IP UPDATE
Exploring the latest in intellectual property law
IP UPDATE
Exploring the latest in intellectual property law
Results for "Fair use limitations"
Subscribe to Results for "Fair use limitations"'s Posts

RAW Confusion? No Error Where Trial Court Declines to Clarify Agreed Jury Instruction

by | May 8, 2025 |

The US Court of Appeals for the Seventh Circuit affirmed a district court’s jury verdict that found trade dress infringement and liability under state deceptive practices law, and the court’s order entering a nationwide permanent injunction. The Seventh Circuit found the district court’s agreed jury instruction accurate and determined that there was no error in refusing to further clarify the instruction for the jury. Republic Techs. (NA), LLC v. BBK Tobacco & Foods, LLP, Case No. 23-2973 (7th Cir. Apr. 25, 2025) (Hamilton, Scudder, Lee, JJ.)

Republic Technologies and BBK Tobacco are competitors in the business of organic, hemp-based rolling papers for cigarettes. Republic manufactures and markets its own papers under the name OCB, and BBK markets papers manufactured by others, including its house brand, RAW. After BBK formally requested that Republic change its OCB trade dress to avoid potential confusion with the RAW trade dress, Republic sued for a declaratory judgment of noninfringement, unfair competition, and deceptive advertisement under the federal Lanham Act, Illinois common law, and the Illinois Uniform Deceptive Trade Practices Act (IUDTPA). BBK filed a counterclaim for trade dress infringement and copyright infringement.

At trial, the parties agreed on the jury instruction for the Lanham Act false advertising claim. However, during deliberations, the jury asked for clarification on the definition of “consumer.” Over Republic’s objection, the district court answered the jury’s question by stating that “the answers are contained in the instructions,” and directed the jury “to refer to and review all the instructions.” The jury returned a mixed verdict, finding against Republic on the federal false advertising claims but finding for Republic on its common law and IUDTPA claims. Republic then sought, and the district court granted, a permanent injunction that set limitations on the statements BBK was permitted to make in its advertisements.

On BBK’s counterclaim of trade dress infringement, the jury found that Republic’s trade dress for its OCB papers infringed BBK’s trade dress for its RAW papers. Republic moved for judgment as a matter of law of noninfringement and for a new trial on its false advertising claim based on the disputed answer to the jury’s question. The court denied both motions. Both parties appealed.

On appeal, the Seventh Circuit affirmed on all issues. First, the Seventh Circuit ruled that the district court did not abuse its discretion in its response to the jury’s question or in denying the request for a new trial because a trial judge’s responsibility is to strike “a balance between giving the jury all it needs but without unnecessary detail” and the judge’s answer in this case did not result in the prejudice necessary for a reversal.

Second, the Seventh Circuit reviewed the evidence presented to the jury concerning the trade dress infringement claim and determined that substantial evidence supported the jury’s verdict and the verdict was not irrational. Republic argued that it was not reasonable to confuse the OCB packaging with the RAW packaging “given the prominent display of the brand names in great big letters [...]

Continue Reading



read more

NO FAKES Act Would Create Individual Property Right to Control Digital Replicas

by | Aug 8, 2024 |

On July 31, 2024, a bipartisan group of US senators introduced the Nurture Originals, Foster Art, and Keep Entertainment Safe (NO FAKES) Act of 2024 to protect the voice and visual likeness rights of individuals from unauthorized use in the form of digital replicas, including digital replicas created by generative artificial intelligence (AI). The bill was introduced by Senators Chris Coons (D-DE), Marsha Blackburn (R-TN), Amy Klobuchar (D-MN) and Thom Tillis (R-NC) and follows a discussion draft released in October 2023. The press release from Senator Coons’ office makes note of the many organizations that support the proposed legislation and includes quotes from representatives of SAG-AFTRA, the Recording Industry Association of America, the Motion Picture Association, OpenAI, IBM and Creative Artists Agency.

Designed to protect all individuals (not just celebrities), the bill defines a digital replica as a newly created, computer-generated, highly realistic electronic representation that is readily identifiable as the voice or visual likeness of an individual and that is embodied in a sound recording, image, audiovisual work or transmission in which the actual individual did not perform or appear, or a version of such work in which the fundamental character of the performance or appearance has been materially altered. The bill would grant each individual or right holder the right to authorize the use of their voice or visual likeness in a digital replica, which the bill states is a property right. The bill also would establish the characteristics, requirements and duration of the license rights that can be granted in a digital replica. The right to authorize the use of an individual’s voice or visual likeness in a digital replica would not expire upon the death of the individual and would be transferable and licensable (subject to certain time limitations on the post-mortem right and registration requirements with the Register of Copyrights).

The bill would create a civil cause of action for a rights holder against any person that produces or makes available to the public an unauthorized digital replica and would provide for injunctive relief, actual or statutory damages, punitive damages and attorneys’ fees. There would be a limitations period, however, and any civil action would have to be commenced no later than three years after the date on which a rights holder discovered – or with due diligence should have discovered – the violation at issue. The bill provides certain exceptions and safe harbors for the production or use of digital replicas in news, public affairs, sports, documentaries, commentary, criticism, scholarship, satire or parody, or for online services that remove or disable access to unauthorized digital replicas upon receiving a notification from the rights holder.

The bill would preempt any cause of action under state law for the protection of voice and visual likeness rights in connection with a digital replica in an expressive work, except for certain existing state statutes or common law or state statutes regulating sexually explicit or election-related digital replicas.

On August 5, 2024, the US Patent & Trademark Office hosted [...]

Continue Reading



read more

PTAB MTA Pilot Program to the Rescue

by | Aug 1, 2024 |

On review of a final written decision from the Patent Trial & Appeal Board in an inter partes review (IPR), the US Court of Appeals for the Federal Circuit found that all challenged claims were obvious but left open the possibility of the patent owner amending the claims under the Motion to Amend (MTA) Pilot Program. ZyXEL Communications Corp. v. UNM Rainforest Innovations, Case Nos. 22-2220; -2250 (Fed. Cir. July 22, 2024) (Dyk, Prost, Stark, JJ.)

ZyXEL Communications petitioned for IPR challenging claims 1 – 4, 6, 7 and 8 of a patent owned by UNM Rainforest Innovation (UNMRI). The patent relates to methods for constructing frame structures in communication systems using orthogonal frequency-division multiple access (OFDMA) technologies. The patent describes a method for constructing a frame structure with two sections, each of which is configured for a different communication system, where the second communication system is used to support high mobility users (i.e., faster moving users).

Before the Board, ZyXEL argued that claims 1 – 4, 6 and 7 were unpatentable in light of two prior art references (Talukdar and Li), and that claim 8 was unpatentable in light of Talukdar and another prior art reference (Nystrom). During the Board proceedings, UNMRI filed a contingent motion to amend if any of the challenged claims were found to be unpatentable. As part of its motion, UNMRI requested preliminary guidance from the Board pursuant to the Board’s MTA Pilot Program. In its opposition to UNMRI’s motion to amend, ZyXEL argued that UNMRI’s amended claims lacked written description support, and in its preliminary guidance, the Board agreed. UNMRI attempted to file a revised motion to amend, but the Board rejected the revised motion and instead permitted UNMRI to file a reply in support of its original motion. It also allowed ZyXEL to file a sur-reply. The Board determined that claims 1 – 4, 6 and 7 were unpatentable, but that claim 8 was not. The Board also granted UNMRI’s motion to amend and determined that the new claims were nonobvious over the prior art of record. Both sides appealed.

With respect to the Board’s decision on the obviousness of claims 1 – 4, 6 and 7, the Federal Circuit found that substantial evidence supported the ruling. UNMRI’s primary argument was that a person of skill in the art (POSA) would not have been motivated to combine Talukdar and Li, but the Court credited the Board’s reliance on ZyXEL’s expert, who demonstrated sufficient motivation to combine the two references.

The Federal Circuit reversed the Board’s finding that claim 8 had not been shown to be obvious, however. The Court noted that while the Nystrom reference may not explicitly state the benefit of the missing limitations, “a prior art reference does not need to explicitly articulate or express why its teachings are beneficial so long as its teachings are beneficial and a POSA would recognize that their application was beneficial.”

Regarding UNMRI’s motion to amend, ZyXEL argued that the Board erred in granting the [...]

Continue Reading



read more

E for Effort? PI Analysis in Trade Secret Suit Riddled With Errors

by | Jun 27, 2024 |

The US Court of Appeals for the Federal Circuit reversed the granting of a sweeping preliminary injunction (PI) in a trade secret suit against a competitor, finding that the district court’s analysis failed to consider potentially dispositive issues and the requirements of the Defend Trade Secrets Act (DTSA). Insulet Corp. v. EOFlow, Co., Case No. 24-1137 (Fed. Cir. June 17, 2024) (Lourie, Prost, Stark, JJ.) Among other things, the district court:

  • Failed to consider whether the plaintiff’s claims were time-barred.
  • Used an incorrect definition of “trade secret.”
  • Based its irreparable harm analysis on an unsubstantiated fear of a competitor’s potential acquisition of the defendant.
  • Failed to meaningfully assess the balance of harm and the public interest factors.

Insulet and EOFlow are medical device manufacturers that make insulin pump patches. Insulet began developing its OmniPod product in the early 2000s and launched next-generation models in 2007 and 2013. EOFlow began developing its own insulin pump product, the EOPatch, in 2011 and began work on its second-generation product in 2017. Around the time that EOFlow began developing its second-generation device, four Insulet employees joined EOFlow.

In early 2023, Medtronic allegedly started a diligence process to acquire EOFlow. Shortly thereafter, Insulet sued EOFlow for trade secret misappropriation, seeking an injunction to bar all technical communications between EOFlow and Medtronic. The district court granted Insulet’s request, finding that Insulet was likely to succeed on its trade secret claim because EOFlow had hired former Insulet employees who retained Insulet’s confidential documents, and Medtronic’s intended acquisition of EOFlow would cause irreparable harm to Insulet. The injunction broadly prevented EOFlow from “manufacturing, marketing, or selling any product that was designed, developed, or manufactured, in whole or in part, using or relying on the Trade Secrets of Insulet.”

EOFlow appealed the injunction. EOFlow argued that the district court failed to address whether Insulet’s claim was time-barred under 18 U.S.C. § 1836(d) of the DTSA and to consider factors relevant to Insulet’s likelihood of success or meaningfully assess the balance of harm and public interest factors.

The Federal Circuit first observed that the district court had expressed no opinion regarding EOFlow’s § 1836(d) statute of limitations (SoL) argument, even though Insulet’s compliance with the SoL was a material factor that would significantly impact Insulet’s likelihood of success. This alone constituted an abuse of discretion meriting reversal.

The Federal Circuit found that even if the district court had addressed the SoL, the injunction was not adequately supported. The Federal Circuit explained that the district court had improperly and broadly defined “trade secret” as “any and all Confidential Information of Insulet,” where “Confidential Information” was defined by the district court to mean any materials marked “confidential” as well as any CAD files, drawings or specifications. The Federal Circuit explained that the district court should have required Insulet to define the allegedly misappropriated trade secrets with particularity. Instead, the district court allowed Insulet to “advance a hazy grouping of information” and stated that “it would be unfair to require at [...]

Continue Reading



read more

A Lesson in Laches: You Waited Too Long to Start Your Kar

by | May 2, 2024 |

After the district court, on remand, held that laches did not bar relief, the US Court of Appeals for the Third Circuit again determined that the district court abused its discretion by not properly applying the presumption in favor of laches and issued an order to vacate and remand with instructions to dismiss a charity’s trademark infringement claims with prejudice. Kars 4 Kids Inc. v. America Can!, Case Nos. 23-1273; -1281 (3rd Cir. Apr. 17, 2024) (Bibas, Porter, Fisher, JJ.)

Kars 4 Kids and America Can! Cars for Kids are charities that sell donated vehicles to fund children’s education programs and have been engaged in a trademark dispute since 2003. Both parties have alleged federal and state trademark infringement, unfair competition and trademark dilution over their respective KARS 4 KIDS and CARS FOR KIDS trademarks. The parties were last before the Third Circuit in 2021, when the Court held that America Can was first to use its CARS FOR KIDS trademark in Texas, and Kars 4 Kids waived any challenge to the validity of America Can’s marks. In that 2021 decision, the Third Circuit also vacated the district court judgment in part and remanded the case for the district court to reexamine its laches and disgorgement conclusions, which had been decided in favor of America Can.

The Lanham Act does not contain a statute of limitations. Instead, it subjects all claims to the principles of equity. To determine whether laches bars a claim, a court considers two elements: whether the plaintiff inexcusably delayed in bringing suit, and whether the defendant was prejudiced as a result of the delay. With respect to the burden of proof for the laches claim at issue, America Can and Kars 4 Kids agreed that their Lanham Act claims were properly analogous to New Jersey’s six-year fraud statute. Therefore, because America Can first discovered the Kars 4 Kids trademark in Texas in 2003 and did not bring counterclaims until 2015, America Can was subject to a presumption that its claims were barred by laches unless it was able to prove both that its delay in filing suit was excusable and that it did not prejudice Kars 4 Kids.

On the issue of delay, the Third Circuit found that the district court erred because it did not find that America Can met its burden of establishing that its delay in bringing suit was excusable and that a reasonable person in its shoes would have waited to file suit. Instead, the district court improperly placed the burden on Kars 4 Kids to establish whether its advertisements in Texas were viewed by a sufficient number of Texans so as to put America Can on notice. As the Third Circuit explained, this was error. The district court should have held America Can to the burden of persuasion to show that it was not sufficiently aware of Kars 4 Kids’s use of its mark in Texas and to show what it did to identify and stop any potentially [...]

Continue Reading



read more

Missed Shot: Lawsuit Against Related Company Doesn’t Toll Prescriptive Period

by | Oct 12, 2023 |

The US Court of Appeals for the Fifth Circuit affirmed a district court’s decision to dismiss claims under the Louisiana Unfair Trade Practices Act (LUTPA), finding that a dispute against a related company did not toll the statute of limitations. Carbon Six Barrels, LLC v. Proof Research, Inc., Case No. 22-30772 (5th Cir. Sept. 29, 2023) (Clement, Elrod, Willett, JJ.)

Proof Research and Carbon Six Barrels both manufacture gun barrels made of carbon fiber. Proof was the first of the parties to enter the market and in 2013 trademarked the unique mottled appearance of its barrels. In 2016, Proof discovered that Carbon Six intended to manufacture and sell similar-looking carbon-fiber barrels and sent a cease-and-desist letter. Carbon Six began production in 2017, sourcing barrel blanks from its sister company McGowen Precision Barrels. Proof filed a trademark infringement suit against McGowen, instead of Carbon Six, in the District of Montana. McGowen initiated a separate proceeding in the Trademark Trial & Appeal Board to cancel Proof’s trademark and was successful in doing so.

After the Board cancelled Proof’s trademark, Carbon Six sued Proof in the Middle District of Louisiana alleging that Proof fraudulently registered its trademark, violated LUTPA, and defamed Carbon Six during the initial litigation and Board proceeding. McGowen brought a similar suit in the District of Montana. Proof asserted several defenses in the lawsuit filed by Carbon Six, including a Rule 12(b)(6) motion to dismiss for failure to state a claim, arguing that Carbon Six’s claims were both untimely and legally insufficient. The district court denied Proof’s other defenses but granted the Rule 12(b)(6) motion, finding that Carbon Six’s claims were time-barred by Louisiana’s one-year prescriptive period and that Carbon Six’s LUTPA claim was also legally insufficient. Carbon Six appealed.

The Fifth Circuit affirmed, explaining that LUTPA has a one-year prescriptive period and that there was no doubt that the violations alleged by Carbon Six occurred more than a year before Carbon Six filed suit in early 2022. The Court reviewed all actions that could potentially give rise to liability under LUTPA and stated that even if any of these acts could give rise to liability, all actions occurred more than a year before Carbon Six’s suit.

Carbon Six attempted to rely on the continuing tort doctrine, alleging that the acts continuously violated LUTPA up until the Board cancelled Proof’s trademark in May 2021. Reviewing Louisiana law, the Fifth Circuit determined that the general principle of a continuing tort is a conduct-based question “asking whether the tortfeasor perpetuates the injury through overt, persistent, and ongoing acts.” The Court agreed with the district court that LUTPA’s prescriptive period is not suspended if a perpetuator of fraud fails to correct false statements, as that proposition would transform almost every business dispute into a continuing tort. The Fifth Circuit also determined that the district court’s conclusion that Carbon Six could not recover for Proof’s lawsuit against McGowan was correct, because the law supported the position that a sister corporation cannot sue on behalf [...]

Continue Reading



read more

A Single Picture Database Is Worth a Thousand Statutory Damages Awards

by | Jun 22, 2023 |

In the latest appeal of a copyright infringement dispute, the US Court of Appeals for the Ninth Circuit upheld the lower court’s finding that the copyright owner’s photographs were not part of a single compilation for purposes of awarding statutory damages. VHT, Inc. v. Zillow Grp., Inc., Case Nos. 22-35147; -35200 (9th Cir. June 7, 2023) (McKeown, Fletcher, Gould, JJ.)

VHT is a professional real estate photography studio that real estate brokerages and listing services hire to photograph properties. VHT retouches the photographs, saves them in its photo database and licenses them to its clients for marketing purposes. In 2015, VHT sued Zillow for copyright infringement based on Zillow’s display of VHT photographs on its real estate listing website and on its Digs home design website. The district court found that Zillow was not liable for displaying VHT photographs on its real estate listing website or for displaying untagged, unsearchable VHT photographs on its Digs home design website. However, the district court found that Zillow’s display of tagged, searchable VHT photographs on Digs constituted infringement and that the searchability functionality was not fair use.

The parties cross-appealed, and the Ninth Circuit considered the issue of infringement in a 2019 decision (Zillow I). In this prior appeal, the Ninth Circuit agreed that Zillow’s display of VHT photographs on its real estate listing website was not copyright infringement, while Zillow’s display of searchable VHT photographs on its Digs home design website constituted infringement and was not fair use. The Ninth Circuit also reversed the jury’s finding that Zillow had willfully infringed 2,700 searchable VHT photographs displayed on Digs and remanded for consideration of whether the searchable photographs were a compilation for purposes of awarding statutory damages. On remand, the district court found that the photographs were not a compilation and awarded statutory damages of $200 for each innocently infringed photograph and $800 for each remaining photograph.

The district court also considered the impact of the Copyright Act’s preregistration requirement and Fourth Estate v. Wall-Street (Supreme Court, 2019) on VHT’s ability to sue. In accordance with Ninth Circuit precedent holding that registration is made when the Copyright Office receives a completed registration application, VHT had sued Zillow for copyright infringement after applying for copyright registration. However, the works were not registered until after the suit was filed. Just 11 days before Zillow I was decided, in Fourth Estate, the Supreme Court held that registration is made when the Copyright Office has registered a copyright after examination—not when the application is filed. Zillow argued that VHT’s claims should be dismissed because VHT did not satisfy the preregistration requirement. The district court excused the exhaustion requirement because dismissal would result in a massive waste of resources. The parties again cross-appealed.

Preregistration and Fourth Estate

Addressing the preregistration issue, the Ninth Circuit agreed that dismissal was not required. The decision to excuse compliance with a non-jurisdictional exhaustion requirement is based on whether the claim is wholly collateral to the substantive [...]

Continue Reading



read more

Heart-to-Heart on Reduction to Practice: When It Comes to Testing, How Much Is Enough?

by | Jun 1, 2023 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board decision that the patent owner successfully demonstrated that the claimed heart catheter invention was conceived and reduced to practice prior to the effective date of the reference, by record evidence of adequate testing to demonstrate that the invention would work for its intended purpose. Medtronic, Inc. v. Teleflex Innovations S.Á.R.L., Case Nos. 21-2356; -2358; -2361; -2363; -2365 (Fed. Cir. May 24, 2023) (Moore, C.J.; Lourie, J.) (Dyk, J., dissenting).

Teleflex Innovations owns five patents directed to guide extension catheters that use a tapered inner catheter that runs over a standard coronary guidewire to reduce the likelihood that a guide catheter will dislodge from the coronary artery’s opening. All of the patents are related and share a common specification. Around the time of the challenged patents’ priority date, the applicant was working to develop two commercial variants of similar technology: the “rapid exchange” (or “RX”) version of the GuideLiner product, which Teleflex claims practices the challenged patents, and an “over-the-wire” (or “OTW”) variant, which does not practice the challenged patents.

Medtronic petitioned for inter partes review (IPR), challenging all five patents on the basis that they were predated by a patent to Itou. During the IPR proceedings, Teleflex claimed that conception and reduction to practice occurred prior to Itou’s priority date and submitted several declarations and exhibits such as lab notebooks, internal company memoranda, presentations, invoices, sales orders, photographs, engineering drawings and documents from outside patent counsel in support of its contentions. Ultimately, the Board found that Itou did not constitute prior art and therefore Medtronic had failed to demonstrate that the challenged claims were unpatentable. Medtronic appealed.

On appeal, Medtronic did not challenge conception but argued that the Board’s findings on actual reduction to practice and reasonable diligence toward constructive reduction to practice should be reversed. To establish an actual reduction to practice, the patent owner must show that the inventors constructed an embodiment that met all the limitations of the claimed invention and determined that the invention would work for its intended purpose. Medtronic’s arguments were based on the grounds that the Board erred in three ways:

  1. Incorrectly identifying the intended purpose of the claimed invention
  2. Not requiring comparative testing to demonstrate that the invention worked for that purpose
  3. Relying solely on uncorroborated inventor testimony.

On the first issue, Medtronic argued that the Board incorrectly found an over-broad intended purpose of the claimed invention by relying too heavily on extrinsic evidence. The Federal Circuit acknowledged that while “the patents themselves are the most important” evidence, “it is appropriate to consider extrinsic evidence, particularly when it does not contradict the patents themselves.” The Court went on to conclude that the intended purpose here was broader than the narrow purpose argued by Medtronic (relating to difficult occlusions)—“[t]he very title of the patents themselves, ‘Coaxial Guide Catheter for Interventional Cardiology Procedures,’ describes the purpose of the claimed inventions, and it is undisputed that the [...]

Continue Reading



read more

Neither Narrow Proposed Claim Construction nor Work Product Claim Justify Withholding Material Factual Information

by and | Jun 1, 2023 |

The Patent Trial & Appeal Board of the US Patent & Trademark Office (PTO) canceled all challenged claims across five patents because the patent owner failed to meet its duty of candor by selectively and improperly withholding material information that was inconsistent with its patentability arguments. Spectrum Solutions, LLC v. Longhorn Vaccines & Diagnostics, LLC, IPR2021-00847; -00850; -00854; -00857; -00860 (PTAB May 3, 2023) (Braden, Yang, Derrick, Pollock, APJs) (per curiam) (Braden, APJ concurring).

The Board instituted inter partes reviews (IPRs) against five Longhorn patents based on petitions filed by Spectrum. During the proceedings, Longhorn filed motions to amend, after which the Board issued preliminary guidance suggesting that Spectrum established a reasonable likelihood that the proposed substitute claims were unpatentable. Longhorn engaged Assured Bio Labs (ABL) to conduct biological testing that would support its arguments distinguishing a prior art reference, but Longhorn made attorney work product objections in Spectrum’s ABL depositions and withheld testing data inconsistent with its arguments on the patentability of the original and proposed substitute claims. The Board subsequently allowed additional questioning on certain ABL testing, after which Spectrum filed a motion for sanctions, requesting judgment against Longhorn, a finding that the prior art reference taught the claim limitations and precluding Longhorn from contesting the finding, and an award to Spectrum of compensatory expenses, including attorneys’ fees.

The Board determined that sanctions of adverse judgment as to all challenged claims was appropriate because Longhorn failed to meet its duty of candor and good faith. The Board explained that parties have a duty of candor and good faith before the Board that requires any factual contentions to be well supported by evidence. Parties have “a duty to disclose to the [PTO] all information known . . . to be material to patentability.” (37 C.F.R. §1.56(a).) Information is material to patentability when it is “not cumulative to information already of record or being made of record in the application and . . . it refutes, or is inconsistent with, a position the applicant takes in . . . asserting an argument of patentability.” Taking a position contrary to any known fact while shielding factual information from the Board violates the duty of candor and good faith to the PTO, even if the party may otherwise withhold the information as being immaterial to patentability or privileged.

The Board criticized Longhorn’s proposed claim constructions as too narrow and contrary to the express language in both the original and proposed substitute claims. The Board explained that although Longhorn was free to maintain arguments grounded on Longhorn’s claim constructions, that did not excuse Longhorn’s duty of candor and good faith dealing, including disclosing material information relating to the Board’s preliminary claim constructions. Longhorn could not “simply withhold information” that the PTO would find material to patentability and should instead contest the Board’s constructions at trial.

The Board also explained that Longhorn took an overly strict view of what was material to claim patentability and a lax view as to the duty of candor [...]

Continue Reading



read more

UK High Court Issues Landmark Global FRAND Rate Decision

by | Apr 6, 2023 | ,

The UK High Court of Justice issued its long-anticipated decision establishing a global Fair, Reasonable and Non-Discriminatory (FRAND) royalty rate for a patent portfolio essential to 3G, 4G and 5G cellular technologies. InterDigital Tech. Corp. et al. v. Lenovo Group Limited, Case No. HP-2019-000032, [2023] EWHC 529 (Pat) (Mar. 16, 2023) (Mellor, J.)

InterDigital owns a portfolio of standard essential patents (SEPs) that have been declared essential to the European Telecommunications Standard Institute’s (ETSI) 3G, 4G and 5G cellular technology standards. InterDigital sought to license the SEPs to Lenovo, which implements these cellular standards in its mobile phones, tablets and PCs. After the parties could not agree on the terms under which Lenovo should take a license, InterDigital filed a lawsuit. The High Court held several technical trials in which it found that Lenovo infringed certain of the patents.

Based on the result of the technical trials, the High Court determined that InterDigital had established the right to a FRAND determination of its portfolio. The parties presented two issues regarding FRAND. The first issue was whether the InterDigital license offer was FRAND, and if not, what terms would be FRAND for a license to Lenovo of the InterDigital patent portfolio. The second issue was whether InterDigital was entitled to an injunction based on the parties’ negotiation conduct, including whether InterDigital acted as a willing licensor and whether Lenovo acted as a willing licensee.

The High Court concluded that Lenovo should pay InterDigital a FRAND rate of $0.175 per cellular unit for a worldwide license to InterDigital’s portfolio. The $0.175 rate yields a lump sum payment of $138.7 million for sales from 2007 to the end of 2023. The Court’s FRAND rate determination was closer to Lenovo’s offered rate of $0.16/unit than to InterDigital’s demand of $0.498/unit.

In determining the appropriate FRAND rate, the High Court analyzed whether InterDigital’s proposed rate was comparable to the rate in InterDigital’s other license agreements for SEPs. InterDigital argued that its license offer to Lenovo was consistent with “program rates” under which it had already licensed its SEPs to other companies. The Court, however, rejected InterDigital’s program rates as comparable because the other licenses included volume discounts ranging from 60% to 80% of InterDigital’s program rate. InterDigital argued that Lenovo was not entitled to the same type of steep volume discount and, therefore, those licenses with discounts applied were not comparable licenses for Lenovo. The Court disagreed, finding that the volume discounts applied to those licenses “do not have any economic or other justification” and that their primary purpose was to “shore up InterDigital’s chosen program rates.” The Court further observed that the primary effect of the volume discount in the other licenses was to discriminate against smaller licensees, which is exactly what FRAND is supposed to avoid.

InterDigital tried to bolster its argument that its program rate was FRAND by applying a top-down cross-check. The top-down approach starts with the cumulative value of all royalties that should be paid on FRAND [...]

Continue Reading



read more

BLOG EDITORS

Paul Devinsky

Amol Parikh

Jodi Benassi

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES