Fordham Focus 14: an IP-and-competition postscript

You thought it was all over -- and it is now (click here for cultural allusion) -- but there's another bit of last week's Fordham IP conference story that remains untold. The IPKat specially commissioned Fordham Senior Research and Conference Fellow Daan Erikson to write up some notes on the conference's competition law stream which, on account of there being so many other attractions that he was obliged to attend, the Kat was obliged to forgo. This is what Daan (a.k.a. "Daan, Daan,  the Competition Law Man") has to say:

"This year’s Fordham IP Conference contained three sessions on competition law, weighing in at a whopping four hours and ten minutes.  The length of time devoted to the topic was due in large part to a massive three-part panel on smartphones.

Professor Hugh Hansen moderated the first session, Competition Overview and Recent Developments.  The first speaker, Professor Eleanor Fox (NYU), kicked off the competition track of sessions by identifying the major topics: refusal to deal cases, reverse payments, and standard essential patents (SEPs).  By describing the intersection of IP and antitrust in broad terms, she left room for the entire sessions on pharmaceuticals and smartphones that followed. 

Presenting a European Union perspective was Monika Tomczak-Gorlikowska (Miller Canfield).  Her presentation encapsulated competition developments in the EU from the past year, including success stories in the areas of Treaty on the Functioning of the EU Article 102 (abuse of dominant position) and commitments.  Also, she described “the long road” to the new Technology Transfer Block Exemption Regulation (TTBER), as the current Regulation expires on April 30, 2014.  She noted that public consultation of the draft TTBER is invited until May 17, 2013.

Next in the competition track was Pharma & Competition, moderated by Professor Daryl Lim (John Marshall).  He introduced the panel by describing the anti-reverse payments position. Generics want patents to end as soon as possible, he commented, and generics are aligned with consumers that want inexpensive drugs now.  Yet speaker Dr Steven J. Lee (Kenyon & Kenyon) noted that both brand-name pharmaceutical companies and generics want reverse payments to continue.  He described the circuit split leading to FTC v Actavis currently pending in the United States Supreme Court.  He predicted that the Supreme Court will reject the “quick look” analysis from the Third Circuit defended by the Federal Trade Commission (FTC).

Christine White (FTC) spoke next, commenting on FTC v Actavis and strongly emphasizing that she did not speak on behalf of the FTC.  She argued that “quick look” works because the detailed analysis is not necessary at this point in the lifespan of reverse payment litigation.  In her view, “quick look” is appropriate now when we already know what interests are involved.    Also, she posited that “quick look” is not the same as per se condemnation because defendants can rebut with motivations other than procuring the generic’s late entry.

Presenting an EU perspective, Romano Subiotto (Cleary Gottlieb) went through the European Commission’s position on Lundbeck.  Following the prepared talks, Professor Lim engaged the panel in a discussion, starting by asking why we have this problem with reverse payment cases.  Professor Michael Carrier (Rutgers Camden) suggested that it is because of the Hatch-Waxman Act and the 180-day period of exclusivity for the first generic company.  Subsequent generics are paralyzed because they cannot enter the market until the first generic company does.  However, Professor Lim responded that the problem is not unique to the US with its Hatch-Waxman Act; rather, the problem exists around the world.  Professor Kent Bernard agreed that the Act is “weird,” but argued that it did not create the problem.  The session concluded with panelist Nicola Dagg (Allen & Overy) noting that, in addition to finding what test is fair, companies need an answer on how to deal with other transfers of value.

Next came the session on Smartphones, which drew almost as large an audience as the standing room only plenary sessions on the first day of the conference.  Justin Watts (Freshfields) began by describing litigation from around the world, leading into Professor Joel Reidenberg’s talk highlighting his research with Fordham’s Center on Law and Information Policy (CLIP).  He presented findings from the forthcoming CLIP report for the WIPO, which includes a collection of information on every lawsuit involving 37 market-leading hardware, software, and communications companies.

After Professor Reidenberg’s talk, the panel was split into two parts.  The first part addressed injunctions and the second setting FRAND royalties.  Judge Shinji Oda (IP High Court of Japan) spoke first, describing two Japanese case between Samsung and Apple.  In these cases, the court declined to issue an injunction, closing the courtroom door on patent owners and licensees, he said.  Judge Oda described the reasoning for not issuing an injunction as that setting up negotiations is not the court’s job.  Also, he acknowledged that the cases will probably be appealed to the IP High Court and the Supreme Court.

Heinz Polsterer (Deutsche Telecom) spoke second on why we need standard essential patents (SEPs).  He said that we need our technology and equipment to work in the same way around the world.  In order for the equipment to work the same way around the world, it must speak with each other, which is why we are so dependent on standardization.  He posed the question whether it proper to allow injunctions that could shut down a whole network if the patent’s validity is questionable and the patent is one of thousands.

Third, the vivacious Kenneth Adamo (Kirkland & Ellis) described the certainties and uncertainties in FRAND obligations while only threatening to shoot the timekeeping device twice.  He proposed that the sole certainty is that when Apple v Motorola goes on appeal to the Federal Circuit, Chief Judge Rader will be on the panel.

The last speaker of the first half, Joseph Wayland (Simpson Thacher), former US Department of Justice (DOJ) Antitrust head, gave the government perspective.  In his view, the government is concerned with “superpowers” and large amounts of money, as shown in government speeches and policy statements.  The biggest problem the government faces right now is what to do about “unreasonable behaviour.”  Also, he highlighted the government’s increased scrutiny of standard setting organizations (SSOs) and possible FTC/DOJ action.

Ari Laakkonen (Powell Gilbert), moderator of the second part of the panel,  began with a question and the first of many analogies.  He queried who we ask to determine a FRAND royalty, and he compared visions in the FRAND royalty dispute to perspectives of people seeing a landscape differently. 

Next, Dr Tobias Hahn (Reimann Osterrieth Köhler Haft) spoke on the Orange Book decision from the German Federal Supreme Court and offered the benefits and detriments of having different types of entities determine what is FRAND. 

Following Dr Hahn was a trio of speakers representing American giants in the smartphone wars.  T. Andrew Culbert (Microsoft) posed the question, “what does non-discriminatory mean?”  He then analogized negotiation in a FRAND situation to a broken-down motorist negotiating with a tow truck driver where the tow truck driver asks the motorist’s bank balance and interest in having the car towed before initiating services.

Next up,Warren Heit (White & Case), one of Google’s outside counsel, emphasized the value of “innovators” as well as “implementers.”  Noreen Krall (Apple) then presented on challenges in determining FRAND royalties.  She identified multiple challenges including parties’ self-declaration of what patents are standards essential.  She used a sports team analogy to encapsulate FRAND disputes.  Unlike the manner in which players are allowed to negotiate and sign with different teams, parties in a FRAND dispute are forced to sign a contract with one team instead of being allowed to go to another team, she argued.

In the following discussion, Mr Heit continued the flow of analogies by describing the positions of the established “goal posts”, Microsoft and Apple representatives being seated on either side of him due to the alphabetical order of the American speakers.  He noted his advocacy for the side of innovators and wanting to protect people from de-incentivizing innovators in the course of negotiating to the lowest price.  Mr Culbert and Ms Krall frequently referred to each other’s statements and expressed agreement on many issues.  Ms Krall and Sarah Guichard (Blackberry) questioned what it is about SEPs that make them special to the point where reasonable royalties should not be applied.  At the end of the day, Ms Guichard commented, SEPs are patents.  Olivier Thirard (Orange) put forth a long-term view of FRAND, noting that after 20 years of FRAND, “companies sitting at the table here are doing very well,” and positing that FRAND has achieved its purpose of making available technology to consumers".

Thanks so much, Daan, says the IPKat.