Wednesday, April 30, 2014

Supreme Court rulings on fee-shifting are helpful, but not a substitute for patent reform legislation

This month of April I've done a lot more blogging than I intended to. This here should be my final post for the month (barring unforeseeable events), and I will considerably slow down my blogging in the coming months to about five (and at most 10) posts per month. I'll talk about my priorities further below.

With so much public debate over the Apple v. Samsung II trial (with a poor signal-to-noise ratio as neither the jury nor mass media focus on the most important issues), I lacked the time recently to talk about some other interesting developments. For example, the question of ITC jurisdiction over non-physical imports is a fascinating (or potentially troubling, depending on one's perspective) issue. Patently-O also analyzed two decisions by the Supreme Court of the United States that came down yesterday and relate to attorney fee-shifting in patent litigation: Octane Fitness v. Icon Health and Highmark Inc. v. Allcare. An initial analysis, already fairly detailed, can also be found on the Comparative Patent Remedies blog.

In both cases the Supreme Court took a fee shifting-friendlier position than the Federal Circuit. Octane is about the standard, and the SCOTUS gives district courts more wiggle room because they can now award fees in their discretion not only if a patent infringement complaint was "objectively baseless". Highmark makes it harder for the Federal Circuit to overrule a district court's discretionary finding that a case was exceptional enough to warrant fee-shifting.

These (unanimous) decisions are not the first ones in which the Supreme Court disagrees with the Federal Circuit, and probably won't be the last. I would particularly like Google to further appeal the "Posner case", over which a Federal Circuit panel was divided in key areas.

However, disagreements between the Supreme Court and the Federal Circuit don't justify the bashing of the highest U.S. patents court that I've seen in some places on the Internet.

Some of those opposing far-reaching patent reform measures in the U.S. argue that lawmakers should keep their hands off patent law because judges can redress the balance all by themselves. I disagree with the anti-reform movement. The hurdle may be lower now for fee-shifting than it appeared to be, but if fee-shifting is really meant to make patent trolling a considerably less lucrative business than it currently is, then fee-shifting must become the norm. And that can only be achieved through legislation. However, if lawmakers couldn't agree on a new framework that would make fee-shifting the standard outcome, then it might indeed be better to just wait and see how case law evolves after yesterday's SCOTUS rulings. A watered-down political compromise could ultimately be less helpful than judicial decisions in this post-Octane era.

Also, fee-shifting is just one of various patent reform topics. It is a particularly important one, but other matters such as ways to cost-efficiently challenge bad patents, transparency in ownership, or measures against deceptive demand letters are examples of other priority subjects that even the SCOTUS can't address (but Congress can).


The average number of posts on this blog peaked at 52 per month in 2012 and decreased to 41 in 2013, but was still above the 2011 average of 28. In the first four months of this year, the monthly average was 26. But for the remainder of the year, and going into 2015, it will decrease sharply: my plan is to do only an average of five or six posts per month going forward, but in some months the number could increase to 10, should there be an exceptional density of developments I absolutely want to cover. There may also be months in which I do less than five posts.

I just need to focus on my app development project. I have decided that my future is in software development, not IP- and antitrust-related consulting. In connection with my app development project, I will file for patent applications in different jurisdictions.

I may still do limited amounts of consulting of the kind that doesn't distract me. For example, I have done and may still do some litigation monitoring and research for the purpose of private (non-published) reports.

Over the next few months, these are topics that I will talk about:

  • I will obviously comment on the Apple v. Samsung II jury verdict and some of the post-trial proceedings.

  • The litigation I am most interested in no longer involves patents: Oracle v. Google is now a copyright-only case over Android's unlicensed use of Java. I have been advocating reasonably strong protection of API-related code (provided that it's creative and not infringed inadvertently) for more than a decade. During most of that time, I did not have any relationship of any kind with Oracle. I had that position before, while, and after fighting against Oracle's acquisition of Sun Microsystems (the deal that resulted in Oracle's ownership of Java). The fact that Oracle became a client in connection with standards issues in 2012 changed nothing about that. Nor did the district court's decision change anything: it will very likely be reversed soon by the Federal Circuit, which held a hearing in early December, with respect to copyrightability, and Google had not prevailed on "fair use" because a hung jury can't resolve an issue, so it will be decided by a court or a jury. After the erroneous district court ruling on copyrightability all sorts of people criticized me, and they will soon have to admit that I was actually right, just like I also accurately predicted what would happen to Judge Posner's Apple v. Motorola ruling on appeal.

  • I plan to also blog about Microsoft v. Motorola cases pending before three Munich-based courts (a preliminary injunction case, a related Federal Patent Court nullity action, and an appeal involving a patent narrowed by the Federal Patent Court last year). All of this is taking place in my backyard, I think very highly of both parties' lawyers, and I always find their courtroom clashes entertaining.

  • I will occasionally comment on patent reform, as I just did further above. My angle in that regard is primarily going to be that of an app developer (thus I care particularly about issues like deceptive demand letters and ways to fend off bogus patents), though I will also draw on my experience as a long-time patent litigation watcher.

  • The rules of procedure for Europe's Unified Patent Court (UPC) are of great concern to me. I hope that the right balance will be struck. Since I'm going to file for patents (also in Europe), I don't want patent enforcement to be weakened, but I'm concerned that Europe could become too attractive for trolls.

  • Closely related to patent reform is the question of certain patent holders' tactics. In retrospect I recognize I should have talked more, and sooner, about such issues as privateering. I have had various meetings in recent months with industry players (from strongly anti-reform to centrist to decidedly pro-reform organizations) and none of them was positive about privateering, though one of them sold patents to a troll a few years ago. I'm not going to bash everyone who ever sold a few patents to a troll or contributed funding to a privateering-oriented transaction, but I will keep an eye on longer-term patterns of behavior. For example, Nokia has transferred patents to various organizations, and I don't blame the buyers but I don't like the fact that Nokia complicates patent licensing. Also, now that Nokia has (which I think was the right outcome from an antitrust point of view) sold its devices business to Microsoft, it's going to be more patent monetization-focused than ever. While the deal was procompetitive with a view to mobile platforms (I really liked some of Microsoft's recent announcements and Windows is my #2 platform priority, after Android), a side effect with respect to patents is that Nokia is now, more than before, a privateer. To be clear, I'm not anti-Nokia, and I hope that it will act in ways that I will consider reasonable. But I will keep an eye on it and criticize it if (IF!) necessary.

  • FRAND-pledged standard-essential patents (SEPs) were a key issue to me in recent years. Actually, FRAND matters to me in other contexts than patents, too. The first work I did on FRAND was in 2007 for a soccer club that won an important game yesterday in my town (I went to the stadium here to support them, as always). My positions won't change, but my focus and priorities will be adjusted. App developers like me usually don't have to deal with SEP assertions. And yesterday's European Commission decisions in the Samsung and Motorola Mobility cases, prior to which there had already been settlements and clearance decisions in the U.S. and Korea, have greatly reduced my interest in Samsung and Motorola's SEP assertions. Should they do anything that raises serious issues, I'll talk about it, but it doesn't appear likely (otherwise antitrust regulators wouldn't have let them off the hook). However, just like antitrust regulators focused on those two companies' SEP assertions in recent years, so did I, and I do know that there are some other key SEP portfolios out there that must be licensed on FRAND terms. The Competition Commission of India's investigations of Ericsson's conduct are very interesting -- this looks like the new FRAND frontier. I may at some point also talk about FRAND in connection with major SEP portfolios held by players like Qualcomm, Nokia, and Rockstar (former Nortel patents). And while there are key differences between SEPs and non-SEPs from an antitrust point of view, I will highlight any inconsistencies between companies' "reasonable royalties" positions in SEP and non-SEP contexts.

  • I started this blog more than four years ago because I wanted to talk about open source-related IP issues. I've talked about those from time to time, but this blog became more of a Smartphone Patents than FOSS (Free and Open Source Software) Patents blog. Every once in a while I may still chime in on open source IP issues.

In October -- four years after some key disputes broke out and I decided to focus on smartphone patent litigation -- I plan to summarize the outcome of numerous patent assertions against Android. There was a time when courts had identified a number of infringements around the globe, but meanwhile there have been appeals, reexaminations, and invalidation decisions. Android has proved unstoppable, and an update on how much (or, actually, how little) impact patents have actually have had on Android is something I really need to do. I adjust positions when it's warranted by facts, and the fact that only a very small percentage of all patent assertions against Android had any effect at all (and even that effect was very limited so far) just can't be ignored. But it's more of a mid-term than near-term plan.

Longer-term I might also talk about how app developers might benefit from patent protection, but I'm not sure I'd even want to go into detail on that before my own patent applications have been published (i.e., late 2015).

When my app is launched, I will also announce it on this blog, but will set up a separate website (with or without a blog) for my app.

I hope you will still find this blog a useful, interesting source of information and opinion even as I discontinue my high-frequency, granular litigation (and litigation-related antitrust) coverage and focus on select issues, which I'll mostly be able to write about at a time of my choosing, except for some key appellate decisions.

I've concluded that litigation coverage of the kind I did in recent years requires a total commitment. It's an all-or-nothing proposition. In a year like 2012, I would not have missed Apple's inadvertent disclosure of its patent licensing terms with Nokia and others, for example. Even in the first half of 2013 I wouldn't have missed it. But then I had to gradually reduce the time I spend on this. Something worth doing is worth doing right. And that's what my app is. But I will still, occasionally, comment on key issues, most of the time proactively, sometimes reactively. Thank you very much in advance for your continued interest!

If you haven't done so yet, you may now wish to subscribe to this blog because it will be more convenient to get email updates than to check on it every day when there will be new posts only once a week or even less frequently at times. In the righthand column you can find a field that enables you to subscribe to it by email.

I have another blog to recommend and you can subscribe to it by email, too. Professor Thomas Cotter's Comparative Patent Remedies blog covers cross-jurisdictional developments in patent remedies and the intersection of patent law and competition enforcement. I believe many of my readers are also interested in those issues, and Professor Cotter's blog is really worth recommending.

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