Transcript 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 --

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…
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State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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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
Think Like A Business Person
Infringing sales
Lost sales/
market
Price Erosion
VERSUS
Attorney
and
Expert
fees
Internal
litigation
expense
Drain on
internal
business
functions
Total outof-pocket
cost
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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State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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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
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– 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/biotech), 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
Time Matters
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Recent Steps Towards Unified European
Patent System
• “London Agreement” – subset of EU countries
Entered 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.
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
London Agreement (EU) Patent
– 300-500 MM Consumers
Italy and Spain
are now hold-outs
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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.,
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equitable estoppel, inequitable conduct);
Infringement – only defenses are license and noninfringement;
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
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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.
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…. And “EU Seizure Proceedings”?
Fast
Typical EU Entry points:
Port of Rotterdam
Airport of Frankfort
Port of Hamburg
Inexpensive
Simple
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”
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Comparison US v EU
US
EU
No pre-judgment relief (generally)
Pre-suit seizure without court order
Jury trial
Discovery
No jury
No or little discovery (varies)
45% or more reversal rate from trial
(often requires 2nd trial)
Low reversal rate
Judge only/Court appointed experts
Injunction only where equitable
Suspended pending appeal
Injunction as matter of course
Injunction 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
Foreign Patent Filings - PCT
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State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Foreign Patent Filings - PCT
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State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Foreign Patent Filings - PCT
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State 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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State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Trend in Patent Applications
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Share of Top 5 Offices in Total Applications
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Patents In Force By Destination and Source, 2008
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Cost-Effectiveness of Enforcement
TaylorWessing Global Intellectual Property Index 2011,
Available at www.taylorwessing.com/ipindex
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Foreign Patent Filings – U.S. Patentees
Inovia U.S. 2011 Global Patent & IP Trends Indicator
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Foreign Patent Filings – U.S. Patentees
Inovia U.S. 2011 Global Patent & IP Trends Indicator
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
Patent Indices
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
Other Countries – China
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Other Countries – China
http://www.China-Pat.com
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Other Countries – China
http://www.China-Pat.com
State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
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Other Countries – China
http://www.China-Pat.com
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Other Countries – China
http://www.China-Pat.com
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Other Countries – China
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
India – “Danger Will Robinson”
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State Bar. TX Adv Pat Lit July 2011 - For Discussion Only
India – “Danger Will Robinson”
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India – “Danger Will Robinson”
• Huge population.
• But patents last a long time – value unknown 5-10 years
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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).
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- Blogging on the business of patent
assets…
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