Posts Tagged: "settlement"

BlackBerry Ltd (NASDAQ:BBRY) announced that it had reached an agreement with San Diego, CA-based semiconductor designer Qualcomm, Inc. (NASDAQ:QCOM) to resolve arbitration proceedings over tech royalty payments made between the companies. Terms of the agreement involve Qualcomm paying BlackBerry a total of $940 million to account for net royalties due to BlackBerry during 2016’s calendar year and 2017’s first quarter. The announcement indicates that the payment were to be made before or on May 31st.

The $43.5 million from the recent Spotify settlement will reportedly go towards a separate fund to compensate publishers and songwriters. Such payments made by Spotify and other streaming services to copyright owners are known as mechanical royalties. Mechanical royalties are usually paid when a copy of a song is made, such as when a music publisher creates a CD containing copyright-protected songs. Although Spotify doesn’t sell or distribute physical media, it does owe mechanical royalties when it streams a copy of a song to a user.

The Federal Circuit found that the district court did not abuse its discretion in admitting the AT&T settlement agreement for several reasons. First, the agreement covered the same patented technology at issue and thus was a reliable estimate of the technology’s value to Prism and potential infringers. Second, though both litigations were commenced the same day, the agreement came from an “earlier” case because it was entered into after all discovery was complete and on a fully developed record. This increased the likelihood that the settlement reflected the value of the patented technology rather than a desire to avoid a potential unfavorable judgment. Finally, the settlement was reached after a large share of litigation costs had already been expended, again reducing the role of litigation cost-avoidance in the decision to settle.

Why should the costs of the tortfeasing infringer be relevant in determining whether the extracted value from a settlement is fair? The fact that law firms charge a lot of money to defend patent infringement cases, and don’t particularly have any incentive to settle cases early, somehow translates into certain settlements being for nuisance value without any consideration of whether the settlement is a fair value for the rights trampled upon by the infringer? The FTC has quite a lot of explaining to do, because it seems they picked an arbitrary number that is a function of what attorneys ordinarily charge infringing defendants through discovery. I don’t see how that is a function of the value of the innovation, or how it says anything about the merits of the infringement case, the damages case, or the tactics of the patent owner. In fact, it seems as if the $300,000 figure is completely irrelevant.

The suit filed by MONKEYmedia identified Apple software products as allegedly infringing upon the patents-in-suit… Six years of litigation later and on September 6th, 2016, an order of dismissal was filed in W.D. Tex. indicating that both parties had settled their respective claims for relief filed in the case. A joint stipulation of dismissal filed on September 2nd stated that both parties had stipulated to the dismissal of all claims and counter-claims asserted against each other. This comes about a year after MONKEYmedia had settled similar patent infringement claims against Sony Corporation (NYSE:SNE), developer of the Blu-ray digital content standard which takes advantage of seamless expansion technologies covered by MONKEYmedia’s patents. “We’re pleased that the litigation has been resolved with each of Apple and Sony,” said Eric Gould Bear, co-founder of MONKEYmedia and a renowned designer of user interface and interaction technologies. “They each make great products, and I believe synergistic relationships are better business than sitting on opposite sides of the court.”

One reason the PTAB is convenient for reaching reverse payment deals is that there is no direct antitrust oversight, since its judges are administrators with very narrow legal authority. Further, while there is a statute requiring agreements between Hatch-Waxman firms to be submitted to the Federal Trade Commission (FTC) for antitrust review, the parties may attempt to evade it. The statute requires submission of agreements that relate to the manufacture or sale of either firm’s drug. The parties might therefore feel justified (rightly or wrongly) in not submitting a consent decree stating that the patent is valid and would be infringed by the proposed generic, since this does not expressly address manufacture or sales. Alternatively, it could be that the parties submit a district court consent decree (which includes no reverse payment), but not the PTAB settlement (which could include a reverse payment). After all, a PTAB settlement simply says that the parties agree to terminate the IPR – it need not declare the patent valid – and this arguably does not relate to manufacture or sales.

The number of these potentially anticompetitive deals has fallen significantly following the Supreme Court’s landmark antitrust decision in FTC v. Actavis in 2013. The total number of such deals filed with the FTC has dropped to 21 in FY 2014 from 29 in FY 2013, and 40 in FY 2012 prior to the Actavis ruling. The FTC staff report for FY 2014 represents the first annual snapshot of such deals following the Actavis decision.

The PTAB has seen more than triple the number of inter partes review (IPR) petitions—now the preferred way for a company accused of infringement in court to challenge a patent’s validity—than it projected when the challenge first became available in 2012. But the fact that proceedings can run simultaneously presents challenges.

The settlement comes after a nearly 10-year legal battle in which Pfizer and Nycomed (now part of Takeda) sought to enforce the patent for its blockbuster acid reflux medicine. Pfizer subsidiary Wyeth and Takeda will divide the proceeds of the settlement with Pfizer receiving $1.376 billion and Takeda receiving $774 million. Collectively, this $2.15 billion patent infringement settlement is the largest patent settlement in history, dwarfing the $1.7 settlement achieved by Johnson & Johnson in 2010 and the $1.35 billion settlement achieved by hall-of-fame inventor Dr. Gary Michelson against Medtronic in 2005.