hardly automatic. For discussion, see Luginbuehl, supra note 34, at 40; Christian W. Appelt & Heinz Goddar, Enforcement of Patents in Europe—Germany as an Example, ip4inno Consortium, European Patent Academy (Nov. 27, 2006), at 6–8, available at (stating that the Düsseldorf court is reluctant to grant stays in patent proceedings, but that stays must be granted in utility model proceedings if the court believes the invalidation action will be successful); Bühling, supra note 24, at 28–29; Verhauwen & Bergermann, supra note 35, at 1 (reporting that “the court stays the infringement proceeding only if it is highly likely that the nullity action or opposition proceeding will be successful”; that this “is regularly assumed if state of the art can be presented that is novelty-destroying and in addition has preferably not yet been assessed in the examination proceeding”; and that “[i]f the validity argument is merely based on lack of inventive step it is most likely that the infringement court will not stay the proceeding”).
(This type of stay, by the way, should be distinguished from the Aufbrauchfrist, a stay pending transition, which to my knowledge is even more rare and doesn't result in an interim award of damages.  For previous discussion on this blog, see here and here.)  Anyway, I haven't read the article by Köllner et al. very carefully yet, but the authors seem to be of the view that German courts could be a bit more open to the practice.  Here is the abstract (my translation):
In a European comparison, the frequency of stays in patent infringement actions in Germany is compared with the frequency in England, France, and the Netherlands.  The comparison is based on stays in infringement disputes in which a parallel European opposition proceeding is pending.  Substantial differences emerge.  A following investigation of the legal arguments for handling stays in Germany raises serious concerns about the German practice with regard to stays. 
Footnote 1 reads (again in my translation): "According to tradition, these 95 Theses are said to have been nailed to the gates of the Düsseldorf and Munich District Courts on the Eve of All Saints' Day 2017.  The historicity of this proposition, however, is disputed."  Funny.  Perhaps an English-language subtitle could have been, "Here I stay, I can do no other."    

Image result for picture of luther nailing 95 theses

Monday, March 26, 2018

Li, Yiu & Vary on Chinese Huawei v. Samsung FRAND Decisions

In January I published this post on the decision by the Intermediate People's Court in Shenzhen, China, to issue an injunction against Samsung for the infringement of two FRAND-committed Huawei SEPs.  Yang Li, Christine Yiu, and Richard Vary have now published a post, titled "Shenzhen court issues written judgment in Huawei v Samsung case," reporting that last week the court published its written decisions--two of them, one for each patent I assume, and if I'm understanding the post correctly each is over 350-pages!  Mr. Vary also published a shorter post on the matter in the IPKat this morning. (Neither post links to the decisions themselves, and I doubt that there are publicly available English-language translations yet, though I hope that we'll be able to see some before too long.)   According to the posts, the court not only entered an injunction based on its conclusion (for reasons discussed in the posts) that Samsung was an unwilling licensee, but also adopted a top-down methodology for determining the amount of the FRAND royalty.  The authors also state that, in contrast to the recent decisions in Unwired Planet and TCL, the court did not apply the "patent counting" or numeric proportionality principle, but rather took into account the contribution of Huawei's specific technology, to determine the award.

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In other China-related news, The China IPR Blog published a post over the weekend titled US Files Consultation Request at WTO on Chinese Technology Licensing Practices, while the IAM Blog has published a post (which is behind a paywall, and which I haven't read myself) titled Iwncomm provides update on China SEP campaign – Sony injunction still under appeal, battle with Apple expands.

Friday, March 23, 2018

JPO's Invitation for Public Comments on the Draft of SEP Guide

I mentioned a couple of weeks ago (here) that the Japan Patent Office (JPO) was inviting public comments on its Draft "Guide to Licensing Negotiations Involving Standard Essential Patents."  Here is a link to the draft; comments are due by April 10 (see here).  From my admittedly quick reading of the draft, it seems balanced in its discussion of the various issues, and provides a nice overview of the major topics as presented in the judicial decisions in Japan, Germany, the U.S., and the U.K.  For further discussion, Jacob Schindler recently published a post on the Draft Guide here.

Wednesday, March 21, 2018

Federal Circuit Affirms Denial of Attorneys' Fees

The big news in U.S. IP law today (so far, at any rate) is the Ninth Circuit's decision affirming in part the district court's copyright infringement decision in the Blurred Lines case, which I hope to get around to reading later in the day.  As far as patent remedies are concerned, the Federal Circuit issued a nonprecedential opinion this morning in Sarif Biomedical LLC v. Brainlab, Inc., opinion by Judge Wallach (joined by Judges Reyna and Hughes).  The district court held that the claims of the patent in suit, titled "Computer-Assisted Microsurgery Methods and Equipment," was indefinite, and the parties thereafter stipulated to a judgment of invalidity and noninfringement.  The court also held, however, that the case was not exceptional and denied Brainlab's motion for attorneys' fees.  On this latter issue, the Federal Circuit concludes there was no abuse of discretion:
The District Court properly evaluated the substantive strength of Sarif’s case. The District Court  found that Sarif acted in “good faith” in part because, “[a]t each stage of the litigation, [Sarif] provided detailed arguments, grounded in the intrinsic evidence, in support of its proposed constructions” and “obtained expert opinion which supported its constructions.” . . . The District Court’s ultimate disagreement with Sarif’s proposed construction does not, on its own, render Sarif’s case substantively weak. . . . 
Brainlab’s counterarguments are ultimately unpersuasive under our standard of review. First, Brainlab avers that the PTAB’s decision not to institute an inter partes review for claims 1–9, after stating these claims “cannot be construed” based on a likelihood that they are indefinite . . . demonstrates the weakness of Sarif’s position, as it is an important “objective indicator[] of the invalidity of the ’725 patent” . . . . Brainlab places too much significance on the PTAB’s determination. The PTAB does not have authority to institute an inter partes review under § 112. See 35 U.S.C. § 311(b). Therefore, as Brainlab admitted, any conclusion regarding indefiniteness is dicta. . . .
Second, Brainlab argues Sarif’s proposed construction is weak because portions of Sarif’s expert testimony appear to undermine its ultimate construction. . . . However, the District Court is entitled to weigh the credibility of an expert’s testimony . . . .
Third, throughout its brief, Brainlab argues the District Court “fail[e]d to make findings of fact in support of its conclusion that Sarif’s case was not unusually weak” and “ignored . . . overwhelming evidence.” . . . However, we have recognized that “[t]he trial judge [i]s in the best position to understand and weigh the[] issues,” and the District Court “ha[d] no obligation to write an opinion that reveals [his] assessment of every consideration.” . . . 
The District Court also did not clearly err in considering the reasonableness of the manner in which Sarif litigated this case or any other circumstances of this case. Although Sarif modified its claim construction position from the PTAB to the District Court, the District Court correctly explained that 
[i]t can . . . be reasonable for a party to propose different constructions in PTAB and District Court proceedings, as the PTAB must give claims terms their “broadest reasonable construction,” whereas District Courts give them the meaning they would have to a “person of ordinary skill in the art at the time of the invention.” . . .
Brainlab also has failed to demonstrate that Sarif’s motivations and actions as a whole were improper. . . .  Although we have stated “that a pattern of litigation abuses characterized by the repeated filing of patent infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s claims, is relevant to a district court’s exceptional[-]case determination under § 285,” SFA Sys., 793 F.3d at 1350, the District Court considered Brainlab’s evidence and concluded Brainlab “ha[d] not demonstrated that this is a ‘nuisance suit’” because “[Sarif]’s status as a non-practicing entity, the language of the press releases directed toward its investors, its decision to allege infringement against several other entities, and its decision to settle other cases, do not combine to establish that this case was always ‘meritless’ or ‘predatory,’” Sarif II, 2016 WL 5422479, at *2 (emphasis added). Importantly, Sarif did not delay in its litigation tactics. . . .
Brainlab claims the District Court erred “[b]y limiting itself to comparing Sarif’s conduct only to the cases ‘with which [the District Court] has been involved.’” . . . As we have explained above, the District Court properly determined that this case is not exceptional, grounding its reasoning in the correct legal standards and a proper assessment of the facts. Therefore, we decline Brainlab’s invitation to find legal error “based upon [this] isolated statement stripped from its context.” Waymo LLC v. Uber Techs., Inc., 870 F.3d 1350, 1361 (Fed. Cir. 2017) (internal quotation marks and citation omitted) (pp. 6-11).
In other news regarding attorneys' fees, on remand from the Federal Circuit in AdjustaCam v. Newegg (see previous discussion on this blog here), Judge Gilstrap (E.D. Texas) last week awarded Newegg over $500,000 in fees and expenses, including (pursuant to the court's inherent authority) expert witness fees of over $60,000.  Link here.

Tuesday, March 20, 2018

More on India's Patent Working Requirement

I've published a couple of brief posts recently on papers discussing India's patent working requirement and how it relates to injunctive relief and the public interest (see here and here).  Another paper, which I hadn't seen until recently, is by Jorge Contreras, Rohini Lakshané, and Paxton Lewis and titled Patent Working Requirements and Complex Products, 7 NYU J. Intell. Prop. & Enter. L. 1 (2017).  Here is a link, and here is the abstract:
Patent working requirements exist throughout the world to ensure that the exclusive rights granted under patents result in an economic benefit to the granting jurisdiction. In India, if a patent is not locally worked within three years of its issuance, any person may request a compulsory license, and if the patent is not adequately worked within two years of the grant of such a compulsory license, it may be revoked. The potency of India’s patent working requirement was demonstrated by the 2012 issuance of a compulsory license for Bayer’s patented drug Nexavar. In order to provide the public with information about patent working, India requires every patentee to file an annual statement on “Form 27” describing the working of each of its issued Indian patents.
We conducted the first comprehensive and systematic study of all Forms 27 filed in India with respect to a key industry sector: mobile devices. We obtained from public online records 4,916 valid Forms 27, corresponding to 3,126 mobile device patents. These represented only 20.1% of all Forms 27 that should have been filed and corresponded to only 72.5% of all mobile device patents for which Forms 27 should have been filed. Forms 27 were missing for almost all patentees, and even among Forms 27 that were obtained, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Indian Patent Rules. Patentees adopted drastically different positions regarding the definition of patent working, while several significant patentees claimed that they or their patent portfolios were too large to enable the reporting of required information. Many patentees simply omitted required descriptive information from their Forms without explanation.
It is likely that a combination of factors have led to this high degree of non-compliance, namely technical and administrative failures of the Indian Patent Office, and inadvertent or deliberate omission by patent holders. However, it is also likely that there are more fundamental issues with the very notion of working requirements with respect to complex, multi-patent products. In effect, products that embody dozens of technical standards and thousands of patents may not necessarily be amenable to individual-level reporting of working, or even working requirement themselves. We hope that this study will contribute to the ongoing global conversation regarding the most appropriate means for collecting and disseminating information regarding the working of patents. 
In a related vein, Jacob Schindler recently published a post on the IAM Blog titled "India seeks to re-vamp patent working form, but rights owners are sceptical of the whole endeavour," link here; and Preston Richard has a post on the Trust in IP Blog titled "The Statement of Patent Working in India--Time for a Change," link here.

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In other news, the Essential Patent Blog reports that David Long will be presenting a free webinar tomorrow from 4-5 p.m. Eastern Time titled "What Does U.S. Case Law Tell Us About Standard Essential Patent Licensing," information here.

Monday, March 19, 2018

Obhan on Injunctions and the Public Interest in India

Recently I published a post on Ashish Bharadwaj's article Patent Injunction and the Public Interest in India, 40 EIPR 55-58 (2018), discussing the author's reservations about the Delhi High Court's ruling last year in Bayer Intellectual Property GmbH v Ajanta Pharma Ltd that a "public interest" factor weighing against the granting of an interim injunction is the potential loss of employment or tax revenue if the injunction were to issue.  Similarly critical of the decision is Essenese Obhan's recent article Is Not-Working of a Patent in India Against Public Interest?, Mitteilungen der deutschen Patentanwälten, Feb. 2018, pp. 59-60.  Here is the abstract:
Not working a patent in India can affect a patentee's right to obtain interim relief in a patent litigation.  Recent court decisions in India involving Bayer's patents on Vardenafil consider whether not working a patent is also against public interest, and if so, would non-working of the patent by a patentee in India enable a defendant to manufacture and export a patented article outside India.
The author notes that a subsequent decision of the same court involving the same patents appears to disagree with the earlier decision's conclusion that courts should take into account loss of employment and loss of state revenue. 

Thursday, March 15, 2018

Federal Circuit Affirms Reasonable Royalty Based on 71% Profit Split

The case is Exergen Corp. v. Kaz USA, Inc., a nonprecedential opinion authored by Judge Moore and handed down last Thursday.  (I'm a little surprised it's a nonprecedential opinion, because it covers some important ground on a number of topics.)  The patents in suit relate to thermometers that can read a person's temperature by being swiped across the forehead.  Exergen sued Kaz for infringement, and the district court held that the claims at issue to be patent-eligible.  (Most of Judge Moore's opinion, as well as Judge Stoll's dissent, focuses on the patent eligibility question, and is probably the most significant aspect of the case.)  The jury then found the claims infringed, and on this issue the Federal Circuit affirms in part and reverses in part, holding that only one of the two patents in suit was infringed.  For that reason, the court also vacates the damages award and remands for reconsideration, although it concludes that the actual damages awarded were supported by substantial evidence, and that there was no error in the district court's finding of no willfulness.  What follows relates to these parts of the opinion. 

First, as to actual damages, the jury awarded $9,802,228 in reasonable royalties and $4,840,320 in lost profits.  The court rejects Kaz's arguments that these awards were unsupported by substantial evidence, despite the facts that (1) the royalty amounted to 71% of Kaz's profit on sales of infringing units, and (2) the lost profits were premised on Exergen's argument that CVS, which did not sell Exergen thermometers, would have done so but for the infringement:
Kaz argues both the reasonable royalty and lost profits portions of the jury’s damages award are unsupported by substantial evidence. It argues that the reasonable royalty part of the jury’s award translates into a per-unit rate of 32% of the projected sales price and 71% of Kaz’s projected per-unit net profit. It argues the hypothetical, nonexclusive, U.S.-only royalty agreement contemplated in this case should be set at a rate less than 5.7%, the rate for the worldwide and exclusive license agreement Kaz entered for a different thermometer. Kaz also argues the lost profits portion of the jury award improperly included lost profits for CVS stores, where Exergen did not sell any products.
While a royalty that would have given Exergen 71% of Kaz’s projected net profit is certainly steep, we do not review such fact findings de novo. There was substantial evidence presented at trial which supports the jury’s conclusion that in a hypothetical negotiation, Kaz would have been willing to pay such a price to enter the market. Exergen’s damages expert went through each of the factors in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), explaining why each relevant factor weighed in favor of a high royalty rate. For instance, Exergen’s expert explained that the parties were “fierce competitors” at the time of the hypothetical negotiation, and Exergen would have known that if it licensed the patents to Kaz, it would have lost sales. J.A. 16287. He testified that Exergen had no licenses with respect to the patents-in-suit, and would have needed to be “highly incentivized” to license the patents for a technology with “advantages that other products didn’t have, namely, the noninvasive, the gentle nature of the product.” J.A. 16294, 16297. He further testified that Kaz would have been incentivized to “pay a slightly higher royalty” because there were nine years left on the patents, which would have been a long time to sit out of a growing market. J.A. 16296. The jury was not required to give more weight to Kaz’s license, particularly in light of mitigating testimony that the agreement was for a different type of thermometer “of unknown appeal,” was based on patent applications, and was not between competitors. J.A. 16419–20. Kaz has not presented any evidence that the jury’s reasonable royalty would not have been feasible from a business perspective—indeed, Kaz would have still made 29% of its projected per-unit profit. The jury was entitled to credit Exergen’s evidence that Kaz would have been highly motivated to pay a premium to enter the market.
The jury’s lost profits award with respect to CVS, the only retailer disputed on appeal, is also supported by substantial evidence. Trial testimony established that CVS offers its own generic products alongside a single branded product. The jury was entitled to find that had Kaz’s thermometers not been on the market, CVS would have chosen Exergen’s competing product to be the branded product. While “the patentee needs to have been selling some item, the profits of which have been lost due to infringing sales, in order to claim damages consisting of lost profits,” Poly-America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004), our precedent does not require sales to have been lost in any particular way. Even though the inventor testified that CVS did not carry Exergen’s products because Exergen previously sued them for patent infringement, the jury was entitled to find that in the absence of a feasible alternative product, CVS would have turned to Exergen despite their history of litigation. Trial testimony demonstrated that another major retailer who Exergen had previously sued “got over it” and later carried Exergen’s product. J.A. 16411–13 (pp. 18-20).
On balance, and despite the rather skewed nature of the profit split (which, by the way, appears to be a split of the entire profit made from sales of infringing devices), the court's reasoning seems resasonably persuasive, assuming there is no double-counting here; though I'd note that this may be one of those situations in which (in principle) the plaintiff would have been entitled to lost profits on Kaz's sales if it had been able or willing to provide sufficient proof on the matter.  As Lemley and others noted, sometimes an award of reasonable royalties is really a substitute for an unproven or unprovable lost profits award, and this may be one such case.

As for willfulness/enhanced damages, the trial court granted summary judgment of no willfulness prior to the Supreme Court's decision in Halo, based on its conclusion that Kaz's invalidity arguments were not objectively unreasonable.  After Halo, the court reconsidered but concluded that there was still no basis for finding the infringement to have been willful:
We cannot conclude that the district court abused its discretion in applying the Read factors and declining to award enhanced damages. Because the Supreme Court held that Seagate’s requirement of “a finding of objective recklessness in every case before district courts may award enhanced damages” unduly restricted the discretion of the district court, Halo, 136 S. Ct. at 1932, we have vacated previous enhanced damages decisions premised only on Seagate’s objective prong. . . . But in this case the district court’s summary judgment of no willfulness based on the objective prong of Seagate was not the only rationale on the record. The district court did not clearly err in its later consideration of the Read factors. For example, the district court found that no evidence of copying existed, that no concealment or litigation misconduct had occurred, and that Exergen was able to “more than adequately vindicate its rights.” Halo, 136 S. Ct. at 1933, the district court took into account the particular circumstances of this case and concluded “on balance, this case is not of an exceptional nature warranting an award of multiple damages.” J.A. 54.
Exergen argues a jury must consider willfulness before the district court may exercise its discretion to enhance damages under § 284, but such a blanket rule is directly contrary to the Supreme Court’s mandate that courts exercise their discretion free from inelastic rules like the Seagate test. Halo, 136 S. Ct. at 1933–34; see Arctic Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350, 1371–72 (Fed. Cir. 2017) (refusing to adopt a blanket rule that a district court abuses its discretion by deciding an issue without briefing by the parties). Even if the jury had found that Kaz’s infringement was willful, “an award of enhanced damages does not necessarily flow from a willfulness finding.” Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017). Under the circumstances of this case, the district court did not abuse its discretion in analyzing the Read factors, taking into account the overall circumstances of the case, and denying enhanced damages. We affirm the district court’s denial of enhanced damages (pp. 21-22).
I don't see anything in particular to take issue with on this issue, and (unlike the award of actual damages) on this matter there will be nothing for the district court to reconsider on remand.

Tuesday, March 13, 2018

JFTC to Host Digital Economy and Competition Policy Symposium

Following on from Sunday's post, the Japan Fair Trade Commission and the Competition Policy Research Center are hosting an event titled "Osaka International Symposium: Digital Economy and Competition Policy–IoT, Data, Platforms and Laws" on Friday, March 30, 2018.  (Hat tip to Professor Jorge Contreras for alerting me to this.)  Here is a link, and here is the symposium description:
While innovation is being created one after another through utilization of big data, development and diffusion of artificial intelligence (AI) and IoT, there is concern that parties with a dominant position, such as having the fundamental technology for doing business, distort competition or impose unfair business conditions. In particular, behaviors of giant platformers, standard essential patents owners and “patent trolls” are attracting a lot of attention.
In this symposium, we discuss, in the course of the progress of digital economy, in what kind of competitive environment companies are placed, and what is the role of the competition law and competition policy, taking into consideration domestic and overseas movements.
1. Date: 30 March, 2018 (Fri) 13:00-17:30
2. Osaka Bar Association Building 2nd Floor Hall (
3. Agenda
Chair: Director Yosuke Okada, Professor, Hitotsubashi University/Director of CPRC
(1) Opening remarks (13:00 – 13:10)
Mr Masatoshi Ohara, President of Osaka Bar Association (OBA)
(2) Session I: IPRs and Competition Laws in the IoT/AI Era (13:10-14:15)
Session Chair: Fumio Sensui, Professor, Kobe University
Speaker: Jorge L. Contreras, Professor, the University of Utah
Commentators: Kazonori Shibata, KYOCERA Corporation
Noboru Kawahama, Professor, Kyoto University
Liyang Hou, Professor, Shanghai Jiao Tong University
(3) Session II: Data, Platforms and Laws- State of Play and the Way ahead (14:30-17:20)
Session Chair: Prof Thomas K. Cheng, Hong Kong Competition Commission Commissioner /
Associate Professor, University of Hong Kong
Reports from Public Antitrust Enforcers' and Advisors' View - Japan, Germany and the EU -
Speakers: Reiko Aoki, Commissioner, JFTC
Thomas Weck, Monopolies Commission, Germany
Simon Vande Walle, European Commission (DG Competition)
<Comments and Panel Discussion (15:50-17:20)>
Comments from: Noriko Fukuoka, Panasonic IP Management Co., Ltd
Takayuki Hamanaka, Attorney, Habataki Law Office/OBA
(4) Closing remarks (17:20-17:30)
Akira Negishi, Professor, Kobe University
[Host]: Competition Policy Research Center, Japan Fair Trade Commission
[Co-sponsor]: Osaka Bar Association, Kansai Economic Federation, Osaka Chamber of Commerce and Industry,
Japan Electronics and Information Technology Industries Association Kansai Branch, Kobe University*
[Note]: This symposium was supported by JSPS KAKENHI Scientific Research (A)"Rebuilding of a new competition policy for innovation and platform business"
[Application]: Please send your name and organization to CPRC address ( by e-mail.
[Fee]: Free
[Language]: Japanese-English Simultaneous interpretation

Sunday, March 11, 2018

JPO, RIETI to Host SEP Symposium on Tuesday, March 13

Professor Masabumi Suzuki has alerted me to the METI JPO-RIETI International Symposium, titled Toward Solving Disputes over Standard Essential Patents (SEPs): Licensing 5G SEPs, which takes place on Tuesday, March 13 in Tokyo.  (Presumably one of the topics of conversation will be the JPO's "Invitation for Public Comments on the Draft of 'Guide to Licensing Negotiations involving Standard Essential Patents,'” which Draft Guide I hope to have more to say about sometime later this week or next, after I've had a chance to review it.)  For now, here is the symposium agenda, from the symposium webpage


We are now in the era of the Internet of Things (IoT), in which various things that have not been connected via networks hitherto, such as home electronics and automobiles, can be done so. Also, we are moving toward the 5G era, i.e., the fifth generation mobile communication system, in which larger amounts of data can be exchanged in real time. Meanwhile, standard essential patents (SEPs) are being used for manufacturing products using advanced communication technologies, such as IoT. Licensing negotiations that were conducted among companies in the telecommunications industry also are now being conducted between and among different industries. As a result, new issues have arisen about licensing agreements in terms of, for example, differences in licensing rules and methods of determining royalties.

Under these circumstances, the Japan Patent Office (JPO) is working to formulate guidelines to be used to help prevent or smoothly resolve disputes over SEPs. At this symposium, experts from within and outside Japan, including researchers from RIETI, legal professionals, and intellectual property professionals, will collaborate to discuss and report on the current and future issues involving SEPs. Discussions will be held on international arbitrations that are expected to settle licensing negotiations and disputes involving SEPs immediately in an integrated manner.


  • Time and Date: 9:30-18:00, Tuesday, March 13, 2018 (Registration starts at 9:00)
  • Venue: Kioi Conference, Main RoomOpen a new window (Kioicho 1-4, Chiyoda-ku, Tokyo)
  • Languages: Japanese / English (with simultaneous interpretation)
  • Admission: Free
  • Host(s): Research Institute of Economy, Trade and Industry (RIETI) / Japan Patent Office (JPO)
  • Seating Capacity: 200 (Pre-registration required)
  • Contact: Ms. MARUTAKE at RIETI (E-mail
    Tel: 03-3501-8398

9:30-9:35 Opening Remarks

NAKAJIMA Atsushi (Chairman, RIETI)

9:35-9:55 Keynote Speech "Creating Guidelines for Negotiations on SEP Licensing and Utilization of International Arbitration"

MUNAKATA Naoko (Commissioner, Japan Patent Office)

9:55-10:25 Special Lecture 1 "Changes in the Environment Surrounding SEPs and Trends in Each Country in Recent Years"

David KAPPOS (Former Director, United States Patent and Trademark Office)

10:25-10:55 Special Lecture 2 "Current Situation and Issues of International Arbitration for Resolving Disputes Concerning SEPs"

Randall RADER (Former Chief Judge, Court of Appeals for the Federal Circuit)

10:55-11:05 Break

11:05-12:25 Panel Discussion 1 "Ideal Modality of Negotiations on SEP Licensing"

Session Chair
Heinz GODDAR (Senior Partner, Boehmert & Boehmert / German Patent Attorney and European Patent and Trademark Attorney)
Panelists (in alphabetical order)
Gustav BRISMARK (Chief Intellectual Property Officer, Ericsson)
Christian LOYAU (Legal Affairs Director, European Telecommunications Standards Institute (ETSI))
NAGASAWA Kenichi (Group Executive of Corporate Intellectual Property & Legal Headquarters, Canon)
SUZUKI Masabumi (Faculty Fellow, RIETI / Professor, Nagoya University Graduate School of Law)

12:25-13:40 Lunch Break

13:40-15:00 Panel Discussion 2 "Preventing Disputes over SEPs Involving Parties from Different Industries in the 5G Era"

Session Chair
David KAPPOS (Former Director, United States Patent and Trademark Office)
Panelists (in alphabetical order)
ENDO Yoshihiro (Manager, Intellectual Property and Standardization Division, Honda Motor Co., Ltd.)
Dan LANG (Vice President of Intellectual Property, CISCO)
Max OLOFSSON (Director of Licensing, AVANCI)
Ilkka RAHNASTO (Vice President and Head of Patent Business, Nokia)

15:00-15:10 Break

15:10-16:30 Panel Discussion 3 "Concept for Calculating FRAND Royalty Rates"

Session Chair
NAGAOKA Sadao (Faculty Fellow, RIETI / Professor, Tokyo Keizai University)
Panelists (in alphabetical order)
John HAN (Senior Vice President, Qualcomm Inc. and General Manager, Qualcomm Technology Licensing)
Dylan LEE (Deputy Director for IP Licensing and Transaction, Huawei)
TAKAHASHI Hiroshi (Manager, IP Development Section 1, Innovation IP Department, Panasonic Intellectual Property Management Corporation)
BJ WATROUS (Vice President & Chief IP Counsel, Apple Inc.)

16:30-16:40 Break

16:40-18:00 Panel Discussion 4 "Utilization of International Arbitrations as a Means for Resolving Disputes over SEPs"

Session Chair
TAMAI Katsuya (Professor, Research Center for Advanced Science and Technology, University of Tokyo)
Panelists (in alphabetical order)
Klaus GRABINSKI (Judge, Federal Court of Justice (Bundesgerichtshof), Germany)
Zhipei JIANG (Former Chief Judge, IP Supreme People's Court)
KATAYAMA Eiji (Attorney at Law, Patent Attorney, ABE, IKUBO & KATAYAMA)
Randall RADER (Former Chief Judge, Court of Appeals for the Federal Circuit)

Friday, March 9, 2018

Penn Law to Host SEP Workshop Next Friday

The University of Pennsylvania Law School will be hosting a workshop, titled The Future of Standard Essential Patents: Learning from Microsoft v. Motorola’s Legacy, next Friday afternoon, March 16.  It includes some heavy hitters, including Judge James Robart, DOJ Antitrust Chief Makan Delrahim, and the great antitrust scholar Herb Hovenkamp.  Here is a link, for those who would like to register.  From the conference webpage:
This workshop will bring together leading scholars, practitioners, and business leaders to re-examine the Microsoft v. Motorola framework and explore current and emerging developments in standard essential patents. It will coincide with the official launch of a new website of resources developed at the Penn Program on Regulation (PPR) on the interface between the voluntary codes and standards world and the legal system.

2:00 Welcoming Remarks

Cary Coglianese, Edward B. Shils Professor of Law and Director, Penn Program on Regulation, University of Pennsylvania Law School

Opening Keynote Address
The Honorable James L. Robart
U.S. District Court for the Western District of Washington
(Presiding judge in Microsoft v. Motorola)

Panel Discussion: Microsoft v. Motorola’s Legacy in Today’s High-Tech Business World
R. Polk Wagner, Deputy Dean and Professor of Law, University of Pennsylvania Law School (Moderator)
T. Andrew Culbert, Partner, Perkins Coie (formerly with Microsoft)
Cynthia Laury Dahl, Practice Professor of Law; Director of the Detkin Intellectual Property and Technology Legal Clinic, University of Pennsylvania Law School
Kirk Dailey, Senior Vice President Business Development, Marconi Group (formerly with Motorola)


Panel Discussion: Emerging Legal and Business Issues in Standard Essential Patents
Herbert Hovenkamp, James G. Dinan University Professor, The Wharton School and the University of Pennsylvania Law School (Moderator)
Kirti Gupta, Senior Director, Economic Strategy, Qualcomm, Inc.
Aviv Nevo, George A. Weiss and Lydia Bravo Weiss University Professor, Department of Economics and The Wharton School, University of Pennsylvania
Richard S. Taffet, Partner, Morgan Lewis and Bockius LLP
Henry Wixon, General Counsel, National Institute for Standards and Technology

Concluding Remarks and Introduction of Closing Keynote
Christopher Yoo, John H. Chestnut Professor of Law, Communication, and Computer & Information Science; Director, Center for Technology, Innovation & Competition, University of Pennsylvania Law School

Closing Keynote Address
The Honorable Makan Delrahim
Assistant Attorney General for the Antitrust Division
U.S. Department of Justice

6:00 pm Reception

PPR’s forthcoming website and its underlying materials, including a detailed case study on Microsoft v. Motorola written by Prof. Dahl, was supported from the National Institute of Standards and Technology (NIST) at the U.S. Department of Commerce. Any statements, findings, conclusions, and recommendations associated with the website, as well as the workshop coinciding with the website launch, are those of the individuals making them and not necessarily those of PPR or NIST.

To be sure to receive future announcements, please visit the Penn Program on Regulation’s website at and add your name to the PPR Mailing List via the sign-up field provided in the right column.

This program has been approved for 3.5 substantive CLE credits for Pennsylvania lawyers. CLE credit may be available in other jurisdictions as well. Attendees seeking CLE credit should bring separate payment in the amount of $140.00 ($70.00 public interest/non-profit attorneys) cash or check made payable to The Trustees of the University of Pennsylvania.

Thursday, March 8, 2018

NantKwest En Banc Oral Argument Today

This morning the en banc Federal Circuit will hear oral argument in NantKwest v. Matal.  I've blogged about this case a couple of times before, most recently in a post from last August:
The case is NantKwest Inc. v. Matal (available here).  As I explained in my blog post on the panel opinion from this past June:
The examiner and the PTAB rejected the inventor's patent application on nonobviousness grounds, and rather than immediately appealing to the Federal Circuit (which is one option under these circumstances) the applicant initiated a lawsuit against the director in the U.S. District Court for the Eastern District of Virginia (which is another, less commonly invoked, option).  The district court ruled in favor of the director, and in May the Federal Circuit affirmed (here).  The district court also awarded the director expert witness fees but denied a request for attorney's fees. On appeal of this matter, the Federal Circuit (in an opinion by Chief Judge Prost) concludes that the relevant statute--which in the present context is not 35 U.S.C. § 285, but rather 35 U.S.C. § 145--requires the court to award both expert and attorneys' fees--and, although it isn't at issue in this case, since the director won--the rule applies regardless of outcome.
The per curiam order issued this morning states:
This case was argued before a panel of three judges on February 9, 2017. A sua sponte request for a poll on whether to reconsider this case was made. A poll was conducted and a majority of the judges who are in regular active service voted for sua sponte en banc consideration.
(1) The panel opinion of June 23, 2017 is vacated, and the appeal is reinstated.
(2) This case will be heard en banc sua sponte under 28 U.S.C. § 46 and Federal Rule of Appellate Procedure 35(a). The court en banc shall consist of all circuit judges in regular active service who are not recused or disqualified.
(3) The parties are requested to file new briefs. The briefs should address the following issue:
Did the panel in NantKwest, Inc. v. Matal, 860 F.3d 1352 (Fed. Cir. 2017) correctly determine that 35 U.S.C. § 145’s “[a]ll the expenses of the proceedings” provision authorizes an award of the United States Patent and Trademark Office’s attorneys’ fees? . . .
I'll post the audio of the oral argument when it becomes available.  To be honest, though, I haven't gotten terribly excited about this case--though I'm sure its resolution is important to the parties, I suspect that the number of § 145 cases filed every year is quite small, so whatever the result is its systemic effect will be pretty limited.  For what it's worth, I'm inclined to think the en banc court will reverse the panel, though again I haven't read the briefs or otherwise immersed myself in considering the question presented.  For a discussion of the various briefs, see this January post from Patently-O.

UpdateHere's the audio of today's oral argument.

Wednesday, March 7, 2018

Pant and Jain on SEP Cases in India

Ameya Pant and Dipesh Jain have published an article titled Complexities Surrounding SEP Cases in India:  An Overview of Decisions by the High Court and Competition Commission of India, 13 JIPLP 132-42 (2018).  Here is a link to the paper, and here is the abstract:
This article aims to ascertain whether the decisions passed by the Delhi High Court and Competition Commission of India (CCI), pertaining to standard essential patents (SEPs) are in consonance with international fair, reasonable and nondiscriminatory (FRAND) jurisprudence.
It has been observed that the decisions do not take into consideration the facts of the precedents which are relied upon, and severely lack analysis, which leads to misapplication of the judicial precedents. The decisions by the judiciary and the market regulator display two divergent stands with respect to the ideal base for calculating royalties. As the tasks of both adjudicatory bodies vastly differ, the court would have to determine damages, whereas the market regulator shall ascertain whether the conduct of basing royalties on the product is abusive. The judiciary uses the method of comparable licenses for ascertaining interim damages, however fails to fully appreciate the methodology, which showcases misapplication of the damages model.
The article pits the rational of the adjudicatory bodies against decisions by courts in the USA, EU and China, alongside views expressed by market regulators and IPR policies of various standard-setting organizations (SSOs), thereby giving a holistic view while assessing the Indian judiciary’s take on FRAND.
For other recent takes on interim relief in India, from a variety of viewpoints, see this January 5, 2018 post by Punkhuri Chawla, this October 15, 2017 post by Prashant Reddy and this August 1, 2017 one by Prateek Surisetti, all on SpicyIP.  For further discussion of why interim orders are so important in India--very few cases are litigated all the way through to judgment--see this August 1, 2017 article in the Wall Street Journal.   

Monday, March 5, 2018

Sunstein on Irreparability, Irreversibility, and Injunctions

Cass Sunstein has posted a paper on ssrn titled Irreparability as Irreversibility, forthcoming in the Supreme Court Review.  Here is  a link, and here is the abstract: 
Some things, people say, are “gone forever.” But what exactly does that mean? Some losses are irreparable in the sense that nothing can be done to restore the status quo ante – or if something can be done, it is not enough (or perhaps outsiders can never know if it is). The Irreversible Harm Precautionary Principle takes the form of an insistence on paying a premium to freeze the status quo and to maintain flexibility for the future, while new information is acquired. In many settings, it makes sense to pay for an option to avoid a risk of irreversible losses. An implicit understanding of option value can be found in the emphasis on irreversibility in National Environmental Policy Act and other federal statutes, along with many international agreements. The idea of irreversibility offers a distinctive perspective on the legal concept of “irreparable harm,” a prerequisite for granting preliminary injunctions. In fact some irreparable harms seem to qualify as such precisely because they are irreversible. We can obtain new insights into the time-honored idea of irreparable harm through the lens of irreversibility, especially in environmental cases but also in many contexts, including freedom of speech, privacy, and discrimination on the basis of race and sex.
The article mostly focuses on environmental law, but it's worth thinking about its potential implications for patent and other IP litigation as well.  Thinking about preliminary relief as an option to buy time to acquire better information is interesting, for one thing.  One issue that leaps to mind is whether the "price" of the option is correct, given that U.S. courts (unlike their counterparts in other countries) cap the amount of the compensation to which a wrongly-enjoined defendant is entitled if it prevails at trial in the amount of the injunction bond.  (For previous discussion on this blog, see here.)  On the other hand, in IP cases one type of information that may improve with the passage of time is information relating to the validity of the IP right in suit.  Waiting for better information to develop might tend to favor defendants, though, rather than movants, if one would expect potentially invalidating prior art to be more likely to be uncovered if the suit is delayed.  

Professor Sunstein also discusses how harm can be irreversible in different senses.  For example, a harm may be incommensurable, in the sense that it is "qualitatively distinctive and not fungible with other human goods" (p.13); but such a claim may need to be combined with one involving uncertainty, that is, that "courts do not know how to value the relevant loss in monetary terms, and they will not know how to do that ex post" (p.14).  I would think that IP rights are sometimes incommensurable in the former sense (maybe moral rights in works of art would fall within this category, as suggested by this recent U.S. opinion involving graffit art), but perhaps more often in the latter sense (which is after all one of the standard law-and-economics rationales for granting injunctions of any type in IP cases).  At the same time, Sunstein notes that irreversible harm can occur in both directions, which is also true in IP cases.  A patentee might suffer by waiting for any form of relief until the entry of judgment, if in the meantime its clientele defect or it suffers harms to its goodwill (or if there's a risk the defendant will be judgment-proof, a matter Sunstein doesn't address).  But a defendant also might suffer if a preliminary injunction poses a risk that it will go out of business and the bond won't fully compensate it.     

One suggestion I would make to Professor Sunstein would be to  rethink footnote 3, which cites pre-eBay cases for the proposition that courts can presume irreparable harm to IP rights.  In the patent sphere, that is no longer true, and I don't think it is in U.S. copyright or even trademark law any more either.

Friday, March 2, 2018

Three New FRAND Articles in GRUR

Readers might be interested in these three articles in the February 2018 issue of GRUR. 

1.  Mary-Rose McGuire has published Anwendbares Recht, Rechtsnatur und Bindungswirkung am Beispiel eines ETSI-Standards ("Applicable Law, Legal Nature, and Binding Effect through the Example of an ETSI-Standard"), 2/2018 GRUR 128-35.  Here is the abstract (my translation from the German):
In FRAND disputes, the question ever more frequently arises whether the rightsholder is directly hindered from asserting a claim for injunctive relief, or whether it has granted the prospective licensee only a right to use.  At the same time, one observes that the parties advocate not only contrary opinions with regard to the applicable law, the legal nature and the binding effect of a FRAND declaration, but also that they can appeal to opposing voices in the case law and literature.  All three questions achieve special relevance in the case of the transfer of an SEP prior to licenses.  This essay provides an overview of the state of the discussion and, using the example of an ETSI standard, demonstrates that the foregoing questions cannot be satisfactorily resolved so long as a careful IP rights analysis does not precede them.  The steps necessary for such an examination are presented.  
2.  Constantin Kurtz and Wolfgang Straub have published Die Bestimmung des FRAND-Lizenzsatzes für SEP ("The Determination of FRAND License Rates for SEPs") in 2/2018 GRUR 136-44.  Here is the abstract (again, my translation):
Ultimately the central question in SEP disputes is the amount of the fair and reasonable license rate, and how one determines it.  Once this is clarified, the parties can implement the conditions set out by the CJEU in Huawei/ZTE.  The following essay presents a practical and competition-law compliant way for making this determination.
If I understand correctly, the authors are advocating a top-down type of approach involving the use of expert evidence to determine, first, the aggregate royalty burden for products such as mobile phones, and second the number of relevant, valid, and essential SEPs reading on the device; and then allocating a royalty based on numeric proportionality (patent counting).   They also advocate evaluating a representative sample of the patentee's SEPs to get a sense of the portion that are valid and essential.

3. Antje Baumann has published Einschaltung von Schiedsgerichten zur Bestimmung der FRAND-Konditionen ("Involvement of Arbitration Tribunals in Determining FRAND Conditions"), 2/2018 GRUR 145-53.  Here is the abstract (my translation):
The rules of several standard setting organizations permit FRAND disputes between their members to be resolved in an arbitration proceeding.  As a result, in recent years many publications have addressed the decision of FRAND conditions by arbitration tribunals.  But neither the legality of these arbitration clauses nor the question of whether and why voluntary arbitration agreements may be more advantageous than compulsory arbitration has received much attention.  The following essay addresses these aspects, and further investigates whether the US proposal for final-offer arbitration is an alternative for an efficient disposal of FRAND disputes.
The author is supportive of voluntary arbitration as a means of settling FRAND disputes.