Infringement Suit Research Articles

FRAND in India: The Delhi High Court's emerging jurisprudence on royalties for standard-essential patents

Indian jurisprudence on fair, reasonable, and nondiscriminatory (FRAND) licensing practices for standard-essential patents (SEPs) is at a relatively nascent stage. Unlike US and EU courts, which have dealt with cases concerning calculating a FRAND royalty for a considerable time, Indian courts and the Indian antitrust authority—the Competition Commission of India (CCI)—have only just begun to decide such cases. In its initial orders in the first two antitrust complaints concerning SEPs, the CCI seemed to favour using the smallest salable patent-practising component (SSPPC) as the royalty base to determine a FRAND royalty. However, in the short time since the CCI's orders, the Delhi High Court has rendered contrary decisions in two SEP infringement suits. The Delhi High Court's decisions use the value of the downstream product as a royalty base and rely on comparable licences to determine a FRAND royalty. The Delhi High Court's decisions are not only consistent with sound economic principles, but also indicate that the court is responding to the judicial and industry trends in the rest of the world. Because the CCI is still investigating the antitrust complaints with respect to the same SEPs, the CCI could benefit from considering the legal and economic arguments in the Delhi High Court's decisions. It would be counterproductive for the emerging FRAND jurisprudence in India if the judiciary and the competition authority take opposing views toward the rights of SEP holders and SEP implementers.

Testimony Before the House Committee on Energy and Commerce, Hearing on Patent Demand Letter Practices and Solutions

A small number of patent holders have been abusing the patent system. These patent holders blanket the country with thousands of letters demanding that the recipients purchase a license for a few thousand dollars or else face an infringement suit. The letters are usually sent to small businesses and nonprofits that do not have the resources to investigate allegations of patent infringement. And the letters often contain false or misleading statements designed to scare the recipient into purchasing a license without investigating the claims of infringement. In an attempt to address this problem, eighteen states have recently passed statutes that, generally speaking, outlaw bad faith assertions of patent infringement. Any federal legislation on this issue should recognize that state governments and the federal government each have unique strengths that they can contribute to solving the problem of abusive patent enforcement. The strengths of state governments include both the quantity of law enforcement resources that could be provided by dozens of states’ attorneys general offices and the accessibility of state governments to those most likely to be targeted by deceptive campaigns of patent enforcement: small businesses, nonprofits, and local governments. By contrast, federal legislation on patent demand letters would provide the obvious benefits of legal uniformity and greater predictability for patent holders about whether or not their enforcement actions are legal. In addition, federal legislation could clarify difficult jurisdictional issues that currently arise in cases challenging the lawfulness of patent enforcement conduct. Any legislation regulating patent enforcement, however, will be constrained by a line of Federal Circuit cases holding that patent holders are immune from liability for their enforcement conduct unless the patent holder made allegations of infringement that it knew to be objectively baseless. This broad immunity rule has already immunized two notorious trolls, Innovation IP Ventures and MPHJ Technology Investments, from legal challenges to their enforcement campaigns under state consumer protection laws. But it is possible that the Federal Circuit could revise its immunity doctrine to accommodate greater regulation of patent enforcement conduct. The Federal Circuit keeps close watch when Congress is considering amending patent law, and, in the past decade, the court has repeatedly revised its case law to align with proposed legislation.

Virtual presence as a basis of territorial jurisdiction in trade mark and copyright infringement suits in India

Virtual presence as a basis of territorial jurisdiction in trade mark and copyright infringement suits in India

ONS and Intellectual Property

ONS and Intellectual Property

Copyright Law and Science

Copyright Law and Science

Notes on Intellectual Property: Copyright Law

Notes on Intellectual Property: Copyright Law

Patent Trolls and Preemption

Patent law is usually thought to be the domain of the federal government, not state governments. Yet over half the states have recently passed statutes outlawing unfair or deceptive assertions of patent infringement. The statutes are aimed at fighting so-called patent trolls, particularly those who send letters to users of allegedly infringing technology — as opposed to the manufacturers of that technology — demanding that each user purchase a license for a few thousand dollars or else face an infringement suit. The Federal Circuit, however, has held that state law claims challenging acts of patent enforcement are preempted by the federal Patent Act unless the patent holder made infringement allegations with knowledge that the allegations were objectively baseless. No court has yet applied this rule to the new state statutes, but it will likely provide patent holders with nearly absolute immunity from liability under the new laws. Although the Federal Circuit has called this immunity a matter of “preemption,” a close examination of the court’s decisions reveals that the rule is not grounded in the Supremacy Clause but in the First Amendment right to petition the government. Unlike the Supremacy Clause, the First Amendment limits the power of the federal government, not just state governments, so patent holders will also be able to invoke this immunity to thwart impending federal initiatives to fight abusive patent enforcement, such as unfair competition proceedings brought by the Federal Trade Commission and proposals in Congress to outlaw false or misleading statements made in patent demand letters. This article argues that the broad immunity the Federal Circuit has conferred on patent holders is wrong as a matter of doctrine, misguided as a matter of policy, and inconsistent with a long history of courts enjoining unfair and deceptive acts of patent enforcement. Accordingly, the article suggests a reimagined immunity standard that would not shield extortionate schemes of patent enforcement but would still respect a patent holder’s right to make legitimate allegations of infringement.

Pharmaceutical Patent Enforcement: A Developmental Perspective

Although standards for the grant of intellectual property rights often take center stage in the literature on intellectual property and development, intellectual property enforcement is largely ignored. This paper seeks to fill this gap, albeit to a limited extent, by focusing on the standards for the grant of injunctions in patent infringement suits.This is particularly relevant, as a number of developing countries, such as India, are faced with burgeoning patent disputes disputes that have enormous implications for the future of innovation and the issue of access to patented goods, notably pharmaceuticals. Given that interim injunctions are largely dispositive of intellectual property disputes in many cases, this chapter focuses largely on such injunctions.The standards for the grant of injunctions ought to be calibrated in a manner that appropriately balances the interests of the patentee in securing timely and effective enforcement of her rights with the public interest in guarding against erroneous injunctions (i.e. where the patent turns out to be invalid or not infringed after trial). Such wrongly granted injunctions harm not only competitors against whom they are granted, but also consumers who are forced to pay a monopoly price during the subsistence of the injunction/restraining order.We recommend that, when faced with a complex patent dispute where it is difficult to legitimately assess the strength of each party’s case at the interim stage and effectively predict who is more likely to win at trial, courts move directly to the trial stage - a suggestion that is coming to be increasingly adopted by the Indian Supreme Court. We argue that this is a TRIPS flexibility that developing countries, such as India, can legitimately exploit. We also highlight issues of institutional capacity and ask: Should developing countries such as India institute specialist intellectual property courts to decide patent infringement suits? Would this make for more optimal intellectual property adjudication? Though specific to India, most of the suggestions in this chapter could prove useful for a number of other developing countries, particularly those that follow common law and are yet to experience a significant number of patent infringement cases.

The Recent Trademarking of Pi: A Troubling Precedent

Background Intellectual property law is complex and varies from jurisdiction to jurisdiction, but, roughly speaking, creative works can be copyrighted, while inventions and processes can be patented and brand names thence protected. In each case the intention is to protect the value of the owner’s work or possession. For the most part mathematics is excluded by the Berne Convention [1] of the World Intellectual Property Organization (WIPO) [12]. An unusual exception was the successful patenting of Gray codes in 1953 [3]. More usual was the carefully timed Pi Day 2012 dismissal [6] by a US judge of a copyright infringement suit regarding π , since “Pi is a noncopyrightable fact.” We mathematicians have largely ignored patents and, to the degree we care at all, have been more concerned about copyright as described in the work of the International Mathematical Union’s Committee on Electronic Information and Communication (CEIC) [2]. But as the following story indicates, it may now be time for mathematicians to start paying attention to patenting.

Burden of proof to establish infringement remains with the patentee even in declaratory judgment action brought by licensee

The US Supreme Court unanimously reversed a previous determination by the US Court of Appeals for the Federal Circuit, holding that, even in a declaratory judgment action brought by a licensee, the burden of proving patent infringement remains with the patent holder. Legal context In 2007, the US Supreme Court overruled precedent from the US Court of Appeals for the Federal Circuit which had formerly prevented patent licensees in good standing from bringing a declaratory judgment action for lack of a justiciable case or controversy. In MedImmune, Inc v Genentech, Inc, 549 US 118 (2007), the Supreme Court found that a licensee had standing to bring a declaratory judgment action, despite the fact that it continued to make royalty payments for its licensed products, reasoning that a licensee should not be forced to breach its licensing agreement and risk actual and treble damages in an infringement suit in order to challenge the extent of coverage of the licence. In Medtronic, Inc v Mirowski Family Ventures, LLC, 134 S Ct 843 (2014), the court resolved the ensuing question of which party bears the burden of proving infringement in a declaratory judgment action brought by a licensee in good standing, when the licensor is precluded from making an infringement counterclaim by the continued existence of that licence.

An Overview of Famotidine Polymorphs: Solid-State Characteristics, Thermodynamics, Polymorphic Transformation and Quality Control

Crystal polymorphism of pharmaceuticals has well-known profound effects on the physical, chemical, and pharmaceutical properties of drugs, which can result in changes in the solubility, stability, dissolution, bioavailability, and efficacy of drugs. In this review article, famotidine (FAM), which has a well-known trade name of Pepcid®, was selected as a model drug. Although FAM has three polymorphs (forms A, B and C), forms A and B have been commonly discussed. The active pharmaceutical ingredient (API) in the commercial version of FAM is the metastable form B. FAM has been a concern of FDA because of the physical properties, solubilities, bioavailabilities, or bioequivalencies of the different polymorphic forms. In addition, a patent infringement suit of FAM polymorph had been made sound legal arguments in the pharmaceutical market. We review the solid-state characteristics, thermodynamics, polymorphic transformation, and quality control of FAM in drug products. In particular, pharmaceutical processes, such as grinding, compression, and heating temperature have a significant effect on the polymorphic transformation of FAM. Moreover, environmental humidity and residual water content should be well controlled to prevent polymorphic transformation of FAM during pharmaceutical processing. Several thermal and spectroscopic analytical techniques used for qualitative and quantitative determinations of polymorphic transformation of FAM after different treatments or quality control of FAM in the commercial tablets before and after the expiration dates have been discussed.

William W. Cooper: Innovator, Fighter, and Scholar

W illiam Wager Cooper was born on July 23, 1914 in Birmingham, Alabama, where his father was a bookkeeper and later a distributor for Anheuser-Busch. Bill’s family moved to Chicago when he was three years old. His father owned a chain of gasoline stations, but lost them during the Great Depression. With his father in ill health and no family revenue, Bill left high school after his sophomore year to work at whatever jobs he could find. These included spotting pins in bowling alleys, caddying at golf courses, and even professional boxing, where his record was 58 wins, 3 losses, and 2 draws. While hitchhiking to the golf course one day, Bill met Eric L. Kohler, a principal with Arthur Andersen & Co., who became his life-long mentor. Kohler loaned him money to enroll as a non-degree student at The University of Chicago. Bill liked the academic atmosphere and took the college entrance examinations, intending to become a physical chemist. During his studies, Kohler asked him to review the mathematics used in a patent infringement suit. After Cooper found errors in the mathematics used by the plaintiff’s engineers, Andersen hired him part time during the school year and full time in the summer. This awakened Cooper’s interest in accounting, and he switched his major to economics. While at Chicago, Bill became good friends with a political science student, Herbert A. Simon. Cooper graduated Phi Beta Kappa with his A.B. in 1938.

The Supreme Court in Virgin v Zodiac: whither the fat lady?

Gary Moss is a Solicitor and the Head of EIP Legal, London. In its decision in Virgin Atlantic Airways Limited v Zodiac Seats (UK) Limited the Supreme Court overturned 100 years of jurisprudence and held that an unsuccessful defendant in a patent action could nevertheless raise a subsequent finding of invalidity of the patent in suit as a defence in the inquiry as to damages arising from the first decision. This article examines the possible consequences of this decision and how it might affect the conduct of patent actions going forward, in particular whether the courts will continue to hear patent infringement suits while an opposition is pending in the European Patent Office. The author argues that while the decision has been welcomed in some quarters, potentially the decision raises just as many problems as it solves.

"Patent Litigation as Real Option Exercise in a Highly Competitive, Dynamic Market"

What explains the alarming uptick in the number of patent infringement suits filed by corporate actors? While there may be numerous determinants of patent litigation activity, we propose one possible explanation using two theoretical lenses: real options and competitive dynamics. According to these theoretical frameworks, incumbent firms acquire patents as real options for their potential strategic value under uncertainty, which is the market competitive dynamics. The timing of the option strike depends on the resolution of uncertainty, defined as a competitor's increase in market share. As a reaction to this competitive action, incumbent firms may choose to exercise their options by filing patent infringement suits against their competitors. This phenomenon is observed especially in industry settings with strong appropriability and weak complementary asset value, where firms are more prone to engage in a competitive, rather than cooperative behavior. We empirically test the hypotheses with data from the smartphone industry using panel and rare events logistic regression analysis.

Rethinking Standing in Intellectual Property Challenges

Patents have become a serious business risk. They issue from the Patent and Trademark Office in record-breaking quantity and are aggressively enforced by patent trolls. But many patents are likely to be invalid; and even those which are valid are likely to be narrower than their owners claim. Firms investing in innovation would find it desirable to clear their respective fields of invalid or overbroad patents prior to making their investments, and there is great social value in reducing the number of such patents. But the path to determining the validity or scope of issued patents runs through the courts, and in recent years the Federal Circuit has developed special standing rules for patent challengers that allow access to the courts only when it appears that an infringement suit is temporally or legally proximate. In this Article, I criticize this “proximity” criterion on conceptual, doctrinal, and normative grounds and provide a comprehensive account of standing to challenge the scope and validity of patents. Conceptually, I argue that because patents are a form of regulation, their effects sweep more broadly than the Federal Circuit currently appreciates. When the risk of infringement liability deters business and investment activities, the affected parties can bring a “quiet title” action to obtain certainty about the validity or scope of adverse patents. I then argue as a doctrinal matter that there is no reason to treat patent challenges differently from other cases. Applying traditional principles of constitutional and prudential standing broadens the range of potential plaintiffs. Finally, I justify this result on normative grounds because the Federal Circuit’s restrictive approach creates a misalignment between those who have incentives to challenge patents and those who have access to the courts. Allowing challenges by a broader range of plaintiffs will result in more socially valuable validity litigation.

Person Interested Under Indian Patent Law

According to Section 2(t) of the Indian Patent Act, person interested includes a person engaged in, or in promoting, research in the same field as that to which the invention relates. The definition of person interested is inclusive and thus it was observed in Lord Watson in Dilworth v. Commissioner of Stamps that the word include is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. According to the judgment, the word include is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to mean and include, and in that case it may afford an exhaustive explanation of the meaning which, must invariably be attached to these words or expressions.Person interested has to play wider role under Indian Patent law during post grant opposition and revocation of a patent application where it says that at any time after the grant of patent but before the expiry of a period of one year from the date of publication of grant of a patent, any person interested may give notice of opposition to the Controller in the prescribed manner on prescribed grounds. Similarly a patent granted may, be revoked on a petition of any person interested by the Appellate Board or on a counter-claim in a suit for infringement of the patent by the High Court on any of the prescribed grounds under Section 64(1).

Patent Wars: How the Government Can Best Address Anticompetitive Patent Accumulation by Updating the Horizontal Merger Guidelines

On February 13, 2012, the European Commission approved Google’s acquisition of Motorola Mobility. On the same date, the Department of Justice (DOJ) announced it was closing investigations of Google’s acquisition of Motorola and acquisitions made by Microsoft, Apple and Research in Motion. Many in the press have reported that Google’s acquisition of Motorola is a defensive measure against a wave of attacks against Google’s Android operating system. Google itself has publicly stated that Android was under a systematic legal attack by Microsoft, Apple and other companies and that recent patent acquisitions by these companies posed a continuing threat. Not surprisingly, Google paid a 73% premium for Motorola, even though the average premium for acquisitions in the wireless equipment industry has been 32% in the past five years. Patents are becoming an ever increasing part of the battle for the smartphone and tablet market. A smartphone produced today might involve as many as 250,000 patent claims. Many of these patents can be overlapping and overbroad. Patent infringement suits drive up legal costs for competitors and result in new licensing fees that increase per unit costs. License holders charge different licensing fees to some competitors versus others in order to get a competitive advantage. Patent pools, where competitors pool together patents, can lead to collusive and other anticompetitive behavior. The types of activities that antitrust law is meant to protect against are already happening in today’s patent war. The decision of the DOJ to close its investigations of patent acquisitions postpones the greater issue of how patent law and antitrust law will interact in the future. By not addressing this conflict, the DOJ is allowing patent law to carve out large exceptions to antitrust law that will hurt competition. This note seeks to make the case that the DOJ and FTC should become proactive by addressing patent acquisitions in the Horizontal Merger Guidelines.

The Noerr-Pennington Problem: How Cartels Enforced Through Patent Litigation Can Escape Antitrust Claims

An antitrust exam starts with the following problem: president of A calls the president of B and says, 'Unless you agree to keep prices at $10 a widget we will raise your costs to the point you will no longer be able to stay in business.' If you were a student sitting for the exam you would think this is the easiest question in the world. A is attempting to create a cartel engaging in a conspiracy to restrain trade with an enforcement mechanism. The question goes on: Company B refuses to participate in the price fixing scheme and A makes good on its promise to raise costs. B cannot compete due to its raised costs and subsequently goes out of business. Does B have an antitrust claim against A? Again this sounds simple, B has sustained an injury that antitrust law is meant to protect against. B should have a claim. However, what if the professor adds in one fact: Company A increases the costs of B through patent infringement suits. The Noerr-Pennington Doctrine prevents legal costs from being the basis of an antitrust injury except in certain narrow cases. Without an injury B will even have the standing to make a claim.Unfortunately, this is just a hypo on an antitrust law exam. The above scenario has already happened. In 2007 Steve Jobs, the CEO of Apple, called Ed Colligan, the CEO of Palm, and threatened Palm with patent litigation unless Colligan agreed to make unsolicited calls to Apple employees in order to make job offers. This agreement was an obvious agreement to suppress employee wages. Colligan refused to enter into the agreement in an email to Jobs, citing the fact that the agreement was not only wrong, but likely illegal. In response, Jobs told Colligan I'm sure you realize the asymmetry in the financial resources of our respective companies and to take a look at our patent portfolio before you make a final decision here. This no-poaching agreement was stopped by the FTC and is now the subject of a private antitrust suit by former software engineers who worked at various tech firms that had made this agreement. The question this paper seeks to ask, however, is what legal protections would Palm have had in this situation if Apple (and perhaps other tech companies) made good on its threats. The paper will first examine the current state of the law. Then the paper will analyze how the law applies to the above scenario. Finally the paper will offer potential solutions to Palm's lack of legal protections from Apple.

Anticompetitive Patent Settlements and the Supreme Court's Actavis Decision

In FTC v. Actavis the Supreme Court held that settlement of a patent infringement suit in which the patentee of a branded pharmaceutical drug pays a generic infringer to stay out of the market may be illegal under the antitrust laws. Justice Breyer's majority opinion was surprisingly broad, in two critical senses. First, he spoke with a generality that reached far the pharmaceutical generic drug disputes that have provoked numerous pay-for-delay settlements. Second was the aggressive approach that the Court chose. The obvious alternatives were the rule that prevailed in most Circuits, that any settlement is immune from antitrust attack if it is facially within the of the patent. Under this approach the court may not second guess the settlement by inquiring into the validity of the patent; the settlement itself shields this query from the court. A second alternative concludes that a very large settlement payment is a sign that something is wrong with the patent, inviting the court to look more closely at the underlying patent to determine whether the settlement is really a good faith attempt to manage litigation and business risk. A third approach is that a large settlement exclusion payment disproportionate to litigation risk can be unlawful under antitrust's rule of reason, without inquiry into whether the patent is actually invalid, and even if the settlement agreement does not go beyond the scope of the patent's nominal coverage. Finally, the court might apply a quick look, or truncated, antitrust analysis in which the plaintiff can enjoy presumptions about market power or anticompetitive effect. The Supreme Court chose the third, or rule of reason, option, but it made clear that the plaintiff need not make a long form rule of reason showing and suggested important shortcuts.Also significant is that both sides, without dissent agreed that consumer welfare should be the goal of antitrust law.Payments whose size correlates with risk are essential to entrepreneurial decision making, but entrepreneurial risk is usually private in the sense that the firm risks the resources of its own shareholders. In the pharmaceutical pay-for-delay setting, however, what is being placed at risk is both the investment of the pioneer and the welfare of consumers, interests that pull in opposite directions. Consumers represent an important externality. They are not participants in this dispute, but they stand to lose the benefits of competition that would otherwise have occurred. Traditional settlements reflect the risk of patent invalidity in their terms. For example, as a patent is perceived by the parties to be weaker, settlement royalties rates will be lower. The Hatch Waxman Act uniquely creates an incentive for the parties to take all risk out of the patent because for the life of the settlement no third party may challenge it. Even a very weak patent can obtain both exclusion against third parties and profits equal to the full cartel value of the patented product.While the Court did not discuss private consumer challenges, its substantial revision of the law applies equally to private actions and it is reasonable to expect that several will emerge. Purchasers seeking antitrust overcharge damages from an anticompetitive pay-for-delay settlement should be able to proceed without proving patent invalidity, although they would be subject to the same rule-of-reason constraints that the Court created for the FTC.Finally, the breadth of the Activis opinion makes it relevant for many situations outside of the Hatch-Waxman context. For example, the Court's dicta severely limited its 1926 GE decision permitting price fixing among a patent and its licensees, and implicitly overruled decisions such as Bement, which permitted product price fixing among the members of a patent pool. A central question was whether the Patent Act, either explicitly or by reasonable implication, authorized the challenged conduct. If the answer is no, ordinary antitrust analysis can proceed.

The business model of patent assertion entities in IT: unilateral restraints of competition or business as usual?

This article aims to determine whether the business models of patent assertion entities (PAE) can qualify as restraints of competition under European competition law, and under which circumstance. To do so, the article highlights the main characteristics of the PAE business model and articulates a theory of harm compatible with the competition law of the European Union (EU). The article will consider the framework of the Treaty on the Functioning of the European Union, 2008 O.J. C-115/47 (TFEU), particularly Article 102 TFEU as regards unilateral restraints of competition. The framework of Article 101 TFEU on concerted practices remains relevant, but will not be the main focus of this article. In sum, a general theory of harm can be articulated as regards PAE activities. Assertions by PAEs take advantage of the hold-up value of a technology, ie PAEs extract revenues based on the prospect of an infringement suit. By doing so, PAEs hinder dynamic competition by reducing incentives to innovate. They also inhibit static competition by increasing prices and potentially removing products from the market. As such, European competition law is applicable within the framework described in this article.