Friday, October 25, 2019

Judicial imperialist Birss called "madness" what is just a hypothetical consequence of patent holder's rent-seeking: Unwired Planet v. Huawei

In the England & Wales High Court's Unwired Planet v. Huawei ruling that had given rise to the four-day UK Supreme Court hearing that concluded yesterday, Mr. Justice Birss, a judicial imperialist (who wants UK courts to set FRAND licensing rates even for patents in other countries, on other continents, and--if only he could--in other solar systems or galaxies) wrote that a country-by-country resolution of standard-essential patent (SEP) licensing disputes would be "madness."

I disagree with those who believe this is a factual finding that the UK Supreme Court will have to defer to. It's not a finding of fact such as a damages determination. It's just an opinion--the opinion of an outlier judge and patent extremist.

"Madness" is a particularly absurd label in light of a simple fact: prior to that decision, no other court anywhere in the world did anything similar (there have been a few cases in which courts in one EU member state thought they could adjudicate issues relating to other EU countries, but they didn't get far), yet the industry has been able to avoid parallel SEP litigation in many countries for the most part. The only exception I remember is that--at some point earlier in this decade--Samsung was asserting SEPs against Apple in nine countries, but the dispute had started with Apple asserting non-SEPs and was not the commonplace situation in which a SEP holder just seeks to be compensated.

Most of those disputes get resolved based on a decision in one key jurisdiction, or maybe two. And rarely three. But that's about it.

Justice Birss made up a problem that never existed just so he could solve it. In his extremism he didn't merely legislate from the bench. He actually tried to conclude a global trade agreement between 200+ countries, singlehandedly. The patent system is a country-by-country system. Justice Birss is not alone in seeing the potential benefits of a unified global patent system--but he hasn't been elected to represent even a single nation on Earth, much less the 200+ countries he'd have to be authorized to speak for to achieve what he wants by allowing patent holders--including patent trolls--to leverage the threat of injunctive relief.

There's another reason for which Justice Birss's "madness" opinion is misguided. If a patent holder spends money on patent attorneys' fees, examination fees, registration/renewal fees etc. in order to obtain patents in multiple countries, why would it be unacceptable for that same patent holder to be required to prove validity, essentiality, and value on a country-by-basis unless a commercial agremeent is reached? Implementers won't want to incur the cost of unnecessary scattershot litigation around the globe--provided that a licensing offer is fair, reasonable, and non-discriminatory.

It's amazing that the Supreme Court had to spend approximately 20 hours this week just listening to oral argument over this question. The U.S. Supreme Court would just have needed about one hour, and after no more than 15 minutes it would have been clear that sanity would be restored shortly after the hearing. In the UK, however, where the Supreme Court justices are addressed as "My Lord" and "My Lady," they just have a different style.

The U.S. Supreme Court has heard and decided many patent cases in recent history, so its justices are well-versed in patent law. The five-judge panel of the UK Supreme Court that heard Unwired Planet v. Huawei (consolidated with Conversant v. ZTE) this week required a whole lot of explanations, and the justices often admitted this appeal involved some terminology they weren't too familiar with.

Terminology isn't always critical (when Huawei's counsel said "Federal District," he obviously meant the Federal Circuit), but in some contexts it does make an important difference. When the reliability of any inference from a UK ruling on the validity and essentiality of a patent with a view to the value of a global portfolio came up during yesterday's closing argument, Huawei's counsel first engaged in hyperbole (he said such inference was "100% wrong and it would be a dangerous work route to go down"), but then did the very opposite and agreed with statements by Lord Briggs and Lord Hodge that overstated the reliability of such inference.

Here's the first part:

Lord Briggs: "I think it is common ground, is it not, that the concept of family relates to a single invention, to use that in a completely non-technical sense."

Mr. Howard: "Being completely non-technical it relates to the same invention, but the fact that it relates to the same invention does not lead to the conclusion that the patent of that invention in the United Kingdom and the United States and Germany and China is valid."

And shortly thereafter, the second part:

Lord Hodge: "[...] National courts do look at other experienced national patent courts as a check when they are dealing with a patent validity, patent infringement case. There is no doubt about that. But, yes, you can have a patent which is upheld in the UK but turned down in Germany.

Mr. Howard: "That is right, but you have to remember the position becomes more acute in our particular case because what you are doing in China is things might have been translated into Mandarin and as a result of that you may not have quite got it right; there are all sorts of issues that can arise. There are also different approaches. There are whole lot of issues and we can summarize them without going into detail."

What should have been made in this context is a distinction between the national parts of European patents (= EPO patents) and others. Something may get lost in translation to Mandarin, but also in translation to Finnish. The real issue is not translations. It's that unless you have multiple national parts of an EPO-granted patents, different patent offices may require the inclusion of different claim limitations before they grant a patent. So there can be significant differences in depth. Only the EPO provides a centralized examination that results in multiple national patents with identical (apart from translation) claims. Those national parts are still subject to jurisdictional differences, but at least the critical part--the claims--won't differ.

When different patents from the same family are examined by different patent offices, it could be that China granted a particular patent only in a narrower form, in which case it may not be truly essential, or in a broader form, in which case it may not be valid as granted.

Furthermore, there are derivative patents, such as divisionals and continuations. In that case, differences in scope can be even greater.

One cannot license or assert an "invention." One can license or assert patent claims. The name of the game is the claim--it's what defines the scope of the right. The discussion quoted above was meant to be "completely non-technical," but when the term "invention" comes up, technical aspects can't be avoided 100%.

After four days, the UK Supreme Court appeared very well aware of what's at stake, even in diplomatic terms--at a time when the UK may soon have to conclude a vast number of international trade agreements. It has also been made clear that this is a case of rent-seeking by patent holders trying to use the UK courts as a tool. But there is a limited risk of the justices still believing that a validity and essentiality determination on a UK patent provides a reasonably reliable basis for setting the terms of a contract involving members of the same patent family in other countries. The distinction between a patent family in the sense of multiple national parts of one EPO-granted patent and patents that were granted by different patent offices is an important one as the key non-UK jurisdiction in Unwired v. Huawei/Conversant v. ZTE is China.

The part about courts looking at decisions in other countries on related patents is for the most part just a European thing--because the national parts of an EPO patent have identical claims.

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