INTERNATIONAL PATENTING AND ENFORCEMENT David Healey Fish & Richardson Houston, TX a/k/a...
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Transcript of INTERNATIONAL PATENTING AND ENFORCEMENT David Healey Fish & Richardson Houston, TX a/k/a...
INTERNATIONAL PATENTING AND ENFORCEMENT
David Healey Fish & Richardson Houston, TX
a/k/a “Patentmath.com”
State Bar of Texas Advanced Patent Litigation Course July 14-15, 2011 -- For Discussion Purposes Only!
PATENTMATH.COM- Blogging on the business of patent
assets…- Sign up for RSS, Twitter follower, facebook
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But first a word from my GC• These slides and this speech are not legal advice• No attorney client relationship is formed by this talk• These ideas and thoughts are for discussion purposes
only and to promote academic dialogue• These ideas, thoughts, and positions do not represent the
views of Fish & Richardson, its attorneys, clients, or even of the author…
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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How to think about IP– Think Ahead
• Value is driven by size of market + cost of enforcement + predictability of result.
• Value can change over time: Must think ahead 5 plus years
• Utility patents, design patents, trademarks & copyrights, last a long time – think long range.• 20 years for patents from first application.• Copyrights 50 years or more & trademarks perpetual…• Where will your markets be in 5, 10, 15 years?• Where will your competitors come from in the future?
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Think Like A Business Person
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Attorney and Expert fees
Internal litigation expense
Drain on internal business functions
Total out-of-pocket cost
Infringing sales Lost sales/ market
Price Erosion
VERSUS
What is probability of positive result?How long and how much before return on investment?What is risk of loss? Money? Invalid patent? Publicity? What is risk of Countersuit? “Blow-back”?
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U.S. Litigation Landscape• Trial court litigation 1 year to 3 years (or more)• No pre-trial injunction (as a practical matter)• Most final injunctions stayed on appeal• No injunctions where cannot meet market demand for product
– e.g., NPE, Research Cos., Start-ups.• Trials decided by Juries chosen at random with no floor
competency (other than ability to understand English).• Appeal is 18 months-2 years post-trial.• 45% reversal rate at Federal Circuit Court of Appeals.• Reversal can result in second trial.• Risk of loss of IP: 75% of mechanical patents obvious.• EXPENSIVE AND INTRUSIVE DISCOVERY:
• Depositions, document production, source code production
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Why Look Abroad?• Germany as an example:• Injunction – is still main relief – for NPE or others• Faster – 1 year in first instance (trial court)• Cheaper – 250,000 to 1,000,000 dollars• No discovery – No distraction of employees/inventors• More predictable results – Judges not Juries; court-
appointed independent expert not “hired guns”.• Large Market/Distribution Center – Many international
sellers of products do business in Germany, U.K., etc.• Similar forums exist in other countries: e.g., U.K. (all
have their “twists”)
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU TODAY
• Obtain EPO patent, then must convert to National Patents: Total cost for complete coverage is over 32,000 Euro, most of which is translation and validation at national stage.
• Costs can be controlled by focusing on key population and distribution centers: U.K., Germany, Italy, France, Ireland (for pharma/bio-tech), Spain (for telecom)
• Each country enforces its own patents.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU – London Agreement – 1 Patent• April 13, 2011 – EU press release touted continued work
on a “single EU patent” that would reduce cost from 32,000 Euro for EU wide coverage to 700 Euro.
• EU court decision in March 2011 struck down plans for unified patent court system but gave road map for revisions to implement this system.
• April 13, 2011 – EU states it is continuing to work on a common patent enforcement system using March court decision as a road map.
• Common enforcement mechanism would mean 1 case in 1 court for entire EU: Dramatically reducing costs and logistics for enforcement.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Time Matters
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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• “London Agreement” – subset of EU countriesEntered into force on May 1, 2008 = Cost reduction through a cost-attractive post-grant translation regime:
• States with national language = one of EPO’s official languages (France, Germany, LI, LU, MC, CH, UK): No translation necessary!
• States with national language # EPO’s official languages:
• Translation of claims, Spec in English: Netherlands, Sweden, DK;
• EU patent is growing out of expansion of membership in London agreement.
• Hold outs on EU wide patent are Italy and Spain due to language issues.
Recent Steps Towards Unified European Patent System
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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London Agreement (EU) Patent– 300-500 MM Consumers
Italy and Spain are now hold-outs
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU: Germany is Likely Model for Future Enforcement System• Germany is large EU distribution center and consumer
market.
• Until 2009, Germany, not China, was biggest exporter to US in dollar volume.
• Pro-enforcement (pro-patent) bi-furcated system; “caps” on loser pays.
• UK Intellectual Property County Courts at Law is modeled after German system (no bifurcation is main difference).
• Switzerland is now implementing a new patent enforcement system on German Model.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU Today: Germany 1 yr • German enforcement expense in typical patent case
(including separate infringement and invalidity cases and appeals):• Legal fees $300,000-$500,000 • Court Costs (filing fees) up to about $200,000-$400,000
• No discovery
• No common law defenses – e.g. inequitable conduct
• Loser pays is limited (capped) risk for court costs and statutory schedule of attorney fees: Approx. your own spend up to cap
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU Today – Germany 1 yr• German system:
• Infringement case almost always decided first;• Infringement has no common law defenses (e.g.,
equitable estoppel, inequitable conduct);• Infringement – only defenses are license and non-
infringement;• Judge not jury – court not private experts;• Decision 1 year (did I mention no discovery?);• Validity case allows patent owner to amend claims, but
takes longer due to both, “lag time” in filing after infringement case and slower forum: Favors patent owner in negotiation as injunction will come first in time.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU Today – UK County IP Court • UK County IP Court in London Went “On Line” Oct
2010.• Very streamlined process.• Goal is case disposition under 6 months at low cost.• Max on loser pays is under $100,000.• No depositions, no or limited document exchange, 1-2
days trial, no or limited testimony (also Judge no jury).
• Best uses:• Design patents and trademarks,
• Avoid transfer motion to UK High Court.• Avoid typical narrow or invalidating UK rulings on EPO patents.• Judge is experienced “Q.C.” IP Lawyer.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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…. And “EU Seizure Proceedings”?
Fast
Inexpensive
Simple
Typical EU Entry points:Port of RotterdamAirport of Frankfort Port of Hamburg
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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EU - Seizures• All EU countries allow seizure pre-suit of goods alleged to
infringe:• No court order needed, request to customs only;• Must file suit in 14-28 days after seizure but only if goods
claimed;• USE OF EU SEIZURES HAVE DOUBLED IN LAST
YEAR!• Many “copy cat” goods not claimed;• France and Italy permit for confiscation by police of
sample products from stores or factories for evidence:• Rambus seized masks from Micron Avenzzano Italy
semiconductor plant as “evidence”;• Usually creates “buzz” for enforcement.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Avoid Problems with US Proceedings • Shorter times – Much more predictable
• No discovery (interrogatories, depositions, requests for admission, production of documents, electronic discovery)
• Continental countries: No equitable defenses
• Future EU patent enforcement system likely based on German model
• Injunction regardless of “equities”
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Comparison US v EUUS EU
No pre-judgment relief (generally) Pre-suit seizure without court order
Jury trialDiscovery
No jury No or little discovery (varies)
45% or more reversal rate from trial(often requires 2nd trial)
Low reversal rateJudge only/Court appointed experts
Injunction only where equitableSuspended pending appeal
Injunction as matter of courseInjunction enforceable pending appeal
3-6 years/3-10 million dollars 1-2 years/1,000,000 or less per side/Loser pays (can be capped)
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
21State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Foreign Patent Filings - PCT
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Foreign Patent Filings - PCT
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Foreign Patent Filings - PCT
24State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Source of Change in Total Patent Applications by Office (%), 2008-09
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Trend in Patent Applications
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Share of Top 5 Offices in Total Applications
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Patents In Force By Destination and Source, 2008
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Cost-Effectiveness of Enforcement
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
TaylorWessing Global Intellectual Property Index 2011,Available at www.taylorwessing.com/ipindex
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Foreign Patent Filings – U.S. Patentees State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Inovia U.S. 2011 Global Patent & IP Trends Indicator
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Foreign Patent Filings – U.S. Patentees State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Inovia U.S. 2011 Global Patent & IP Trends Indicator
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Patent IndicesState Bar. TX Adv Pat Lit July 2011 - For Discussion Only
TaylorWessing Global Intellectual Property Index 2011,Available at www.taylorwessing.com/ipindex
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Other Countries – China• System is unpredictable.• Some judges have looked at equitable defenses.• Highly formalistic in submission of proof.• No independent judiciary.• BUT CHINA IS AN ESSENTIAL MARKET for patenting
• Chinese companies are applying for patents in China, US and EU at rates many times their past rate of applications
• Chinese companies now in top ranks of patent applications worldwide.
• 5-10 years how will Chinese use their patents?• Exclude competition?• Will you need Chinese patents to trade for space in China market?
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
33State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Other Countries – China
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Other Countries – China
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
http://www.China-Pat.com
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Other Countries – China
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
http://www.China-Pat.com
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Other Countries – China
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
http://www.China-Pat.com
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Other Countries – China
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
http://www.China-Pat.com
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Other Countries – ChinaState Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Source: EPO
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Other Countries -- Japan• Narrow claim scope in patents.• Long and expensive enforcement system.• But Japanese companies negotiate for Japanese licenses
based on number not quality of patents.• If you want to do business in Japan, you need Japanese
patents…• Otherwise, slow, expensive, processes make this an
unattractive way to spend your money…
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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India – “Danger Will Robinson”State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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India – “Danger Will Robinson”State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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India – “Danger Will Robinson”• Huge population.• But patents last a long time – value unknown 5-10 years
from now…• Very corrupt patent application/PTO.• Very corrupt government.• Presents problems under FCPA and UK Anti-bribery
Act.• Unpredictable system due to corruption & need to police
your patent firm to avoid criminal problems with U.S. or U.K. authorities…
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Other Countries – the Up and coming• For oil exploration, software, electronics, pharma:
• Brazil (oil and telecom)• Australia (much like UK High Court) (oil)• Mexico – Administrative enforcement, trade zone by border
exempt, corruption and violence unattractive, depends on long-term play (why?)
• Russia – BIG QUESTION MARK??????• Israel – Small market but lots of R&D• Ireland – Small market now, but pharma and medical devices
manufactured there for both EU and US markets, fast and cheap time to trial (as little as 6 weeks)(resembles U.K. High Court system).
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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