MoFo Tech | Technology Attorneys | Morrison & Foerster

Figuring FRAND

Posted on May 2, 2013 by Jason R. Bartlett, Alison M. Tucher, and William Goodwin

In our December post “A FRANDlier Realm” we discussed emerging law relating to patents that are essential to technological standards, like 3G wireless telecommunications. What happens when patent owners and product makers cannot agree on fair, reasonable and nondiscriminatory (FRAND) terms? We said then that, rather than issuing injunctions, American courts “are more likely to attempt to force the parties to come to a monetary settlement or to set the terms of a FRAND royalty themselves.”

American courts had expressed a willingness to set FRAND royalty rates but had not had occasion to do so until now. In an April 25 opinion, Judge James L. Robart told Microsoft and Motorola what FRAND royalty rates for Motorola’s standard-essential patents would be. Motorola’s H.264 video compression standard patents are worth 0.555 cents per unit and its 802.11 WiFi standard patents are worth 3.471 cents per unit, Judge Robart found – numbers that are a small fraction of what patentee Motorola had sought. “This appears to be the first time any court anywhere has selected and published a specific FRAND royalty rate – much less a rate calculated to the thousandth of a penny,” says Alison Tucher, a partner in Morrison & Foerster’s Intellectual Property Group. It goes beyond what the FTC attempted in the Rambus case.

Sharing an Umbrella

Posted on March 26, 2013 from MoFo Tech Fall/Winter 2012

Big Pharma and academia cement big deals in the quest for bigger prizes

With the patents of many highly profitable blockbuster drugs expiring over the course of a few years, the search is on for new drugs to fill large pharmaceutical companies’ shrinking product portfolios.

For years, Big Pharma has turned to smaller biotech companies to find new drugs. However, this source has been getting more expensive and less productive—in part because the recession led to reduced investments in biotech, and that has slowed research.

As a result, pharma companies are giving renewed and expanded attention to academic laboratories as a source of innovation. Collaborations have traditionally involved limited, one-off projects—investment of a few hundred thousand dollars in a professor’s research, for example. Now, the scope has increased dramatically, and pharmaceutical companies are forging large-scale, multiyear umbrella arrangements with academia covering a wide range of research efforts and involving millions of dollars.

“Big Pharma and the academic institution agree jointly on which projects to fund, and in return for financing the research, the company has the first option to further develop and commercialize the results of that research,” says Morrison & Foerster partner Van Ellis. “This significantly reduces the lead time, and the academic laboratory can rapidly begin work.”

In some ways, these agreements are similar to the pharma-biotech collaborative model. But business and academia have widely differing needs, Ellis notes. For example, a pharmaceutical company has a strong competitive interest in keeping research findings secret, while academics must publish their research. “Such differences in strategic goals need to be recognized and addressed in their agreements,” he says. “They have to be sensitive to each other’s pressure points and carefully weigh these issues if the collaborations are to succeed.”

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The Rise of Mobile Payments – Impact on M&A Activity in 2013

Posted on March 20, 2013 by Lucy Overbury

What’s involved?

A recent study by Juniper Research predicted that the total value of mobile payments for digital and physical goods, money transfers and near field communications transactions – short-range wireless technology that enables communication between devices over a distance of less than 10 cm. – will reach $670 billion by 2015 and $1.3 trillion annually by 2017[1].

The term “mobile payment” is generally used to refer to payment services performed from or via a mobile device. Instead of paying with cash or card, mobile payments allow consumers to pay for a wide range of goods and services using their mobile phone or other electronic device.

Mobile payments are an increasingly popular method of payment, in part because of the rise in mobile devices generally. Gartner’s, a leading IT research and advisory company, predicted as part of its top 10 tech trends for 2013, that mobile phones will overtake PCs as the most common web access device worldwide[2].

In December 2012 ICM Group, a research firm, surveyed more than 2000 adults to gauge their attitudes to “contactless payment” technology. 80% of respondents said they were aware of contactless payment, just 8% said they currently transact in such a way.

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Cookie Monster

Posted on March 5, 2013 from MoFo Tech Fall/Winter 2012

When it comes to venue, cookie cases are anything but cookie-cutter

Marketers have an insatiable interest to know more about their customers, and the “cookies” they plant in those customers’ computers reveal much of what they need to know. The result has been more focused marketing and more personalized ads, but this tracking has also triggered a backlash against what some regard as intrusions of privacy. The question of where market research ends and privacy invasion begins is unlikely to be settled soon, with enabling technology changing rapidly, and legislators playing catch-up.

That leaves the field wide open for legal battles. An aggressive Internet privacy plaintiffs’ bar has arisen, focused on class actions and the bountiful rewards they promise. In federal courts, these cases face substantial hurdles, says Morrison & Foerster partner Rebekah Kaufman, who chairs the firm’s Consumer Class Action Litigation Group. The plaintiffs have to show they suffered actual damage as a result of the purported privacy invasion. Courts have routinely held that no such damage can be shown in these cases, she notes, and only a few cases survived early motions to dismiss—though that trend is changing.

So the ever-creative plaintiffs’ bar is seeking out more hospitable jurisdictions in states where it might be easier to satisfy the standards of harm or aggregate large numbers for filing class actions. Nine major retailers are now fending off class actions in Rolla, Missouri, hereto-fore not known for hearing litigation with potential national significance.

Disputes in China: Watch Your Step

Posted on February 26, 2013 from MoFo Tech Fall/Winter 2012

As cross-border business in China has exploded, so has the frequency of business disputes there. With both Western and Chinese firms wary of conducting litigation on the other’s home turf, parties can often agree on arbitration. Arbitration may even be preferable to bringing a Chinese company to an American court, says Craig Celniker, a Morrison & Foerster partner in Tokyo. That’s because a Chinese judge may not recognize an American judge’s ruling, but Chinese courts are obliged by international convention to honor arbitral rulings.

The Chinese national arbitration forum, known as CIETAC, has become one of the world’s most popular, says Cedric Chao, a Morrison & Foerster partner who is an approved CIETAC arbitrator (and has also arbitrated for the International Chamber of Commerce and the Singapore International Arbitration Centre). Chinese companies often try to steer their Western partners to arbitrate by CIETAC’s rules in mainland China. But internal friction within CIETAC has yet to settle, Chao says. For the moment, “If you arbitrate in front of CIETAC, you want to do it in Beijing,” rather than other locales such as Shanghai or Guangzhou, Chao recommends.

Better yet, many Chinese partners will agree in the contract for arbitrations to occur at the Hong Kong International Arbitration Centre or the Singapore International Arbitration Centre. In both locations, the courts are friendly to arbitration, Celniker says. Hong Kong has long been open to international law firms, and Singapore recently opened up to them as well.