Thursday, February 28, 2019

Papers from PatDam 2

I mentioned in December that at least some of the papers presented at the February 2017 University of Texas Patent Damages Conference Part 2 had been published, but that there wasn't yet a page on either the Texas Intellectual Property Law Journal (TIPLJ)'s or The Review of Litigation (TROL)'s website dedicated to all of the papers from this conference, as there was for PatDam 1.  There is now; see here.  The first four are published in TROL. The remaining papers are published in TIPLJ, and are available in final form on Westlaw (so I 'm not sure why the website has posted drafts of these papers, rather than final versions).   

Jennifer Blouin & Melissa Wasserman, Tax Solutions to Patent Damages (Draft)

Tuesday, February 26, 2019

Lecture Tomorrow on "Patent Wars"

Just a reminder that I will be in Chicago tomorrow for a free public lecture on my book Patent Wars:  How Patents Impact Our Daily Lives, at John Marshall Law School.  The event starts at 1:15 p.m.  Here is a link if you'd like to register in advance.

I also have some speaking engagements coming up next month in Germany and Spain; more details to follow soon.

Monday, February 25, 2019

Contreras on Extraterritoriality

Jorge Contreras has posted a paper on ssrn titled The New Extraterritoriality: FRAND Royalties, Anti-Suit Injunctions and the Global Race To The Bottom In Disputes Over Standards-Essential Patents, 25 B.U. J. Sci. & Tech. L. (2019 forthcoming).  Here is a link to the paper, and here is the abstract:
While national courts have long exercised extraterritorial authority over domestic entities whose conduct abroad is prohibited in the domestic jurisdiction, national courts have recently begun to use disputes over domestic patent rights as vehicles for shaping the global business arrangements of private parties even absent any violation of national law. This phenomenon has become particularly pronounced in the context of “fair, reasonable and non-discriminatory” (FRAND) licenses of patents that are essential to the manufacture and sale of standardized products. This essay explores the increasing extraterritorial effect of national judicial decisions on licenses for standards-essential patents, including recent instances in which courts in the U.S. and UK have sought to establish global FRAND royalty rates for parties engaged in national patent litigation. It also examines the increasing use of the anti-suit injunction, a powerful procedural tool that can enjoin parallel foreign proceedings while disputes are adjudicated in a first jurisdiction. The combination of national courts’ willingness to determine global patent licensing rates, coupled with the rising prevalence of the anti-suit injunction, threatens to cause a new “race to the bottom” among jurisdictions in this commercially significant area of the law. 
This is a good paper, and I recommend it to those of you who are trying to figure out what SSOs, courts, and others should be thinking about as they take on global FRAND litigation.

Sunday, February 24, 2019

NYT Article on African-American Inventors

February is Black History Month in the U.S. and Canada.  Today's New York Times includes a fascinating article by Claudia E. Cabrero and Julia Jacobs, titled "Seven Black Inventors Whose Patents Helped Shaped American Life."  The seven profiled are Garrett Morgan, Marie Van Brittan Brown, Lonnie Johnson, Mary Beatrice Kenner, Charles Drew, Patricia Bath, and Dennis Weatherby.  Highly recommended!

The article also references a book by Rayvon Fouché titled Black Inventors in the Age of Segregation, which discusses the lives and contributions of three other notable African-American inventors of the late nineteenth and earlier twentieth centuries:  Granville Woods, Lewis Latimer, and Shelby Davidson.  I'll put this on my reading list.  There is also an interesting website, titled "The Black Inventor Online Museum," which discusses these three and many others.

Friday, February 22, 2019

Burdon on Global FRAND Rate-Setting

On the IPKat Blog yesterday, Rose Hughes published an analysis by Michael Burdon of the problems inherent to having courts in one country (say, the U.K.) determine the terms of a global FRAND license.  (This is also a topic that I recently talked about in Japan, and that Jorge Contreras and I plan to write something about in the near future.)  Anyone interested in the topic should take a look at Mr. Burdon's thoughtful analysis.  In brief, he concedes that proceeding on a country-by-country basis is inefficient, but argues that the fault here lies primarily with SSOs, which to date have declined to establish an effective dispute resolution system or provide much guidance on how FRAND terms should be determined.  (I tend to agree; though I worry that some of DOJ Antitrust Chief Makan Delrahim's recent statements about potential antitrust liability on the part of SSOs will only chill these organizations all the more from taking such steps.)  He also notes the arguable imbalance in having a country with relatively minimal contacts with the dispute set the terms of a global license  ("In ZTE’s case, UK sales were less than 0.07% of their global sales. It is difficult to think of any other field of intellectual property where the indirect consequence of infringement of a UK right has an effect, exponentially greater than the local direct effect of that right.").

Anyway, read the analysis in full.  But here are a few thoughts of my own in response to the post:

1.  Citing paragraphs 124-27 of the Court of Appeal's Unwired Planet decision, Mr. Burdon understands that case as standing for the proposition that, when both the SEP owner and the implementer make FRAND offers, the SEP owner's offer effectively controls, because if the implementer refuses the offer it stands to be either (1) enjoined from selling infringing products in the U.K., or (2) coerced into taking a global license.  I hadn't previously thought of the opinion in quite those terms; after all, in Unwired Planet the court itself ultimately determined what the terms of a global license would be, rather than simply accepting the terms proposed by Unwired Planet.  (Mr. Justice Birss also thought there could be only one single set of terms that would be FRAND, a matter on which the Court of Appeal disagreed.)  But this does present a thorny question:  if both offer and counteroffer are FRAND, is the appropriate response to have a court or other third party decide on the terms of a FRAND license (global or otherwise), or must the implementer accept the SEP owner's terms?  The latter option doesn't seem right.  On the other hand, if a FRAND license would be global in scope, as Mr. Justice Birss believed was the case on the facts of Unwired Planet itself, there is a certain logic to saying that the defendant has to accept a global license or risk being enjoined.  It just doesn't follow that all of the terms must be those dictated by the SEP owner.   (It also doesn't follow that a court in a country with relatively few contacts to the matter is the most appropriate forum to determine the terms of a FRAND license.  In both Unwired Planet and Conversant, the court rejected the defendant's request to stay the U.K. litigation under the doctrine of forum non conveniens, but as I suggested in my Japan talks I wonder if this doctrine could be more fruitfully employed in future cases to address such situations.)

2.  Whether a court in the U.S. would follow the lead of the English courts in setting a global FRAND rate over the objection of the implementer is still a bit unclear--though as Professor Contreras pointed out to me recently, last year the Eastern District of Texas rejected such a request in Optis v. Huawei, noting that under Federal Circuit precedent U.S. courts aren't permitted to adjudicate claims involving foreign patents.  (The Federal Circuit so held in Voda v. Cordis, assertedly on the basis of the Paris Convention, though as Professor Graeme Dinwoodie has noted the Paris Convention almost certainly does not compel this result.)  Doctrinally, one further problem might be that, even if (in a given case) a FRAND license would be global, under eBay that still doesn't necessarily lead to the conclusion that the defendant must be enjoined from practicing the patent in the U.S., even if it is unwilling to accept the court's determination of a global FRAND license.   (At least I don't think eBay would contemplate any such "automatic" rule.)  Further, I shudder to think how, if the matter were tried to a jury, a jury could be expected to set a global FRAND rate.  To say that that doesn't seem practical is an understatement.

3.  Mr. Burdon also cites a 2018 U.K. Supreme Court decision, Morris-Garner v One Step ([2018] UKSC 20, which (though a breach of contract decision) discusses, among other matters, the availability in some cases of "user damages" in lieu of an injunction (i.e., an ongoing royalty)--and thus could have considerable relevance in patent and other IP cases as well.  I confess that I wasn't aware of this decision before, and will need to study it and report back.

Wednesday, February 20, 2019

Cotter, Hovenkamp, and Siebrasse on Patent Holdup

Erik Hovenkamp, Norman Siebrasse, and I have posted a paper on ssrn titled Demystifying Patent Holdup, 76 Washington & Lee Law Review __ (forthcoming 2019).  Here is a link to the paper, and here is the abstract: 
Patent holdup can arise when circumstances enable a patent owner to extract a larger royalty ex post than it could have obtained in an arm's length transaction ex ante. While the concept of patent holdup is familiar to scholars and practitioners—particularly in the context of standard-essential patent (SEP) disputes—the economic details are frequently misunderstood. For example, the popular assumption that switching costs (those required to switch from the infringing technology to an alternative) necessarily contribute to holdup is false in general, and will tend to overstate the potential for extracting excessive royalties. On the other hand, some commentaries mistakenly presume that large fixed costs are an essential ingredient of patent holdup, which understates the scope of the problem. 
In this article, we clarify and distinguish the most basic economic factors that contribute to patent holdup. This casts light on various points of confusion arising in many commentaries on the subject. Path dependence—which can act to inflate the value of a technology simply because it was adopted first—is a useful concept for understanding the problem. In particular, patent holdup can be viewed as opportunistic exploitation of path dependence effects serving to inflate the value of a patented technology (relative to the alternatives) after it is adopted. This clarifies that factors contributing to holdup are not static, but rather consist in changes in economic circumstances over time. By breaking down the problem into its most basic parts, our analysis provides a useful blueprint for applying patent holdup theory in complex cases.