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 Fellows Submit Comments to the USPTO on Standardized Technologies

In response to a Request for Comments by the U.S. Patent & Trademark Office (USPTO), National Institute of Standards and Technology, and the International Trade Administration on a Collaboration Initiative Regarding Standards, Hudson fellows submitted comments on November 6, 2023, to the USPTO. They explained the importance of evidence-based policymaking by agencies in securing reliable and effective patents as key to sustaining U.S. global technological leadership and protecting its national security interests. Their comments focused on the proposed regulatory regime for the licensing and litigation of patents on standardized technologies (standard essential patents, or SEPs) by the European Union (EU). They explained how the EU would impose top-down regulatory controls on the licensing of SEPs, including the setting of prices for SEPs. The Hudson fellows highlighted the detrimental effects that the EU’s proposed regime would have on innovation and technological leadership by the EU and the U.S., and how this would undermine efforts by both the EU and the U.S. in responding to geopolitical and competitive threats from China. 

The SNIP: Hudson fellows warn U.S. agencies about the detrimental effects of the EU’s proposed regulatory regime for SEPs on Western technological leadership.

Learn More:

• READ: “Comment of Hudson Institute Scholars on Joint ITA-NIST-USPTO Collaboration Initiative Regarding Standards,” U.S. Patent and Trademark Office (November 6, 2023).

• READ: “Comment of Legal Academics, Economists, and Former Governmental Officials on Joint ITA-NIST-USPTO Collaboration Initiative Regarding Standards,” U.S. Patent and Trademark Office (November 6, 2023).

• READ: “Joint ITA-NIST-USPTO Collaboration Initiative Regarding Standards,” 88 Federal Register 66415 (September 27, 2023).

CASE DEVELOPMENTS

Supreme Court Will Decide Copyright Damages Issue in Warner Chappell Music v. Nealy

On September 29, 2023, the Supreme Court agreed to hear a case on how to assess damages for copyright infringement. The Court will determine whether the Copyright Act precludes a copyright owner from seeking damages for infringement committed more than three years before the plaintiff files a complaint. Presently, there is a circuit split on the matter, with some courts holding that a claim accrues when the infringement is discovered and others ruling that it accrues when the infringement occurs. An amicus brief filed by the Recording Industry Association of America and National Music Publishers’ Association calls this circuit split “intolerable” for creators and companies working in the creative industries. While the oral argument has not yet been scheduled, it is clear that the decision of the Supreme Court will provide much needed clarity on an important issue of damages for copyright infringement.

The SNIP: In the October 2023 Term, the Supreme Court will clarify the availability of damages for copyright owners whose works have been infringed.

Learn More:

• READ: “Supreme Court Will Hear Case ‎Clarifying Extent of Damages ‎Available in Copyright ‎Infringement Lawsuits” Mikaella Evaristo & Glenn Pudelka, JD Supra (October 30, 2023).

• READ: “Supreme Court to Weigh In on Damages Period for Copyright Cases,” Covington & Burling (September 29, 2023).

• READ: “Brief of the Recording Industry Association of America and National Music Publishers’ Association as Amici Curiae in Support of Petition for a Writ of Certiorari,” U.S. Supreme Court (June 5, 2023).

ITC Finds Apple Infringes Masimo Patents and Prohibits Imports of Apple Watch

On October 26, 2023, the International Trade Commission (ITC) found Apple Inc. liable for infringing two patents for healthcare diagnostic technologies in its Apple Watch that are owned by Masimo Corp., a medical device company based in Irvine, California. The ITC issued an exclusion order prohibiting the importation into the United States of Apple Watches with the infringing technologies. Approximately 95% of all Apple products, including the Apple Watch, are manufactured in China and imported into the U.S. The exclusion order will not go into effect for sixty days, during which time the Biden administration is reviewing the exclusion order. The president may overrule an exclusion order, but this has occurred only a few times in the ITC.

The SNIP: The International Trade Commission issued an exclusion order against Apple after finding that the Apple Watch infringed two patents owned by Masimo, a medical device company.

Learn More:

• READ: “ITC Bans Apple Watch Imports in Masimo Patent Case,” Ryan Davis, Law360 (October 26, 2023).

• READ: “Apple Loses at ITC with Apple Watch Import Ban,” Eileen McDermott, IPWatchdog (October 29, 2023).

• READ: “ITC Says Apple Goes ‘Too Far’ In AliveCor Smartwatch Dispute,” Andrew Karpan, Law360 (November 20, 2023).

LEGISLATION & POLICY DEVELOPMENTS

Officials and IP Agencies Caution EU Against Adopting Its Proposed SEP Regulatory Regime

In the last two months, officials and agencies have voiced concerns with the European Commission (EC) about its proposed regulatory regime for the licensing and litigation of SEPs. In a letter dated October 18, 2023, the president of the European Patent Office (EPO) expressed concerns that the EC’s proposal would impose excessive regulatory burdens and unnecessary roadblocks on patent owners and licensees. In a letter dated October 29, 2023, the Intellectual Property Judges’ Association also said the proposed regulations would curb access to justice for patent owners. These letters follow similar concerns expressed earlier this year by other European officials, including the president of the Unified Patent Court, who warned the EC that the proposed regulatory regime would unduly limit access to justice for patent owners. The EC’s proposed regulatory regime for SEPs has proven to be extremely controversial with significant commentary submitted to the EC by all stakeholders in the global innovation economy.

The SNIP: The president of the EPO and the Intellectual Property Judges’ Association express concerns about the EC’s proposed regulatory regime for the licensing and litigation of SEPs.

Learn More:

• READ: “EPO President Criticizes ‘Disproportionate’ Patent Proposals,” Alex Baldwin, Law360 (October 25, 2023).

• READ: “Letter Re: Commission Proposal Concerning Standard Essential Patents,” Robin Jacobs, Intellectual Property Judges’ Association (October 29, 2023).

• READ: “Breaking: UPC Chief Urges EU to Rethink SEP Plan,” Rory O’Neill, Managing IP (May 30, 2023).

Senate Judiciary IP Subcommittee Holds Hearing on the PREVAIL Act

On November 8, 2023, the Intellectual Property Subcommittee of the Judiciary Committee in the Senate held a hearing on the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act. The PREVAIL Act will impose structural reforms on the Patent Trial and Appeal Board (PTAB), an administrative tribunal created by the American Invents Act of 2011 (AIA) to cancel patents. The PTAB has been a focal point of controversy over its “shenanigans”—a term used by many lawyers, commentators, and judges to refer to its internal processes that have resulted in patent cancelation rates of 80% or more. PREVAIL would impose procedural and substantive guardrails to ensure the protection of due process and other rights of patent owners, such as by adopting a standing requirement for PTAB petitioners, requiring the PTAB to apply the same evidentiary standard used by courts in interpreting patents, prohibiting serial petitions against the same patents, and ensuring full implementation of the original intent in the AIA of applying estoppel to all interested parties, among other reforms.

The SNIP: The Senate Judiciary IP Subcommittee held a hearing on the PREVAIL Act that would reform the PTAB to end its procedural abuses resulting in high cancelation rates of patents.

Learn More:

• WATCH: “Reforming the Patent Trial and Appeal Board – The PREVAIL Act and Proposals to Promote U.S. Innovation Leadership,” U.S. Senate Committee on the Judiciary (November 8, 2023).

• READ: “Big Tech’s Abuse of Patent Owners in the PTAB Must End,” Adam Mossoff, Heritage (June 29, 2023).

• READ: “Sen. Suggests AIA is Giving Tech Cos. Unfair Advantage,” Andrew Karpan, Law360 (November 8, 2023).

• READ: “Senate IP Subcommittee Mulls PREVAIL Act Proposals for PTAB Reform,” Eileen McDermott, IPWatchdog (November 8, 2023).