Some New Papers on Antisuit Injunctions, SEPs

1.  Giuseppe Colangelo and Valerio Torti have posted a paper on ssrn titled Anti-suit Injunctions and Geopolitics in Transnational SEPs Litigation.  Here is a link to the paper, and here is the abstract: 

  

         Anti-suit injunctions (ASIs) have recently emerged as a phenomenon significantly affecting the dynamics of standard essential patent (SEP) litigation. The enhanced role played by these patents in the Internet of Things scenario and the willingness of national courts to set themselves up as global licensing tribunals have spurred a race to the courthouse, incentivising forum shopping and the adoption of countermeasures such as anti-anti suit injunctions (AASIs) and anti-anti-anti suit injunctions (AAASIs). The implications of these litigation strategies have become a matter of geopolitics, as countries fear that the intellectual property rights of their companies may be undervalued by foreign courts to promote domestic economic interests. Against this backdrop, this paper aims to provide a comparative overview of European, U.S., and Chinese SEP disputes in which these injunctions have been issued or claimed and to identify some policy recommendations to curb the frictions affecting SEP licensing.

2.  Igor Nikolic has posted a paper on ssrn titled Global Standard Essential Patent Litigation:  Anti-Suit and Anti-Anti-Suit Injunctions  Here is a link to the paper, and here is the abstract:

            The global litigation of standard essential patents (SEP) is taking a new turn with the jurisdictional battle between national courts. Some courts have started issuing anti-suit injunctions (ASI) to prohibit parallel litigation and consolidate the dispute at a single venue, while others have retaliated with anti-anti-suit injunctions (AASI), barring parties from seeking or enforcing foreign ASIs. The anti-suit injunction saga benefits no one: the parties in SEP licensing disputes are faced with legal uncertainty as to which court will hear their case; it incentivises a race to the court to secure the most favourable jurisdiction instead of focusing on licensing negotiations; it increases litigation costs of having to pursue multiple ASIs and AASIs; and parties face fines and imprisonment of officials for non-compliance. The article examines the general conditions for the grant of ASIs and AASIs and analyses their application in SEP disputes. The article then proposes three measures that courts can take to stop the global jurisdictional race. First, courts should exercise judicial restraint and return to the originally strict criteria for the granting of ASIs. In principle, ASIs in SEP cases should not be granted as they are incompatible with international comity, fundamental rights to property and access to a court. Only anti-enforcement injunctions may exceptionally be granted, and under strict conditions. Second, a court could hold a party seeking an ASI as ‘unwilling’ to license, acting as a strong deterrent from seeking this type of remedy. Third, courts could encourage parties to agree on the arbitration of FRAND licensing terms by holding that an unjustified refusal to enter into arbitration is a sign of ‘unwillingness’ to license. Taking these principles into account would ensure that each national court is respected and would incentivise parties to focus on the resolution of the key issue behind every SEP dispute – the appropriate FRAND licensing terms.

3.  Thomas Wein has posted a paper titled Frand Conditions - Applying the Concept of Subgame Perfect Nash Equilibria.  Here is a link to the paper, and here is the abstract:

 

            Holders of standard-essential patents must provide access to potential licensees on fair, reasonable, and non-discriminatory terms (FRAND). In the context of industrial economics, standardization shifts the demand curve outward. On one hand, profits from standardization can flow to the owners of SEPs, since potential licensees are dependent on the respective patent (hold up). On the other hand, the licensee gains an advantage if the owner is not sufficiently compensated for his innovation and standardization costs (reverse hold up). Standardization can also increase the market power of all standard users, and thus generate excessive prices.The Huawei/ZTE ruling of the European Court of Justice prescribes a strict sequential game for SEP owners and SEP users, which they must follow step-by-step in order to make demands and submit offers. The game theoretical backward induction generates two conceivable subgame perfect solutions. Either both parties enter into negotiations with requests or offers that they consider acceptable under competition law, and the courts or third parties decide in favor of one of the two parties, or both parties overdo it—patent owners demand too much, and patent users offer too little—and the courts or third parties take the side of one of the two parties. The latter is highly problematic in terms of legal policy because the rules of the ECJ do not generate sufficient pressure to force cooperation between the parties.

5/2022 GRUR on Ongoing Royalties in German Patent Cases

As noted previously on this blog (see, e.g., here and here), in 2021 the German Parliament enacted an amendment to § 139 of the German Patent Act (German original here) that permits courts to stay injunctions for a period of time while the defendant designs around or sells off infringing products.  Most commentators seem to be of the view that German courts will exercise this discretion rarely, but in the event they do exercise it the question arises how courts should determine the monetary compensation due to the patent owner during that interim period of time.  The 5/2022 issue of the German journal GRUR (Gewerblicher Rechtsschutz und Urheberrecht) includes four articles from an October 2021 conference discussing this issue, which I have noted below, with my translation of their abstracts.  I have not yet read all of the articles carefully, and some of the German terms are not easy to translate into readable English, so the normal caveats apply.  The four articles are preceded by an introductory essay by Professor Martin Stierle, titled Unterlassung under Verhältnismäßigkeit—das 2. PatMoG als Neuanfang (“Injunctions and Proportionality—the Second Patent Law Modernization Act as New Beginning”), 2022 GRUR 273-74.  Here are the papers:

1. Fabian Hoffmann, Der Ausgleichsanspruch im Patentrecht:  Die leistungsgerechte Monetasierung eines Drohpotenzials (“The Compensation Claim in Patent Law:  The Appropriate Monetization of a Threat Potential”), 2022 GRUR 286-93.  Here is the abstract:

This essay comments on the reasonable level of compensation, relevant to the appropriate economic function of the (withheld) claim for injunctive relief, as well as a comparison to other jurisdictions and bodies of law.  In addition, the methodology and justification for enhanced compensation are considered.

If I understand the gist of the paper correctly, it is that the interim compensation should be at a higher rate than other (noninfringing) licensees are paying, which would seem correct as matter of economic logic given that the patent has been found infringed and the infringer arguably has avoided some of the risks that compliant licensees have not, but not so high as to enable the patent owner to unfairly benefit from the defendant's sunk costs (holdup).   

2. Gerhard Wagner, Die Aufopferung des patentrechtlichten Unterlassungsanspruchs (“The Sacrifice of Patent Law’s Claim for Injunctive Relief”), 2022 GRUR 294-99.  Here is the abstract:

With Patent Law articles 139(1) sentences 3 and 4, the German legislature has, for the first time, regulated patent holdup.  Under strict conditions, the claim for injunctive relief will be withheld, though in response the patent owner will have a claim for reasonable monetary compensation.  Article 139(1) makes the puzzle complete, to the extent it clarifies that the claim for damages under article 139(2) remains untouched.  The doctrinal unification of this combination of rules presents a challenge.  For what, exactly, is the reasonable monetary compensation to be paid, and how does this compensatory claim fit into the basis for liability?  This essay provides answers on the basis of common private-law principles.

3.  Christian Osterrieth, Kritirien der Angemessenheit des Ausgleichs nach § 139 I 4 PatG (“Criteria for Reasonable Compensation Under Section 139(1) Sentence 4 of the Patent Law”), 2022 GRUR 299-302. Here is the abstract:

The proportionality examination introduced into the Second Patent Modernization Act, under which in special circumstances the claim for injunctive relief under § 139(1) of the Patent Act can be restricted, is coupled with a claim for reasonable monetary compensation.  The doctrinal orientation of this compensation claim, and especially its distinction from a claim for damages, raises a number of question, to which the following considerations are addressed.  The present essay comes to the conclusion that the “reasonable monetary compensation” is a way of expressing a fair estimation, which should ensure the patent owner, independently of a claim for damages, of a direct monetary benefit, the amount of which depends on the special circumstances of the case.  A windfall is however to be avoided.  

4.  Ansgar Ohly, Der Ausgleichsanspruch gemäß § 139 I 4 PatG als Rechtsfortwirkungsanspruch (“The Compensation Claim Under Patent Act § 139(1) Sentence 4 as a Claim for Effective Legal Continuity"), 2022 GRUR 303-09.  Here is the abstract:

The legislature has entered new territory by enacting into law a compensation claim in connection with the elimination of a claim for injunctive relief under Patent Act § 139(1) sentence 4.  Legislative innovations call for legal analysis.  Like the three preceding essays, the following exposition addresses the legal nature and specific questions concerning the new compensation claim.  The thesis of this essay is that it is a matter of effective legal continuity, which is related to claims under Civil Code § 951(1) sentence 1 and § 812(1) sentence 1 alternative 2, and which is directed to the determining the objective value of the use in accordance with license-analogy principles.

Stein on Italian Supreme Court IP Damages Decisions

Anna Maria Stein has published an article titled The Italian Supreme Court Provides Guidance on Compensation for Damages of IPRs Infringement, 44 E.I.P.R. 185 (2022).  Here is the abstract:

           In Italy, the quantification of damages is determined as part of the main proceedings. The burden of proof rests on the claimant. Under Italian law, the alternative methods for assessing the compensation for damages from IPR infringement are set out in the art.125 of Industrial Property Code (IPC), which is substantially in line with the Enforcement Directive. Nevertheless, the application of IPC art.125 has created discussions among scholars and case law. With two recent decisions, the Supreme Court has clarified the interpretation of art.125 paras 2 and 3 of the IPC and provided a guidance in the application of the criteria of the "reasonable royalty" and of the "disgorgement of the profits" as well as on the simplification in the burden of proof.

The first case discussed is a patent case in which the court held that, under article 125(3) of the Italian IP Code and article 13(1)(a) of the Intellectual Property Rights Enforcement Directive, the plaintiff has the option of recovering the infringer's profit attributable to the infringement, regardless of whether the plaintiff can demonstrate that the infringement caused the plaintiff to lose profits and regardless of whether the infringement was innocent.  For previous discussion on this blog, citing an EPLaw post by Giulia Pasqualetto, see here.  The other is case is a trademark matter, in which the court held that a plaintiff may recover “price of consent” damages, essentially a reasonable royalty, as long as there is sufficient record evidence for the court to estimate what such a hypothetical royalty would have been—but that in the present case, no such record evidence existed, and that in the absence of such evidence there is no right to presumptive damages.