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Brexit whitepaper hints at unitary patent future

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Latest News Cover story: Brexit whitepaper hints at unitary patent future The UK government’s long awaited Brexit whitepaper has suggested that the country will accept the supremacy of the Court of Justice of the EU (CJEU) in matters of the Unified Patent Court (UPC). Section 2.3 of the whitepaper said that the UK government will “bring an end to the jurisdiction of the CJEU in the UK”. But it added that the UK will “continue to honour [its] international commitments and follow international law”. This could potentially encompass the commitments the UK has to the UPC and the unitary patent system. Late last month, the UK government avoided any mention of the CJEU’s role in the UPC. An explanatory memorandum to the protocol on privileges and immunities of the UPC was submitted by UK IP minister Jo Johnson to accompany a 20 January command paper to UK Parliament ahead of ratification. The memorandum expressly said that the “EU is not a signatory” to the UPC agreement and that the UPC forms a “separate jurisdiction to the national court systems”. “The UPC Agreement establishes a specialised non-EU patent court under international law with jurisdiction for disputes relating to European patents in 25 European countries.” “The agreement is between 25 EU countries (not Spain, Croatia or Poland), the EU is not a signatory.” But as one lawyer pointed out in a recent article on the future of the unitary patent system: “The UPC recognises the ultimate supremacy of EU law as decided by the CJEU. It remains to be seen whether the UK will continue as part of the unitary patent system once it leaves the EU.” Earlier in January, the UPC preparatory committee said it expects the unitary patent system to become operational in December. It is working under the assumption that the provisional application phase will begin at the end of spring 2017, meaning that the projected timeline for the UPC Agreement to enter into force will be at the end of this year. Apple vs Samsung remanded The long running patent dispute between Apple and Samsung has been sent back to the California district court where it began. Last year, the US Supreme Court reversed a US Court of Appeals for the Federal Circuit decision in favour of Apple, finding that its narrower reading of ‘article of manufacture’ “cannot be squared with the text of Section 289 of the Patent Act”. On remand to the Federal Circuit, Apple asked that the court reaffirm its $399 million damages award. Samsung asked that the case be remanded to the US District Court for the Eastern District of California for a new trial on damages. But the Federal Circuit said it would do neither. Instead, the panel agreed to “remand this case to the district court for further proceedings, which may or may not include a new damages trial”. It said that both parties dispute what jury instructions the current trial record supports, and that the “district court is better positioned to parse the record to evaluate the parties’ competing arguments”. The district court will have to consider Apple and Samsung’s arguments in light of the trial record and Supreme Court decision. Conservative groups urge Trump to dump Qualcomm complaint Several conservative groups have written to US President Donald Trump asking him to terminate the Federal Trade Commission’s (FTC) investigation into Qualcomm. The groups, including the US Business & Industry Council and Americans for Tax Reform, wrote to Trump on 26 January, following the FTC’s anti-trust complaint against Qualcomm, which was filed in the final days of Barack Obama’s presidency and accused the semiconductor company of refusing to license its standard-essential patents to its competitors, in violation of its fair, reasonable and non-discriminatory (FRAND) commitments. The complaint was derided as ‘midnight litigation’, launched on the eve of a presidential transition that would likely see many of the agency’s top brass lose their jobs. Commissioner Maureen Ohlhausen dissented from the majority over concerns about the agency’s investigation into Qualcomm, saying: “[It was] based on a flawed legal theory that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine US intellectual property rights in Asia and worldwide.” The conservative groups’ letter to Trump echoed these accusations: “The FTC’s complaint against Qualcomm is midnight regulation at its worst—a misuse of antitrust litigation to promote a destructive policy agenda that aims to undercut patent property rights and conservative free market principles.” They asked Trump to “take immediate steps to terminate the FTC’s midnight complaint against Qualcomm” and “install commissioner Ohlhausen as permanent chair of the FTC and new Republican commissioners to make sure the agency does its job: to protect American consumers, rather than invite foreign competitors to attack our innovators”. Qualcomm has denied all of the FTC’s charges. It also faces complaints from Apple in the US and China over its standardessential patent licensing practices. A Qualcomm shareholder has added to the semiconductor company’s woes with a class-action suit demanding compensation for a fall in share prices he blames on the way management has handled anti-trust controversies. The class-action complaint, filed on 23 January in the US District Court for the Southern District of California by shareholder Rasesh Shah, alleged that Qualcomm lied to shareholders about its licensing practices. Qualcomm’s assertion that, “unlike some other companies in the industry that hold back certain key technologies”, it offers its “entire patent portfolio for use in cellular subscriber devices and cell site infrastructure equipment”. These statements were “materially false and/or misleading because they represented and failed to disclose adverse facts pertaining to Qualcomm’s business, operational and financial results, which were known to [Qualcomm] or recklessly disregarded by them”. Specifically, Shah claimed that Qualcomm failed to disclose that it was “engaging and/ or had engaged in anti-competitive conduct to maintain a monopoly for semiconductors used in mobile phones in violation of the Federal Trade Commission Act (FTC).” 4

Latest News Shah alleged in his class-action complaint: “In turn, Qualcomm lacked effective internal controls over financial reporting and as a result. [Qualcomm’s] public statements were materially false and misleading at all relevant times.” Shah demanded damages sustained as a result of legal actions against Qualcomm. The semiconductor company has had a torrid start to 2017, having already paid out a fine of $853 million to the Korea Fair Trade Commission (KFTC) in December over antitrust abuse in its licensing of standardessential patents. Then the FTC lodged its complaint earlier in January, which was followed by a $1 billion lawsuit from one of its licensees, Apple, and a further lawsuit in China from the smartphone company. According to Qualcomm, one of Apple’s complaints alleges a violation of China’s anti-monopoly law. The second asks for a determination of the terms of a patent licence between Qualcomm and Apple for Qualcomm’s standard-essential patents. Don Rosenberg, executive vice president and general counsel of Qualcomm, said: “These filings by Apple’s Chinese subsidiary are just part of Apple’s efforts to find ways to pay less for Qualcomm’s technology.” “Apple was offered terms consistent with terms accepted by more than one hundred other Chinese companies and refused to even consider them. These terms were consistent with our National Development and Reform Commission rectification plan.” “Qualcomm is prepared to defend its business model anywhere in the world. We are proud of our history of contributing our inventions to the development and success of the mobile communications ecosystem.” Qualcomm published its Q1 2017 results on 25 January, revealing licensing revenue of $1.86 billion. Steve Mollenkopf, CEO of Qualcomm, said in a statement accompanying the results: “The recent legal and governmental actions against Qualcomm are at their core driven by commercial disputes.” “As we have done in the past, we will vigorously defend our business model and the value of a portfolio of technologies that has been so instrumental to the success of the mobile communications industry.” Copaxone patents invalidated in court A US district court has invalidated all asserted claims in four patents covering Teva Pharmaceutical’s Copaxone multiple sclerosis drug. Teva confirmed the US District Court for the District of Delaware decision, invalidating all claims of the glatriamer acetate injection, but said it plans to appeal. The case involved five of six Abbreviated New Drug Application (ANDA) filers intent on releasing their own generic versions of Copaxone. Erez Vigodman, president and CEO of Teva, said: “We intend to move forward with an immediate appeal.” “We will continue to vigorously protect our Copaxone franchise against further challenges and through the duration of this process.” The US Patent Trial and Appeal Board ruled in favour of Mylan last year and invalidated three of Teva’s four patents on the drug. But Mylan’s petition against the fourth patent was found to be ineligible for postgrant review. Heather Bresch, CEO of Mylan, said: “Through significant investment in research and development and by challenging these invalid patents, we are working to bring a more affordable generic alternative of Copaxone to the market.” “Challenging patents is just one of the ways that Mylan helps to ensure patient access to medicines.” 5

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