Thursday, October 31, 2019

Appointment of PTAB Judges Is Unconstitutional--But Easily Remedied?

This will be a short post, because I'm in Chicago for a conference at John Marshall and don't have a lot of time to devote to it.  In addition, the case is not really related to patent remedies, but nevertheless it's pretty hard to ignore.  Today in Arthrex, Inc. v. Smith & Nephew, Inc., the Federal Circuit held that, under the Patent Act, Administrative Patent Judges (APJs)--the PTAB judges who preside over, among other things, IPRs--are "principal officers" of the United States; and that because they are appointed by the Secretary of Commerce rather than by the president, subject to the subject to the advice and consent of the Senate, their appointment is unconstitutional.  However, the court also concluded that it could sever the provision of the statute preventing PTAB judges from being fired without cause, and that doing so would render the judges "inferior officers" subject to removal by the Director of the USPTO and therefore constitutional.  The court vacated and remanded the case to a new PTAB panel, and stated that its ruling would only affect cases in which the PTAB rendered a final written decision and the litigants raised the appointments issue on appeal.  So IPRs are, mostly, saved, and (I should think) most final written decisions issued to date will remain valid--though I would guess there will be a petition for rehearing and possible Supreme Court review.  

This is an important case--though if you find the issues immensely confusing, join the club.  If, on the other hand,  you're a separation of powers or administrative law maven, you probably will find the issues raised in the opinion endlessly fascinating.  Either way, it's an important case.  Further discussion on Bloomberg, Law360, FedCircuitBlog, and Patents Post-Grant

Wednesday, October 30, 2019

Unwired Planet Oral Arguments

The oral arguments in the joined cases of Unwired Planet v. Huawei and Conversant v. Huawei and ZTE concluded last week.  Commentary, some of it from people who were able to attend the hearings live, is available, among other places, on FOSS Patents, IPKat, IP Watchdog, and Law360 (which quotes me).  The IP Watchdog post also notes that recordings of the arguments are available on the U.K. Supreme Court's webpage here.  I haven't had a chance to listen to these yet myself.  I would be interested in hearing how readers think the court will decide.

Monday, October 28, 2019

Dijkman on Bayer v. Richter

Léon Dijkman has posted an informative paper on Bayer v. Richter, which I blogged about recently in a post I titled Bayer v. Richter: Worst CJEU Decision Ever?  Here is a link to the paper, titled CJEU rules that repeal of provisional measure does not automatically create liability for wrongful enforcement, which is forthcoming in the Journal of Intellectual Property Law & Practice, and here is the abstract:
In its ruling in Bayer, the Court of Justice of the European Union (CJEU) found that denial of compensation to a provisionally enjoined party in case of later revocation of a patent may be allowable under Article 9(7) of Directive 2004/48/EC (the Enforcement Directive). The ruling has potentially far-reaching implications for European IP practice, which are discussed in this note. 
The author holds out some hope that the decision will be limited to at-risk launch by generic drug companies, despite some broader statements in portions of the opinion.  I hope he's right.

Friday, October 25, 2019

French Court Overturns €25 Million Patent Damages Award

The case is Mermet v. Chavanoz Industrie.  Pierre Véron recently published a post on EPLaw, titled "The largest ever patent infringement damages award in Europe (€25,000,000) overturned on appeal; patent held invalid for lack of novelty because of a public prior use; no 'morning-after pill' available to erase it," with links to a more detailed analysis and copies of the decision in the original French and in English translation.  The decision, by the Cour d'appel de Lyon, does not address the methodology the trial court used for calculating the damages.  Rather, the appellate court finds the patent in suit invalid, based on evidence that the patent owner sold the patented product to another (the company that later became the infringement defendant, as it turned out) before the effective filing date, and that an after-the-fact confidentiality agreement between the parties could not erase the public disclosure of the invention.  U.S. patent lawyers should take note of two matters:  first, that in France and most other countries, there is no "grace period" analogous to U.S. Patent Act section 102(b) exempting the applicant's public use or sale of the invention before the filing date from the scope of the prior art; but second, that in other countries secret sales (like that at issue in the U.S. Supreme Court's recent Helsinn Healthcare decision) generally do not count as prior art.  The problem for the patent owner in the French decision is that the sales weren't secret when made.

Wednesday, October 23, 2019

My new casebook: "Remedies in U.S. Patent Law: An Open-Source Casebook"

I am pleased to announce that LawCarta has published my new casebook, Remedies in U.S. Patent Law:  An Open-Source CasebookHere is a link, and here is the book description:
Remedies in U.S. Patent Law:  An Open-Source Casebook is a free, 'open' textbook designed for a one or two-credit course in U.S. patent remedies.  The casebook covers the law of permanent and preliminary injunctions, damages, and declaratory judgments. Thomas Cotter has used these materials for courses on patent remedies that he has taught at the University of Minnesota and the University of Iowa. Instructors may request access to the teacher's manual by emailing and creating a LawCarta account.  Model syllabi, upon request.
I will be using this next semester for my course at the University of Minnesota, and would welcome any feedback or comments, as well as questions from anyone who might be interesting in using it for their own course or seminar.  There is also a short teacher's manual available to instructors.

Tuesday, October 22, 2019

Unwired Planet Hearing Underway in U.K. Supreme Court

I was in Oxford last week for a conference at which I spoke on the (then-upcoming) Unwired Planet and Conversant hearings this week before the U.K. Supreme Court (see here).  I'm back in the U.S. now, but I'm following others' reporting on the hearings, which run from Monday-Thursday this week.  For reports so far, see FOSS Patents (here and here), IAM, JUVE Patent, and a preview on Bloomberg.  For my own views, see here.

Monday, October 21, 2019

American Law Institute

I am pleased to announce this morning that I have been elected as a member of the American Law Institute.  The ALI's announcement is here.  For readers who are not familiar with the ALI's work, here is its description:
The American Law Institute is the leading independent organization in the United States producing scholarly work to clarify, modernize, and otherwise improve the law.
ALI drafts, discusses, revises, and publishes Restatements of the Law, Model Codes, and Principles of Law that are enormously influential in the courts and legislatures, as well as in legal scholarship and education.
By participating in the Institute’s work, its distinguished members have the opportunity to influence the development of the law in both existing and emerging areas, to work with other eminent lawyers, judges, and academics, to give back to a profession to which they are deeply dedicated, and to contribute to the public good.

Thursday, October 17, 2019

Justice Kagan to Visit the University of Minnesota on Monday

On Monday, October 21, U.S. Supreme Court Justice Elena Kagan will visit the University of Minnesota Law School, and will give the 2019 Stein Lecture later that afternoon at the Northrop Auditorium.  I look forward to hearing her speak.  Regarding IP matters specifically, Justice Kagan has authored majority opinions in three patent-related cases--Caraco Pharmaceutical Labs. v. Novo Nordisk A/S, Bowman v. Monsanto Co., and Kimble v. Marvel Entertainment, LLC (the last of which I blogged about quite a bit, see, e.g., here)--as well as the majority opinion in two of last year's trademark-related decisions, Mission Product Holdings, Inc. v. Tempnology, LLC. and Iancu v. Brunetti, and the opinion in the 2016 copyright/attorney's fees case, Kirtsaeng v. John Wiley & Sons, Inc.  Welcome, Justice Kagan! 

Justice Kagan

Wednesday, October 16, 2019

Ghafele on FRAND

As previously noted, on Friday of this week I will be participating in an event titled "OxFirst's Fourth IP and Competition Forum: Globalisation And FRAND: Coming to Grips With The Interplay of IP & Competition Law," to be held at St. Cross College, Oxford.  (Further details here.)  In this regard, forum organizer Professor Roya Ghafele has posted the following two recent papers on FRAND.  The first is titled Economic Perspectives on FRAND.  Here is the abstract:
The economic valuation of intellectual property is an area with which IP professionals still need to fully come to grips with. In the context of Standard Essential Patents (SEPs), the valuation of fair, reasonable and non-discriminatory (FRAND) royalty rates adds an additional level of complexity. Against this background, this paper aims at economically clarifying basic elements of FRAND valuation and royalty rate determination. The concept of FRAND will be briefly touched upon, so as to establish the framework for the discussion. Specifically, it discusses FRAND royalty calculations in light of the conception of the ‘present value-added’. The method hinges the concept of value on the ability to generate earnings. The concept can be used in the absence of comparable licenses and/or newly developing business sectors and remains neutral with respect to the royalty base or the question whether a SEP should be valued on an ex-ante basis, that is before the standard was developed or on an ex-post level, that is after the standard was adopted.
The second is Global FRAND Licensing in light of Unwired Planet vs Huawei.  Here is the abstract:
The 2017 decision by Justice Birss, which was upheld on appeal by Lord Kitchin, and Lord Justices Floyd and Asplin in the matter of Unwired Planet versus Huawei, significantly changes the Standard Essential Patents (SEPs) licensing ecosystem at the global level. In light of the fact that the case will be heard by the UK Supreme Court in October 2019, this paper intends to address its potential effects on future SEPs licensing negotiations that are to be concluded on fair, reasonable and non-discriminatory (FRAND) terms.
The (FRAND) licensing rate set by the judgment, which was set on a global basis, makes the validity, essentiality and infringement of global SEPs contingent on the opinion of the judiciary of England and Wales. At the same time as this allows the patentee to reduce transaction costs associated with global FRAND licensing, it increases information asymmetry with respect to extraterritorial SEPs as a national Court is inherently limited in an international undertaking. This can affect FRAND licensing negotiation that precede formal Court intervention.
To overcome the inherent tension between a territorially limited patent system and an increasingly international economic order, a global FRAND licensing rate should be set (if at all) by an international Court, which is equipped with transnational authority. At the European level, the establishment of such a Court is already under way in the form of the Unified Patent Court which is expected to come into place at some point. 
I should note, by the way, that the U.K. Supreme Court will be hearing the appeals in Unwired Planet and in Conversant next week.   Case details can be found at here, and the order granting review here.  For my recent discussion on Law360, see here.

Monday, October 14, 2019

Bayer v. Richter: Worst CJEU Decision Ever?

OK, so maybe that's a bit harsh.  But the September 12, 2019 judgment in Case C-688/17, Bayer Pharma AG v. Richter Gedeon Vegyészeti Gyár Nyrt. and Exeltis Magyarország Gyógyszerkereskedelmi Kft. seems very problematic to me.  This case first came to my attention via blog posts on IPKat and Kluwer, after which I mentioned it on this blog but said I would return to it after I had read the decision myself.  Now I have, and if I'm reading it correctly, the court is reading article 9(7) of the Intellectual Property Rights Enforcement Directive and the corresponding recitals (as well as article 50(7) of TRIPS) as standing for the proposition that, when a patent owner demonstrates irreparable harm and the court issues a preliminary injunction (based on irreparable harm and other factors), but the patent is later invalidated (and the preliminary injunction therefore dissolved), the court may not award the defendant compensation unless the patent owner's act of requesting the injunction constituted an abuse.  (Further, the court states that this interpretation must be a matter of uniform EU law.)  The court's reasoning is that the application for a preliminary injunction is "unjustified" only if there was no risk of irreparable harm (see paras. 62-63).  Therefore, the fact that the defendants's launch of their generic contraceptive product put Bayer at risk of suffering irreparable harm may mean that Bayer isn't required to pay adequate compensation to the defendants, even though the patent in suit was later invalidated, for having been wrongly excluded from the market.  (I say "may" only because, as the commentator on IPKat notes, the injunction was lifted on other grounds before the patent was invalidated, and thus the defendants may still have a basis for seeking compensation in the Hungarian court.  But the broader principle against compensation otherwise would appear to apply.) 

Here is the relevant text of article 9(7):
Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by those measures.
This interpretation strikes me as bizarre, particularly in light of what I understood to be common practice outside the U.S. of requiring plaintiffs who obtain a preliminary injunction but then lose on the merits to compensate the defendant for its losses, even beyond the amount of the judgment bond.   (For previous discussion on this blog, see here; see also, titled )  Perhaps that practice was not as widespread as I had thought?

Now, maybe the case will be limited to its facts--the defendants here launched before they filed an invalidation action, and Hungary has a bifurcated system such that a patent could be infringed but later found invalid.  But this still seems like a bad policy.  The court's statement that a contrary holding would "run counter to the directive's objective of ensuring a high level of protection of intellectual property" ignores the harm that follows if the owner of a nonexistent IP right can exclude a competitor from the market.

Thursday, October 10, 2019

News on Injunctions, Part 1

1.  Several commentators recently have published posts on recent events at which a topic of discussion was whether the German government will amend section 139 of its Patent Law to require courts to consider proportionality before issuing injunctions--or whether, instead, it will undertake some more limited procedural reforms (e.g., relating to stays pending invalidity proceedings), or not address the injunction issue at all.  JUVE Patent reports that whatever is forthcoming "will likely disappoint many experts and not include the major changes to the automatic injunction that have been called for by the German automotive and telecommunications industries."  Léon Dijkman published a post on IPKat titled Industry takes stance on automatic patent injunctions as German Ministry of Justice considers reform of the patent law, while on FOSS Patents Florian Mueller published a post titled "Press release: IoT Innovators send strong message in support for reform of Germany's outdated 'automatic injunctions' law (ACT | The App Association)."

2.  Simon Holzer published a post on Kluwer titled Irreparable Harm Discussion Awakens from Its Slumber in Switzerland, discussing two recent Swiss decisions discussing how irreparable harm in connection with requests for preliminary injunctions.  Mr. Holzer provides links to the relevant decisions.  I have not read them yet myself, but according to his analysis in the first of the two cases the Swiss Federal Supreme Court concluded (1) that irreparable harm could be based on the risk that, absent a preliminary injunction, other firms will be tempted to enter the market, and (2) that it was not arbitrary to assume that the Swiss patent owner would be harmed, where the authorized Swiss distributor is a related company (both firms being subsidiaries of the same larger entity).  The other decision, by the Swiss Federal Patent Court, arguably takes a narrower view on the second issue.

Update (10-14-2019):   Kilian  Schärli also has a write-up  of these two cases on EPLaw.

3.  In the U.S., Judge Mazzant (E.D. Tex.) denied a permanent injunction to Texas Advanced Optoelectronic Solutions, Inc. in its long-fought litigation against Renesas Electronics America. (Discussion on Bloomberg here; link to the opinion here.) Although the jury found the latter to have willfully infringed, the court was convinced that the defendant no longer sells any infringing products in the U.S., and thus that there was no prospect of irreparable harm.  In addition, the court concluded that there was no causal nexus between the infringement and the plaintiff's potential loss of a sale to Apple in 2008; that there was an adequate remedy at law; and that balance of hardships and public interest were neutral.  For previous discussion on this blog of this complex case, which resulted in substantial monetary awards for trade secret misappropriation and other claims, see here, here, and here.

Tuesday, October 8, 2019

Some Upcoming Conferences

1.  On October 11-12, the University of Pennsylvania Law Review will host a symposium titled "The Post-Chicago Antitrust Revolution."  Details here.  I understand there will be at least one panel on patent holdup.

2.  On October 18, Oxfirst will host an event titled “Globalizing FRAND” at St. Peter’s College, Oxford.  Details are available here.  I’ll be one of the speakers.

3.  John Marshall Law School will be presenting the 63rd Annual Intellectual Property Law Conference in Chicago on November 1.  I will be on the competition law panel.  Here is a link to the conference webpage, from which you can access the program and other information.

4.  FOSS Patents will be putting on an event titled “Component Level SEP Licensing” in Brussels on November 12.  Details here.    

5.  Finally, a belated welcome to the blogosphere to Professor David Taylor's new FedCircuitBlog, which promises "Comprehensive coverage of activities and news regarding the U.S. Court of Appeals for the Federal Circuit." 

Monday, October 7, 2019

Peters v. NantKwest

This morning, the U.S. Supreme Court will hear oral argument in Peters v. NantKwest Inc.  The question presented is "Whether the phrase '[a]ll the expenses of the proceedings' in 35 U.S.C. 145 encompasses the personnel expenses the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation."  As I wrote in June 2017 (and quoted again in March 2019):
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.  Here is the relevant statute (35 U.S.C. § 145): 
An applicant dissatisfied with the decision of the Patent Trial and Appeal Board in an appeal under section 134(a) may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the Eastern District of Virginia if commenced within such time after such decision, not less than sixty days, as the Director appoints. The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the Patent Trial and Appeal Board, as the facts in the case may appear and such adjudication shall authorize the Director to issue such patent on compliance with the requirements of law. All the expenses of the proceedings shall be paid by the applicant.
The Federal Circuit later decided sua sponte to rehear the case en banc, and concluded that the statute does not authorize awards of attorneys' fees to the USPTO.  Then in March 2019 the Supreme Court granted cert.  I was a little surprised, because to my knowledge § 145 actions are rare.  (R Street Institute's Supreme Court amicus brief states at p.17 that "There appear to be only eight such actions of colorable merit filed since 2011.")  On the other hand, the Federal Circuit's en banc opinion created a conflict with the Fourth Circuit's interpretation of the analogous statute applicable in trademark matters, so that may explain the Supreme Court's interest.  If it were up to me, I would have let it go, but for what it's worth the argument is today.  Scotus Blog has a good write-up by Professor Ronald Mann, and links to the briefs here.  Discussion also on IPWatchdog here.

Update:  Here's the oral argument transcript.

Friday, October 4, 2019

Carrier Responds to Iancu

Last December, U.S. Antitrust Division chief Makan Delrahim announced that the DOJ was withdrawing its assent to the USDOJ/USPTO 2013 Policy Statement on Remedies for the Standards-Essential Patents Subject to Voluntary F/RAND Commitments.  (For previous coverage on this blog, see here and here.)  The USPTO is still studying the matter, according to a recent speech USPTO Director Andre Iancu gave at the Solvay Institute in Brussels.  (For previous mention on this blog, see here.) Yesterday Professor Michael Carrier published an expert analysis in Law360 titled Answer To Iancu's SEP Policy Call Is In Plain Sight (available here, behind a paywall).  Professor Carrier rightly notes that the "balance" Director Iancu says is necessary, between encouraging innovation and discouraging abuses on the part of patent owners, is already built into the Policy Statement--an observation with which I agree, as stated for example in this piece published shortly after Mr. Delrahim's announcement last December.  Or, as Professor Carrier puts it, "Iancu is reasonably looking for a balanced and structured approach to standard essential patents that relies on good faith on both sides and disincentivizes holdup and holdout.  That answer is lying right in front of him: the 2013 PTO/DOJ Statement." 

Thursday, October 3, 2019

My Law360 Article on the Upcoming Unwired Planet Hearing

Later this month the U.K. Supreme Court will hold hearings in Unwired Planet v. Huawei.  I discuss some of the pending issues in an October 2, 2019 Law360 article titled Huawei Case Might Mean UK Forum Sets Global FRAND Rates, now available here and on Law360's website.

Wednesday, October 2, 2019

Willful Blindness (And Maybe Recklessness?) Can Support Finding of Willful Infringement

The decision, which I first read about on Bloomberg, is Motiva Patents LLC v. Sony Corp., No. 9:18-CV-00180  (E.D. Tex. Sept. 27, 2019).   On a motion to dismiss claims for induced infringement, contributory infringement, and willful infringement, Judge Gilstrap first concludes that the facts as pleaded provide a sufficient basis for denying the motion to dismiss the induced infringement claim because, inter alia, Motiva alleges that HTC "has a policy or practice of not reviewing the patents of others," and that it instructs its employees accordingly.  Judge Gilstrap reasons that such "allegations plausibly suggest that additional discovery will reveal evidence in support of Motiva's claim."  These allegations in turn support the willful infringement claim:
HTC argues that Motiva failed to plead a sufficient factual predicate to state a claim for willful infringement. HTC argues that even a well-pled allegation of willful blindness is insufficient to state a claim for willful infringement. The Court disagrees, and finds that a well-pled claim for willful blindness is sufficient to state a claim for willful infringement. There are at least three reasons which support such a holding.
First, Global-Tech held that willful blindness is a substitute for actual knowledge for purposes of the infringement analysis. Global-Tech rested upon two "traditional rationale[s]" for recognizing willful blindness in the context of inducement: a knowledge-based rationale and a culpability-based rationale. Global-Tech, 563 U.S. at 766 . With respect to the knowledge-based rationale, Global-Tech explained that "persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts." Id . (emphasis added). With respect to the culpability-based rationale, Global-Tech explained that "defendants who behave in this manner are just as culpable as those who have actual knowledge." Id .; see also id . ("'[U]p to the present day, no real doubt has been cast on the proposition that [willful blindness] is as culpable as actual knowledge'" (quoting J.J. Edwards, The Criminal Degrees of Knowledge, 17 Mod. L. Rev. 294, 302 (1954)) (latter alteration in original) (emphasis added).
For both of these reasons, Global-Tech held that willful blindness is a substitute for actual knowledge in context of infringement. Recognizing the equivalence between actual knowledge and willful blindness makes clear why alleging willful blindness is sufficient in this case—if Motiva had alleged actual knowledge, it would indisputably state a claim for willful infringement. Since the Supreme Court has explained that willful blindness is a substitute for actual knowledge in the context of infringement, it follows that willful blindness is also a substitute for actual knowledge with respect to willful infringement. See id. at 769 . ("Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts."). 
A contrary holding would produce inconsistent results such that the same infringing act performed by the same defendant could be both willful (sufficient to be willfully blind to infringement) and not-willful (insufficient to willfully infringe). The Court declines to create such an inconsistency.
Second, the culpability rationale underlying Global-Tech also supports treating an allegation of willful blindness as sufficient to allege willful infringement. Global-Tech repeatedly noted that willful blindness involves serious culpable conduct. Id. at 765-66 . In fact, acting with willful blindness is "just as culpable as . . . actual knowledge." Id. at 766 . Consistent with its rationale, the high standard for willful blindness set out by Global-Tech requires substantial culpable behavior. The Supreme Court made clear that qualifying culpable conduct "surpasses recklessness and negligence," which do not suffice to state a claim for willful blindness. Id. at 769 . Instead, the Court's test had "two basic requirements: (1) The defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact. We think these requirements give willful blindness an appropriately limited scope . . . ." Id . Thus, conduct which suffices to state a claim for willful blindness inherently—or at least, plausibly—requires culpable conduct.
Third, Halo's description of subjective willfulness suggests that willful blindness is sufficient to state a claim for willful infringement. Halo described subjective willfulness as "'knowing or having reason to know of facts which would lead a reasonable [defendant] to realize'" that its conduct is "unreasonably risky." Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 , 1933 , 195 L. Ed. 2d 278 (2016). Halo also recognized that "reckless" conduct—that is, conduct that is reckless to the risk of infringement—may give rise to willful infringement. Id. at 1932 . By definition, willful avoidance requires more than mere recklessness—and Halo holds that recklessness alone is enough to show willful infringement. Similarly, Halo described "[t]he sort of conduct" justifying a finding of willful infringement as "willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate." Id . These descriptions have a common thread that runs through them: culpability.
The Supreme Court made clear that willful blindness is culpable conduct of the same tenor as the foregoing list. The Supreme Court's two-part test for willful infringement essentially parallels language from Halo: it requires a "conscious" belief on the defendant's behalf, compare Global-Tech, 563 U.S. at 769 ("defendant must subjectively believe"), with Halo, 136 S. Ct. at 1933 (defendant is "conscious"), as well as a "deliberate" act to effectuate that belief, compare Global-Tech, 563 U.S. at 769 ("defendant must take deliberate actions"), with Halo, 136 S. Ct. at 1933 (defendant's conduct must be "deliberate"). Put simply, willful blindness is an allegation that the defendant should have known of the plaintiff's patents, and took deliberately wrongful steps to ignore them. Cf. Halo, 136 S. Ct. at 1933 (defendant's conduct was willful when it acted "'knowing or having reason to know of facts which would lead a reasonable [defendant] to realize'" that its conduct was "unreasonably risky"). This is just the type of allegation that Halo suggests should suffice. Accordingly, Halo's description of willfulness instructs that a well-pled claim of willful blindness is sufficient to state a claim for willful infringement.
HTC's primary argument against treating an allegation of willful blindness as sufficient is that willful blindness does not involve intentional, affirmative conduct as required by Halo. This argument is misplaced. The second prong of Global-Tech's willful blindness test requires a defendant to engage in intentional, affirmative conduct to blind itself. Global-Tech, 563 U.S. at 769. For example, in this case, Motiva alleges that HTC engaged in affirmative conduct by creating a willfully blind policy, and then took additional affirmative steps to police its employees in complying with such policy. Both the act of creating a policy and acts of implementation constitute intentional, affirmative conduct within the ambit contemplated by Halo. Since allegations of affirmative conduct are required to state a claim for willful blindness under the second prong of Global-Tech, well-pled allegations of willful blindness generally entail allegations of affirmative conduct. Thus, a well-pled claim for willful blindness embodies an allegation of affirmative conduct. HTC's argument to the contrary is incorrect.
In short, both the holding and the twin rationales of Global-Tech suggest that well-pled allegations of willful blindness suffice to state a claim for willful infringement. The alternative would create a legal quagmire where a defendant's infringing conduct could simultaneously be willful (induced infringement) and not-willful (willful infringement). By contrast, the factual requirements for and culpable nature of willful blindness are squarely consistent with Halo's articulation of subjective willfulness. As a result, this Court finds that a well-pled allegation of willful blindness is sufficient to state a claim for willful infringement. Since Motiva has included well-pled allegations of willful blindness, the Court finds it has also stated a claim for willful infringement.
So did the court get it right?  In Global-Tech Appliances, Inc. v. SEB, S.A., 563 U.S. 764 (2011), the Supreme Court held that willful blindness could suffice for the "knowledge" needed to prove active inducement, but it rejected the Federal Circuit's rule that "deliberately disregard[ing] a known risk that [the plaintiff] had a protective patent" is enough.  Isn't that all that HTC is alleged to have done here?  Its alleged conduct certainly seems less "willfully blind" than the more specific conduct alleged in Corephotonics, Ltd. v. Apple, Inc., a 2018 case I blogged about here, in which Judge Lucy Koh also concluded that willful blindness suffices to satisfy the "intentional and knowing" standard for willful infringement.  (Of course, if this analysis is correct, then the induced infringement claims in Motiva should have been dismissed.)  

On the other hand, if Judge Gilstrap is right in stating that, under Halo, courts may award enhanced damages for merely "reckless," as opposed to "willful," infringement, then maybe the conduct alleged here suffices even if it's more "reckless" than "willfully blind."  I'm not 100% sure I agree with Judge Gilstrap's interpretation of Halo, though I'm not sure he's wrong either, and I would note that Professor Dmitry Karshtedt also reads Halo in that manner.   See his article here--and take a look at the Halo opinion itself here (pages 10-11, which correspond to the pages Judge Gilstrap cites) and see what you think.

Finally, as Judge Gilstrap notes, this case is just at the pleading stage, so it remains to be seen what sort of specifics, if any, turn up in discovery.

Tuesday, October 1, 2019

Remembering Professor Kenneth Port

I just learned from Professor Sharon Sandeen, via Twitter, that Professor Kenneth Port, the founder of Mitchell-Hamline Law School's Intellectual Property Institute, has died.  Ken was a professor at Mitchell-Hamline in St. Paul and a prolific trademark and Japanese law scholar.  We had several contacts over the years, both before and after I moved to Minnesota, including at least one dinner in Tokyo long ago.  We also overlapped in law school, with Ken graduating two years after I did.  He will be missed.

    Kenneth L. Port