Wednesday, September 2, 2015

U.S. District Court Awards Octane Fitness $1.6 Million in Attorney's Fees

35 U.S.C. § 285 permits awards of attorneys’ fees only in “exceptional” cases.  As most readers of this blog probably are aware, in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the U.S. Supreme Court held that exceptionality should be determined based on the totality of the circumstances.  On July 1 of this year, Judge Ann Montgomery held that Octane was entitled to fees in an amount yet to be determined (see blog post here), and I just learned (courtesy of my colleague Prentiss Cox) that Judge Montgomery has now awarded Octane "attorney’s fees of $1,633,333 and costs of $144,697."  Here is a copy of the decision.  For my blog post on two recent papers presenting some statistics on fee litigation post-Octane Fitness, see here.

Siebrasse and Cotter on the Value of the Standard

Norman Siebrasse and I have posted a draft paper on ssrn (an earlier version of which I presented this past June in Tokyo and Fukuoka).  Here is a link to the paper, and here is the abstract:
Standard-setting organizations (SSOs) often require member firms to license their standard-essential patents (SEPs) on undefined “fair, reasonable, and nondiscriminatory” (FRAND) terms.  Courts and commentators in turn have proposed various principles for calculating FRAND royalties, among them that the royalty should not reflect “the value of the standard.”  As we show, however, this principle could be understood to mean any or all of three distinct concepts, namely that the royalty should not reflect the implementer’s sunk costs; that the patentee should not be able to extract any of the value resulting from network effects; or that the royalty should be proportionate to the patent’s contribution to the standard.   
This Article proposes, as an alternative benchmark, that a FRAND royalty should reflect the incremental contribution of the patent to the value of the standard.  This principle combines two related ideas:  first, that royalties should reflect the hypothetical bargain the parties would have struck ex ante (prior to standard adoption), in view of the incremental value of the technology over unpatented alternatives as revealed ex post; and second, that multiple patents reading on a standard should be valued in proportion to their marginal contribution (“ex post Shapley pricing”).  Our proposal would prevent patentees from extracting sunk costs or a disproportionate share of standard value, but (contrary to some approaches) it would enable them to draw some of the increased value resulting from network effects.  We show that our approach is more consistent with sound innovation policy, and suggest some practical applications.

Monday, August 31, 2015

Two Empirical Studies of Awards of Attorneys' Fees Post-Octane Fitness

Two student notes present some descriptive statistics on U.S. district court awards of attorneys' fees to the prevailing patent owner following the Supreme Court's decision last year in Octane Fitness.

1.  Hannah Jiam has posted a note on ssrn titled Fee-Shifting and Octane: An Empirical Approach Toward Understanding 'Exceptional' (forthcoming, Berkeley Technology Law Journal).  Here is a link to the paper, and here is the abstract:
This note examines the legal landscape for fee-shifting in exceptional cases following the Supreme Court's ruling in Octane Fitness, LLC v. ICON Health & Fitness, Inc. This note considers emerging trends post-Octane Fitness based on an empirical analysis of attorneys' fees granted under § 285 post-Octane Fitness and discusses district determinations of "exceptional."
The empirical portion of the paper (pp. 15-22) states that the author used "LexisNexis and Westlaw to consolidate all cases from April 29, 2014 to March 1, 2015 involving a 35 U.S.C. § 285 motion. The cases retrieved were checked against a list on the blog that consolidated several fee-shifting motions post-Octane" (p.16 n.84).   Citing research by Professor Colleen Chien, Ms. Jiam states that in 2011, approximately twenty awards were granted out of eighty-six cases, while in 2002, approximately ten awards were granted out of fifty cases.  By contrast, after Octane Fitness the proportion of fee awards granted under § 285 has more than doubled” to 26 out of 59 (although the actual fees awarded in the twelve cases that have reached that issue since Octane Fitness have tended to be modest, mostly ranging from $200,000 to $300,000).  The author also provides a breakdown of fee motion decisions by federal district court and by month, and a table of motions brought against NPEs.  Note, however, that "there is still not enough data to make any statistically significant determinations" (p.18).

For previous discussion on this blog of papers taking measure of the impact of Octane Fitness, see here.  I should note also that Ms. Jiam published a blog post about her paper on the Patently-O Blog in May. 

2.   In addition, Darin Jones has published a note titled A Shifting Landscape for Shifting Fees:  Attorney-Fee Awards in Patent Suits After Octane and Highmark, 90 Wash. L. Rev. 505 (2015).  Here is the abstract:
Section 285 of the Patent Act authorizes courts to award attorney fees to the prevailing party in patent litigation in “exceptional cases.” Until recently, interpretation of § 285 had been governed by a highly restrictive formulation set forth by the United States Court of Appeals for the Federal Circuit. In April 2014, the United States Supreme Court released a pair of decisions—Octane Fitness v. ICON Health & Fitness, and Highmark Inc. v. Allcare Health Management System, Inc.—that rejected the Federal Circuit’s interpretation of § 285 and reinvigorated the potential for fee shifting in patent suits. This Note argues that the Supreme Court’s decisions in Octane and Highmark broaden the potential for parties in patent litigation—particularly defendants—to seek and receive awards of attorney fees. This Note presents a survey and analysis of the district court opinions deciding attorney-fee motions under § 285 announced in the eight months following Octane and Highmark. The results of that survey indicate that defendants are now significantly more likely to receive attorney-fee awards than they were previously. This Note ultimately argues that defendants in patent suits should consider these new fee dynamics as a key element of their litigation strategy from the outset of patent defense cases. Doing so may enable them to take advantage of the newly expanded opportunity for fee shifting. To that end, this Note suggests that defendants should actively strive to inform district court judges about their broad authority to award fees. Additionally, this Note recommends that litigants avoid analogizing to prior successful cases when arguing for fees. Instead, this Note proposes that parties should follow the example set by the Supreme Court and focus on the plain meaning of the statute using common sense arguments.
The empirical portion of the paper (pp. 523-28) states that the author set out to collect every decision interpreting section 285 from April 29 through December 31, 2014 (55 cases).  Of these, 26 resulted in a fee award.  Defendants brought 42 of the motions (20 successfully) and plaintiffs 13 (6 successfully), for an overall success rate of 47%.  The author also lists the number of motions filed, by which party, and the success rate of each, by the leading districts in which such motions have been filed.  Like Ms. Jiam's paper (which presents her data in table 3, pp. 41-61), Mr. Jones's paper lists all of the relevant cases the author has found during the period of time studied (p.524 n.141) and provides some analysis of the early case law.

Friday, August 28, 2015

New Edition of Kühnen's "Patent Litigation Proceedings in Germany"

My law school library just recently received a copy of the new seventh edition of Thomas Kühnen's Patent Litigation Proceedings in Germany:  A Handbook for Practitioners (Frank Peterreins tr., Carl Heymanns Verlag 2015), the English-language edition of Dr. Kühnen's book Handbuch der Patentverletzung.  Dr. Kühnen is the chief judge of the Düsseldorf Oberlandesgericht and Dr. Peterreins is the managing partner at Fish & RIchardson's  Munich office.  I haven't looked very carefully at the new edition yet, but I've found the previous edition helpful in understanding various aspects of German patent law, particularly as it relates to remedies.  Should be a good resource to have on hand.

Update (August 31, 2015):  I should note that since a few months ago Dr. Peterreins is now a partner at the firm of Peterreins Schley in Munich.