2017 in Review From a Patent Perspective – A look at the Biggest Headlines in Patent Law
The countdown has started.
As the end of 2017 approaches, it’s time to take a peek down the memory lane and review some of the biggest newsmakers in 2017. It has been a year of headlines, from Michelle Lee stepping down as the Director of USPTO to the law changing decision in TC Heartland and its significant impact on district court venue. From NPEs divesting their interests in diverse business models to China’s relatively new IP Priorities, 2017 also saw the rise of a new patent strategy – Transferring IP rights to tribes that enjoy sovereign immunity, as a means to protect them from being axed by PTAB.
Wait, there’s more. Get on the sleigh as we take a brief look at some of the global patent law related newsmakers this year.
The Conversation around Standard Essential Patents
2017 can fairly be labeled as the year of the Standard Essential Patents, as a lot of conversations took place around the globe, focusing on this buzzword. Below listed are some of the major newsmakers around SEPs.
- Early this April, the High court of London issued its first-ever FRAND/SEP- related decision in Unwired Planet Vs. Huawei Case. The court sided with licensor (and NPE) Unwired Planet while giving guidance on the determination of fair, reasonable and non-discriminatory (FRAND) royalty rates for standard-essential patents on a worldwide basis. Huawei was asked to agree to a global FRAND-based licensing deal while entitling Unwired planet an injunctive relief in the UK. This decision is cited as “decision of the decade”, making UK, probably the most favored destination for FRAND-based disputes from a licensor’s perspective.
- In other news, the European Commission published its long-awaited communication on the licensing of SEPs during the end of November. The communication hit the balance right, taking care of needs of both for originators and implementers, leaving them to negotiate, while enabling interference of courts in the matter, if things don’t work out. A big plus for both the parties.
- SEPs were a topic of conversation in the oriental countries as well. Back in July, the Japanese government proposed the ADR system, as a part of its 2017 IP Promotion plan. The ADR scheme (described as licensing award system for SEPs) proposed that when two parties couldn’t come to an agreement on a SEP licensing agreement, the licensee could request a mediation by the JPO, which would determine a FRAND royalty rate in a mandatory process, “with due care of not unfairly haring the interests of the patent holders”. After facing numerous objections, the government shelved the plans to introduce ADR in late November.
- Meanwhile, the Beijing High court in China issued revised guidelines for patent infringement determination. The guidelines state that injunctions – which are quite the norm upon finding of infringement – for SEPs could be denied if the SEP implementers are found to be free of the fault during licensing negotiations. Further, the implementers could avoid injunctions by depositing interim royalties with the court, the deposit amount being decided by the implementer (infringer) rather than the court. The move is cited as a sensible, progressive approach which would refine with time.
At the end of the year, there are more certainties and more answers than questions around Standard essential patents.
Michelle Lee stepped down as Director of USPTO; Andrei Iancu appears For Confirmation hearing
After a three-year stint as the first female Under Secretary of Commerce for Intellectual Property and Director of USPTO, Michelle Lee stepped down from the coveted position on June 6, leaving the reins of USPTO and a greater task at hand for her next successor.
On August 25, the Trump administration nominated Andrei Iancu for the position. Previously, the Managing partner at Irelle & Manella LLP, Andrei involved himself in all aspects of Intellectual property practice, focusing mainly on Intellectual property litigation.
Iancu appeared before the Senate Judiciary Committee for his confirmation hearing on November 29, the results of which we are likely to find in 2018. If things turn out well, Andrei Iancu would be the next Director of the USPTO. It is only a matter of time before we find out.
In other news, early this October, Antonio Campinos was chosen as the next president of the European Patent Organisation. He succeeded Benoît Battistelli, who is due to leave his position on 30th June 2018. Campinos would take reins of EPO on 1st July of 2018, where he has some huge tasks to handle.
How would Campinos and Iancu fare to the challenge? Well, the tale would unfold in 2018.
TC Heartland VS. Kraft Foods – The Landmark Law changing Decision
On May 22, the Supreme Court of the US issued the ruling on TC Heartland, which is credited to have changed the law on a venue for patent cases. As suspected, the decision had a real impact on the district court case filing numbers. The Eastern District of Texas court, which is highly popular for being plaintiff friendly suffered a huge blow while other courts witnessed a rise in the number of cases filed.
Below is a chart illustrating infringement cases filed numbers in different district courts pre and post TC Heartland.
Most of the readers would also recall that it was highly speculated that this law-changing decision would affect NPE litigation numbers as well. We conducted an in-depth analysis to test this hypothesis and concluded that the decision had no impact on NPE litigation, as it was consistent with numbers from previous quarters.
China’s IP Priorities – China’s New-found Respect for Patents
China has finally realized the importance of patents, and the role it plays towards bolstering a nation’s economy.
This has become apparently clear by the comments of President Xi Jinping, at the National Financial Work Conference, where he called for strengthened intellectual property rights protection and more stringent punishment for infringement.
“Wrongdoing should be punished more severely so that IP infringers will pay a heavy price.”
– President Xi Jinping
This very quote by the president became the most cited patent related quote of the year. Finally, someone realized it is important to respect IP if you want to start an innovation revolution in your country.
Further, according to Chinese business Journal Caixin, Judicial IP reforms emerged as one of the top national priorities in a policy committee meeting in China. One of the key pointers during this meeting was Better training of professionals serving in China’s specialized IP courts, which would, in turn, improve the quality of the Chinese patent system.
While specialized IP courts continue to be the topic of discussion, this bit of news ought to be mentioned- The Beijing IP court published a report on patent litigation statistics since its establishment in Nov 2014. According to the report, a total of 1813 patent cases were filed, spanning from Nov 6, 2014, to June 30, 2017.
One of the highlights of the reports is the winning rate for patent owners, which grosses around 82% for Chinese plaintiffs and 77% for foreign plaintiffs, hinting that the court is equally favorable towards patent owners, irrespective of their nationality.
While China has emerged as one of the key litigation hubs and a potential innovation hub in recent time, the description used by Chinese media to portray NPEs is quite colorful. Some of the terms used by the Chinese media and their direct translations are mentioned below:
Source- IAM Blog
Editor’s Note: Calling an NPE a scoundrel? Not cool. In fact, research has proved that NPEs, otherwise labeled as “Patent Trolls” are good for economy and innovation. Read our take on the other side of the coin- Patent Trolls are good.
Seeking Sovereign IPR Immunity – The Patent strategy of 2017
At the beginning of 2017, PTAB granted a motion to dismiss three inter partes reviews(IPR) in Covidien LP vs. University of Florida Research Foundation(UFRF) Inc. The dismissal was held on the grounds that UFRF was entitled to Sovereign immunity under the Eleventh Amendment of the US Constitution. This decision came across as particularly crucial for state universities and their research foundations with patent portfolios who might face the wrath of IPR reviews in the future. Sovereign Immunity turned out to be a boon for many.
Why not make hay while the sun shines? – With that thought, multiple state-owned universities whose patents faced the wrath of IPR petitions used the sovereign immunity to their aid to dismiss the cases waged against them.
But the highlight of this year is how a tribe used this loophole to make millions while protecting six pharma patents from IPR review.
Wait, Who and What?
In a very clever move, The Saint Regis Mohawk Tribe, regarded as a sovereign government entity in the US and their counsel, “approached Allergan with a sophisticated opportunity to strengthen the defense of RESTASIS® intellectual property in the upcoming inter partes review proceedings before the Patent Trial and Appeal Board.
The deal took place after some thorough evaluation, the terms of which were a one-off payment of $13.75 million from Allergan, and annual royalties of $15 million for the lifetime of patents. $100 Million for 6 pharma patents. Probably worth it.
But that’s not it. This is the most crucial deal of the year, which has the potential to challenge how litigations play out in the future.
It is a matter of time before we find out whether Sovereign immunity as an efficient patent strategy makes its way into the Black book of corporate patent strategy or not.
One thing is evidently clear- IPRs are a pain in the neck for patent owners and the PTAB is rightfully cited as “death squad”. But when you think of it, are IPRs even constitutional?
The Oil States Hearing- Deciding Constitutionality of IPRs
That’s the exact question raised by Oil states.
The whole story started when Oil States Energy Services tried to sue Greene’s Energy Group LLC for patent infringement. Greene’s challenged the validity of the patent by filing an IPR and the Patent Office declared the patent invalid.
Outraged, Oil States claimed that the whole Patent Office review process is unconstitutional. The company argued that patents are property rights, which can’t be extinguished without proper intervention by a court.
On November 27, the Supreme court heard oral arguments in Oil States Vs. Greene’s Energy, around the specific issue.
Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
While the judgment is due in 2018, experts predict that IPRs would not be held unconstitutional. Unconstitutional or not, a few reforms in the process are the need of the hour, to make the US Patent system great again. To make America Great again.
2017 has been a mixed bag of events. While there are a few certainties in some events, there are more questions that we are left with this year. The answers of which, we would probably have in 2018.
Let’s hope these answers extinguish all the obstacles in the path of a stronger patent system, which would make patents great again, innovation great again, and America and the rest of the world great (again).
Authored by: Anjali Chopra, Senior Business Analyst, Market Research.