Parallel Litigation Research Articles

Royalty rate determination in standard essential patent litigation in China - from regional rate to global rate

Standard essential patent (SEP)-related disputes frequently involve parallel litigation cases in various jurisdictions in the world. With the rapid advancement of the telecommunication industry, Chinese companies are more and more embroiled in such global dispute, particularly with the issue of fair, reasonable, and non-discriminatory (FRAND) rate determination by the courts. Chinese courts are actively asserting jurisdiction over global FRAND disputes. It is important to note that within the framework of Chinese court practice, the court should further improve its trial procedures to ensure that parties have reasonable expectations regarding rate determination result on the merits and the procedural due process. This article reviews the judicial practice in China regarding the cases of FRAND rate dispute, summarizing the characteristics and recent development in the court practice. The article outlines how Chinese courts apply comparable license and top-down approach to calculate the FRAND rate. Notably, Chinese courts have taken a more flexible and pragmatic approach when addressing this issue, tailoring their decisions based on the circumstances in individual case. Additionally, it discusses the possibility of Article 24 in the Judicial Interpretation II as the legal basis for determining the global FRAND rate, as well as how the requirement for good-faith negotiation is interpreted by the court and whether the regional discount is reasonable in the context of the global FRAND rate. Consequently, the article argues that the courts should consider harmonizing its practice with prevailing norms in international jurisdictions. Several recommendations for optimizing the trial procedure also proposed, thereby ensuring scientific rigor and transparency of the rate calculation.

The anti-suit injunctions in patent litigation in China: what role for judicial self-restraint?

Abstract Starting from 2020, the Chinese courts have actively participated in the jurisdictional battles for the standard essential patent (SEP) disputes, a pivotal development marked by the Supreme People’s Court’s inaugural SEP-related anti-suit injunction (ASI) in Huawei v Conversant. Subsequently, lower courts in China have emulated this approach by issuing ASIs targeting SEPs in the domain of information and communication technology. The present study highlights the features of the Chinese ‘act preservation measures’ by comparing them with the typical ASIs originally developed in the common law jurisdictions. This comparison reveals significant divergence in the factors considered by Chinese courts issuing ASIs, particularly in the context of cross-border patent litigation. The study aims at elucidating potential defenses that the respondents in SEP litigation may employ to contest the issuance of ASIs in Chinese judicial proceedings, with particular attention accorded to the principles of comity and public interest. The article concludes that the invocation of international comity and public interest in SEP litigation will encounter a formalistic assessment by the Chinese judiciary due to potential conflicts with statutory provisions and the lack of a more context-specific analysis. As a result, in the absence of supra-national mechanisms that would address the problem of parallel litigation, there appears to be little room for judicial self-restraint.

China's Practice and Response Strategies for ASI of Standard-essential Patent Disputes

The Anti-suit injunction (ASI) system originated from the common law system. Its function has developed from the initial solution of domestic parallel litigation to the present widely used in coordinating the handling of international parallel litigation jurisdictional conflicts. In recent years, international parallel litigation is frequent in the Standard-essential Patents (SEPs), and the ASI has become an important institutional tool for resolving jurisdictional disputes over SPEs. In particular, the Chinese judiciary has started the practice of "ASI" in SEP disputes by way of behavior preservation, which has aroused widespread concern of the international community. AS Chinese law has not established an ASI system, the current judicial practice mainly refers to the trial experience in the United Kingdom and the United States, and relies on China's behavioral preservation system to make decisions. However, there are many shortcomings in this ruling itself, for example, Chinese judicial organs have paid attention to the lack of sufficient basis for the time sequence of parallel litigations, their arguments in respect of the public interest and international comity are not sufficient, and the ASI is excessively broad in terms of remedies and territorial coverage. Therefore, it is not only necessary but also urgent to establish a perfect legal system of ASI for China's legislation and judicial practice.

B Swiss Case Law: 4A_530/2020, Arrêt du 15 juin 2021 [LCIA arbitration in Switzerland – High Court judgment in parallel litigation incorporated in the arbitral award – No violation of right to be heard or public policy (Res judicata) – No postponement of hearing (virtual) in Covid-19 pandemic

B Swiss Case Law: 4A_530/2020, Arrêt du 15 juin 2021 [LCIA arbitration in Switzerland – High Court judgment in parallel litigation incorporated in the arbitral award – No violation of right to be heard or public policy (Res judicata) – No postponement of hearing (virtual) in Covid-19 pandemic

Inter Partes Review and the Design of Post-Grant Patent Reviews

Inter partes review (IPR) is one of a number of mechanisms for eliminating improper patents through “post-grant review.” Challenging an issued patent is expensive and paid for by the challenger, but all who practice the patent benefit from its invalidation, creating a free-rider problem. While post-grant review has widely been heralded as a cheaper, more expert alternative to litigation for screening out bad patents, little attention has been paid to the particular design of post-grant review systems. These design choices matter tremendously, as arguably small changes to the pre-existing inter partes reexam system, leading to the inter partes review system, have had a big impact, the expanded uptake of reviews. As the US weighs making additional changes to the IPR system created by the America Invents Act just a few years ago, it is worthwhile to consider the experiences of other countries whose systems are older. One particularly important feature of IPR relates to the interplay between invalidity and infringement. District courts more often than not stay their cases when parallel IPRs are filed, meaning that the USPTO decides novelty and obviousness based on a subset of prior art, leaving infringement and remaining invalidity issues to the district courts to decide. This creates a bifurcated system that resembles the system that Germany has had in place for decades, in which validity and infringement are decided by different venues. Much can be learned by considering the two countries’ systems, and the similarities and differences in their designs and their outcomes. In the first several years that IPRs have been available, an estimated 84 % of decided IPRs resulted in partial or total invalidation of the patent, raising great concern. But this number must be understood in context. The patents that get reviewed in IPR are those that are highly selected, both by the Patent Office as reasonably likely containing an invalid claim, and by the public as justifying the considerable expense of a challenge. Many claims drop out along the way, because they do not meet these thresholds. Thus, only about 25% of challenged claims (as opposed to reviewed) claims end up being canceled. Accordingly, IPR decisions are likely to be issued in that tiny fraction of issued patents where the case for invalidity is particularly strong. In most cases, the invalidated patents represent Patent Office mistakes; patents that should never have been issued in the first place, they also may be the product of a change in law. Post grant proceedings are a well-recognized way to correct Patent Office error – for example, in Europe, opposition proceedings at the European Patent Office (EPO), which are used to review 5-8 %% of issued patents, have resulted in the partial or total invalidation of patents close to 70 % of the time, and in German revocation proceedings, which in many ways resemble IPRs, 73 % of patents are partially or fully revoked. Within EPO opposition and German revocation proceedings, chemistry patents have been the most likely to have been revoked or amended (71 % in EPO, and 84 % in German revocation); in US IPRs, medical device (93 %, N=29) and biopharma and chemistry patents (87 %, N=23) have fared the worst, but based on relatively small sample sizes.Another key metric is the share of instituted reviews that are actually decided, rather than settled. In the US, a high stay rate of parallel litigation, as facilitated by clear and predictable timeframes and outcomes, contribute to a high decision rate on validity and the efficient staging of disputes. This provides a benefit to the public, the clarified status of the claims. In Germany, in contrast, infringement proceedings do not wait for the validity decision. This leads to validity challenges often settling, for example when the infringement decision is handed down. As a consequence, the status of the patent claim is left unclarified. We examine these and other key aspects of post-grant review as well as various factors, including claim construction standards, litigation stays, and the timing of reviews, to consider some general lessons for the design of post-grant inter partes patent reviews.

Parallel Litigation in Cross-Border Disputes Practice: Comparative Analysis of Foreign Legislation

Parallel Litigation in Cross-Border Disputes Practice: Comparative Analysis of Foreign Legislation

A Case Study on Chevron V. The Republic Ecuador Arbitration Proceedings: Their Impact on Ecuador's National Investment Arbitration Policy

The chapter that follows is a case study regarding the impact of the Chevron v. the Republic Ecuador case in Ecuador’s investment and international arbitration policy. The case involves numerous layers of parallel legal proceedings in various jurisdictions on a national and international level. However, it is the authors’ objective to discuss only certain aspects of the case which are relevant to the impact of the Chevron v. the Republic of Ecuador case in Ecuador’s investment and international arbitration policy. Therefore, the focus of the chapter will be restricted to the international investment arbitration proceedings taking place at the PCA in the Chevron v. the Republic of Ecuador case.Section 1 of this chapter, is a brief introduction to the Chevron v. the Republic of Ecuador case, which highlights the most recent legal development of the arbitration case. Section 1 also, outlines the content of this chapter. In Section 2, the authors present the case’s historical and factual background. The information that the authors provide in this section will simplify the facts behind the dispute. The section starts with a description of the operation of Texaco in Ecuador together with an overview of the historic developments concerning the contractual relationship between Texaco and the Government of Ecuador with regard to the exploration and the exploitation of the Oriente region. In the same section, the parallel litigation in the US (the Aguinda Action) and Ecuador (the Lago Agrio action) is highlighted as part of the dispute. In Section 3 the authors focus on the PCA international investment arbitration proceedings. The section starts with the explanation of the US-Ecuador BIT (1993) regime and with an introduction of the initial arbitration proceedings between Chevron and the Republic of Ecuador at the PCA. In particular, attention is given to the legal arguments of both Chevron and the Republic of Ecuador in the PCA. The facts of the case as well as the claims of the parties are presented in the light of the PCA’s interim decisions and partial awards. In Section 4, the authors examine the implications of the international investment arbitration proceeding of the case Chevron v. the Republic of Ecuador on the investment and international arbitration policy of Republic of Ecuador. The impact of the case is discussed on the basis of three qualitative characteristics that the policies showcase.

GLI Accordi Sulla Giurisdizione Nella Nuova Disciplina Degli Artt. 25 E 31 Nel Reg. 1215/2012

With resolution of 20 November and decision of 6 December 2012, the Parliament and Council of the European Union have adopted Regulation 1215/2012, which replaces and revises Regulation 44/2001 on the jurisdiction and recognition and enforcement of decision in civil and commercial matters. Thus, the ‘system of Brussels’, the foundation of the jurisdictional structure in Europe, opens a new chapter in the history of European integration, characterised by the circulation of decisions without the need of a preliminary decision on enforceability (exequatur). Although this is the major novelty introduced, Regulation 1215/2012 also reforms other crucial aspects of European procedure in trying to resolve certain difficulties that appeared under the previous regime, primarily the dilatory use of certain procedural rules. The present article focuses on the changes in the area of forum selection clauses, which the European lawmakers have adopted both with regard to the merits and with regard to procedure. With regard to the latter, the Regulation adopts a special mechanism to deal with lis pendens, which gives preference to the jurisdiction of the chosen forum independently of the time at which the complaint is filed. In this new arrangement, the lawmakers have left unaddressed the question of the level of depth with which the court seized can review the validity or the inexistence of the forum selection clause, a question that is addressed in the present article, both in cases with and in cases without parallel litigation.

Damages for the Breach of an Arbitration Agreement: Is It a Viable Remedy?

Arbitration and jurisdiction agreements give effect to procedural party autonomy and, thus, are fundamental tools for commercial parties to plan an effective dispute resolution policy. The factual assumption that would give rise to the possibility of claiming damages will be where, despite the existence of a valid and enforceable arbitration agreement, a party seizes a court either because it genuinely believes that the arbitration agreement is null and void or that it does not cover the dispute submitted, or for tactical reasons (delaying the arbitration or obtaining a more favourable decision).Undoubtedly, the forum where parties litigate their dispute will influence the outcome of the case. Thus, to be forced to litigate in a non-contractual forum when the parties have expressly agreed to resolve their disputes trough arbitration - with the arbitration rules, conflict-of-law rules, etc. - certainly makes a big difference.The focus of this work is to explore the options available for the innocent party when the breaching party initiates litigation in violation of the arbitration agreement. In that scenario, the main contribution will be to demonstrate that the innocent party should be able to file a claim for monetary relief before the arbitral tribunal, either in the form of an award of damages or in the form of an indemnity against any judgment that might be rendered in the parallel litigation. Additionally, that the claim for damages falls within the arbitral tribunal’s jurisdiction because it is covered by the arbitration agreement.

Inter Partes Review and the Design of Post-Grant Patent Reviews

Inter partes review (IPR) is one of a number of mechanisms for eliminating improper patents through “post-grant review.” Challenging an issued patent is expensive and paid for by the challenger, but all who practice the patent benefit from its invalidation, creating a free-rider problem. While post-grant review has widely been heralded as a cheaper, more expert alternative to litigation for screening out bad patents, little attention has been paid to the particular design of post-grant review systems. These design choices matter tremendously, as arguably small changes to the pre-existing inter partes reexam system, leading to the inter partes review system, have had a big impact, the expanded uptake of reviews. As the US weighs making additional changes to the IPR system created by the America Invents Act just a few years ago, it is worthwhile to consider the experiences of other countries whose systems are older. One particularly important feature of IPR relates to the interplay between invalidity and infringement. District courts more often than not stay their cases when parallel IPRs are filed, meaning that the USPTO decides novelty and obviousness based on a subset of prior art, leaving infringement and remaining invalidity issues to the district courts to decide. This creates a bifurcated system that resembles the system that Germany has had in place for decades, in which validity and infringement are decided by different venues. Much can be learned by considering the two countries’ systems, and the similarities and differences in their designs and their outcomes. In the first several years that IPRs have been available, an estimated 84 % of decided IPRs resulted in partial or total invalidation of the patent, raising great concern. But this number must be understood in context. The patents that get reviewed in IPR are those that are highly selected, both by the Patent Office as reasonably likely containing an invalid claim, and by the public as justifying the considerable expense of a challenge. Many claims drop out along the way, because they do not meet these thresholds. Thus, only about 25% of challenged claims (as opposed to reviewed) claims end up being canceled. Accordingly, IPR decisions are likely to be issued in that tiny fraction of issued patents where the case for invalidity is particularly strong. In most cases, the invalidated patents represent Patent Office mistakes; patents that should never have been issued in the first place, they also may be the product of a change in law. Post grant proceedings are a well-recognized way to correct Patent Office error – for example, in Europe, opposition proceedings at the European Patent Office (EPO), which are used to review 5-8 %% of issued patents, have resulted in the partial or total invalidation of patents close to 70 % of the time, and in German revocation proceedings, which in many ways resemble IPRs, 73 % of patents are partially or fully revoked. Within EPO opposition and German revocation proceedings, chemistry patents have been the most likely to have been revoked or amended (71 % in EPO, and 84 % in German revocation); in US IPRs, medical device (93 %, N=29) and biopharma and chemistry patents (87 %, N=23) have fared the worst, but based on relatively small sample sizes.Another key metric is the share of instituted reviews that are actually decided, rather than settled. In the US, a high stay rate of parallel litigation, as facilitated by clear and predictable timeframes and outcomes, contribute to a high decision rate on validity and the efficient staging of disputes. This provides a benefit to the public, the clarified status of the claims. In Germany, in contrast, infringement proceedings do not wait for the validity decision. This leads to validity challenges often settling, for example when the infringement decision is handed down. As a consequence, the status of the patent claim is left unclarified. We examine these and other key aspects of post-grant review as well as various factors, including claim construction standards, litigation stays, and the timing of reviews, to consider some general lessons for the design of post-grant inter partes patent reviews.

Putting Stockholders First, Not the First-Filed Complaint

The prevalence of settlements in class and derivative litigation challenging mergers and acquisitions in which the only payment is to plaintiffs’ attorneys suggests potential systemic dysfunction arising from the increased frequency of parallel litigation in multiple state courts. After examining possible explanations for that dysfunction, and the historical development of doctrines limiting parallel state court litigation — the doctrine of forum non conveniens and the “first-filed” doctrine — this article suggests that those doctrines should be revised to better address shareholder class and derivative litigation. Revisions to the doctrine of forum non conveniens should continue the historical trend, deemphasizing fortuitous and increasingly irrelevant geographic considerations, and should place greater emphasis on voluntary choice of law and the development of precedential guidance by the courts of the state responsible for supplying the chosen law. The “first-filed” rule should be replaced in shareholder representative litigation by meaningful consideration of affected parties’ interests and judicial efficiency.

Drafting arbitration clauses for IP agreements

Patrick Rohn is an attorney with Thouvenin rechtsanwalte in Zurich, Switzerland and Philipp Groz is an attorney with Schellenberg Wittmer, also based in Zurich.IP rights are by nature territorial and related disputes often involve litigation in multiple jurisdictions. Such parallel litigation may create substantial practical and legal difficulties. Many of these difficulties may be overcome by using arbitration instead of state court litigation, provided the arbitration process is lined up properly.This article discusses the key issues to be considered when drafting an arbitration clause in an agreement related to IP rights.The authors aim to provide guidance to practitioners faced with the task of drafting an arbitration clause that is tailored to their needs and expectations as a uniform, efficient and effective dispute resolution procedure.

Lions in the path or paper tigers?

AstraZeneca's European patent EP 0907364 relating to a sustained release formulation of the antipsychotic drug quetiapine was held invalid in the UK, this being the opposite outcome to parallel litigation before the District Court of the Hague.

Traps for the unwary: the pitfalls of ad hoc arbitration

An ad hoc arbitration at first blush may be seen to provide an opportunity to have a bespoke process for resolution of trust disputes. But, if contemplating trust arbitration, settlors and trustees need to bear in mind that the process does not always go as planned. There is scope for parallel litigation even with an arbitration agreement that appears to be completely water-tight. Moreover, once locked into arbitration, it is hard to escape from it.

The Jurisdiction of the Court of Federal Claims and Forum-Shopping in Money Claims Against the Federal Government

Over the past decade, the United States Court of Appeals for the Federal Circuit has issued a series of opinions clarifying the jurisdictional priority of the Court of Federal Claims (CFC) under the Tucker Act over claims against the United States that are means to a monetary end, even if cleverly or mistakenly drafted as suits for injunctive or declaratory relief under the Administrative Procedure Act (APA) that could be filed in District Court. Because the APA expressly excludes judicial review in District Court when an “adequate remedy” lies in another court, the CFC retains its traditional and exclusive jurisdiction to hear claims against the Federal Government that are adequately remedied by a money judgment. This venerable understanding was disturbed by an aberrational decision a decade ago in the United States District Court for the District of Columbia. In Cobell v. Babbitt, the District Court assumed authority under the APA to adjudicate claims for mis-management of government-established financial accounts for the distribution of profits derived from Native American resources held in trust by the United States. The District Court aggressively extended the Supreme Court’s 1988 decision in Bowen v. Massachusetts — a unique case arising from the Federal-State administration of the Medicaid health care program that the Supreme Court had found unsuited for review in the CFC. To add to the jurisdictional chaos, several tribes then filed breach of trust claims in the District Court seeking an accounting and restitution, while simultaneously filing parallel breach of trust lawsuits in the CFC that forthrightly sought money damages. In early 2011, in United States v. Tohono O’odham Nation, the Supreme Court held that money judgment lawsuits filed in the CFC must be dismissed if parallel litigation for specific relief is pending in the District Court. Reading 28 U.S.C. § 1500 as “a robust response” to the burdens of duplicative litigation against the United States, the Court held that a plaintiff may not maintain one lawsuit in the CFC while a second lawsuit is proceeding in another court that arises out of the same operative facts, even if the two lawsuits seek wholly different relief. In rejecting the plaintiff’s claim of hardship in that case, the Tohono Court observed that the plaintiff “could have filed in the CFC alone and if successful obtained monetary relief to compensate for any losses caused by the Government’s breach of duty.” In the aftermath of Tohono, attempted detours from the CFC in what essentially are money claims should be coming to an end. Recent rulings in both the Supreme Court and the Federal Circuit confirm that, when “[a]t bottom it is a suit for money,” then “the Court of Federal Claims can provide an adequate remedy, and it therefore belongs in that court.”

Arbitrators Granting Antisuit Orders: When Should They and on What Authority?

Parallel proceedings are common even when an arbitral agreement mandates that all disputes be resolved in one forum. When a party to an arbitration agreement wishes to prevent the other from pursuing a parallel proceeding it may seek an antisuit remedy, either from the court at the seat of arbitration or from the arbitral tribunal. This article considers when and on what authority an arbitral tribunal should grant an antisuit order. This article argues that an exclusive arbitration agreement, requiring the parties to resolve their disputes through arbitration to the exclusion of any other forum, gives arbitrators the authority to grant an antisuit order to remedy a breach of the arbitration agreement itself. It is also argued that an award of damages covering the costs of the parallel litigation may be an appropriate supplementary remedy for the breach of an arbitration agreement, or an appropriate remedy for the breach of an antisuit order already granted.

ILA Final Report on Lis Pendens and Arbitration

1.1 This is the Committee’s final report on lis pendens.1 After a conceptual introduction (Part I), the report gives an overview of lis pendens from the perspective of domestic law and public international law (Parts II and III). Thereafter, the doctrine of lis pendens is discussed and analysed from an international commercial arbitration perspective (Part IV). Finally, the Committee sets out its conclusions and commentary to its recommendations (Part V). 1.2 James Fawcett, in his authoritative 1994 Report to the International Academy of Comparative Law on Declining Jurisdiction in Private International Law,2 describes lis pendens3 as a ‘situation in which parallel proceedings, involving the same parties and the same cause of action, are continuing in two different states at the same time’.4 1.3 Fawcett identifies four possible ways in which a court might deal with a lis pendens situation:5 ... 1.4 The rationale for taking such steps is threefold: to avoid conflicting judgments; to prevent costly parallel litigation; and to protect parties from oppressive litigation tactics. These justifications are very similar to those underpinning the doctrine of res judicata.6

Parallel Litigation and Foreign Investment Dispute Settlement

Parallel litigation has become a recurrent issue in foreign investment disputes. International tribunals have consistently addressed the issue through the essentially civil law institution of lis pendens. The article argues that lis pendens has no legitimacy to be the tool dealing with parallel litigation in an international setting. To begin with, lis pendens is based on the assumption that the competing adjudicators are legitimate and comparable whereas in many situations this will not be the case. Moreover, comparative international civil procedure shows that, even when the competing adjudicators can be meaningfully compared, a more flexible remedy would be more legitimate and indeed appropriate.

D&O Update Litigation: Be careful what you wish for: The unintended effects of the Private Securities Litigation Reform Act of 1995

Corporations lobbied for the passage of the Private Securities Litigation Reform Act of 1995 (PSLRA) to limit private enforcement of the US securities laws. While the PSLRA has achieved this goal to a certain extent, it has also impacted securities litigation, and related Employee Retirement Income Security Act (ERISA) and derivative litigation, in ways that its proponents never intended. This paper discusses the impact of institutional investor participation in securities litigation, which increased significantly as a result of lead plaintiff provisions in the PSLRA that evince an intent to have institutional investors play a larger role in securities cases. Specifically, the paper focuses on the ability of institutional investors to obtain corporate governance reforms and the contribution of personal funds by outside directors, as components of securities litigation settlements. The paper also provides an overview of ERISA actions that are often litigated in parallel with securities fraud actions. While these actions concern different legal theories, pleading standards and damages formulations to those of securities actions, there is an interplay between the two types of actions in at least two major areas — settlement and discovery. Indeed, the presence of parallel ERISA litigation in several high-profile securities actions has enabled the securities plaintiffs to obtain relief from the PSLRA's discovery stay allowing them to have early access to any materials that have been produced to the ERISA plaintiffs.

Harmonization of IP litigation practice--still a long road ahead

Legal context. Notwithstanding the advanced level of harmonization of IP laws, these substantive laws are still not applied in a harmonized way because of the vast differences in procedural rules amongst the member states of the European Union. For example, the speed, type of relief, costs and potential drawbacks of a legal action still vary substantially between countries. These differences continue to influence the choice of venue for many IP owners and their adversaries. Key points. When a national or Community IP right is infringed and the potential acts of infringement (or infringers) are located in more than one jurisdiction, the situation might give rise to multiple parallel litigation in a number of countries. A well-informed IP specialist will not advise on such a decision without considering a number of issues, analysed in this article: (1) how and where to find evidence of the infringement, and its potential trans-border use; (2) whether the questions of validity and infringement are inseparable (particularly for patents); (3) the availability of injunctions reaching across national borders; (4) the availability of so-called “torpedo” actions; (5) the recoverability of costs and attorneys' fees; and (6) the ability to protect confidential proprietary information during the litigation. Practical significance. As long as differences continue to exist between Member States, the level of IP enforcement will continue to vary from one jurisdiction to another, and the type of relief that is sought by the IP owner will never be exactly the same. Of course this creates disparities and disadvantages. The advantage of this situation is that an IP owner, when he is confronted with a multi-jurisdictional IP dispute, can pick and choose the best available procedural tools and remedies that are available in each jurisdiction. So forum shopping is still the name of the game, as every experienced litigator knows.