maximizing patent value – minimizing cost: eu & ip & u david healey fish & richardson...
TRANSCRIPT
MAXIMIZING PATENT VALUE – MINIMIZING COST:EU & IP & U
David Healey Fish & Richardson Houston, TX
a/k/a “Patentmath.com”
Erick Robinson, Senior Patent Counsel, Red Hat Inc.,
Raleigh, NC
University of Texas Technology Law Conference, May 26-27, 2011
2
But first a word from our GCs• 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 Red Hat, its affiliates, customers, suppliers, distributees,etc., Fish & Richardson, its attorneys, clients, or even of the authors
• We don’t know whose ideas or views these are….
U.T. Tech. Law Conf. - For Discussion Only
3
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?
U.T. Tech. Law Conf. - For Discussion Only
4
Think Like A Business Person
U.T. Tech. Law Conf. - 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”?
5
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 suspended 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
U.T. Tech. Law Conf. - For Discussion Only
6
Why Think Europe?
• 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
U.T. Tech. Law Conf. - For Discussion Only
7
EU TODAY
• Obtain EPO patent, then must convert to National Patents.
• Each country enforces its own patents.• Today, no EU country has comparable population to US.
• But Germany and UK are EU distribution points; and,
• EU is working toward a unified patent and enforcement system (which would exceed US market).
U.T. Tech. Law Conf. - For Discussion Only
• “London Agreement”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.
Recent Steps Towards Unified European Patent System
11
EU Today: Germany 1 yr to Trial Decision
• 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.
U.T. Tech. Law Conf. - For Discussion Only
12
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
U.T. Tech. Law Conf. - For Discussion Only
13
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.
U.T. Tech. Law Conf. - For Discussion Only
14
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.
U.T. Tech. Law Conf. - For Discussion Only
…. And “EU Seizure Proceedings”?
Fast
Inexpensive
Simple
Typical EU Entry points:Port of RotterdamAirport of Frankfort Port of Hamburg
16
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;• 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.
U.T. Tech. Law Conf. - For Discussion Only
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
• Injunction regardless of “equities”
18
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)
U.T. Tech. Law Conf. - For Discussion Only
22U.T. Tech. Law Conf. - For Discussion Only
Source of Change in Total Patent Applications by Office (%), 2008-09
26
Cost-Effectiveness of Enforcement
U.T. Tech. Law Conf. - For Discussion Only
TaylorWessing Global Intellectual Property Index 2011,Available at www.taylorwessing.com/ipindex
27
Foreign Patent Filings – U.S. Patentees U.T. Tech. Law Conf. - For Discussion Only
Inovia U.S. 2011 Global Patent & IP Trends Indicator
28
Foreign Patent Filings – U.S. Patentees U.T. Tech. Law Conf. - For Discussion Only
Inovia U.S. 2011 Global Patent & IP Trends Indicator
29
Patent IndicesU.T. Tech. Law Conf. - For Discussion Only
TaylorWessing Global Intellectual Property Index 2011,Available at www.taylorwessing.com/ipindex
30
Other Countries – China• System is unpredictable.• Gravitating toward adoption of 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?
U.T. Tech. Law Conf. - For Discussion Only
37
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…
U.T. Tech. Law Conf. - For Discussion Only
40
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…
U.T. Tech. Law Conf. - For Discussion Only
41
Other Countries – the Up and coming• For oil exploration, software, electronics, pharma:
• Brazil• Australia (much like UK High Court)• Mexico – Administrative enforcement, trade zone by border
exempt, corruption and violence unattractive, depends on long-term play
• 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)
U.T. Tech. Law Conf. - For Discussion Only