Wednesday, March 21, 2018

Federal Circuit Affirms Denial of Attorneys' Fees

The big news in U.S. IP law today (so far, at any rate) is the Ninth Circuit's decision affirming in part the district court's copyright infringement decision in the Blurred Lines case, which I hope to get around to reading later in the day.  As far as patent remedies are concerned, the Federal Circuit issued a nonprecedential opinion this morning in Sarif Biomedical LLC v. Brainlab, Inc., opinion by Judge Wallach (joined by Judges Reyna and Hughes).  The district court held that the claims of the patent in suit, titled "Computer-Assisted Microsurgery Methods and Equipment," was indefinite, and the parties thereafter stipulated to a judgment of invalidity and noninfringement.  The court also held, however, that the case was not exceptional and denied Brainlab's motion for attorneys' fees.  On this latter issue, the Federal Circuit concludes there was no abuse of discretion:
The District Court properly evaluated the substantive strength of Sarif’s case. The District Court  found that Sarif acted in “good faith” in part because, “[a]t each stage of the litigation, [Sarif] provided detailed arguments, grounded in the intrinsic evidence, in support of its proposed constructions” and “obtained expert opinion which supported its constructions.” . . . The District Court’s ultimate disagreement with Sarif’s proposed construction does not, on its own, render Sarif’s case substantively weak. . . . 
Brainlab’s counterarguments are ultimately unpersuasive under our standard of review. First, Brainlab avers that the PTAB’s decision not to institute an inter partes review for claims 1–9, after stating these claims “cannot be construed” based on a likelihood that they are indefinite . . . demonstrates the weakness of Sarif’s position, as it is an important “objective indicator[] of the invalidity of the ’725 patent” . . . . Brainlab places too much significance on the PTAB’s determination. The PTAB does not have authority to institute an inter partes review under § 112. See 35 U.S.C. § 311(b). Therefore, as Brainlab admitted, any conclusion regarding indefiniteness is dicta. . . .
Second, Brainlab argues Sarif’s proposed construction is weak because portions of Sarif’s expert testimony appear to undermine its ultimate construction. . . . However, the District Court is entitled to weigh the credibility of an expert’s testimony . . . .
Third, throughout its brief, Brainlab argues the District Court “fail[e]d to make findings of fact in support of its conclusion that Sarif’s case was not unusually weak” and “ignored . . . overwhelming evidence.” . . . However, we have recognized that “[t]he trial judge [i]s in the best position to understand and weigh the[] issues,” and the District Court “ha[d] no obligation to write an opinion that reveals [his] assessment of every consideration.” . . . 
The District Court also did not clearly err in considering the reasonableness of the manner in which Sarif litigated this case or any other circumstances of this case. Although Sarif modified its claim construction position from the PTAB to the District Court, the District Court correctly explained that 
[i]t can . . . be reasonable for a party to propose different constructions in PTAB and District Court proceedings, as the PTAB must give claims terms their “broadest reasonable construction,” whereas District Courts give them the meaning they would have to a “person of ordinary skill in the art at the time of the invention.” . . .
Brainlab also has failed to demonstrate that Sarif’s motivations and actions as a whole were improper. . . .  Although we have stated “that a pattern of litigation abuses characterized by the repeated filing of patent infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s claims, is relevant to a district court’s exceptional[-]case determination under § 285,” SFA Sys., 793 F.3d at 1350, the District Court considered Brainlab’s evidence and concluded Brainlab “ha[d] not demonstrated that this is a ‘nuisance suit’” because “[Sarif]’s status as a non-practicing entity, the language of the press releases directed toward its investors, its decision to allege infringement against several other entities, and its decision to settle other cases, do not combine to establish that this case was always ‘meritless’ or ‘predatory,’” Sarif II, 2016 WL 5422479, at *2 (emphasis added). Importantly, Sarif did not delay in its litigation tactics. . . .
Brainlab claims the District Court erred “[b]y limiting itself to comparing Sarif’s conduct only to the cases ‘with which [the District Court] has been involved.’” . . . As we have explained above, the District Court properly determined that this case is not exceptional, grounding its reasoning in the correct legal standards and a proper assessment of the facts. Therefore, we decline Brainlab’s invitation to find legal error “based upon [this] isolated statement stripped from its context.” Waymo LLC v. Uber Techs., Inc., 870 F.3d 1350, 1361 (Fed. Cir. 2017) (internal quotation marks and citation omitted) (pp. 6-11).
In other news regarding attorneys' fees, on remand from the Federal Circuit in AdjustaCam v. Newegg (see previous discussion on this blog here), Judge Gilstrap (E.D. Texas) last week awarded Newegg over $500,000 in fees and expenses, including (pursuant to the court's inherent authority) expert witness fees of over $60,000.  Link here.

Tuesday, March 20, 2018

More on India's Patent Working Requirement

I've published a couple of brief posts recently on papers discussing India's patent working requirement and how it relates to injunctive relief and the public interest (see here and here).  Another paper, which I hadn't seen until recently, is by Jorge Contreras, Rohini Lakshané, and Paxton Lewis and titled Patent Working Requirements and Complex Products, 7 NYU J. Intell. Prop. & Enter. L. 1 (2017).  Here is a link, and here is the abstract:
Patent working requirements exist throughout the world to ensure that the exclusive rights granted under patents result in an economic benefit to the granting jurisdiction. In India, if a patent is not locally worked within three years of its issuance, any person may request a compulsory license, and if the patent is not adequately worked within two years of the grant of such a compulsory license, it may be revoked. The potency of India’s patent working requirement was demonstrated by the 2012 issuance of a compulsory license for Bayer’s patented drug Nexavar. In order to provide the public with information about patent working, India requires every patentee to file an annual statement on “Form 27” describing the working of each of its issued Indian patents.
We conducted the first comprehensive and systematic study of all Forms 27 filed in India with respect to a key industry sector: mobile devices. We obtained from public online records 4,916 valid Forms 27, corresponding to 3,126 mobile device patents. These represented only 20.1% of all Forms 27 that should have been filed and corresponded to only 72.5% of all mobile device patents for which Forms 27 should have been filed. Forms 27 were missing for almost all patentees, and even among Forms 27 that were obtained, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Indian Patent Rules. Patentees adopted drastically different positions regarding the definition of patent working, while several significant patentees claimed that they or their patent portfolios were too large to enable the reporting of required information. Many patentees simply omitted required descriptive information from their Forms without explanation.
It is likely that a combination of factors have led to this high degree of non-compliance, namely technical and administrative failures of the Indian Patent Office, and inadvertent or deliberate omission by patent holders. However, it is also likely that there are more fundamental issues with the very notion of working requirements with respect to complex, multi-patent products. In effect, products that embody dozens of technical standards and thousands of patents may not necessarily be amenable to individual-level reporting of working, or even working requirement themselves. We hope that this study will contribute to the ongoing global conversation regarding the most appropriate means for collecting and disseminating information regarding the working of patents. 
In a related vein, Jacob Schindler recently published a post on the IAM Blog titled "India seeks to re-vamp patent working form, but rights owners are sceptical of the whole endeavour," link here; and Preston Richard has a post on the Trust in IP Blog titled "The Statement of Patent Working in India--Time for a Change," link here.

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In other news, the Essential Patent Blog reports that David Long will be presenting a free webinar tomorrow from 4-5 p.m. Eastern Time titled "What Does U.S. Case Law Tell Us About Standard Essential Patent Licensing," information here.

Monday, March 19, 2018

Obhan on Injunctions and the Public Interest in India

Recently I published a post on Ashish Bharadwaj's article Patent Injunction and the Public Interest in India, 40 EIPR 55-58 (2018), discussing the author's reservations about the Delhi High Court's ruling last year in Bayer Intellectual Property GmbH v Ajanta Pharma Ltd that a "public interest" factor weighing against the granting of an interim injunction is the potential loss of employment or tax revenue if the injunction were to issue.  Similarly critical of the decision is Essenese Obhan's recent article Is Not-Working of a Patent in India Against Public Interest?, Mitteilungen der deutschen Patentanwälten, Feb. 2018, pp. 59-60.  Here is the abstract:
Not working a patent in India can affect a patentee's right to obtain interim relief in a patent litigation.  Recent court decisions in India involving Bayer's patents on Vardenafil consider whether not working a patent is also against public interest, and if so, would non-working of the patent by a patentee in India enable a defendant to manufacture and export a patented article outside India.
The author notes that a subsequent decision of the same court involving the same patents appears to disagree with the earlier decision's conclusion that courts should take into account loss of employment and loss of state revenue. 

Thursday, March 15, 2018

Federal Circuit Affirms Reasonable Royalty Based on 71% Profit Split

The case is Exergen Corp. v. Kaz USA, Inc., a nonprecedential opinion authored by Judge Moore and handed down last Thursday.  (I'm a little surprised it's a nonprecedential opinion, because it covers some important ground on a number of topics.)  The patents in suit relate to thermometers that can read a person's temperature by being swiped across the forehead.  Exergen sued Kaz for infringement, and the district court held that the claims at issue to be patent-eligible.  (Most of Judge Moore's opinion, as well as Judge Stoll's dissent, focuses on the patent eligibility question, and is probably the most significant aspect of the case.)  The jury then found the claims infringed, and on this issue the Federal Circuit affirms in part and reverses in part, holding that only one of the two patents in suit was infringed.  For that reason, the court also vacates the damages award and remands for reconsideration, although it concludes that the actual damages awarded were supported by substantial evidence, and that there was no error in the district court's finding of no willfulness.  What follows relates to these parts of the opinion. 

First, as to actual damages, the jury awarded $9,802,228 in reasonable royalties and $4,840,320 in lost profits.  The court rejects Kaz's arguments that these awards were unsupported by substantial evidence, despite the facts that (1) the royalty amounted to 71% of Kaz's profit on sales of infringing units, and (2) the lost profits were premised on Exergen's argument that CVS, which did not sell Exergen thermometers, would have done so but for the infringement:
Kaz argues both the reasonable royalty and lost profits portions of the jury’s damages award are unsupported by substantial evidence. It argues that the reasonable royalty part of the jury’s award translates into a per-unit rate of 32% of the projected sales price and 71% of Kaz’s projected per-unit net profit. It argues the hypothetical, nonexclusive, U.S.-only royalty agreement contemplated in this case should be set at a rate less than 5.7%, the rate for the worldwide and exclusive license agreement Kaz entered for a different thermometer. Kaz also argues the lost profits portion of the jury award improperly included lost profits for CVS stores, where Exergen did not sell any products.
While a royalty that would have given Exergen 71% of Kaz’s projected net profit is certainly steep, we do not review such fact findings de novo. There was substantial evidence presented at trial which supports the jury’s conclusion that in a hypothetical negotiation, Kaz would have been willing to pay such a price to enter the market. Exergen’s damages expert went through each of the factors in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), explaining why each relevant factor weighed in favor of a high royalty rate. For instance, Exergen’s expert explained that the parties were “fierce competitors” at the time of the hypothetical negotiation, and Exergen would have known that if it licensed the patents to Kaz, it would have lost sales. J.A. 16287. He testified that Exergen had no licenses with respect to the patents-in-suit, and would have needed to be “highly incentivized” to license the patents for a technology with “advantages that other products didn’t have, namely, the noninvasive, the gentle nature of the product.” J.A. 16294, 16297. He further testified that Kaz would have been incentivized to “pay a slightly higher royalty” because there were nine years left on the patents, which would have been a long time to sit out of a growing market. J.A. 16296. The jury was not required to give more weight to Kaz’s license, particularly in light of mitigating testimony that the agreement was for a different type of thermometer “of unknown appeal,” was based on patent applications, and was not between competitors. J.A. 16419–20. Kaz has not presented any evidence that the jury’s reasonable royalty would not have been feasible from a business perspective—indeed, Kaz would have still made 29% of its projected per-unit profit. The jury was entitled to credit Exergen’s evidence that Kaz would have been highly motivated to pay a premium to enter the market.
The jury’s lost profits award with respect to CVS, the only retailer disputed on appeal, is also supported by substantial evidence. Trial testimony established that CVS offers its own generic products alongside a single branded product. The jury was entitled to find that had Kaz’s thermometers not been on the market, CVS would have chosen Exergen’s competing product to be the branded product. While “the patentee needs to have been selling some item, the profits of which have been lost due to infringing sales, in order to claim damages consisting of lost profits,” Poly-America, L.P. v. GSE Lining Tech., Inc., 383 F.3d 1303, 1311 (Fed. Cir. 2004), our precedent does not require sales to have been lost in any particular way. Even though the inventor testified that CVS did not carry Exergen’s products because Exergen previously sued them for patent infringement, the jury was entitled to find that in the absence of a feasible alternative product, CVS would have turned to Exergen despite their history of litigation. Trial testimony demonstrated that another major retailer who Exergen had previously sued “got over it” and later carried Exergen’s product. J.A. 16411–13 (pp. 18-20).
On balance, and despite the rather skewed nature of the profit split (which, by the way, appears to be a split of the entire profit made from sales of infringing devices), the court's reasoning seems resasonably persuasive, assuming there is no double-counting here; though I'd note that this may be one of those situations in which (in principle) the plaintiff would have been entitled to lost profits on Kaz's sales if it had been able or willing to provide sufficient proof on the matter.  As Lemley and others noted, sometimes an award of reasonable royalties is really a substitute for an unproven or unprovable lost profits award, and this may be one such case.

As for willfulness/enhanced damages, the trial court granted summary judgment of no willfulness prior to the Supreme Court's decision in Halo, based on its conclusion that Kaz's invalidity arguments were not objectively unreasonable.  After Halo, the court reconsidered but concluded that there was still no basis for finding the infringement to have been willful:
We cannot conclude that the district court abused its discretion in applying the Read factors and declining to award enhanced damages. Because the Supreme Court held that Seagate’s requirement of “a finding of objective recklessness in every case before district courts may award enhanced damages” unduly restricted the discretion of the district court, Halo, 136 S. Ct. at 1932, we have vacated previous enhanced damages decisions premised only on Seagate’s objective prong. . . . But in this case the district court’s summary judgment of no willfulness based on the objective prong of Seagate was not the only rationale on the record. The district court did not clearly err in its later consideration of the Read factors. For example, the district court found that no evidence of copying existed, that no concealment or litigation misconduct had occurred, and that Exergen was able to “more than adequately vindicate its rights.” Halo, 136 S. Ct. at 1933, the district court took into account the particular circumstances of this case and concluded “on balance, this case is not of an exceptional nature warranting an award of multiple damages.” J.A. 54.
Exergen argues a jury must consider willfulness before the district court may exercise its discretion to enhance damages under § 284, but such a blanket rule is directly contrary to the Supreme Court’s mandate that courts exercise their discretion free from inelastic rules like the Seagate test. Halo, 136 S. Ct. at 1933–34; see Arctic Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350, 1371–72 (Fed. Cir. 2017) (refusing to adopt a blanket rule that a district court abuses its discretion by deciding an issue without briefing by the parties). Even if the jury had found that Kaz’s infringement was willful, “an award of enhanced damages does not necessarily flow from a willfulness finding.” Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017). Under the circumstances of this case, the district court did not abuse its discretion in analyzing the Read factors, taking into account the overall circumstances of the case, and denying enhanced damages. We affirm the district court’s denial of enhanced damages (pp. 21-22).
I don't see anything in particular to take issue with on this issue, and (unlike the award of actual damages) on this matter there will be nothing for the district court to reconsider on remand.

Tuesday, March 13, 2018

JFTC to Host Digital Economy and Competition Policy Symposium

Following on from Sunday's post, the Japan Fair Trade Commission and the Competition Policy Research Center are hosting an event titled "Osaka International Symposium: Digital Economy and Competition Policy–IoT, Data, Platforms and Laws" on Friday, March 30, 2018.  (Hat tip to Professor Jorge Contreras for alerting me to this.)  Here is a link, and here is the symposium description:
While innovation is being created one after another through utilization of big data, development and diffusion of artificial intelligence (AI) and IoT, there is concern that parties with a dominant position, such as having the fundamental technology for doing business, distort competition or impose unfair business conditions. In particular, behaviors of giant platformers, standard essential patents owners and “patent trolls” are attracting a lot of attention.
In this symposium, we discuss, in the course of the progress of digital economy, in what kind of competitive environment companies are placed, and what is the role of the competition law and competition policy, taking into consideration domestic and overseas movements.
1. Date: 30 March, 2018 (Fri) 13:00-17:30
2. Osaka Bar Association Building 2nd Floor Hall (
3. Agenda
Chair: Director Yosuke Okada, Professor, Hitotsubashi University/Director of CPRC
(1) Opening remarks (13:00 – 13:10)
Mr Masatoshi Ohara, President of Osaka Bar Association (OBA)
(2) Session I: IPRs and Competition Laws in the IoT/AI Era (13:10-14:15)
Session Chair: Fumio Sensui, Professor, Kobe University
Speaker: Jorge L. Contreras, Professor, the University of Utah
Commentators: Kazonori Shibata, KYOCERA Corporation
Noboru Kawahama, Professor, Kyoto University
Liyang Hou, Professor, Shanghai Jiao Tong University
(3) Session II: Data, Platforms and Laws- State of Play and the Way ahead (14:30-17:20)
Session Chair: Prof Thomas K. Cheng, Hong Kong Competition Commission Commissioner /
Associate Professor, University of Hong Kong
Reports from Public Antitrust Enforcers' and Advisors' View - Japan, Germany and the EU -
Speakers: Reiko Aoki, Commissioner, JFTC
Thomas Weck, Monopolies Commission, Germany
Simon Vande Walle, European Commission (DG Competition)
<Comments and Panel Discussion (15:50-17:20)>
Comments from: Noriko Fukuoka, Panasonic IP Management Co., Ltd
Takayuki Hamanaka, Attorney, Habataki Law Office/OBA
(4) Closing remarks (17:20-17:30)
Akira Negishi, Professor, Kobe University
[Host]: Competition Policy Research Center, Japan Fair Trade Commission
[Co-sponsor]: Osaka Bar Association, Kansai Economic Federation, Osaka Chamber of Commerce and Industry,
Japan Electronics and Information Technology Industries Association Kansai Branch, Kobe University*
[Note]: This symposium was supported by JSPS KAKENHI Scientific Research (A)"Rebuilding of a new competition policy for innovation and platform business"
[Application]: Please send your name and organization to CPRC address ( by e-mail.
[Fee]: Free
[Language]: Japanese-English Simultaneous interpretation

Sunday, March 11, 2018

JPO, RIETI to Host SEP Symposium on Tuesday, March 13

Professor Masabumi Suzuki has alerted me to the METI JPO-RIETI International Symposium, titled Toward Solving Disputes over Standard Essential Patents (SEPs): Licensing 5G SEPs, which takes place on Tuesday, March 13 in Tokyo.  (Presumably one of the topics of conversation will be the JPO's "Invitation for Public Comments on the Draft of 'Guide to Licensing Negotiations involving Standard Essential Patents,'” which Draft Guide I hope to have more to say about sometime later this week or next, after I've had a chance to review it.)  For now, here is the symposium agenda, from the symposium webpage


We are now in the era of the Internet of Things (IoT), in which various things that have not been connected via networks hitherto, such as home electronics and automobiles, can be done so. Also, we are moving toward the 5G era, i.e., the fifth generation mobile communication system, in which larger amounts of data can be exchanged in real time. Meanwhile, standard essential patents (SEPs) are being used for manufacturing products using advanced communication technologies, such as IoT. Licensing negotiations that were conducted among companies in the telecommunications industry also are now being conducted between and among different industries. As a result, new issues have arisen about licensing agreements in terms of, for example, differences in licensing rules and methods of determining royalties.

Under these circumstances, the Japan Patent Office (JPO) is working to formulate guidelines to be used to help prevent or smoothly resolve disputes over SEPs. At this symposium, experts from within and outside Japan, including researchers from RIETI, legal professionals, and intellectual property professionals, will collaborate to discuss and report on the current and future issues involving SEPs. Discussions will be held on international arbitrations that are expected to settle licensing negotiations and disputes involving SEPs immediately in an integrated manner.


  • Time and Date: 9:30-18:00, Tuesday, March 13, 2018 (Registration starts at 9:00)
  • Venue: Kioi Conference, Main RoomOpen a new window (Kioicho 1-4, Chiyoda-ku, Tokyo)
  • Languages: Japanese / English (with simultaneous interpretation)
  • Admission: Free
  • Host(s): Research Institute of Economy, Trade and Industry (RIETI) / Japan Patent Office (JPO)
  • Seating Capacity: 200 (Pre-registration required)
  • Contact: Ms. MARUTAKE at RIETI (E-mail
    Tel: 03-3501-8398

9:30-9:35 Opening Remarks

NAKAJIMA Atsushi (Chairman, RIETI)

9:35-9:55 Keynote Speech "Creating Guidelines for Negotiations on SEP Licensing and Utilization of International Arbitration"

MUNAKATA Naoko (Commissioner, Japan Patent Office)

9:55-10:25 Special Lecture 1 "Changes in the Environment Surrounding SEPs and Trends in Each Country in Recent Years"

David KAPPOS (Former Director, United States Patent and Trademark Office)

10:25-10:55 Special Lecture 2 "Current Situation and Issues of International Arbitration for Resolving Disputes Concerning SEPs"

Randall RADER (Former Chief Judge, Court of Appeals for the Federal Circuit)

10:55-11:05 Break

11:05-12:25 Panel Discussion 1 "Ideal Modality of Negotiations on SEP Licensing"

Session Chair
Heinz GODDAR (Senior Partner, Boehmert & Boehmert / German Patent Attorney and European Patent and Trademark Attorney)
Panelists (in alphabetical order)
Gustav BRISMARK (Chief Intellectual Property Officer, Ericsson)
Christian LOYAU (Legal Affairs Director, European Telecommunications Standards Institute (ETSI))
NAGASAWA Kenichi (Group Executive of Corporate Intellectual Property & Legal Headquarters, Canon)
SUZUKI Masabumi (Faculty Fellow, RIETI / Professor, Nagoya University Graduate School of Law)

12:25-13:40 Lunch Break

13:40-15:00 Panel Discussion 2 "Preventing Disputes over SEPs Involving Parties from Different Industries in the 5G Era"

Session Chair
David KAPPOS (Former Director, United States Patent and Trademark Office)
Panelists (in alphabetical order)
ENDO Yoshihiro (Manager, Intellectual Property and Standardization Division, Honda Motor Co., Ltd.)
Dan LANG (Vice President of Intellectual Property, CISCO)
Max OLOFSSON (Director of Licensing, AVANCI)
Ilkka RAHNASTO (Vice President and Head of Patent Business, Nokia)

15:00-15:10 Break

15:10-16:30 Panel Discussion 3 "Concept for Calculating FRAND Royalty Rates"

Session Chair
NAGAOKA Sadao (Faculty Fellow, RIETI / Professor, Tokyo Keizai University)
Panelists (in alphabetical order)
John HAN (Senior Vice President, Qualcomm Inc. and General Manager, Qualcomm Technology Licensing)
Dylan LEE (Deputy Director for IP Licensing and Transaction, Huawei)
TAKAHASHI Hiroshi (Manager, IP Development Section 1, Innovation IP Department, Panasonic Intellectual Property Management Corporation)
BJ WATROUS (Vice President & Chief IP Counsel, Apple Inc.)

16:30-16:40 Break

16:40-18:00 Panel Discussion 4 "Utilization of International Arbitrations as a Means for Resolving Disputes over SEPs"

Session Chair
TAMAI Katsuya (Professor, Research Center for Advanced Science and Technology, University of Tokyo)
Panelists (in alphabetical order)
Klaus GRABINSKI (Judge, Federal Court of Justice (Bundesgerichtshof), Germany)
Zhipei JIANG (Former Chief Judge, IP Supreme People's Court)
KATAYAMA Eiji (Attorney at Law, Patent Attorney, ABE, IKUBO & KATAYAMA)
Randall RADER (Former Chief Judge, Court of Appeals for the Federal Circuit)