Wednesday, June 30, 2021

Cotter on Antitrust, Intellectual Property, and Dynamic Efficiency

Last fall I mentioned my essay Antitrust, intellectual property, and dynamic efficiency: An essay in honor of Herbert Hovenkamp, which was published in  the September 2020 issue of Concurrences (see here and here).   I am happy to announce that the essay is now available as one of several contributions to Herbert Hovenkamp Liber Amicorum (Nicolas Charbit & Sébastien Gachot eds.  2021).  Here is a link  to the webpage for the book.  Judging from the table of contents, the book looks terrific. 

Tuesday, June 29, 2021

U.S. Supreme Court Upholds a Limited Version of Assignor Estoppel

The case is Minerva Surgical, Inc. v. Hologic, Inc., majority opinion by Justice Kagan, with a dissent by Justice Alito and another by Justice Barrett (joined by Justices Thomas and Gorusch).    From the majority opinion:

In Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U. S. 342, 349 (1924), this Court approved the “well settled” patent-law doctrine of “assignor estoppel.” That doctrine, rooted in an idea of fair dealing, limits an inventor’s ability to assign a patent to another for value and later contend in litigation that the patent is invalid. The question presented here is whether to discard this century-old form of estoppel. Continuing to see value in the doctrine, we decline to do so. But in upholding assignor estoppel, we clarify that it reaches only so far as the equitable principle long understood to lie at its core. The doctrine applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent  (p.1).

As for the dissents Justice Alito would dismiss the writ of certiorari as having been improvidently granted, because in his view the Court cannot "decide the question that the petition in this case presents unless we decide whether Westinghouseshould be overruled," and neither the majority nor the principal dissent address that issue (Alito dissent p.5).  As for the principal dissent,  it argues that the 1952 Act abrogated assignor estoppel because the Act doesn't mention the doctrine, and the doctrine was not "part of the well-settled common-law backdrop against which Congress legislated in 1952" (Barrett dissent, p.1).  To be honest, I didn't follow this case as closely as many of my colleagues as it was making its way up to the Court; but for what it's worth, the majority opinion seems sensible to me, and both dissents a bit silly in their adherence to a hyper-textualist approach to patent law that has little if any relationship to the Court's traditional practice, reaching back to the nineteenth century, of resolving questions of patent law.

Monday, June 28, 2021

Recent Essential Facilities Case in China

Jill Ge forwarded me this write-up by the Allen Overy firm, titled Hitachi Metals:  Essential Patents Recognised as Essential Facility in China.  The article discusses a recent decision of the Ningbo Intermediate Court in Ningbo Ketian Magnet Co. v. Hitachi Metals, Ltd., in the court concluded that Hitachi's patent portfolio relating to sintered NdFeB magnets constituted an essential facility, and that Hitachi abused its dominant position by refusing, without objective justification, to license Ningbo.  According to the article, the court ordered Hitachi to pay "damages of RMB4.9 million (approximately USD756,800"), and "in effect required Hitachi Metals to license its patents to" Ningbo.  No indication so far, as I take it, what the licensing terms will need to be. 

Friday, June 25, 2021

Justice Story on Noneconomic Damages in Patent Cases

A few weeks ago I published a paper titled Damages for Noneconomic Harm in Intellectual Property Law, 72 Hastings L.J. 1055-1120 (2021) (available here and here, and previously noted on this blog here).  A few days ago, in the course of researching something else, I was reading a portion of William Robinson's 1890 treatise on the law of patents when I came across the quotation below from Justice Story's opinion in Whittemore v. Cutter, 29 F. Cas. 1123 (C.C.D. Mass. 1813)--which I would have cited in my article, had I been aware of it.  To cut to the chase, Justice Story didn't think it would be appropriate to award damages for emotional harm in a patent infringement.  As discussed in my paper, that is my view as well, though courts in some countries, and some scholars, have expressed the opposite view.  Of course, Justice Story's views about what patent law did and didn't tolerate in 1813--in a case in which he was sitting as a trial court judge--are not binding precedent, though it's also fair to note that courts have continued to cite Story's views on IP and other matters to the present day.  Anyway, here's the quote, with the most relevant portion in italics:

As to the rule, by which the plaintiff's damages are to be estimated, it is clear by the statute, that only the actual damages sustained can be given. By the terms “actual damages,” in the statute, are meant such damages, as the plaintiffs can actually prove and have in fact sustained, as contradistinguished to mere imaginary or exemplary damages, which in personal torts are sometimes given. The statute is highly penal, and the legislature meant to limit the single damages to the real injury done, as in other cases of violation of personal property, or of incorporeal rights. In mere personal torts, as assaults and batteries, defamation of character, &c. the law has, in proper cases, allowed the party to recover not merely for any actual injury, but for the mental anxiety, the public degradation and wounded sensibility, which honorable men feel at violations of the sacredness of their persons or characters. But the reason of the law does not apply to the mere infringement of an incorporeal right, such as a patent, and the legislature meant to confine the damages to such a sum, as would compensate the party for his actual loss. If the jury are of opinion, that an user of the machine is actually proved in this case, the rule of damages should be the value of the use of such a machine, during the time of the illegal user. If the jury are of opinion, that a making of the machine only is proved, as there is no evidence in the case, to show any actual damages by the making, they ought to give nominal damages to the plaintiffs. For where the law has given a right, and a remedy for the violation of it, such violation of itself imports damage; and in the absence of all other evidence, the law presumes a nominal damage to the party.
As the song goes, "Everything old is new again"--the relevance of which to the law of patent damages I previously noted here.

Tuesday, June 22, 2021

Cotter on Extraterritorial Damages in Patent Law

My article Extraterritorial Damages in Patent Law, 39 Cardozo Arts & Entertainment Law Journal 1-54 (2021), is now out.  Here is a link to the article on CAELJ's website, and here is the link to ssrn.  Here is the abstract: 

In 2018, the Supreme Court in WesternGeco LLC v. ION Geophysical Corp. held that the owner of a U.S. patent could recover its lost profit on sales it would have made outside the United States, but for the defendant’s violation of 35 U.S.C. § 271(f)(2)—a rarely-used provision of the Patent Act that prohibits, subject to certain conditions, the export of patented components for combination abroad. The Court left open the question of whether owners also can recover extraterritorial damages resulting from the (much more common) setting in which the defendant is accused of an initial act of making, using, or selling the invention within the United States, in violation of § 271(a). Consideration of this question exposes an ostensible tension between two long-established principles of U.S. patent law: first, that owners are, in general, entitled to full compensation for their losses; and second, that patent rights are territorial, that is, unenforceable against conduct occurring outside a nation’s borders.

In this Article, I argue that allowing patent owners to recover damages for extraterritorial losses stemming from violations of § 271(a) does not, in fact, undermine the territoriality principle, as long as courts are consistent in their application of three limiting principles. The first is that the domestic infringement must be the cause-in-fact (or “but-for” cause) of the defendant’s subsequent foreign sales. While this requirement might seem obvious, in the present context it means that, if the defendant could have avoided infringing the U.S. patent by outsourcing production, then as a matter of economic logic the domestic infringement is not a cause-in-fact of the extraterritorial sales, and at most the patent owner is entitled to a royalty reflecting the lower cost, if any, of domestic manufacture. Second, even if the domestic infringement is the cause-in-fact of foreign sales, the patent owner cannot recover damages unless those sales also are proximately caused by the domestic infringement. Contrary to the views of some commentators, however, there is nothing inherently unforeseeable, indirect, remote, or speculative about foreign sales tied to domestic infringement, and no sound public policy reason for categorically excluding them from consideration. The third principle is that courts should not compensate patent owners twice for the same loss. Fortunately, courts in the U.S. and elsewhere have considerable experience applying, under a range of circumstances, the “single recovery” rule (otherwise known as the rule against double recovery). Taken together, application of these principles should enable courts to avoid the parade of horribles that some commentators fear will result from any slackening of the territoriality principle.


Monday, June 21, 2021

Inter Partes Review Survives Constitutional Challenge

The Supreme Court today handed down its opinion in United States v. Arthrex, Inc., concerning whether the authority vested in judges of the Patent Trial and Appeal Board is consistent with the Appointments Clause of the U.S. Constitution.  There are four different opinions commanding different views, but the bottom line appears to be that (1) a 5-4 majority of the justices believes that the authority vested in the board to issue decisions on behalf of the Executive Branch, without further review by the Director of the USPTO, is unconstitutional, but (2) a 7-1 majority believes that the remedy for this violation, assuming it exists, is to remand the matter to the (currently Acting) director to review the decision rendered by the PTAB judges in this case.  So, if I understand correctly, the PTAB may continue to operate, as long as there is an opportunity for the director to review the PTAB judges' decisions (before any subsequent appeal to the Federal Circuit).   Bottom line, inter partes review survives, thank goodness.

Podcast on Injunctions in Patent Cases

On FOSS Patents, Florian Mueller just posted a podcast on injunctive relief in patent cases.  I was one of the panelists, along with Dr. Christof Augenstein and Dr. Dietrich Kamlah.  Topics included the new German legislation on injunctions (and how it compares with practice elsewhere); the Munich court's referral to the CJEU relating to preliminary injunctions in patent cases; and the German Sisvel decisions on injunctions and SEPs (and how the German approach compares with the U.S.).  For previous discussion on this blog of these topics, see, e.g., here, here, and here.

Thursday, June 17, 2021

OxFirst 6th Annual IP and Competition Forum: The Future of FRAND

OxFirst will be putting on its 6th IP And Competition Forum, titled "Standard Essential Patents & FRAND," next week, June 23-25, from 13:00 BST – 18:00 BST each day. Registration is available here.  Information below:

Day 1: June 23

   Topics:

    Where in the Supply Chain should one take a license?  
    Updates on Recent FRAND Disputes
    Essentiality Perspectives on SEPs              

    Key Presenters

    CEO of the UKIPO
    Mr Vajda QC, Monckton chambers, visiting Professor in King’s College London, previous Judge at CJEU
    Representatives from Nokia & Audi…

Day 2 : June 24

 Topics:

    The FRAND Defense  
    Anti-suit Injunctions
    Propotionality of injunctions            

   Key Presenters:

    Madame Sabotier, Head & Judge, 3rd chamber Civil Court and Head of 3rd Chamber
    Dr Zigann, Presiding Judge, Landgericht Munich
    Professor Picht, University of Zurich
    Representatives from Siemens, Deutsche Telekom…

Day 3: June 25

   Topics:

    Standard essential patents & AI
    Should the mandate of Standard Setting Organisations be expanded?
    International perspectives on FRAND

   Key Presenters:

    Sir Nicholas Forwood, White & Case, Counsel & former Judge at CJEU
    Lord Justice Arnold, Judge at the Court of Appeal of England and Wales
    Representatives from IBM, Philips and Panasonic…

Tuesday, June 15, 2021

My Law360 Article on Alternative Methods for Calculating FRAND Royalties

Law360 has published my article, titled Transparency More Crucial Than New FRAND Royalty Methods.  It is available on Law360's website, as well as here.

Monday, June 14, 2021

Helmers, Lefouili, Love & McDonagh on Fee Shifting

Christian Helmers, Yassine Lefouili, Brian Love, and Luke McDonagh have posted a paper on ssrn titled The Effect of Fee Shifting on Litigation: Evidence from a Policy Innovation in Intermediate Cost Shifting, American Law & Economics Review (forthcoming 2021).  Here is a link to the paper, and here is the abstract:

We study the effect of fee shifting rules on litigation. First, we build a model to study the theoretical effect of a change in cost-recovery rules on case filings, (post-filing) settlement, win rates, and plaintiffs' average litigation expenditures. We then undertake an empirical analysis of the introduction of an intermediate cost shifting rule that falls between the English and American Rules: a reform that limits the size of fee awards to successful litigants in cases decided by the Intellectual Property Enterprise Court (IPEC), one of two venues where IP cases may be filed in England and Wales. Our empirical analysis takes advantage of heterogeneity among case types and compares IPEC cases with intellectual property cases litigated at the High Court of England and Wales, which was not subject to this reform. We find that patent case filings increased following the IPEC’s shift from a pure English Rule to a rule that caps costs awards. Consistent with our model's predictions, we also find evidence that smaller plaintiffs both won less often and settled more often post-reform, as well as evidence that larger plaintiffs spent less on litigation post-reform.

The paper has already been the subject of guest post on Sufficient Description.  It is an important theoretical and empirical contribution to the literature on fee-shifting.  Highly recommended.

Friday, June 4, 2021

Blogging Break

I will be taking a blogging break next week.  If you're looking for something to read while I' m away, check out today's Kluwer Patent Blog post by Enrico Bonadio, Luke McDonagh, and Anushka Tanwar, titled for an informative discussion of Koninklijke Philips v. Rajesh Bansal and Koninklijke Philips v. Bhagirathi Electronics and InterDigital v Xiaomi.

Thursday, June 3, 2021

German Legislature Set to Approve Amendment to Patent Act Relating to Injunctions

Sources inform me that the German legislature is now poised to enact an amendment to section 139 of the German Patent Act, relating to injunctions.  Here is the wording that will pass into law:

„Der Anspruch ist ausgeschlossen, soweit die Inanspruchnahme aufgrund der besonderen Umstände des Einzelfalls und der Gebote von Treu und Glauben für den Verletzer oder Dritte zu einer unverhältnismäßigen, durch das Ausschließlichkeitsrecht nicht gerechtfertigten Härte führen würde. In diesem Fall ist dem Verletzten ein angemessener Ausgleich in Geld zu gewähren. Der Schadensersatzanspruch nach Absatz 2 bleibt hiervon unberührt.“

I would translate this as follows:

"The claim [for injunctive relief] is excluded insofar as, on account of the special circumstances of the case and the obligation of good faith, its utilization would result in disproportionate hardship, not justified by the nature of the exclusive right, to the infringer or third parties.   In this case, reasonable monetary compensation is to be awarded to the infringed party.  The claim for damages under paragraph 2 is unaffected."

The reference to the interests of third parties is, if I remember correctly, a departure from previous drafts.  I stand corrected--I am informed that the October 2020 proposal did refer to third party interests.

Update:  Here is Florian Mueller's take on the amendment.

Wednesday, June 2, 2021

OxFirst Webinar on IP Valuation

OxFirst will be putting on a free webinar on June 11 from 14:00 to 15:00 GMT titled "IP Valuation."  Here is OxFirst's description:

The recent 1.2 billion trademark backed loan American Airlines obtained, the valuation of Michael Jackson’s ‘name and likeness’ for tax purposes, as well as the commitment of UK Courts to offer a valuation of FRAND royalty rates are good examples of the various goals an IP valuation can support.

 

In this webinar we discuss the nexus between IP valuation and reporting systems and assess the elements needed to uncover the economic potential of IP. The traditional legal and accounting tick-boxes commonly ignore the valuation of intellectual property and are a relic of an industrial age that is not fit for an era dominated by intellectual property. Failing to keep pace with innovation and considering the economic contribution of IP risks undermining today’s entrepreneurship.

 

This webinar is the first step to advance the debate.

 

Join in and discuss!

Speakers include Lord Justice Richard Arnold, Zeeger Vink, and Professor Roya Ghafele.  Registration is available here.