Friday, May 31, 2019

Landers on Proximate Cause and Patent Law

Amy Landers has posted a paper on ssrn titled Proximate Cause and Patent Law, forthcoming in the Boston University Journal of Science & Technology Law.  Here is a link to the paper, and here is the abstract:
The U.S. Supreme Court’s WesternGeco LLC v. ION Geophysical Corp. decision provides the opportunity to open a policy space for proximate cause in patent litigation. As the country’s highest Court has pushed patent law, as well as other statutory torts, in the same direction as other civil causes of action, the full adoption of proximate cause in all monetary forms of recovery appears to be inevitable. At this time, a full adoption of this complex, multidimensional requirement will allow the patent system to resolve several troubling existing problems, including the appropriate extraterritorial reach of the system. Properly implemented, proximate cause in patent law can resolve other difficulties that are explored in this article. These include accounting for the social benefits of infringing implementations, the multiple serial plaintiff problem, and the problem of patent infringement actions brought against end-user consumers as some examples. As the patent system joins other civil causes of action in implementing proximate cause, it is likely that other problems can be implemented and resolved so long as the standard is modified to account for the unique policy problems of the patent system.
The article reviews a good deal of case law and scholarship on proximate cause generally, before reaching its conclusions that, among other things, the Supreme Court's opinion in WesternGeco and Judge Stark's opinion in Power Integrations are incorrect.  (I respectfully disagree, see here.)

Wednesday, May 29, 2019

From Around the Blogs: Qualcomm and More

1.  On FOSS Patents, Florian Mueller published a post this morning on Qualcomm's filing of a motion to stay enforcement of Judge Koh's ruling pending appeal (which we both think the judge will deny).  The post also notes the rather remarkable publication of a Wall Street Journal op-ed by a sitting FTC Commissioner, Christine Wilson, criticizing her own agency's victory before Judge Koh!

For further discussion on  FTC v. Qualcomm, see my previous posts here, here, here, and here; Law 360's compilation of its reporting on the decision here; Bloomberg Law's several articles (see here, here, and here); Gene Quinn's take on IP Watchdog here; and David Long's brief discussion of the decision on Essential Patents, here.  (Mr. Long had previously expressed his skepticism over the FTC's case here.)  Earlier this week, Mr. Mueller published a post discussing the recent invalidation of one of the patents Qualcomm had sought to enforce against Apple in Germany, here

2.  Also on Essential Patents, Mr. Long summarizes Judge Rodney Gilstrap's ruling last week in HTC Corp. v. Telefonaktienbolaget LM Ericsson, entering a declaratory judgment that Ericsson complied with its FRAND obligation to HTC.  Judge Gilstrap concluded that Ericsson was not required to base the royalty on the profit margin or cost of a baseband processor, and that the amount Ericsson sought was in line with other comparable licenses Ericsson had concluded with other firms.

3.  On the Kluwer Patent Blog, Brian Cordery has published the somewhat improbably titled post Has the leopard changed his spots?  Hold your horses, about a May 9, 2019 decision by Mr. Justice Carr in Evalve Inc. v. Edwards Lifesciences Ltd (Patents Court for England and Wales), denying an interim injunction against Edwards's plans to install ten infringing medical devices, prior to the expected date of trial and final judgment, as a pilot launch.  The court concluded that, under the American Cyanamid factors, the balance of conveniences did not favor the patent owner, since the alleged infringement was on a small scale and would be remediable in damages.  (The title, and some of the post itself, is a playful allusion to the judge's dismay at the plaintiff's use of animal metaphors, i.e.,  "copycat," "piggybacking").  Update (May 30):  Further discussion of this case on IPKat here.    

Sunday, May 26, 2019

Recording of Knowledge@Wharton Interview on FTC v. Qualcomm

This past Friday, Professor Herb Hovenkamp and I participated in a half-hour Knowledge@Wharton radio segment on FTC v. QualcommThe show is available online on SiriusXM’s On Demand feature for one week, channel 132, and also is available from me here.  If you're interested in hearing our views on this important case, listen in!

Friday, May 24, 2019

Knowledge@Wharton Segment on FTC v. Qualcomm

This morning at 10 a.m. Central Time, Knowledge@Wharton will be broadcasting a live, call-in radio segment on FTC v. Qualcomm.  They'll be interviewing Professor Herb Hovenkamp and me.  From Knowledge@Wharton's webpage:
Knowledge@Wharton is a daily, call-in business interview program, broadcasting live from The Wharton School’s historic Ivy League campus. Host Dan Loney goes behind the headlines with world-renowned Wharton professors, distinguished alumni and expert guests. Listen to Knowledge@Wharton Monday through Friday, 10AM-Noon Eastern on SiriusXM 132. We’d love to take your calls at 1-844-WHARTON (1-844-942-7866).

Thursday, May 23, 2019

Thoughts on Judge Koh's Findings of Fact and Conclusions of Law in FTC v. Qualcomm

As noted yesterday, Judge Lucy Koh has now entered her 233-page Findings of Fact and Conclusions of Law in FTC v. Qualcomm, concluding that Qualcomm violated U.S. antitrust law.  Now that I've had a chance to read through the Findings of Fact and Conclusions of Law, here are my thoughts.  (For conciseness, from here on I'll call the Findings of Fact and Conclusions of Law an opinion.)

1.  Overall, I think the opinion is quite impressive.  Judge Koh's analysis of the evidence seems thorough, and she bases her legal conclusions on that evidence.  In several portions of the opinion, she indicates how contemporaneous documents contradicted what Qualcomm witnesses said at trial (e.g., about the firm not actually threatening to cut off OEMs' supply of chips).  I suspect that Judge Koh's detailed factual analysis will make it very hard for Qualcomm to prevail on appeal.  (As for the appeal, I wonder if the DOJ will weigh in again at the appellate level?  Very odd to have the two federal antitrust enforcers taking different views about the role of antitrust in policing FRAND breaches, as discussed here . . . .)

2.  Among the key factual conclusions are that Qualcomm had market power in the markets for CDMA and premium LTE modem chips; that Qualcomm imposed de facto exclusivity requirements on OEMs and on Apple (through, e.g., rebates,  threats of cutting off supply, and agreements that purchasers/licensees wouldn't challenge Qualcomm's patents or other licensing practices; see summary at pp. 113-14, 151); and that the royalties Qualcomm charged for its SEPs were above-FRAND (pp. 157 et seq.).  In reaching this last conclusion, Judge Koh finds, among other things, that Qualcomm earned $7.7 billion in licensing revenue in 2016, which "exceeded the combined 2016 licensing revenue of twelve other patent licensors, including Ericsson, Nokia, and Interdigital" (pp. 8-9)--even though other firms' patents contribute more value to the standards by which end devices operate (pp. 165-66).  Judge Koh also appears to be of the view that FRAND licenses generally must be based on the smallest saleable patent practicing unit (SSPPU), in order to conform to Federal Circuit precedent (pp. 172-73).

3.  The key legal conclusion, in my view, is that Qualcomm excluded competitors in the markets for CDMA and premium LTE chipsets by means of (1) its "no license, no chips" policy, and (2) its imposition of de facto exclusive dealing requirements on the OEMs and Apple.  In an article I published in Law360 a couple of months ago, I explained how the no license, no chips policy could lead to this result.  Since (in the short term, at least) all the OEMs care about is the "all-in" price--that is, the price Qualcomm charges for the combination of chips + license--Qualcomm can manipulate the price of the license to put its rivals at a competitive disadvantage.  E.g., if the all-in price Qualcomm charges an OEM, taking into account discounts, rebates, etc., is $20, consisting of $10 for a license and $10 for a chip, a rival could charge the OEM no more than $10 for a chip.  (These numbers I'm using are for illustrative purposes only.)  Suppose further that a FRAND royalty would be $5 and that the marginal cost of producing a comparable chip, not including the FRAND royalty, is $12.  On these hypothetical facts, however, the OEM could not charge more than $10 for its comparable chip, and thus Qualcomm's circumvention of its FRAND commitment would be a direct cause of the rival's inability to compete.  That would be the economic theory, at any rate, and I believe that is what Judge Koh has in mind at pages 153-54, 185 in her discussion of why the no license, no chips policy enables Qualcomm to maintain its chip monopolies.  Such a scheme might also involve rebating back some portion of the all-in price when the OEM buys chips from Qualcomm and not from a rival.

4.  Further, Qualcomm's imposition of de facto exclusivity requirements on OEMs and on Apple puts competitors at an obvious disadvantage, particularly given the high costs of entry into the chipset market (and thus the need for some prospect of a significant customer base to make that investment worthwhile).  Judge Koh appears to provide a substantial evidentiary basis for her conclusion that Qualcomm's conduct contributed to the inability of Intel and other potential rivals to gain a foothold in the chipset market during the time period in question.

Judge Koh also concludes that, in view of her summary judgment ruling from last fall, Qualcomm's FRAND commitment required it to license its competitors, and thus amounted to an antitrust duty to deal.  Under Judge Koh's analysis of the Aspen Skiing case, Qualcomm's breach of this antitrust duty itself amounted to a violation of Sherman Act section 2 (see pp. 134-31).   

5.  By these means, Judge Koh concludes, Qualcomm was able to foreclose potential rivals and maintain its monopolies in the CDMA and premium LTE modem chip markets.  This diminished competition resulted in the OEMs (and, ultimately, consumers) paying higher prices and having fewer alternatives from which to choose.

Some portions of the opinion, in isolation, might be read as resting on the premise that Qualcomm's breaches of its FRAND commitments (e.g., charging above-FRAND royalties), standing alone, caused competitive harm and thus violated the antitrust laws (see, e.g., p.183).  In my view, this would be a more tenuous claim under U.S. antitrust law, which generally doesn't make it illegal for a monopolist merely to charge a monopoly price.  Nevertheless, I think there is enough in the opinion to support the conclusion that Qualcomm's circumvention of its FRAND commitments enabled it to distort competition in the chip markets and thus to maintain its monopoly power (which is a standard sort of antitrust offense under U.S. law).  The harm is then measured by the higher prices consumers pay and, possibly, by the loss of whatever the foreclosed rivals would have contributed to longer-term innovation in the chip markets.  On the latter harm, see, e.g., pp. 124, 196-98; Judge Koh would appear implicitly to reject arguments that penalizing Qualcomm will have a negative impact on innovation.

6.  As for remedy, Judge Koh asserts that "Qualcomm’s anticompetitive conduct is ongoing," in that it "continues to refuse to provide patent exhaustion, refuse to sell modem chips to an OEM until the OEM signs a license, and engage in chip supply threats and cutoffs" (p.218).  The resulting injunction has five provisions (pp. 227-33):
 (1) Qualcomm must not condition the supply of modem chips on a customer’s patent license status and Qualcomm must negotiate or renegotiate license terms with customers in good faith under conditions free from the threat of lack of access to or discriminatory provision of modem chip supply or associated technical support or access to software.
(2) Qualcomm must make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and non-discriminatory (“FRAND”) terms and to submit, as necessary, to arbitral or judicial dispute resolution to determine such terms.
(3) Qualcomm may not enter express or de facto exclusive dealing agreements for the supply of modem chips.
(4) Qualcomm may not interfere with the ability of any customer to communicate with a government agency about a potential law enforcement or regulatory matter.
(5) In order to ensure Qualcomm’s compliance with the above remedies, the Court orders Qualcomm to submit to compliance and monitoring procedures for a period of seven  (7) years. Specifically, Qualcomm shall report to the FTC on an annual basis Qualcomm’s compliance with the above remedies ordered by the Court.
Judge Koh thus rejects the DOJ's suggestion from a few weeks back that there should be some further briefing or hearing on remedies (pp. 226-27).  

Wednesday, May 22, 2019

Judge Koh Rules for FTC, Against Qualcomm

I will be reading the opinion this morning, and hope to post something later today or tomorrow.  Here's the story in Bloomberg, FOSS Patents, Law360, the WSJ.

Here's a copy of Judge Koh's Findings of Fact and Conclusions of Law.

Monday, May 20, 2019

From Around the Blogs: Dutch FRAND Case, Fees 5 Years After Octane Fitness, and More

1.  On the IPKat Blog last week, Annsley Merelle Ward published a post by Léon Dijkman titled Dutch Court of Appeal injuncts unwilling licensee in first post-Huawei v ZTE FRAND decision.  The decision, Koninlijke Philips N.V. v. Asustech Computers Inc., was handed down on May 7, and Mr. Dijkman provides links to both the Dutch original and an English translation.  Mr. Dijkman notes, inter alia, that the defendant's "alleged willingness to enter into negotiations after the institution of the proceedings and a possible counteroffer in that regard cannot render the litigation abusive or trigger an obligation to stay the proceedings," and that the court "does not interpret Huawei/ZTE as obliging SEP holders to substantiate why their license offers are FRAND."    EPLaw also has a write-up, earlier noted on IPKat, here.

2.  Also on EPLaw (and earlier noted on IPKat) is a write-up, and link to an English language summary, in Graf v. Kaban & Daser, a decision of the Barcelona Commercial Court from last November, denying a request for an ex parte injunction against the exhibition of a device at a trade fair in Madrid.  The summary discusses the circumstances under which a patent owner should use a procedure known as a "preliminary verification of facts" to determine if a device infringes.

3.  Also on IPKat is a post by Peter Ling titled Does a “Launch At Risk” Automatically Exclude the Right to Appropriate Compensation for a Wrongfully-Issued Preliminary Injunction?  The post discusses a referral from the Metropolitan Court of Budapest to the CJEU, and AG Pitruzzella's opinion that the Enforcement Directive does not authorize member states to automatically deny compensation for a wrongly issued injunction if the defendant launched at risk (without having first sought to invalidate the patent in suit).
4.  As for the U.S., Ryan Davis published an article on Law360 last week titled 5 Things We've Learned in 5 Years Since Octane Fitness.  Citing data compiled by Nirav Desai, Mr. Davis presents descriptive statistics on the number of attorneys' fee motions filed and the grant rate post-Octane Fitness, and concludes that while fee awards have become more common, they are still unusual (as one would expect, given the statutory requirement that fees be awarded only if the case is exceptional).  Mr. Davis also discusses various factors that courts have considered in determining that a case is exceptional.

Friday, May 17, 2019

AAI Panel on Antitrust Enforcement and IP

The American Antitrust Institute (AAI) will be holding its 20th Annual Policy Conference, titled "Strengthening Antitrust Enforcement," on June 20, 2019 in Washington D.C. (link here).  Session III, titled "Intellectual Property and Competition:  Major Developments at the Agencies," should be quite interesting, in view of the recent squabble between the FTC and the Antitrust Division over the appropriate relationship between antitrust and IP law.  Speakers for this session, which will be moderated by Professor Jorge Contreras, will include former Acting Assistant Attorney General in charge of the Antitrust Division, Renata Hesse; former FTC Commissioner Terrell McSweeny; and the FTC's Chief Counsel for Intellectual Property, Suzanne Munck.

Wednesday, May 15, 2019

New Papers on SEP/FRAND Related Topics

1.  Jorge Contreras has posted a paper on ssrn titled Private Law, Conflict of Laws, and a Lex Mercatoria of Standards-Development OrganizationsHere is a link to the paper, and here is the abstract:
Technical standards created by industry standards-development organizations (SDOs) enable interoperability among products manufactured by different vendors. Over the years, SDOs have developed policies to reduce the risk that SDO participants holding patents covering the SDO’s standards will disrupt or hinder the development and deployment of these standards. These policies, including commitments to license standards-essential patents (SEPs) on terms that are fair, reasonable and non-discriminatory (FRAND), gain transnational application given the international character of SDO activities and are most effectively interpreted and applied on the basis of private law (contractual) principles. However, SDO policies are typically embodied in an SDO’s governing documents, which are in turn regulated by the law of the jurisdiction in which the SDO is based. This somewhat arbitrary linkage of SDO policies to national and state law has created inconsistencies in their interpretation and threatens to spark jurisdictional competition in an unproductive race to the bottom. This paper poses the question whether it would be possible to decouple SDO policy interpretation from the patchwork of national and state laws that purport to govern such policies in favor of a common lexicon of interpretive principles derived from the shared understanding of SDO participants: a “lex mercatoria” of standardization.
2.  Eli Greenbaum has posted a paper on ssrn titled No Forum to Rule Them All:  Comity and Conflict in Transnational FRAND DisputesHere is a link to the paper, and here is the abstract:
Recent years have seen an explosion in FRAND litigation, in which parties commit to license intellectual property under “fair, reasonable and non-discriminatory” (FRAND) terms, but cannot agree on the meaning of that commitment. Almost all of this litigation is multinational, and involves coordinating patent, antitrust and contract claims across several jurisdictions. A number of courts and commentators have aimed to centralize and thereby streamline these disputes, whether by consolidating all litigation in one judicial forum or through the creation of a comprehensive arbitral process. This Article argues that such efforts are misguided – FRAND disputes are particularly unamenable to centralization, and the costs of centralizing FRAND disputes are high. Rather, absent other agreement between the parties, FRAND disputes should be resolved through the ordinary territorial structures of patent law, and attempts to simplify these disputes should focus on procedural and substantive coordination between jurisdictions. 
Mr. Greenbaum raises some important challenges to arguments favoring some sort of global FRAND determination, many of which had not previously occurred to me.  I will need to reread this article and give it some deeper consideration.

3.  Yee Wah Chin has posted a paper on ssrn titled Standards and Patent Assertion Entities at the IP-Antitrust Interface:  Adhering to Basic PrinciplesHere is a link, and here is the abstract:
The United States antitrust approach to intellectual property has evolved over time. The same antitrust analysis now applies to conduct involving IP as to conduct involving other forms of property, taking into account the specific characteristics of the particular property right.
However, there have been significant calls recently for presumptions that infringements suits and licensing conduct by patent assertion entities (PAEs) labeled “patent trolls” and holders of standard essential patents (SEPs) are monopolization or attempts to monopolize that violate Sherman Act §2, 15 U.S.C. §2. This paper argues that the basic principles of keeping in mind history and context, and general antitrust principles, apply equally to SEPs and PAEs as to other economic phenomena, and there is no need for any special presumptions.
4.  Peter Picht has published an article in the April 2019 issue of  Mitteilungen der deutschen Patentanwälten (pages 146-51) titled Neues SEP/FRAND-Recht vom englischen Court of Appeal:  Unwired Planet/Huawei und Convesant/Huawei & ZTE ("New SEP/FRAND Law from the English Court of Appeal:  Unwired Planet v. Huawei and Conversant v. Huawei & ZTE").  Here is the abstract (my translation):
Judicial disagreements over the licensing of standard essential patents on FRAND conditions have already generated an extensive case law from a wide range of jurisdictions.  The first instance decision of the High Court of England and Wales in the Unwired Planet/Huawei decision has already achieved special prominence, because (among other reasons) it takes on, in a level of detail not previously seen, the painstaking endeavor of establishing FRAND-conforming conditions.  This willingness, and its rather patent owner-favorable outcome, may have contributed to the decision of the patent licensor Conversant Wireless to file its complaint before the English court, although the background facts of the proceeding gave reason for the defendant firms Huawei and ZTE to challenge the jurisdiction of this court, initially at first instance and then by way of appeal to the Court of Appeal.  With its decisions the Court of Appeal has now largely affirmed the first instance court, and updated the English SEP/FRAND case law in a meaningful way. 

Monday, May 13, 2019

Report on 2018 Zurich Conference on Injunctions

For readers who have access to the German publication GRUR Int., the April 2019 issue (pages 352-56) contains a short article (in English) by Vital Lüthi titled Conference Report:  Zurich IP Retreat 2019--Injunctions at a junction?  Mr. Lüthi writes:
This year's topic of the Zurich IP Retreat, held on 2 and 3 November 2018 at Zunfthaus zur Waag, organized by INGRES and ETH Zurich was another fundamental question of intellectual property law:  Is there or should there be room for a balance of interest analysis before the issuance of an injunction, or are injunctions to be granted unless requirements for compulsory licensing are met?  What are the alternatives?
Among the discussants were Professors Stefan Bechtold, Rochelle Dreyfuss, and Christoph Rademacher, along with two (Franz Hofmann, Daniel Alexander) who were involved with the recent Erlangen conference on injunctions and proportionality.  Much of the discussion in Zurich also appears to have overlapped with the discussions in Erlangen and at the recent conference at LMU in Munich, e.g., does the Enforcement Directive require member states to take proportionality into consideration before issuing injunctions, are there other alternatives (such as Aufbrauchfristen, or grace periods) that might serve the same interest without conferring wider discretion on judges, etc.

Wherever the law ultimately comes to rest in Europe, I'm happy to see that these issues are at long last receiving the attention they deserve.  Further, if I get more information on the meeting the German Ministry for Justice and Consumer Protection will be holding on this topic on May 20, I will pass it along.

Friday, May 10, 2019

FTC Tells DOJ to Back Off

Well, not in so many words, but yesterday the Federal Trade Commission responded to last week's filing of a statement of interest by the Antitrust Division of the Department of Justice in the FTC v. Qualcomm matter (see my previous post here).  The first sentence says it all:  "The FTC files this short response to the untimely Statement of Interest submitted by the Antitrust Division of the U.S. Department of Justice to clarify that the FTC did not participate in or request this filing."  For coverage, see stories on FOSS Patents.and Law360.

It might be worth noting as well that some of Antitrust Division head Makan Delrahim's comments at the Federalist Society event on Wednesday (as noted in Law360's coverage), and even one oblique comment by the panel moderator at that event, might be viewed as digs at the FTC--an independent agency that, as I understand it, some conservative commentators believe is itself unconstitutional.  Ah, these are interesting times . . . .  

Update (May 13, 2019):  Law360 has a follow-up article here, which quotes me, among others.

Thursday, May 9, 2019

Delrahim, Iancu Panel Discussion at FedSoc Event

I saw this article by Bryan Koenig, titled DOJ Antitrust Chief Wants to Take Thumb Off Patent Scales, on Law360 this morning, and then was able to find a video of yesterday's panel discussion at the Federal Society's Seventh Annual Executive Branch Review Session.  I don't think a transcript is available yet.  Mr. Delrahim states, among other things, at about the 17 minute point, that the unilateral exercise of exclusive rights in a valid patent should never be an antitrust violation.  The discussion of SEPs begins at about the 37 minute mark.  Mr. Delrahim defends his withdrawal from the 2013 USDOJ/USPTO Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (previously discussed here, and critiqued by me here); Mr. Iancu says, as he did a couple of weeks ago at Fordham, that the USPTO is still considering its options.

The panel discussion touches on other issues as well, including AI.  Brief discussion of eBay towards the very end (around 1:03).

I'm working on a short paper that will take on some of Mr. Delrahim's views about the intersection of patents and antitrust, and hope to have something to post soon.

Tuesday, May 7, 2019

IP Owners Association Paper on Apportionment in Reasonable Royalty Calculations

The Intellectual Property Owners Association Damages and Injunctions Committee has completed a paper titled Apportionment in Determining Reasonable Royalty Damages:  Legal Principles, Practical Considerations and Countervailing Viewpoints.  From the introduction:
The Damages and Injunctions Committee of the Intellectual Property Owners Association (IPO) is pleased to present this white paper on apportionment. Our goal in presenting this paper is twofold. First, we have sought to provide a neutral exposition of background law regarding principles of reasonable royalty damages in patent infringement lawsuits, focusing on the legal, economic, and policy-based requirements to apportion damages to the footprint of the invention. Second, recognizing that IPO’s membership comes to the subject from different perspectives, we have also sought to present point/counterpoint discussions to bring out arguments on both sides of common disputes relating to apportionment. We hope IPO’s membership finds this to be a helpful resource and a thought-provoking starting point for further analyses and discussion.
I think the paper does a nice job setting out the law, as well as the pros and cons of using the SSPPU as the royalty base.  Thanks to Alan Cox for sending this my way.

Monday, May 6, 2019

The Comparative Patent Remedies Blog Turns Six

Today is the sixth anniversary of this blog.  I've published over 1,100 posts since then, and the blog just recently surpassed 600,000 pageviews.  I've enjoyed meeting with readers all over the world, and have appreciated the comments, cases, and articles that some of you have shared with me.  Thank you for making this project worthwhile!

Friday, May 3, 2019

University of Minnesota "Book Bites" Video

Here is a link to a video of me discussing my book "Patent Wars."  For those of you who receive our alumni magazine "Minnesota Law," the upcoming issue also has a feature about the book.

From Around the Blogs: Quintuple Damages in China, Fordham IP Conference, Willful Infringement in the U.S.

1. The China IPR Blog recently published a post titled Trademark Law and AUCL Revisions Passed Into LawI bring it to the attention of readers of this blog because the revision includes changes to China's trademark and unfair competition laws which will permits courts to award up to quintuple damages for wilful misconduct, or statutory damages of up to RMB 5 million.  (For a follow-up post on the China IPR Blog, see here.)  Similar changes, as I have noted previously, appear to be in the works for the next revision of China's patent law. 

Also on the subject of Chinese IP law, I recommend a recent post on Kluwer by Hui Zhang, Hanmei Wang, and Xiang Li titled .  The post discusses a recent case in which the trial court entered a judgment of infringement and a permanent injunction, leaving the question of damages to be determined at a later proceeding; the Supreme People's Court IP Tribunal affirmed on interlocutory appeal.  The authors state that the case is significant in that Chinese courts previously had not entered such interim judgments, or in general permitted interlocutory appeals.  The authors also state that China might eventually moves from a bifurcated system (like Germany's) to one in which validity and infringement and determined at one trial.  Finally, Norman Siebrasse alerted me to this article on the IAM Blog on the phenomenon of so-called reverse patent trolls in China.

2.  The IPKat has been publishing write-ups of various sessions held at the recent Fordham IP Conference.  The competition law panel in which I participated is not one of them, but readers of this blog may be particularly interested in Annsley Merelle Ward's post on the FRAND panel.

3.  On Law360, Jonah Mitchell and Nicole Medeiros have published an expert analysis titled Navigating Willfulness in Patent Cases 3 Years After Halo.  The article includes some interesting post-Halo statistics on how often willfulness is tried, its possible impact on jury determinations of infringement, and how often district judges enhanced damages following a finding of willfulness (less than a third of the time!).  It also highlights the difference of opinion among the district courts on whether willfulness can be based solely on conduct occurring subsequent to the filing of the complaint, and it discusses various strategic considerations surrounding proof of subjective intent.  This is a very good article--though it makes me even more skeptical than I already was that it is a good idea (1) for the applicable legal standards to make the infringer's subjective intent such an important issue, and (2) to rely on juries to decide willfulness.  But that is another story . . .

And this just in:  Apparently the Antitrust Division of the DOJ last evening filed a letter asking Judge Koh to limit any remedy she might impose against Qualcomm, in the event she rules in favor of the FTC.  Here is a copy of the letter.  For discussion, see articles on Bloomberg, FOSS Patents, Law360, Reuters, and the Wall Street Journal.  I wonder when the last time was that the DOJ did something like that in an FTC case? Ever?

Wednesday, May 1, 2019

Federal Circuit Affirms "Unusual" Exceptional Case Determination

The case is ThermoLife Int'l LLC v. GNC Corp., opinion by Judge Taranto (joined by Judges Bryson and Stoll).  Stanford University (a co-plaintiff) granted ThermoLife an exclusive license to four patents, described in the opinion as claiming "methods and compositions involving the amino acids arginine and lysine, to be ingested to enhance vascular function and physical performance" (p.3).  Plaintiffs sued various companies, some of which settled, for infringement.  The district court held all of the claims in suit invalid, and that decision was not on appeal here.  The district court also concluded that the case was exceptional, and therefore merited an award of attorneys' fees, based primarily on what it characterized as the plaintiffs' inadequate pre-filing investigation. This determination is the issue on appeal.  

In particular, the district court held that an adequate investigation would have disclosed that at least one gram of L-arginine was required to infringe claim 1 of one of the four patents in suit, and that the accused products, all of which were publicly available, did not meet this requirement.  Without my going through all of the evidence the district court considered on exceptionality (as the Federal Circuit opinion does), suffice to say that the appellate court recognizes that it is "unusual" to base a fee award on matters that "had nothing to do with the only issues litigated to reach the judgment on the merits."  It concludes nevertheless that the district court did not abuse its discretion, noting among other things that the plaintiffs "did not discuss any of the other claims to show why they differed as to the adequacy of the pre-suit investigation" (p.11) and that the plaintiffs "had an opportunity to meet the contentions made in the fees motion" (p.17).   

Apropos of attorneys' fee awards in the U.S., I would also call readers' attention to Christine Armellino and Robert Frederickson's informative post on IP Watchdog, titled Examining Octane Fitness Five Years On.  The post includes statistics on the number of exceptional case decisions and grant rates, as well as descriptive analysis of the various types of conduct that have resulted in a finding of, or have been held not to constitute, exceptional circumstances.