Preliminary Injunctions and Costs

A couple of months ago I noted with dismay the CJEU's recent decision in Bayer v. Richter, which appears to exempt patent owners from having to compensate defendants from having been excluded from the market during the pendency of a preliminary injunction that is subsequently lifted after the patent is found to be invalid or not infringed.  (See posts here and here.)   On a related--and from a policy perspective, sounder--note is a recent decision of the Danish High Court, as reported by Anders Valentin on the Kluwer Patent Blog a few weeks back.  The article, titled "Danish High Court radically changes its course on costs awards," reports a decision in which a preliminary injunction was granted but later vacated, and the defendant sought an award of costs.  According to the author, in previous cases Danish costs awards were "typically . . .  only a fraction of the costs actually incurred."  In this case, however, the Maritime and Commercial High Court awarded "legal costs in an amount reflecting those generally applicable in  the IP practice area as well as substantial and suitable amount of the fair costs actually incurred," as well as costs for expert statements and assistance from a patent agent.  According to the author, the court was persuaded to deviate from prior Danish practice, which was far less generous as to costs, in view of the CJEU's 2016 decision in United Video Properties.  In that case, which I previously discussed here, the court concluded that article 14 of the Enforcement Directive "precludes national legislation providing flat-rates which, owing to the maximum amounts that it contains being too low, do not ensure that, at the very least, that a significant and appropriate part of the reasonable costs incurred by the successful party are borne by the unsuccessful party"; and that "to the extent that the services, regardless of their nature, of a technical adviser are essential in order for a legal action to be usefully brought seeking, in a specific case, to have such a right upheld, the costs linked to the assistance of that adviser fall within ‘other expenses’ that must, pursuant to Article 14 of Directive 2004/48, be borne by the unsuccessful party."

Proposed Inventor Rights Act Would Overrule eBay, Award Infringer's Profits

As reported earlier on Patently-O (here and here) and on IP Watchdog, Representatives Danny Davis and Paul Gosar recently introduced a bill titled the Inventor Rights Act of 2019.  The bill appears to be a variation on the Inventor Protection Act, a bill I blogged about a little over a year ago.  Like that bill, which went nowhere, the present bill would be something of a train wreck, though fortunately I think it has little chance of passing.  The bill defines an "inventor-owned patent" as "a patent with respect to which the inventor of the invention claimed by the patent or an entity controlled by that inventor—(1) is the patentee; and (2) holds all substantial rights." It would add a new section 330 to the U.S. Patent Act that would, among other things, prohibit the PTAB from conducting IPRs, PGMs, or CBMs with respect to inventor-owned patents, without the consent of the inventor ("The United States Patent and Trademark Office shall not undertake a proceeding to reexamine, review, or otherwise make a determination about the validity of an inventor-owned patent without the consent of the patentee"); and would largely overrule TC Heartland by allowing inventors to file suit in any venue in which "an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit," or "where a party has a regular and established physical facility that such party controls and operates, not primarily for the purpose of creating venue, and has—(A) engaged in management of significant research and development of an invention claimed in a patent in suit prior to the effective filing date of the patent; (B) manufactured a tangible good that is alleged to embody an invention claimed in a patent in suit; or (C) implemented a manufacturing process for a tangible good in which the process is alleged to embody an invention claimed in a patent in suit . . . ."  As for remedies, sections 330(c) and (d) would largely overrule eBay and would allow for awards of infringer's profits:

(c) INJUNCTION.—

(1) PRESUMPTION.—Upon a finding by a court of infringement of an inventor-owned patent not proven invalid or unenforceable, the court shall presume, respectively, that—

(A) further infringement of the patent would cause irreparable injury; and

(B) remedies available at law are inadequate to compensate for that injury.

(2) OVERCOMING THE PRESUMPTION.—A presumption described under subparagraphs (A) or (B) of paragraph (1) may be overcome if the infringing party shows clear and convincing evidence that the patentee would not be irreparably harmed by further infringement of the patent, including evidence of unreasonable delay by the patentee from the date on which the infringement was known or reasonably could have been known to the patentee.

(d) RECOVERY.—A patentee that asserts a claim for infringement of an inventor-owned patent in a civil action under subsections (a), (b), (c), (f), or (g) of section 271 may elect, at any time before final judgment is entered by the court, recovery under this subsection in lieu of damages under section 284. If an election for recovery under this subsection is made, the following provisions apply upon a finding of infringement:

(1) PROFIT DISGORGEMENT.—The court shall award the patentee the profits from the use made of the invention by the infringer. In assessing profits the patentee shall be required to prove only the infringer’s revenues resulting from the infringement; the infringer must prove all elements of cost or deduction claimed.

(2) INTEREST AND COSTS.—The court shall award the patentee the costs described under section
1920 of title 28.

(3) INFRINGEMENT FOUND WILLFUL.—If the court finds the infringement to be willful, the court may award the patentee damages equal to no more than three times the amount of the profits found in paragraph (1).

(4) ATTORNEYS FEES.—The court shall award the patentee any amount of their attorneys fees that exceeds 10 percent of the amount of the profits and damages of paragraphs (1) to (3).’’

Most of what I said in 2018 about the Inventor Protection Act applies here, so I'll just repeat it:

This just boggles the mind.  Although, as I have written elsewhere on several occasions, there is a theoretical argument to be made in favor of requiring an intentional infringer to disgorge its profits attributable to the infringement (that is, the profit it earned above what it would have earned from the use of the next-best available noninfringing alternative), perhaps as an alternative to enhanced damages, I don't think it makes sense as a remedy for infringement generally due to its potential overdeterrent effect.  And as the above text indicates, the bill contemplates that courts could award disgorgement and still award (up to) treble damages for willful infringement . . . . Would any of this be tied into the economic value of the invention, that is, the value to the user over and above the value the infringer would have accrued from using the next-best noninfringing alternative?  

More to the point, have any of the sponsors of this bill thought at all about the rent-seeking and gaming that would ensue from enacting a class of protections solely for the benefit of inventor-owned patents?  Or about how any of this would affect consumers?  

I certainly understand that patent litigation (including, most definitely, the damages portion of trial) can be enormously expensive, and that there may be benefits in considering reforms that would simplify some aspects of it, particularly when the stakes are comparatively small.  (I talk about some of this stuff in my Patent Damages Heuristics paper; and I would suggest in addition that reforms such as creating a small(er)-claims-type court patterned after the Intellectual Property Enterprise Court in the U.K. might be worth considering.)  But the proposals floated . . . strike me as rather poorly thought out.

For more of my thoughts on why we don't need to introduce a presumption of irreparable harm (e.g., because the evidence suggests that eBay has had, if anything, a positive impact on innovation), see my testimony before the U.S. Senate Subcommittee on Intellectual Property Rights (here and here), and my follow-up responses to questions.  For discussion of disgorgement, see this chapter from Patent Remedies for Complex Products.  Finally, for information from an organization that favors the law, see here; I would note that the webpage seems a bit inaccurate in implying that, under the bill, disgorgement would apply in the case of willful infringement.

Davidson and Ng on IP Damages in China

Justin Davidson and Stanley Ka-Yuen Ng have published an article titled Aim Higher and Go Bigger:  Strategies for Claiming IP Infringement Damages in China, 41 EIPR 729 (2019).  Here is the abstract:

IP owners who litigate in China often complain about the low damages awarded by the courts, which then has limited deterrent effect on infringers and can erode the worthwhileness of enforcement steps. This article discusses the use of a number of strategies through which IP owners can reduce or shift the high evidential burden placed on them in China to prove infringement damages. Some cases from the Chinese court will be discussed to illustrate the application of these strategies.

The aforementioned strategies include:

(1) Asking the court for assistance in collecting evidence--for example, if there is a risk it will be destroyed, or there is some other "objective" reason the parties need assistance (I'm not sure what these latter would be, however).

(2)  Shifting the burden to the defendant, if the plaintiff first satisfies certain requirements.  For example, if the plaintiff makes a preliminary showing that the defendant profited from the infringement, the court may order the defendant to produce its accounts--and if the defendant refuses, the court may "find adversely against the defendant on the quantum of damage" (p.731).

The authors illustrate these principles with reference to three  patent cases.  Very interesting article!

USPTO, DOJ, and NIST Issue New Policy Statement on Injunctions and SEPs

Yesterday the United States Patent Office, the Antitrust Division of the Department of Justice, and the National Institute of Standards and Technology issued a new Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments.  This statement replaces the USDOJ/USPTO 2013 Policy Statement on Remedies for the Standards-Essential Patents Subject to Voluntary F/RAND Commitments, which I previously blogged about several times (see, e.g., here and here).  From the new statement (pp. 4-5):

As a general matter, to help reduce the costs and other burdens associated with litigation, we encourage both standards-essential patent owners and potential licensees of standards essential patents to engage in good-faith negotiations to reach F/RAND license terms. All remedies available under national law, including injunctive relief and adequate damages, should be available for infringement of standards-essential patents subject to a F/RAND commitment, if the facts of a given case warrant them. Consistent with the prevailing law and depending on the facts and forum, the remedies that may apply in a given patent case include injunctive relief, reasonable royalties, lost profits, enhanced damages for willful infringement, and exclusion orders issued by the U.S. International Trade Commission. . . . These remedies are equally available in patent litigation involving standards-essential patents. . . . While the existence of F/RAND or similar commitments, and conduct of the parties, are relevant and may inform the determination of appropriate remedies . . . the general framework for deciding these issues remains the same as in other patent cases.

My initial reaction is that, while there was nothing in the 2013 Policy Statement that needed correcting, the revised statement isn't as bad as I feared it might be.  But I need to digest this further, and will be back with further commentary sometime before or after the holidays. 

Federal Circuit: An Isolated Act May Render A Case "Exceptional"

This morning the Federal Circuit handed down a precedential opinion in Intellectual Ventures I LLC v. Trend Micro Inc. (opinion by Judge Stoll, joined by Judges Dyk and Taranto).  In 2010, Intellectual Ventures filed  an infringement action against Trend Micro, Symantec, and two other defendants.  The Trend Micro and Symantec cases were severed, and the Symantec case went to trial.  During the course of that trial, Intellectual Ventures's expert changed his opinion regarding a matter of claim construction.  Eventually, the Federal Circuit held that the claims in suit recited unpatentable subject matter, as a result of which the district court then entered judgment for the defendant in the parallel Trend Micro case.  On appeal now was the district court's finding that the Trend Micro case was "exceptional," and thus merited an award of attorneys' fees.  The Federal Circuit holds that, while an isolated act may render a case exceptional, it was unclear whether the district court applied the correct legal standard (pp. 4-7):

Trend Micro . . . moved for attorney fees under § 285, requesting that the court declare the case exceptional due to the circumstances surrounding Intellectual Ventures’s expert’s changed opinion. Ruling from the bench, the district court granted Trend Micro’s motion. The district court concluded that Intellectual Ventures’s conduct was exceptional “solely with respect to this collection of circumstances regarding [its expert’s] changed testimony.” J.A. 58–59. Considering “whether the case overall is exceptional,” however, the district court expressly “f[ou]nd it was not.” J.A. 57. The district court also concluded that “it would be wrong to say that [Intellectual Ventures’s] case was objectively unreasonable.” J.A. 56. After reviewing the parties’ briefing regarding accounting, the district court awarded Trend Micro $444,051.14 in attorney fees. . . .

It is not clear that the district court applied the proper legal standard when it considered whether the case was exceptional under § 285. The district court considered “whether [Intellectual Ventures’s] case was objectively unreasonable” and concluded “it was not.” J.A. 56. The district court also considered “whether the case overall is exceptional” and concluded “it was not.” J.A. 57. Nonetheless, the district court found that the circumstances surrounding the expert’s changed opinion “stand out from other cases, [and] from all the other portions of this case[,] in terms of either the substantive strength of a position [Intellectual Ventures] was advocating or the manner with which [Intellectual Ventures] was litigating.” J.A. 58. The district court determined that the circumstances surrounding the expert’s changed opinion alone were “exceptional, st[ood] out, and [met] the standard of Section 285.” J.A. 59.

Instead of determining whether the case was exceptional, it appears that the district court may have focused on whether one discrete portion of the case stood out “from other cases, from all the other portions of this case[,] in terms of either the substantive strength of a position [Intellectual Ventures] was advocating or the manner with which [Intellectual Ventures] was litigating.” J.A. 58. This is not the appropriate analysis. Section 285 gives the district court discretion to depart from the American Rule and award attorney fees “in exceptional cases.” Accordingly, under the statute, the district court in this case should have determined whether the circumstances surrounding the expert’s changed opinion were such that, when considered as part of the totality of circumstances in the case, the case stands out as exceptional.

Intellectual Ventures argues that a district court may never find a case exceptional based on a single, isolated act. According to Intellectual Ventures, a case is exceptional only when there are “repeated instances—i.e., a pattern—of bad faith, sharp tactics, and unreasonable litigation positions.” Reply Br. 3. The district court made clear that it did not view the circumstances surrounding the expert’s changed opinion as a single, isolated act. Regardless, we decline Intellectual Ventures’s invitation to adopt this bright-line rule.

We hold that a district court has discretion, in an appropriate case, to find a case exceptional based on a single, isolated act. The Supreme Court has made clear that “[d]istrict courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances.” Octane, 572 U.S. at 554. The Court has also explained that “[t]here is no precise rule or formula for making these determinations,” and disapproved a formulation that “superimpose[d] an inflexible framework onto statutory text that is inherently flexible.” Id. at 554–55 (first alteration in original) (citation omitted). Rather, “[section] 285 commits the determination whether a case is ‘exceptional’ to the discretion of the district court.” Highmark, 572 U.S. at 563. Whether the conduct is a single, isolated act or otherwise, the relevant question for the district court is the same. The district court must determine whether the conduct, isolated or otherwise, is such that when considered as part of and along with the totality of circumstances, the case is exceptional, i.e., the case stands out among others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated. Octane, 572 U.S. at 554.

Trend Micro notes that courts frequently award attorney fees under § 285 in an amount related to particular conduct and circumstances that stood out and made a case exceptional, even when the entirety of the conduct in the case was not exceptional from start to finish. This is, of course, true. For example, in Rembrandt Technologies, we explained that after determining that a case is exceptional, a court must award fees in an amount that “bear[s] some relation to the extent of the misconduct.” In re Rembrandt Techs. LP Patent Litig., 899 F.3d 1254, 1278 (Fed. Cir. 2018) (quoting Rambus Inc. v. Infineon Techs. AG, 318 F.3d 1081, 1106 (Fed. Cir. 2003)). But in all such cases we have required a finding of an exceptional case—not a finding of an exceptional portion of a case—to support an award of partial fees. See, e.g., id.; Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1553 (Fed. Cir. 1989). Because the district court did not find that the case overall was exceptional, we vacate its finding of exceptionality under § 285 and remand for an analysis under the proper legal standard.

FRAND News

1.  I previously noted Alex Woolgar's IPKat post on the Karlsruhe OLG's October 30 decision in Philips v. Wiko.  More recently,  Hetti Hilge discusses the case on the Kluwer Patent Blog in her post titled Another German FRAND Ruling-OLD Karlsruhe, Judgment of 30 October 2019, 6 U 183/16 (Philips v Wiko).  Although the two posts necessarily cover a lot of the same territory, Ms. Hilge's post also states that the Karlsruhe court allowed the patent owner to obtain information on the defendant's costs and profits, "in direct opposition to the judgment of the OLG Duesseldorf according to which an SEP holder who has not (yet) complied with its FRAND obligations cannot request more than a FRAND royalty as damages (and not, e.g., infringer’s profits) so that information on cost and profits is not required."

2.  While we await the U.K. Supreme Court's decision in Unwired Planet and Conversant, Bloomberg News has reported that InterDigital recently filed an infringement action against Huawei in the U.K., asking the court to determine either that its offer to Huawei was FRAND or to set a global FRAND rate.  According to the article, Huawei had previously filed its own action against InterDigital in Shenzhen, asserting that InterDigital's offer to license its SEPs was not FRAND.  (For InterDigital's announcement, see here.)  Can yet another antisuit (anti-antisuit) injunction be far behind?

3. On JUVE Patent, Konstanze Richter recently published an article titled Focus on France in Philips and TCL FRAND Battle, discussing litigation brought by Philips against TCL in England and by TCL against Philips and ETSI in France.  According to the article, "TCL is challenging whether the UK court has the jurisdiction to rule on the FRAND issue. The company argues that, as the European Telecommunication Standards Institute is based in the south of France, the French courts have jurisdiction. TCL therefore filed a counterclaim at the Tribunal de Grande Instance in Paris in February. This was an attempt to clarify the FRAND licence issue at the French court."  A hearing took place in Paris last week, and a decision on whether to allow the matter to proceed is expected in February.

4.  Matthieu Dhenne has published an article titled Calculation of FRAND Royalties:  An Overview of Practices Around the World, 41 EIPR 755 (2019).  The abstract states that "This article aims to give an overview of the methods of calculating FRAND royalties applied by the jurisdictions all around the world."  The article discusses the various methodologies courts have used to determine the FRAND rate (hypothetical negotiation, comparables, top-down, incremental value, and bottom-up, as well as differing views within the E.U. concerning what information the patent owner must produce to comply with Huawei v. ZTE.  In addition, the author discusses issues relating to the royalty base and apportionment (EMVR, SSPPU).

5.  As reported on IP Watchdog and Bloomberg, entities including Apple and Ford Motor have sent a letter to U.S. Secretary of Commerce Wilbur Ross and USPTO Director Andre Iancu, urging the USPTO to keep in place the USDOJ/USPTO 2013 Policy Statement on Remedies for the Standards-Essential Patents Subject to Voluntary F/RAND Commitments.  As I have previously stated, I agree that the 2013 Policy Statement is sound (a sentiment also shared by Professor Michael Carrier, see here), and have criticized Antitrust chief Makan Delrahim's decision a year ago to withdraw from it.

6.  Last but not least, here is Qualcomm's reply brief in FTC v. Qualcomm, filed last Friday.

Federal Circuit Affirms $70 Million Damages Award

The case is Amgen Inc. v. Hospira, Inc. (precedential opinion authored by Judge Moore, joined by Judges Bryson and Chen).  As explained in the damages portion of the opinion, the $70 million award reflects a reasonable royalty that Hospira might have agreed to ex ante, before manufacturing fourteen infringing batches of recombinant erythropoietin (EPO), even though to date Hospira has not received FDA approval to actually sell its biosimilar products.

The two patents in suit relate to EPO isoforms.  Hospira submitted a Biologics License Application (BLA) to the FDA in 2014, in which it sought approval for a biosimilar to Epogen, the product Amgen makes and sells.  Amgen filed suit, and the jury found the patents in suit valid and infringed.  (Hospira succeeded in proving that seven batches of product were covered by the § 271(e)(1) safe harbor, but not the other fourteen batches.)  The Federal Circuit affirms on liability and validity for reasons I will skip, and then considers the evidence and arguments on damages.  To wit:

According to Hospira, the jury’s damages award does not reflect a “reasonable royalty.” Hospira takes issue both with the amount of the award and its lump-sum structure. Dr. Heeb’s opinions, argues Hospira, are erroneously based on the “value of delay” to Hospira, i.e., the profit Hospira could earn if it were in a place to launch its EPO as soon as the patents expired. Hospira contends that this methodology is flawed because it requires Hospira to accept all the risk of the transaction and considers only the benefit to Hospira, not the harm to Amgen. Further, Hospira argues, a lump-sum payment that cannot be clawed back gives Amgen a windfall because at the time of trial, Hospira still had not received FDA approval or sold any EPO. And, Hospira argues, Dr. Heeb did not account for the reality that Amgen does not use the ’298 patent to produce Epogen or any other product. According to Hospira, the “book of wisdom” doctrine allows parties to consider after-the-fact events, like Hospira’s lack of FDA approval, Amgen not practicing the ’298 patent, and the claw-back provision in the only other lump-sum agreement in the evidence.

Amgen contends that the district court did not abuse its discretion by allowing the jury to hear Dr. Heeb’s opinions. According to Amgen, Dr. Heeb determined what Hospira would have expected to gain from obtaining a license to manufacture the volume of batches needed to meet its expected product launch date in 2015, before expiration of the ’298 patent, and appropriately concluded that the hypothetical negotiators would have been incentivized to obtain the license needed for Hospira’s pre-launch manufacture. Amgen also argues that Dr. Heeb’s reliance on a lump-sum royalty structure is supported by the evidence in the record in the context of a method of the sales of the product. And, Amgen contends, Hospira was permitted to present testimony to the jury that Amgen did not use the ’298 patent’s inventions. According to Amgen, although Hospira appeals the district court’s denial of JMOL, Hospira’s damages argument is entirely about its Daubert challenges to Dr. Heeb’s methodology.

We see no reversible error. The district court permitted Hospira to cross-examine Dr. Heeb and to present the testimony of its own damages expert, Dr. Bell. Hospira was permitted to argue at trial that it had not yet received FDA approval, and that the amount of damages should be based on “replacement cost” because Hospira could simply re-make the product. J.A. 1881–82; see also J.A. 148–51 (instruction stating that the jury “may consider events and facts that occurred after the hypothetical negotiation took place.”). Dr. Heeb testified that he considered the appropriate factors in determining a reasonable royalty and placed the timing of the hypothetical negotiation in late 2013, before the act of first infringement. See J.A. 778–79; see also Georgia-Pacific Corp. v. United Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). He also explained that he considered the gain to Hospira from obtaining a license to manufacture batches to meet its expected 2015 launch date, and the harm to Amgen if it entered a license. J.A. 779–85. Finally, Dr. Heeb explained his reasoning for proposing a lump-sum structure for the royalties, including the fact that in this case, infringement is tied to manufacture and not directly to the sales of the product. J.A. 786. Accordingly, the district court did not abuse its discretion in permitting Dr. Heeb to testify.

In view of Dr. Heeb’s testimony, we also find that substantial evidence supports the jury’s damages award and see no reason to vacate it. The jury heard Dr. Heeb testify at length and propose a reasonable royalty in the range of between $154 and $170 million. J.A. 788. It also heard the testimony of Hospira’s expert, Dr. Bell, who proposed a batch. J.A. 1465. In addition, Dr. Heeb explained his reasoning for proposing a lump-sum structure. J.A. 786. As to his proposal of a lump-sum damages amount without a claw-back provision, Dr. Heeb distinguished the claw-back provision in the only other lump-sum agreement in the evidence as a “mutually profitable arrangement” instead of a license from one competitor to another. J.A. 792 at 664:10–665:13. Dr. Heeb further testified that Amgen would not be incentivized to “refund[] [any] royalty” to Hospira because it would not want to offer license terms that would encourage other competitors to infringe its patent. J.A. 792–93 at 665:15–666:3. It was not unreasonable for the jury to choose a damages award within the amounts proposed by each expert. Accordingly, we affirm the district court’s denial of Hospira’s JMOL motion regarding the jury’s damages award (pp. 19-21).

The question of whether a reasonable royalty should be based primarily or exclusively on ex ante information, or alternatively should take into account the defendant's ex post success or failure in benefiting from the infringement, is an interesting one.   Norman Siebrasse and I have argued in favor of broader use of such ex post information in A New Framework for Determining Reasonable Royalties in Patent Litigation, 68 Fla. L. Rev. 929 (2016), and I plan to publish a post later this week on the general topic of "damages for infringement without use or sale," which addresses some other contexts in which this type of fact pattern can arise.

*                    *                      *

In other news, the Federal Circuit also affirmed an award of $363,243.80 in attorneys' fees and expenses in Blackbird Tech LLC v. Health in Motion LLC (precedential opinion authored by Judge Wallach, joined by Chief Judge Prost and Judge Hughes).  The court notes, among other matters, that the district court found (1) that the plaintiff's litigation position was "meritless" and "frivolous"; (2) that the plaintiff made what the Court of Appeals characterized as multiple "nuisance value settlement offers"; and (3) that granting a fee award would "deter future abusive litigation."

My week in Taiwan

As I mentioned at the end of November, I had a series of speaking engagements lined up in Taiwan during the first week of December.  I would like to thank Professor Chung-Lun Shen for inviting me, and for his great hospitality in hosting me throughout the week.  I greatly enjoyed  spending time with Professor Shen and his family; meeting and interacting with students, judges, and other academics; and seeing some of the terrific sights around Taipei.  I learned a lot about the Taiwanese law of patent damages, and hope to incorporate some of what I learned into future writing projects.

My schedule for the week was busy.  On Monday, December 2, I gave a talk titled Extraterritorial Damages in Patent Law to the judges of Taiwan's Intellectual Property Court.  I plan to develop this into an article or a portion of an article on extraterritoriality in the near future.  In case readers are interested, here are my slides.  

Tuesday through Thursday, I guest-lectured in Professor Shen's class at National Chengchi University (NCCU) on, respectively, (1) Introduction to Comparative Patent Remedies, (2) Introduction to Standard Essential Patents and FRAND Royalties, and (3) The Comparative Law of Patentable Subject Matter.  

Finally, on Friday, December 6, I gave a presentation titled Damages for Noneconomic Harm in Intellectual Property Law at a Patent Damages Symposium organized by NCCU and National Taiwan University.  Again, in case readers are interested, here are the slides from this presentation.  I am working on a paper on this subject too, and comments on this or on the extraterritorial damages slides would be welcome.

Supreme Court Affirms in Peter v. NantKwest

Opinion here.  No big surprise, in my view.  Justice Sotomayor, writing for a unanimous Court, states:

Section 145 of the Patent Act affords applicants “dissatisfied with the decision of the Patent Trial and Appeal Board” an opportunity to file a civil action in the United States District Court for the Eastern District of Virginia. 35 U. S. C. §145. The statute specifies that “[a]ll the expenses of the proceedings shall be paid by the applicant.” Ibid. The question presented in this case is whether such“expenses” include the salaries of attorney and paralegal employees of the United States Patent and Trademark Office (PTO). We hold that they do not (p.1).

The Court makes the following points in support of its conclusion:

1. The "Court’s '"basic point of reference" when considering the award of attorney’s fees is the bedrock principle known as the "'American Rule'": Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise'" (pp. 4-5) (citation omitted).

2.  "To determine whether Congress intended to depart from the American Rule presumption, the Court first 'look[s] to the language of the section' at issue" (p.6) (citation omitted).

3.  "The reference to 'expenses' in §145 does not invoke attorney’s fees with the kind of 'clarity we have required to deviate from the American Rule'" (p.6) (citation omitted).  "The complete phrase 'expenses of the proceeding' is similar to the Latin expensæ litis, or 'expenses of the litigation.' This term has long referred to a class of expenses commonly recovered in litigation to which attorney’s fees did not traditionally belong" (p.7).  Further, "the modifier 'all' does not expand §145’s reach to include attorney’s fees. Although the word conveys breadth, it cannot transform 'expenses' to reach an outlay it would not otherwise include" (id.). In addition, the fact that the words "'expenses' and 'attorney’s fees' appear in tandem across various statutes shifting litigation costs indicates that Congress understands the two terms to be distinct and not inclusive of each other" (p.8).

4.  Finally, historic practice suggests that until recent years the Patent Office itself never considered the term "expenses" to include attorney's fees (p.9).  By contrast, when Congress has "intended to provide for attorney’s fees in the Patent Act, it stated so explicitly. See, e.g., 35 U. S. C. §285 ('The court in exceptional cases may award reasonable attorney fees to the prevailing party'); §271(e)(4) ('[A] court may award attorney fees under section 285'); §273(f) (same); §296(b) (same); §297(b)(1) ('Any customer . . . who is found by a court to have been injured by any material false or fraudulent statement . . . may recover . . . reasonable costs and attorneys’ fees'). Because Congress failed to make its intention similarly clear in §145, the Court will not read the statute to 'contravene fundamental precepts of the common law.' United States v. Rodgers, 461 U. S. 677, 716 (1983)" (p.10). 

This all seems quite reasonable to me, and is what I predicted (see here).  The Court does not expressly address the merits of the Fourth Circuit's interpretation (in Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015)) of an analogous provision of the Lanham Act (15 U.S.C. § 271(b)(3)), as requiring a person appealing an adverse decision of the Trademark Trial and Appeal Board to pay the USPTO's attorneys' fees, but I would think that Shammas's days probably are now numbered.

Federal Circuit Reverses TCL v. Ericsson Judgment on Jury Trial Grounds

Last week while I was in Taiwan the Federal Circuit issued a precedential decision in TCL Communication Technology Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson (opinion by Judge Chen, joined by Judges Newman and Hughes.  The court reverses Judge Selna's FRAND determination from December 2017 (for previous discussion of which, see Judge Chen's thorough discussion at pp. 10-16, as well my previous blog post here), but not on the merits.  Rather, the Federal Circuit concludes that, because (1) the district court's FRAND royalty included, as one component, a release payment intended to compensate Ericsson for TCL's past infringement of Ericsson's SEPs, and (2) this release payment was a form of legal, not equitable, relief, the district court deprived Ericsson of its constitutional right to trial by jury on the amount of the release payment (see pp. 17-27).  Relatedly, the court also concludes that the statement TCL relies on in support of its theory that Ericsson waived its right to a trial by jury on the amount of the release payment did not, in fact, constitute a waiver (see pp. 24-26).  

So, back to the drawing board, apparently.  The fact that the U.S., uniquely among the nations of the world as far as I can tell, still has juries decide patent matters may well be correct under our Seventh Amendment, but it seems crazy to me as a matter of policy--particularly in FRAND cases like this one.  I really have no idea how one can expect a jury of lay people to come to a reasoned determination of something of this complexity, even if (as I think will be the case, see p.27) the jury will only determine the amount of the release payment (that is, past damages).