Time was the Eastern District of Texas was the global center for patent litigation. Companies from around the world went -- or were dragged -- to the tiny East Texas city of Marshall to slug it out in in front of judges who prided themselves on their “rocket docket” and willingness to slap even giants like
Texas is still a hub of patent litigation but foreign courts have stepped up their game since an influential 2006 U.S. Supreme Court made it harder to obtain injunctions. German judges are becoming more aggressive in issuing injunctions blocking the sale of products containing infringing technology, especially cellphones and other mobile devices, and India and China aren’t far behind.
“We’ve seen a number of foreign jurisdictions adopt practices that look like either current or previous versions of U.S. law,” said Ira Blumberg, vice president in charge of intellectual property at
Until a decade ago or so the rules in U.S. courts were favorable to patent owners and harsh for infringers, as Microsoft learned in 2009 when a Marshall judge ordered Microsoft to stop selling Word after Toronto-based i4i won a patent case over XML technology. European courts, on the other hand, were inclined to force companies to negotiate compulsory licenses for their patented technology, an approach designed to prevent them from abusing their monopoly powers.
“You couldn’t force a product off the market” in Europe, Blumberg said. “U.S. lawyers used to scoff.”
Things flip-flopped a bit after the Supreme Court’s 2006 decision eBay v. MercExchange, which rejected the idea patent owners are automatically entitled to a permanent injunction when they win in court. The decision had a big impact on non-practicing entities, or trolls, who’ve had a harder time convincing U.S. courts they will suffer irreparable harm if somebody else uses patented technology they aren’t selling themselves.
At the same time, European courts started getting tougher on infringers, especially in the area of “standard-essential patents” covering elements of standardized technology used by all the companies in a given market such as cellphones. German courts have issued injunctions that require infringers to obtain global licenses to use technology, not just in Germany, Blumberg said. That can be devastating to an international company like Motorola, which Lenovo bought last year from
“If this reasoning were applied consistently, personal computers would cost $1 million,” said Blumberg, who said Lenovo is virtually always the defendant in patent litigation. (Which Blumberg knows more than a little about. He previously served as a licensing executive at Intellectual Ventures, former Microsoft exec Nathan Myrhvold's firm that buys patents and sues to enforce licensing deals, and before that he worked at Rambus, which is infamous for enforcing patents covering standards it participated in setting on dynamic random access memory chips.)
The European Court of Justice issued a ruling last year requiring EU member courts to refrain from issuing injunctions unless companies engage in fair, reasonable and non-discriminatory license negotiations. But German courts have pushed back, granting a Swiss company an injunction (later overturned on appeal) against Chinese cellphone maker Haier Group over patents the Swiss company acquired from Nokia. And a German court in March put Apple’s streaming-video service in doubt, in Germany at least, after ruling it had violated OpenTV patents held by Swiss security company Kudelski. The Dusseldorf court acted before a patent court in Munich ruled on Apple’s request to invalidate the patent.
In the U.S., companies can fight to keep selling products based upon standards, as Apple did in 2013 when it convinced the White House to veto an International Trade Commission ruling blocking sales of iPhones that violated a Samsung patent. In Germany, “if you sue on a standard essential patent and win, that’s it. They will seize your goods at the border, and end of story,” Blumberg said. “If you haven’t taken license by the end of this process, that’s too bad.”
With foreign courts adopting what was the U.S. style of aggressive enforcement, he said, defendants are facing a much more difficult calculation on whether to fight or fold.
“If you can go to the U.S., Germany, India and possibly China where there’s lots of revenue, it puts huge pressure on the defendant,” said Blumberg, whose company is engaged in at least 60 patent disputes in multiple countries now. “That alone is enough to convince defendants to settle.”
One partial solution is to join a patent pool, where the participants in an industry agree not to enforce patents against each other. An alternative is LOT Network, a consortium launched by Google, Canon, Newegg and others in 2014. It pools more than 500,000 patents under agreements that allow the owners to enforce them but grant members a license if any patent is transferred to a “troll,” defined as a company that derives more than half its revenue from patent royalties.
