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Last month, we briefly discussed an article that proposed that “baseball-style” arbitration be used to resolve FRAND licensing disputes.  The following guest post about this article was authored by David Balto, a former Policy Director of the Bureau of Competition for the Federal Trade Commission who currently has his own public interest antitrust practice here in Washington, DC.  David’s views expressed below are his own, and do not necessarily reflect the views of the authors of The Essential Patent Blog, Dow Lohnes PLLC, or Dow Lohnes’s clients.

Baseball has the Best Rules:  Using Arbitration to Solve FRAND Disputes

How to calculate Fair, Reasonable and Nondiscriminatory (FRAND) royalties seems like one of the most intractable problems firms, standard setting organizations and the courts are grappling with.   No wonder, there is sparse authority and relatively few litigated cases.

Two of the most thoughtful scholars on antitrust intellectual property issues — Professors Mark Lemley and Carl Shapiro — have weighed in and issued a paper outlining an interesting solution to the FRAND licensing problem and it provides a clarion call for how to grapple with the problem.Continue Reading Baseball has the Best Rules: Using Arbitration to Solve FRAND Disputes

We’re going to take a quick time-out from standard-essential patent issues for a minute for a brief post on non-practicing entities.  These NPEs are getting more and more attention from industry, regulators, and Congress, with a multitude of recent legislation (e.g., the SHIELD Act, the Patent Quality Improvement Act and the End Anonymous Patents…

European-Flag1We generally focus on U.S.-specific standard-essential patent issues here at the Essential Patent Blog, but often there are some international developments that are worth noting.  Today brings us one of those, as the European Commission announced that it has sent a Statement of Objections to Motorola Mobility as part of its investigation into Motorola’s potential…

ForestJudge Robart’s RAND decision in the Microsoft v. Motorola case is receiving well-warranted attention, and for good reason.  Of course, we here at the Essential Patent Blog find this developing area of law fascinating.  So I welcomed Tom Keene’s invitation to discuss Judge Robart’s decision live on Bloomberg TV’s “Bloomberg Surveillance” program this past Monday, April 29.  The focus was to be on the particular question of whether Google’s purchase of Motorola has panned out, given recent Motorola patent litigation losses.  So I prepared through immersive study of Judge Robart’s decision, as well as our prior postings and the details of the various Motorola cases in the so-called Smartphone Wars.  Forget the forest or the trees — I stared at every branch, twig and leaf.

And Monday morning, in a remote studio in Washington, DC, Tom Keene’s voice from New York came into the earpiece asking an important question I never expected: What about the forest?
Continue Reading The Patent Forest

Back in December 2012, the Federal Trade Commission and the Department of Justice held a joint workshop to explore the impact that patent assertion entities (PAEs — or non-practicing entities/NPEs) may be having on innovation, competition, and the U.S. economy.  The FTC and DOJ invited the public to submit comments for consideration by the agencies, even extending the deadline for submission until early April.  All in all, 68 separate submissions have been received and posted on the FTC/DOJ workshop’s site.

The commenters represent a wide variety of industries and interests, and express divergent viewpoints and positions about the effects of PAE activity.  Many comments focus on the newly-reintroduced SHIELD Act.  Given that the main focus of this blog is on standard-essential patent issues, we won’t even try to give a comprehensive rundown of all of the comments — we’ll leave the focus on non-practicing entities to others.  But several of the comments do express particular concern about the interplay between PAEs, standard-setting organizations and standard-essential patents.  After the jump, we’ll discuss some of these issues that are being flagged as troublesome.


Continue Reading Public comments on FTC/DOJ Patent Assertion Entity Workshop include worries that PAEs may “game the system” of standard-setting and RAND licensing

This afternoon, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet held a hearing titled “Abusive Patent Litigation: The Issues Impacting American Competitiveness and Job Creation at the International Trade Commission and Beyond.”  This hearing comes on the heels of a broader hearing on abusive patent litigation held by the same committee two months ago, as well as a different hearing in July 2012 that generally addressed the ITC’s role in deciding patent disputes.  Several witnesses representing a variety of diverse backgrounds and interests testified today before the subcommittee, including:

  • Kevin Rhodes, VP and Chief IP Counsel for 3M Innovative Properties Co.
  • Jon Dudas, Former Director of the USPTO (and a member of the board of non-practicing entity MOSAID Technologies)
  • Prof. Colleen Chien of Santa Clara University
  • Russell Binns, Associate General Counsel for IP Law & Litigation at Avaya
  • Deanna Tanner Okun, Former Chairwoman of the ITC (and a partner at Adduci Mastriani & Schaumberg)
  • David Foster, Chairman of the Legislative Committee for the ITC Trial Lawyers Association (and a partner at Foster, Murphy, Altman & Nickel)

A link to the video webcast of the full hearing is available at the House Judiciary Committee’s website, along with PDFs of each witness’s prepared testimony.  Our friends at Patent Progress also live-tweeted the event — take a look at their Twitter feed @PatentProgress for their blow-by-blow account.

As we anticipated, while standard-essential patents were not the focus of this particular hearing, the issue of SEPs was indeed given some attention.  In his opening remarks, Congressman Melvin Watt noted concerns some have expressed about the potential for improper usage of standard-essential patents in seeking injunctive relief, and Congressman Ted Poe briefly quizzed Prof. Chien about the propriety of asserting standard-essential patents in the ITC. 
Continue Reading House Judiciary Subcommittee hearing on abusive patent litigation and the ITC focuses on non-practicing entities, litigation costs, and remedies

(Note: the subject matter of this post is a bit off-topic for this blog, but with all of the attention being paid to non-meritorious patent lawsuits and potential solutions, we thought this warranted mentioning.)

Patent litigation, like most litigation in this country, is generally controlled by the “American Rule” — the general rule that each party pays its own litigation-related costs and attorneys’ fees.  This stands in contrast to the rules in other countries such as England, where the losing party generally pays the other’s attorneys’ fees.  There are exceptions to the American Rule in various jurisdictions and types of litigations, including the patent-related provision in 35 U.S.C. § 285.

Section 285 provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”  However, it’s well-known that courts rarely award fees under Section 285 except in the most egregious circumstances (in fact, we recently posted a patent alert about a denial of fees).  Under current Federal Circuit precedent, cases are only deemed exceptional if there has been litigation misconduct or fraud in securing the patent, or if an infringer’s claim is both objectively baseless and brought in subjective bad faith.  See Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1308 (Fed. Cir. 2012).

In a recent petition for certiorari, Octane Fitness LLC has asked the U.S. Supreme Court to overturn this precedent and make it easier for prevailing patent infringement defendants to recover attorneys’ fees from infringement plaintiffs.
Continue Reading Is Section 285’s “exceptional case” requirement too exceptionally hard to satisfy?

CapitolPatents have been getting a lot of attention on Capitol Hill lately, with the reintroduced SHIELD Act and the recent Congressional hearing on “abusive patent litigation.”  Next week patents will get even more airtime, as the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet will hold a hearing titled Abusive …

We recently came across a new paper written by noted scholars Mark Lemley and Carl Shapiro that we thought was worth passing along.  Lemley and Shapiro have written extensively about the interplay between patent issues and standard-setting, including the oft-cited article “Patent Holdup and Royalty Stacking.”  In their new paper, titled “A Simple Approach to Setting Reasonable Royalties for Standard-Essential Patents,” Lemley and Shapiro propose a way to tackle the difficult task of determining the appropriate terms for a FRAND-encumbered standard-essential portfolio (if the parties are unable to agree on terms).

Their solution to this common problem?  Requiring the parties to enter into a binding “baseball-style” arbitration — where each party must propose its final offer, and the arbitrator picks which one is the most reasonable (the arbitrator cannot choose a different number).  In their paper, Lemley and Shapiro describe how their proposed system would work in practice, and claim it would moot many of the FRAND-related disputes ongoing today.
Continue Reading Lemley, Shapiro propose “baseball-style” arbitration as solution to FRAND disputes