Posts Tagged: "Licensing"

Senator Chris Coons (D-DE) and Congressman Steve Stivers (R-OH) reintroduced the STRONGER Patents Act of 2019 today in an event on Capitol Hill. Coons first introduced the STRONG Patents Act in 2015, which then became the STRONGER Patents Act in 2017. This latest iteration, like the iterations before, seeks to take a number of steps to strengthen patent protections and…

On May 2, the Antitrust Division of the U.S. Department of Justice (DOJ) took the unusual step of submitting a Statement of Interest in the Federal Trade Commission’s (FTC’s) case against Qualcomm to take a position contrary to the FTC. The DOJ argued that “[b]ecause an overly broad remedy could result in reduced innovation, with the potential to harm American consumers, this Court should hold a hearing and order additional briefing to determine a proper remedy that protects competition while working minimal harm to public and private interests.” In response, the FTC informed the court that it “did not participate in or request” the DOJ’s filing, that it “disagree[d] with a number of contentions” made by the DOJ, and that the DOJ “misconstrues applicable law and the record.” In the end, the court agreed with the FTC and issued injunctive relief against Qualcomm without conducting the further remedy proceedings the DOJ advocated. The public feuding between the two federal antitrust enforcement agencies about how to resolve a case litigated by one them was a remarkable spectacle. It also brought into focus a broader divide between the FTC and DOJ on the role of antitrust law in addressing patents that are essential to industry standards (SEPs) and subject to commitments to license on fair, reasonable, and non-discriminatory (FRAND) terms.

You are about to strike a deal with an industry partner to develop an exciting new product. Or maybe you have identified the perfect opportunity to acquire an upstart company whose tech would allow you to expand into a lucrative market. Smart companies do their diligence and plan ahead to ensure they maximize the benefits and mitigate the risks of the deal. Fortunately, diligence into technology assets and intellectual property is not that different from the diligence you would do when buying a house. Not everyone is fluent in technology and intellectual property, though—these are complex areas with their own sets of issues. This article lays out five simple questions a company should ask itself throughout the diligence process to help tease out and navigate red flags, with the assistance of an experienced IP transactional attorney.

In a 233-page Order issued yesterday, Judge Lucy Koh of the United States Federal District Court for the Northern District of California handed Qualcomm a stinging defeat in the case brought by the Federal Trade Commission (FTC) alleging that Qualcomm engaged in unlawful licensing practices. It was just three weeks ago that Apple and Qualcomm entered into a peace treaty. The revelations about Apple’s coordinated efforts to manipulate the licensing market by shrewdly challenging inferior patents to beat down prices should have led to the FTC dropping its pursuit of Qualcomm. It is no secret that Apple has urged regulators all over the world to chase Qualcomm for alleged anticompetitive licensing practices, but it has now come out in federal court proceedings that Apple just didn’t like the rate it agreed to pay Qualcomm and decided to manipulate the marketplace and then use that manipulation to pull the wool over the eyes of regulators, including the FTC, in an attempt to leverage a better deal with Qualcomm.Apple succeeded in achieving peace with Qualcomm, although the company has been badly beaten by Apple in near collusion with regulators all over the world. So why would the FTC continue to persecute Qualcomm given the revelations in the Apple/Qualcomm litigation that demonstrate that Qualcomm did not seek an unreasonably high licensing rate?

Now that Apple and Qualcomm have made peace it would be easy to allow the case and the issues to recede into the background. That is likely what Apple would prefer, and almost certainly why Apple made the decision to settle with Qualcomm rather than proceed with trial. The case presented an existential threat for Qualcomm, which would have required the San Diego tech company to fight as if the company depended on victory–because it did.  What is most shocking is how successful Apple was in its coordinated effort to manipulate the licensing market and effectively extinguish any reasonable notion of a fair, reasonable, and non-discriminatory rate (FRAND) in the process. Meanwhile, fabricated licensing rates wholly unrelated to the Qualcomm portfolio were used by Apple to dupe regulators into chasing Qualcomm across the world for committing phantom antitrust violations.

As of now, ten states have legalized recreational cannabis. Twenty-one other states allow medicinal use of cannabis, many of which are expected to legalize recreational cannabis in the near future. Investors have sunk an estimated $10 billion into cannabis-related businesses in 2018, an amount that is expected to reach $16 billion this year. The fast spreading legalization of cannabis presents a unique opportunity for entrepreneurs, businesses and investors to get in on the “ground floor” of this growing market. California, as the largest single market for legalized Cannabis in North America, has attracted outsized attention from potential investors, who also see the state’s legalization as a trend setter for other states. However, would be investors in the California cannabis market often find themselves in a maze of complicated and changing licensing rules and regulations, banking challenges and uncertainties, choice of the appropriate business structure, and protection of potential intellectual property (IP).

On March 20, U.S. District Judge Gonzalo Curiel of the Southern District of California issued an order denying a motion by Apple, which was seeking partial judgment against Qualcomm on that company’s claim that it had fulfilled its fair, reasonable and non-discriminatory (FRAND) obligations for licensing its standard-essential patents (SEPs). As a result, Qualcomm can move ahead with its efforts to prove that its SEP portfolio licensing activities have met the company’s FRAND obligations and that Apple has forfeited its right to FRAND licensing because it hasn’t been a willing licensee.The court sided with Qualcomm in finding that Apple’s arguments regarding the unsuccessful licensing negotiations presented a definite and concrete controversy. Qualcomm had cited to a 2017 Eastern District of Texas case, Huawei Techs. Co. v. T-Mobile US, Inc., to show an instance where a court had found subject-matter jurisdiction in a case where a patent holder sought a declaration that it had complied with FRAND obligations. In the current case, Apple hadn’t stated unequivocally that it wouldn’t pursue a stand-alone breach of contract action, giving rise to a substantial controversy with sufficient immediacy and reality to justify declaratory relief. A favorable outcome to Qualcomm on this claim would afford additional relief, as Qualcomm could demonstrate that Apple had engaged in unreasonable holdout behavior, relieving Qualcomm of further FRAND obligations towards Apple.

The Licensing Executives Society (LES) 2017 High Tech Deal Term & Royalty Rate Survey is a milestone event for at least three reasons. First, it was the third survey since the inaugural survey in 2011, and the three surveys fully covered the time period of a decade—from 2008 to 2017. Second, the 2017 Survey marked the fifth anniversary of Inter Partes Review (IPR) procedure and the third anniversary of the Supreme Court’s ruling in Alice v. CLS Bank. Third, at the time of the Survey, a new USPTO Director was nominated by the Trump Administration, bringing a fresh glut of uncertainties, anxieties, and hopes to the already jittery IP market.

In a decision published in redacted form on January 29, Judge Beth Labson Freeman of the Northern District of California denied ASUSTek Computer Inc.’s and ASUS Computer International’s (collectively, ASUS’s) motion for summary judgment that InterDigital, Inc.’s (InterDigital’s) standard essential patent (SEP) licensing practices breached its FRAND obligations. The court also granted-in-part and denied-in-part InterDigital’s motion for summary judgment, rejecting a request to dismiss ASUS’s Sherman Antitrust Act claim but granting summary judgment as to issues relating to judicial and promissory estoppel and as to a California competition law claim. ASUS Computer Int’l v. InterDigital, Inc., Case No. 5:15-cv-01716-BLF, ECF No. 367 (N.D. Cal. Jan. 29, 2018). The court’s ruling comes as the case is progressing toward a jury trial, presently scheduled for May 2019. Several of the issues addressed are fact-specific to the case, but the rulings relating to breach of contract, most favorable licensees, and the Sherman Act are of particular interest for SEP licensing and illustrate how the legal landscape continues to evolve.

Mission Product Holdings v. Tempnology was argued last week at the Supreme Court and seeks to solve a circuit split regarding the effects of bankruptcy proceedings on trademark licenses. The case asks the nation’s highest court to determine if the rejection of a license in bankruptcy terminates the licensee’s right to to the trademarks or whether that license rejection only constitutes a breach by the licensor, in which case the licensee can still use the marks. The International Trademark Association (INTA) has dubbed the issue presented as “the most significant unresolved legal issue in trademark licensing.” Following our in-depth guest report on the oral argument, IPWatchdog asked those following the case to provide their take on the import of the case, the oral argument, and potential implications of the justices’ questioning.

Yesterday’s IPWatchdog webinar, “How to Evolve Your IP Strategy Over Time,” focused on the trouble companies—both large and small—can run into when they don’t take the time to audit and implement concrete strategies to ensure they are focusing on developing valuable, rather than merely voluminous, IP portfolios. Michael Gulliford, Managing Principal at Soryn IP Group, said that there is often “a disconnect between the academic exercise of building a patent portfolio and the reality of running a business. It takes discipline and time to start implementing strategies to ensure it’s worthwhile.”

On Wednesday, February 20, the U.S. Supreme Court heard oral arguments in Mission Product Holdings, Inc. v. Tempnology, LLC, where the Court was asked to address one of the most important issues at the intersection of trademark law and bankruptcy law: whether a debtor-licensor’s rejection of a trademark license terminates the rights of the licensee to use that trademark. Taking seriously the language of the question presented, and generally acknowledging that 11 U.S.C. § 365(g) provides that rejection constitutes a “breach” of the contract, the justices focused on the remedies for breach outside of bankruptcy law and whether, because trademarks (and quality control issues) are involved, deviation from ordinary, contract law principles is warranted. Both the advocates and the justices returned to whether analogies, including with respect to breaches of apartment and photocopier leases, are apposite. The question of whether the case was moot also received some attention, though it seems unlikely that the case will be dismissed on that ground.

Standard Essential Patents (SEPs) are patents that are unavoidable for the implementation of a standardized technology. They represent core, pioneering innovation that entire industries will build upon. These patents protect innovation that has taken extraordinary effort to achieve. Standard Development Organizations (SDOs) exist as a mechanism for industry innovators to work together to collectively identify and select the best and most promising innovations that will become the foundation for the entire industry to build upon for years to come. Those contributing patented technologies to the development of a standard are asked to provide a FRAND (which stands for Fair, Reasonable and Non-Discriminatory) assurance, in essence committing to providing access to patents that are or may become essential to the implementation of the standard.

While part one of this two-part series on intellectual property (IP) due diligence focused on a life science company’s own IP portfolio, part two will address a company’s understanding of how it fits into the market by considering its freedom to operate, as well as its competitors’, and the interplay of patent and regulatory exclusivity as it relates to the company’s product. Patent and regulatory exclusivity—two areas that can provide the most value and protection to a life science product—are very interrelated. Simply identifying when a key patent naturally expires is not sufficient, because regulatory exclusivity could possibly extend the company’s ability to keep competitors off the market or allow competitors to speed up entry in certain situations.

Hopefully, you’ve been fortunate enough—at least once in your life—to work for someone you really admired. That happened to me as a Senate Judiciary Committee staffer for Senator Birch Bayh (D-IN), who gave me the opportunity that changed my life. He turns 91 today… Bayh-Dole not only cut through the bureaucratic red tape strangling the development of federally-funded R&D; it marked a turning point in how patents were viewed in Congress. When I first joined the Committee, patents were considered tools for big business to stifle competition. Intellectual property fell under the jurisdiction of the Subcommittee on Antitrust and Monopolies. The Senate Small Business Committee was a hot bed of anti-patent sentiment.