Monday, July 24, 2017

Beijing High Court's Revised Guidelines for Patent Infringement Determination

And here, courtesy of Jill Ge, is a link to an English-language translation (available from China Patent Agent (H.K.) Ltd.) of the Beijing High Court's 2017 Guidelines for Patent Infringement Determination.  Articles 149 to 153 are the provisions relating to SEPs and injunctions, mentioned in my post from earlier today.

Ge, Pommiès, & Shen on the Beijing High Court's SEP Guidelines

This morning on the IAM Blog Jacob Schindler introduces a post by Jill Ge, Charles Pommiès, and David Shen on articles 149 to 153 of the Beijing High Court's Revised Guidelines for Patent Infringement Determination, which deal with the litigation of SEP cases.  I mentioned these guidelines here recently, as discussed in a post on the Kluwer Patent Blog by Yin Li, Hui Zhang, and James Yang.  Today's post also links to the guidelines themselves, in Chinese; if any readers can point me in the direction of a translation into English (or French or German), I'd appreciate it.

According to Ge et al., under article 24(2) of the 2016 Interpretations (II) of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases, "an injunction is not generally available where during the negotiations, (i) a patentee intentionally violates the FRAND obligations, and (ii) the accused infringer is clearly not at fault."  The newly issued Beijing High Court Guidelines "affirm the majority view in China that SEP-based injunctions should be denied, unless there is wrongdoing on the part of an implementer.  It should be noted that this FRAND defence to injunctions has nothing to do with the competition law."  In addition, according to the authors, "China has essentially adopted a fault-based analytical framework to assess whether a SEP injunction should be granted" patterned to some degree after the CJEU's judgment in Huawei v. ZTE, though "[c]ompared to Europe there is a greater onus on the patentee/licensor to act 'reasonably'."  In addition, the authors raise questions regarding how Chinese courts will determine whether a party is "at fault for 'obstructing or delaying the licensing negotiation without justifiable reasons,'" and whether "an offer or counter-offer [is] "clearly unreasonable."  They also note that under the guidelines if neither party is at fault the implemener should deposit an interim bank guarantee, but that "leaving the amount of payment to be determined by an implementer without checks by the court could be problematic."

For readers interested in FRAND/SEP issues, this is essential reading; according to Mr. Schindler's introduction, there are over 2O SEP cases pending at the Beiing IP Court right now, suggesting that these issues are only going to become more salient in the months to come.  Additionally, as I noted last week, you also might want to register for a free webinar tomorrow hosted by the USPTO and the Federal Circuit Bar Association covering these issues.  Ms. Ge, who as I like to point out is one of my former students, will be one of the speakers.

Thursday, July 20, 2017

Updates on Compulsory Licensing, Punitive Damages, Unwired Planet

1.  This past Monday I published a post titled German Court Affirms Preliminary Grant of Compulsory License for HIV DrugWe still are awaiting the release of the BGH's judgment in this case (all we have for now is a press release), but the June 2017 issue of GRUR has a brief discussion of the August 2016 judgment of the Bundespatentgericht in an article by Ingrid Kopacek and Wolfgang Morawek titled Aus der Rechtsprechung des BPatG im Jahr 2016:  Teil II:  Patent Recht und Gebrauchsmusterrecht ("From the Case Law of the Bundespatentgericht in 2016, Part 2:  Patent and Utility Model Law").  See pp. 545-57, see in particular pp. 555-56.  Also of possible interest, although it doesn't discuss the recent German case, is an article by Hugh Dunlop titled Compulsory Licensing under a Unitary Patent, 39 EIPR 393 (2017).  Here is the abstract:
Expectations are high that the European Unitary Patent and the Unified Patent Court will get off the ground very soon. The new court will have jurisdiction over unitary patents (and "traditional" patents granted under the EPC that are not opted-out) for actions in relation to patent infringement and licences of right, but compulsory licences are supposed to be left to national courts. This article explores whether this assumption may be challenged and, even if it stands, whether national courts may take an EU-wide view of compulsory licences under unitary patents.
2.  Also this week, Norman Siebrasse published another post on Airbus v. Bell (see my previous post here, which links to Professor Siebrasse's other posts on this case), this one discussing in greater depth the issue of determining the quantum of punitive damages in patent cases.   As Professor Siebrasse notes, the rationales for awarding punitive damages under Canadian law are retribution, deterrence, and denunciation--a trio that dates back to an 18th century English case, Wilkes v. Wood, as cited in the 2002 Canadian Supreme Court decision in Whiten--but the only one of these that provides any real guidance with regard to quantification, if only in an imperfect sense, is deterrence:  
The difficulty with this principled scheme, as I see it, is that it actually provides very little guidance in assessing quantum. Quantum must in the end be expressed as a number. Deterrence, as discussed below, naturally lends itself to quantification, but the siblings of denunciation and deterrence communicate moral values and judgments, which are by the nature almost impossible to quantify.
Highly recommended, and not just for patent aficionados. 

3.  I should also note that Professor Peter Picht's paper Unwired Planet/Huawei: A Seminal SEP/FRAND Decision From the UK, which I previously mentioned on the blog here, has been published in the July 2017 issue of GRUR Int (pp. 569-79).  Here is a link, and here again is the abstract:
With its decision in Unwired Planet (UWP) v. Huawei, Birrs J has not only handed down the first major ruling on SEP/FRAND issues in England but also decided a case that poses a number of questions which are key for this area of the law. Well aware of this, he has drafted a thorough and extensive opinion that is likely to have considerable impact – not only – on the development of EC law. Inter alia, the decision discusses the legal nature of an ETSI FRAND declaration; the question whether “FRAND” is a range or a single set of licensing conditions; the procedural component of FRAND; the existence of a qualified “unFRANDliness”-threshold below which competition law is not triggered; the sequencing of negotiation and litigation over FRAND licences; hard-edged vs. soft-edged discrimination; the role of “Comparables” for calculating FRAND; and the anti-competitiveness of offering a mixed portfolio of SEPs and non-SEPs.

Tuesday, July 18, 2017

USPTO/Federal Circuit Webinar on SEPs in China

The ChinaIPR Blog this morning posted a notice of a free conference/webinar hosted by the USPTO and the Federal Circuit Bar Association, titled "Recent Developments in Standard-essential Patents in China."  The event takes place next Tuesday, July 25, from 9:00 to 11:30 a.m. Eastern Time.  This looks really interesting, with a terrific list of speakers.  Here is a link to the registration page, and here is the description:
The United States Patent and Trademark Office (USPTO) and the Federal Circuit Bar Association (CFBA) are co-hosting this meeting and webinar to discuss updates on the treatment of standard-essential patents (SEPs) in China, with a focus on prosecution and injunctions. This free event will offer an unparalleled opportunity to gather information from leading academics and experts on this topic from the United States, China, and Switzerland. 
Speakers Include:
  • Mark Cohen, senior counsel, USPTO
  • David Kappos, partner, Cravath, Swaine & Moore LLP
  • Koren Wong, director, Global Antitrust Institute, Adjunct Professor of Law, Antonin Scalia Law School, George Mason University
  • Li ZHU, judge, Supreme People’s Court of China
  • Gaétan De Rassenfosse, holder of the chair of innovation and IP policy, College of Management of Technology, Switzerland
  • Yuan HAO, researcher, IP Research Center, Tsinghua Law School, Tsinghua University
  • Yijun Jill GE, IP managing associate, Allen & Overy, Shanghai Office

Registration:

The meeting is open to members of the public to attend on a first-come, first-served basis. Registration is free. Registration can be done online in advance of the meeting at the link below, and may also be available on site one half hour on the day of the meeting, space permitting. Register to attend here (link is external). 

Webcast:

The meeting will be available for viewing via live webcast (link is external)
  • Event number: 310 682 179
  • Event password: Ey94PWAX
  • Dial-in number (audio only):  +1 (571) 270-7000

Agenda:

The agenda will be published no later than one week prior to the event.

Additional information:
The registration website (link is external) provides additional information about directions and accommodation. For non-press inquiries, please contact Kelly Sheng (link sends e-mail) at the USPTO’s Office of Policy and International Affairs, telephone (571) 272-2227; or Nadine Herbert (link sends e-mail), telephone (571) 272-6094.

Monday, July 17, 2017

German Court Affirms Preliminary Grant of Compulsory License for HIV Drug

As readers of this blog probably are aware, a few decades ago it wasn't all that uncommon for countries either to exclude pharmaceuticals from the scope of patent protection altogether, or to require drug patent owners to submit to the compulsory licensing of those patents.  Following implementation of the TRIPs Agreement, just about everybody now issues drug patents, and while TRIPs permits countries to engage in compulsory licensing subject to various conditions, compulsory licensing isn't all that common any more, particularly among developed countries.  (These days, when governments do invoke or threaten to invoke their power to compel patent licensing, it's more often developing countries such as Brazil or Thailand or India that are involved.)  So when Germany's Federal Supreme Court (the Bundesgerichtshof, or BGH) recently affirmed a ruling of the Federal Patent Court  (Bundespatentgericht) awarding Merck a preliminary injunction to continue selling the HIV drug raltegravir (trade name Isentress), it's big news.  The story has already been covered in other sources including a recent post by Mark Schweizer on IPKat (which also links to this press release, in German, from the BGH, which hasn't yet published its judgment); and discussion of the August 31, 2016 decision of the Federal Patent Court can be found in this post on Kluwer Patent Blog from this past March and this post from Mayer Brown's "All About IP" from this past November.  There's also a summary of the Federal Patent Court decision by Dr. Uwe Friedrich in the May 2017 issue of Mitteilungen der deutschen Patentanwälten.  But I thought I should add a few observations of my own as well. 

First off, before anyone starts jumping to the conclusion that the BGH's recent decision heralds a new era of compulsory licensing in Germany, it's important to note that the underlying facts--as far as I've been able to piece them together so far, albeit without having invested a lot of time into researching the matter--appear to be rather unusual.  The Japanese firm Shionogi & Co. applied for a European patent back in August 2002 (with priority dates going back to August 2001), but the patent (EP 1,422,218, "Antiviral Agent") didn't issue until 2012.  (The Japanese patent appears to have issued in 2005.)  Meanwhile, Merck obtained marketing approval for the drug in the U.S. in 2007 (see here) and in Germany in 2008 (and for all I know, lots of other places too).  The FDA's Orange Book lists several U.S. patents under the heading "raltegravir potassium," the earliest of which appear to have been filed by an Italian inventive entity in October 2002, with priority dates going back to October 2001.  

Anyway, I haven't yet reviewed the patents very carefully, or looked into whether there are any European Patents corresponding to these U.S. patents--so if anyone has any relevant information on these issues that you'd be willing to share with me, or can point to any errors in my reconstruction of the facts, I'd appreciate it--but based on what I have read I gather that Merck (not Shionogi) has marketed the drug in question Europe since 2008.  (I think that Shionogi has been involved in the marketing of other related integrase inhibitor drugs, but not this specific one.)  In 2014, Merck and Shionogi entered into negotiations for Merck to take a worldwide license, but that didn't get anywhere, so Shionogi sued Merck for infringement in Germany in 2015.  That litigation was stayed pending a German invalidity proceeding which is still ongoing (though the patent survived an opposition proceeding before the EPC).  Merck then applied to the German Patent Court for a compulsory license, and moved for a preliminary injunction to allow it to continue marketing the drug, which the court granted--the first time the court has ever granted a preliminary injunction for this purpose.  Earlier this month, the BGH affirmed the grant.  As discussed in the IPKat post:
§ 24(1) Patent Act allows the grant of a compulsory license if (i) the infringer tried to obtain a license on reasonable terms, and (ii) there is a public interest in the grant of the license. In its Polyferon decision, the BGH had further specified the requirements for a compulsory license in the public interest for medicaments (BGH GRUR 1996, 190 – Interferon-gamma/Polyferon). The BGH ruled that in order for a medicament to fulfill the requirement of public interest, it (a) must treat a serious disease that (b) cannot be treated by a comparable product or (c) can only so with considerable side effects.
Applying the Polyferon criteria, the Federal Patent Court held that HIV-infections were both infectious and lethal, thus a “serious disease”. While there might have indeed been alternative compounds like Dolutegravir on the market the Court appointed experts confirmed that the replacement of Isentress with another drug was not acceptable given potential life-long side effects and  disadvantageous drug interaction due to the exchange.
Further, the expert also stated that Raltegravir showed particular advantages in the post-exposure prophylaxis and in the treatment of certain patient groups (e.g. babies, infants, pregnant women and long-term patients). In consequence, as the other pre-requisites of § 24(1) Patent Act were fulfilled, the public interest outweighed Shionogi’s interest in the exclusive exploitation of the patent at issue.
Judging from the media release - the grounds of the decision are not available yet - the Federal Court of Justice fully followed this reasoning, preliminarily permitting Merck to distribute Isentress for the treatment of specific patient groups that could not be treated with other drugs without serious side effects.
Again, I'd like to know more about the underlying facts, which seem quite unusual to me.  I am fairly sure, however, that the fact that the allegedly infringing product was on the market for a long time before Shionogi's European patent issued and before the parties entered into negotiations would have strongly weighed against granting Shionogi a preliminary injunction in its infringement lawsuit, had it sought one.  In the U.S., delay in filing suit can be a factor weighing against granting a permanent injunction as well, both under the eBay factors and the equitable doctrine of laches.  On the other hand, to my knowledge delay in enforcing one's rights wouldn't normally preclude the entry of a permanent injunction in Germany, as long as the action was brought within the relevant statute of limitations; but perhaps in cases like this one the availability of the compulsory licensing option serves much the same purpose as the eBay or laches rules in the U.S.  At some point, in other words, even if you think that patents generally should be protected by property rules (injunctions), perhaps the reliance interests of implementers and their customers must take precedence over the interests of a patent owner that has been slow to assert its rights. 

Finally, if I understand correctly the amount of the compulsory licensing fee is yet to be determined.  I also would assume that, if the preliminary injunction ultimately were to be vacated, Merck would have to reimburse Shionogi for having been wrongly denied the ability to enforce its patents in the interim.

Thursday, July 13, 2017

Stryker v. Zimmer: District Court Awards $248.7 Million in Damages

This case has been up and down the litigation ladder, from district court to Federal Circuit to Supreme Court to Federal Circuit (see my last blog post until today on this case here) and now again to the district court.  Applying the Halo standard for enhanced damages, Judge Jonker has awarded treble damages, plus several million more in supplemental damages, fees, and interest.  Here is a copy of the order on remand, and here is a copy of the judgment.  Here is a link to a story on Reuters.

Wednesday, July 12, 2017

Two Recent Damages Decisions from Australia

These have both been covered by John Collins on the Kluwer Patent Blog (here and here), so I'll be fairly brief.  In the first decision, Bayer Aktiengesellschaft v. Generic Health Py Ltd [2017] FCA 250, the Federal (trial) Court awarded Bayer Aus$25 million in lost profits against a generic drug manufacturer that had introduced an infringing oral contraceptive product (marketed under the brand name "Isabelle").  Bayer started selling its patented contraceptive under the brand name "Yasmin" in 2002.  (In 2008, it began to reduce production of Yasmin in favor of a product marketed under the name "Yaz," which has a lower dosage of ethinylestradiol.)  In 2012, Generic Health began selling the bioequivalent generic version of "Yasmin," under the brand name "Isabelle."  Bayer sued for infringement, but it also applied for permission to amend its patent.  Later in 2012, the court allowed the amendments (which related to, among other things, dosage and composition).  In 2014, the court ordered Generic Health to cease selling "Isabelle," and a week later Bayer began selling its own generic version of Yasmin under the brand name "Petibelle."  Bayer sought damages for lost profits on lost sales of Yasmin due to (1) sales lost to Generic Health's Isabelle from 2012-14, and (2) Bayer's own sales of Petibelle, which sold for a lower price than Yasmin but which Bayer claimed it would not have introduced but for the introduction of Generic Health's product.  The defendant argued, first, that under section 115(1) of the Australian Patent Act Bayer couldn't recover damages for the period of time preceding its amendment of the patent, which states that "Where a complete specification is amended after becoming open to public inspection, damages shall not be awarded, and an order shall not be made for an account of profits, in respect of any infringement of the patent before the date of the decision or order allowing or directing the amendment: (a)  unless the court is satisfied that the specification without the amendment was framed in good faith and with reasonable skill and knowledge; or (b)  if the claim of the specification that was infringed is a claim mentioned under subsection 114(1)."  Upon reviewing the evidence, the court concluded that "Bayer has discharged its onus of proving that the unamended claims and specification as a whole were framed in good faith and reasonable skill and knowledge" (para. 186).  Second, Generic Health argued that Bayer hadn't lost one sale for every sale of Isabelle, but upon review of the evidence the court concluded that Bayer had proven that it had.  Third, Generic Health argued that Bayer couldn't recover the losses caused by its own introduction of a generic version of Yasmin, but the court disagreed, concluding that "but for the infringement, Bayer would not have introduced the lower priced Petibelle" (para. 310).  "Bayer's concern was that Isabelle had disrupted the market possibly introducing a price sensitivity that would not have existed but for Isabelle" (para. 300).  Finally, the court agreed with Bayer's expert on the issue of the deductible costs ("costings"), and held that Bayer was entitled to prejudgment interest based on its pre-, not post-, tax damages.

The other case is Coretell Pty Ltd v Australian Mud Company Pty Ltd [2017] FCAFC 54.  The principal remedies issue of interest is whether the owner of an "innovation patent"--Australia's version of a utility model--can recover damages for the period of time prior to the innovation patent being "certified."  As I mentioned in another recent post, in countries that offer utility model protection applications are examined for compliance with formalities, after which the utility model is granted; but if the applicant seeks to enforce the utility model in court, she will either first have to submit it to a full-blown substantive examination or at the very least its validity will be subject to third-party challenge.  For discussion in my book, see pp. 16-17, 172, 237-38, 301, 338-41, 363-64.  Anyway, under the Australian system (which was amended in 2001, prior to which Australian utility models were called "petty patents") the innovation patent is granted after a formal examination but is not enforceable unless and until it is "certified" by the Commissioner of Patents, following a substantive examination.  The ultimate holding of the court in Coretell (in another opinion by Justice Jagot) is that there is no remedy for the infringement of an innovation patent prior to grant (and subject to certification), even though, as in many countries, the owner of a standard patent can sometimes recover damages for unauthorized pre-grant use, as in the Canadian Dow v. Nova case (see here and here).