Wednesday, January 31, 2024

Federal Circuit Affirms Denial of Preliminary Injunction

The nonprecedential decision is SmartSky Networks, LLC v. GoGo Business Aviation, LLC, opinion by Judge Cunningham, joined by Judges Chen and Hughes.  The parties are “competitors as business aviation network providers, both offering air-to-ground (‘ATG’) networks that provide broadband in-flight internet connections to aircrafts” (p.2).  SmartSky filed suit, “alleging that GoGo’s 5G network infringes claims of four patents relating “to technology that enables wireless in-flight internet connections (id.).  SmartSky also moved for a preliminary injunction against GoGo’s manufacture, use, sale, or offering to sell its 5G network.  The district court denied the motion, concluding that SmartSky had not proven a likelihood of success on the merits or irreparable harm.  The Federal Circuit perceives no abuse of discretion and therefore affirms, finding it necessary to consider only the irreparable harm arguments.  From the opinion (which, though nonprecedential, does cover a lot of ground on how one might go about trying to prove irreparable harm):

SmartSky has the burden of establishing that it is likely to suffer irreparable harm absent a preliminary injunction and that there is a causal nexus between the alleged infringement and the alleged harm. . . . . Price erosion, loss of goodwill, damage to reputation, and loss of business opportunities are examples of possible grounds for finding irreparable harm. . . .


. . . We find SmartSky’s lost sales arguments unpersuasive as to Gogo’s 5G network. SmartSky itself concedes that Gogo’s 5G network has not been released. . . . Even accepting SmartSky’s argument that the district court should have relied on evidence that Gogo’s accused 5G network has been offered for sale since October 2021, Appellant’s Br. 50, the district court did not abuse its discretion in finding that any lost sales and service revenue through the date of trial is quantifiable because SmartSky’s own expert conceded to this conclusion. . . .


. . . SmartSky has not pointed us to any additional evidence in the record that suggests that any consumers who chose Gogo’s 5G network would have chosen SmartSky’s product rather than, for example, Gogo’s unaccused 4G product or a non-infringing product offered by another provider of in-flight connectivity service. Furthermore, although “the existence of a two-player market may . . . create[] an inference that an infringing sale amounts to a lost sale for the patentee,” Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1151 (Fed. Cir. 2011), SmartSky’s argument fails because the district court never made a finding that SmartSky and Gogo are the only two competitors in the relevant market. . . .


SmartSky also argues that the district court erred in deeming its price erosion theory of irreparable harm speculative by ignoring testimony from SmartSky’s president alleging that customers used Gogo’s pricing to negotiate price reductions from SmartSky. Appellant’s Br. 55–56.


We find this argument unpersuasive. In previous cases, we have required concrete evidence of reduced price to find price erosion. . . . Such concrete evidence is not present in the testimony of SmartSky’s president. The cited testimony shows that a few potential customers requested a price decrease in light of Gogo’s 4G network pricing, not that SmartSky lowered its price because of the launch of Gogo’s 5G network. J.A. 9594, 9597–99, 9602–03. Furthermore, SmartSky’s president conceded that SmartSky set its prices before Gogo announced the prices of its 5G network. . . (pp. 6-10).

The court further agrees that SmartSky did not show any irreparable harm to its reputation or goodwill, or “irreparable harm based on past and future lost R&D and investments” (p.12); and that evidence that the two parties are competitors and that customers are “sticky” (tend to stick with the same provider) was insufficient.  Evidence, comparable to what has sufficed in other cases, “of the loss of a few important customers is not present in this case” (pp. 13-14).

Tuesday, January 30, 2024

Jury Awards $67.5 Million in G+ v. Samsung Case

I have blogged twice recently about interim decisions in this case (see here and here).  This past Friday, the jury returned a verdict of $67.5 million for the patentee, G+.  There were three patents, and four claims altogether, in suit.  According to the verdict form, the jury found claim 10 of U.S. Patent No. 10,564,443 to be patent-ineligible.  For the two remaining patents in suit, the jury awarded $45,000,000 for the infringement of U.S. Patent No. 8,761,776, and half that much or $22,500,000, for U.S. Patent No. 10,736,130.  (Without delving into the record, I would guess that the awards for these two patents, both essential to 5G technology, reflects the more recent date of issue of the latter of the two.)  Both awards are said to be running royalties, so barring a settlement I would expect a hearing to set the amount of any ongoing royalty that may still be due.  The jury also concluded that neither party breached its FRAND obligation to act in good faith, so there are no further damages under that heading.  According to Law360, G+ withdrew its claim for willful infringement following the court’s decision earlier this month that Samsung could argue it was unaware that G+’s predecessor in interest, ZTE Corp., had not already licensed Samsung the patents in suit. 

The verdict form is available here.

Thursday, January 25, 2024

FRAND Commitment to ETSI Is Irrevocable, But Can Be Suspended

Judge Gilstrap reached the above conclusion in a decision earlier this week in G+ Communications, LLC v. Samsung Electronics Co., Civil Action No. 2:22-CV-00078-JRG.  The conclusion comes in response to a request by Samsung that the court “make the following determination of French law:  French law does not allow a SEP declarant to unilaterally discharge (and thus avoid) its irrevocable FRAND obligations, including its duty to negotiate in good faith and its obligation to license declared patents on FRAND terms” (p.5).  The court agrees that the commitment is irrevocable, as stated in Clause 6.1 of the ETSI IPR Policy, but that it can be suspended during the period of time, if any, that the opposite party fails to discharge its obligation to negotiate in good faith:


The Court is persuaded that the obligation to negotiate toward a FRAND license in good faith may be temporarily suspended. . . . First, G+ and Samsung are subject to reciprocal obligations of good faith during negotiations for a license to a FRAND-encumbered patent. The parties’ experts agree on this point. . . . Next, one party’s failure to fulfil its obligation to negotiate in good faith suspends the other’s. . . . Indeed, Samsung’s own expert, Professor Molfessis, testified that “[w]hen in presence of reciprocal obligations a party doesn’t perform its obligation, it’s possible for the other party to ask for the termination of the contract or to suspend its own obligation.” (Dkt. No. 552-1 at 49:3–7 (emphasis supplied).) . . .


SEP holders maintain an obligation to license its [sic] SEPs on FRAND terms and to negotiate toward such licenses in good faith. These obligations are irrevocable in the sense that SEP holders cannot withdraw them or take them back. However, their irrevocable nature does not mean they are static.


. . . It is both practical and logical that the obligations of a party acting in good faith be suspended when a counterparty to a negotiation for a FRAND license is acting in bad faith. If the counterparty is acting in bad faith, it is impossible for negotiations for a “fair” and “reasonable” and “non-discriminatory” contract to proceed. . . . To hold otherwise would strain logic and reason. However, when the counterparty ceases acting in bad faith, the barrier to consummation of the license on FRAND terms is removed and the negotiations can and must resume (in good faith). Further, holding that a party’s duty to negotiate in good faith is suspended while the counterparty is acting in bad faith prevents the party acting in good faith from being taken advantage of by the counterparty. Such a suspension can counter the effects of holding up and holding out. . . .


For the reasons and supporting sources noted herein, the Court makes the following determination of French law pursuant to FRCP 44.1:


Where a patent is contributed to an adopted standard established by a standard setting organization, such contribution contractually burdens the patent to thereafter be licensed on fair, reasonable, and non-discriminatory terms. This is known as the FRAND obligation. This obligation is irrevocable, and thereafter runs with the patent. However, if in negotiating for a license to a patent burdened by a FRAND obligation either the patent holder or the implementer of the adopted standard fails to act in good faith and thereby prevents a license from being granted, the other party’s obligation to continue negotiations is suspended. This does not remove the burden of the FRAND obligation from the patent, but avoids obliging a party acting in good faith to continue negotiating with a party who fails to do so. If the bad faith actor ceases its bad faith and begins acting in good faith, the good faith negotiations must also resume (pp. 6-11).

 Hat tip to my former student Michael Sikora, for calling this decision to my attention.

Tuesday, January 23, 2024

From Around the Blogs

1.  On Sufficient Description, Norman Siebrasse has (I think) completed his insightful multipart series on Nova v. Dow, the Canadian Supreme Court decision addressing the noninfringing alternative concept in the context of an accounting of the infringer’s profit.  The installments are available  here, here, here, here, here, here, here, here, here, and hereHe also published a post last week titled What Is the Evidentiary Threshold for Denying a Permanent Injunction on Public Interest Grounds?, discussing the Federal Court’s recent decision denying AbbVie an injunction against JAMP’s marketing of a generic version of a patented drug (previously noted here).  And, while I’m at it, I may as well noted a post he published in November that I overlooked at the time, titled The UK Approach to Electing an Accounting, in which he takes issue with a strand of U.K. case law that allows the patentee to opt for an accounting of profits if the quantum will be higher than an award of actual damages.  As Professor Siebrasse argues, awarding a supracompensatory remedy should be permitted only if there is some rational policy reason for doing so, e.g., the need to deter a type of infringement that otherwise might go undetected.   And yet another post I overlooked at the time is this one from September, titled What Causation Concept Is to Be Used in Allocating Fixed Costs?, which uses both Nova v. Dow and a recent Federal Court of Appeal case (GreenBlue Urban North America Inc. v. DeepRoot Green Infrastructure, LLC, 2023 FCA 184), to illustrate the difficulties in determining the appropriate way to deduct fixed costs, if such a deduction is required, when trying to calculate the infringer’s profit.

2. On the Kluwer Patent Blog, Chloe Dickson published a post titled Philip Morris v Nicoventures—e-cigarettes light up the doctrine of equivalents and Arrow declarations.  An Arrow declaration is a type of discretionary remedy, whereby the claimant seeks a declaration that a product the claimant has launched or is planning to launch lacks or would have lacked novelty or inventive step as of a particular date (and therefore, by implication, cannot infringe the opposing party’s pending patent(s)).  In the decision at issue, Justice Hacon sets out the following principles that are relevant for granting such a declaration:


(1) The court has a broad and flexible discretion to grant Arrow declaratory relief, Mexichem at [13].


(2) The circumstances in which an Arrow declaration will be justified are likely to be uncommon, Fujifilm at [95].


(3) The discretion should be exercised only where the declaration will serve a useful purpose, which requires critical examination by the court, Glaxo at [25]; Mexichem at [13].


(4) The requirement of a useful purpose will not be fulfilled solely because the respondent has pending patent applications and the applicant would like to know whether it will infringe any patents which may be granted pursuant to those applications, Fujifilm at [93] and [94(iv)) and (v)]; Glaxo at [25].


(5) The usual course envisaged by the statute is that the applicant should wait and see what, if any, patents are granted and where necessary use the remedy of revocation, Fujifilm at [93].


(6) Where it appears that the statutory remedy of revocation is being frustrated by shielding the subject-matter from scrutiny by the national court, this may be a reason for the court to intervene with a declaration, Fujifilm at [93].


(7) The court must guard against the application being used as a disguised attack on the validity of a granted patent, Fujifilm at [81]-[82] and [98(ii)].


(8) A declaration may be sought in relation to one or more features of a product or process, as opposed to a product or process in its entirety, Mexichem at [18]-[20].


(9) Where a declaration is sought in respect of only one feature or some features of a product or process, the level of generality of the proposed declaration may be relevant to whether it serves a useful purpose, Mexichem at [18].


(10) The court may take into account the possibility that a declaration is likely to be useful solely in arguments on obviousness in which it is deployed in an illegitimate step-by-step analysis of obviousness, although it may be difficult to know that this is likely to arise, Mexichem [22]-[25].


(11) The features in respect of which the declaration is sought must be defined with sufficient clarity, Glaxo at [30].


(12) Equally, the useful purpose said to justify the declaration must be clearly identified, Mexichem at [13]. . . .


(13) Subject always to the qualifications referred to in (7), (11) and (12) above, an Arrow declaration is likely to serve a useful purpose if the applicant can show that (a) the respondent's portfolio of patent applications and/or patents creates real doubt, likely to continue for a significant period, as to whether technical subject-matter which the applicant wishes to exploit can lawfully be used, (b) the applicant's reasonable intention to exploit that subject-matter would be of significant commercial advantage to it and (c) the declaration sought would, if granted, eliminate or significantly reduce the delay.


In this context "significant" means cumulatively sufficient to warrant the intervention of the court.


(14) The court will more readily find that there is a useful purpose where the respondent's behaviour has been consistent with an intent to prolong the doubt (paras. 190, 198).

 On the facts, the court declines to exercise its discretion to grant the declaration.

3. Of relevance to remedies but also broader issues of subject matter jurisdiction and procedure is an article by Ruixue Ran, Thomas Garten, and Justin Wang on Law360, titled A Comparison of Patent Dispute Resolution in US and China.