Today, a three-judge panel of the Fifth Circuit affirmed the judgment that Ericsson’s licensing offers to HTC on 2G, 3G and 4G standard essential patents (SEPs) based on the mobile device price (rather than the price of the baseband processor component inside the mobile device) complied with Ericsson’s ETSI commitment to license SEPs on fair,
Oral Argument in the appeal of Judge Koh’s FTC v. Qualcomm decision is schedule to take place February 13, 2020 before the 9th Circuit Court of Appeals in San Francisco to consider whether and to what extent competition law should apply to licensing standard essential patents (SEPs). This appears to be the most important and impactful U.S. case so far on the issue and could have far reaching impact on domestic and foreign SEP licensing.
The Court will hear from Qualcomm and the U.S. Federal Trade Commission (FTC) and has also allotted the U.S. Department of Justice (DOJ) five minutes to present as amicus curiae during the argument. In addition to the parties-at-interest and DOJ, twenty-two amicus briefs have been lodged in the case by other companies, licensors, industry groups, academics, and interested parties. In fact, due to public interest in the case, the Ninth Circuit has created a separate website dedicate to the appeal, “to notify the media and public of procedures and rules for admission to proceedings, as well as access to case information.” The FTC also maintains its own website on the litigation that includes all the FTC’s filings and public statements regarding the proceedings.
In anticipation of the upcoming hearing, we’re provide this summary of the appeal issues and topics raised by the amicus briefs. As usual, we provide links to the filings and encourage you to read through them yourself.
Continue Reading Ninth Circuit to Hear Argument Feb. 13 from FTC, DOJ and Qualcomm on Competition Law’s Applicability to SEP Licensing (FTC v.Qualcomm)
Today the Federal Circuit vacated Judge Selna’s bench trial decision in the much-watched TCL v. Ericsson case, ruling that Ericsson has the right to a jury trial to determine compensation for past infringement of Ericsson’s standard essential patents (SEPs) under the Seventh Amendment of the U.S. Constitution. So this case involving a FRAND computation method…
Today, the Ninth Circuit issues an Order that stays Judge Koh’s injunction entered in the FTC v. Qualcomm case in order to maintain the status quo so that the Ninth Circuit can decide whether Judge Koh’s “order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act”, which is not decided by this Order but “is a matter for another day.”
We provide a summary of the ruling below and, as always, recommend reading the 7-page Order for yourself (see link in first sentence above). The Ninth Circuit has not decided the substantive issues–that will be done on “another day”–but did indicate that Qualcomm had raised meritorious arguments that (1) Qualcomm was not required to license its SEPs to rival chip suppliers and (2) Qualcomm could assess royalties on its SEPs on a per-handset basis (rather than based on modem chip component of the handset).
As far as next steps, the parties and interested amicus on all sides of the issue are preparing briefing on an expedited schedule in preparation for a hearing at the Ninth Circuit in January 2020.
Continue Reading Ninth Circuit Stays Judge Koh’s Injuncton in the FTC v. DOJ Competition Brawl (FTC v. Qualcomm)
Today the Federal Circuit (Renya, Bryson and Hughes) ruled that implied waiver may apply where the prior owner of a U.S. patent had a duty to disclose a related foreign patent application to ETSI even though ETSI had rejected that prior patent owner’s proposed contribution to the standard. This decision provides insight into several areas, including:
- Applying the equitable doctrine of implied waiver to the duty to disclose intellectual property rights (IPR) to standard setting bodies. Among other things, the decision indicates that there may not be a requirement to show reliance on the implied waiver.
- The importance of looking to the specific standard setting body’s IPR Policy at issue and providing evidence for interpreting that policy.
- The difference between disclosing patents that “may be” essential to the standard and a FRAND commitment that arises because the patent “actually is” essential to the standard.
- Failure to disclose is not a “gotcha’” defense; rather, you must show that the patent owner obtained some unfair advantage by its misconduct in not disclosing the patent.
As with many decisions, this case is fairly case-specific as far as interpretation of the ETSI IPR Policy. Only the patent challenger (Apple) provided testimony on interpretation of the ETSI Policy without any rebuttal evidence beyond the language of the IPR Policy itself. The Federal Circuit indicated that its decision was based on the specific record evidence–and lack of evidence–before it.
Continue Reading Federal Circuit provides guidance on implied waiver defense applied to failure to disclose foreign patent application to SDO (Core Wireless v. Apple)
The Federal Circuit’s recent Exmark v. Briggs-Stratton decision further confirms that there is no categorical rule about selecting a royalty base when litigating a reasonable royalty in order to apportion value to the patented invention, but that “apportionment can be addressed in a variety of ways … [s]o long as [the patent owner] adequately and reliably apportions between the improved and conventional features” of the accused product. Thus, in this case, the Federal Circuit ruled that the patent owner properly could use the entire lawn mower as the royalty base and was not limited to the innovative baffle component of the lawn mower as a royalty base. This case continues the clarification made in the Federal Circuit’s CSIRO decision involving standard essential patents that recognized that “adaptability [in determining patent damages] is necessary because different cases present different facts” and rejected as “untenable” the argument that every damages model must start with the smallest salable patent practicing unit (SSPPU) (see our Dec. 3, 2015 post).
A persistent dispute in the standard essential patent (SEP) community is whether a patent owner may license its SEPs based on the sales price of the end product or if the patent owner must license its SEPs based on the sales price of a component within that end product (e.g., the smallest salable patent practicing unit or SSPPU). The Federal Circuit’s Ericsson v. D-Link decision explained that the SSPPU theory was based on an evidentiary principle to avoid confusing jury’s in U.S. patent damages litigation (see our December 5, 2014 post). Yet some continued to claim that the SSPPU principle was a substantive rule of law required in all circumstances, including outside of litigation in private negotiations for SEP licenses. The Federal Circuit’s CSIRO decision later held it was “untenable” to argue that all damages methodologies must start with the SSPPU (see our December 3, 2015 post). Yet the debate somehow continued. The Federal Circuit’s Exmark decision here may finally settle and dispel arguments that the royalty base cannot be the end product, but must be the SSPPU. But we will see ……
Continue Reading Federal Circuit confirms flexibility in determining royalty base (Exmark v. Briggs & Stratton)
Today, the Supreme Court issued its decision in Impression Products v. Lexmark Int’l that draws a bright line for triggering the patent exhaustion doctrine when products are sold and leaves post-sale activity restrictions subject to any contractual rights between the parties, not patent law. This decision is sure to have patent owners and licensees reviewing their existing licensing agreements and tweaking future ones. The decision also provides another reason why patent owners may license their patents at an end product level, rather than a component level, to ensure that they have direct patent law remedies against the end product manufacturer that otherwise may be exhausted and unavailable if the patent is licensed at a component level.
The Supreme Court summarized its decision as follows:
This case presents two questions about the scope of the patent exhaustion doctrine:
First, whether a patentee that sells an item under an express restriction on the purchaser’s rights to reuse or resell the product may enforce that restriction through an infringement lawsuit.
And second, whether a patentee exhausts its patent rights by selling its product outside the United States, where American patent laws do not apply.
We conclude that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.
Importantly, the decision focuses on whether patent rights exist after an authorized sale. The decision does not mean that the sale extinguishes other non-patent law remedies that a patent owner may have after the sale, such as remedies under contract law.…
Today, the U.S. Supreme Court issued its decision in TC Heartland v. Kraft Foods that limits the venue — i.e., geographical location–of where patent cases may be brought. For decades prior to this decision, venue was construed broadly to be essentially anywhere a defendant has minimum contacts. By today’s decision, venue is construed narrowly as limited to where the defendant either (i) is incorporated or (ii) has a regular and established place of business in which the defendant committed acts of infringement.
This ruling may substantially limit the number of patent cases that may be brought in the perceived patent-friendly Eastern District of Texas. This also may increase the number of patent cases brought in patent-savvy Delaware, because that is where most companies are incorporated. The decision also may make it harder to sue multiple defendants in a single action, because it may be difficulty to establish proper venue over all defendants.
This decision also takes more wind out of the sales of those seeking legislative changes to U.S. patent law. Whether rightly or wrongly (we express no view here), the E.D. Texas has been used as an example of patent litigation abuse, venue shopping and the need for patent reform. This decision may end that concern and follows other court decisions addressing patent litigation issues as well as the FTC’s patent assertion entity study that did not find the widespread patent litigation abuse that had fueled legislative efforts. (see, e.g., our Apr. 29, 2014 post on Supreme Court making it easier to get attorneys fees in patent cases and our Oct. 7, 2016 post on the FTC’s PAE study).
Continue Reading Supreme Court limits patent venue statute (TC Heartland v. Kraft)
Today the Supreme Court ruled that the laches defense could not be used to limit 35 U.S.C. § 284 patent damages given the 35 U.S.C. § 286 statute of limitations that permits recovery of patent damages up to six years prior to filing an infringement suit. Specifically, the Court ruled that “Laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.” The result of the ruling is that the laches defense may limit equitable relief, such as an injunction, but will no longer preclude past damages in patent cases.
From a practical standpoint, the ruling may not be as significant as it otherwise might appear. Laches is a frequently raised, but seldom successful, equitable defense in patent litigation. Laches basically arises from a patent owner unreasonably delaying its assertion of a patent right during a period of time when the accused infringer made investments and the infringer would be prejudiced by the delayed assertion of the patent. If successful, the defense traditionally would bar all past damages, limit injunctive relief and preclude future royalties on products purchased during the laches period. The Federal Circuit’s en banc decision below in the instant case limited the defense so that it would no longer preclude any future royalties (see our Sep. 18, 2015 post explaining the en banc decision). In sum, prior to today’s decision, the laches defense could limit damages prior to the filing of the lawsuit and limit injunctive relief. This might have little impact in most patent cases where the period of past infringement may be relatively short and the patent has many years of life remaining for which future royalties would be paid even if an injunction were not granted.
Laches was a more promising defense when a litigation patent assertion entity purchased and asserted a near-end-of-life dormant patent (i.e., a never asserted patent) against defendants who have long-used the alleged infringing technology (see our Oct. 7, 2016 post on the FTC’s PAE Study and distinction between non-problematic “portfolio PAEs” and some problematic “litigation PAEs”). In such circumstances, a laches defense could have a substantial impact because it would bar the bulk of the damages period (six years prior to the lawsuit) and would bar injunctive relief. This would leave a remedy of only a future royalty for the short period of time remaining in the patent’s life. For example, consider a patent with only a year remaining before it terminates. The litigation PAE could seek seven years of damages: six years of damages prior to the lawsuit and one year of royalties before the patent terminates. A successful laches defense would limit the damages exposure by over 85% — i.e., remove all six years of pre-suit damages, leaving only one year of future royalties before the patent expires.
The Supreme Court’s decision today will now permit six years of pre-suit damages notwithstanding a successful laches defense. The related doctrine of equitable estoppel still remains as a defense. Equitable estoppel is a somewhat harder defense to establish, because it requires proof that the infringer relied on some action by the patent owner indicating it would not assert the patent. But equitable estoppel is a more effective defense, because it is a complete defense — i.e., it precludes all past and future damages and injunctive relief.
Below is a short summary of the case and the Supreme Court’s decision.
Continue Reading Supreme Court rules laches cannot preclude statutory damages within the 6 year period before a patent suit is filed (SCA v. First Quality)
Today the Supreme Court in Life Technologies v. Promega ruled that 35 U.S.C. § 271(f)(1) liability for supplying from the U.S. “all or a substantial portion of the components of a patented invention” is a quantitative, not qualitative, analysis of the number of components supplied such that supplying only a single component of a multicomponent invention does not give rise to liability under that section (though it might give rise to liability under § 271(f)(2) if that single component “is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use”). (see also our June 27, 2016 post on the Supreme Court’s grant of review of this case). As Justice Alito’s concurrence states, the opinion “establishes that more than one component is necessary, but does not address how much more.” So the art of litigating Section 271(f)(1) will focus on the litigants’ ability to delineate how many separate “components” are in a claimed invention and whether the resulting number of such components supplied from the U.S. is “substantial.”…
Continue Reading Supreme Court rules that number of components supplied from U.S., not their importance to invention, is relevant to Section 271(f)(1) infringement (Life Tech. v. Promega)