Welcome to 2020! Here's what happened around the IP blogs while you were digital detoxing over eggnog.

Mittens is casually easing into another decade of IP blogging Source: Cats are on top

End of the year (and decade) content 

Patent industry insiders shared their Christmas wishlists on IP Watchdog. Their wildest IP dreams for 2020 range from no more monkeys in courtrooms (literally) to the USPTO Director taking on the responsibility of instituting America Invents Act trials and the US government maintaining a database of patent ownership and transactions.

IP Watchdog also asked its experts to gaze into their crystal balls and make predictions about the future. Some are looking forward to major IP decisions on the US Supreme Court docket, while others forecast more litigation on AI, deep fakes, cannabis, and paparazzi photos.

Patently-O made graphics showing the number of utility patents issued per year and per decade. 2019 and the 2010s both saw record numbers.

Kluwer Patent Blog shared it's top 10 most popular posts of 2019. Posts on management and leadership at the European Patent Office dominate the list.

Kluwer Copyright Blog also shared its top 10 most popular posts of 2019. The top spots are occupied by posts clarifying various aspects of the new Copyright Directive.

The 1709 Blog published a thorough, lengthy recap of copyright news in 2019. Catch up on the eventful year here.


Patents

Do some changes in the Inventor Rights Act of 2019 sound familiar to you? Patently-O explained their historical underpinnings.

Longstanding and economically efficient balance in Standard-Essential Patent (SEP) licensing is being destabilized by misinformation and manipulation of commercial practices and of benchmarks in Fair, Reasonable and Non-Discriminatory (FRAND) licensing. This is epitomized in litigation between Apple and Qualcomm, commencing January 2017, until settlement in April 2019 and in the US Federal Trade Commission’s antitrust action against Qualcomm also commencing around the same time and now on appeal. Find out more on IP Finance.

Trade Marks

Over the past few weeks, two courts cases dealt with the scope of protection of the PDO “Aceto Balsamico Tradizionale di Modena” and the PGI “Aceto Balsamico di Modena”. Both courts agreed that "Acerto" and "Balsamico" are generic and common terms which do not fall under the scope of protection of PDOs/PGIs, but one of them found enough “evocation” to establish infringement. Kluwer Trade Mark Blog wrote about these decisions. 


Copyright

In reaction to the impact of illegal distribution of audiovisual content, some important improvements in the fight against piracy were made. Kluwer Copyright Blog compared two types of court orders created for sport events: "fast injunctions" in Italy and "super injunctions" in the UK.

The IPKat is grateful to the eagle-eyed FRAND watcher Richard Vary for this guest contribution:

Readers will remember the news of Christmas 2017: Judge Selna in the Central District of California determined the FRAND royalties that TCL should pay to Ericsson. The decision attracted comment because the rates were very much lower than the findings that Mr Justice Birss had made in relation to Ericsson's portfolio in Unwired Planet, despite similar evidence

Today the Court of Appeals of the Federal Circuit overturned that decision.

Ericsson appealed on two grounds: that it had been deprived of its right to a jury trial, and that Judge Selna's calculations contained many errors. Happily for Ericsson, but disappointingly for followers of FRAND, the CAFC agreed with the first of those grounds. That means it did not need to look at the second.

The right to a trial by jury arises from the Seventh Amendment to the US constitution. This provides that “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be pre-served . . . .” . If the Claimant would have had a right to a jury trial in the common law courts of England (before the courts of law and equity were merged) then he shall have that right in the US.

The issue was whether the relief granted by Judge Selna was legal or equitable. According to a case called Dairy Queen v Wood where there were mixed legal claims and equitable claims arising from the same facts, the legal claims must first be decided by a jury. Judge Selna had determined that all remaining claims were equitable, so could be determined by a bench trial. The CAFC disagreed with Judge Selna in respect of  the past payments that TCL must make to Ericsson, finding that although in form these were an element of the injunctive relief, in substance these were damages for patent infringement. Those are a legal remedy, and as such were a matter for the jury.

As a consequence, Judge Selna's decisions in relation to Ericsson's offers, and his determination of both past and prospective royalties, were vacated. The case is remanded for a jury trial.

The IPKat is delighted to receive this guest report on the latest development in the ongoing FRAND wars, this time from Germany and concerning the requirements for a FRAND offer. Rien Broekstra and Gaëlle Béquet of Brinkhof (Amsterdam), who represent Wiko in the parallel Dutch litigation, are the authors.

On 30 October, the higher regional court (“OLG”) of Karlsruhe handed down its first decision on the merits on FRAND (case number 6 U 183/16) since the landmark CJEU ruling in Huawei v. ZTE. It confirms that holders of Standard Essential Patents (“SEPs”) must comply with certain (information) duties vis-à-vis willing licensees in order to avoid contravening Article 102 TFEU, and that the date of filing of a complaint is not a cut-off date for fulfilling duties under the Huawei framework.

The facts of the case

Plaintiff and SEP holder Philips notified defendant and implementer Wiko on 28 July 2015, that Wiko’s sale mobile phones allegedly infringed Philips’ SEPs. The notification contained partial mappings of claim features of the patent in suit to the UMTS and LTE standards implemented in Wiko’s phones, and a license offer. Wiko’s reply, wherein it indicated that it was willing to negotiate a license, was received by Philips on 21 October 2015. Two days earlier, Philips had filed infringement lawsuits against Wiko. During the proceedings, Wiko made a counteroffer backed up with a matching escrow. Negotiations took place during the proceedings, but parties did not reach agreement on a FRAND license.

The decision

Regarding FRAND, the decision revolves around the nature and extent of the obligations for SEP holder and implementer that flow from Huawei, and around the question whether these obligations must be fulfilled before a lawsuit is filed.

Nature: non-compliance with Huawei duties will, as a rule, lead to a finding of abuse

The OLG reiterates the criteria set out by the CJEU, which – if followed by the SEP holder – exclude abuse of a dominant position. The court characterizes these criteria as formal and material duties (“Pflichten”) on the SEP holder. Among the duties of the SEP holder is the provision of a written license offer on FRAND terms, as well as the provision of information with regard to the royalty. The duties, however, only exist vis-à-vis an implementer that shows itself to be a willing licensee by meeting certain obligations (“Obliegenheiten”).

The OLG is of the opinion that, if the SEP holder does not follow these duties, the pursuit of an injunction claim will, as a rule, amount to abuse of dominance. If, however, the implementer does not meet its obligations or is employing delaying tactics, the duties of the SEP holder will be suspended, and the pursuit of an injunction can be justified.

Timing: complaint filing date is not a cut-off date

The OLG does not set stringent demands on the first Huawei duty: the SEP holders infringement alert. The alert must put the implementer in a position to assess whether the infringement allegation is prima facie without merit. For that purpose, claim charts are not necessarily required. The time allowed to the implementer for making such assessment is relatively short. The almost three months that had passed between Philips’ alert and Wiko’s reaction was deemed too long.

However, the OLG is of the opinion that both SEP holder and implementer can make up failures in meeting their obligations after a lawsuit was filed. The OLG held that it is not contrary to the CJEU’s decision to qualify the pursuit of an injunction as abusive only after the (initially non-abusive) filing of a lawsuit, for example, when the implementer complies with its obligations only after being sued. The OLG is of the opinion that the obligation to grant a license on FRAND terms, as well as the negotiation obligations set out in Huawei, exist regardless of the existence of lawsuits.

The OLG goes on to explain that, in view of the principle of proportionality, it is not necessary to curtail the rights of a SEP holder by denying him the possibility to make up compliance failures after filing suit, as the SEP holder can always avoid undue pressure on the implementer e.g. by suspending the proceedings. Likewise, the OLG does not think it necessary to curtail the implementer’s right to a FRAND license by denying the implementer similar make up possibilities. The OLG notes that this does not give the implementer the possibility to delay the proceedings, since the risk associated with late compliance remains with the implementer. E.g. if due to late compliance of the implementer, there is insufficient time within the proceedings for the SEP holder to comply with subsequent duties, the pursuit of an injunction will not constitute abuse.

Extent: SEP-holder must substantiate FRANDness of license offer

According to the OLG, the information duty following from Huawei § 63 requires that the SEP holder present the implementer with information on objective circumstances that allow the implementer to determine whether the license offer from the SEP holder is FRAND. While the duty does not generally require disclosure of the full content of all license agreements concluded with others, it does require that the implementer is put in a position to assess if and why he is treated differently from existing licensees. Absent such information, the implementer cannot meaningfully assess the SEP holder’s license offer.

In the case in point, there was at least one lump sum license concluded with another party with conditions different from the license on offer. Philips was therefore obliged to disclose and explain at least the essential conditions of that license. Since it did not offer any explanation, Philips was held not to have complied with its information duty.

The OLG does not find relevant, and does therefore not assess, whether Philips’ license offer was in fact FRAND. By not fulfilling its information duties, Philips undermined expedient negotiations for a FRAND license. Therefore, the pursuit of injunction, recall and destruction claims constitute an abuse of a dominant position. These claims are therefore denied.


Comment

The decision strengthens the German body of appellate level FRAND case law on the Huawei obligations [see e.g. here]. However, it is becoming increasingly apparent that there are serious divergences in the application of supposedly uniformed European law in various member states – in particular in Germany, the United Kingdom and the Netherlands.

On the nature of the obligations, the Karlsruhe appeals courts appears to be stricter than its British and Dutch counterparts. These have so far viewed the steps in Huawei as guidelines for good faith negotiations. When fulfilled, the SEP holder is in a safe harbor, and starting injunction proceedings will not amount to an abuse of dominance. If a SEP holder steps outside of these bounds, it does not necessarily contravene Article 102 TFEU. Rather, the court then needs to assess based on the circumstances of the case whether or not there is abuse of dominance.

The OLG acknowledges that abuse is to be assessed based on all circumstances of the case. Nevertheless, the decision firmly indicates that in that assessment, the correct fulfillment of duties by the SEP holder carries considerable weight – in particular the information duty. The pursuit of an injunction while failing to comply with a duty will, as a rule, constitute abuse (unless the implementer is being non-compliant).

On timing, the German decision is largely in line with the UK courts – there, the CoA held that its approach on timing was indeed consistent with the flexible approach taken earlier by the German courts. It is, however, fundamentally different from the approach of the Dutch CoA, which is of the opinion that, at least within the context of Huawei, the moment of bringing the action is decisive.
On the extent of the obligations for the SEP holder, in particular on the substantiation requirements of the FRAND offer, the approaches of the German and Dutch courts are diametrically opposed.

The OLG is clear that there is a separate duty on the SEP holder to explain and substantiate why its offer is FRAND. Non-fulfilment of this duty alone makes the pursuit of an injunction abusive. Moreover, the OLG suggests that in legal proceedings, the burden of proof of FRANDness of the offer may well be on the SEP holder, not the other way around.

In contrast, the Dutch court ruled earlier in the parallel Dutch case (on essentially the same facts) that Huawei does not impose an obligation on the SEP holder to explain, substantiate or prove the FRANDness of the offer. The burden of proof of FRANDness was held to be on the implementer – and the SEP holder was not obliged to provide any information, even when it was clear that different licenses had been concluded.

The OLG realizes that the interpretation of the obligations under Huawei, in particular on timing and extent of obligations, needs further clarification. It therefore allowed a further appeal to the Federal Court of Justice. The Dutch cases referenced above are in the stage of Supreme Court appeal already. It will be interesting to see whether the highest instances will provide alignment on these issues, or whether they will decide to refer the matter to the CJEU.

This morning, the Court of Appeal handed down its judgment in Conversant Wireless Licensing S.A.R.L v Huawei Technologies Co. Ltd, ZTE Corporation and Ors [2019] EWCA Civ 38.  As regular Kat readers will know, the appeal concerns the English court's jurisdiction to grant a global FRAND licence where UK sales only account for 1% or less of the sales on which royalties are claimed.  The Kat's correspondents, Jane Mutimear and Richard Vary, send this report:

On 30 January 2019 the Court of Appeal handed down its judgment in Huawei and ZTE's appeal against Carr J's refusal to dismiss the case brought against them by Conversant on jurisdictional grounds.  The Court of Appeal dismissed the appeal, with Lord Justice Floyd setting out the reasons with which Lord Justices Flaux and Patten agreed. 


Background

Conversant sued both companies on patents it claims are standard essential, seeking injunctive relief and damages, together with a declaration that it had made FRAND offers or a determination of the FRAND terms.  Huawei and ZTE challenged jurisdiction on two grounds: 1) that the case would raise validity and infringement of foreign patents which is not justiciable subject matter in the English Court and 2) that the Chinese court is the natural and appropriate forum so the Court should refuse permission to serve the Chinese entities out of the jurisdiction on forum non conveniens grounds.  Following the CoA judgment in Unwired Planet v Huawei, the appellants accepted that the justiciability point was no longer arguable before the Court of Appeal, so the Court only had to deal with the forum non conveniens ground (which Huawei had not argued in Unwired Planet).  The appellants also proposed that if the appeal failed on this point, questions should be referred to the ECJ.  The judgment goes through the background of licensing in the SEP area, quoting from the Court of Appeal's judgment in Unwired Planet, and explained briefly the wider fight between the companies, which includes proceedings commenced in China by Huawei China and ZTE China against Conversant seeking to invalidate Conversant's Chinese patents and seeking a FRAND determination.

Jurisdiction over UK defendants

The Court addressed the position as against the two UK domiciled appellants, turning to the Brussels Recast Regulation Article 4, which provides that "persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State" and relied on the CJEU judgement in Owusu v Jackson [2005] for authority that the English court could not apply forum non conveniens to decline jurisdiction over a claim against a person domiciled in a contracting state on the ground that the natural forum for the claims was the courts of a non-contracting state.  The question was whether this reasoning applied to cases involving Article 24 (giving Member States exclusive jurisdiction over proceedings involving registration or validity of patents).  The Court concluded that it was a matter of discretion for the court whether to assume jurisdiction under Article 4 when the subject matter fell within Article 24 (relying on the judgment of Andrew Smith J in Ferrexpo v Gilson [2012]).

Service out of the jurisdiction on Chinese companies

Turning to service on the Chinese entities, there was no dispute that the first two hurdles were met: 1) the claim falls within a gateway (CPR 6 PDB) and 2) there is a serious issue to be tried.  The dispute related to the third hurdle i.e. whether England and Wales is the proper forum to hear the case.  The "case" for this analysis is not just what the Claimant has pleaded; the court must have regard to the totality of the dispute, including the likely defence and the case must be characterised in a way which does not pre-judge the appropriate forum.

The evidence before the judge at first instance had caused him to conclude that the Chinese courts did not have jurisdiction to determine essentiality or infringement of non-Chinese patents, nor did they have jurisdiction to determine FRAND rates without agreement from both parties.  Conversant had not agreed to accept the Chinese court's jurisdiction for such determination and the judge had concluded that their refusal was reasonable.  It was on this basis that the judge had concluded that China was not an alternative available forum.

The appellants sought to adduce new evidence before the Court of Appeal to introduce the Guangdong Court Guidelines, which had been issued 10 days after Carr J had handed down judgment, but before the order was sealed.  These guidelines stated that where the territorial scope of the SEPs in question exceeded the territorial scope of the court and the other party did not object (or the objection was deemed unreasonable), the court could determine the royalty.  The Appellants sought to rely on this as evidence that the Chinese court would now exercise jurisdiction to determine essentiality, infringement and FRAND for a global portfolio in circumstances where both parties consented and their expert claimed that if the facts were analogous to this case, the court would take the view that the refusal to agree was unreasonable. Conversant's expert disagreed and pointed out that there was no case law on the circumstances in which it would be "unreasonable" for one party to object. The Court of Appeal agreed with Conversant's expert.  The Guidelines had been introduced for a trial period and it was speculative to interpret them in the way the appellants' expert was seeking to do.

In reaching its decision the Court of Appeal stated that it was clear that you could get different answers to the forum conveniens questions, depending on the level of generality at which the dispute is characterised.  If you just look at the relief which would be granted in the English court, that would be too specific.  But if you ended up making the claimant pursue a claim on a different property right with different underlying facts in the foreign forum, that meant it had been defined too broadly. Conversant's claim was closely analogous to the claim advanced in Unwired Planet and accepted by the Court – (i) the UK patents are essential to the standard; (ii) that the claimant has complied with its ETSI undertaking in making FRAND offers; (iii) that the defendants have not so complied without any reasonable ground for so doing; and (iv) that it is entitled to enforce its UK SEPs and obtain the usual relief for infringement, including a FRAND injunction and damages, and a determination of the FRAND terms.  If Conversant were made to seek a remedy in China, they would have to advance their case based on different patents, relying on different facts.  Floyd LJ pointed out that that it was not legitimate to characterise the claim as one for the enforcement of a global portfolio right, as no such right exists.  It is a dispute involving determination of infringement, validity and essentiality of UK patents.  The FRAND element is embedded in the determination of whether Conversant is entitled to the relief for infringement of their UK SEPs.  The FRAND element cannot be considered separately for the purpose of the forum conveniens analysis.

Relevance of the new evidence

Although the new evidence in relation to the Chinese Court Guidelines would be admissible under the first Ladd v Marshall test (couldn't have been submitted at first instance trial) it did not meet the second criteria of having an influence on the outcome of the case.  There was no guidance on how the court would apply the test of when refusal by one party was reasonable, and even Huawei's letter to the Supreme Court in relation to its petition to that Court for leave to appeal in Unwired Planet stated "[T]here is no decided case in which the Chinese courts have gone further, as the English courts did in these proceedings, by conducting a global royalty-setting exercise without the consent of the parties and then imposing the result thereof as a condition of avoiding a territorial injunction."

Rejecting reference to CJEU

Finally the Court refused the CJEU reference on the basis that first, the Court of Appeal in Unwired Planet was able to reach a decision on justiciability without a reference. Secondly, Huawei had never suggested that a reference was necessary in that case, and now accepts that the Unwired CoA decision precludes any justiciability argument before the Court of Appeal in this case. Thirdly, despite a lengthy draft produced by Huawei's counsel, Floyd LJ was not persuaded that there is any lack of clarity in the relevant EU law.