Selected Int’l IP Issues

• Effecting Hague Convention service abroad - Mike Atkins 

• Madrid System Strategies for International Trademark Filings - Julianne Henley

• IP issues in Germany - Gina Culbert, Rich Medway, Steve McGrath, Cyrus Christenson

• IP issues in China and Taiwan - Michael Zachary and Ching-Yi Chiu

Hague Convention Service

Michael Atkins

Atkins Intellectual Property, PLLCOctober 25, 2012

The issue

• Commencing an action−File complaint (Rule 3)

• Joining defendant−Serve summons (Rule 4)

No default without proof of service (Local Rule 55(a))

120-day rule (Rule 4(m)) does not apply to service on foreign defendant, but service still required

Authority for Effecting Service Abroad

• Rule 4(f)− “Unless federal law provides otherwise,

an individual … may be served at a place not within any judicial district of the United States:(1)By any internationally agreed means that

is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents”

Hague Convention Highlights• Effective November 15, 1965• Intended to simplify service• Send documents to foreign

government’s “central authority”−Request + summary of documents to

be served + certificate of service−Two copies of the documents to be

served in English−Two copies of the documents to be

served in defendant’s language (usually)

Hague Convention Highlights

• Central authority sends to local court, which arranges for service, often by police

• Central authority may refuse service only if service would infringe sovereignty or security

Hague Convention Highlights

• Default−Plaintiff may obtain default if it effects

Hague service and defendant does not appear

−Court may enter default judgment even if central authority does not provide certificate of service if: Plaintiff properly transmitted document At least six months have passed Plaintiff has made reasonable efforts to

obtain certificate of service

Hague Signatories• Many countries, including:• Canada• China• Many European countries• Japan• Mexico• Korea• United Kingdom• Russia … or not?

Hague Tips• It can take a long time – at least six months

−Consider telling court• Central authority isn’t only means of

service. Hague Convention does not rule out:−Service by mail−Personal service−But service must be legal in foreign jurisdiction,

and proving effective service may be difficult• Get help

− International process server−Lawyer in foreign jurisdiction

Madrid System Strategies for International Trademark Filings

IP Inn of Court – October 2012

© 2012. Perkins Coie LLP. All rights reserved.

Julianne A. Henley

JHenley@perkinscoie.com206.359.8385

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Madrid System Overview

Madrid System Membership: Madrid Agreement (established in 1891) Madrid Protocol (established in 1989 and the United States

joined in 2003) Madrid Agreement and Madrid Protocol

Administered by the International Bureau (IB) of the World Intellectual Property Organization (WIPO)

One International Registration (IR) can be used to obtain trademark protection in multiple jurisdictions through designations that can be made over time ((Original) Designations and Subsequent Designations)

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Benefits of the Madrid System Lower Cost (Usually)

Paris Convention Priority Available

Centralized Management One Renewal Application One Filing for Chain of Title / Address / Correspondent Changes

12 or 18 Month Refusal Period

Ability to Add Subsequent Designations

Favorable Opposition Timing Example: China

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Drawbacks of the Madrid System Reliance on Office of Origin Filing for 5 Year

Dependency Period Identification of Goods/Services Limitations Use Requirements for Office of Origin Filing (Example: U.S.) All Designations Hinge on Viability of Office of Origin Filing "Centralized Attack"

Madrid-Based Rights Not Recognized in All Member Jurisdictions Example: Sierra Leone

Assignment Restrictions Madrid Assignees Must Be Qualified for Madrid Ownership

(National, Domicile, and/or Real and Effective Establishment in Madrid Member Country/ies)

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Drawbacks of the Madrid System No Certificate of Registration or Grant of Protection from

Some Jurisdictions (Additional Fee in Other Jurisdictions)

Customs Recordations (Translation Issues, Additional Fees)

Confusing Notices & Calculations Example: Grant of Protection Notices from Australia and

Singapore Example: Determining 12 & 18 Month Refusal Periods

Unfavorable Opposition Timing Example: European Union – The Madrid opposition period is

between 6-9 months after publication whereas the national opposition period is between 1-3 months after publication.

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Strategies for Utilizing the Madrid System Before Filing Office of Origin Application:

What are the Office of Origin choices? Paris Convention Members Client qualifies as National, Domicile, and/or Real & Effective

Establishment

Which Office of Origin will best serve the portfolio? U.S.? (Substantive examination, narrow identifications, use

requirements, expensive/long opposition process) European Union? (Limited substantive examination, broad

identifications, active opposition practice) Benelux? (Short examination timeline)

After File Office of Origin Application: Try to resolve any identification or substantive issues before 6

month priority foreign filing deadline Confer with foreign associates regarding special situations

(trade dress, non-traditional marks, geographic references, descriptiveness)

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Strategies for Utilizing the Madrid System

Strategic national filings to obtain broader identification coverage (European Union)

Whether seniority or continuation of effect claims should be added

Filing national applications in prospective Madrid member jurisdictions to obtain priority over Subsequent Designations (Example: New Zealand)

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Strategies for Utilizing the Madrid System

Narrowing Classes / Identifications in particular Madrid Designations to avoid likelihood of confusion and/or descriptiveness refusals

Strategic selection of address to avoid geographic refusals

Securing agents in jurisdictions with short response deadlines shortly after filing International Application (China, Japan, and South Korea)

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Madrid Resources WIPO Website: http://www.wipo.int/

WIPO Madrid Member Resources: http://www.wipo.int/madrid/en/members/

ROMARIN IR Search Portal: http://www.wipo.int/romarin/

WIPO IR Fee Calculator: http://www.wipo.int/madrid/en/fees/calculator.jsp

USPTO Madrid Forms: http://teasi.uspto.gov/

USPTO Madrid TMEP Section 1900: http://tess2.uspto.gov/tmdb/tmep/1900.htm

Patent Litigation in Germany

Patent Litigation in Germany• Significant recent attention due in part to “smartphone wars”

• Multiple factors enable maximum pressure on accused infringer• Bifurcated system of infringement and validity reduces ability to

effectively challenge validity• Stays are uncommon• First instance decisions on the merits within 6 to 18 months• Permanent injunctions regularly granted and immediately enforceable

• Generally perceived as predictable and patentee-friendly decisions by experienced judges

• The European “East Texas”?

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German Patent Act § 9, second sentence •Prohibition of direct use of the invention

•A third party not having the consent of the patentee shall be prohibited

•…

•2. from using a process which is the subject-matter of the patent or, when the third party knows, or it is obvious in the circumstances, that the use of the process is prohibited without the consent of the proprietor of the patent, from offering the process for use within the territories to which this Act applies; 21

“All elements” rule

•The “all elements” rule for direct infringement exists also in Germany. However, there can be exceptions.

•“There is direct (and not only indirect) infringement if the infringer does not carry out the very last part of the method according to the invention but uses a third person for this purpose as his “instrument”, who finishes the method predictably, inevitably, and indepenent of any knowledge of the invention” (LG Düsseldorf, GRUR-RR 2001, 201)

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Joint infringement

•Several persons are joint infringers (“Mittäter”) if they consciously and knowingly work together in the use of the patent

• Example: delivering infringing devices to a recipient outside Germany, knowing that the recipient will import them into Germany

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Aiding in infringement•There may be liability for patent infringement if someone supports the patent infringement of a third person

• Example: providing machines or means for carrying out a patented method

• Requirements: (1) the third person must commit an unlawful and wilful patent infringement and (2) wilful aiding in the patent infringement of the third person

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Indirect infringement

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German Patent Act § 10•Prohibition of indirect use of the invention

•(1) A patent shall have the further effect that any third party not having the consent of the patentee shall be prohibited from offering or supplying within the territory to which this Act applies other than a party entitled to use the patented invention, means relating to an essential element of that invention for use of the invention within the territory to which this Act applies, when the third party knows, or it is obvious in the circumstances, that these means are suitable and intended for use of the invention.

It is not required that infringer knows about the patent

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Means relating to an essential element of the invention •“Means”:

• “Means” = physical object, not necessarily solid but also liquid or gaseous object (BGH GRUR 2001, 231 – Luftheizgerät)

• According to the Dusseldorf District Court, even digitally processed data can be a “means”

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Means relating to an essential element of the invention •Essential element of the invention:

• Principally any claim feature (BGH X ZR 48/03, GRUR 2004, 758 – Flügelradzähler)

• Unless the feature’s importance for the invention is entirely ancillary

• E.g., (practically) no contribution to the solution of the problem of the invention (BGH X ZR 38/06, GRUR 2007, 769 – Pipettensystem)

• Irrelevant whether or not the feature was known in the state of the art

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Means relating to an essential element of the invention •The means “relates” to an essential element if either

• The means is itself an essential element

• For a method claim, an apparatus mentioned in the claim which is used for carrying out the invention as a rule relates to an essential element (BGH GRUR 2007, 773 – Rohrschweißverfahren)

•Or the means is suitable for functionally interacting with an essential element such that the inventive idea is realized (BGH X ZR 48/03, GRUR 2004, 758 –Flügelradzähler )

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Intended for use of the invention •When is the intention of infringing use obvious?

• No technically or economically sensible non-infringing use

• Indirect infringer points out or recommends directly infringing use (BGH, X ZR 173/02, GRUR 2007, 679 – Haubenstretchautomat)

• E.g. in user manual or advertisement

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U.S. direct infringement• 35 U.S.C. § 271(a) Except as otherwise provided in this title, whoever

without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

• For a party to be liable for direct patent infringement under 271(a), that party must commit all the acts necessary to infringe the patent, either personally or vicariously. For a method claim, accused infringer must perform all steps of the method either personally or through another acting under his direction or control.

• No direct infringement for method claims where several parties collectively commit acts to constitute infringement. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007).

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U.S. inducement of infringement• (b) Whoever actively induces infringement of a patent shall be

liable as an infringer. • Requires knowledge of the patent, or willful blindness.

Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011)• Divided infringement under Akamai Techs., Inc. v. Limelight

Networks, Inc., 2012 U.S. App. LEXIS 18532, 2012 WL 3764695 (Fed. Cir. Aug. 31, 2012):

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Facts• Akamai – Defendants perform some of the steps of claimed

method and induced others to perform remaining steps. (Limelight placed content on its servers, instructed customers to modify web pages)

• McKesson – Defendant induced others to perform collectively all the steps of method claim, but no single party performed all the steps itself. (Patients initiated communication, doctors completed the steps.)

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Akamai holding

• Court declined to decide case on direct infringement theory. No change to law of direct infringement.

• Change to law of induced infringement: No longer necessary to prove that some single entity is liable for direct infringement. (Overruling BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). However, proof that infringement occurred still required.

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On remand. . .• Epic can be held liable for inducing infringement if it can be

shown that (1) it knew of McKesson’s patent, (2) it induced the performance by others of the steps of the method claimed in the patent, and (3) those steps were performed.

• Although it did not “direct and control” its customers for purposes of direct infringement, Limelight would be liable for inducing infringement if the patentee could show that (1) Limelight knew of the patent, (2) it performed all but one of the steps of the method claimed, (3) it induced the content providers to perform the final step of the claimed method, and (4) the content providers performed that final step.

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Dissents

• Linn, Dyk, Prost, O’Malley: Would retain the single-entity rule.

• Newman: Would reject the single entity rule and resolve case under 271(a), with tort-like apportionment of liability.

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Contributory infringement

• (c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer

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Scope of Infringement Claims in Germany (comparison)• Actions on the merits – two types: (1) infringement or (2)

D.J. of non-infringement• Theories generally similar to U.S. Patent Law

• Make, use, sell, offer to sell, import without patentee authority• Direct infringement – literal or doctrine of equivalents

• Literal: all elements• Doctrine of Equivalents well recognized

• Contributory infringement is actionable unless the material supplied is a staple article of commerce

• Induced infringement is actionable• No willfulness

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Scope of Infringement claims cont.• There would be liability for the Akamai facts under Section 10.

No concept of “divided infringement.”• Contributory infringement roughly corresponds to Section 10

of German Patent Act, but not required that infringer know about the patent.

• Takeaway – German law generally appears to have broader scope of liability.

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Bifurcated Litigation System

40InvalidityInfringement

District Court

“Landgericht”

Federal Patent Court

“Bundespatentgericht”

Court of Appeal

“Oberlandesgericht”

Federal Court of Justice

“Bundesgerichtshof”

Germany’s Bifurcated Litigation System• Infringement and validity are decided by different courts

• Invalidity of asserted patent is not a defense in infringement proceedings

• Infringement court may stay the infringement proceedings

• if invalidity proceedings are pending• and invalidation of the patent is likely

• Typically only if new and highly relevant prior art is presented• “Highly relevant” means anticipating or close to anticipating

• But not likely – stays only granted in 10 to 15% of cases 41

Enforcement - Venues

• 12 district courts can hear patent infringement cases in Germany

• Infringement usually in entire Germany; if so Plaintiff has free choice of forum

• But, vast majority of cases brought in three courts:

• Dusseldorf (~50% of the cases)• Mannheim (~25% of the cases)• Munich (~10% of the cases)

• Those three appear to compete for filings42

Enforcement - People• Judges

• Panel of 3 legally trained judges • Not necessarily specialized in patent law or IP law, but much

experience• No jury

• Court experts

• Rarely appointed (<10% of the cases)• External to the court, often university professors • Appointment delays proceedings by 9-12 months and increases cost

• Party experts

• Can be used, but influence on the court very limited• Usually not cross-examined

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Enforcement - Complaint

• Primarily written submissions

• Written pleadings and documentary evidence very important• Decide about 80-90% of a case

• Usually two substantive briefs by each party• Court files are not open to public inspection (but hearings are)

• Frontloaded proceedings

• All relevant facts and evidence presented with the initial complaint (otherwise risk of rejection for late filing)

• Initial complaint is a comprehensive brief comprising claim construction and detailed infringement analysis

• Damages issues saved for later• No discovery

•Limited exceptions for inspections, but don’t count on it

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Enforcement - Timeline

Typical course of proceedings in the Mannheim District Court

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Complaint HearingPlaintiff`'s 2nd Brief

Reply to complaint

EnforceableDecision

2 4 6 8 10Months

Defendant's 2nd Brief

Post-hearing submissions

Typical time from filing of complaint to decision• Mannheim District Court : 7 to 9 months • Dusseldorf District Court: 12 to 18 months • Munich District Court : 6 to 9 months

Enforcement – Hearing/Trial• No Jury – trial to three judge panel• Burden of proof on plaintiff

• Preponderance, but not much emphasis

• No pre-trial motions or rulings - parties usually do not know the court’s opinion

• Only one substantive hearing, no prior claims construction• No written statements by the court in advance→ No incentive for early settlement

• Exception: Munich District Court with its 2 substantive hearings

• Oral hearing

• Lean oral proceedings: focused discussion on items addressed by the presiding judge in an initial “preliminary opinion”

• Takes only 1 to 4 hours• Witnesses and experts rarely heard• Hearings are public

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Enforcement - Remedies• Injunctions: immediate if infringement found

• No Ebay-like balancing • Generally enforced regardless of invalidity proceeding or appeal• Defendant cannot prevent by posting bond • Favored for early “win”, but limited to German market

• Damages: determined in separate proceeding• First infringement suit with DJ claim for unspecified damages• Later accounting by the infringer to calculate amount of damages• Three theories:

• Own lost profits• Reasonable royalties• Infringer’s profits

• Three year limitations period• In most cases, parties settle the damages amount

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Enforcement - Appeals• Court of Appeal (2nd Instance)

• Appeal as of right• De novo review of the case

• But submission of new facts & evidence which could have been duly submitted in 1st instance will generally be rejected

• Duration: Dusseldorf 12 to 18 months, Karlsruhe (Mannheim’s Court of Appeal) 10 to 14 months, Munich 9 to 12 months

• Federal Court of Justice (3rd Instance)• Purely legal review • Leave for appeal can be granted for reasons of i) general importance,

ii) furtherance of the law, or iii) uniform application of the law• Duration: 2 to 4 years

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Invalidity Proceedings • All invalidity proceedings take place before the Federal

Patent Court in Munich

• The panel in invalidity proceedings• 2 legally trained judges• 3 technically trained judges

• Usually former examiners

• Counsel• Parties may represent themselves• But typically represented by patent attorney

• Often in a team with attorney-at-law

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Invalidity Proceedings • Case statistics 2010

• Cases filed: 255• Cases decided: 108• Withdrawn/settled: 137• Average duration of proceedings: 22 months

• Success rate

• Patent fully maintained: ~ 25%• Patent maintained in amended form: ~ 25%• Patent invalidated: ~ 50%

• Note that invalidity action is filed in less than 50% of the litigated cases 50

Invalidity Proceedings

Typical course of proceedings

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ComplaintPreliminary

opinionPlaintiff's 2nd Brief

Reply to complaint

Hearing & Decision

4 8 12 20Months

Defendant's 2nd Brief

Last round of Briefs

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Invalidity Proceedings Appeal• All invalidity decisions can be appealed to the Federal

Court of Justice

• Panel at the Federal Court of Justice consists of 5 legally trained judges

• Mostly legal review• But most of the important issues (claim interpretation, non-

obviousness) are legal issues

• Statistics• 70% of all first instance decisions are appealed• 50% of the appeals are settled or withdrawn• Reverse rate ~50% • Duration of proceedings: ~ 4 years

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Fee/Cost Shifting – Loser Pays?• Reimbursement of statutory court and attorney fees by losing

party• Fees depend on “value in litigation” (“ViL”)• Typical ViL between € 500K and € 5M (depending on stage of

proceedings)• But, not U.S. litigation magnitude of fees

• Cost risk (costs of losing party)

• Reflects: court fees, based on ViL; adversary’s statutory attorney fees, based on ViL, and reimbursable expenses; own attorney fees

• Typical cost risk: • Infringement proceedings € 75K to € 230K (1st instance)• Invalidity proceedings: € 90K to €255K (1st instance)• 2nd instance: 15% higher; 3rd instance: 100% higher

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Takeaways• The new East Texas? Not exactly• Though considered “patentee friendly”,

• Judges are very informed about merits – must have a real case• No discovery burden on defendant• Impact of German injunction may be limited due to practicalities

of market - think of strategic reality• Big damages not significant factor; most damages cases settled by

the parties • Cost shifting for loser, but less dramatic than would be for U.S.

• Must have case fully baked - decisions based on pleadings; amendments cause delays

• No pre-trial rulings, quick post-trial decision, and relatively low cost create little incentive for settlement

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Microsoft v. Motorola• No. 12-35352, Sept. 28, 2012 (appeal from Dist. Ct. No. 2:10-

cv-01823-JLR, WDWA).• Microsoft sued in WDWA for breach of agreement to license

standard essential patents on RAND terms.• Motorola sued for patent infringement in Germany, and

obtained injunction enjoining Microsoft from selling Xbox and certain Windows software in Germany.

• District Court in WDWA issued preliminary injunction to enjoin Motorola from enforcing German injunction.

• Bench trial scheduled in WDWA for November 2012 (Robart).

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China’s Patent HistoryMichael Zachary

Seattle IP American Inn of CourtOctober 25, 2012

Patents in Historical China

• First Chinese Dynasty 2100 B.C. (Xia) • First Patent Law 1898 (end of Ching Dynasty)

– lasted two months; abolished with the end of Hundred Days' Reform (effort to modernize China, squashed by the Empress Dowager)

• Compare Europe, U.S.– England (before 1300); Venice (1474); U.S. (1790

and earlier)

Patents in Communist China

• Interim Rules 1950– 4 patents (owned by employer) and 6 inventors'

certificates in 13 years– Patent Rules and all IPR ownership made

obsolete during Cultural Revolution

• First modern Patent Law 1985 – based on Deng Xiaoping's initiative 1978

Chinese Patent Law (1985)

• "inventions," "utility models," "designs"– Excluded, inter alia, business methods,

pharmaceuticals, plant varieties, methods of disease treatment, foods and beverages

Amendments 1992• Extended patent protection to

pharmaceuticals, foods and beveragesFurther Amendments 2001, 2010

China's National Patent Development Strategy (2011):• "In 2015 the annual quantity of applying for patents for

inventions, utility models and designs will reach 2 million."

• "China will rank among the top two in the world in terms of the annual number of patents for inventions granted to the domestic applicants . . . ."

• "The number of overseas patent applications filed by Chinese applicants will double."

• "The proportion of patent applications in industrial enterprises above designated size will reach 8% . . . ."

Compare U.S. Patent Filing Statistics

• 500,000 Utility Applications (2011)

• 30,000 Design Applications (2011)

Utility Patent Applications in China(domestic/foreign)

Utility Model Applications In China (domestic/foreign)

Design Patent Applications in China (domestic/foreign)

2006

2007

2008

2009

2010

2011

201322267668

312904 351342421273

521468

0

100000

200000

300000

400000

500000

600000

Yearforeign

domestic

total

Granted Utility Patents in China (domestic/foreign)

Top Foreign Applicants in 2011(By Country)

U.S. Patent Grant Statistics

Domestic Foreign Total

2011 108,626 115,879 224,505

2010 107,792 111,822 219,6142009 82,382 84,967 167,3492008 77,502 80,270 157,7722007 79,526 77,756 157,282

Patent Litigation in U.S.Patent Case Filings and Grants

Patent Litigation in China

15972081 2110

25492947 3196

4041 40744422

5700

7866

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

*

*Estimate

Other China Patent Litigation Statistics of Note

• Of 3000 patent cases concluded in 2011, only 129 (4.3%) involved a foreign party

• Of 88 adjudicated cases involving a foreign party and a Chinese party, the foreign party won 52 cases, while the Chinese party won 36

Patent Cockroaches

• Small companies taking on big companies in questionable patent cases

• Problem is becoming a big sport in China, as in the U.S.

• Utility Models (unexamined patents) are the vehicle of choice

• Anyone recognize this design?

Patent Management In China Sharing Experiences with Taiwanese Corporations

Ching-yi ChiuIntellectual Property Law and Policy LL.M.University of Washington School of Law

October 25, 2012

Ching-Yi Chiu

Work Experience More than 3 years patent management experience for US, China, and

Taiwan. Education

Master of Law, University of Washington (present) Master of Law, National Tsing-Hua University (2008) Bachelor of Engineering, National Tsing-Hua University (2005)

Thesis U.S. Patent Litigation in Federal Courts and the International Trade

Commission: An Empirical Study of Taiwanese High-Tech Corporations. Publication

Important Issues in Patent Infringement Damages--A Study of Recent US Judgments, coauthor of 5 – MMOT Conference Journal , November 2011

China is Taiwan’s Primary Trade Partner

No1. China (total:28%, export: 39%, import: 16% ) Intellectual Property Regulation protection of the ECFA

(2010) No3.

US (total:10%, export: 11%, import: 8.8% ) Taiwan was the United States' 10th largest supplier of goods

imports, and 15th largest goods export market in 2011.

– Source: Office of US Trade Representative and Taiwan Trade Bureau

Why Taiwanese Corporation Focus on China Patent Application?

The Large Market Domination China is Taiwan’s Largest Trade Partner

US Patent Holders have Difficulties Enforcing Patent Rights against Infringers Manufacturing and Selling ONLY in China. E.g., Cell Phone Chips Companies (the so called pirate

phones)

China Patent Examination Quality is improving Personal Observation

Taiwanese Corporation’s Patent Management in China

Chinese Government Encourages High-Tech Corporations to file patents Reimburse Fee can almost cover Application Cost

E.g., Shanghai Patent Inventive Regulation 80% patent filing fee refund 2000 RMB (333USD) patent agent fee refund

High-Tech Corporations Set Up Subsidiaries and Follow Chinese Regulations This strategy may be applicable to the US Companies

Patent Damages in China

Patent Damages a maximum patent damages limit of One Million RMB,

when a plaintiff fails to prove actual amount of damages.

Recent Patent Infringement Judgment: An Increasing Monetary Amount of Patent Damages:

157 Million RMB (16.7MillionUSD) patent damages was determined recently.