June 23, 2015

Supreme Court Cites Spiderman In Ruling Against Post-Expiration Patent Royalties

By Robert S. Schwartz

Spiderman swung through the halls of the U.S. Supreme Court yesterday as Justice Elena Kagan liberally relied on the comic book superhero in the Court’s decision in Kimble v. Marvel Enterprises, Inc., reaffirming the Court’s 51-year-old rule precluding patent owners from collecting patent royalties on expired patents.

In 1964 the U.S. Supreme Court ruled in Brulotte v. Thys Co. that the statutory limit on patent terms precludes patent licensors from enforcing any contract to receive royalties for exploitation of the patent after its term had expired.  The Court accepted the Kimble case explicitly to consider whether, in light of subsequent antitrust law and economics scholarship, this precedent should be overruled.  On Monday, the Court, adhering to principles of stare decisis, declined to do so in a six to three opinion by Justice Kagan.  The majority held that, assuming that the antitrust economics criticisms of Brulotte are correct, it would be up to Congress to revise the law in order to change this long-standing interpretation of the Patent Act.

Kimble, which patented a toy that shot “webbing” like Spiderman, successfully sued Marvel for infringement in 1997.  The parties, both ignorant of Brulotte, settled the case by agreeing Marvel would purchase Kimble’s patent for a lump sum payment and a running three percent royalty on all future sales.  More than a decade later, Marvel, as Justice Kagan put it, “stumbled across Brulotte,” and filed for a declaratory judgment to release its royalty obligation.  After the district court granted the relief, the U.S. Court of Appeals for the Ninth Circuit affirmed, but, per Justice Kagan, was “none too happy about doing so.”  The Supreme Court accepted the case “to decide whether, as some courts and commentators have suggested, we should overrule Brulotte.”

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Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

    February 10, 2015

    European Antitrust Watchdogs Warn Of Uncertain Future For Pay-For-Delay Settlements

    A View from Constantine Cannon’s London Office

    By Irene Fraile

    A recent lively discussion with European Commission competition officials indicates that antitrust enforcement is continuing to evolve to deal with the thorny issues raised by so-called “reverse-payment” or “pay-for-delay” patent litigation settlements designed to delay the sale of generic drugs.

    On January 29, 2015, Brussels Matters (which hosts informal discussions with senior EU officials) hosted the first pan-EU discussion with officials from the European Commission’s Directorate General for Competition (“DG COMP”) after the Commission’s Lundbeck decision, which imposed hefty fines for entering into pay-for-delay agreements that violated EU antitrust rules that prohibit anticompetitive agreements.

    In that June 19, 2013, decision, the Commission imposed a fine of 93.8 million euros on the Danish pharmaceutical company Lundbeck and fines totalling 52.2 million euros on several producers of generic medicines for delaying generic market entry of the drug Citalopram.  This was the first EU infringement decision concerning pay-for-delay agreements.

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    Categories: Antitrust and Intellectual Property Law, Antitrust Enforcement, Antitrust Policy

      February 5, 2015

      Feds Green-Light Institute’s New Patent Policy For Wi-Fi Standards, Finding It Potentially Procompetitive

      By David Golden

      The Antitrust Division of the U.S. Department of Justice announced on Monday that it would not challenge recent revisions to the Patent Policy of the Institute of Electrical and Electronics Engineers Standards Association (“IEEE-SA”)—giving the green light to new Wi-Fi standards that computers, smartphones and tablets will follow in connecting to the Internet.

      The Antitrust Division’s decision removes one of the last barriers to the implementation of the revised Patent Policy, which governs the licensing of patents essential to IEEE standards, such as the ubiquitous Wi-Fi networking protocols.  The changes could lead to cheaper devices for consumers.

      We blogged about the IEEE-SA’s preliminary adoption of the changes earlier this year, following a Federal Circuit decision that required trial courts to consider a standard-setting organization’s patent-licensing policy when calculating patent royalty rates and damages.  The IEEE-SA submitted its revised policy to the government under the Antitrust Division’s Business Review  program.

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      Categories: Antitrust and Intellectual Property Law, Antitrust Policy

        January 5, 2015

        Reasonableness Of Licensing Royalties Is On Trial As Courts And Standard-Setting Organizations Wrestle With Standard-Essential Patents

        By David Golden

        The ongoing battle over what constitutes a “reasonable” licensing royalty for standard-essential patents has now been joined by the U.S. Court of Appeals for the Federal Circuit with its decision in Ericsson, Inc. v. D-Link Systems, Inc., concerning the alleged infringement of patents essential to the ubiquitous Wi-Fi networking technology.

        This definitional battle is also being fought in standard-setting organizations, such as the Institute of Electrical and Electronics Engineers (“IEEE”), the promulgator of Wi-Fi standards, which recently adopted a resolution that defines the calculation of a “Reasonable Rate” for standard-essential patents.

        Many modern electronic devices, such as smartphones and tablets, incorporate voluntary industry-wide communication and networking standards, such as Wi-Fi, cellular data, and Bluetooth technologies. Generally, the members of organizations that create and maintain such standards compete in the markets for these products, and frequently own patents that are essential to the implementation of the standards. Thus, the member companies’ collective selection of technologies to include in the organization’s standard can prove advantageous in both product and technology licensing markets. It is not surprising then that the Supreme Court has described private industry standard-setting organizations as “rife with opportunities for anticompetitive activity.”

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        Categories: Antitrust and Intellectual Property Law

          September 25, 2014

          Antitrust Regulators Taking Aim At Drug Companies’ “Forced Switching”

          By Rosa M. Morales

          Signs continue to accumulate that antitrust regulators are on the lookout for innovative anticompetitive tactics by pharmaceutical companies seeking to delay entry of lower-priced generic drugs.

          This growing interest by federal and state regulators in policing the anticompetitive suppression of generic drugs was the subject of a recent post on this blog by Ankur Kapoor.  Among the antitrust enforcement actions analyzed was a reverse-payment case filed earlier this month by the New York State Attorney General against Actavis and its recently acquired, wholly-owned subsidiary Forest Laboratories.

          In recent comments, Eric Stock, chief of the Antitrust Bureau of the New York State Attorney General’s Office shed light on what antitrust enforcers may be looking at when he discussed “forced switching” – one of the anticompetitive tactics used by the pharmaceutical companies that is attracting the interest of antitrust enforcers.  “Forced switching” occurs when pharmaceutical companies “force” the use of new branded drugs by either pulling older branded versions from the market or reducing their supply.

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          Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

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