Thursday, September 30, 2021

DOJ Antitrust Division Economics Director of Enforcement Jeffrey Wilder on SEPs

Jeffrey Wilder, the U.S. Department of Justice Antitrust Division Economics Director of Enforcement, gave a speech yesterday before the IAM and GCR Connect SEP Summit in Washington.  Here is a link to the text, which I perceive as a welcome return to sanity.  The key paragraph that summarizes the Antitrust Division's approach under the Biden Administration is as follows: 

First, the Antitrust Division will open investigations and bring enforcement actions when anticompetitive conduct—by SEP holders or any other participants in the standards development process—harms competition. That does not mean that every licensing dispute invites an antitrust challenge. Antitrust claims are not a panacea for failed bilateral negotiation. But antitrust can and should play a role when the standards-setting process is used to thwart competition and harm consumers. Second, the Antitrust Division will promote government policies that encourage good-faith licensing negotiation. That includes providing clearer guidance on what good-faith negotiation looks like and how bad-faith conduct can hinder competition. Third, the Antitrust Division will support (and not discourage) SDOs in their efforts to adopt IPR policies that address licensing inefficiencies and enable the dissemination of standardized products to consumers. Finally, the Antitrust Division will strive to be transparent about our enforcement priorities and policy changes to ensure that firms participating in the standards ecosystem understand what conduct can run afoul of the antitrust laws.

The speech goes on to note that in recent months the Division has begun to review its widely-criticized December 2018 SEP Remedies Statement, as directed by President Biden’s July 9 Executive Order, and has downgraded the Division’s 2020 supplemental letter to the IEEE as advocacy (see here, here).  Also of interest is a statement towards the beginning of the speech, where Mr. Wilder says that the Division’s “analysis of intellectual property aims to appropriately reflect the competing policy considerations, the realities of innovation in the modern economy, and the law. It also generally aligns with the views of the Federal Trade Commission, and we have been working intensely to ensure collaboration and communications between the intellectual-property experts on the staff of each agency.”  I take this to mean we should not expect the agencies to work at cross-purposes, as they did in FTC v Qualcomm.  And it’s also interesting that, in referring to the Division’s activities “in recent years aimed at encouraging standards development and good-faith SEP licensing”—including the issuance of “business review letters to SDOs and patent pools,” the release of “guidelines on the appropriate remedies for infringing SEPs subject to FRAND commitments and IP licensing generally,” the filing of “amicus briefs and statements of interest in district and appellate courts,” and “competition advocacy with SDOs and their accrediting organization ANSI”—he states that “[m]any of these steps helped make standards development and SEP licensing more competitive and efficient. Others arguably did not” (my emphasis).

If this had been a Makan Delrahim speech, it would have been prefaced with the title of a classic rock song, so I’ll suggest one of my own:

 Bowiechanges.jpg

Tuesday, September 28, 2021

Federal Circuit Clarifies That "Deliberate" or "Intentional" Infringement Is "Willful"

The case is SRI Int’l, Inc. v. Cisco Sys., Inc., precedential opinion by Judge Stoll, joined by Judges Lourie and O’Malley.  This first case came before the Federal Circuit in 2019, when the court affirmed on liability but vacated the district court’s finding of willfulness and an award of enhanced (here, double) damages.  (For previous discussion on this blog, see here.)  On remand . . . well, here, I’ll let the court explain what happened:

On remand, the district court reasonably read our opinion to require a more stringent standard for willful infringement than our other cases suggest—conduct rising to “the level of wanton, malicious, and bad-faith behavior.” SRI Int’l, Inc. v. Cisco Sys., Inc. (SRI III), Civil Action No. 13-1534-RGA, 2020 WL 1285915, at *1 (D. Del. Mar. 18, 2020). Based on this standard, the district court in SRI III held that substantial evidence did not support the jury verdict of willful infringement after May 8, 2012 (p.4).

Reasonable or not, the Federal Circuit now says, the understanding that the court was imposing a “more stringent” standard (wantonness, malice, or bad faith) is not correct:

 

The district court . . . noted that “the Court of Appeals is not entirely consistent in its use of   adjectives to describe what is required for willfulness.” SRI III, 2020 WL 1285915, at *1 n.1. To eliminate the confusion created by our reference to the language “wanton, malicious, and bad-faith” in Halo, we clarify that it was not our intent to create a heightened requirement for willful infringement.Indeed, that sentence from Halo refers to “conduct warranting enhanced damages,” not conduct warranting a finding of willfulness. Halo, 136 S. Ct. at 1932 (“The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.”) As we said in Eko Brands, “[u]nder Halo, the concept of ‘willfulness’ requires a jury to find no more than deliberate or intentional infringement.”  Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (citing Halo, 136 S. Ct. at 1933) (pp. 9-10).

Based on the evidence presented at trial, moreover, the court states that the jury’s finding of willful infringement was supported by substantial evidence, including “the jury’s unchallenged findings on induced infringement, when combined with Cisco’s lack of reasonable bases for its infringement and invalidity defenses” (p.9) 

Two other matters of interest going forward:  first, the court notes that neither party challenged on appeal the district court’s willfulness instruction, which (1) “directed the jury to consider whether Cisco “‘acted despite a high likelihood that [its] actions infringed a valid and enforceable patent’” (p.4); (2) if so, to “determine whether Cisco ‘actually knew or should have known that its actions constituted an unjustifiably high risk of infringement of a valid and enforceable patent’” (id.); and (3) “[t]o determine whether Cisco had this state of mind . . . to consider the following factors:

 

One, whether or not defendant acted in accordance with the standards of commerce for its industry.

 

Two, whether or not defendant intentionally copied a product of plaintiff’s that is covered by the patents-in-suit.

 

Three, whether or not there is a reasonable basis to believe that defendant did not infringe or had a reasonable defense to infringement.

 

Four, whether or not defendant made a good-faith effort to avoid infringing the patents-in-suit, for example, whether defendant attempted to design around the patents-in-suit.

 

And, five, whether or not defendant tried to cover up its infringement (pp. 4-5).

I would imagine other courts may view these instructions as persuasive precedent in other cases.  Second, the court notes that

 

. . . a finding of induced infringement does not compel a finding of willfulness Indeed, the standard required for willful infringement is different than that required for induced infringement (p.9).

I mention this because there has been some discussion over the past few years whether a finding of willful blindness, which can count as “actual knowledge” for purposes of determining liability for induced infringement, is also sufficient for purposes of finding willful infringement.  (For previous discussion on this blog, see here, here, here, and here.)  I’m not sure, but the court may be hinting that willful blindness isn’t enough, by itself, for willful infringement.

Finally, the court reinstates the double damages award and affirms an award of fees (pp. 11-15).   

 

Monday, September 27, 2021

Two Recent Decisions Considering Non-SEP Antisuit Injunctions

Before mentioning the cases below--neither of which are SEP cases--I should note an article in this morning's Wall Street Journal that is about antisuit injunctions in SEP cases, titled China Wields New Legal Weapon to Fight Claims of Intellectual Property Theft:  A Delaware firm preparing to sue a Chinese smartphone maker for patent infringement was beaten to the punch with anti-suit injunction. 

1. I mentioned the other day that I would be returning to a post Norman Siebrasse had published on Sufficient Description addressing antisuit injunctions.  The post, titled Anti-Suit Injunction Refused, discusses the decision of Canada's Federal Court in Seismotech Safety Systems Inc v Forootan 2021 FC 773Seismotech is a complex, non-SEP dispute over the ownership of certain U.S. and Canadian patents,  involving litigation in both Canada and in California state court.  I don't need to go into all the details here, but it's interesting to see how Canadian law articulates the requirements for an antisuit injunction.  According to the court:

[33] An anti-suit injunction orders a party subject to the Court’s jurisdiction to cease litigation proceedings in a different jurisdiction. It does not purport to directly order the other court or tribunal to do anything. But the impact on proceedings in another jurisdiction, and on the other court to control its process, is clear. As the Federal Court of Appeal has described it, an anti-suit injunction is “an aggressive remedy, and contrary to judicial comity”: Apotex Inc v AstraZeneca Canada Inc, 2003 FCA 235 at para 13.

 

[34] The principles applicable to anti-suit injunctions in Canada remain those set out by Justice Sopinka for the Supreme Court of Canada in Amchem Products Incorporated v British Columbia (Workers’ Compensation Board), [1993] 1 SCR 897. Assessing whether an anti-suit injunction should issue involves a two-part analysis. First, the Court must determine whether the foreign court has assumed jurisdiction on a basis inconsistent with principles relating to forum non conveniens (inconvenient forum). Second, if it has, the Court must assess whether the requested injunction will deprive the plaintiff in the foreign court of a juridical advantage it would be unjust to deprive them of: Amchem at pp 931–933; Li v Rao, 2019 BCCA 264 at paras 46–48, 77.

 

[35] In addition to these two steps, Justice Sopinka referred to several “preliminary aspects of procedure.” As can be seen, the first branch of the Amchem analysis effectively assumes the foreign court has made a determination on jurisdiction. Given the importance of principles of comity, a Canadian court should not generally entertain an application for an anti-suit injunction that is merely theoretical because there is no foreign proceeding pending, and it is “preferable” that a stay or similar remedy has been unsuccessfully sought in the foreign court: Amchem at pp 930–931. These preliminary aspects are sometimes broken out as part of a five-part framing of the Amchem requirements for an anti-suit injunction: Bell’O International LLC v Flooring & Lumber Co, [2001] OJ No 1871 (SCJ) at para 9; Precious Metal Capital Corp v Smith, 2008 CanLII 64008 (ONSC) at para 18.

 

[36] In addition, since an anti-suit injunction is directed to an individual litigant rather than a foreign court, the Canadian court must have personal jurisdiction (in personam jurisdiction) over the individual in order to issue the order: Amchem at p 913; Veritas Investment Research Corporation et al v Indiabulls Real Estate Limited et al, 2015 ONSC 6040 at para 43; Google Inc v Equustek Solutions Inc, 2017 SCC 34 at para 38. Personal jurisdiction over an out-of-jurisdiction party may arise in three ways: presence-based jurisdiction (physical presence of the non-resident); consent-based jurisdiction (by submission, attornment, or prior agreement); or assumed jurisdiction based on the “real and substantial connection” test: Chevron Corp v Yaiguaje, 2015 SCC 42 at para 82, citing Club Resorts Ltd v Van Breda, 2012 SCC 17 (see para 79) and Muscutt v Courcelles, 2002 CanLII 44957 (ON CA) at para 19.

Applying this framework to the present dispute, the court concludes that an antisuit injunction should not issue.  Although the court has personal jurisdiction over the individual against whom the injunction was sought, the court concluded that “[t]he California State Court could reasonably, and in keeping with forum non conveniens principles, conclude it should maintain jurisdiction,” even though some of the assets in dispute are Canadian patents (and even though the California court hasn’t decided the matter itself yet).  Moreover, “[t]here is no juridical advantage it would be unjust to deprive Mr. Forootan of,” and “[t]he lack of a stay request in the California State Court speaks against issuing an anti-suit injunction.”

2. The other case worth noting here is a U.S. case, which perhaps surprisingly doesn’t actually use the term “antisuit injunction” or apply the traditional factors U.S. courts employ in determining whether to grant such an injunction.  Rather, in Nomadix, Inc. v. Guest-Tek Interactive Entertainment Ltd., No. 20-55439, 2021 WL 4027807 (Sept. 3, 2021), the Ninth Circuit held that Nomadix, in accordance with a forum selection clause in a license agreement it had concluded with Guest-Tek, could obtain an injunction preventing Guest-Tek from challenging the validity of Nomadix patents before the PTAB.  As I understand it, historically one of the most common fact patterns giving rise to a request for an antisuit injunction was when one party allegedly breached an agreement providing for disputes to be resolved in one forum (or in arbitration) by filing suit in another forum.  Here, however, the court applies just the standard factors that relate to permanent injunctions, without saying anything about the additional factors that normally are at issue when parties seek antisuit injunctions.  (For discussion of these factors, see, e.g., See Jorge L. Contreras & Michael A. Eixenberger, The Anti-Suit Injunction - A Transnational Remedy for Multi-Jurisdictional SEP Litigation, in The Cambridge Handbook of Technical Standardization Law 451, 454-55 (Jorge L. Contreras ed. 2018).)  Anyway, the court approved the entry of an injunction precluding Guest-Tek from proceeding with its PTAB petition—which, maybe you could say, isn’t a “suit” as such, but seems pretty analogous to me.