Welcome to The SNIP, a monthly newsletter by Urška Petrovčič, Adam Mossoff, and Devlin Hartline of Hudson Institute's Forum for Intellectual Property. The SNIP offers a brief breakdown of the latest policy issues and case developments in intellectual property. 

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THE LATEST FROM HUDSON

Hudson Hosts Panel Discussion on the Standard‑Essential Patents Policy Statement

On February 2, Hudson Institute hosted a panel discussion between two former Directors of the U.S. Patent and Trademark Office and a former Acting Chair of the Federal Trade Commission to discuss the Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to F/RAND Commitments, published by the Antitrust Division of the U.S. Department of Justice on December 6, 2021. Commissioner Maureen Ohlhausen, Director Andrei Iancu, and Director David Kappos expressed serious concerns about the draft policy statement, signaling bipartisan opposition to its proposals concerning the licensing and enforcement of standard-essential patents. They emphasized that the proposed revisions would incentivize strategic holdout by potential licensees and undermine innovators’ ability to enforce patents against infringers. This would have detrimental effects on American innovation and damage the country’s ability to sustain its global technological leadership.

The SNIP: Former agency officials express bipartisan concerns with the Biden Administration’s approach towards the licensing and enforcement of standard essential patents.

Learn More:

• WATCH: “The New Policy Statement on Standard-Essential Patents: A Move in the Wrong Direction?” Hudson Institute (February 2, 2022).

Hudson Hosts Panel Discussion on Artificial Intelligence and Intellectual Property Rights

On February 22, Hudson Institute hosted a panel discussion on artificial intelligence (AI) and intellectual property (IP). AI is a beneficial tool for the development of new technologies, such as autonomous cars or genetics research, and it is also a new, valuable technology in the creative industries. The panelists discussed how the law has dealt with novel issues related to AI-generated inventions and creative works, such as the ability to protect them through IP rights and the availability of licensing. AI-based creativity and innovation pose complex and uncertain questions that our domestic and global IP systems need to be prepared to address, particularly given the economic rewards and pace of technological advancement they represent.

The SNIP: Expert panel discusses policy issues surrounding AI-generated creative innovation and the novel implications for IP law it presents.

Learn More:

• WATCH: “Artificial Intelligence and Intellectual Property,” Hudson Institute (February 22, 2022)

CASE DEVELOPMENTS

Supreme Court Rules that Inadvertent Errors in Copyright Registrations Are Not Invalidating

In a 6-3 decision authored by Justice Stephen Breyer, the Supreme Court held in Unicolors v. H&M that inadvertent mistakes of both law and fact, such as labeling mistakes, do not invalidate copyright registrations. Unicolors made a legal mistake in its initial application to register copyrights for 31 fabric designs. The company distributed some designs to a select group of customers, and it erroneously believed that it was allowed to file a single application for the designs. Justice Breyer, writing for the majority of the Court, explained that the Copyright Act establishes that “inadvertent mistakes [do] not invalidate a copyright.” Thus, registrations can only be invalidated when a registrant has actual knowledge of an error and still files the registration.

The SNIP: In what is likely Justice Breyer’s final copyright decision, the Supreme Court holds that inadvertent mistakes in registering a copyright do not invalidate the registration.

Learn More:

• READ: “Unicolors, Inc. v. H&M Hennes & Mauritz, LP,” SCOTUSblog.

• READ: “Victory for Unicolors as SCOTUS Rules Innocent Mistakes of Law Can’t Invalidate Copyright Registration,” Eileen McDermott, IPWatchdog (February 24, 2022).

• READ: “Justices Require Actual Knowledge that Application was Erroneous to Invalidate Copyright Filing,” Ronald Mann, SCOTUSblog (February 24, 2022).

Federal Circuit Orders New Trial for Apple’s Infringement of Caltech’s Wi-Fi Patents

On February 4, the U.S. Court of Appeals for the Federal Circuit upheld a 2020 verdict that Apple and Broadcom infringed two patents on Wi-Fi technology owned by Caltech. However, the Federal Circuit vacated the award of $1.1 billion in damages. The court reasoned that the formula used to calculate damages was “legally unsupportable,” and thus remanded the case for a new trial on damages. The Federal Circuit also ordered a new trial on Apple’s infringement of a third patent owned by Caltech due to faulty jury instructions.

The SNIP: Federal Circuit holds that $1.1 billion damages award is “legally unsupportable” and orders new trial to determine the damages Apple must pay for infringing two patents owned by Caltech.

• READ: “Apple, Broadcom Win New Trial in $1.1 bln Caltech Patent Case,” Blake Brittain & Jonathan Stemple, Reuters (February 4, 2022).

• READ: “Apple Wins New Trial in $1.1 Billion CalTech Patent Case,” Susan Decker & Jon Morgan, Bloomberg Law (February 4, 2022).

• READ: “CAFC Orders New Trial on Damages, Clarifies IPR Estoppel Rule in Appeal of Caltech’s $1.1 Billion Win Against Apple and Broadcom,” Matthew Schutte, IPWatchdog (February 7, 2022).

Court Issues Preliminary Injunction to Stop State Compulsory eBook Licensing

On February 16, the U.S. District Court for the District of Maryland issued a preliminary injunction against a Maryland law that mandated compulsory licensing by publishers of eBooks to Maryland public libraries. In the lawsuit filed by the Association of American Publishers (AAP) in December 2021, the court agreed with the AAP that the state law was likely preempted by the federal Copyright Act and that AAP likely would suffer irreparable harm since it would negatively impact the commercial market for eBooks and audiobooks. The State argued that the law benefits the public by expanding access to digital works, but the court concluded that the public interest is best served by “allowing publishers to exercise their exclusive rights protected by the Copyright Act.”

The SNIP: Maryland district court grants a preliminary injunction prohibiting the enforcement of a state law requiring compulsory licenses of digital works to state public libraries.

• READ: “Publishers Win Preliminary Injunction Against Maryland Law that Requires Licensing Digital Works to Libraries,” Eileen McDermott, IPWatchdog (February 17, 2022).

• READ: Association of American Publishers, Inc. v. Frosh, No. DLB-21-3133 (D. Md. Feb. 16, 2022).

• READ: “State Compulsory eBook and Audiobook Licensing is Wrong on Law and Policy,” Devlin Hartline, IPWatchdog (February 1, 2022).

European Commission Files Complaint at the WTO Concerning China’s Court Decisions on Standard-Essential Patents

On February 18, the European Commission filed a request with the World Trade Organization (WTO) for an investigation of China’s use of anti-suit injunctions in lawsuits over standard-essential patents (SEPs). These injunctions order patent owners to terminate patent infringement lawsuits filed in U.S. or European courts, and mandate that they litigate their infringement claims only in Chinese courts. The European Commission said that this practice prevents European companies from properly protecting their patented technologies. The Request for Consultations is the first step in WTO dispute proceedings. If the parties do not resolve the issue themselves within sixty days, the EU can request a WTO panel ruling on the matter.

The SNIP: The EU files a case against China at the WTO regarding the use of anti-suit injunctions by Chinese courts in global legal disputes concerning standard essential patents.

• READ: “European Union Challenges China at the WTO Over Anti-Suit Injunctions Preventing Patent Holders from Asserting Their Rights Outside of China,” Aaron Wininger, The National Law Review (February 18, 2022).

• READ: “EU Launches WTO Dispute Against China Over Telecom Patents,” Philip Blenkinsop, Reuters (February 18, 2022).

LEGISLATION & POLICY DEVELOPMENTS

Policy Statement on Standard-Essential Patents Draws Significant Criticisms

A bipartisan group of lawmakers and former political officials heavily criticized the draft policy statement on the licensing and enforcement of standard-essential patents (SEPs), published by the Antitrust Division of the U.S. Department of Justice on December 6, 2021. The group, which included President Obama’s Assistant Attorney General Christine Varney, President Trump’s U.S. Patent & Trademark Office Director Andrei Iancu, Senator Thomas Tillis (R-NC), and Senator Chris Coons (D-DE), said that the draft policy statement is “unbalanced” in its policy prescriptions and “disconnected from the realities of SEP licensing.” It also emphasized that the draft policy statement would undermine the ability of the U.S. to compete against China, the twenty-first-century strategic and economic competitor of the U.S. for global technological leadership.  

The SNIP: The draft policy statement on SEPs issued by the Antitrust Division of the Department of Justice was heavily criticized by bipartisan lawmakers and former officials.

Learn More:

• READ: “Bipartisan Groups of Administration Officials, Senators, Voice Opposition to New Joint Policy Statement of SEPs,” Eileen McDermott, IPWatchdog (February 6, 2022).

• READ: “Innovation Alliance Comment Letter on Biden Administration’s Draft Policy Statement on Standard-Essential Patents,” Innovation Alliance (February 4, 2022).

• READ: “Draft Standard-Patent Policy Draws Former Officials’ Opposition,” Matthew Bultman, Bloomberg Law (February 4, 2022).

European Commission Opens Public Consultation on Standard-Essential Patents

In a “Call for Evidence” published on February 14, the European Commission called for comments on practices related to the licensing and enforcement of standard-essential patents. This mirrors similar requests for public comments by agencies in the U.S. and U.K. The Commission’s call for comments focuses on issues concerning licensing negotiations, disclosure of information relevant to determine if a patent covers a feature of a standardized technology, and the use of alternative dispute resolution as a substitute to formal litigation in court. The Commission will accept comments until May 9, 2022.

The SNIP: The European Commission is accepting public comments on the licensing and enforcement of standard-essential patents until May 2022.

Learn More:

• READ: “SEP Regulation: European Union Calls for Stakeholders’ Views,” Henrik Holzapfel & Maximilian Kiemle, National Law Review (February 17, 2022).

• READ: “Intellectual Property – New Framework for Standard-Essential Patents,” European Commission.

• READ: “European Commission Consultation on Standard Essential Patents Published,” Practical Law IP&IT, Thomson Reuters (February 16, 2022)