Turoski on Promoting Diversity of Patent Practitioners

This is not particularly relevant to patent remedies, but I wanted to take the opportunity nonetheless to mention some recent work by my colleague Professor Christopher Turoski, who heads our Master of Science in Patent Law Program at the University of Minnesota Law School.  Professor Turoski recently filed a comment in response to the USPTO's Request for Comments on the National Strategy for Expanding American Innovation, 85 Fed. Reg. 83,903, 83,906 (Dec. 23, 2020) [Docket No. PTO-P-2020-0057], specifically to the question: “What are ways of promoting diversity in the corps of intellectual property attorneys and agents who represent innovators?” The comment recommends increasing the diversity of patent practitioners by (i) expanding the pipeline of students who aspire to become patent practitioners, and (ii) removing systemic barriers these students face at the USPTO.  Professor Turoski also has posted a related paper on ssrn titled Trade Secrets to Promoting Diversity of Patent Practitioners.  Here is a link to the paper, and here is the abstract:

This article responds to the following question presented by the National Strategy for Expanding American Innovation: “What are ways of promoting diversity in the corps of intellectual property attorneys and agents who represent innovators?” The article recommends increasing the diversity of patent practitioners by (i) expanding the pipeline of students who aspire to become patent practitioners, and (ii) removing systemic barriers these students face at the USPTO.

For further information, see here.

University of Texas Symposium on Financing and Damages in IP Litigation

On Friday, March 5, from 9 to 5 Central Time, the Texas Intellectual Property Law Journal will be hosting a virtual symposium titled "Show Me the Money:  Financing and Damages in IP Litigation."  I'll be one of the speakers.  Registration information is available here; the agenda follows:

Yelderman on Damages for Privileged Harm

Stephen Yelderman has published an article titled Damages for Privileged Harm, 106 Va. L. Rev. 1569 (2020).  Here is a link to the paper, and here is the abstract:  

The law often permits us to impose substantial harm on others without incurring liability. Once liability is triggered, compensatory damages require a defendant to pay for the harm caused by his wrongful conduct. Calculating these damages requires consideration of the harm that the defendant could have caused without incurring liability in the first place. This harm is “privileged,” in the sense that the defendant would have been free to impose it in a counterfactual universe in which he complied with the substantive law. Having transgressed that law, he is responsible for damages. But the question is whether these damages should be reduced to account for the harm he could have imposed without owing damages at all.

The treatment of privileged harm is fundamental to the calculation of compensatory damages. Nonetheless, it has received little scholarly attention and has been the subject of conflicting decisions in the courts. In some areas of law, damages are routinely reduced to account for privileged harm; in others, this credit is given only sporadically, or not at all. Critically, there is not yet any sound theoretical explanation for why the rule ought to be different in one set of cases than another.

This Article begins by exploring the effects of crediting or not crediting privileged harm. It then relates the treatment of privileged harm to several well-known questions of remedial design. Finally, it proposes several general principles that a court or policymaker might follow in determining whether to reduce damages to account for privileged harm.

This is a really interesting and thought-provoking article, which I first read in draft nearly two years ago.  Professor Yelderman illustrates his thesis, that the law sometimes takes "privileged harm" into account when awarding damages, and sometimes doesn't, with examples drawn from several bodies of law, including patents.  In U.S. patent law, for example, when considering whether to award lost profits courts take into account whether a defendant could have caused the same harm to the patent owner by substituting a noninfringing alternative for the patented technology.  Professor Yelderman argues (and I agree) that in the IP context this makes sense, since IP rights themselves "are a tailored exception to a general policy of free competition" (p.1602).  (I might also add that if courts didn't take noninfringing alternatives into account, the result might be that the patentee is overcompensated in comparison with its contribution to the art.)  In some other contexts, by contrast, courts don't reduce damages even when the defendant could have caused the same harm lawfully, and this reluctance may be justified because (among other possibilities) the amount of privileged harm is predictably low, or because plaintiffs otherwise would be left with no remedy  or defendants inadequately deterred.  Highly recommended.  

From Around the Blogs

1. On Law360, Brian Johnson published an expert analysis titled How Parties Can Prep for Global FRAND Jurisdictional Battles.   The essay touches on several issues of importance in the ongoing SEP wars, including whether antisuit injunctions ever are or should be available to prevent a party from proceeding with litigation in the first-seised forum; the capabilities of the forum; and the question of whether the exercise of jurisdiction to determine global rates can ever constitutes "international coercion."  He closes with some practical considerations, including the "need to act quickly to obtain [one's] preferred venue."  

For my recent thoughts on these issues, see here.

2.  On the Kluwer Patent Blog, Matthieu Dhenne published a post titled Pemetrexed in France Act 2: 1 PI + 4 millions.  The post discusses a recent decision in France (which I have not yet obtained a copy of, myself, so I'm going on M. Dhenne's description here) granting a preliminary injunction against the marketing of (yet another) generic Pemetrexed product, and awarding provisional damages in the amount of  €4 million.  The decision to grant the preliminary injunction touches on issues courts in France and elsewhere have addressed in recent years concerning claim construction under article 69 of the EPC.  As for the provisional damages, M. Dhenne is critical of the court's use of a 25% royalty rate multiplied by the defendant's turnover.  He describes the rate as having "no basis . . .   except that it is an increased rate compared to a normal one," and the base (turnover) as having no textual basis in article L 615-7 of the French IP Code, which allows royalties to be awarded as a lump sum.  (But I thought it was common to use turnover as the royalty base in France, and isn't €4 million itself a lump sum?)  He also published a follow-up to a post I mentioned recently, this one titled The FRAND Lectures (Part 2): which Judge can order a cross-border injunction?.  In the post, Professor Anne-Catherine Chriariny analyzes EU law relating to cross-border injunctions under the Brussels I Bis Regulation.

Also on Kluwer are two posts by Vaishali Mittal titled Implementors must be given access to FRAND agreements: Delhi High Court, Part 1, and Implementors must be given access to FRAND agreements: Delhi High Court, Part 2.  The author discusses the decision of the Delhi High Court in the InterDigital/Xiaomi dispute in which "[t]he Court held that that Xiaomi’s employees must necessarily have access to InterDigital’s third party patent license agreements, so that Xiaomi may put up an adequate defense in the suit filed by InterDigital with respect to the infringement of its 3G, 4G Standard Essential Patents (SEPs)."  This matter also has been the subject of discussion recently on the SpicyIP Blog, including a more critical assessment here.

3.  On FOSS Patents, Florian Mueller published a post titled European Commission's expert group report on standard-essential patents uses misnomers "license to all" and "access to all".  The post discusses the recently published document titled Group of Experts on Licensing and Valuation of Standard Essential Patents ‘SEPs Expert Group’ - full contribution.  While I make my way through the document itself (it's long, and it's been a busy month), which I may have more to say about in due time, I'll just note for now that Mr. Mueller makes what I think may be a very good suggestion, namely that we abandon use of the terms "license to all" and "access to all," which he views as being somewhat misleading, in favor of "implementer's choice" and "patentee's choice."  I recall that a few years ago someone suggested that I refrain from using the term "FRAND-encumbered," which sounds kind of negative, in lieu of the more neutral "FRAND-committed," and I have mostly done so ever since.  Maybe this will be another such change worth making.  

Mr. Mueller has published one follow-up article here, as well as a follow-up to his recent post on the Munich Court's referral to the CJEU on a question relating to preliminary injunctions.  

Symposium on Civil Remedies at George Mason on Friday

I'm not sure how much, if any, of this will touch on remedies in patent or other IP cases, but readers may be interested nonetheless.  The Law & Economics Center at Antonin Scalia Law School at George Mason University is putting on an event this Friday, February 19, from 10:00 a.m. to 2:55 p.m. Eastern Time, titled "Symposium on the Economics and Law of Civil Remedies: Developments in Damages and Nationwide Injunctions."  Registration information is available here.  Topics will include nationwide injunctions, punitive damages, high damages awards, and "issues in documenting and calculating damages: the debate over medical financing and 'phantom' damages." 

Okakita on Limits on Injunctive Relief in Germany and Japan

Yuhei Okakita has published a paper titled Limitation of Injunctive Relief in Germany and Japan in the September 2020 issue of A.I.P.P.I.-Journal of the Japanese Group of AIPPI, pp. 293-302.  Here is the abstract:

The improvements in the performance of computers and the development of innovative technologies such as AI, IoT, Blockchain have ushered in an era known as the Fourth Industrial Revolution.  As society changes, the intellectual proeprty system needs to be updated in line with the new era.  Under these circumstances, the right to seek an injunction, which is one of the core rights of a patent, has become one of the main issues in Germany and Japan.  To follow the latest situation in both countries, this paper first reviews the arguments regarding the limitation of the right to seek an injunction.  Next, an overvew of the draft amendments to the German Patent Act published in January 2020 and the opinions submitted in response are described.  Then, the deliberation status in Japan is presented.  In particular, the contents of the report of the Intellectual Property Strategy Headquarter and the latest discussions at the Patent System Subcommittee is outlined.

The article notes that in both the German and Japanese systems, the general rule to date has been that the prevailing patent owner is entitled to an injunction, except for SEP cases in which competition law or the abuse of rights doctrine may provide some leeway.  The article also notes the ongoing deliberations in Germany over the proposed amendment to article 139, which would clarify that that courts have authority to stay injunctive relief in some cases.  (For previous discussion on this blog of the German proposal, see here, here, here, here, and here.  For a more up-to-date account of why, unfortunately, the German proposal probably isn't going to amount to anything, see this post on FOSS Patents.)  Of particular interest to me was Mr. Okakita's summary of discussions held in 2020 by the JPO's Patent System Subcommittee, on whether there should be some codification of factors that might result in a denial of injunctive relief under the abuse of rights doctrine (particularly in cases brought by PAEs, in SEP cases, and in other complex product cases).  According to the author, for example, the Japan Patent Attorneys Association (JPAA) "raised the following points as factors to be considered to determine whether an injunction request is abuse of right: (i) the degree of contribution of the patent to the whole product, (ii) SEPs or not, (iii) to what extent the patentee has implemented the invention, (4) the amount of damages the patentee incurs and the likelihood of recovery by compensation for damages, (5) the subjective aspect of the patentee/alleged infringer, (6) the amount of damages to the infringer."  The author also points out, however, that for now "there is no concrete proposal for amendments."  I am heartened to see, however, that these issues are getting some serious consideration.

From Around the Blogs

1.  On the Kluwer Patent Blog, Matthieu Dhenne published an essay by Professor Anne-Catherine Chriariny titled The FRAND Lectures (Part 1): which Judge can fix a global royalty rate?.  Professor Chriariny notes the risk of forum shopping if different courts take it upon themselves to set global FRAND rates, and suggests that "one might imagine ETSI"--which is headquartered in France--"could modify its IPR in order to assume this competence (i.e. fixing the royalty rate) or expressly designate the Judge – the French Judge – who could establish objective criteria for setting a global rate for the FRAND license. Failing that, a conflict rule could be added in the ETSI IPR which would be binding on both the holder of the SEP patent and the candidate for the FRAND license.”  For my recent thoughts on some of these issues, see here.

2.  On FOSS Patents, Florian Mueller published a post titled Another pre-emptive strike by the German judiciary against patent injunction reform: no reform at all might be the best outcome by now.  The post discusses, among other things, an article recently published in GRUR by German Federal Supreme Court Judge Klaus Grabinski.  I haven't read the article yet myself; these days, I work remotely and only go to my office every couple of weeks to check my mail, but I am hoping that this issue of GRUR will be there when I check this weekend.  Based on the post, however, and if I understand correctly, the article argues that a pending bill to amend Germany's patent act by conferring some (very) limited discretion to stay injunctive relief should not authorize courts to consider third-party interests in deciding whether to exercise this authority.  Rather, third-party interests should be taken into account only in connection with applications for compulsory licenses.  As Mr. Mueller notes, however, such applications are rare--indeed, to my knowledge, Germany approved only one in the past thirty years or so, see discussion here and here--and thus the proposal would even further weaken an already very weak bill.

3.  IPWatchdog published a post titled Inhofe Bill Would Authorize Commerce to Penalize Chinese Companies that Withhold Wireless SEP Licensing Fees.  The post discusses a pending bill that would do, well, what the title says.  Personally, I think I would be inclined to let the courts deal with bad-faith behavior on the part of implementers, if and when it occurs, rather than to enact these additional penalties into law.

4.  On Bloomberg Law, Perry Cooper published an article titled Trademark Next Hot Area of IP Law, Federal Court Judge Says.  The article discusses some remarks given by Federal Circuit Judge Kathleen O'Malley at a recent webinar.  Judge O'Malley notes, among other things, that Congress recently amended the federal trademark statute (the Lanham Act) to create a rebuttable presumption of irreparable harm (for discussion, see, e.g., here).  It quotes Judge O'Malley as stating that “Frankly, I love the change with respect to the presumption with respect to preliminary injunctions,” and that “I wish we could get that change in the patent arena, since I think eBay has done some real damage.”  I have great respect for Judge O'Malley, but I'd like to know:  where exactly is the evidence that eBay has had this deleterious effect?  If anything, as I have noted previously (see here and here), the evidence seems to point in the opposite direction.     

5.  On a personal note, I have a tremendous amount of administrative work, among other matters, to complete by the end of this month, so I'm thinking of taking a blogging break for the coming week to catch up on some of it.

Munich Court Refers Preliminary Injunction Question to CJEU

This was reported last week by Henrik Holzapfel and Christian Dölling in the National Law Review and by Florian Mueller on FOSS Patents.  The set-up for the referral is that German patent litigation is bifurcated, meaning that the district courts hear infringement trials, but validity challenges are litigated separately (either as opposition proceedings before the EPO or the Deutsches Patent- und Markenamt, or in nullity actions before the Bundespatentgericht).  Validity challenges take longer than infringement trials, which gives rise to the "injunction gap"--meaning that a court may enter an injunction against an accused infringer in an infringement action, only to have it determined several months later that the patent in suit was invalid.  (For an interesting take on this issue, see this recent post on IPKat.)  Bifurcation also affects preliminary injunction practice, in that German courts generally do not grant preliminary injunctions in patent cases unless the patent in suit has survived a validity challenge in of these other forums (though there are exceptions, as Holzapfel and Dölling note, citing the Düsseldorf Oberlandesgericht’s 2008 decision Olanzapin, for discussion of which see my book pp. 243-44 and this 2017 blog post).  Anyway, the Munich I District Court has now referred the following matter to the CJEU, as announced in a press release:

Ist es mit Artikel 9 Abs. 1 der Richtlinie 2004/48/EG vereinbar, dass im Verfahren des einstweiligen Rechtsschutzes letztinstanzlich zuständige Oberlandesgerichte den Erlass einstweiliger Maßnahmen wegen der Verletzung von Patenten grundsätzlich verweigern, wenn das Streitpatent kein erstinstanzliches Einspruchs- oder Nichtigkeitsverfahren überstanden hat?

Holzapfel and Dölling translate this as "Is it in line with Article 9(1) of Directive 2004/48/EC for the Higher Regional Courts having jurisdiction at final instance in proceedings for interim relief to refuse in principle to grant interim measures for infringement of patents if the patent in dispute has not survived opposition or nullity proceedings at first instance?"  Mueller translates it as ""Is it a correct application of Art. 9 para. 1 of Directive 2004/48/EC that higher regional courts, whose decisions cannot be appealed further in preliminary injunction proceedings, generally deny injunctive relief over patent infringement if the patent-in-suit has not survived an opposition or nullity proceeding in the first instance?"  By way of comparison, here is the text of article 9(1) of the IP Enforcement Directive:

1. Member States shall ensure that the judicial authorities may, at the request of the applicant:

(a) issue against the alleged infringer an interlocutory injunction intended to prevent any imminent infringement of an intellectual property right, or to forbid, on a provisional basis and subject, where appropriate, to a recurring penalty payment where provided for by national law, the continuation of the alleged infringements of that right, or to make such continuation subject to the lodging of guarantees intended to ensure the compensation of the rightholder; an interlocutory injunction may also be issued, under the same conditions, against an intermediary whose services are being used by a third party to infringe an intellectual property right; injunctions against intermediaries whose services are used by a third party to infringe a copyright or a related right are covered by Directive 2001/29/EC;

(b) order the seizure or delivery up of the goods suspected of infringing an intellectual property right so as to prevent their entry into or movement within the channels of commerce. 

Anyway, the press release indicates that the referring court doesn't think that German practice is in conformity with article 9(1), because a recently-granted patent is effectively denied the possibility of preliminary injunction relief; moreover, patent owners don't have the ability to control whether their patents will be subject to a validity challenge. In addition, the release notes that patents, unlike some other forms of IP, are issued only after there has been an examination for compliance with the requirements of patentability.  True, but as Mueller points out, a substantial number of these patents are invalid.  Further, even in non-bifurcated systems, preliminary injunctions tend to be rare in patent infringement actions, precisely because it is difficult for a court to determine, at some an early stage, that the patentee is likely to succeed on the merits in the face of (the typically inevitable) validity challenge.  (Under Federal Circuit case law, for example, a court should deny a preliminary injunction if there is a “substantial question” of validity.  See Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372 (Fed. Cir. 2009).)

Although I am not well-positioned to guess what the CJEU will do, I would hope that at a minimum it determines that the patentee must demonstrate a likelihood of validity, beyond the mere fact that the patent has been granted, before a court may issue a preliminary injunction.  Anything short of that poses a substantial risk to competition and innovation, in my view, given the large number of patents that are, in fact, invalid.  Alternatively, I don’t know that it would be wrong for the court to hold that you simply can’t get a preliminary injunction in a bifurcated system absent proof that the patent has survived a validity challenged or other exceptional circumstances:  after all, having a bifurcated patent system is a choice, not an entitlement—isn’t it?

For further discussion of preliminary injunctions, see Norman V. Siebrasse et al., Injunctive Relief, in Patent Remedies and Complex Products: Toward a Global Consensus 116, 122-25 (Brad Biddle et al. eds. 2019), available at https://www.cambridge.org/core/services/aop-cambridge-core/content/view/4BF0CDC6D7FE0085E7B8DE0134C9923C/9781108426756c4_115-159.pdf/injunctive_relief.pdf.  For a country-by-country analysis, see selected portions of Patent Law Injunctions (Rafal Sikorki ed. 2019).