• Judge Koh on Enhanced Damages, FRAND

    U.S. District Judge Lucy Koh has issued two important opinions within the past week on issues related to patent royalties.  First, in Apple Inc. v. Samsung Elecs. Corp., Case No. 12-CV-00630-LHK (N.D. Cal .June 23, 2017)–the case involving, among others, the slide-to-unlock patent–the court on remand from the Federal Circuit entered a 30% damages enhancement based on its finding that, under the Halo v. Pulse standard, Samsung willfully infringed.  Of particular interest here are the following findings and conclusions:  (1) Samsung copied the slide-to-unlock feature; (2) at the time it copied, the relevant patent hadn’t issued yet; (3) copying in the absence of knowledge of the patent, standing alone, doesn’t amount to willful infringement; (4) Samsung’s continued infringement after having been put on notice of the patent, by virtue of the filing of the lawsuit, can support an inference of willful infringement; (5) Samsung had a noninfringing alternative but chose not to use it.  See in particular pp. 18-21:
    The fact that Samsung copied is evidence of willfulness. The initial copying of the slide-to-unlock feature before the instant suit was filed, as discussed above, cannot alone support a willfulness finding. However, after Samsung was notified of the ‘721 patent by the filing of the instant suit, Samsung continued to sell the same copied designs. The continued sale of a copied product supports an inference that Samsung’s infringement was willful. See Final Jury Instructions at 39 (“A factor that may be considered as evidence that Samsung or Apple was willful is whether it intentionally copied a product of the other side that is covered by a patent.”); see also Polara Eng’g, Inc. v. Campbell Co., 2017 WL 754609, at *15 (C.D. Cal. Feb. 27, 2017) (upholding willfulness jury finding where there was evidence that “Campbell intentionally copied Polara’s two-wire device”). Accordingly, Samsung’s copying supports the jury’s finding of willfulness.

    Second, there is evidence in the record that Samsung had a non-infringing alternative that it could have implemented quickly. ECF No. 1717 at 222–23 (Samsung Expert Saul Greenberg) (“Well, at the time of the filing of this case, which was February 8, 2012, there were [non-infringing alternatives, such as “circle unlock”]…. So it would have taken them no time at all. They could have just swapped out the interface and used that instead.”). There is also evidence that the non-infringing alternatives were not well-received by Verizon, or were less effective. PX181 at 5 (discussing Verizon’s “negative response towards our company’s circle lock playing the role of the unlock visual cue”); ECF No. 1623 at 187–90 (Apple Expert Andrew Cockburn) (explaining that Samsung’s alternatives had various flaws that made them less desirable). From this evidence, a reasonable juror could infer that Samsung chose to continue infringing because it did not want to give up market share by switching to a less desirable alternative.
    Finally, Samsung’s defenses at trial do not preclude a finding of willfulness. . . .
    The court then applies the Read v. Portec factors to conclude that a 30% enhancement is appropriate (pp. 21-31):
    The Read factors include: (1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other’s patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; (3) the infringer’s behavior as a party to the litigation; (4) defendant’s size and financial condition; (5) closeness of the case; (6) duration of defendant’s misconduct; (7) remedial action by the defendant; (8) defendant’s motivation to harm, and (9) whether defendant attempted to conceal its misconduct. Read, 970 F.2d at 827. . . .
    Factors 1, 4, and 8 weigh in favor of enhanced damages; factor 2 slightly weighs in favor of enhanced damages; factors 3 and 5 weigh against enhanced damages; factors 6 and 7 weigh slightly against enhanced damages; and factor 9 is neutral. Taking into account the jury’s finding and the above Read factors, the Court finds that enhancement is warranted in this case. The evidence of direct copying, continued sale of copied products after Samsung received notice of the ‘721 patent, Samsung’s motivation to obtain a competitive advantage using Apple’s own designs, and the availability of less desirable non-infringing alternatives that could be implemented in no time indicate that Samsung’s actions were sufficiently egregious to warrant enhancement.
    However, “[t]rebling damages is reserved for the cases at the most egregious end of the spectrum.” Polara, 2017 WL 754609 at *27. Here, Samsung’s remedial actions, the duration of misconduct, the closeness of the case, and Samsung’s litigation behavior, although insufficient to preclude the award of enhanced damages, weigh against an award of double or treble damages and weigh in favor of a moderate award. Accordingly, the Court exercises its discretion and finds that increasing the damages award by 30% of the compensatory damages award is a sufficiently punitive sanction for Samsung’s conduct in this case. The jury awarded $2,990,625 to Apple on the ‘721 patent. The Court increases this amount by $897,187.50 to a total award of $3,887,812.50.
    The other decision, which came down on Monday, is Judge Koh’s order denying Qualcomm’s motion to dismiss in FTC v. Qualcomm, Case No. 17-CV-00220-LHK.  (You can access a copy of the opinion on Westlaw or, via Scribd, on the FOSS Patents blog.) I’m not going to go into all the details of this complex antitrust matter here and now (and I still need to read the entire opinion myself, carefully), but will just note Judge Koh’s conclusion that the FTC’s complaint adequately alleges both that Qualcomm charges a supra-FRAND rate, in violation of its FRAND commitments, and that this harms the competitive process (an important point under U.S. antitrust law, because excessive pricing standing alone doesn’t constitute an antitrust violation).  See, e.g., the following passage from the opinion:
    Significantly, although Qualcomm nominally imposes the same surcharge on all modem chips sales, Qualcomm’s surcharge does not affect Qualcomm and its competitors equally. For Qualcomm, as discussed above, Qualcomm’s surcharge is a means for Qualcomm to functionally extract a higher price for Qualcomm’s own modem chips without being underbid in the modem chips market by competing modem chips manufacturers. See Compl. ¶¶ 86, 85–95. The revenue from Qualcomm’s surcharge comes back to Qualcomm as a form of profit, and it maintains Qualcomm’s modem chips monopoly. Moreover, Qualcomm can offer OEMs incentive payments that provide OEMs discounts from Qualcomm’s above-FRAND royalties if an OEM uses Qualcomm’s modem chips as opposed to the modem chips of Qualcomm’s competitors. Id. ¶ 103. Qualcomm’s competitors, by contrast, cannot offer OEMs such incentive payments, and Qualcomm’s surcharge works to reduce competitors’ modem chips sales and margins, which prevents these competitors from effectively competing with Qualcomm. See id. ¶ 106. In effect, FTC alleges, Qualcomm’s surcharge “artificially stunt[s]” its competitors’ ability to effectively grow and challenge Qualcomm on the merits, in violation of the Sherman Act. McWane, 783 F.3d at 824, 839–40; see also United States v. Dentsply Intern., Inc., 399 F.3d 181, 191 (3d Cir. 2005) (finding monopolist’s actions anticompetitive where the monopolist’s conduct “help[ed] keep sales of competing [products] below the critical level necessary for any rival to pose a real threat to [the defendant’s] market share”).
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  • Raising Venue Post TC Heartland

    There’s going to be a lot of litigation over whether a defendant who failed to object to venue pre-TC Heartland can raise it now.  In fact, why not a plaintiff? One argument has succeeded, but I honestly wonder about its foundation.  The argument goes like this:  (a)  Rule 12 only operates to waive certain 12(b) […]

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  • The Battle for ‘ODESSA’: The Story of Trademark Registration in Ukraine

    Kyiv, Odessa, Crimea, Novy Svet, Inkerman – not only these are the names of locations, but also the signs registered as trademarks for alcoholic beverages, and some cases, the companies themselves, in the Ukraine. The Odessa Sparkling Wine Company has been producing and selling ODESSA branded sparkling wine for more than 20 years now.  However, they have faced an unusual challenge when trying to register ODESSA trademark.

    The post The Battle for ‘ODESSA’: The Story of Trademark…

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  • Nantkwest, Inc. v. Matal (Fed. Cir. 2017)

    By Josh Rich — Patent applicants dissatisfied with final outcome of patent prosecution proceedings have long had two options for court review of a Patent and Trademark Appeal Board decision: an appeal to the Federal Circuit under 35 U.S.C. § 141 or a civil action in the Eastern District of Virginia under 35 U.S.C. § 145. For over 175 years, applicants faced the same risk of paying the Patent and Trademark Office’s fees in either proceeding. But in the Nantkwest case, the Patent and Trademark Office asserted that it was entitled to recover attorneys’ fees (and other expenses) regardless of…

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  • Stanford wins appeal at CAFC in interference case

    The outcome:

    The Board of Trustees of the Leland Stanford Junior
    University (“Stanford”) appeals from orders of the Patent
    Trial and Appeal Board (“Board”) in three interference
    proceedings between Stanford and the Chinese University
    of Hong Kong (“CUHK”). In all of these proceedings, the
    Board found that Stanford’s claims were unpatentable for
    lack of written description. See Quake v. Lo, No. 105,920
    (P.T.A.B. Apr. 7, 2014); Lo v. Quake, No. 105,923
    (P.T.A.B. Apr. 7, 2014); Lo v. Quake, No. 105,924
    (P.T.A.B. Apr. 7, 2014).1 Because we conclude that the
    Board relied on improper evidence to support its key
    findings and did not cite to other substantial evidence to
    support its findings, we vacate the Board’s interference
    decisions and remand for further proceedings.

    Of written description:

    Whether a patent claim satisfies the written description
    requirement of 35 U.S.C. § 112, paragraph 1, depends
    on whether the description “clearly allow[s] persons of
    ordinary skill in the art to recognize that [the inventor]
    invented what is claimed.” Vas-Cath Inc. v. Mahurkar,
    935 F.2d 1555, 1562–63 (Fed. Cir. 1991) (internal quotation
    marks omitted) (quoting In re Gosteli, 872 F.2d 1008,
    1012 (Fed. Cir. 1989)).
    [W]hatever the specific articulation, the test requires
    an objective inquiry into the four corners of
    the specification from the perspective of a person
    of ordinary skill in the art. Based on that inquiry,
    the specification must describe an invention understandable
    to that skilled artisan and show that
    the inventor actually invented the invention
    Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351
    (Fed. Cir. 2010) (en banc).


    For these reasons, we vacate the interference decisions
    and remand for the Board to reconsider whether
    Quake’s relevant patents and applications satisfy the
    written description requirement. In re Nuvasive, Inc., 842
    F.3d 1376, 1382 (Fed. Cir. 2016) (finding that the Board
    must “make the necessary findings and have an adequate
    ‘evidentiary basis for its findings’” (quoting In re Lee, 277
    F.3d 1338, 1344 (Fed. Cir. 2002)); Ariosa Diagnostics v.
    Verinata Health, Inc., 805 F.3d 1359, 1365 (Fed. Cir.
    2015) (“[W]e must not ourselves make factual and discretionary
    determinations that are for the agency to make.”)
    (citing In re Lee, 277 F.3d at 1342, Interstate Commerce
    Comm’n v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 283
    (1987), and Chenery, 332 U.S. at 196–97).

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    –> round

    $$ Vortex shedding is caused when a fluid flows past a blunt object. / 流体が鈍体を通過すると渦放出が生じる。(USP8584454)

    $$ As a consequence, the ends 21 of the clip, when in its closed clip condition, are blunt. / したがって、クリップの端部21は、クリップがその閉クリップ状態であるときには鋭利でない。(USP8287559)

    $$ The extent of cure is monitored by applying a metal probe rod (diameter about 7 mm) to the surface of the cement disk, the probe having a blunt rounded end. / 硬化の程度が、金属製のプローブロッド(直径がほぼ7mm)をセメントの円盤の表面に適用することによって、監視され、プローブは、鈍な丸い端部を有している。(USP8139221)

    $$ Accordingly, the potential disadvantage of the needle becoming blunt is overcome. / 従って、鈍くなった針の潜在的な欠点が克服される。(USP8101137)

    $$ This tends to blunt or even chip the cutting blade. / このことは、切れ味を鈍くするか、または、切断刃をかけさせる傾向にある。(USP6616803)

    $$ Blunt-ended plasmid DNA was incubated with buffer alone (left block for each time point) or VLPs from either wild-type (middle block for each time point) or yku70 cells (right block for each time point). / ブラント末端を有するプラスミドDNAを緩衝法のみ(各時点につき左ブロック)、又は野性型細胞から(各時点につき中央ブロック)又はyku70細胞から(各時点につき右ブロック)からのVLPと共にインキュベートした。(USP6242175)

    $$ This blunts the effect of the statins and limits the extent of cholesterol reductions attainable. (USP02035058)

    $$ Blunt ended PTK1B is prepared as in Example 8. (USP01024817)


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  • What Direction Will the Incoming Director of the U.S. Patent and Trademark Office Need to Provide?

    Overall, incoming USPTO leadership must have the capacity to see the “big picture” and weigh options for improving our innovation economy. Recognition that recent changes have weakened the patent system too much, and the leadership ability to make changes that achieve the appropriate balance between enforcing strong patents and limiting abusive enforcement of meritless patents, should be criteria in selecting the next Under Secretary of Commerce for Intellectual Property and Director of the…

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