Saturday, November 4, 2017

Blogging Hiatus

I'm going to take a blogging hiatus for the next few weeks, while I devote some time to some other matters.  I hope to resume the blog before too long.  Meanwhile, I've published 837 posts since May 2013, so for those of you who are new to the blog, there's plenty of back reading.

Friday, November 3, 2017

More New Papers on FRAND, SEPs

1.  Joseph A. Alfred has published a paper titled Licensing Standards Essential Patents in les Nouvelles, Sept. 2017, pp. 223-28.  Here is a link to the paper, and here is the abstract:
This article reviews the progress of cellular standards and compares that rise with the increase of standards essential patents because of the smartphone. Relevant case law is examined including the seminal Georgia-Pacific fifteen factors and how they were cited in 95 cases since 1995. Relevant articles are reviewed concerning the smartphone royalty stack, GATT and standards and in particular the case law surrounding device licensing represented by the key factors deciding the Microsoft v. Motorola case. A way forward is proposed that industry once again take the lead to determine reasonable royalty when licensing standards essential patents.  
2.  Roberto Grasso has published a paper titled Standard Essential Patents:  Royalty Determination in the Supply Chain, 8 J. Euro. Comp. L. & Prac. 283 (2017).  Here is a link to the paper, which lists among its "key points" the principles that royalties should be calculated based on the SSPPU and on incremental ex ante value; that for complex products, one must take into account the aggregate royalty demand; and that SEP owners "must negotiate with and provide a FRAND license to anyone who requests it, regardless of which level of the value chain it operates."

3.   David Kappos published a paper in the May 2017 issue of AIPPI-Japan (pp. 111-17) titled Patent Hold-Up and Royalty Stacking--From Theory to Data to Rethink.  From the conclusion:
Scientific inquiry begins with hypotheses--it does not conclude with them. . .  [W]e must accept that the latest and most robust empirical studies dispatch with the theories of patent holdup and royalty stacking, and point towards a future where patents and standard play an enduring, viral and harmonious, role.
The paper cites to papers by Galetovic, Haber, and others that I have from time to time criticized on this blog.

Wednesday, November 1, 2017

Some Recent Articles, Posts on Unwired Planet v. Huawei

Readers will recall that back in April Mr. Justice Birss concluded in Unwired Planet v. Huawei (paras. 148-61) that FRAND is a point, not a range--one reason being to avoid a situation where both parties make FRAND offers and the court then has to decide which (if either) to accept.  I'm not sure I find that reasoning compelling; it seems to me more sensible to think of FRAND as a range, even if one consequence of this view is that courts sometimes will need to (somehow) select a rate within that range to decide a specific case.  One of Greg Sidak's papers that I mentioned on this blog recently (see here, heading number 6) also argues that FRAND is better conceived as a range, not a rate.  Anyway, the papers and posts listed below also address this issue, among others.

1.  Jorge Contreras has published a paper titled Global Markets, Competition, and FRAND Royalties:  The Many Implications of Unwired Planet v. Huawei, in the August 2017 issue of The Antitrust Source.  Here is a link to the article, and here is the abstract:
The recent UK decision in Unwired Planet v. Huawei addresses, for the first time, several key issues arising from the international nature of SEP licensing transactions and the manner in which national court decisions can impact global business and litigation strategies. The court's analysis is deeply rooted in competition law principles, often at the expense of the contractual underpinnings of the FRAND commitment. Most importantly, the court's willingness to establish global license terms covering patents outside the UK has serious implications for international commercial litigation and licensing transactions.  
Professor Contreras critiques the single FRAND rate rule at pages 2-4.

2.  Maximilian Haendicke published an article titled Lehren aus der Huawei v. Unwired Planet-Entscheidung für das deutsche Patentrecht ("Teachings of the Huawei v. Unwired Planet Decision for German Patent Law") in the August-September 2017 issue of GRUR Int. (pp. 661-69).  Here is the abstract (my translation):
On April 5, 2017, the Patents Court (England and Wales) has in the person of Judge Birss has reached a decision on numerous questions that must be confronted in connection with standard essential patents.  From a German perspective, the decision deserves special consideration because it touches on themes which up to now have not been decided, either at all or not explicitly but rather only partially and in divergent ways, by the German courts.  These concern in particular the methods for determining the FRAND rate as well as the conditions under which a competition-law based compulsory license defense can be applied.  The present article illuminates the English decision with a focus on the suggestions that the German courts may take away from it, especially with regard to the design of FRAND licensing contracts and the determination of FRAND rates.  
Dr. Haendicke is not enthusiastic about the one-FRAND-rate concept either.
 
3. On the IAM Blog, Richard Lloyd recently published a post titled Microsoft v Motorola judge criticises recent UK Unwired Planet SEP licensing decision.  According to the post, Judge Robart stated at a recent IPO annual meeting that Mr. Justice "Birss was wrong to offer specific royalty rates for the technology in question, rather than offering a range, and stated that he did not expect the judgment to be particularly influential in US courthouses."

4.  Two recent papers in the Journal of European Competition Law & Practice provide an overview of the Huawei decision: Sophie Lawrence and Francion Brooks's Unwired Planet v. Huawei:  The First UK FRAND Determination, 8 Euro. J. Comp. L. & Prac. (forthcoming 2017), and Damien Neven & Pierre Régibeau's Unwired Planet vs Huawei: A Welcome Clarification of the Concept of FRAND and of the Role of Competition Law Towards SEP Licencing, 8 Euro. J. Comp. L. & Prac. 463 (2017), and Sophie Law.  In contrast to the above sources, neither appears to be critical of Mr. Justice Birss's one-single-FRAND-rate rule.   

Monday, October 30, 2017

Some Recent Papers on Injunctions, Stays in the U.S.

1.  Steven M. Amundsen has published a paper titled Federal Circuit Decisions Concerning Smartphones Have Created Uncertainty Regarding the Evidence Needed to Prove Irreparable Harm and Establish Entitlement to Injunctive Relief, 42 Rutgers Comp. & Tech. L.J. 232 (2016).  From the introduction:
In four decisions by the Court of Appeals for the Federal Circuit in two patent cases that Apple filed against Samsung, the court has appeared to flip-flop when describing the evidence needed to prove an essential element for injunctive relief: irreparable harm. A patentee must establish irreparable harm, among other things, to obtain a preliminary or permanent injunction. And to establish irreparable harm, a patentee must demonstrate a sufficiently strong connection-or causal nexus-between the patent infringement and the alleged irreparable harm.
In its Apple v. Samsung decisions, the Federal Circuit explained that "[s]ales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature."' So if "the accused product would sell almost as well without incorporating the patented feature," the infringement injures the patentee only insubstantially even if the accused product's sales cause substantial damage commercially.' Thus, the causal-nexus requirement (1) ensures that the infringement causes the irreparable harm "in the first place"' and (2) prevents the patentee from "leverag[ing] its patent for competitive gain beyond that which the inventive contribution and value of the patent warrant."
This article discusses the causal-nexus requirement's evolution at the Federal Circuit based on two cases initially filed in April 2011 and February 2012. This article also discusses how various trial courts have applied the causal-nexus requirement when considering the propriety of injunctive relief. It then discusses points to consider when seeking to show or refute a causal nexus.
The most recent Federal Circuit decision in this series is currently awaiting a cert. decision from the U.S. Supreme Court.  For discussion, see, e.g., this post and this post by Florian Mueller on FOSS Patents. 

2.  J. Gregory Sidak has published a paper titled Irreparable Harm from Patent Infringement, 2 Criterion J. on Innov. 1 (2017).  Here is a link to the paper, and here is the abstract:
The Patent Act empowers a court to issue an injunction “to prevent the violation of any right secured by patent.” Whether a court will permanently enjoin an infringer depends on whether (1) the patent holder would suffer irreparable harm otherwise, (2) its legal remedies are inadequate, (3) the balance of hardships favors the patent holder, and (4) the injunction would not disserve the public interest. Similar factors inform the grant of a preliminary injunction. The Federal Circuit often says that the harm from patent infringement is irreparable if it cannot be measured. I say that such harm is irreparable because it irreversibly destroys wealth.
Patent infringement irreversibly obliterates wealth when it impedes society’s technical progress. Patent infringement does more than transfer wealth involuntarily from the patent holder to the infringer; it also harms third parties by devastating the surplus that consumers would derive from using the product practicing the new technology. Damages are impotent to cure that harm to the public interest. A court’s order of damages can no more recreate the wealth that has been or will be destroyed by an act of patent infringement than it can restore an ancient redwood after the axeman has felled it.
3.   Jonathan Stroud has published a paper titled NFC Technology LLC v. HTC America, Inc.:  Judge Bryson's Sitting-by-Designation Guide to Securing Stays in Light of Inter Partes Review, 65 Am. U. L. Rev. 1075 (2016).  Here is a link to the paper, and here is the abstract:
Federal Article III judges may stay civil litigation. Stays are most appropriate where another court or authority may resolve a part of or the entire dispute. Some statutes guide the courts on when to stay; some case law and appellate precedent guide judges on when a stay is appropriate. But the interlocutory nature of such decisions makes precedential decisions scarce. The Patent Trial and Appeal Board (PTAB), an administrative body tasked with patent post-grant review, efficiently reviews patentability of and can estopp later validity arguments. Stays in light of these proceedings are particularly favored. Although it will be some time before a body of appellate precedent develops surrounding these stays, one senior appellate judge from the patent-focused U.S. Court of Appeals for the Federal Circuit, sitting by designation, has issued a district court decision in a contentious district, where he exhaustively compiled district court stay cases and offered a guide for other judges faced with determining whether to stay. This Essay analyzes that decision.
Here is a copy of the decision itself.   

Thursday, October 26, 2017

Two New Papers on SSPPU

Following up on a post from last month on the IEEE's Patent Policy, here are two more papers discussing whether it is preferable for the royalty base to be the sales revenue from the sale of the end product, or rather the smallest saleable patent practicing unit (SSPPU):

1.  Anne-Layne Farrar published The Practicalites and Pitfalls of the Smallest Saleable Patent Practicing Unit in the December 2016 issue of les NouvellesHere is a link to the paper, and here is the abstract:
Dr. Anne Layne-Farrar reviews a paper by Teece and Sherry who assess the economics of the SSPPU doctrine. She summarizes each argument made in support of the application of SSPPU and evaluates their logical underpinnings. She also discusses the practical difficulties that arise in applying the SSPPU doctrine and discusses the policy implications. Many limitations raised by Teece and Sherry caution against a broad, automatic application of the SSPPU doctrine and suggest and more careful use of the doctrine when it is applied. 
For another recent paper by Dr. Layne-Farrar on this topic, see here.

2.  Gerard Llobet and Jorge Padilla have published The Optimal Scope of the Royalty Base in Patent Licensing, 59 J. L. & Econ. 445 (2016).  Here is the abstract:
Legal scholars debate the merits of using the total value of the product, as opposed to the value of the component to which the technology contributes, as the base for a royalty in licensing contracts. In this paper we make use of the fact that these two royalty bases are equivalent to using ad valorem and per-unit royalties, respectively. We abstract from implementation and practicability considerations to analyze the welfare implications of the two rules. Ad valorem royalties tend to lead to lower prices, particularly in the context of successive monopolies. They benefit upstream innovators and do not necessarily hurt downstream producers. This benefit increases when there are multiple innovators contributing complementary technologies, as is typical of standard-setting organizations. Ad valorem royalties are even more desirable when enticing upstream investment is optimal. Our findings explain why most licensing contracts include royalties based on the value of the product.

Tuesday, October 24, 2017

Minnesota Law Review Symposium on Pharmaceutical Drug Development

Though not directly related to the topic of patent remedies, this upcoming event may be of interest to some of my readers, particularly as it relates to the law and economics of patent protection for drugs.  On Friday of this week, the Minnesota Law Review will be hosting a symposium titled "A Prescription for Pharmaceutical’s Future: Balancing Industry and Consumer Concerns in Pharmaceutical Drug Development" at the University of Minnesota Law School from 8:15 a.m. to 4:00 p.m. (webpage here).  They have quite an impressive list of speakers lined up, as described below, so if you happen to be near the Twin Cities area you might want to check this out.  I assume that at least some of the presentations will be appearing in a future volume of the Minnesota Law Review.  (Update (10/26/17):  Here is a link to a video about the conference, which states (among other things) that a video recording of the conference will be available on the Minnesota Law Review's website.)  Anyway, here is the agenda:

Key Note Address by Dr. Jonathan Jarow, Senior Medical Advisor to the Director of the Center for Drug Evaluation and Research, U.S. Food and Drug Administration
  • “FDA Regulation of Drugs and Biologics: Finding the Right Balance”
Introduction by Michelle M. Mello, Ph.D., J.D., Professor of Law, Stanford Law School, and Professor of Health Research and Policy, Stanford University School of Medicine
  • “Why Ensuring Access to Affordable Drugs Is the Hardest Problem in Health Policy”
Address by Joanne Chan, J.D., Assistant General Counsel, Pharmaceutical Research and Manufacturers of America

Panel 1: Investigating the Pricing Equation: A Law and Economics Analysis
Pricing pharmaceutical drugs is a complex endeavor bogged down by disparate market forces and motivations. On one side of the equation, pharmaceutical companies gauge competitor prices by consulting insurers, consulting providers to assess prices with treatment plans, assessing input costs (such as research, development, marketing, FDA approval and other compliance measures, etc.), and determining desired profits for shareholders and the company, to name a few factors. On the other side of the equation, consumers want prescriptions and insurance premiums to be affordable and effective. The pricing process remains largely hidden, because partly Medicare cannot negotiate prices directly with drug companies. This panel confronts which underlying issues need to be addressed in the pricing equation and which issues should change or remain the same. Moderated by Thomas F. Cotter, M.S., J.D., Briggs and Morgan Professor of Law, University of Minnesota Law School.

Featuring:
  • Arti K. Rai, J.D., Elvin R. Latty Professor of Law, Duke University Law School
    • “Regulatory Gaming and Antitrust: Drugs vs. Biologics”
  • Christopher Robertson, Ph.D., J.D., Professor of Law and Associate Dean for Research and Innovation, University of Arizona College of Law
    • “The Economics and Experience of Patient Cost Exposure”
  • Rachel E. Sachs, M.P.H., J.D., Associate Professor of Law, Washington University School of Law
    • “The Role of Reimbursement”
  • Stephen W. Schondelmeyer, PharmD, Ph.D., Professor and Head of the Department of Pharmaceutical Care and Health Systems, Director of the PRIME Institute, University of Minnesota

Panel 2: “Safe & Effective” or “Now & Cheap”?: Finding the Right Role for the FDA
The FDA, its mission, and its powers are partially the result of Congressional response to a series of national incidents sparked by bad drugs and public outcries. Such a history lends itself to a potentially incoherent or incomplete mission. In fact, critiques of the FDA have suggested that its mission is in one sense too broad because it must investigate drugs for effectiveness and not merely safety. Others have suggested that the FDA’s commitment to be only scientific in its approval process is too narrow and does not allow for the consideration of other relevant factors, such as immediate need of the product. State right to try laws, in which a terminally ill patient may try drugs before FDA approval, exemplify one way that lawmakers challenge the approval process. As with any administrative agency, there are also issues of “mission creep” and exceeding statutory bounds, often to consider factors in drug approval that are not statutorily permitted. This panel will explore potential changes to the statutory mission and authority of the FDA. What should be its fundamental mission? What factors should it be allowed to consider? Have we already struck the proper balance? Moderated by Ralph Hall, J.D., Professor of Practice, University of Minnesota Law School.
Featuring:
  • Amy Kapczynski, M.A., J.D., Professor of Law and Faculty Director of the Global Health Justice Partnership, Yale Law School
    • “Why Do We Have Pre-Market Review of Medicines? The“Precautionary” Fallacy and the FDA’s Role in Information Production”
  • Jordan Paradise, J.D., Professor of Law, Loyola Chicago School of Law
    • “Regulatory Silence at the FDA: Impact on Drug and Biologic Competition”
  • Nicholson Price II, J.D., Ph.D., Assistant Professor of Law, University of Michigan Law School
    • “Drug Approval in a Learning Health System”

Panel 3: Pharmaceuticals Around the Globe: Access and Delivery Issues for Consumers

A final vital aspect of pharmaceutical drug development concerns bringing these drugs to consumers. Due to the expense of drug research and development, pharmaceutical companies need to make careful decisions on what products to pursue. However, consumers, particularly those consumers in poor areas, can suffer from the unavailability of particular pharmaceuticals or underdeveloped pharmaceuticals. Moreover, the pharmaceutical drugs that even are available might not be delivered competently. How does the intellectual property regime influence this phenomenon? Is pharmaceutical research and development compatible with social justice, and how so? What kinds of reforms are needed, and what is feasible for businesses? This panel will tackle both the international community’s need to respond as well as the United States’ role in response efforts. Moderated by Fred Morrison, Ph.D., J.D., Popham, Haik, Schnobrich/Lindquist & Vennum Professor of Law, University of Minnesota Law School.

Featuring:
  • Margo A. Bagley, J.D., Asa Griggs Candler Professor of Law, Emory University School of Law
    • “Making Room at the (Drug Access) Table: Is There a Place for Traditional Medicine?”
  • James Love, Director, Knowledge Ecology International
    • “Delinking R&D Costs, including Incentives from Prices for Drugs and Vaccines”
  • Jerome H. Reichman, J.D., Bunyan S. Womble Professor of Law, Duke University Law School
    • “Compulsory Licensing of Patented Pharmaceuticals under Article 31bis of TRIPS: The Way Forward”

Monday, October 23, 2017

Some Recent Papers on Huawei v. ZTE

1.  Giuseppe Colangelo and Valerio Torti have posted on ssrn the following abstract of their paper Filling Huawei's Gaps:  The Recent German Case Law on Standard essential Patents, Eur. Comp. L. Rev. (forthcoming):
The Huawei ruling identified the steps that owners and users of SEPs will have to follow in negotiating a FRAND royalty. Compliance with the code of conduct will shield patent holders from the gaze of competition law and, at the same time, will protect implementers from the threat of an injunction.
The licensing framework provided by the CJEU is aimed at increasing legal certainty and predictability for the whole standardisation environment. Nevertheless, the judgment has been criticised because a relevant number of issues are left unresolved. In this scenario the activities of national courts in filling the gaps left by the CJEU deserve the utmost consideration. This paper will seek to explore the approach developed at national level post Huawei, focusing on the German judicial experience. 
2. Urska Petrovcic has posted on ssrn the following abstract of her paper Injunctions for Standard-Essential Patents in the European Union:
Injunctions for standard essential patents (SEPs) — that is, patents that are essential to practice an industry standard — have been at the center of the antitrust debate for more than a decade. In July 2015, the Court of Justice of the European Union (CJEU) issued its long awaited decision in Huawei Technologies. Co. v. ZTE Corp., in which it addressed, for the first time, the question of whether an SEP holder’s request for an injunction could violate Article 102 of the Treaty on the Functioning of the European Union (TFEU) — the provision of EU competition law that prohibits a dominant company from abusing its market position. In this article, I analyze the implications of the CJEU’s judgment for SEP holders that seek to enforce their SEPs in the European Union. Huawei confirmed that an SEP holder faces a stricter level of antitrust scrutiny in the European Union than in some other jurisdictions, such as the United States. In practical terms, however, the developments that followed Huawei showed that the judgment limited Article 102 TFEU’s scope in addressing an SEP holder’s behavior, when compared with the approach that the European Commission had adopted in its previous investigations. After Huawei, an SEP holder’s request for an injunction is less likely to trigger antitrust liability under Article 102 TFEU. In addition, Huawei raised the barrier that an SEP holder must overcome to obtain an injunction. Yet, the requirements established in Huawei are not so strict as to preclude obtaining that remedy. Unlike in the United States, where, as of August 2017, no SEP holder has obtained an injunction, several SEP holders have requested and obtained injunctions against infringers in the European Union. 
3.  Nicolo Zingales has posted on ssrn a paper titled The Legal Framework for SEP Disputes in EU Post-Huawei:  Whither Harmonization?Here is a link to the paper, and here is the abstract:
This article revisits the antitrust treatment of unilateral conduct in Standard Essential Patent (SEP) disputes in EU, with particular focus on the landmark CJEU judgment in Huawei v ZTE and the way it has affected subsequent developments before national courts. It illustrates that while the Court in Huawei significantly improved legal certainty both for SEP holders and their potential licensees, it also left open a number of crucial questions affecting everyday’s licensing practice. First, it is not entirely clear whether the liability of an SEP holder presupposes leveraging by a vertically integrated firm or can also arise in purely vertical or horizontal relationships. Secondly, the safe harbor procedure formulated in the judgment begs important questions concerning burden of proof and portfolio licensing, which have given rise to divergent interpretations. It follows that the space remains wide open for competing national and even regional approaches to the rights and obligations of SEP holders, calling for further European harmonization - be it judicially, legislatively, or administratively through the European Commission. In support for the latter measures, the article illustrates the limited remit of EU private international law rules in preventing the forum shopping which is likely to unfold as a result of a fragmented landscape for the resolution of SEP disputes.