Friday, January 29, 2021

More on Antisuit Injunctions

I devote a small section of my recent paper Is Global FRAND Litigation Spinning Out of Control?, 2021 Patently-O L. Journal 1, to the recent spate of anti- and anti-antisuit injunctions.  Readers interested in this fast-developing topic might also want to take a look at an article by Mathieu Klos published today on JUVE Patent, titled China wakes up in global SEP litigation, which discusses it in some detail.  The article mentions a few developments I wasn't aware of--stating, among other things, that a Munich court in October entered an AASI and an AAAASI (!) against Oppo in regard to the Oppo v. Sharp matter I mention at page 13 of my piece; and that a Munich appellate court yesterday heard an appeal from Xiaomi in regard to an AASI injunction pertaining to the Xiaomi v. InterDigital matter that I mention at pp. 12-13, 20-21.

Wednesday, January 27, 2021

Cotter on Global FRAND Litigation

The Patently-O Law Journal just published my essay, Is Global FRAND Litigation Spinning Out of Control?  Here is a link, and here is the abstract:

It has often been observed that, while patent rights are territorial in scope, commerce is global and, increasingly, interconnected.  Indeed, with the advent of 5G and the Internet of Things (IoT), technical standards soon will enable not only devices such as smartphones and tablets, but also automobiles, medical devices, and even home appliances to receive and transmit data within and across national borders.  To achieve these ends, firms participate in standard-setting organizations (SSOs) to hammer out the technical standards that enable communication and interoperability among devices.  Moreover, because the implementation of these standards requires the use of many different, typically proprietary, technologies, SSOs generally encourage or require their members both to declare their ownership of patents that may be essential to the practice of the relevant standard, and to commit to licensing these standard-essential patents (SEPs) on fair, reasonable and nondiscriminatory (FRAND) terms.  The FRAND commitments themselves, in turn, often are interpreted as binding contracts for the benefit of third parties (that is, for the benefit of implementers).  In principle, these requirements work to ensure both that implementers are able to access essential technologies, and that owners are fairly compensated for their inventive contributions. 

Two problems nevertheless can impede the smooth working of such a system.  The first is that SSO rules typically do not define the term “FRAND,” for a variety of reasons.  Disputes over the meaning of FRAND therefore are inevitable.  The second is that, because patents are territorial, courts often have been reluctant to adjudicate foreign patent rights.  This understanding of patent rights, however, might appear, to some observers at least, to collide with commercial realities, when parties are unable to reach agreement and opt for adjudication by national courts.  Current responses to these problems are likely to prove unsatisfactory for both owners and implementers; a comprehensive solution nonetheless remains, for now, elusive.


Monday, January 25, 2021

What Can Patent Damages Law Learn from Taylor Swift?

You might think that the answer to the question posed above is—with all due respect to the talented Ms. Swift—not much.  But a recent New York Times, titled Citing Taylor Swift, Supreme Court Seems Set to Back Nominal Damages Suits, did set me to thinking.  The article discusses the recent Supreme Court oral argument in Uzuegbunam v. Preczewski, a case that poses the question "[w]hether a government’s post-filing change of an unconstitutional policy moots nominal-damages claims that vindicate the government’s past, completed violation of a plaintiff’s constitutional right."  The matter arose after two students sued public college officials based on a college policy that impeded their ability to publicly speak on campus about their religious beliefs.  The students sought equitable relief and damages.  The college thereafter changed its policy, which led the district court and the Court of Appeals to conclude that the case was moot; but the students contended that they were entitled to nominal damages nonetheless.  I hadn't been following this case, but the Times article's description of oral argument poses some interesting questions about damages remedies generally.  Although Chief Justice Roberts appeared skeptical, suggesting that the plaintiff was seeking nothing more than a declaration that his rights were violated, the article notes that Justice Kagan “asked about 'the most famous nominal damages case I know of in recent times, which is the Taylor Swift sexual assault case.'  Ms. Swift, the pop superstar, sued a Denver radio host she said had groped her. She sought $1 in nominal damages. 'I’m not really interested in your money,' Justice Kagan said, describing Ms. Swift’s thinking. 'I just want a dollar, and that dollar is going to represent something both to me and to the world of women who have experienced what I’ve experienced.'"  Following up, Justice Barrett stated that "What Taylor Swift wanted was, you know, vindication of the moral right, the legal right, that sexual assault is reprehensible and wrong," and Justice Alito suggested that "nominal damages can serve an important goal, as when there is 'a real concrete violation that can’t be easily monetized.'"

I don't want to make a prediction about how this particular case will play out, but my understanding is that there are other lower court decisions in which courts have awarded nominal or emotional distress damages for violations of constitutional rights; and Justice Barrett's analogy to moral rights rang a bell for me, because (as I discuss in my forthcoming paper on noneconomic damages in intellectual property law) courts outside the United States frequently do award nominal damages for violations of authors' moral rights.   As I also discuss in that paper, citing work by among others Professor Mark Geistfeld, in deciding questions relating to damages for intangible harms such as emotional harm, pain and suffering, and the like, there are really two interrelated inquiries:  should these harms be cognizable under the body of law at issue, and if so how should one go about quantifying the resulting damages. 

In this regard, as far as patent law is concerned, I argue (contra an article published a couple of years ago by Professor Ronan Avraham) that courts shouldn't consider emotional harm to be a cognizable injury resulting from patent infringement.  But a question with, arguably, more real-world significance is whether there should be a damages remedy for patent infringement, if the evidence shows that the patented invention is no better than the next-best noninfringing alternative, or if the plaintiff simply fails to present any admissible evidence on damages.  Patent Act section 284 states, after all, that "[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty."  Last fall, however, the Federal Circuit in TecSec Inc. v. Adobe, Inc., 978 F.3d 1278 (Fed. Cir. 2020), rejected the argument that the statute "require[s] an award of damages greater than zero in all cases where the jury finds infringement," holding instead that if the plaintiff fails to prove any damages, it is not entitled to any damages.  (See my blog post here.)  On the other hand, in Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014), the Federal Circuit found fault with Judge Posner’s decision (Posner was sitting as trial court judge)  dismissing the action altogether, after deciding that (1) Apple wasn't entitled to an injunction, under eBay; (2) it hadn't presented admissible evidence on damages; and (3) it had no right to proceed to trial for nominal damages, which in Judge Posner's view would be, essentially, merely an advisory opinion.  As I wrote in an article discussing that case:

Section 284 of the U.S. Patent Act . . . states that “[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer” (emphasis added).  In Apple, Inc. v. Motorola, Inc., the Federal Circuit interpreted the italicized language to mean that, even when the patent owner fails to introduce admissible evidence quantifying the amount of its loss, the court still has an obligation to “determine what constitutes a reasonable royalty from the record evidence”75—in effect, creating a rebuttable presumption that the patent owner is entitled to something as a consequence of the infringement.  The rule is consistent with practice in some other countries, but it provides no guidance on how to calculate the royalty due when the parties’ evidence is deficient.  One might imagine, though, that in such cases courts will have to take it upon themselves to apply methodology heuristics akin to those I discuss in a subsequent section below, based on whatever record evidence there may be concerning the amount of the use, comparable license rates, and the advantages of the technology over alternatives.  For now, however, this appears to be an area in which U.S. patent damages law remains largely underdeveloped.

75/  . . .  Further:

 

. . . if the patentee’s proof is weak, the court is free to award a low, perhaps nominal, royalty, as long as that royalty is supported by the record . . . .

 

Thus, a fact finder may award no damages only when the record supports a zero royalty award. For example, in a case completely lacking any evidence on which to base a damages award, the record may well support a zero royalty award. Also, a record could demonstrate that, at the time of infringement, the defendant considered the patent valueless and the patentee would have accepted no payment for the defendant’s infringement. Of course, it seems unlikely that a willing licensor and willing licensee would agree to a zero royalty payment in a hypothetical negotiation, where both infringement and validity are assumed.

 

At summary judgment, as is the case here, a judge may only award a zero royalty for infringement if there is no genuine issue of material fact that zero is the only reasonable royalty. Thus, if a patentee raises a factual issue regarding whether it is due any non-zero royalty, summary judgment must be denied. In any event, simply because a patentee fails to show that its royalty estimate is correct does not, by itself, justify awarding a royalty of zero at summary judgment, as the district court did here . . . .

So, maybe the pending decision in Uzuegbunam will provide some guidance, at least by way of analogy, for cases in which (as in Apple) the patent owner is not entitled to an injunction, and (as in TecSec) it doesn’t provide sufficient evidence on damages either.  Is the whole matter moot, or is there some entitlement to vindicate the owner’s claim that its rights have been violated?  I’d be inclined to say that the patent owner’s case is moot, even if the college students’ case is not, either because a civil right (or, as in the Swift matter, the right to be free from sexual assault) is more fundamental than a patent right, or because emotional and other intangible harms should be cognizable in the former but not the latter.  Also, as the Times article points out, citing a comment made at oral argument by Justice Kavanagh, under the civil rights laws the students may be entitled to attorneys’ fees if they qualify as prevailing parties, so that could be an important consideration differentiating that type of case from the patent context.  (Now that I think of it, there may be some relevance as well for cases involving whether someone has standing to sue for data breaches--something I briefly mention in my noneconomic damages paper, citing an important paper on this topic by Daniel Solove and Danielle Citron.)  But maybe I’m wrong, and need to think about this some more.   

Thursday, January 21, 2021

Berkeley-Tsinghua Conference on Transnational IP Litigation

As noted previously on the China IPR Blog, the 3rd Berkeley-Tsinghua Transnational IP Litigation Conference starts this afternoon at 4:30 PST, and will continue in two-hour increments at that same time tomorrow and then again next Thursday and Friday.  Today's session is titled "Overview:  Litigation, Enforcement, Legislation," and tomorrow's "SEPs/FRAND/Licensing: Global Developments and Impact on US-China Trade."  Registration for academics, non-profit, government and students is complimentary.  More information here. 

Tuesday, January 19, 2021

Towards an International FRAND Tribunal?

Law360 published a very interesting article last week, titled FRAND Rate 'Nightmare' Raises Call For International Tribunal.  The article discusses, among other things, the anti-antisuit injunction recently entered by Judge Gilstrap in the Ericsson v. Samsung matter, and quotes Professor Jorge Contreras, Josh Landau, and David Tsai, all of whom support creating some sort of international tribunal to decide FRAND rate cases.  I agree 100%:  I don't think the current system of national litigation, which inevitably results in forum shopping (now with the accompanying complication of anti- and anti-antisuit injunctions issued by different national courts), is sustainable in the long run.  The difficulty is how to get to where we need to be.  One possibility is that, with Makan Delrahim stepping down as head of the USDOJ's Antitrust Division today, maybe his replacement under the Biden Administration (Renata Hesse?) will be more receptive to efforts on the part of SSOs themselves to require some sort solution along these lines, without risking incurring antitrust liability.  Anyway, it should be an interesting year in FRAND litigation.  

I working this week on completing an essay that will touch on these and other issues.  For foundational papers on the global tribunal idea, see Jorge L. Contreras, Global Rate-Setting:  A Solution for Standards-Essential Patents?, 94 Wash. L. Rev. 701 (2019); Roya Ghafele, Global FRAND Licensing in Light of Unwired Planet v. Huawei, 24 UCLA J.L. & Tech. (2020), https://uclajolt.com/wp-content/uploads/2020/04/Ghafele-Final.pdf. 

Thursday, January 14, 2021

More FRAND News

1. Enrico Bonadio and Luke McDonagh published a post on the Kluwer Patent Blog titled Patenting Standards and Declarations of Essentiality in Europe: The Report of the “Pilot Project”.  The post discusses the Pilot Program for Essentiality Assessment of Standard Essential Patents (coauthored by Rudi Bekkers, Joachim Henkel, Elena Mas Tur, Tommy Van Der Vorst, Menno Driesse, Byeongwoo Kang, Arianna Martinelli, Wim Maas, Bram Nijhof, Emilio Raiteri, Lisa Teubner, and Nikolaus Thumm), produced in response to a call for tenders by the European Commission.

2. Bowman Heiden posted a paper on ssrn titled IPR Policy As Strategy – The Battle To Define the Meaning of Frand,   Here is a link to the paper, and here is the abstract:

 

The current contentions over SEP licensing in mobile telecommunications is primarily a result of the success of standardization to build a multi-trillion-dollar market. This success has generated a large economic surplus, whose distribution among different actors in the value chain is the focus of these contentions. This article illustrates the battle among market actors to define the meaning of FRAND through policy interventions that seek to change the rules of the game in alignment with their strategic interests. This article takes a first step towards building an operative model to describe the political processes behind the construction of the meaning of FRAND by defining the self-assertive interests, key normative concepts and claims, and legitimizing arenas where the concept of FRAND is actively socially constructed.

3. Florian Mueller posted a podcast on developments in component-level licensing, featuring Christian Donle, Jay Jurata, Paul Lugard, and Pat Treacy.

4. Nikhil Purohit published a post on SpicyIP titled SEPs and Confidentiality Clubs: Protecting Fair Play from Excessive Secrecy, discussing a decision of the Delhi High Court rejected a two-tiered confidentiality club proposal tendered by InterDigital in its FRAND lawsuit against Xiaomi.   

5. Chayanin Wipusanawan has posted a paper on ssrn titled Standard-essential patents and incentives for innovation.  Here is a link to the paper, and here is the abstract:

 

Patent holders whose patents are essential to a standard are usually required to license their patents under fair, reasonable, and non-discriminatory (FRAND) terms. This requirement is often interpreted as a price cap such that royalties for the patents do not exceed their pre-standardisation incremental values. Using a theoretical model of innovators with interacting technologies, I consider the problem of choosing the incentive scheme to induce welfare-maximising research investments under the condition that it only uses the values created by the innovators, and analyse the prevalent interpretation of FRAND compared to the optimal scheme. It shows that in some cases, this incremental value rule does not lead to the efficient level of innovation investment.