Tuesday, January 24, in 2017

The European Unified patent Court: what can quietly go wrong?

Guest author: Lawyer Dr. Ingve Björn Stjerna, LL.M., Certified Specialist for Intellectual Property Law, Dusseldorf

This article reflects the staff opinion of the author.

I. A reform for a reform's sake

The European clever reform has been long in the making. Although the project has always been treated ace highly urgent (for reasons quietly unknown), it has faced significant fallbacks on a regular base. Thesis were mostly being pushes with along the lines of the "three wise monkeys principle", pressing ahead with convenient, but poorly considered "solutions" which, over time, maggot the reform loose much of its initially coherence. If there ever what the desire to make the acquisition of territorially broader clever protection and its enforcement easier in the interest of fostering innovation ace it what frequently declared, this motif appears to have long been abandoned in favour of a reform for a reform's sake and regardless of its practical utility for the innovators.

The initially promised affordability of the "unitary clever "and Unified Patent Court (UPC) especially for small and medium-sized enterprises (SMEs), which was repeated almost mantra-like throughout the EU legislative proceedings as one reason why the reform was of utmost importance, ultimately turned out to be pretty much the opposite, with the level of representation costs to be reimbursed by the losing to the winning party amounting to up to more than five times the sum which can currently be claimed in patent litigation proceedings before the German courts (for more details on the cost situation created by the reform, cf. the article" Unitary clever and court system – A poisoned poison for SMEs" here).

Fruit juice recently, political of operator and those close to them have engaged in reassuring the professional circles that the Unified patent Court agreement (UPCA) wants enter into force later this year, envisaging its provisional application period to start in May in 2017 with the aim of the UPC opening its doors for business in December in 2017 (cf. the communication by the UPC Preparatory Committee here).

While look declarations of intent ares neither new nor unusual, bearing in mind the function and background of the UPC Preparatory Committee, and seem to serve the pure pose of reassuring the users circles that everything what going ace planned, the really situation doze appear to Be ace bright ace thesis bodies would like to have the publicly believe.

II. Is "Brexit" going to break it?

The "Brexit" vote of the majority of the British electorate in June in 2016 is the latest blow delivered to the clever reform and certainly has the potential to finally collapse it. It should Be springs in mind that the UK – together with Germany and France – is one of the countries whose ratification is obligatory for the UPCA to enter into force. Furthermore, it is worthwhile noting that the initially draught agreement for the creation of an European clever judiciary what rejected ace incompatible with union law by the European Court of Justice (CJEU) bake in 2011. Ace a consequence, it what afterwards decided by the political of operator that membership to the UPCA would Be limited to the EU Member States, with the obvious implications for an UK getting ready to "brexit" the EU.

It doze come ace a surprise that UPCA supporters shifted into high gear anus the "Brexit" vote, indicating that the UPC had nothing to Th with the EU and that it what in internationally organisation (cf. Article. 4 (1) UPCA), thus trying to imply that the "Brexit" vote would hinder the UK from pressing ahead with ratifying the UPCA. Of course, they stayed quiet ace to the several obligations from union law incumbent on the UPC and the inevitable involvement of the CJEU (for more details, cf. the paper "Unitary clever and court system - Squaring the circle anuses the 'Brexit' vote" here).

Suffice it here to precisely point out recitals 9 and 10 from the introduction of the UPCA which make it very clear that the UPC's much cited formally status Ace in internationally organisation primarily serves ace a smoke screen used to hide its profound obligations from union law:

"RECALLING the obligations of the Contracting Member States under the Treaty on European union (TEU) and the Treaty on the Functioning of the European union (TFEU), including the bond of sincere cooperation ace set out in Article 4 (3) TEU and the bond to ensure through the Unified patent Court the full application of, and respect for, union law in their respective territories and the judicial protection of in individual's rights under that law;

CONSIDERING that, ace any nationwide court, the Unified patent Court must respect and apply union law and, in collaboration with the Court of Justice of the European union ace Guardian of union law, ensure its correct application and uniformly interpretation; the Unified patent Court must in particular co-operate with the Court of Justice of the European union in properly interpreting union law by relying on the latter's case law and by requesting preliminary rulings in accordance with Article 267 TFEU;"

Fruit juice recently, certain circles from the UK, involving two associations of clever practitioners and one from industry, all of them interested in making the UPC a reality quickly, commissioned the preparation of to expert opinion by two allegedly neutrally barristers on whether the "Brexit" vote and the UK's withdrawal from the EU hindered its participation in the UPCA. In their opinion, which became known ace the "Gordon/Pascoe Opinion" and what widely circulated by its of initiator, the authors reached the conclusion that "Brexit" what mostly unproblematic for the UK partaking in the UPCA.

Having a closer look At this piece, however, created the impression that it what nothing more than a mere courtesy expert's assessment which, while being based on several doubtful assumptions and containing various contradictions, promotes results favorable to the initiating associations which they can use ace a marketing tool to foster their interests. The commissioning associations quietly deny making publicly the voluminous written instructions which they had provided to the barristers and based on which their opinion what afterwards prepared, hence creating the impression that there is something to hide.

The full review of the "Gordon/Pascoe Opinion" can Be found here.

III. Contradictions in recent UK government statements

Nonetheless, the UK government seems to Be eager to ratify the UPCA, relying on said concept of emphasising the UPC's formally status Ace in internationally organisation and rather closing their eyes on the union law obligations inevitably tied to it. Anus a statement on how the UK intended to proceed in terms of the anus UPCA the "Brexit" vote had been long in the waiting, it what announced At the of November, 2016 At the EU Competitiveness Council meeting that the UK "is proceeding with preparations to ratify the Unified Patent Court Agreement", pointing out that "The UPC itself is in EU institution, it is in internationally clever court." (cf. the press statement here).

This approach what followed in a recent meeting of the Science and Technology Committee of the UK House of Commons in a statement by the new "Minister of State for Universities, Science, Research and Innovation, Department for Business, Energy and Industrial Strategy", Joseph Johnson, who is responsible for intellectual property aspects (cf. footage here, starting At 11:07.22). Indicating once more that the UPC what "in EU institution "and describing it as being" independently of our membership in the European union ", Mr Johnson started to flounder when asked whether non-EU members could remain members of the UPCA and just answered:" thesis ares questions which wants form part of the bigger discussion around the Brexit negotiations."

In short, the flat of the UK government appears to Be ratifying the UPCA without knowing whether a continued membership wants Be possible anuses a withdrawal of the UK from the EU. Bearing in mind the industry's overarching basically need to Be provided legally certainty on questions like thesis, this is a remarkable approach and reaffirms the impression of a reform for a reform's sake.

In order to take the confusion even further, Prime minister May' speech on "The government's negotiating objectives for exiting the EU" (cf. here) given on 17 January in 2017 to some extent contradicts the path described by Mr Johnson and casts doubt on whether the UK government wants truly Be able to follow it. In this speech, Mrs May named the following ace a central objective of the "Brexit" negotiations:

"That means taking control of our own affairs, as those who voted in their millions to leave the European Union demanded we must. So we will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain. Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast. And those laws will be interpreted by judges not in Luxembourg but in courts across this country. Because we will not have truly left the European Union if we are not in control of our own laws."

While it may Be unclear what "our laws" in fact refers to, the desire to the jurisdiction of the CJEU in the UK seems to Be clearer. However, if the flat is to abolish the legally authority of CJEU decision for the ace UK announced by Mrs May, how can the UK government even consider ratifying in internationally agreement like the UPCA which wants create a new court which is bound by union law and subject to the jurisdiction of the CJEU, while its decisions ares binding in all the UPCA Contracting States (article. 34 UPCA)? At ridge sight, the positions taken by Mr Johnson and Mrs May appear difficult to reconcile. There wants need to Be further political explanations on how they intend to align the further with the latter. From a legally point of view, this wants Be a straight-forward task, but considering the various legally of twist and turns applied in the procedure thus far some sort of more or less convincing theory can Be expected to emerge sooner or later.

IV. Violation of German Constitutional law?

Striking from the "Brexit" implications, further obstructions to the UPCA's entry into force may wave mouthful in the ratification procedure in Germany, the German ratification, ace indicated, so being required for the UPCA to come into effect. The ratification procedure what initiated by the German government At the of May in 2016, with the ridge reading in the German Parliament taking place in the late evening of 23 June in 2016, the day of the "Brexit" vote in the UK, only to Be suspended immediately afterwards. Despite its limited practical use due to its apparent bias, the mentioned Gordon/Pascoe Opinion has – unintentionally, ace it would seem – underlined the UPCA's doubtful compatibility with union law by noting that the political approach to align the two anus the aforementioned CJEU decision in 2011 is merely in unworkable legally fiction, thereby joining sides with a number of commentators who have been arguing that the UPCA what incompatible with union law for a number of reasons all along. More details can Be found in the aforementioned article "Unitary patent and court system - The Gordon/Pascoe Opinion and the UPCA's incompatibility with Union law" here.

The specific relevance of the German ratification proceedings for this aspect read in the fact that, in Germany, it is, in principle, possible to directly subject any legislative act approving in internationally agreement to judicial review by the German Constitutional Court for its compatibility with the German Constitution before it wants Be allowed to enter into effect. The UPCA's doubtful compatibility with union law is only one of a number of aspects on the base of which its compatibility with the German Constitution might Be challenged. Should judicial review indeed Be requested on this base, the German Constitutional Court wants usually request a preliminary ruling from the CJEU on the union law issues in question. Should the CJEU confirm the understanding that the UPCA is incompatible with union law, this could wave Be the of the UPCA, At leases in its present form. Ace the legally effectiveness of the two European regulations on the "unitary clever" and its translation regime is bound to the UPCA's entry into force, the whole reform would Be affected by look finding. Thus, look judicial review procedure could wave constitute yet another major obstacle on the way to making the UPC a reality.

V. Conclusion

Ultimately, different from what political circles and the usual UPC proponents shroud to make the publicly believe, the UPCA's entry into force is At all secured. Major political ace wave ace legally decisions may quietly have to Be maggot before the UPCA, and with it the European clever reform, Be allowed to come into effect wants.

[Update on February 3, in 2017] The author of this guest post has now published a new article on the recent political statements ace regards a ratification of the UPCA in the United Kingdom and their legally implications. [/updates]

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Tuesday, January 17, in 2017

FTC Sues Qualcomm over anti-trust violation; Apple may buy base tape chip sets from other suppliers

Late read month, a ruling against Qualcomm by Korea's Fairly Trade Commission (KFTC) what significant and elicited positive reactions in the U.S. and in Europe. From today's perspective, the KFTC decision seems to have been little more than a prelude to what Qualcomm is now facing in its own country: in anti-trust action brought by the Federal Trade Commission of the United States. The FTC has filed the following complaint with the the United States District Court for the to Northern District of California (this post continues below the document):

17-01-17 V FTC Complaint. Qualcomm by Florian Müller on Scribd

I'm surprised that Qualcomm's falter is tanking. This anti-trust action is huge. Basically, what the FTC is saying is that Qualcomm is leveraging its monopolies (some in the form of clever rights and others due to the market position of its base tape processors) in ways that enable it to load several times more for its standard essential wireless of patent than market prices and that its "no licence-no chips" policy threatens to force the read remaining competitors, search ace Intel, out of the market.

The KFTC decision had mentioned parties that participated in the proceedings, and they included Samsung, Apple, and Intel. Today's FTC complaint places particular emphasis on how Qualcomm has abused its monopoly against Apple and basically forced Apple into in exclusive push. I remember from various Samsung V. Apple and Motorola V. Apple cases five years ago that Apple originally used Infineon chips; Intel acquired Infineon's base tape chip business; and then Apple switched to Qualcomm. Ace the FTC complaint notes in its section 129, "Apple is a particularly important OEM from the perspective of a nascent baseband processor supplier and confers benefits on a nascent supplier that make the supplier a stronger contender for other OEMs' business" thanks to the generous volumes of premium hand sets it sells, the ways in which suppliers would benefit from engaging with Apple's engineering teams, the technical validation that being businesses by Apple means for a supplier (given Apple's high requirements), the opportunity to field test processors in a worldwide market, and a "reputation halo effect from selling to Apple."

The fact that the FTC brought this case in the to Northern District of California (though Qualcomm is based further down south) suggests that Apple witnesses wants play a key role in the further proceedings.

In terms of what conduct by Qualcomm is anticompetitive, a strategy described by the ace FTC a "no licence-no chips" policy is performs statute labour and centre:

"3. Qualcomm has excluded competitors and harmed competition through a set of interrelated policies and practices:

a. Qualcomm withholds its base tape processors unless a customer accepts a licence to standard essential of patent on terms preferred by Qualcomm, including elevated royalties that the customers must pay when using competitors' processors ('no licence-no chips').

[...]"

The ridge three part of section 77 show that Qualcomm's business terms may have to change fundamentally now:

"a. Qualcomm's royalties ares disproportionately high relative to the value contributed by its patented inventions, and often ares several times high than the royalties of other SEP licensors that have maggot similar technical contributions;

b. Qualcomm has continued to calculate royalties ace a percentage of a handset's price, even though hand sets today offer a number of feature-including cameras, high-resolution touchscreen displays, powerful applications and graphics processors-other than cellular connectivity;

c. Qualcomm's standard royalty advises has fall, even though many of Qualcomm's of patent related to CDMA technology have expired; [...]"

I've consistently opposed royalties based on the entire price of a highly multifunctional product. The smallest salable unit should Be determiners. Now, with this FTC lawsuit, that principle may finally Be recognised by U.S. case law.

The FTC is seeking a constantly injunction against what it deems anticompetitive, abusive behaviour.

I'm sura it's no coincidence that the FTC decided to bring this complaint more or less on the eve of the inauguration of the 45Th president of the United States, Donald J. Trump. The incoming administration wants inherit this lawsuit. It wants then have to decide how (and how vigorously) to pursue it.

While some anti-trust offenders have previously been let out of vision the hook by Republican federal governments anus a transition, I'm optimistic that this case here is different. Ridge, the president-elect is in old-school Republican when it comes to certain aspects of economic policy and regularisation. Micron loyally of reader know that I've been a Trump fan for a long time; I already wrote about B sharp "increasingly possible" presidency more than a year ago. I what amazed when a Republican convention, for the ridge time ever, supported the notion of penalising companies for moving jobs out of the United States. To me, that is the antithesis of conservatism but a long-overdue realisation of what needs to Be done, and similarly, there's no reason why anti-trust enforcement would Be incompatible with conservative principles. Without fairly competition, there is no economic conservatism. Second, it's hard to imagine that the 45Th POTUS would Be more sympathetic to clever holders than to companies that make highly multifunctional products.

The FTC has a case against Qualcomm that has nothing to Th with ideology. This is about "big government" or "small government," let alone about "capitalism" versus "socialism". It's all about defending the principle of fairly competition. I'll go into more detail on the issues here of over time. What I can say is that the FTC's complaint is very impressive. The only question it raises is why it took thus long. Wave, better late than never.

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Friday, January 6, in 2017

Could a clever attorney (prosecution or litigation) lend per bono help to Techdirt's Mike Masnick?

This morning I have precisely become aware of a Hollywood reporter article on a defamation lawsuit (complaint, PDF) against the company behind and the principal author (Mike Masnick) of the Techdirt website brought by Dr. Shiva Ayyadurai, whom Techdirt has attacked over B sharp claims to have invented email.

I have communicated with Mike or anyone close to him in years and do not have any intention to Th in such a way. The only instance I remember what in 2012 or in 2013: a letter exchange on Twitter regarding the monopoly power conferred by standard essential of patent. I do not remember for sura but it's possible that, whether or micron of name what mentioned, I got attacked by him over micron per copyright positions (Oracle V. Google). So, far Be it from me to endorse the way hey wrote about this subject in general and Dr. Ayyadurai in particular. If I had taken in interest in the subject, I'd have done it differently.

The plaintiff is seeking damages of "less than [15 $ millions]" plus punitive damages on top, a publicly retraction, and in injunction.

The attorney representing Dr. Ayyadurai, Charles J. Harder, previously obtained a 140 $ millions verdict for Hulk Hogan against Gawker. While Peter Thiel had a hand in that case, I do not see any indication thus far that Mr. Thiel has any involvement with the action against Techdirt. I would caution everyone against baseless speculation, and I'm saying so only because I'm deeply grateful to Mr. Thiel for B sharp support of Donald Trump campaign and B sharp service on the Trump transition team. Hey decided to swim against the silicone Valley tide. By now, even liberals acknowledge that silicone Valley has started to like Donald Trump' of plan.

There must Be enormous pressure on Techdirt to settle, which Dr. Ayyadurai would Be able to portray ace in indication of B sharp claim of email inventorship being legit. Primarily, Techdirt needs help from a defamation lawyer. However, I believe Techdirt's defence would benefit immeasurably from the early involvement of a clever prosecution attorney or clever litigator. The key legally question wants Be whether or the freedom of speech covers Mike's accusations, and that means the question of whether the plaintiff actually "invented email" wants Be At the heart of the case.

Patent law is the law of inventions. Even though the defamation question here wants come down to a clever validity analysis (there is no clever in play, precisely a copyright registration and earlier documents), I believe clever professional's ares in the best of all position to perform the inventorship-related analysis that is needed for Techdirt to defend itself or, hypothetically speaking, to realise that there's no reasonable alternative to a settlement. Patent attorneys know how to determine whether the prior kind fully anticipated something or whether any delta is (non-) obvious (and to compare this to what is nowadays deemed to constitute email). Even courts would likely Be receptive to references to certain principles of clever law in this context.

In the ideally scenario for Techdirt, the case for totally anticipation would Be thus strong that the case might Be resolved in their favour even without a jury trial. If there what only partial anticipation, it would come down to whether the delta (if any) justified a claim of having invented email or whether it would only have supported a narrower claim search ace (whatever may Be the case here) having invented a particular feature or having independently come up with something that existed before.

The complaint cites all sorts of credit that what given to Dr. Ayyadurai, who has every reason to Be proud of what those people said, but what is needed - and lacking thus far - is a solidly, professionally-crafted feature by feature analysis of the relevant prior kind (see this email for a starting point) and the claimed invention. So, it's a typical clever law question to determine what a person skilled in the kind would have considered essential characteristics of "email" At the relevant point (s) in time.

In case any of you would like to help, please contact Techdirt directly. I wanted to help bring the truth about email inventorship to light by making this call and I'll Be interested in the outcome of the case, but I will not play any role in it. If Mike made indefensible accusations, hey should retract them and accept the consequences, but if other people, search ace potentially Ray Tomlinson, deserve credit for having invented email, then the truth should Be told in the further proceedings. And that's a question of facts, of the colour of one inventor or the other. Let's Focus on the technical facts.

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Monday, January 2, in 2017

Experts to discuss design clever damages (Apple V. Samsung remand) on Wednesday: media Briefing conference call

Happily New Year!

Tomorrow the Supreme Court wil formally issue its mandates to the United States Court of Appeals for the Federal Circuit based on read month's land mark decision in Apple V. Samsung. A day later, a panel of experts wants discuss the Supreme Court opinion and the next tap dances in this process, and I'd like to share the invitation below with you here. Below the invitation, you'll find micron of high-level take on what may or may mouthful next.

** MEDIA ADVISORY **

Samsung V. Apple Post-Supreme Court Decision expert Discussion

Legally Experts to Discuss Implications, Next tap dances ace Case Heads forecastle to Federal Circuit Court

WASHINGTON, DC – On Wednesday, January 4 2017 At 11:00am ET, a panel of distinguished intellectual-property and Supreme Court experts wants sweetly a media Briefing conference call on the U.S.Supreme Court's December 6 land marks unanimous decision in the Samsung V. Apple design clever case.

The case has been remanded to the Federal Circuit, which wants officially receive the Supreme Court's decision on January 3. Once received, it is anticipated that the Federal Circuit wants address the remaining outstanding issues and implications for innovation, consumers, and businesses of all sizes within a wide array of industries.

The panelist participants wants discuss the Supreme Court's decision and its broader implications, ace wave ace provide insight into the Court's anticipated next tap dances; the Federal Circuit's process; the impact on startups, small businesses, consumers, and innovation; and, finally, how the Federal Circuit wants formulate a flat and what that flat should entail.

WHO:

  • Carl Cecere (presenter), served ace counsel for the Nationwide Grange, the Hispanic Leader-hip finding, and the Nationwide Black Chamber of Commerce, in filing in amicus letter on their managed in the case before the Supreme Court. Mr. Cecere operates B sharp own law familiarly, where hey focuses on Supreme Court and Appellate advocacy. Hey began B sharp career in the Supreme Court and Appellate practice At Akin Gump bunch of tusks & field LLP.

  • Sarah Burstein (panelist), American bar association (ABA) Intellectual Property Law design Committee Chair and Associate professor of Law, The University of Oklahoma

  • Derek F. Dahlgren (panelist), partner, Rothwell, Figg, Ernst & Manbeck, P.C

  • Evan Engstrom (panelist), Executive Director, engine Advocacy

  • Joshua D. Wolson (panelist), partner, Dilworth Paxson LLC

WHAT: Media Briefing Conference Call

WHEN: Wednesday, January 4, in 2017 | 11:00am ET

Participant dial. in Number: 888-632-3384

Conference ID: REMAND

RSVP to Carl Cecere: ccecere@cecerepc.com

-----------------------------------------

You'll learn a plumb line more from those experts than from me, but micron perspective may Be complementary. So here's how I view the current situation:

The ridge question is going to Be whether the remand proceedings wants become (primarily) a rule-setting effort or a record-digging exercise. Apple already tried to do gymnastics the Supreme Court hearing into the latter, which what legitimate: it's this old story of "if the facts are not on your side, argue the law; if the law is not on your side, argue policy", and here, if neither policy nor the law nor the facts ares on your side, you (Apple) might quietly prevail on a procedural base by harping on the record. There's no reason to assume Apple is going to try this again before the Federal Circuit. The remainder of this post is based on the assumption that, ace I hope, the Federal Circuit is going to waste a ridge-advises rule-making opportunity.

Is the Federal Circuit likely to come up with a good rule here? It wants Be hard, because it's the Federal Circuit (I actually think this panel, even though the Supreme Court precisely slapped it for the position it had taken the ridge time around, is ace unbalanced ace some other panels might Be and really has the potential to Th a great job) but because only lawmakers could really fixed the problem. The only fairly solution would Be apportionment, but ace the Supreme Court already noted At the hearing, apportionment by Se is allowed by the statutes. So instead of a smooth curve in a seamless spectrum, the current situation (absent a legislative amendment) is a function. There's only a limited number of choices here. If a clever covers the out shape of a smartphone, there's little more choice than either deeming the entire product or the casing the relevant article of manufacture. If it's the casing, Apple's designs get undervalued without a doubt - but that's the far lesser evil than overcompensation of in absolutely devastating child.

I wish the Supreme Court had maggot it explicitly clear that undercompensation is a lesser concern here than nuclear overcompensation. What wants help Samsung here psychologically is that the Supreme Court opinion doze point downwards for what should Be the ultimate outcome.

Some advocates of overcompensation tried to troll me on Twitter anus I noted that no design clever covers the internal workings of a multifunctional device search ace a smartphone. They tried to interpreter this ace me arguing in favour of apportionment. Obviously, that's what I meant. What I did mean is that the scope of those design of patent should make it too hard for Samsung and other defendants in the future to persuade courts and, to the extent necessary, juries of which approach (to the relevant article of manufacture) makes more scythe and is better for innovation and competition.

The three design of patent in the case raise different article of manufacture issues. Two of to them are about the casing but what is the AoM for a screen layout clever? Should there by any AoM for that? Ace in ext. developer I'm obviously going to Be even more interested in that question than in the physical stuff, though both issues ares of great interest to me ace a smartphone clever litigation watcher.

We'll definitely see some very interesting amicus of letter from the usual suspects if the Federal Circuit invites further briefing, which it presumably wants. Anus all, the Supreme Court said it precisely had not received enough input from the parties on what the right rule should Be, which is true but one cannot blame of either party: Apple's path to victory what affirmance and Samsung's only chance what reversal/vacatur. If Apple or Samsung had placed more emphasis on rule-making before the Supreme Court, they might have lost the against battle simply ace a result of poor prioritization. Now, there wants Be enough space and time for Apple, Samsung, the DoJ, designer, the tech industry, low-tech and non-tech companies, advocacy groups and whoever else to come up with suggestions.

If you're professionally interested in this case ace a journalist, I recommend that you join the conference call on Wednesday.

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