Standards, FRAND, NPEs & Injunctions Conference: Final part

Here's a report on the second day of the IBIL/Taylor Wessing conference about Standards, FRAND, NPEs & Injunctions, conducted under the Chatham House Rule (click here and here to read the notes on Parts 1 and 2). 

Due to a conflicting agenda, this guest Kat could join the event only after lunch, just in time to attend the final topics of the day. For more information about the topics discussed during the event, all of the presentations should be soon available on the IBIL website. 

The first topic of the afternoon was ITC proceedings with standards essential patents (SEPs). The cast featured Sir Robin Jacob, who has been extremely busy during these two days, together with panellists Chief Judge Charles E.Bullock (Chief Administrative Law Judge at the International Trade Commission), Eric Fues (President of the ITC Trial Lawyers Association) and Franck Vecella (Ericsson).

The discussion strarted with a brief overview of the ITC and the role of the administrative law judge. This introduction was quite useful for all European lawyers not familiar with this particular function. This guest Kat recalls that most of the cases held before the ITC involve patents (90%) but the Commission has jurisdiction over every kind of IP.

The ITC eagle, swift
to reach decisions

In order to bring an IP case before the ITC you must demonstrate several elements listed in section 337 of the Tariff Act of 1930: when filing a complaint, an IP holder must establish (1) unfair competition or an unfair act, e.g., patent or trade mark infringement, (2) importation, sale for importation, or sale after importation into the United States of the accused products, and (3) the existence of a domestic industry relating to the product in question.

Benefits of the ITC were then exposed. ITC is a fast track for litigaton (8 months for hearing) which makes the ITC highly attractive for IP holders. Another benefit of the ITC is that the decision's consequences come in addition to what you can get in a district court. The commission does not award money damages but issues exclusion orders that can have a huge impact on the US market.

The discussion then went on SEPs, citing the Apple v Samsung dispute. Apparently there are few challenges for the ITC when dealing with standard essential patents. The first difficulty is that some standards organization are ruled by foreign law, such as ETSI being governed by French law. The second difficulty concerns the eBay test for injunctions. This test as such is not applicable for SEP under FRAND terms, but it seems that the ITC does not apply the eBay test.

The evolution of ITC investigations was then described as well as the consecutive rejections of challenges brought by defendants to exclude ITC from dealing with SEPs, notably in the 745 investigation (Motorola v Apple). The discussion then turned to the Apple v Samsung case where the Commission issued an exclusion order against Apple products. As you may know, the Obama administration overruled this decision in August 2013. The audience commented on the Obama administration's act, describing it as something quite “alien regarding the rule of law” i.e US protectionism. 

The next topic was entitled “Lastest cross-border issues and how well will the UPC serve parties in portfolio disputes?” Panellists were Claudia Tapia Garcia (Blackberry), Dieter Kamlah (Taylor Wessing) and Kevin Mooney (Simmons & Simmons, also Chairman of the Drafting Committee of the rules of procedure of the UPC).

The first speaker opened the discussion with a presentation about the 15th UPC Draft Rules of Procedure. The main topics discussed were the bifurcation possibilities, stays in proceedings, licensees' actions in proceedings and permanent injunctions. A second speaker then made a speech about Patent Assertion Entities (PAEs) and the UPC system. She explained why the draft rules of procedure might give incentives for PAEs to use the UPC, in regard to bifurcation, stays and injections, proposing different wordings for each of these rules. She also pointed out the positive aspects of the UPC against NPEs, such as the absence of automatic injunctions,  the consideration for proportionality, flexibility, fairness and equity (in accordance with Articles 41(3), 42 and 52(1) of the UPC Agreement) and the 'loser pays' rule. 

The next speaker discussed parallel proceedings under the UPC. Parallel proceedings can appear when using one patent in many countries or in one country against many different parties. He stated: "Rule 33 allows the aggregation of different actions but there is nothing in the draft against the multiplication of proceedings in different language before different local courts, or even between UPC and national courts, during the transitional period". Does it create a boulevard for NPEs, then?

The discussion next moved on to NPEs specifically. Regarding the definition of an NPE, the audience and panel agreed on the impossibility of achieving such task. [Merpel asks: if you cannot define something, how can you prevent it?] All agreed that the key point for addressing "bad" behaviours in patent litigation was to give discretion to judges to figure whether or not the plaintiffs were conducting a troll model, a patent hold up, or making any abuse of the system.

The final topic was labelled "Complexities and challenges of standardization- The operator’s panel." Participants in this session were Michael Loch from GSMA, David Muus from KPN, Heinz Polsterer from IPR management, Simon Harris from Vodafone and Olivier Thirard from Orange.

The first speaker described what standardization/interoperability meant, and the economic purpose of standard organizations; he presented the numbers of contributions made in 2012 for interoperability. Apparently, Ericsson leads the way, while Apple remains the lowest contributor in terms of SEPs for interoperability.

A second speaker added some comments on the purpose of standards, which is mostly about interconnectivity between products. "Without interoperability, a lot of services could not exist" , he stated. However, he emphasized the need for an increasingly bigger broadband to follow technology evolution:

"To not run out of resources, we need to find a way to transport more data and to do so, interoperability is key" 

A subsequent speaker described the importance of standardization for all mobile companies and the benefits for companies to deploy quickly into the market and rely less on suppliers. Another panellist agreed, pointing his speech in the same direction. Said he, "SEPs help to lower the litigation activity." He also spoke about the changes to come in this industry and the related business models, one challenge remaining quality of SEP patents: "Standardised rules do not ensure of the validity of a patent. Deciding what patent is truly essential is also another difficulty. There is a need for more patent quality in SEPs" he stated.

The last speaker closed the discussion by speaking about the emergence of PAEs in Europe. He cleverly pointed out the fact that PAEs acquire patents from of the same companies that created the SEP system. He observed that, "When NPEs come back to you for litigation through the back door, it is like paying a second time for technology."