UNIVERSITÄT BAYREUTH
Patent trolls: a European perspective Ansgar Ohly Oxford Intellectual Property Research Centre 2 March 2010
On trolls in Norway …
De tre bukkene Bruse som skulle gå til seters og gjøre seg fete Det var engang tre bukker som skulle gå til seters og gjøre seg fete, og alle tre så hette de Bukken Bruse. På veien var det en bro over en foss, som de skulle over, og under den broen bodde et stort, fælt troll, med øyne som tinntallerkener, og nese så lang som et riveskaft. Først så kom den yngste Bukken Bruse og skulle over broen. Tripp trapp, tripp trapp, sa det i broen. …
… and in the patent system.
„Somebody who tries to make a lot of money from a patent that they are not practicing and have no intention of practicing and in most cases never practiced” Peter Detkin
Outline
1. Diagnosis 2. Therapy
Outline
1. Diagnosis 1.1 Three cases 1.2 „Trolls“: monsters or bridge builders? 2. Therapy
1.1
Three cases
NTP v Research in Motion • Patent on vaguely described “electronic mail system with RF communications to mobile processors and method of operation thereof“ • CAFC grants injunction: NTP v Research In Motion 418 F.3d 1282 (2005) • Settlement for $ 612,5 Millions • Troll or David v Goliath?
1.1
Three cases
eBay v MercExchange • Patent (29 claims) on internet market place ‐ Claim 1a: “A system for presenting a data record of a good for sale to a market for goods, said market for goods having an interface to a wide area communication network for presenting and offering goods for sale to a purchaser (...)”
• CAFC: 401 F.3d 1323 (2005) ‐ eBay’s “buy now“ option covered by claims ‐ permanent injunction should be issued absent exceptional circumstances
1.1
Three cases
eBay v MercExchange • Supreme Court (126 S Ct 1837 (2006)) sets aside CAFC judgment • Four factors test: injunction will issue when plaintiff shows (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
1.1
Three cases
http://www.ipcom-munich.com
1.1
Three cases
The IPCom litigation • 2007: patents relevant for key IT standards purchased from Bosch • Claims against Nokia, HTC and T‐Mobile before LG (= Regional Court) Mannheim (12 billion € (!)) • 27 Feb 2009: LG grants injunction (Mitt 2010, 25) • 11 May 2010: stay of execution granted by OLG (= Court of Appeal) Karlsruhe (Mitt 2010, 30) • 14 Jan 2010: Nokia withdraws complaint for abuse of dominant position, Commission closes investigation • 18 Jan 2010: two IPCom patents revoked by Patents Court (Floyd J) ([2009] EWHC 3482 (Pat))
1.2 “Patent trolls“: monsters or bridge builders?
or
?
Outline
1. Diagnosis 2. Therapy
2.1
Therapy: overview
Two words of caution:
Don‘t throw him out!
No “patent remedy“
Outline 1. Diagnosis 2. Therapy 2.1 Novelty and inventive step 2.2 Remedies of procedural law 2.3 Compulsory licence for non‐working 2.4 Abuse of rights 2.5 Competition law: abuse of dominant position 2.6 Estoppel 2.7 Limiting injunctive relief 2.8 Assessment of damages
2.1
Therapy: novelty and inventive step
• Novelty and inventive step ‐ “raising the bar“ ‐ attack on validity
2.2
Therapy: procedure
• Novelty and inventive step • Remedies of procedural law ‐ Stay of execution (OLG Karlsruhe)
2.3
Therapy: compulsory licenses
• Novelty and inventive step • Remedies of procedural law • Compulsory licence for non‐working ‐ E.g. Art 21 (1) draft EU Patent Regulation: “The Community Patent Court may grant a compulsory licence for lack or insufficiency of exploitation of a Community patent to any person filing an application four years or later after the patent application was filed and three years or later after the patent was granted if the patent proprietor has not exploited the patent in the Community on reasonable terms or has not made effective and serious preparations to do so, unless he provides legitimate reasons to justify his inaction. (...)”
2.4 • • • •
Therapy: abuse of rights
Novelty and inventive step Remedies of procedural law Compulsory licence for non‐working Abuse of rights ‐ Different national doctrines: patent misuse (US), abus de droit (F), Treu und Glauben / Rechtsmissbrauch (D) ‐ Abuse of dominant position (art 102 TFEU) as more specific case
2.5 • • • • •
Therapy: competition law
Novelty and inventive step Remedies of procedural law Compulsory licence for non‐working Abuse of rights Competition law: abuse of dominant position
2.5
Therapy: competition law
Competition law • What is the relevant market? ‐ Dominant position (‐) if technology can be substituted
• Abuse ‐ Refusal of licence not sufficient ‐ Three cumulative criteria (Magill, C‐241, 242/91 P; IMS Health, C‐ 418/01): (1) emergence of a new product prevented (2) for which there is a potential consumer demand that it is (3) unjustified and such as to exclude any competition on a secondary market. ‐ CFI in Microsoft case (T‐201/04): broader view of possible criteria ‐ Federal German Supreme Court (Germany) [2005] IIC 741 – Standard tighthead drum ‐ Federal Supreme Court GRUR 2009, 694 – Orange Book Standard
2.6 • • • • • •
Therapy: estoppel
Novelty and inventive step Remedies of procedural law Compulsory licence for non‐working Abuse of rights Competition law: abuse of dominant position Relevance of FRAND declaration ‐ Overlap “troll cases“ – standardisation issues ‐ Contract for the benefit of third parties? ‐ Standardisation estoppel (see Merges and Kuhn, 97 Cal L R 1 (2009))
2.7 • • • • • • •
Therapy: restricting injunctive relief?
Novelty and inventive step Remedies of procedural law Compulsory licence for non‐working Abuse of rights Competition law: abuse of dominant position Relevance of FRAND Restricting injunctive relief?
2.7
Therapy: restricting injunctive relief?
The common law position • US approach ‐ Four‐factors‐test: eBay v MercExchange 126 S Ct 1837 (2006) ‐ Lemley and Shapiro, 85 Texas L Rev 1991, 2035 (2007)
• English law ‐ Jaggard v Sawyer [1994] EWCA Civ 1 ‐ Cantor Gaming v Gameaccount Global Ltd [2007] EWHC 1914, para 112: “Nothing in the more recent approaches to the law, whether in the CPR or the EU Enforcement Directive (... ), suggests that the power of the court to refuse relief in the case of technical breaches or trivial matters has been removed. To the contrary, the concept of proportionality has been given greater status in recent times, reinforcing the fact that the court should not encourage costly litigation over very little by granting relief even in trivial cases.”
2.7
Therapy: restricting injunctive relief?
• P!: no distinction common law – equity in civil law countries ‐ See e.g. § 139 German Patents Act: “An injunction can be claimed against any person who uses a patented invention contrary to §§ 9 to 13 when there is a risk of renewed infringement. (...)“
• Art 11 IPR Enforcement Directive (2004/48/EC) ‐ Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. (...)
2.7
Therapy: restricting injunctive relief?
How to interpret art 11? • Wording inconclusive ‐ judicial authorities “may“ ‐ WTO Panel WTO Panel Report WT/DS79/R of 24 August 1998, EC/India: “issue of judicial discretion, not that of general availability”
2.7
Therapy: restricting injunctive relief?
How to interpret art 11? • Wording inconclusive ‐ judicial authorities “may“ ‐ WTO Panel WTO Panel Report WT/DS79/R of 24 August 1998, EC/India: “issue of judicial discretion, not that of general availability”
• General principles of IP law? ‐ Art 98 TMR: the court “shall, unless there are special reasons for not doing so, issue an order prohibiting the defendant from proceeding with the acts which infringed” ‐ ECJ, case C‐316/05, Nokia/Wärdell [2006] ECR I‐12083
2.7
Therapy: restricting injunctive relief?
• Converse argument from art 12? ‐ Member States may provide that (...) the competent judicial authorities may order pecuniary compensation to be paid to the injured party instead of applying the measures provided for in this section if that person acted unintentionally and without negligence, if execution of the measures in question would cause him/her disproportionate harm and if pecuniary compensation to the injured party appears reasonably satisfactory
• General principle (art 3 (2)) ‐ Those measures, procedures and remedies shall also be effective, proportionate and dissuasive
2.7
Therapy: restricting injunctive relief?
• Recital 17 ‐ The measures, procedures and remedies provided for in this Directive should be determined in each case in such a manner as to take due account of the specific characteristics of that case, including the specific features of each intellectual property right and, where appropriate, the intentional or unintentional character of the infringement.
• Recital 24 ‐ Depending on the particular case, and if justified by the circumstances, the measures, procedures and remedies to be provided for should include prohibitory measures aimed at preventing further infringements of intellectual property rights.
2.7
Therapy: restricting injunctive relief?
Factors of disproportionality: a proposal for a test • Does the product require the use of high number of inventions? • Are the costs of stopping the infringing activity significantly higher than expected amount of damages? • Is the claimant a non‐inventing and non‐practicing entity? • Has the defendant copied the invention or has he/she devised it independently? • Did the infringer act intentionally or only with (slight) negligence?
2.8 • • • • • • • •
Therapy: assessment of damages
Novelty and inventive step Remedies of procedural law Compulsory licence for non‐working Abuse of rights Competition law: abuse of dominant position Relevance of FRAND Disproportionality of injunctive relief Assessment of damages ‐ Many licences needed? ‐ Cost of “inventing around“ (see Reitzig/Henkel/Heath, Research Policy 36 (2007) 134)
3
Conclusion
Thank you for your attention!
