Thursday, May 30, 2024

National Association of Patent Practitioners Event at the University of Minnesota Law School

This event is still a couple of months away, but I thought I would mention it now.  July 17-19, the University of Minnesota Law School will be hosting the National Association of Patent Practitioners (NAPP) Annual Meeting and Conference.  More information can be found here.  Speakers will include USPTO Deputy Commissioner for Patents Charles Kim, who will be discussing USPTO Artificial Intelligence (AI) Initiatives. Conference registration is $125 for students and academics who are NAPP members. I am informed that students can become members for $100, and that academics who are not practitioners can save $25 on the nonmember conference fee if they sign up for the Associate Membership with NAPP.

Tuesday, May 28, 2024

Rantasaari on Fee Shifting and the UPC

Krista Rantasaari has published an article titled Patent Litigation in Europe:  intermediate fee shifting and the UPC, 18 JIPLP 642 (2023).  Here is a link to the paper, and here is the abstract:


            This writing explores the European understanding of fee shifting rules and how the unitary patent regime addresses fee shifting rules. In European jurisdictions, the IP Enforcement Directive has harmonized some parts of the remedies, even though they are mainly governed by national law.  European jurisdictions often apply fee shifting rules, meaning that the losing party pays the winning parties’ expenses and fees.


            However, in most cases, costs are not fully covered. Instead, European jurisdictions use intermediate fee shifting that allows the winning litigant to recover some, but not all, of its litigation expenses.


            The UPC follows intermediate fee shifting. Hence, the UPC may lower or raise the ceiling of the recoverable costs or, upon request, wholly or partially reimburse expenses. For example, the recoverable cost might be disproportionate if the unsuccessful party is a small and medium size company. Like national rules, fee shifting in the unitary patent regime has limitations and discretionary elements, such as proportionality, equity, and partial success. In addition, the UPC will follow the case law of the Court of Justice of the European Union related to the interpretation of the IP Enforcement Directive.

I’ve been working on a book chapter that addresses, among other matters, fee shifting, and I found this article very informative.  The UPC approach reminds me a bit of the aborted attempt by the U.S. Congress in 2013 to incorporate a version of intermediate fee shifting into U.S. patent law—it would have made fee shifting mandatory  “unless the court finds that the position and conduct of the nonprevailing party or parties were reasonably justified in law and fact or that special circumstances (such as severe economic hardship to a named inventor) make an award unjust.”  Although compromises are not always the best solution, it may be that some sort of intermediate fee shifting is the best way to reconcile the positive and negative effects of fee shifting, though I’m still inclined to think that in most cases the prevailing party should recover the majority of their actual fees and expenses.   

Thursday, May 23, 2024

Franzoni and Kaushik on Damages for Trade Secret Misappropriation

As the title suggests, this paper is not about patent remedies, but since trade secrets are an alternative option for inventors—and since I’m interested in, in fact writing a book about, IP remedies generally, I thought I would mention it here.  The authors are Luigi Alberto Franzoni and Arun Kumar Kaushik, and the paper is Lost Profits and Unjust-Enrichment Damages for the Misappropriation of Trade Secrets, 53 J. Legal Stud. 237 (2024).  Here is a link to the journal’s website, and here is the abstract:

            This paper analyzes civil remedies for the misappropriation of trade secrets. We study the impact of different damages doctrines on firms’ competitive behavior and on the incentives to misappropriate. We find that the owner of a trade secret is better off under the lost-profits regime, while the rival (independently of whether he obtained the technology by misappropriation or by independent development) is better off under the unjust-enrichment regime. The unjust-enrichment regime provides fewer incentives to misappropriate and yields a smaller market deadweight loss. The choice between the two rules essentially depends on the lawmaker’s goal.

This is an interesting paper in its application of game theory to the topic of damages.  The model assumes that the defendant is either an honest or a dishonest rival, but that the trade secret owner has imperfect knowledge of which.  I would note, however, that as the authors state toward the end of the article, their “analysis assumes away some important factors,” including “the possibility that the rival develops a product to which consumers attach a greater value” and “litigation costs”; and the authors “posit errorless adjudication” (p.262; cf. p.247).  (Errorless adjudication in particular may be a stretch in the real world, as Norman Siebrasse has pointed out in connection with the Canadian Supreme Court’s analysis of how to calculate the infringer’s profits in patent litigation, see here.)  Most of the analysis also assumes that the rival/defendant is as efficient as, or slightly more efficient than, the trade secret owner (with a substantially more efficient infringer being considered later in the paper).  Of course, if enforcement is perfect and adjudication error-free, the rival will always be deterred with unjust enrichment damages; but if enforcement is not perfect and the rival is less efficient, the trade secret owner will be worse off, perhaps a lot worse off, if misappropriation occurs and causes the secret to become widely known (and thus no longer a secret), in which case I would think lost profits are unambiguously the correct remedy.  (Maybe the authors would agree, see p.260 n.24.)  For now, I remain convinced that the best operable rule in the real world is one that permits the trade secret owner the option of either lost profits or the infringer’s profits, whichever is higher, with reasonable royalties being preferable in a case in which the misappropriation was initially inadvertent (e.g., the defendant started using the secret information before learning that it was disclosed in breach of a duty of secrecy); but I could be wrong, and this paper does highlight the consumer welfare tradeoffs of awarding lost profits versus infringer’s profits under its assumed conditions.