WWWDLAPIPERCOMIP_GLOBAL | 01

Perspectives bull Analysis bull Visionary Ideas

INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

NORTH AMERICA

THE EU GENERAL DATA PROTECTION REGULATION ARE YOU READY

wwwdlapipercomip_global | Issue 28 Q4 2015 Attorney Advertising

UNDERSTANDING JAPANrsquoS PATENT SYSTEM

WOMEN IN IP LAW 9TH YEAR

THE IMPACT OF ROBOTIC PROCESS AUTOMATION

SUPREME COURT CORNER

Wow the year has gone by quickly Welcome to the fourth issue of 2015 and my last as Editor in Chief

In this issue we provide you with a review of a recent Ninth Circuit case with copyright implications and an update on a pending case in the patent area

Data privacy continues to be a hot topic This quarter we summarize upcoming EU regulatory changes taking shape and offer some practical advice to prepare for those developments

Robotics is gaining importance in company operations and in this issue we discuss the potential implications of these technologies in outsourcing arrangements

We provide a summary of the different types of patent licenses recognized under Japanese law and how they differ from patent licenses under US law ndash understanding the differences can be important for companies seeking to expand in the Japanese market

Itrsquos been my privilege to work with our editorial and marketing team who help to bring you this publication each quarter Itrsquos also been my honor to work with my colleagues who have authored the articles yoursquove enjoyed throughout the year I thank them for making my job as Editor in Chief so easy and so much fun Irsquove truly enjoyed reading and editing their articles and have learned a thing or two in the process

As you read this the Thanksgiving holiday will have just passed for us here in the US and the holiday season will be upon all of us wherever we may be around the world so Irsquoll sign off with early wishes to all of you for a joyous holiday season Make sure you look for your IPT News in 2016

victorialeedlapipercom

EDITORrsquoS COLUMN

Victoria Lee Global Co-Chair Technology Sector Partner Intellectual Property and Technology

Intellectual Property and Technology News is published in the North America Asia Pacific and EMEA regions Find all current and past editions of the IPT News here wwwdlapipercomipt_news To subscribe to this complimentary publication please email your contact information (including your physical mailing address) to IPTnewsdlapipercom

You are receiving this communication because you are a valued client former client or friend of DLA Piper The information contained in this newsletter is for informational purposes only and should not be construed as legal advice on any matter To unsubscribe from this mailing list send an email to communicationsdlapipercom or send your written request to DLA Piper Attention Marketing Depar tment 401 B Street Suite 1700 San Diego California 92101-4297 USA Copyright copy 2015 DLA Piper LLP (US) DLA Piper UK LLP and other affiliated entities For questions comments and suggestions email us at IPTnewsdlapipercom or contact Diane Vislisel Senior Marketing Manager T +1 619 699 3541 dianevisliseldlapipercom US Chair ndash Intellectual Proper ty and Technology John Allcock T +1 619 699 2828 johnallcockdlapipercom Editor in Chief Victoria Lee T +1 650 833 2091 victorialeedlapipercom Director Intellectual Proper ty and Technology Licia Vaughn T +1 619 699 2997 liciavaughndlapipercom DLA Piper LLP (US) 401 B Street Suite 1700 San Diego California 92101-4297 USA | MRS000047467

PATENT LAWYER

MIKE MCGURK JOINS

DLA PIPER IN BOSTON

Mike McGurk has joined DLA Piperrsquos Intellectual Property and Technology practice as a partner in Boston Mike brings more than 25 years of experience in virtually all aspects of patent law Working with clients ranging from startups to Fortune 100 companies he provides counsel in due diligence matters global portfolio development and adversarial proceedings including litigation interferences and reexaminations Mike focuses on the pharmaceutical chemical medical device mechanical technology and robotics fields

Mikersquos practice is informed by his background as a patent examiner in the chemical arts for the United States Patent and Trademark Office He has provided strategic litigation counseling support to clients filing in district courts across the nation and has handled numerous patent matters before the Patent Trial and Appeal Board His due diligence experience is vast and it involves pre-litigation acquisition in-license freedom-to-operate product andor process clearance design around and validity and patentability matters

Active in the community Mike serves as co-chair of the IP Law Committee for the Boston Bar Association

Mike earned his JD from George Washington Universityrsquos National Law Center and his BS in Chemical Engineering from the University of Delaware Chambers USA ranks him as a leading IP lawyer in Massachusetts

Learn more about Mike at wwwdlapipercomenuspeoplemmike-mcgurk

Claudia Frost US ndash Texas

Mark D Fowler US ndash California

Adam Cooke UK

Gualtiero DragottiItaly

John AllcockUS ndash California

Lisa A Haile US ndash California

George Godar UK

James Heintz US ndash Nationwide US ndash DC

Kathryn Riley Grasso US ndash California US ndash DC

Denise Seastone Kraft US ndash Delaware

John M GuaragnaUS ndash Texas

Joseph LavelleUS ndash DC

Dale Lazar US ndash DC

Matthew Satchwell US ndash Illinois

Frank W Ryan US ndash New York

Stuart E Pollack US ndash New York

Mark F RadcliffeUS ndash California

Gianni Minutoli US ndash DC

Stacy L TaylorUS ndash California

Paul R Steadman US ndash Illinois

Jean-Christophe Tristant France

Roberto Valenti Italy

Richard Taylor UK

Yan Zhao China - foreign

WWWDLAPIPERCOMIP_GLOBAL | 03

24 DLA PIPER LAWYERS RANKED AS WORLDrsquoS LEADING PATENT PRACTITIONERS

IAM Patent 1000 The Worldrsquos Leading Patent Practitioners 2015 has named

24 DLA Piper lawyers to its 2015 list IAM interviewed lawyers and

clients around the world to determine who companies turn to ldquowhen only

the best patent work will dordquo

BUILDING RESOURCES

At DLA Piper we are always in the business of building both in practice areas and geographies to meet the needs of our clients

The IPT group has a significant focus on technology and life sciences companies And those clientsrsquo needs are global So itrsquos natural for us to want to build our experience in markets that have a high concentration of clients in technology and life sciences and to build our experience in the global marketplace In todayrsquos IP market companies no matter their size need global legal capability

The announcements to the left of this column are culminations of our efforts in both respects

Boston is a significant technology and life sciences market and the addition of Mike McGurk in that office is a great step forward for building our IPT practice there Expect more additions in this important market in the months to come

And when our clients in Boston need patent advice in other parts of the US and around the globe they can look to our tremendous capability as recognized by IAM Patent 1000 While the list certainly does not include (yet) all of the talented patent practitioners we have around the globe (in particular the younger ones) itrsquos quite impressive and we are proud of it

Building both globally and locally is a key aspect of our IPT practice

johnallcockdlapipercom

John AllcockPartner Global Co-Chair and US Chair Intellectual Property and Technology

The outsourcing industry is experiencing a game-changing technological advance that will challenge the status quo of transaction pricing models and fees Service providers globally are realigning their workforce by rapidly removing expensive human resources (FTEs) and replacing them with robotic equivalents at a fraction of the cost This adoption of Robotic Process Automation (RPA) by outsourcing service providers is driving a material reduction in the cost of service delivery resulting in better margins

What do these innovative and disruptive provider efficiencies mean for existing and future outsourcing customers Certainly lower provider delivery costs should translate into lower fees for customers Customers negotiating new service agreements with an RPA-adopting provider will be the first beneficiaries as they have the negotiating power to drive lower fees based on the new lower cost structure Beyond the initial price reductions new service agreements that cover service periods of three to five years should include guaranteed fee decreases year-over-year to reflect the anticipated continuing cost-reduction benefits of further adoption of robotics and artificial intelligence Similarly new contracts should reflect the reliability and speed of automated transaction processing and increased automated volume throughput by guaranteeing year-over-year improvement in relevant service levels

What about customers with existing contracts When can they expect to see fee reductions attributed to RPA efficiencies The answer depends on the flexibility and foresight embodied in the existing outsourcing contract If an agreement is approaching a renewal window the customer should be able to seek fee reductions similar in scope to fees offered to new customers However realized savings on renewals may not initially equal new customer pricing minus renewing customers likely do not have as much negotiating leverage because they have already invested in and are more dependent on the incumbent provider Service providers often recognize and use as negotiating leverage the material cost and business risk to the customer of disengaging and transitioning service management to a new provider solely to achieve price reductions (as opposed to improving service)

Customers that are not at a renewal point may still achieve fee reductions with existing providers if their contracts contain a benchmarking provision A benchmark typically compares the fees and service levels of a specific contract against a relevant comparison market comprised of similar service providers delivering similar services to a normalized base of customer transactions If the benchmark results show with reliability that the existing fees fall outside a pre-defined band of normalized market-based fees then the customer often has the ability to lower its fees bringing such costs within a pre-defined pricing band (eg top quartile pricing) or to seek other relief including termination Even if a customerrsquos service provider is not implementing RPA benchmarking may still entitle a customer to a fee reduction based on industry peers realizing lower delivery costs If enough comparable industry players are benefitting from new disruptive technologies and processes they can drive non-adopters to grant fee reductions to customers or face breach or termination remedies under a benchmarking scheme

Robotic Process Automation is an undeniable disruptive force in the outsourcing industry As providers adopt RPA and other artificial intelligence solutions the customer market overall should benefit as lower provider delivery costs translate into lower customer fees

Adam Sak a partner in the IPT practice and based in Silicon Valley focuses on IT outsourcing business process outsourcing and commercial and technology transactions Reach him at adamsakdlapipercom

04 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS04 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

BY ADAM SAK

THE IMPACT OF ROBOTIC

PROCESS AUTOMATION

ON OUTSOURCING FEES

Service providers globally are realigning their workforce by rapidly removing

expensive human resources (FTEs) and replacing them with robotic equivalents

at a fraction of the cost

THE EU GENERAL DATA PROTECTION REGULATION ARE YOU READY

BY CAROL A F UMHOEFER

In 1995 the EU Data Protection Directive established the first-ever legal framework for personal data protection across multiple countries The Directive has since shaped how the EU member states minus and countries across the world minus look at

individualsrsquo privacy rights in their personal data

In the coming months we will witness what may be the most important event to date in the short history of personal data protection law the EU will adopt the EU General Data Protection Regulation or GDPR resetting the pace of reform and raising the bar for data protection in the EU and across the world

The path to reform has been long The first consultations on the GDPR opened in 2009 The European Commission European Parliament and European Council are currently negotiating the final terms the final version is expected by early 2016 and the GDPR could be effective as early as 2017

The GDPR will replace the Directive in its entirety Intended to harmonize the data protection regime across all of the EU the GDPR will be directly applicable to member states eliminating the need for national data protection laws in the 28 EU member states

Herersquos a quick look at just a few of the many significant changes

TERRITORIAL APPLICATION OF EU DATA

PROTECTION LAW

Since 1995 EU data protection laws have applied whenever a data controller (an entity determining how and why personal data is processed) is established in the EU or is established outside the EU but using means of processing personal data (such as servers) in the EU

The GDPR will adopt a consumer law approach to application of EU data protection law businesses will be subject to the GDPR if they target EU consumers even if the businesses are not established in the EU and do not use servers in the EU to process data As a result it is possible that the simple act of selling a product to an EU resident (even without actively targeting the EU market) and processing that one residentrsquos data during the sale will be enough to trigger oversight by the GDPR

ADMINISTRATIVE FINES

The maximum fines for violations of data protection law will increase dramatically under the GDPR

Though the terms are not yet final both the European Commission and the European Council have proposed that any relevant authority (typically a national authority) may impose a fine up to euro1 million or up to 2 percent of yearly worldwide revenues The Parliamentrsquos version of the draft GDPR increased the maximum fine to euro100 million or up to 5 percent of yearly worldwide revenues whichever is higher

DATA SECURITY BREACH NOTIFICATION

The GDPR will likely require notification of security breaches under certain specified circumstances and within a predetermined period Among the circumstances currently under discussion breaches that could create a risk of discrimination identity theft or fraud financial loss unauthorized reversal of pseudonymization damage to reputation or loss of confidentiality of data protected by professional secrecy Other scenarios that could lead to significant economic or social disadvantage are also being considered for the notification requirement

DATA PROTECTION IMPACT ASSESSMENTS (DPIA)

The GDPR will require Data Protection Impact Assessments (DPIA) but the situations in which they are mandated are still under review A DPIA is a documented assessment of the risks a particular personal data processing operation may raise for the privacy of individuals (such as profiling that forms the basis of a decision producing legal effects)

PRIVACY BY DESIGN AND PRIVACY BY DEFAULT

Privacy by design is the notion that a product or service can be conceived from the outset to ensure a certain level of privacy for an individualrsquos personal data Privacy by default is just that minus products and services should be default-set to ensure privacy of personal data

The GDPR will include obligations for data controllers to adopt privacy by design and privacy by default principles While there is no agreement on the details yet the European Parliamentrsquos proposed version goes the farthest providing that any data controller shall ensure that by default the only personal data processed is the data necessary for each specific part of the processing and that the personal data is not collected retained or disseminated beyond the minimum necessary for those purposes both in terms of volume of data and duration of its storage In particular the controller will need to implement mechanisms to ensure that an indefinite number of people cannot access consumersrsquo personal data and that individuals are able to control the dissemination of their personal data

DLA Piper France LLP par tner Carol AF Umhoefer is a US-educated and New York licensed attorney who is also admitted to the Paris Bar where she has been practicing for more than 15 years Her practice encompasses information technology e-commerce and commercial matters as well as related regulatory compliance issues Reach her at carolumhoeferdlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 07WWWDLAPIPERCOMIP_GLOBAL | 07

UPDATE In October the European Court of Justice invalidated the EU-US Safe Harbor that enabled EU businesses to legally transfer personal data to more than 4000 US companies that had self-certified adherence to the US Safe Harbor Principles which embody the key tenets of EU data protection law Even companies that were not certified may be affected because their data is transferred to certified vendors Our Data Privacy and Security team has been advising hundreds of clients on how to maintain compliance in light of the ECJ ruling Contact the team at dataprivacydlapipercom

US COMPANIES EU DATA REGULATION MEANS NEW OVERSIGHT

BY JENNIFER KASHATUS

The proposed EU General Data Protection Regulation will cover entities regardless of their physical presence or scope of operations within the EU even if all they do is sell products in the EU This means that many US companies are about to experience new regulatory oversight

To get ready US-based companies as well as companies that only have US entities should focus on the following

Data collection and storage practices You must understand the scope of your EU operations including the type of data you collect from the EU what you do with that data whether you need all the data that you collect and process and how long you retain that data

Current scope of EU regulatory compliance Examine what you have done to date with regard to regulatory compliance ndash eg where applicable the extent of your compliance with data collection and data transfer requirements and whether you have taken steps to adopt a plan providing acceptable compliance by Q4 2017

Privacy by design If privacy by design principles are not already embedded in your companyrsquos processes then evaluate how to revise processes company-wide to make these principles operational

And given the EUrsquos high proposed fines it is vital to remain aware of the progress of the EU Regulationrsquos implementation to ensure you timely make any necessary changes to mitigate risk

Jennifer Kashatus of counsel in the IPT group and based in Washington DC advises companies in all industry sectors on privacy and data protection Reach her at jenniferkashatusdlapipercom

Service providers globally are realigning their workforce by rapidly removing

expensive human resources (FTEs) and replacing them with robotic equivalents

at a fraction of the cost

THE EU GENERAL DATA PROTECTION REGULATION ARE YOU READY

BY CAROL A F UMHOEFER

In 1995 the EU Data Protection Directive established the first-ever legal framework for personal data protection across multiple countries The Directive has since shaped how the EU member states minus and countries across the world minus look at

individualsrsquo privacy rights in their personal data

In the coming months we will witness what may be the most important event to date in the short history of personal data protection law the EU will adopt the EU General Data Protection Regulation or GDPR resetting the pace of reform and raising the bar for data protection in the EU and across the world

The path to reform has been long The first consultations on the GDPR opened in 2009 The European Commission European Parliament and European Council are currently negotiating the final terms the final version is expected by early 2016 and the GDPR could be effective as early as 2017

The GDPR will replace the Directive in its entirety Intended to harmonize the data protection regime across all of the EU the GDPR will be directly applicable to member states eliminating the need for national data protection laws in the 28 EU member states

Herersquos a quick look at just a few of the many significant changes

TERRITORIAL APPLICATION OF EU DATA

PROTECTION LAW

Since 1995 EU data protection laws have applied whenever a data controller (an entity determining how and why personal data is processed) is established in the EU or is established outside the EU but using means of processing personal data (such as servers) in the EU

The GDPR will adopt a consumer law approach to application of EU data protection law businesses will be subject to the GDPR if they target EU consumers even if the businesses are not established in the EU and do not use servers in the EU to process data As a result it is possible that the simple act of selling a product to an EU resident (even without actively targeting the EU market) and processing that one residentrsquos data during the sale will be enough to trigger oversight by the GDPR

ADMINISTRATIVE FINES

The maximum fines for violations of data protection law will increase dramatically under the GDPR

Though the terms are not yet final both the European Commission and the European Council have proposed that any relevant authority (typically a national authority) may impose a fine up to euro1 million or up to 2 percent of yearly worldwide revenues The Parliamentrsquos version of the draft GDPR increased the maximum fine to euro100 million or up to 5 percent of yearly worldwide revenues whichever is higher

DATA SECURITY BREACH NOTIFICATION

The GDPR will likely require notification of security breaches under certain specified circumstances and within a predetermined period Among the circumstances currently under discussion breaches that could create a risk of discrimination identity theft or fraud financial loss unauthorized reversal of pseudonymization damage to reputation or loss of confidentiality of data protected by professional secrecy Other scenarios that could lead to significant economic or social disadvantage are also being considered for the notification requirement

DATA PROTECTION IMPACT ASSESSMENTS (DPIA)

The GDPR will require Data Protection Impact Assessments (DPIA) but the situations in which they are mandated are still under review A DPIA is a documented assessment of the risks a particular personal data processing operation may raise for the privacy of individuals (such as profiling that forms the basis of a decision producing legal effects)

PRIVACY BY DESIGN AND PRIVACY BY DEFAULT

Privacy by design is the notion that a product or service can be conceived from the outset to ensure a certain level of privacy for an individualrsquos personal data Privacy by default is just that minus products and services should be default-set to ensure privacy of personal data

The GDPR will include obligations for data controllers to adopt privacy by design and privacy by default principles While there is no agreement on the details yet the European Parliamentrsquos proposed version goes the farthest providing that any data controller shall ensure that by default the only personal data processed is the data necessary for each specific part of the processing and that the personal data is not collected retained or disseminated beyond the minimum necessary for those purposes both in terms of volume of data and duration of its storage In particular the controller will need to implement mechanisms to ensure that an indefinite number of people cannot access consumersrsquo personal data and that individuals are able to control the dissemination of their personal data

DLA Piper France LLP par tner Carol AF Umhoefer is a US-educated and New York licensed attorney who is also admitted to the Paris Bar where she has been practicing for more than 15 years Her practice encompasses information technology e-commerce and commercial matters as well as related regulatory compliance issues Reach her at carolumhoeferdlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 07WWWDLAPIPERCOMIP_GLOBAL | 07

UPDATE In October the European Court of Justice invalidated the EU-US Safe Harbor that enabled EU businesses to legally transfer personal data to more than 4000 US companies that had self-certified adherence to the US Safe Harbor Principles which embody the key tenets of EU data protection law Even companies that were not certified may be affected because their data is transferred to certified vendors Our Data Privacy and Security team has been advising hundreds of clients on how to maintain compliance in light of the ECJ ruling Contact the team at dataprivacydlapipercom

US COMPANIES EU DATA REGULATION MEANS NEW OVERSIGHT

BY JENNIFER KASHATUS

The proposed EU General Data Protection Regulation will cover entities regardless of their physical presence or scope of operations within the EU even if all they do is sell products in the EU This means that many US companies are about to experience new regulatory oversight

To get ready US-based companies as well as companies that only have US entities should focus on the following

Data collection and storage practices You must understand the scope of your EU operations including the type of data you collect from the EU what you do with that data whether you need all the data that you collect and process and how long you retain that data

Current scope of EU regulatory compliance Examine what you have done to date with regard to regulatory compliance ndash eg where applicable the extent of your compliance with data collection and data transfer requirements and whether you have taken steps to adopt a plan providing acceptable compliance by Q4 2017

Privacy by design If privacy by design principles are not already embedded in your companyrsquos processes then evaluate how to revise processes company-wide to make these principles operational

And given the EUrsquos high proposed fines it is vital to remain aware of the progress of the EU Regulationrsquos implementation to ensure you timely make any necessary changes to mitigate risk

Jennifer Kashatus of counsel in the IPT group and based in Washington DC advises companies in all industry sectors on privacy and data protection Reach her at jenniferkashatusdlapipercom

THE EU GENERAL DATA PROTECTION REGULATION ARE YOU READY

BY CAROL A F UMHOEFER

In 1995 the EU Data Protection Directive established the first-ever legal framework for personal data protection across multiple countries The Directive has since shaped how the EU member states minus and countries across the world minus look at

individualsrsquo privacy rights in their personal data

In the coming months we will witness what may be the most important event to date in the short history of personal data protection law the EU will adopt the EU General Data Protection Regulation or GDPR resetting the pace of reform and raising the bar for data protection in the EU and across the world

The path to reform has been long The first consultations on the GDPR opened in 2009 The European Commission European Parliament and European Council are currently negotiating the final terms the final version is expected by early 2016 and the GDPR could be effective as early as 2017

The GDPR will replace the Directive in its entirety Intended to harmonize the data protection regime across all of the EU the GDPR will be directly applicable to member states eliminating the need for national data protection laws in the 28 EU member states

Herersquos a quick look at just a few of the many significant changes

TERRITORIAL APPLICATION OF EU DATA

PROTECTION LAW

Since 1995 EU data protection laws have applied whenever a data controller (an entity determining how and why personal data is processed) is established in the EU or is established outside the EU but using means of processing personal data (such as servers) in the EU

The GDPR will adopt a consumer law approach to application of EU data protection law businesses will be subject to the GDPR if they target EU consumers even if the businesses are not established in the EU and do not use servers in the EU to process data As a result it is possible that the simple act of selling a product to an EU resident (even without actively targeting the EU market) and processing that one residentrsquos data during the sale will be enough to trigger oversight by the GDPR

ADMINISTRATIVE FINES

The maximum fines for violations of data protection law will increase dramatically under the GDPR

Though the terms are not yet final both the European Commission and the European Council have proposed that any relevant authority (typically a national authority) may impose a fine up to euro1 million or up to 2 percent of yearly worldwide revenues The Parliamentrsquos version of the draft GDPR increased the maximum fine to euro100 million or up to 5 percent of yearly worldwide revenues whichever is higher

DATA SECURITY BREACH NOTIFICATION

The GDPR will likely require notification of security breaches under certain specified circumstances and within a predetermined period Among the circumstances currently under discussion breaches that could create a risk of discrimination identity theft or fraud financial loss unauthorized reversal of pseudonymization damage to reputation or loss of confidentiality of data protected by professional secrecy Other scenarios that could lead to significant economic or social disadvantage are also being considered for the notification requirement

DATA PROTECTION IMPACT ASSESSMENTS (DPIA)

The GDPR will require Data Protection Impact Assessments (DPIA) but the situations in which they are mandated are still under review A DPIA is a documented assessment of the risks a particular personal data processing operation may raise for the privacy of individuals (such as profiling that forms the basis of a decision producing legal effects)

PRIVACY BY DESIGN AND PRIVACY BY DEFAULT

Privacy by design is the notion that a product or service can be conceived from the outset to ensure a certain level of privacy for an individualrsquos personal data Privacy by default is just that minus products and services should be default-set to ensure privacy of personal data

The GDPR will include obligations for data controllers to adopt privacy by design and privacy by default principles While there is no agreement on the details yet the European Parliamentrsquos proposed version goes the farthest providing that any data controller shall ensure that by default the only personal data processed is the data necessary for each specific part of the processing and that the personal data is not collected retained or disseminated beyond the minimum necessary for those purposes both in terms of volume of data and duration of its storage In particular the controller will need to implement mechanisms to ensure that an indefinite number of people cannot access consumersrsquo personal data and that individuals are able to control the dissemination of their personal data

DLA Piper France LLP par tner Carol AF Umhoefer is a US-educated and New York licensed attorney who is also admitted to the Paris Bar where she has been practicing for more than 15 years Her practice encompasses information technology e-commerce and commercial matters as well as related regulatory compliance issues Reach her at carolumhoeferdlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 07WWWDLAPIPERCOMIP_GLOBAL | 07

UPDATE In October the European Court of Justice invalidated the EU-US Safe Harbor that enabled EU businesses to legally transfer personal data to more than 4000 US companies that had self-certified adherence to the US Safe Harbor Principles which embody the key tenets of EU data protection law Even companies that were not certified may be affected because their data is transferred to certified vendors Our Data Privacy and Security team has been advising hundreds of clients on how to maintain compliance in light of the ECJ ruling Contact the team at dataprivacydlapipercom

US COMPANIES EU DATA REGULATION MEANS NEW OVERSIGHT

BY JENNIFER KASHATUS

The proposed EU General Data Protection Regulation will cover entities regardless of their physical presence or scope of operations within the EU even if all they do is sell products in the EU This means that many US companies are about to experience new regulatory oversight

To get ready US-based companies as well as companies that only have US entities should focus on the following

Data collection and storage practices You must understand the scope of your EU operations including the type of data you collect from the EU what you do with that data whether you need all the data that you collect and process and how long you retain that data

Current scope of EU regulatory compliance Examine what you have done to date with regard to regulatory compliance ndash eg where applicable the extent of your compliance with data collection and data transfer requirements and whether you have taken steps to adopt a plan providing acceptable compliance by Q4 2017

Privacy by design If privacy by design principles are not already embedded in your companyrsquos processes then evaluate how to revise processes company-wide to make these principles operational

And given the EUrsquos high proposed fines it is vital to remain aware of the progress of the EU Regulationrsquos implementation to ensure you timely make any necessary changes to mitigate risk

Jennifer Kashatus of counsel in the IPT group and based in Washington DC advises companies in all industry sectors on privacy and data protection Reach her at jenniferkashatusdlapipercom

ADMINISTRATIVE FINES

The maximum fines for violations of data protection law will increase dramatically under the GDPR

Though the terms are not yet final both the European Commission and the European Council have proposed that any relevant authority (typically a national authority) may impose a fine up to euro1 million or up to 2 percent of yearly worldwide revenues The Parliamentrsquos version of the draft GDPR increased the maximum fine to euro100 million or up to 5 percent of yearly worldwide revenues whichever is higher

DATA SECURITY BREACH NOTIFICATION

The GDPR will likely require notification of security breaches under certain specified circumstances and within a predetermined period Among the circumstances currently under discussion breaches that could create a risk of discrimination identity theft or fraud financial loss unauthorized reversal of pseudonymization damage to reputation or loss of confidentiality of data protected by professional secrecy Other scenarios that could lead to significant economic or social disadvantage are also being considered for the notification requirement

DATA PROTECTION IMPACT ASSESSMENTS (DPIA)

The GDPR will require Data Protection Impact Assessments (DPIA) but the situations in which they are mandated are still under review A DPIA is a documented assessment of the risks a particular personal data processing operation may raise for the privacy of individuals (such as profiling that forms the basis of a decision producing legal effects)

PRIVACY BY DESIGN AND PRIVACY BY DEFAULT

Privacy by design is the notion that a product or service can be conceived from the outset to ensure a certain level of privacy for an individualrsquos personal data Privacy by default is just that minus products and services should be default-set to ensure privacy of personal data

The GDPR will include obligations for data controllers to adopt privacy by design and privacy by default principles While there is no agreement on the details yet the European Parliamentrsquos proposed version goes the farthest providing that any data controller shall ensure that by default the only personal data processed is the data necessary for each specific part of the processing and that the personal data is not collected retained or disseminated beyond the minimum necessary for those purposes both in terms of volume of data and duration of its storage In particular the controller will need to implement mechanisms to ensure that an indefinite number of people cannot access consumersrsquo personal data and that individuals are able to control the dissemination of their personal data

DLA Piper France LLP par tner Carol AF Umhoefer is a US-educated and New York licensed attorney who is also admitted to the Paris Bar where she has been practicing for more than 15 years Her practice encompasses information technology e-commerce and commercial matters as well as related regulatory compliance issues Reach her at carolumhoeferdlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 07WWWDLAPIPERCOMIP_GLOBAL | 07

UPDATE In October the European Court of Justice invalidated the EU-US Safe Harbor that enabled EU businesses to legally transfer personal data to more than 4000 US companies that had self-certified adherence to the US Safe Harbor Principles which embody the key tenets of EU data protection law Even companies that were not certified may be affected because their data is transferred to certified vendors Our Data Privacy and Security team has been advising hundreds of clients on how to maintain compliance in light of the ECJ ruling Contact the team at dataprivacydlapipercom

US COMPANIES EU DATA REGULATION MEANS NEW OVERSIGHT

BY JENNIFER KASHATUS

The proposed EU General Data Protection Regulation will cover entities regardless of their physical presence or scope of operations within the EU even if all they do is sell products in the EU This means that many US companies are about to experience new regulatory oversight

To get ready US-based companies as well as companies that only have US entities should focus on the following

Data collection and storage practices You must understand the scope of your EU operations including the type of data you collect from the EU what you do with that data whether you need all the data that you collect and process and how long you retain that data

Current scope of EU regulatory compliance Examine what you have done to date with regard to regulatory compliance ndash eg where applicable the extent of your compliance with data collection and data transfer requirements and whether you have taken steps to adopt a plan providing acceptable compliance by Q4 2017

Privacy by design If privacy by design principles are not already embedded in your companyrsquos processes then evaluate how to revise processes company-wide to make these principles operational

And given the EUrsquos high proposed fines it is vital to remain aware of the progress of the EU Regulationrsquos implementation to ensure you timely make any necessary changes to mitigate risk

Jennifer Kashatus of counsel in the IPT group and based in Washington DC advises companies in all industry sectors on privacy and data protection Reach her at jenniferkashatusdlapipercom

WOMEN IN IP LAW 9TH YEAR PRIVACY AND PATENT LAW

DLA Piperrsquos Intellectual Property and Technology group hosted its ninth annual Women in IP Law CLE Luncheon at the Four Seasons Silicon Valley in late September More than 200 guests registered to attend 70 percent of whom were leading IP counsel for some of the Bay Arearsquos largest tech companies

Showcasing women as leaders in the IP field this yearrsquos discussion focused on two topics keeping ahead of privacy issues and navigating the changing world of patent litigation Leading the discussion on privacy were panelists Karen McGee (Chief Privacy Officer LifeLock Inc) Patricia Wyrod (General Counsel IPSYcom) and DLA Piperrsquos Jennifer Kashatus (Washington DC) The Honorable Marilyn L Huff (US District Court Judge Southern District of California) along with Global Patent Co-Chairs Claudia Frost (Houston) and Robynne Sanders (Melbourne) led the patent panel The event was co-sponsored by ACC ndashSFBA and Leading Women in Technology

PRIVACY PANEL

All companies have privacy and data security issues Because privacy and data security issues come in many shapes and sizes and the rules and regulations vary and are evolving around the globe the panel discussed how companies should prioritize these concerns The US unlike many other countries has not adopted comprehensive privacy and data security laws Instead the US has numerous constantly changing federal laws governing

specific areas such as financial services childrenrsquos issues and health information In addition nearly every state has adopted a data breach law addressing what to do in the event of a data incident Confusingly these laws are far from uniform and are constantly expanding in scope

Panelists agreed that DLA Piperrsquos CyberincidentData Breach Response Emergency Checklist and the firmrsquos Preparedness Guide are valuable free resources for companies View them here wwwdlapipercomCyberdata_breach_response_checklist

PATENT PANEL

Judge Huff noted that in the past year there was a huge drop in patent litigation filings for the first time since 2009 More recently we have seen a revival of patent case filings ndash so high that Q2 2015 marked the highest number of patent case filings ever observed in one quarter (according to Lex Machina)

Impacting patent case filings have been the AIA practice (inter partes reviews and CBMs) Research

shows 80 percent of IPRs have parallel district court cases which could be stayed pending the IPRrsquos resolution Although such stays are not mandatory statistics show district courts are quite willing to exercise their discretion to issue them

The panel addressed both domestic and international jurisdictional differences in patent litigation Judge Huff reported on the Patent Pilot Program within the Southern District of California and other US district courts Claudia Frost addressed the Eastern District of Texas and its high volume of patent cases along with the European Unionrsquos upcoming Unified Patent Court the biggest change in Europersquos patent system in history For the first time a patent decision in Europe will have pan-European effect affecting in one action a market of 500 million consumers Many commentators have predicted the UPC system will increase the number of lawsuits brought by patent trolls in Europe To find out more about the UPC visit DLA Piperrsquos dedicated UPC website wwwdlapipercomenusfocusupc Finally Robynne Sanders discussed strategic options for global patent litigation including use of the judicial systems in China and Australia and in particular the Australian Innovation Patent

Licia Vaughn based in San Diego is DLA Piperrsquos director of Intellectual Proper ty and Technology She practices IP litigation and functions as the practice group manager for the IPT practice in the US Reach her at liciavaughndlapipercom

BY LICIA VAUGHN

From left to right Licia Vaughn (San Diego) Jennifer Kashatus (Washington DC) Karen McGee (LifeLock Inc) Patricia Wyrod (IPSYcom) Hon Marilyn L Huff (United States District Court Judge for the Southern District of California) Robynne Sanders (Melbourne) and Claudia Frost (Houston)

Charlotte Lewis Jones (Flextronics International) poses a question for the panelists

Attendees learn about key privacy and patent issues

08 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

SUPREME COURT CORNER

Photo Credit iStock Tarik Kizilkaya

CASES TO WATCH

Stryker Corp v Zimmer Inc Halo Electronics Inc v Pulse Electronics Inc

PATENT ndash CERT GRANTED

Issue Whether the Federal Circuit erred by using a two-part test for enhancing patent infringement damages under 35 USC sect 284 that is similar to the former test for imposing attorney fees under 35 USC sect 285 which the Court rejected in Octane Fitness (2014)

Section 284 of the Patent Act permits a district court to increase damages in a patent case ldquoup to three times the amount found or assessedrdquo In 2007 an en banc Federal Circuit held an award of enhanced damages requires a showing of willful infringement and a party seeking a finding of willfulness must prove by clear and convincing evidence (1) the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and (2) this risk was either known or so obvious that it should have been known to the accused infringer In re Seagate Tech LLC 497 F3d 1360 (Fed Cir 2007)

In two separate appeals the petitioners argue the Seagate test is erroneous because sect 284 does not require a finding of willful infringement and because the two-part test is overly rigid In support of the latter petitioners argue the Seagate test is similar to the former test for imposing attorney fees under 35 USC sect 285 which the Supreme Court rejected in Octane Fitness1 In contrast the respondents argue review is inappropriate because in both cases the petitioners failed to raise a challenge to Seagate and the Federal Circuit declined en banc review Further the respondents argue the Seagate test is appropriate and was properly applied

Mylan Pharmaceuticals Inc v Apotex Inc

PATENT ndash CERT PENDING

Issue Whether Article IIIrsquos case or controversy requirement can be satisfied when the suit seeks a judgment of non-infringement of a disclaimed patent

Pro-Football Inc v Amanda Blackhorse (4th Cir)

TRADEMARK

Issue Whether the ED Va decision affirming the Trademark Trial and Appeal Boardrsquos decision to cancel the Washington Redskinsrsquo trademarks was correct

Supreme Court Corner reported on the ED Va decision in our previous issue We write to update that the owners of the Redskins trademarks have appealed to the Fourth Circuit briefing is scheduled to finish in February 2016

Editorrsquos Note While in this feature we normally focus on cases before the US Supreme Court here we highlight an interesting important copyright law appellate issue decided by the Ninth Circuit that may eventually make its way to the Supreme Court Petitions for rehearing have been filed by both sides

1 For a discussion of the Octane case see Supreme Court Corner in the Q2 2014 IPT News

Par tner Stan Panikowski based in San Diego focuses on IP antitrust appeals and other areas of business litigation Reach him at stanleypanikowskidlapipercom

Associate Brian Biggs based in Wilmington Delaware represents clients across many technical fields in patent litigation Reach him at brianbiggsdlapipercom

Associate Andrew Stein based in Washington DC focuses on patent litigation in federal district cour ts and sect337

investigations Reach him at andrewsteindlapipercom

RECENT DECISIONS

Lenz v Universal Music Corp et al (9th Cir)

COPYRIGHT ndash DECIDED SEPTEMBER 14 2015

Holding A copyright owner must consider fair use prior to issuing a take-down notice under 17 USC sect 512(f)

The Digital Millennium Copyright Act (DMCA) provides protection from copyright infringement liability to web-based multimedia-sharing service providers such as YouTube if a user unlawfully posts copyrighted material Under the DMCA the service provider can avoid infringement by ldquoact[ing] expeditiously to remove or disable access to the materialrdquo upon receiving a takedown notice from the copyright holder 17 USC sect 512(c)

Appellant Lenz uploaded to YouTube a 29-second home video of children dancing to Princersquos ldquoLetrsquos Go Crazyrdquo Universal owner of the songrsquos copyright sent YouTube a takedown notice YouTube then removed the video and notified Lenz who sent a counter-notification to YouTube resulting in Universalrsquos protest After Lenz sent a second counter-notification YouTube reinstated Lenzrsquos video Lenz then filed a district court complaint alleging liability under 17 USC sect 512(f) for misrepresentation then appealed the district courtrsquos denial of her motion for summary judgment

The Ninth Circuit held that Universal before sending the takedown letter was required to consider whether Lenzrsquos work was ldquofair userdquo under copyright law The court reasoned that a fair use of a copyrighted work is ldquonot just excused by the law it is wholly authorized by the lawrdquo and Universal would have needed a subjective good faith basis for believing Lenzrsquos use of the copyrighted song did not constitute a fair use

Many commentators read this opinion to strengthen the fair use doctrine as a check on copyright holders However the Ninth Circuit held the copyright holder need only have a subjective not objective good faith belief the use was not lawful to issue a take-down notice The court suggested minus ldquowithout passing judgmentrdquo minus the copyright holder could in establishing its good faith belief use an algorithm to review the ldquoplethora of contentrdquo on the web

10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

The scenario is familiar Your company is expanding product sales worldwide or restructuring to form subsidiaries outside the US New entities ndash whether third parties or corporate affiliates ndash need patent rights Your company may think that a global license with distribution rights will accomplish this result But does this license have the same effect everywhere And when litigation arises do your licensees have standing to take part and collect damages

This issue is especially critical in Japan the worldrsquos second largest pharma market and manufacturer of 25 percent of the worldrsquos technology products Japanrsquos patent system differs significantly from that of the US Its system of licensing and the remedies available when patent disputes arise diverge from the rules so familiar in the US

In the US the basic rule is that the patent owner and exclusive licensee have standing to sue for patent infringement Injunctions and damages are possible remedies to both the owner and the exclusive licensee An exclusive licensee need not have all substantial rights to

have standing and entitlement to damages For example rights in an exclusive field of use can be sufficient to establish standing However if the exclusive licensee does not hold all substantial rights the patent owner is required to join the litigation Non-exclusive licensees do not have standing to sue or even join as a party with the patent owner and they are not entitled to damages As a result it is difficult for the patent owner to collect damages on behalf of its affiliate when the affiliate is not an exclusive licensee and cannot join as a party

STANDING STRONGUNDERSTANDING JAPANrsquoS PATENT SYSTEM

BY DR ERICA PASCAL AND SHUZO MARUYAMA

10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

Japan has three types of licenses (i) a senyo license (ii) an exclusive tsujo license and (iii) a non-exclusive tsujo license Each type has different standing requirements and available remedies

A senyo license is created only when an exclusive license is registered as such with the Japan Patent Office A senyo licensee may hold less than all of the rights under the patent A senyo licensee has standing to sue on its own for patent infringement and to seek both an injunction and damages

A tsujo license grants the right to practice the patented invention It can be non-exclusive or exclusive An exclusive Tsujo licensee has standing to sue for patent infringement on its own and can seek damages However under current interpretations of Japanese law an exclusive tsujo licensee may not have standing to seek an injunction1 Only the patent owner can seek an injunction against an infringer Non-exclusive tsujo licensees do not have standing to sue for patent infringement and cannot seek damages or an injunction for infringement

Given the differences between jurisdictions patent owners and licensees should consider these questions

What activities will each entity perform in a jurisdiction Which entities will sell manufacture import and perform RampD and regulatory and clinical testing What rights are necessary to accomplish these activities

What considerations shape the choice between exclusive and non-exclusive licenses For example are there tax implications particularly between company affiliates Does the company have arrangements with multiple manufacturers and distributors that require non-exclusive arrangements or dividing the rights by territory Has the company previously distributed patent rights to third parties that would prevent it from providing these rights on an exclusive basis including to its affiliates

What possible future scenarios may arise with regard to potential patent infringers In which jurisdictions may infringement likely occur What remedies will be sought ndash injunction lost profits reasonable royalty Which entities will seek remedies What type of patent rights does each hold in each relevant jurisdiction

Understanding the variables you may encounter and keeping jurisdictional differences in mind from the outset will help your company tailor licensing agreements to fit your unique circumstances Then should trouble arise the players will be entitled to seek appropriate remedies and can stand together to defend the patent

1 Japanese law is not settled on this issue Under rare circumstances the licensee may have standing to seek an injunction by ldquousingrdquo the patent ownerrsquos rights (for example the patent owner and the licensee may have specifically agreed that the patent owner is obligated to take action against infringers)

Dr Erica Pascal an IPT partner and based in San Francisco focuses on patent litigation in the life sciences area Reach her at ericapascaldlapipercom

Shuzo Maruyama is a former Japanese judge and litigator who focuses on US patent litigation involving Japanese corporations Based in Chicago he is an associate in the IPT group and is a Bengoshi registered with the Japan Federation of Bar Associations Reach him at shuzomaruyamadlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 11

This issue is especially critical in Japan

the worldrsquos second largest pharma market

and manufacturer of 25 percent of the

worldrsquos technology products

SUPREME COURT CORNER

Photo Credit iStock Tarik Kizilkaya

CASES TO WATCH

Stryker Corp v Zimmer Inc Halo Electronics Inc v Pulse Electronics Inc

PATENT ndash CERT GRANTED

Issue Whether the Federal Circuit erred by using a two-part test for enhancing patent infringement damages under 35 USC sect 284 that is similar to the former test for imposing attorney fees under 35 USC sect 285 which the Court rejected in Octane Fitness (2014)

Section 284 of the Patent Act permits a district court to increase damages in a patent case ldquoup to three times the amount found or assessedrdquo In 2007 an en banc Federal Circuit held an award of enhanced damages requires a showing of willful infringement and a party seeking a finding of willfulness must prove by clear and convincing evidence (1) the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and (2) this risk was either known or so obvious that it should have been known to the accused infringer In re Seagate Tech LLC 497 F3d 1360 (Fed Cir 2007)

In two separate appeals the petitioners argue the Seagate test is erroneous because sect 284 does not require a finding of willful infringement and because the two-part test is overly rigid In support of the latter petitioners argue the Seagate test is similar to the former test for imposing attorney fees under 35 USC sect 285 which the Supreme Court rejected in Octane Fitness1 In contrast the respondents argue review is inappropriate because in both cases the petitioners failed to raise a challenge to Seagate and the Federal Circuit declined en banc review Further the respondents argue the Seagate test is appropriate and was properly applied

Mylan Pharmaceuticals Inc v Apotex Inc

PATENT ndash CERT PENDING

Issue Whether Article IIIrsquos case or controversy requirement can be satisfied when the suit seeks a judgment of non-infringement of a disclaimed patent

Pro-Football Inc v Amanda Blackhorse (4th Cir)

TRADEMARK

Issue Whether the ED Va decision affirming the Trademark Trial and Appeal Boardrsquos decision to cancel the Washington Redskinsrsquo trademarks was correct

Supreme Court Corner reported on the ED Va decision in our previous issue We write to update that the owners of the Redskins trademarks have appealed to the Fourth Circuit briefing is scheduled to finish in February 2016

Editorrsquos Note While in this feature we normally focus on cases before the US Supreme Court here we highlight an interesting important copyright law appellate issue decided by the Ninth Circuit that may eventually make its way to the Supreme Court Petitions for rehearing have been filed by both sides

1 For a discussion of the Octane case see Supreme Court Corner in the Q2 2014 IPT News

Par tner Stan Panikowski based in San Diego focuses on IP antitrust appeals and other areas of business litigation Reach him at stanleypanikowskidlapipercom

Associate Brian Biggs based in Wilmington Delaware represents clients across many technical fields in patent litigation Reach him at brianbiggsdlapipercom

Associate Andrew Stein based in Washington DC focuses on patent litigation in federal district cour ts and sect337

investigations Reach him at andrewsteindlapipercom

RECENT DECISIONS

Lenz v Universal Music Corp et al (9th Cir)

COPYRIGHT ndash DECIDED SEPTEMBER 14 2015

Holding A copyright owner must consider fair use prior to issuing a take-down notice under 17 USC sect 512(f)

The Digital Millennium Copyright Act (DMCA) provides protection from copyright infringement liability to web-based multimedia-sharing service providers such as YouTube if a user unlawfully posts copyrighted material Under the DMCA the service provider can avoid infringement by ldquoact[ing] expeditiously to remove or disable access to the materialrdquo upon receiving a takedown notice from the copyright holder 17 USC sect 512(c)

Appellant Lenz uploaded to YouTube a 29-second home video of children dancing to Princersquos ldquoLetrsquos Go Crazyrdquo Universal owner of the songrsquos copyright sent YouTube a takedown notice YouTube then removed the video and notified Lenz who sent a counter-notification to YouTube resulting in Universalrsquos protest After Lenz sent a second counter-notification YouTube reinstated Lenzrsquos video Lenz then filed a district court complaint alleging liability under 17 USC sect 512(f) for misrepresentation then appealed the district courtrsquos denial of her motion for summary judgment

The Ninth Circuit held that Universal before sending the takedown letter was required to consider whether Lenzrsquos work was ldquofair userdquo under copyright law The court reasoned that a fair use of a copyrighted work is ldquonot just excused by the law it is wholly authorized by the lawrdquo and Universal would have needed a subjective good faith basis for believing Lenzrsquos use of the copyrighted song did not constitute a fair use

Many commentators read this opinion to strengthen the fair use doctrine as a check on copyright holders However the Ninth Circuit held the copyright holder need only have a subjective not objective good faith belief the use was not lawful to issue a take-down notice The court suggested minus ldquowithout passing judgmentrdquo minus the copyright holder could in establishing its good faith belief use an algorithm to review the ldquoplethora of contentrdquo on the web

10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

The scenario is familiar Your company is expanding product sales worldwide or restructuring to form subsidiaries outside the US New entities ndash whether third parties or corporate affiliates ndash need patent rights Your company may think that a global license with distribution rights will accomplish this result But does this license have the same effect everywhere And when litigation arises do your licensees have standing to take part and collect damages

This issue is especially critical in Japan the worldrsquos second largest pharma market and manufacturer of 25 percent of the worldrsquos technology products Japanrsquos patent system differs significantly from that of the US Its system of licensing and the remedies available when patent disputes arise diverge from the rules so familiar in the US

In the US the basic rule is that the patent owner and exclusive licensee have standing to sue for patent infringement Injunctions and damages are possible remedies to both the owner and the exclusive licensee An exclusive licensee need not have all substantial rights to

have standing and entitlement to damages For example rights in an exclusive field of use can be sufficient to establish standing However if the exclusive licensee does not hold all substantial rights the patent owner is required to join the litigation Non-exclusive licensees do not have standing to sue or even join as a party with the patent owner and they are not entitled to damages As a result it is difficult for the patent owner to collect damages on behalf of its affiliate when the affiliate is not an exclusive licensee and cannot join as a party

STANDING STRONGUNDERSTANDING JAPANrsquoS PATENT SYSTEM

BY DR ERICA PASCAL AND SHUZO MARUYAMA

10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

Japan has three types of licenses (i) a senyo license (ii) an exclusive tsujo license and (iii) a non-exclusive tsujo license Each type has different standing requirements and available remedies

A senyo license is created only when an exclusive license is registered as such with the Japan Patent Office A senyo licensee may hold less than all of the rights under the patent A senyo licensee has standing to sue on its own for patent infringement and to seek both an injunction and damages

A tsujo license grants the right to practice the patented invention It can be non-exclusive or exclusive An exclusive Tsujo licensee has standing to sue for patent infringement on its own and can seek damages However under current interpretations of Japanese law an exclusive tsujo licensee may not have standing to seek an injunction1 Only the patent owner can seek an injunction against an infringer Non-exclusive tsujo licensees do not have standing to sue for patent infringement and cannot seek damages or an injunction for infringement

Given the differences between jurisdictions patent owners and licensees should consider these questions

What activities will each entity perform in a jurisdiction Which entities will sell manufacture import and perform RampD and regulatory and clinical testing What rights are necessary to accomplish these activities

What considerations shape the choice between exclusive and non-exclusive licenses For example are there tax implications particularly between company affiliates Does the company have arrangements with multiple manufacturers and distributors that require non-exclusive arrangements or dividing the rights by territory Has the company previously distributed patent rights to third parties that would prevent it from providing these rights on an exclusive basis including to its affiliates

What possible future scenarios may arise with regard to potential patent infringers In which jurisdictions may infringement likely occur What remedies will be sought ndash injunction lost profits reasonable royalty Which entities will seek remedies What type of patent rights does each hold in each relevant jurisdiction

Understanding the variables you may encounter and keeping jurisdictional differences in mind from the outset will help your company tailor licensing agreements to fit your unique circumstances Then should trouble arise the players will be entitled to seek appropriate remedies and can stand together to defend the patent

1 Japanese law is not settled on this issue Under rare circumstances the licensee may have standing to seek an injunction by ldquousingrdquo the patent ownerrsquos rights (for example the patent owner and the licensee may have specifically agreed that the patent owner is obligated to take action against infringers)

Dr Erica Pascal an IPT partner and based in San Francisco focuses on patent litigation in the life sciences area Reach her at ericapascaldlapipercom

Shuzo Maruyama is a former Japanese judge and litigator who focuses on US patent litigation involving Japanese corporations Based in Chicago he is an associate in the IPT group and is a Bengoshi registered with the Japan Federation of Bar Associations Reach him at shuzomaruyamadlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 11

This issue is especially critical in Japan

the worldrsquos second largest pharma market

and manufacturer of 25 percent of the

worldrsquos technology products

10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

The scenario is familiar Your company is expanding product sales worldwide or restructuring to form subsidiaries outside the US New entities ndash whether third parties or corporate affiliates ndash need patent rights Your company may think that a global license with distribution rights will accomplish this result But does this license have the same effect everywhere And when litigation arises do your licensees have standing to take part and collect damages

This issue is especially critical in Japan the worldrsquos second largest pharma market and manufacturer of 25 percent of the worldrsquos technology products Japanrsquos patent system differs significantly from that of the US Its system of licensing and the remedies available when patent disputes arise diverge from the rules so familiar in the US

In the US the basic rule is that the patent owner and exclusive licensee have standing to sue for patent infringement Injunctions and damages are possible remedies to both the owner and the exclusive licensee An exclusive licensee need not have all substantial rights to

have standing and entitlement to damages For example rights in an exclusive field of use can be sufficient to establish standing However if the exclusive licensee does not hold all substantial rights the patent owner is required to join the litigation Non-exclusive licensees do not have standing to sue or even join as a party with the patent owner and they are not entitled to damages As a result it is difficult for the patent owner to collect damages on behalf of its affiliate when the affiliate is not an exclusive licensee and cannot join as a party

STANDING STRONGUNDERSTANDING JAPANrsquoS PATENT SYSTEM

BY DR ERICA PASCAL AND SHUZO MARUYAMA

10 | INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS

Japan has three types of licenses (i) a senyo license (ii) an exclusive tsujo license and (iii) a non-exclusive tsujo license Each type has different standing requirements and available remedies

A senyo license is created only when an exclusive license is registered as such with the Japan Patent Office A senyo licensee may hold less than all of the rights under the patent A senyo licensee has standing to sue on its own for patent infringement and to seek both an injunction and damages

A tsujo license grants the right to practice the patented invention It can be non-exclusive or exclusive An exclusive Tsujo licensee has standing to sue for patent infringement on its own and can seek damages However under current interpretations of Japanese law an exclusive tsujo licensee may not have standing to seek an injunction1 Only the patent owner can seek an injunction against an infringer Non-exclusive tsujo licensees do not have standing to sue for patent infringement and cannot seek damages or an injunction for infringement

Given the differences between jurisdictions patent owners and licensees should consider these questions

What activities will each entity perform in a jurisdiction Which entities will sell manufacture import and perform RampD and regulatory and clinical testing What rights are necessary to accomplish these activities

What considerations shape the choice between exclusive and non-exclusive licenses For example are there tax implications particularly between company affiliates Does the company have arrangements with multiple manufacturers and distributors that require non-exclusive arrangements or dividing the rights by territory Has the company previously distributed patent rights to third parties that would prevent it from providing these rights on an exclusive basis including to its affiliates

What possible future scenarios may arise with regard to potential patent infringers In which jurisdictions may infringement likely occur What remedies will be sought ndash injunction lost profits reasonable royalty Which entities will seek remedies What type of patent rights does each hold in each relevant jurisdiction

Understanding the variables you may encounter and keeping jurisdictional differences in mind from the outset will help your company tailor licensing agreements to fit your unique circumstances Then should trouble arise the players will be entitled to seek appropriate remedies and can stand together to defend the patent

1 Japanese law is not settled on this issue Under rare circumstances the licensee may have standing to seek an injunction by ldquousingrdquo the patent ownerrsquos rights (for example the patent owner and the licensee may have specifically agreed that the patent owner is obligated to take action against infringers)

Dr Erica Pascal an IPT partner and based in San Francisco focuses on patent litigation in the life sciences area Reach her at ericapascaldlapipercom

Shuzo Maruyama is a former Japanese judge and litigator who focuses on US patent litigation involving Japanese corporations Based in Chicago he is an associate in the IPT group and is a Bengoshi registered with the Japan Federation of Bar Associations Reach him at shuzomaruyamadlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 11

This issue is especially critical in Japan

the worldrsquos second largest pharma market

and manufacturer of 25 percent of the

worldrsquos technology products

Japan has three types of licenses (i) a senyo license (ii) an exclusive tsujo license and (iii) a non-exclusive tsujo license Each type has different standing requirements and available remedies

A senyo license is created only when an exclusive license is registered as such with the Japan Patent Office A senyo licensee may hold less than all of the rights under the patent A senyo licensee has standing to sue on its own for patent infringement and to seek both an injunction and damages

A tsujo license grants the right to practice the patented invention It can be non-exclusive or exclusive An exclusive Tsujo licensee has standing to sue for patent infringement on its own and can seek damages However under current interpretations of Japanese law an exclusive tsujo licensee may not have standing to seek an injunction1 Only the patent owner can seek an injunction against an infringer Non-exclusive tsujo licensees do not have standing to sue for patent infringement and cannot seek damages or an injunction for infringement

Given the differences between jurisdictions patent owners and licensees should consider these questions

What activities will each entity perform in a jurisdiction Which entities will sell manufacture import and perform RampD and regulatory and clinical testing What rights are necessary to accomplish these activities

What considerations shape the choice between exclusive and non-exclusive licenses For example are there tax implications particularly between company affiliates Does the company have arrangements with multiple manufacturers and distributors that require non-exclusive arrangements or dividing the rights by territory Has the company previously distributed patent rights to third parties that would prevent it from providing these rights on an exclusive basis including to its affiliates

What possible future scenarios may arise with regard to potential patent infringers In which jurisdictions may infringement likely occur What remedies will be sought ndash injunction lost profits reasonable royalty Which entities will seek remedies What type of patent rights does each hold in each relevant jurisdiction

Understanding the variables you may encounter and keeping jurisdictional differences in mind from the outset will help your company tailor licensing agreements to fit your unique circumstances Then should trouble arise the players will be entitled to seek appropriate remedies and can stand together to defend the patent

1 Japanese law is not settled on this issue Under rare circumstances the licensee may have standing to seek an injunction by ldquousingrdquo the patent ownerrsquos rights (for example the patent owner and the licensee may have specifically agreed that the patent owner is obligated to take action against infringers)

Dr Erica Pascal an IPT partner and based in San Francisco focuses on patent litigation in the life sciences area Reach her at ericapascaldlapipercom

Shuzo Maruyama is a former Japanese judge and litigator who focuses on US patent litigation involving Japanese corporations Based in Chicago he is an associate in the IPT group and is a Bengoshi registered with the Japan Federation of Bar Associations Reach him at shuzomaruyamadlapipercom

WWWDLAPIPERCOMIP_GLOBAL | 11

This issue is especially critical in Japan

the worldrsquos second largest pharma market

and manufacturer of 25 percent of the

worldrsquos technology products

TOP TWO PATENT LITIGATION DEFENSE FIRMS ndash US

When you have a patent dispute that can only be solved in the courtroom DLA Piper has the trial strength and technical depth to guide you Corporate Counselrsquos Annual Patent Litigation Survey 2015 ranked DLA Piper among the top two most active defense firms in the US and among the top five

most active firms overall based on the number of new district court patent case filings We are honored that clients around the globe trust us with their patent matters

DLA Piper llp (us)

401 B Street Suite 1700San Diego California 92101-4297

Attorney Advertising

wwwdlapipercom