Thursday, 30 June 2022

Senator Leahy Statement on proposed PTAB Reform Act of 2022

Senator Patrick Leahy, who is chair of the Senate IP Subcommittee, has released a statement concerning the bipartisan proposed PTAB Reform Act of 2022.  The statement provides:

Patents drive our economy, allowing innovators to do what they do best while knowing they can reap the benefits of their hard work.  Good quality patents thus give small businesses and inventors certainty that they can defend their inventions from others who didn’t put in the work. Without the rights guaranteed by patents, the engine of our economy, American innovation, simply would not be as strong.  

Given the power that a patent conveys, though, a patent issued by the U.S. Patent and Trademark Office needs to actually represent innovation.  There are serious consequences for our entire economy when the system permits enforcement of a patent that never should have issued.  Vermonters and small businesses all across the country have suffered these consequences.  Several years ago, an out-of-state company asserted poor-quality patents against dozens of Vermont small businesses and non-profits, demanding payments for each and every time a business scanned a document and then emailed it. It was a scam. And it was an egregious abuse of our patent system.    

That is why I am proud of the work we did in 2011to pass the Leahy-Smith America Invents Act, which allowed the public to take their concerns about a questionable patent back to the Patent Office for a more in-depth review.  Through proceedings created by the Leahy-Smith Act, the scan-to-email patents were brought back to the Patent Office and invalidated, allowing Vermont companies and non-profits to continue their important work.  The Patent Trial and Appeal Board, or PTAB, created under the Act, resolved those disputes in a way that was faster, less expensive, and more accurate than a district court because the disputes were overseen by technically trained patent judges under a strict deadline.  In the past decade of the PTAB’s existence, the public has brought thousands of patents to the Patent Office’s attention, and the Patent Office has expertly addressed validity, reinforcing the strength of high-quality patents and cancelling ones that never should have issued. 

As with any big new undertaking, that success has also brought new questions. And all enacted laws—particularly those dealing with ever-evolving technologies and science—need to be revisited and updated from time to time. That is why I am thrilled that Ranking Member Tillis, Senator Cornyn, and I just last week introduced the PTAB Reform Act of 2022.  We gathered feedback from participants in the patent system, including the public broadly and businesses across the country covering a vast array sectors and technologies.  We looked at concerns from all corners and presented a series of different options for addressing them.  This bill, the product of months of hard work and compromise, addresses the biggest concerns of stakeholders from across the spectrum.  This bill will update the PTAB so it can continue its important work into the next decade and beyond.

This is important legislation for a number of reasons.  One big question it addresses:  If a petition to the Patent Office to review a patent is meritorious on its face, should the Patent Office decline review anyway?  Many believe that all meritorious petitions should result in a review.  Many others believe that it is harassing to patent owners to have the same members of the public able to request review of the same patent repeatedly over time, when the patent owner has already defended the patent.  We addressed these issues—as we often do in the Senate—through compromise.  While meritorious petitions to review a patent should generally be granted, serial petitions over time from the same or related parties will not be allowed.

Another big question:  Who has the authority to make a final validity decision, civil-servant PTAB judges or the politically appointed Director of the Patent Office?  While the Supreme Court last year resolved that the Director is the final decision-maker, it left open questions about how the Director may make decisions.  This bill ensures that the decision-making process must be open to the public.  The public has a right to know when independent PTAB judges are making a decision, and when a politically-appointed Director is making a decision. We should not have a patent system where any given PTO Director can influence and decree decisions non-transparently and behind the scenes.

Our bill also addresses a concern raised by small business patent owners:  They had to pay to apply for a patent and then may have to pay again to defend it at the PTAB.  This is expensive, and we want to help small businesses shoulder the expense.  Thus, if a small entity has not already decided to undertake the expense of litigation, the Patent Office will cover the expense of a PTAB proceeding for that small business under our bill. 

. . . 

I know that Ranking Member Tillis and Senator Cornyn share my belief that the patent system should work well for all Americans and all sectors of our economy.  I look forward to continuing the bipartisan work of our IP Subcommittee to help deliver real improvements to our patent system. I want to leave behind an even stronger patent system that further empowers America’s greatest natural resource: our ingenuity and innovation. 

A Great Idea to Raise Funding for Research: University of Pennsylvania and NFTs

The University of Pennsylvania appears to be one of the first universities to use NFTs to raise additional funding for research.  The university is offering for sale an NFT that commemorates the development of the mRNA technology used to develop vaccines for COVID-19.  Here is a description of the project:

The NFT features a stunning, one-minute 3D animation of the type of modified mRNA that protects the immune system from SARS-CoV-2 and the platform technology which holds promise for combatting other infectious diseases, as well as immunotherapeutics, cancer treatments, genetic diseases, and more. The video shows mRNA encapsulated inside of lipid nanoparticles, the fat droplets that are the delivery technique Weissman’s lab applied to ensure mRNA reaches the right part of the body to trigger an immune response. The NFT also includes images of Penn mRNA patent documents and a letter from Weissman, who directs the Penn Institute for RNA Innovation, about the ways in which he and colleagues are leveraging the mRNA technology platform to fight not only coronaviruses but also influenza, herpes, malaria, sickle cell anemia and cancer.

Funds raised by the sale of the NFT—the first digital asset Penn has offered—will further important research across the university.

Saturday, 18 June 2022

TRIPS Waiver Agreement Released

The following appears to be the “Draft Ministerial Decision on the TRIPS Agreement.”  Will COVID-19 vaccines become more available based on the waiver?  I am sure this will be carefully tracked. 

Ministerial Conference Twelfth Session Geneva, 12-15 June 2022 Original: English

DRAFT MINISTERIAL DECISION ON THE TRIPS AGREEMENT Revision

. . . The Ministerial Conference, Having regard to paragraphs 1, 3 and 4 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization. Noting the exceptional circumstances of the COVID-19 pandemic; Decides as follows:

1. Notwithstanding the provision of patent rights under its domestic legislation, an eligible Member[Footnote 1] may limit the rights provided for under Article 28.1 of the TRIPS Agreement (hereinafter "the Agreement") by authorizing the use of the subject matter of a patent [Footnote 2] required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic, in accordance with the provisions of Article 31 of the Agreement, as clarified and waived in paragraphs 2 to 6 below.

2. For greater clarity, an eligible Member may authorize the use of the subject matter of a patent under Article 31 without the right holder's consent through any instrument available in the law of the Member such as executive orders, emergency decrees, government use authorizations, and judicial or administrative orders, whether or not a Member has a compulsory license regime in place. For the purpose of this Decision, the "law of a Member" referred to in Article 31 is not limited to legislative acts such as those laying down rules on compulsory licensing, but it also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders.

3. Members agree on the following clarifications and waiver for eligible Members to authorize the use of the subject matter of a patent in accordance with paragraphs 1 and 2:

(a) An eligible Member need not require the proposed user of the subject matter of a patent to make efforts to obtain an authorization from the right holder as set out in Article 31(b).

(b) An eligible Member may waive the requirement of Article 31(f) that authorized use under Article 31 be predominantly to supply its domestic market and may allow any proportion of the products manufactured under the authorization in accordance with this Decision to be exported to eligible Members, including through international or regional joint initiatives that aim to ensure the equitable access of eligible Members to the COVID-19 vaccine covered by the authorization.

(c) Eligible Members shall undertake all reasonable efforts to prevent the re-exportation of the products manufactured under the authorization in accordance with this Decision that have been imported into their territories under this Decision. [Footnote 3] Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products manufactured under the authorization in accordance with this Decision, and diverted to their markets inconsistently with its provisions, using the means already required to be available under the TRIPS Agreement.

(d) Determination of adequate remuneration under Article 31(h) may take account of the humanitarian and not-for-profit purpose of specific vaccine distribution programs aimed at providing equitable access to COVID-19 vaccines in order to support manufacturers in eligible Members to produce and supply these vaccines at affordable prices for eligible Members. In setting the adequate remuneration in these cases, eligible Members may take into consideration existing good practices in instances of national emergencies, pandemics, or similar circumstances. [Footnote 4]

4. Recognizing the importance of the timely availability of and access to COVID-19 vaccines, it is understood that Article 39.3 of the Agreement does not prevent an eligible Member from enabling the rapid approval for use of a COVID-19 vaccine produced under this Decision.

5. For purposes of transparency, as soon as possible after the adoption of the measure, an eligible Member shall communicate to the Council for TRIPS any measure related to the implementation of this Decision, including the granting of an authorization. [Footnote 5]

6. An eligible Member may apply the provisions of this Decision until 5 years from the date of this Decision. The General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council will review annually the operation of this Decision.

7. Members shall not challenge any measures taken in conformity with this Decision under subparagraphs 1(b) and 1(c) of Article XXIII of the GATT 1994.

8. No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics.

9. This Decision is without prejudice to the flexibilities that Members have under the TRIPS Agreement, including flexibilities affirmed in the Doha Declaration on the TRIPS Agreement and Public Health, and without prejudice to their rights and obligations under the TRIPS Agreement, except as otherwise provided for in paragraph 3(b). For greater certainty, this Decision is without prejudice to the interpretation of the above-mentioned flexibilities, rights and obligations outside the scope of this Decision.

Footnote 1: For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision. Such binding commitments include statements made by eligible Members to the General Council, such as those made at the General Council meeting on 10 May 2022, and will be recorded by the Council for TRIPS and will be compiled and published publicly on the WTO website.

Footnote 2: For the purpose of this Decision, it is understood that 'subject matter of a patent' includes ingredients and processes necessary for the manufacture of the COVID-19 vaccine.

Footnote 3: In exceptional circumstances, an eligible Member may re-export COVID-19 vaccines to another eligible Member for humanitarian and not-for-profit purposes, as long as the eligible Member communicates in accordance with paragraph 5.

Footnote 4: This includes the remuneration aspects of the WHO-WIPO-WTO Study on Promoting Access to Medical Technologies and Innovation (2020), and the Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical Technologies published by the WHO (WHO/TCM/2005.1).

Footnote 5: The information provided shall include the name and address of the authorized entity, the product(s) for which the authorization has been granted and the duration of the authorization. The quantity(ies) for which the authorization has been granted and the country(ies) to which the product(s) is(are) to be supplied shall be notified as soon as possible after the information is available

[Hat tip to Professor Justin Hughes]

Thursday, 9 June 2022

Retraction of 2019 Statement on Remedies and SEPs

The USPTO, DOJ and NIST have issued a statement retracting the 2019 policy statement on remedies for SEPs.  The Press Release states:

WASHINGTON—The Department of Justice, U.S. Patent and Trademark Office (USPTO) and the National Institute of Standards and Technology (NIST) (the Agencies) announced today the withdrawal of the 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (2019 Statement). After considering public input on the 2019 Statement and possible revisions, the Agencies have concluded that withdrawal of the 2019 Statement is the best course of action for promoting both competition and innovation in the standards ecosystem.

On Jan. 8, 2013, the Antitrust Division of the Department of Justice and the USPTO issued a Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (2013 Statement). On Dec. 19, 2019 the Agencies withdrew the 2013 Statement and issued the 2019 Statement, which offered the views of the Agencies and expressly recognized that it had “no force or effect of law.” 

In July 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy noting that, “[a] fair, open, and competitive marketplace has long been a cornerstone of the American economy.” He encouraged the Agencies to review the 2019 Statement to ensure that it adequately promoted competition.

In response to the Executive Order, on Dec. 6, 2021, the Agencies issued a Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments and a request for public comments through a Dec. 6, 2021 news release, extending the deadline for comments in a Dec. 13, 2021 news release. The Agencies thank the wide range of individuals, organizations and other stakeholders who submitted comments, all of which have been considered.

After a review of those comments and a collaborative deliberation on how best to proceed, the Agencies are announcing the withdrawal of the 2019 Statement. As noted in the Withdrawal of the 2019 Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, “[a]fter considering potential revisions to that statement, the Agencies have concluded that withdrawal best serves the interests of innovation and competition.” 

“The U.S. Patent and Trademark Office is focused on creating incentives to generate more innovation, especially in underserved communities and in key technology areas, and maximizing that innovation’s widespread impact,” said Under Secretary of Commerce for Intellectual Property and USPTO Director Kathi Vidal. “Forging our global leadership in new industries cannot happen without greater investment in research and development in technologies that may become international standards. We also need greater U.S. engagement in global standards-setting organizations from our large multinational companies, as well as from small- to medium-sized businesses and start-ups. I stand behind any measure that will enable innovation that will drive sustainable, long-term growth in the U.S. economy.”

“The withdrawal of the 2019 Statement will strengthen the ability of U.S. companies to engage and influence international standards that are essential to our nation’s technology leadership and that will enable the global technology markets of today and tomorrow,” said Under Secretary of Commerce for Standards and Technology and NIST Director Laurie E. Locascio. “A common thread in so many of the thoughtful stakeholder comments we received is a commitment to America’s industry-led, voluntary, consensus-based approach to standards development. This approach consistently delivers the best technical solutions, and I wholeheartedly support it.”

“The Antitrust Division will carefully scrutinize opportunistic conduct by any market player that threatens to stifle competition in violation of the law, with a particular focus on abusive practices that disproportionately affect small and medium sized businesses or highly concentrated markets,” said Assistant Attorney General Jonathan Kanter. “I am hopeful our case-by-case approach will encourage good-faith efforts to reach F/RAND licenses and create consistency for antitrust enforcement policy so that competition may flourish in this important sector of the U.S. economy.”

In exercising its law enforcement role, the Justice Department will review conduct by standards essential patent (SEP) holders or standards implementers on a case-by-case basis to determine if either party is engaging in practices that result in the anticompetitive use of market power or other abusive processes that harm competition. In addition, in accord with President Biden’s Executive Order, the Agencies plan to continue to cooperate as appropriate on matters that affect the intersection of competition, standards development, and intellectual property rights. 

Standards-developing organizations (SDOs) and the widespread and efficient licensing of SEPs on reasonable and non-discriminatory (RAND) or fair, reasonable and non-discriminatory (FRAND) terms (collectively F/RAND) help to promote technological innovation, further consumer choice, and enable industry competitiveness, including in emerging technologies and by new and small- to medium-sized market entrants. 

SDOs may require parties participating in the standards development process to voluntarily commit to making patents essential to the standard available on F/RAND terms. The specific F/RAND commitments are contractual obligations that vary by SDO. United States laws and regulations govern the interpretation of those contractual obligations and otherwise govern the conduct of parties participating in SDOs.

Sunday, 29 May 2022

Practicalities and Problems in Comparing and Setting FRAND Royalties for SEPs

I was a speaker last week at the Patents in Telecoms & the Internet of Things conference in London. This is an excellent biennial event, organized this year by Professor Sir Robin Jacob of UCL Laws and James Marshall of Taylor Wessing. It focuses on the topic of licensing Standard-essential Patents (SEPs) on Fair, Reasonable and Non-Discriminatory terms. I was on a panel among economists Jorge Padilla, Avantika Chowdbury, Tim Pohlman and Mark Schankerman in one of two sessions on FRAND Determination Methodologies: Principles, procedures and problems. The other session focused on comparable licenses. Our session also considered top-down and value-based methods as well as the economics in bargaining agreements.

I have received some requests from conference attendees asking for my panel session talking points. I am posting these here for access by all. My spoken remarks were slightly different, so as not to duplicate what had been said earlier at the event and to save some time. I have added several hyperlinks —mostly to articles of mine—to provide support to some of my assertions.

Value of SEPs in a large ecosystem downstream

Patented intellectual property in products and services such as cellular is clearly very valuable. In an ecosystem that is only 40 years old for voice services, 30 years old for text messaging and just 25 years old for Internet services, more than 6 billion of the world’s 8 billion population have a mobile phone. There are now more cellular connections than there are people on the planet. For most of these people their mobile phone is their primary or only means of calling or accessing the Internet for communications, information, entertainment and commerce.

According to a new report prepared by Kearney for the GSM Association of mobile operators, the Internet value chain was worth $ 6.7 trillion in 2020, with 28% of that value through connectivity services and devices and the vast majority of that in cellular.

Notwithstanding all that, a big question for us here today is what proportion of that value is attributable to cellular SEPs, as distinct from other SEPs and other forms of intellectual property. What are fair shares of value vertically down the supply chain from SEP owners to implementers in device manufacturing and further downstream. And, in the case of SEPs, what are fair and non-discriminatory charges horizontally among different patent owners and licensees?

Patent policies and business models

SEP licensing occurs with different patent policies among different standards setting organizations, and with differing business models among patent owners and voluntary licensing groups.

Some technology standards such as Bluetooth, USB and DOCSIS for cable modems are largely licensed royalty-free by mutual consent among most patent owners. With no patent fees, the only opportunity to monetize intellectual property  is downstream, for example, by implementation along with others’ IP in products.  

In the case of video standards such as AVC/H.264 the vast majority of SEPs are monetized through patent pooling. This voluntary private solution with licensing costing no more than around 20 cents per device divides royalties among patent owners, most of whom are also implementers.

Monetizing SEPs in cellular

In the special case of cellular, SEP owners justifiably seek rather higher royalties, in partial compensation for multi-billion dollar annual R&D investments for innovation and standards development, for example, by the likes of Ericsson, Nokia and Qualcomm at around $5 billion apiece annually. These fees are charged at the handset level at an average aggregate of approximately $10, which is 4% of the $250 average wholesale selling price for mobile phones.

In my previous presentation at this conference series— in Tokyo at the end of 2019— I showed that the economic value added of cellular connectivity, after incremental product costs, in a 4G smartphone was more than 20 times higher than that aggregate royalty rate percentage of 4%. I showed the example of an iPhone model that was priced by Apple at an additional $250 over that for a $200 iPod Touch with near identical functionality apart from the cellular capability costing $32 in manufacture. I also emphasized the significance of this beyond price setting by Apple in what economists call consumers’ “revealed preferences” with 12 times the volume and 46 times the value in sales of iPhones over all iPods.

While there is no cellular SEP licensing further downstream, SEP technologies also generate value in the extended ecosystem of Internet services and beyond including externalities (e.g. human health and safety).

Cellular SEP licensing in mobile phones is almost entirely bilateral among parties with various business models in developing standard-essential technologies and implementing them in devices.  Companies like Qualcomm and InterDigital are more dependent on out-licensing to generate revenue than are vertically-integrated SEP owners like Samsung that is more interested in protecting its downstream handset business with cross-licensing, and in minimizing licensing out-payments for its leading market share of handset sales.

Licensing frameworks

Licensing cellular SEPs is a complex matter given all the above and with FRAND commitments.

So now to the heart of the matter: including practicalities and problems with techniques employed in comparing and setting royalties.

There are various ways of: 1. Defining royalty prices and 2. Determining levels for these.

1.Price definitions

Pricing royalties can be ad valorem – i.e. a percentage of the device cost, or in dollars-per-unit charges, or with a hybrid of the two including dollar floors and caps. Lump sum prepayments are also common. Making comparisons among all these can be tricky and can be presented to give various impressions.

We tend to refer to percentage rates when, for example, talking about aggregate royalties.

Effective royalty rates paid (what I call royalty yields) including aggregate figures have fallen as royalty caps have been exceeded with increasing handset average selling prices as smartphone sales have surged since the mid-2000s.

2.Determining charges

Three commonly used methods include top-down, comparable licenses and value-based methods.

Top-down valuation

Use of top-down methods is inevitable, but I do not like them because of the way the aggregate is set and because of the way this is apportioned. Top-down is increasingly popular with the courts because it is simple and easy to apply. Serious shortcomings include:

Comparable licenses

These are seemingly ideal if they are well established with years of substantial licensed sales volumes and royalty payments. But we can have a chicken and egg problem with new standards such as 5G and some agreements have too little trading associated with them, or are associated with side deals and other actions that make them of dubious applicability.  In my experience with litigation, parties usually differ on which licenses are suitable comps. Some licensees object to use of agreements that were signed under the threat of alleged "patent hold-up". Comparing percentage rates with capped, dollar-per-unit or lump sum figures in different agreements is tricky.

Cross-licenses need to be unpacked to derive one-way rates, which is also problematic including because unpacking calculations tend to use SEP counts that are subject to similar shortcomings as where patent counts are used in top-down methods.

Implementers with small numbers of SEPs can have disproportionately strong leverage against major vertically integrated players with both large SEP portfolios and large downstream businesses to protect from patent infringement claims. Unpacking these cross-licenses underrates the major party.

Value-based methods

These methods are in accordance with patent law and are commonly used where few patents are involved. They seek to measure and apportion economic value. Techniques can include use of hedonic pricing models and consumer preference measurements with conjoint analysis.  I’ve used such techniques as a testifying expert witness in a non-SEP case and in cartel price-fixing litigation.

But judges seem less inclined to consider such methods in FRAND cases where they have misplaced concerns about alleged and unproven patent hold-up and royalty stacking, because they now have the crutch of top-down valuation methods to use in addition to comparable licenses. For example, in the TCL v. Ericsson Decision (which as unanimously and entirely vacated on appeal), Judge Selna threw out an Ericsson expert’s so called “Ex-Standard” valuation approach for lacking fundamental credibility and because the judge thought it suggestive of royalty stacking, even though the judge agreed that TCL did not challenge the methodology, but rather the inputs to the calculations.

I believe that value-based methods should be increasingly employed — not disregarded.  Imperfect though they all are, various different techniques should be explored to figure out where and how much real economic value is generated, and to set royalties accordingly.

Monday, 23 May 2022

Fair Use and the Future Explored: Chip N' Dale: Rescue Rangers Movie

Yesterday, my kids and I watched the new movie, Chip N’ Dale:Rescue Rangers.  This is probably the funniest Intellectual Property law related movie I’ve seen.  Disney takes on IP Law doctrine and policy in a very humorous way.  As an exercise in understanding U.S. IP law, the facts the movie raises are very nice.  Here’s a few examples: ET v. Batman; Ugly Sonic; Chippendales; and on and on.  They also take on: a glimpse at the future of augmented reality; artificial intelligence and creativity; culture wars; Hollywood nostalgia reboots (talk about bootlegging); and the future of counterfeiting. There are so many references my brain almost exploded from overload. As a tip, be sure to take in the background materials, e.g., advertisements. Lol. They take some pretty nice shots at competitors, but I wonder what’s going to come back.  Interestingly, the Pirates of the Caribbean ride at Disneyland has been closed for “refurbishment.”  [In full disclosure, I am a very big fan of Disney and may be extremely biased.]

Friday, 20 May 2022

White Hat Hackers Safe from CFAA Prosecution?

The U.S. Department of Justice announced yesterday that it will not prosecute white hat researchers under the Computer Fraud and Abuse Act!  However, white hat hackers beware: There are many state laws that criminalize such behavior.  The press release states:

The Department of Justice today announced the revision of its policy regarding charging violations of the Computer Fraud and Abuse Act (CFAA). 

The policy for the first time directs that good-faith security research should not be charged. Good faith security research means accessing a computer solely for purposes of good-faith testing, investigation, and/or correction of a security flaw or vulnerability, where such activity is carried out in a manner designed to avoid any harm to individuals or the public, and where the information derived from the activity is used primarily to promote the security or safety of the class of devices, machines, or online services to which the accessed computer belongs, or those who use such devices, machines, or online services. 

“Computer security research is a key driver of improved cybersecurity,” said Deputy Attorney General Lisa O. Monaco. “The department has never been interested in prosecuting good-faith computer security research as a crime, and today’s announcement promotes cybersecurity by providing clarity for good-faith security researchers who root out vulnerabilities for the common good.”

The new policy states explicitly the longstanding practice that “the department’s goals for CFAA enforcement are to promote privacy and cybersecurity by upholding the legal right of individuals, network owners, operators, and other persons to ensure the confidentiality, integrity, and availability of information stored in their information systems.” Accordingly, the policy clarifies that hypothetical CFAA violations that have concerned some courts and commentators are not to be charged. Embellishing an online dating profile contrary to the terms of service of the dating website; creating fictional accounts on hiring, housing, or rental websites; using a pseudonym on a social networking site that prohibits them; checking sports scores at work; paying bills at work; or violating an access restriction contained in a term of service are not themselves sufficient to warrant federal criminal charges. The policy focuses the department’s resources on cases where a defendant is either not authorized at all to access a computer or was authorized to access one part of a computer — such as one email account — and, despite knowing about that restriction, accessed a part of the computer to which his authorized access did not extend, such as other users’ emails.

However, the new policy acknowledges that claiming to be conducting security research is not a free pass for those acting in bad faith. For example, discovering vulnerabilities in devices in order to extort their owners, even if claimed as “research,” is not in good faith. The policy advises prosecutors to consult with the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) about specific applications of this factor. 

All federal prosecutors who wish to charge cases under the Computer Fraud and Abuse Act are required to follow the new policy, and to consult with CCIPS before bringing any charges. Prosecutors must inform the Deputy Attorney General (DAG), and in some cases receive approval from the DAG, before charging a CFAA case if CCIPS recommends against it. 

The new policy replaces an earlier policy that was issued in 2014, and takes effect immediately.

Thursday, 5 May 2022

How Europe can build on strengths in SEPs to reclaim leadership in cellular with 5G and 6G

 The EU is in grave danger of “throwing out the baby with the bathwater” in its prospective attempts to reform SEP licensing with interventions for the purported benefit of European Small and Medium-Sized Enterprises (SMEs) in IoT. 

Europe was once preeminent in cellular communications with 2G GSM—including standard-essential technology innovation, product developments and sales, network deployments, and operator services adoption by consumers. Since its heyday in the in the late 1990s, Europe has declined through a succession of falls from various leading positions in cellular.

Revenue growth captured in cellular by newcomers from outside Europe

Source: Companies’ yearend reports and average annual exchange rate figures

The European Commission’s initiatives to regulate standard essential patents (SEPs)—most significantly in cellular technologies and ostensibly for the benefit of SMEs and other technology implementers—are oblivious to this bigger picture. It is vital for all Europeans that the region’s remaining major players in the cellular ecosystem can flourish profitably and are able to continue investing in R&D for innovation, new products, network deployments and services growth. That means ensuring standard-essential technology developers including the European Union’s Ericsson and Nokia can make fair and adequate returns on their SEP investments. The SEP licensing system needs to be reinforced, not weakened with prospective interventions that are inconsistent, contradictory or that have weak factual justification and would jeopardise Europe’s competitiveness.

Re-establishing European strength in cellular also requires reregulation of operator and other services markets so that European mobile network operators can become profitable leaders in the mobile ecosystem once again. Hopefully the EU’s new Digital Markets Act (DMA) that seeks to reign-in the dominant and abusive behaviour of Big Tech companies such as Apple, Alphabet and Meta will help European mobile operators and others improve their competitive positions and abilities to become leaders rather than remain followers with new technologies and services. Anticipated measures against these Big Tech “gatekeepers” include restrictions on bundling and self-preferencing between complementary services (e.g. search versus shopping), and mandating interoperability among different messaging platforms. 

The European Commission, with its call for evidence for an Impact Assessment regarding a new framework for standard-essential patents closing May 9, 2022, follows the US Department of Justice and the UK’s Intellectual Property Office with public consultations on the topic of SEP licensing. These focus on various issues including improved “transparency” with the counting of essentiality-checked patents in setting royalty rates, prospective new collective licensing arrangements and purported problems such as opportunistic behaviour by patent owners and implementers.

While the European Commission threatens to meddle with SEP licensing, a paper I have written for 4iP Council considers the broader strategic issues on Europe’s competitiveness in cellular. This longer read shows that virtually all the $14 billion in SEP royalties to Europe’s world-leading innovators Ericsson and Nokia over the last 5 years— that were vital to fund their R&D at a total cost of around $10 billion in 2021—were export revenues generated on smartphone sales by Apple and Asian OEMs. Royalties generated from SEPs in Europe are tiny in comparison: most IoT modules are produced by a top five manufacturers that are Chinese, and there is no requirement for software application developers to take SEP licenses. 

Licensing costs pale in comparison to total revenues and profits derived as the cellular ecosystem expands to be worth many trillions of dollars in products, services and applications including IoT.

This summary article was originally Published in RCR Wireless on 4th May 2022.

Tuesday, 19 April 2022

Women and the Unified Patent Court - Free Webinar hosted by OxFirst April 28 3 p.m. UK time

 Date & Time:  April 28 2022 15h00 -16h00 GMT = 16.00 – 17.00 CET

 The Influence of Women in IP: Women and the Unified Patent Court.

What the Panel Discussion is About

The establishment of the Unified Patent Court is likely the biggest game changer in European patent system. But what role and influence will women play in shaping this new Court?

Should under the UPC the opportunities for women be stronger established? Should women judges, given equal qualification and competence, be given priority in the selection process? Should there be adjustments made to allow judges who are also parents to participate in the UPC?

And, is there a need to come to grips with more gender-neutral language under the UPC?

This panel addresses these and more questions relating to women in IP and asks what can be done to remove gender barriers in intellectual property.

About the Speakers

Marina Tavassi has until most recently been the President of the Milan Court of Appeal. She has been a judge in Italy for over 40 years (specialized in IP) and sat on Samsung vs Apple, Italy. Since June 2014, she has also been a member of the panel of experts responsible for drafting rules of procedure for European Unitary Patent Court. She has also been a national judge on the Enlarged Board of Appeal of the European Patent Office (based in Munich). She is of counsel with BonelliErede.

 

Julia Dias is Senior IP Policy Counsel for Huawei. Julia specialises in SEP/FRAND licensing, litigation and policy. She is also the Vice Chair of the IPR working group of Digital Europe. Prior to joining Huawei, Julia gained IP experience in the UK and in Germany, including at the EPO where she worked in various ICT projects focusing on SEPs and emerging technologies. 

                                                                                                              

Katie Colart Katie is a partner in the London IP litigation team at Kirkland & Ellis. Katie specialises predominantly in patent litigation across a range of sectors including life sciences and tech. Katie regularly deals with major cross-border disputes of significant strategic importance to her clients and is ranked as an “Up and Coming” lawyer by Chambers, and a “Next Generation Partner” by The Legal 500.

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