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Welcome to the inaugural issue of The SNIP, a quarterly newsletter by Urška Petrovcic and Adam Mossoff 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.
CASE DEVELOPMENTS
Publishers Sue the Internet Archive for Copyright Infringement
In response to the quarantines and shutdowns precipitated by the COVID-19 pandemic, the Internet Archive announced on March 24 that it was providing free access of its digital database of copyrighted books to an unlimited number of users. The Internet Archive called it the “National Emergency Library.” On June 1, several publishers sued the Internet Archive for copyright infringement, claiming that the Internet Archive is an unlicensed, mass aggregator of copyrighted works with a piracy business model. Meanwhile, the Internet Archive alleges its free, unlimited access database was “fair use” given the pandemic and shutdowns. In early April, Senator Thom Tillis and Internet Archive founder, Brewster Kahle, exchanged letters concerning this unlimited-access, unlicensed database of works and its legality under
copyright law. On June 11, the Internet Archive announced its decision to end its National Emergency Library.
THE SNIP: After facing legal action from publishers, the Internet Archive ended its National Emergency Library, which provided unlimited access to its digital database of copyrighted books.
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Germany’s Bundeskartellamt Asks the Court to Refer a Question about Component-Level Licensing to the CJEU
On June 18, Germany’s Federal Cartel Office (Bundeskartellamt) asked the regional court of Mannheim to suspend all cases between Nokia and Daimler and refer a series of questions to the Court of Justice of the EU (CJEU). Specifically, the Bundeskartellamt proposed to present four questions to the CJEU. First, the Bundeskartellamt asks whether a Standard-Essential Patent (SEP) holder is abusing its dominant market position by refusing to offer a license to a component supplier while seeking an injunction against a manufacturer of an end-product. Second, the brief reads, the CJEU should “clarify whether an SEP holder is entirely free to choose which company at what level of the production chain to target as a potential patent infringer.” Third, the CJEU should clarify whether cases in which “certain companies in a
production chain are willing to take a license, but do not receive their own full license from the SEP holder” would result in competitive concerns. Lastly, they ask whether an SEP holder with a dominant market position is free to decide to offer FRAND licenses to exclusively one level in the production chain. The Mannheim court was originally scheduled to announce its decision on June 24 but has postponed the decision until August 4.
THE SNIP: The German Federal Cartel Office asked the court to refer several questions to the CJEU to clarify whether a refusal to license SEPs to component manufacturers violates EU competition law.
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Judge Dismisses Intel-Apple Lawsuit Against Fortress
On June 22, U.S. District Court Judge Edward M. Chen stated during an oral argument that Intel and Apple have a “pleading problem” in the lawsuit they brought against Fortress. Judge Chen reasoned that the market definition proposed by Intel and Apple was “vague” and “unsustainable.” The complaint defined the relevant market as “an antitrust market for patents for high-tech consumer and enterprise electronic devices and components or software therein and processes used to manufacture them.” On March 20, the Antitrust Division of the Department of Justice filed a statement of interest which claimed that the case should be dismissed because of the “facially overbroad” and “unsustainable” proposed definition of the relevant market, as well as the failure to plead
“harmed competition through the combination or elimination of previously-competitive substitutes.” Judge Chen agreed with the DOJ regarding the inadequate definition, although he said that he found no “conceptual problems” with plaintiffs’ theory of harm. On July 7, Judge Chen issued an order under seal which granted Fortress’ motion to dismiss; however, the order allows the plaintiffs to file an amended complaint.
THE SNIP: A U.S. district judge dismissed a complaint filed by Intel and Apple against Fortress, because of a vague and unsustainable market definition, but allowed the parties to amend their complaint.
Learn More:
- READ: “Apple, Intel Have 'A Pleading Problem' Against Fortress,” Bryan Koenig, Law360
- READ: “Fortress Wins First Round in Apple-Intel Antitrust-Patent Fight,” Malathi Nayak, Bloomberg Law
- READ: Complaint, Intel Corp. and Apple Inc. v. Fortress Inv. Grp., LLC, No. 19-7651 (N.D. Cal. Nov. 20, 2019).
- READ: Statement of Interest of the United States, Intel Corp. and Apple Inc. v. Fortress Inv. Grp., LLC, No. 19-7651 (N.D. Cal. Mar. 20, 2020).
LEGISLATION & POLICY DEVELOPMENTS
Consequential U.S. Patent System Bill Introduced Into the House
On June 25, Congressman Thomas Massie (re)introduced a bill into the House of Representatives that would bring important changes to the U.S. patent system. The bill, co-sponsored by Congressman Tom McClintock and Congressman Paul Anthony Gosar, seeks to “promote the leadership of the United States in global innovation by establishing a robust patent system.” The proposed bill would abolish the Patent Trial and Appeal Board (PTAB) and therefore eliminate the inter partes review (IPR). It would also return the U.S. patent system to a first-to-invent system. The bill would also repeal the 2006 eBay decision by restoring injunctive relief to patent owners, while also repealing the 2008 decision in Quanta and the 2017 decision in Lexmark on patent exhaustion.
THE SNIP: Congressman Thomas Massie (re)introduced into the House a bill that would bring important changes to the U.S. patent system, including eliminating the PTAB, re-establishing the first‑to‑invent system, and restoring injunctive relief for patent owners.
Learn More:
READ: H.R.7366 - To Promote the Leadership of the United States in Global Innovation by Establishing a Robust Patent System that Restores and Protects the Right of Inventors to Own and Enforce Private Property Rights in Inventions and Discoveries, and for Other Purposes, 116th Congress (2019-2020)
RECENT POLICY WORK OF NOTE
Professor Adam Mossoff Publishes White Paper on Restoring Injunctions for Patent Owners
Hudson Institute Senior Fellow and George Mason University Law Professor Adam Mossoff has published a report on the need to restore injunctions as the presumptive legal remedy for victims of ongoing or willful patent infringement. Mossoff impresses that in eBay v. MercExchange, the Supreme Court effectively halted the economic functions of injunctions vital to a truly free market for innovation. That is, he explains, eBay led lower courts to “radically [alter] historical practices in remedies for patent infringement by no longer granting injunctions to stop violations of patent rights.” Mossoff says that “[t]he ability to secure personal values and commercial decisions in the use of one’s own property [is] an essential foundation of both a liberal political order and a free market,” one
applicable to all types of property, “whether real estate or patents.” Taking a practical approach, he offers that in order for today’s inventors’ rights to reflect those originally intended by the Founders which have, for 200 years, led America’s thriving “innovation economy,” either (1) the Supreme Court must reverse its decision in eBay, or (2) Congress must pass the STRONGER Patents Act and the RALI Act, each sitting before it since 2018.
THE SNIP: Professor Adam Mossoff has published a white paper suggesting that the Supreme Court reverse eBay or Congress pass an act that would restore injunctive relief for patent holders.
Learn More:
READ: The Supreme Court or Congress Must Restore Injunctions for Patent Owners, Adam Mossoff, Heritage Foundation
Principal Deputy Assistant Attorney General Nigro Talks About the Evolving Antitrust-IP Relationship
On May 29, Bernard A. Nigro, Jr., Principal Deputy Assistant Attorney General at the Antitrust Division of the Department of Justice, spoke about the evolving antitrust-IP relationship at an online event at Hudson Institute. Mr. Nigro emphasized that “respect for intellectual property rights in competition enforcement is critical to promoting innovation and spurring economic growth.” He spoke about the Antitrust Division’s intervention in some recent cases, including Continental v. Avanci, Intel v. Fortress, and FTC v. Qualcomm. Mr. Nigro emphasized that “[i]t’s the position of the Division that a patent holder cannot violate antitrust laws by solely and properly exercising the rights the patent laws confer, such as seeking an injunction or choosing where in the supply
chain to license a patent.” He also reiterated that a unilateral and unconditional refusal to license “should be considered per se legal.”
THE SNIP: At a Hudson event, Principal Deputy Assistant Attorney General Nigro made the case that, to promote innovation and spur economic growth, antitrust enforcement must respect intellectual property rights.
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