Paris Court of Appeal Denies Permanent Injunction on Proportionality Grounds

I’ve been catching up on some back issues of the European IP journals, and so I am a little late reporting on this decision, which was handed down in October 2024.  The decision is Peugeot Motocycles SAS c. Société Piaggio & C. SpA, Cour d’appel de Paris, No. 21/18176, Oct. 16, 2024, and is discussed in a short article by Abdelaziz Khatab, Oscar Lamme, and Peter Meyer titled Redefining remedies:  the Paris Court of Appeal applies proportionality to deny a permanent injunction, 2025 GRUR Patent 138; in another short article by Jacques Raynard titled Contrefaçon et contrôle proportionalité, Propriété Industrielle, Feb. 2025, p.25; and in PIBD 1238-III-1 (with a link to the full decision in French), though this last article doesn’t discuss what the other commentators (and I) perceive to be the most interesting issue.  

The facts of the case, in brief, are as follows.  The plaintiff (Piaggio) sued the defendant (Peugeot) for the infringement of four patents and a design model.  As it turned out, only a few dependent claims of one of the patents were found to be both valid and infringed (by the defendant’s METROPOLIS line of scooters).  There are several issues of importance in the case—including an award of damages which takes into account the fact that the patented feature at issue covers only one feature of a complex end product—but the most important, arguably, comes toward the very end of the decision, where the Court of Appeal reverses the lower court’s order for a permanent injunction.  The defendant notes, inter alia, that the patent in suit deals with only a detail in implementing an anti-tilting system, and that the patent was due to expire on February 1.  The Court of Appeal agrees that an injunction would be disproportionate, stating (in my translation):

In view of the particular circumstances of the present case, consisting of an initial proceeding involving four patents of which was invalidated, the appellate proceeding concerning no more than the EP 612 patent whose expiration is near and which has been the object of long and fruitful debates concerning its scope, concerning a relatively limited turnover and moreover that the market share occupied by Peugeot Motocycles has been decreasing since 2021, the court concludes that the corrective measures and injunction sought would appear disproportionate in regard to the interests before the court and, not only for the infringer but also for third parties acting in good faith, would entail excessive hardship, not justified by the right of exclusivity, while that a measure of pecuniary compensation suffices to remedy the right of the injured party, the plaintiff having admitted that it granted a license concerning its exploitation to another competitor.        

Instead of a permanent injunction, therefore, the court awarded damages equal to €150,000, which would cover the 300 scooters the defendant was expected to sell following the entry of the lower court’s judgment up to the date of expiration.

Professor Raynard notes the source of the proportionality requirement in the Intellectual Property Rights Enforcement Directive and in the Charter of Fundamental Rights, though he expresses  some concern that denying injunctive relief on proportionality grounds could result a slippery slope by which exclusive rights are rendered merely rights to demand compensation--though if I read him correctly, he believes that some departures from a purely property-rule entitlement may be necessary in the modern economy.   For their part, Messrs. Khatab et al. emphasize that the decision rests upon a consideration of the relevant facts and circumstances; and both articles note some departures from a strict property-rule perspective in a few other contexts involving copyright, neighboring rights, and moral rights.  According to both articles, however, this appears to be the first French patent case in which a court has denied the prevailing plaintiff a permanent injunction.

A Couple of New Articles on SEP Litigation in the UPC, Germany, and the UK

1. Matthias Leistner has posted a paper on ssrn titled The first SEP/FRAND decisions on the merits of the UPC—an overview in context.  Here is a link to the paper, and here is the abstract:

 

After a period of consolidation, in the past two years the European SEP/FRAND enforcement landscape has seen considerable movement. Significant decisions have been issued by the UPC (Local Division Mannheim – Panasonic v Oppo and shortly afterwards Local Division Munich – Huawei v Netgear) and the English Court of Appeal (most recently in Lenovo v Ericsson). In addition, the Commission intervened in a Munich SEP infringement case recommending a stricter interpretation of the Huawei v ZTE requirements. To this the Higher Regional Court Munich (Oberlandesgericht München) has since responded with an informative legal notice (Hinweisbeschluss) during the proceedings and, ultimately, a judgment nonetheless granting injunctive relief (HMD Global v VoiceAge). This case is currently under legal review before the German Federal Court of Justice, since the Higher Regional Court granted relief for an appeal in law. The focus of this contribution is on the decision of the UPC’s Local Division Mannheim, but also takes into account the judgment of the Local Division Munich and the aforementioned overall context.

This very thoughtful and detailed paper deserves wide attention.

2. Peter D. Camasesca and Konstantina E. Sideri have published an article titled Abusive Conduct of SEP Holders in Pursuing Injunctions Across Jurisdictions:  The EU Angle, 74 GRUR Int. 607 (2025).  Here is a link to the article (though you may need a subscription or institutional access), and here is the abstract:

The enforcement of a standard essential patent (SEP) has been fraught with complex legal and commercial considerations, particularly regarding the interplay between intellectual property rights and antitrust principles. SEPs occupy a unique position on the market as they support industry standards, granting their holders quasi-monopolistic power while imposing obligations to license on Fair, Reasonable and Non-Discriminatory (FRAND) terms. However, these obligations often conflict with SEP holders’ desire to assert exclusivity rights, creating tension within the licensing ecosystem. This tension is amplified when SEP holders seek injunctive relief in jurisdictions like Germany while simultaneously agreeing to, or having engaged in, FRAND determinations in venues such as the UK. The issue at hand is whether pursuing injunctions in Germany while a FRAND determination is underway in another jurisdiction constitutes an abusive practice. We argue that this behavior undermines the core principles established by the Court of Justice of the European Union in the Huawei v. ZTE case and represents a form of procedural manipulation that is both legally and ethically questionable.

RJR’s Petition for Certiorari

While I was away earlier this month, R.J. Reynolds Vapor Company filed a petition for certiorari presenting the following two questions:

1. Does the Federal Circuit’s judicially created “built-in apportionment” exception, which allows patent owners to use unrelated prior licenses to prove damages without providing “evidence tending to separate or apportion” the patent’s contribution, violate Garretson v. Clark’s requirement that apportionment “must in every case” be shown?

 

2. Alternatively, in light of the Federal Circuit’s intervening en banc decision in EcoFactor, Inc. v. Google LLC, 137 F.4th 1333, 1339-40, 1346 (2025)—which reiterated that expert damages opinion evidence “that is connected to existing data only by the ipse dixit of the expert” is inadmissible under Daubert and Federal Rule of Evidence 702 and rejected damages expert testimony regarding a royalty rate purportedly used in reaching lump-sum license agreements that did not support such a rate—should the Court grant the petition, vacate the judgment, and remand for application of that precedent, as is typical practice when an intervening development reasonably shows that the lower court’s decision rests on a premise that it would reject if given the opportunity for further consideration?

The cert. petition has already been discussed on Bloomberg, Law360, and (in greater detail) Patently-O, so I’ll just add a few thoughts of my own here.  I previously noted the underlying non-precedential decision, in which the Federal Circuit affirmed the $95 million damages award, here.

First, as question # 1 above states, the petition squarely aims at the Federal Circuit’s use of the “built-in apportionment” concept.  In the typical case applying this concept, the patent owner’s damages expert asserts that the express or implicit royalty rate set forth in a purportedly comparable portfolio license which included, among many other patents and/or other IP rights, the patent in suit (or, as here, a supposedly comparable patent or patents) implicitly or effectively apportioned the value of the patent in suit, because (for example) the patent  in suit was the most valuable patent in the portfolio, or for some reason is said to be as or more valuable than the patents licensed in the portfolio, etc.  Commentators--including William Lee and Mark Lemley, in an article that I noted here and which is cited throughout the petition—have argued that the courts have wrongly permitted use of the built-in apportionment concept in cases in which the basis for doing so has been slight to none, and that this has resulted in inflated jury awards.  I think they are basically right about that, and that this case may be an appropriate vehicle for the Supreme Court to step in with a needed correction.  The Federal Circuit itself did not address the issue in its recent EcoFactor decision (see here), though as suggested by question # 2 above that decision’s focus on the reliability of expert testimony should be relevant in this context as well.

Second, it’s interesting that the petition cites (as it should) not only old Supreme Court patent cases such as Garretson v. Clark, 111 U.S. 120 (1884), which addressed a type of apportionment, but also a copyright case and a trademark case that each stressed the need for proper apportionment.  See Petition p.16, citing Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390 (1940), and Dewberry Group, Inc. v. Dewberry Engineers Inc., 145 S. Ct. 681 (2025).  The implication, I think, is that the current patent damages jurisprudence on apportionment is something of an outlier, for no good reason.  That may be so, although the petition notes that the latter case (Dewberry) stands for the proposition that an award of the defendant’s profits for trademark infringement must be “limited to those ‘properly attributable’ to the named defendant, not to other, unnamed affiliates” (Brief at 16).  Subject to that caveat, however, U.S. trademark and copyright law actually follow different rules; in a trademark case, once the decision has been made to award profits, the plaintiff is entitled to all of the defendant’s net profits—though to avoid windfalls, disgorgement is permissible only if the unauthorized use of a trademark is a substantial factor in the defendant’s profits.  See Pamela Samuelson, John M. Golden & Mark P. Gergen, Recalibrating the Disgorgement Remedy in Intellectual Property Cases, 100 B.U. L. Rev. 1999, 2009-11 (2020).  (In my view, this rule was more defensible back when disgorgement was permitted only in cases of willful infringement.  Unfortunately, however, the Supreme Court jettisoned that limitation on disgorgement in Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. 212 (2020), previously noted on this blog here.)  And, of course, U.S. patent law doesn’t allow disgorgement at all except in design patent cases, where (irrationally) the plaintiff is entitled to the entire profit attributable to the infringing article of manufacture.  Indeed, one of many odd things about IP damages law in the U.S. is that, as the preceding examples show--and in contrast to the law as it exists in many other countries--the rules can vary quite a bit from one body of IP law to another.  But there should at least be a plausible reason for a different rule, and I think the petitioners are right to imply that, at least with regard to the apportionment principle, patent law doesn’t need to deviate from copyright by applying the built-in apportionment concept.

Third, as Dennis Crouch points out in his post, Garretson v. Clark involved a different sort of apportionment issue, namely the need to ensure that an award reflects the value of the patented invention and not other features of the end product.  As Professor Crouch also notes, however, the “basic idea” is the same, namely that the award should reflect only the patent in suit and not other patents or other IP rights or other features of the accused product.  To be sure, that basic idea is not always easy to apply, and reasonable minds may differ about what it means in a given situation—for example, when a plaintiff can show that, but for the infringement of a single patent, a prospective purchaser of a complex end product incorporating many other features would have purchased that product from the plaintiff rather than from the defendant.  See, e.g., Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275 (Fed. Cir. 2017), where the Federal Circuit held—properly in my opinion—that in such a case the plaintiff could recover its entire lost profit without further apportionment.  Moreover, as I point out in my forthcoming book Remedies in Intellectual Property Law, apportionment can mean slightly different, albeit related, things in different contexts, even if the “basic idea” is in some sense the same:  that the royalty should reflect the value the IP in suit contributes to profitability or cost savings, as distinct from the value of other IP not in suit, or other features of the end products into which the IP is incorporated (the issue in Garretson); that the value to the defendant of the specific IP right at issue should be isolated from the aggregate royalty rate implicit in a purportedly comparable portfolio license (this case); and that the royalty base should be one which does not present an undue risk that the trier of fact will inflate (or deflate?) the appropriate award (as in the many cases involving the applicability of the SSPPU rule).  The overarching idea, in other words, is that we should aspire to compensate the patentee for the profit or royalty it lost as a consequence of the infringement, but not to put it in a better position than it otherwise would have occupied (unless, of course, the conditions for awarding enhanced damages are present).  The difficulty lies in carrying out that principle, both conceptually and in a cost-effective manner.  In this regard, advocates of built-in apportionment might argue that the concept economizes on information/administrative costs, and that whatever loss of accuracy arises as a result is worth it-- but in my view, that case has yet to be persuasively made.  

Two New Papers on China and FRAND

1.  Mark A. Cohen has published China’s Many Faces of FRAND, 47 EIPR 418 (2025).  Here is the abstract:

China has become a major destination for resolution of disputes over the licensing of patents incorporated into global technical standards. These patents are generally required to be licensed on "FRAND" terms. FRAND is an English language acronym that consists of four separate components: (A) "fair", (B) "reasonable", (C) "and" (D) "non-discriminatory." Chinese courts have typically applied these four admittedly vague components in their Chinese translations, rather than their native English. These translations have not been standardised across cases and policy documents. There are often multiple translation variants in an individual judicial decision with at least 120 potential variant translations of the four FRAND components. In addition, there are three significant grammatical variants, plus various combinations of the four components, which brings a total of potential variants used by Chinese courts to over 500. Not all these variants impose new meanings of FRAND. In fact, the most significant of the variant translations is grammatical and not based on a semantic difference. It entails removing a Chinese term for "and" and utilising the Chinese enumerative comma or dunhao, which looks like a backwards comma, to replace the Western comma. According to relevant Chinese national standards and practice, the use of the dunhao means "pause." It can mean "and" or "or." It potentially fragments the integrated concept of "FRAND" into its separate components. In this dominant translation variant, FRAND means "fair and/or reasonable and/or non-discriminatory." It might more appropriately be called "FRND". The Chinese courts’ use of FRND maximises judicial discretion by facilitating new combinations of individual FRAND components, thereby selectively ignoring certain FRAND components, and by introducing new terms into FRAND. These translations have also worked to the disadvantage of the foreign party by imposing preferential treatment for a Chinese licensee or a rate that is equal to the lowest rate charged by [sic] the licensee, regardless of the costs and challenges faced by the foreign licensor in negotiating and litigating with its Chinese counterpart. While foreign courts and companies have observed that it is difficult to obtain fair remuneration for standards-essential patents ("SEPS") licensed to China, these varied translated "faces of FRAND" are not observable to readers who rely solely on English translations. The English translations that I have reviewed have uniformly declined to address inconsistent translations from English into Chinese and back into English. These Chinese translations are also inconsistent with the translations into Chinese of international organisations and the approaches to translating FRAND’s vague components that have been undertaken by many foreign countries and economies. The effect of these mistranslations is to not merely to uniquely translate FRAND in judicial decision making, but, in certain instances, to suggest or impose new meanings based on Chinese law upon FRAND. These new Chinese meanings also serve to facilitate transplanting FRAND into new areas of the law and diplomacy where the Chinese government typically has expressed an interest in managing private property rights to serve governmental interests.

2. Zhang Guangliang, Qiao Zixuan, and Huang Yu have published Probe into Component-Level Licensing and Judicial Pricing of Standard Essential Patents, China Patents & Trademarks, No. 3, 2025, pp. 30-39.  The authors argue, among other things, that FRAND licenses should be available on a license-to-all, rather than on access-to-all basis (I tend to agree), and that regardless of which party pays the royalty the amount should be the same (a point Judge Thomas Kühnen has made, and with which I also agree).  They then go on to argue that, in FRAND litigation, the SEP owner should be able to recover the entire royalty from the end manufacturer; but that the component manufacturer who itself has infringed the SEP should be obligated to reimburse a portion of those royalties; and if I am understanding correctly, they believe that, in general, more of the responsibility should fall on the end manufacturer than on the component manufacturer (see pp. 34-35).  They also suggest that the end manufacturer and component manufacturer “can negotiate in advance and count the reimbursed damages into the component price.”  They proceed to discuss the merits of the SSPPU and entire market value rules, expressing a mild preference for the former but concluding that the choice should be determined case-by-case (see discussion at p.37).  The authors then conclude by proposing that the SEP royalty should be apportioned between the component manufacturer and the end manufacturer “according to the ratio of the component manufacturers’ profits to the end-product manufacturer’s profits” (pp. 37-38),  but I’m not persuaded.  In addition to the difficulties of determining what those profit levels are (a point which the authors acknowledge, while concluding nonetheless that they can be adequately estimated), I fail to see the significance of comparative profitability as a criterion for apportionment between the manufacturers, particularly when profitability can depend on so many extraneous factors (including that, by assumption, the parties’ profits would be inflated by not having paid for a FRAND license in advance).  More fundamentally, it’s not clear to me why the division of financial responsibility between end manufacturer and component manufacturer cannot be simply a matter of contract law—or, absent a contractual provision addressing this issue, whatever default rules applies under the relevant state’s commercial law.

Blogging break

I will take a blogging break for the next two weeks, resuming on or about August 18.  Meanwhile, a question for readers: am I the only one who's having trouble accessing opinions from the Federal Circuit's website?  I keep getting this (below), and can't seem to make the upper portion go away to let me see the most recent opinions.

  

 Update (8-2):  It looks the CAFC's website is back to normal now.