Thursday, October 6, 2022

Recent TIPLJ Papers on FRAND and Other Patent Remedies-Related Topics

I may have comments on some or all of these sometime soon, but for now I will just list them:


1.  Bernard Chao and Tod Duncan published Why Patent Monopsonies Increase Consumer Welfare, 30 Tex. Intell. Prop. L.J. 1 (2021).  Here is a link, and here is the abstract: 


Technical standards are an essential part of how the modern world operates. Standards enable different devices to communicate with each other, use the same power supply, and even exchange data. These standards are created by groups of companies coming together through standard settings organizations (SSOs). Besides defining standards, SSOs set policies that affect how much member companies charge for their standard essential patents (SEPs). Unsurprisingly, many companies desire lower patent prices. But as SSOs adopt policies that lower prices, their conduct begins to look like collusion subject to antitrust scrutiny. Indeed, classic economic theory suggests that when a monopsonist (or multiple oligopsonists) lowers prices, it also lowers output and creates deadweight loss. Presumably, that is why the antitrust authorities in the Trump administration have adopted policies that caution SSOs against these practices.


This paper argues that these policies result from a misunderstanding of economic theory. The monopsony problem is typically discussed in the context of private goods, goods which are both excludable and rivalrous. While patent licenses are excludable (i.e., a licensor can refuse to grant the license), they are not rivalrous because the grant of one license does not prevent the simultaneous grant of licenses to other companies. This combination of traits means that patent licenses are not private goods, but a type of “artificially scarce goods.” As this paper explains, the economics of artificially scarce goods are fundamentally different than the economics of private goods. When a monopsonist buying artificially scare goods lowers prices, it increases output and reduces deadweight loss. Thus, the core rationale for prosecuting monopsonies under antitrust law, increasing allocative efficiency, does not apply to patent monopsonies like SSOs.


The Trump administration also tried to justify the use of antitrust law to strengthen patents rights and increase innovation incentives. While antitrust law certainly has a role in guarding against conduct that suppresses innovation, antitrust law was never meant to create innovation incentives themselves. That is the role of patents. More particularly, patent law calibrates incentives to properly encourage innovation without unduly discouraging subsequent follow-on innovation. Unless there are reasons to believe that patent monopsonies are harming innovation, antitrust law should not interfere with the balance patent law seeks to strike. When SSOs implement a policy that lower rates to reflect the contribution an SEP makes to the standard, the policy is simply reinforcing a patent law principle called “apportionment.” Thus, antitrust law should not oppose such a policy.


2. Kristy J. Downing published Rogue One: Section 285 Attorney’s Fees in Doctrinal Patent Ineligibility Cases, 30 Tex. Intell. Prop. L.J. 23 (2021).  Here is a link, and here is the abstract:


Recently, a US Court of Appeals panel found that enforcing an issued patent that could potentially be found ineligible under Section 101’s doctrinal exclusions might constitute an “exceptional” circumstance, warranting attorney’s fees under 35 U.S.C. § 285: Inventor Holdings v. Bed Bath & Beyond. In patent law, there is a diversion from the American Rule on fees, that each party be responsible for their own fees; instead, prevailing parties may be entitled to fees where the case is exceptional. Under the totality-of-the-circumstances test of Octane Fitness, merely enforcing patents in the face of unestablished invalidity challenges from the accused is rarely considered exceptional and in these cases fees are awarded when the arguments are objectively baseless. However, with all the discord in the industry about the unpredictable, unobjective application of the doctrinal exclusions to § 101, it is arguably immoderate for courts to find that an otherwise innocent pursuit of infringement damages constitutes exceptional conduct. This article compares and contrasts fee awards for truly objectively baseless invalidity or noninfringement grounds with recent 101-invalidity fee awardsand establishes just how rogue fee awards are in most ineligibility cases.


3. Christopher S. Storm published Standard Essential Patents Versus the World: How the Internet of Things Will Change Patent Licensing Forever, 30 Tex. Intell. Prop. L.J. 259 (2022).  Here is a link, and here is the abstract:


Our connected world depends on proper licensing of standard-essential patents (SEPs). Decades of intra-industry SEP disputes have shaped how modern courts resolve SEP licensing issues. Emerging cross-industry SEP disputes, however, present new reasons to question the assumptions made by courts and scholars during the era of intra-industry SEP disputes. This Article examines cross-industry SEP disputes between telecommunications companies and Internet of Things (IoT) implementers to demonstrate how SEP owners use the “exhaustion-avoidance licensing model” to capture more value than they are entitled to receive under U.S. patent damages law. This IoT fact pattern will force U.S. courts to choose one of two paths. Courts could choose to protect established licensing practices by deemphasizing the apportionment rule; this path, however, would erode a bedrock legal doctrine responsible for keeping patent damages tethered to reality. Instead, this Article recommends rigorously enforcing the patent apportionment and misuse doctrines in SEP disputes, even if such enforcement disrupts established SEP licensing practices. No matter which path courts choose, patent licensing will never be the same.

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