Friday, April 10, 2015

The Google that has joined Via Licensing's LTE pool is the real Google--not the FRAND abuser

Yesterday's announcement that Google has agreed to make its LTE (4G) standard-essential patents, all or most of which previously belonged to Motorola, available through Via Licensing's LTE patent pool, is for all intents and purposes more meaningful than most settlements of patent disputes between industry players are. It means that Google is being Google again, and has distanced itself from the abusive conduct that gave rise to antitrust investigations in the U.S. (consent order) and Europe (decision, but no fine, which also looks like a compromise).

By "Google being Google again" I mean that the search giant and Android maker has given up on the notion that two wrongs (overwhelmingly meritless, at least impactless, patent assertions against Android on the one hand, and retaliatory abuse of FRAND-pledged standard-essential patents on the other hand) could make a right. Google temporarily used its SEPs in ways that ran counter to positions it was simultaneously taking on non-SEPs, even to the extent that Google, the parent company, submitted a public interest statement in an ITC proceeding that was amazingly inconsistent with what Motorola, the subsidiary, was saying in its own submission in connection with a parallel case. Also, Google's (ab)use of SEPs didn't really lend credibility to its positions on patent reform.

Now the "Don't Be Evil" company has apparently decided to become consistent again. In the LTE context Google is now aligned with companies that have never abused FRAND-pledged SEPs, some of which have even made significant efforts to advocate reasonable interpretations of FRAND. These are the other contributors to the Via Licensing LTE pool: AT&T, China Mobile, Clear Wireless, Deutsche Telekom, DTVG Licensing, Hewlett-Packard, KDDI, NTT DOCOMO, SK Telecom, Telecom Italia, Telefonica, and ZTE. Temporarily, Google's (Motorola's) FRAND positions were actually the same that some infamous SEP trolls and some failed businesses with an increasing or near-exclusive focus on patent licensing (and the privateers they feed with patents) tend to take.

This is the very Google that more than any other (IT) industry giant wants to make the world a better place through investments that the stock market doesn't reward in the short term but Google can afford, such as self-driving cars and "interventions that enable people to lead longer and healthier lives." More than any other large company I know, Google is truly about much more than just making money for its shareholders and other stakeholders. (Of course, this still doesn't give Google the right to violate antitrust rules in its core business, or to leverage excessive control over Android in anticompetitive ways.)

I find it hard to believe that the timing of the announcement--one day after an appellate hearing at which Google saw that it can't win the FRAND part of its Microsoft dispute, though it is winning the real war over Android royalties--is a coincidence. In that Microsoft v. Motorola case, Google's lawyers consistently argued that patent pool rates should not be used as an indicator of FRAND rates. Different standards (H.264 and WiFi) are at issue in that case, but still: Google wouldn't have wanted to undermine its anti-pool-rate argument. It certainly didn't want to give Microsoft's counsel the chance to mention its new position at the hearing, and if it had seen any realistic chance of Judge Robart's FRAND rate-setting opinion being overturned, it might have waited (possibly forever) with this move. Yes, this is speculative, but the connection is close and strong enough to support such a theory.

It's not clear whether Apple and Microsoft (which builds LTE devices as a result of the Nokia acquisition) will be able to benefit directly from Google's contribution to the Via Licensing LTE pool. With Apple, Google has a ceasefire in place, but no license deal (at least none that would have been announced). With Microsoft, it is still embroiled in litigation, though Microsoft hasn't brought any new offensive cases against Motorola in a while (at least none that would be discoverable).

Maybe Google's agreement with Via Licensing precludes Apple and Microsoft from licensing Motorola's LTE patents through that pool until comprehensive license agreements between those companies and Google are in place. In that case, Apple and Microsoft could still use the Via Licensing pool rates as pretty powerful evidence in any FRAND rate-setting dispute with Google.

Maybe Google doesn't even care if Apple and Microsoft license its LTE patents through that pool. Google could still assert older (3G) patents if necessary, as long as those haven't expired. And with the lack of success of Apple and Microsoft's patent assertions against Android devices so far, Google may not even be afraid and, therefore, may not feel it needs any leverage from LTE patents to counterbalance Apple and Microsoft's non-SEP enforcement. Apple started its enforcement against Android more than five years ago; Microsoft, more than four-and-a-half. After all this time, Google may be convinced that it doesn't need a good offense as its best defense because a defense-defense will always do the job to protect Android.

The main reason I used to criticize Google's position on patents so much was its inconsistency. It wanted to devalue non-SEPs while trying to gain undue leverage from SEPs. At first sight, one could also say that Apple and Microsoft are inconsistent because they want to bring SEP license fees down while exaggerating the value of non-SEPs. But FRAND-pledged SEPs are encumbered, and encumbrance is not a value enhancer. Consistency obviously depends on the particular arguments that are used and on whether any differences in value have a logical basis. For example, Apple is in my opinion being inconsistent by stressing its royalty base and "smallest saleable unit" point in connection with SEPs but arguing that even minor aspects of minor features (where the price of the smallest saleable unit, Android, is technically zero) make a substantial percentage of the entire value of a smartphone.

Overnight, Google has gone from "most inconsistent" to "most consistent" when it comes to patent licensing. This overnight change took years of litigation and a couple of antitrust investigations. Still it's great news, and I hope that some others, such as Apple, will soon match Google's level of consistency in this regard.

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Thursday, April 9, 2015

Appeals court not inclined to toss $14.5 million FRAND breach verdict against Google's Motorola

More than 4½ years after Microsoft sued Motorola for not renewing a license agreement (a renewal that would likely have been costly after Motorola stopped making Windows devices), Motorola still hasn't paid Microsoft a dime in patent royalties on its Android devices, and for now there's no reason to assume that Motorola will come under serious legal pressure in the near term to do so. What Microsoft may, however, receive before or around the 5th anniversary of the dispute is a check over $14.5 million--not in Android patent license fees, but in damages for Motorola's abuse of its (own) standard-essential patents. This would effectively increase Google's cost of acquiring Motorola by slightly more than 0.1%. This amount is certainly much less than whatever Google spent on legal fees related to Motorola's spats with Apple (where a ceasefire was agreed upon almost a year ago, with the exception of Google's continuing fight against the European rubberbanding patent) and Microsoft. I'm sure (though I don't know what Microsoft demanded from Motorola in 2010) it's also a tiny fraction of what Microsoft would have wanted Motorola to pay in royalties.

A Seattle jury's $14.5 million damages award for breach of the duty of good faith and fair dealing will likely become enforceable in a matter of months, given that the United States Court of Appeals for the Ninth Circuit appeared, at a hearing held yesterday, unlikely to grant Google's wish for a reversal or retrial. After a panel opinion, Google could theoretically ask for a rehearing and/or file a petition with the Supreme Court. The former would hardly help, and the latter wouldn't make sense for Google, which has other priorities than this matter. So, all going as expected, it will be "game over" for the FRAND breach story soon.

As a part-time intercontinental litigation watcher who prefers not to travel I appreciate the Ninth Circuit's second-to-none degree of transparency. A video recording of the appellate hearing is available on YouTube (this post continues below the video):

Google previously appealed a decision in this case, from the Western District of Washington, to the Ninth Circuit: a temporary-restraining-order-turned-preliminary-injunction that barred Motorola from enforcing a couple of German patent injunctions. Google lost in 2012 and really, really didn't want to come back. But the Federal Circuit rejected Google's attempt at appellate forum-shopping, and yesterday Motorola's counsel, Quinn Emanuel's Kathleen Sullivan, had to face the very same panel as last time: Chief Judge Thomas, Senior (literally--he's 86) Circuit Judge Wallace, and the author of the 2012 opinion, Circuit Judge Berzon. The latter played by far the most active role on yesterday's bench, suggesting to me that she'll also write the next opinion.

None of the judges expressed any opinion on the (un)reasonableness of Motorola's 2010 royalty demand from Microsoft, which technically amounted to $4 billion a year. The focus was on the procedures that led to the jury trial and the verdict. But I can't imagine that the judges wouldn't consider it ridiculous, and there's no indication that they have a problem with District Judge Robart's FRAND rate-setting opinion, which came down to about one-twentieth of a percent of Motorola's original demand.

Google complains that the discrepancy between Motorola's initial demand (they still prefer to describe it as an "offer letter" and say Microsoft also rejects 99% of all initial licensing offers it gets) and Judge Robart's rate, which was presented to the jury as law of the case (so Google was unable to challenge the underlying rationale), was tantamount to a directed verdict. My interpretation is that the judges were telling Google between the lines: "It's your problem that the only conclusion at which the jury could arrive based on these numbers was unfavorable to you. That still doesn't mean Judge Robart treated you unfairly in the process."

I'm not surprised about that. However, I didn't expect the following: throughout the Seattle proceedings, Motorola had tried to stall and derail. It was against pretty much everything Judge Robart did, except when he denied some Microsoft motions. But the appeals court apparently can't find a clear and timely objection by Motorola to the course of events that resulted in a jury verdict against the background described before. The case was bifurcated (FRAND rate first, breach damages later), and Google now says that any consent was only limited to the possibility of the court creating an actual license agreement, not to an isolated rate-setting opinion (since there are various non-monetary terms that go into a full-fledged license agreement) that was subsequently used as law of the case in a jury trial on damages.

The judges indicated to Google's counsel that they disagreed with her, and nothing she said appeared to change that. By contrast, the message between the lines to Microsoft's counsel, Sidley Austin's Carter Phillips, was like "we agree with you and just want to be sure that we didn't miss anything important." You can see on the video above how comfortable he was with the overall situation.

Mr. Phillips stressed that the way Judge Robart introduced the rate-setting opinion into the jury trial and instructed the jury on breach was as favorable to Motorola as it could have been under the circumstances (one circumstance being that the rate determination was law of the case). I think that's right. Judge Robart didn't disadvantage Motorola, and he didn't do some things he could have done, such as granting Microsoft summary judgment on breach. This made it harder, or at least more time-consuming, for Microsoft to prevail. But it also upped the ante for Google's appeal, which became very clear yesterday.

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Tuesday, March 31, 2015

In post-Alice world, weaker software copyright would harm the U.S. economy: Oracle v. Google

The three branches of the U.S. government--legislative, executive, judiciary--have all become aware in recent years of the negative effects of overprotection of software-related intellectual property. When too much leverage is given to right holders (especially those whose patents are dubious), IP becomes a substitute for innovation, and a threat to true innovators. All three branches have taken initiatives to curb (software) patent abuse. The Supreme Court doesn't take initiatives per se because it just interprets the law, but it has heard more patent cases recently than in the past and almost all of the time its rulings have benefited defendants. This time around it appears that a Republican-led Congress will get things done; the Obama Administration, the future leader of Senate Democrats (Sen. Schumer from New York), Sen. McCaskill from Missouri and some other Democratic politicians will gladly support meaningful reform.

Concerns will continue to be expressed by certain stakeholders and their political allies. None of the reform measures discussed in Congress appears inherently overreaching to me. However, I want to make a point here that I believe the decision makers in the White House and the Department of Justice (and maybe even the Supreme Court) might consider:

With all that is going on in connection with software patents, this is the worst time one could pick for destabilizing the software copyright system. The good fight against overprotection, coupled with unnecessary uncertainty surrounding the IP regime that even the reasonable ones among the critics of software patentability support, could result in underprotection and, even before any decision is reached or (if a SCOTUS ruling raised even half as many questions as the Alice decision has) its effects become clearer, discourage investment in software innovation.

Sometime this spring (presumably), the Solicitor General of the United States, Donald Verrilli, will respond to the Supreme Court's request for input on whether Google's petition for a Supreme Court review of Oracle's appellate victory raises a question of law that it is in the public interest to address. With a little help from long-standing friends who orchestrated an amicus brief campaign, Google has apparently been able to position its petition as one that is not necessarily irrelevant, yet it has not convinced the court that this is a must-hear issue.

Different commentators have taken different perspectives on how much Google has accomplished so far, and -- surprise, surprise -- their opinions (including the one I expressed in January) are all consistent with who they believe to be right on the merits. The merits, of course, are not really a factor for the Supreme Court to consider at this stage. It's all about "to hear or not to hear."

We just don't know two very important things:

  1. To what extent has the Supreme Court analyzed Google's legal argument so far? (Circuit split etc.)

  2. What position will the government take? (The Supreme Court won't necessarily follow it anyway, but it wouldn't have asked if it didn't care.)

One can only speculate about the first question and make a more or less educated guess about the second point.

Everybody who is interested in software IP issues knows that non-technical people face particular difficulties in figuring them out. The Supreme Court can do this if necessary. But it doesn't have to make the related effort at the very beginning. So far it appears to feel that Google's (and its friends') claim that this is a key issue isn't facially implausible (a copyright expert has explained very well why there is no circuit split but Google can obviously afford lawyers who will make pretty much anything appear plausible at first sight). So the court decided to ask the administration for input to see whether those amici are really representative of the software industry (which they are not, but with Oracle's supporters having remained silent after the Federal Circuit ruling, that's easier for industry insiders than for a court to see).

The less time the Supreme Court spent time analyzing the details and intricacies of the underlying issue (because the amicus briefs suggested there could be an industry-wide concern), the less meaningful Google's achievement is. Considering how many cert petitions the SCOTUS has to decide on at any given point in time, one may or (as I do) may not believe that an incredibly deep analysis of such questions as whether declaring code is more or less functional than other program code has occurred so far.

As for the second question, I would be thoroughly surprised if the Department of Justice determined that Google's agenda in this context is in the interest of the United States. A week and a half ago I quoted from and linked to a Wall Street Journal article that highlighted the particularly close and cordial relationship between the Obama Administration and Google. But even friends can't ask for all sorts of favors. I absolutely cannot imagine that the DoJ would support Google's petition in the Android-Java copyright case. Whether one focuses on the broad scope of the petition (Google wants the SCOTUS to hold lots of software code, not just API-related declaring code, uncopyrightable) or on the narrower business objective of weakening copyright in API-related declaring code: what Google wants is terrible for the U.S. software industry, and bad for the U.S. economy at large given that software is such a key driver of growth.

Eight of the ten largest software companies according to Wikipedia are U.S. corporations. The only non-U.S. company among the top nine, SAP, is formally headquartered in Germany but has Silicon Valley operations that go far beond the role of a local subsidiary of the "sales, marketing and support" kind.

A different list, which I found on Investopedia, defines "software company" more broadly and includes, for example, IBM and Salesforce.com. On that top ten list, SAP is the only non-U.S. corporation.

Starting on page 4 of this PricewaterhouseCoopers publication, there's a list of the global 100 software leaders; an overwhelming majority of the companies on that list are from the U.S.

U.S. companies stand the most to lose from what Google is up to in the Oracle case, even if one focused only on APIs (which Google's proposed cert question doesn't). Who owns valuable APIs? It's hard to think of any non-U.S. company other than SAP that does. Of course, there are some key interfaces that do not belong to U.S. companies, but those are available on open source (or equivalent) terms, so everyone in the world is equally free to use them.

Generally, industry (segment) leaders are most likely to own valuable APIs. As Thomas Young has recently explained on his Copyright Culture blog, "[c]opyright law doctrines, such as scènes à faire, appear well suited to the task by delineating which expressions are copyrightable at the time of creation" but Google's proposed "focus on ex-post considerations, such as user familiarity, [would] undermine copyright's basic principles and threaten to penalize a copyright holder for creating a successful work that has achieved market saturation." The U.S. government cannot possibly want to penalize American companies for having succeeded in a key growth industry.

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Friday, March 27, 2015

Administrative Council offers 'formal recognition of the trade unions within the EPO's legal framework'

My hopes for some progress resulting from this week's meeting of the Administrative Council (AC) of the European Patent Organisation (EPOrg), the multinational body that runs the European Patent Office (EPO), haven't been exceeded by much, but I'm not disappointed either. Late on Thursday, a joint statement by the Chairman of the AC (Jesper Kongstad) and the EPO president (Benoît Battistelli) was published.

They promise to "launch new initiatives to restore social peace" and call for a "renewed social dialogue." The statement gets slightly more specific in that the first step could be "the formal recognition of the trade unions within the EPO's legal framework", and they "invite the trade unions of the EPO to a dedicated kick off meeting on 22 April 2015."

I believe SUEPO as a trade union speaks for the EPO staff at large. There's also an Association of the Members of the Boards of Appeal (AMBA) with a new website. It appears to me that AMBA's focus is on specifically judicial issues.

It could be that the EPO's leadership is pursuing a "divide and conquer" strategy so it doesn't have to face a united front of all EPO staff. If that is indeed the strategy, then it remains to be seen whether it will work out.

The announcement suggests that the EPO must now take some action based on the legal framework it has in place or that some amendment to the EPO's rules could be needed. Either way, yesterday's announcement is a diplomatic gesture and everything depends now on how this will be fleshed out. In the most negative scenario, the stakeholders would fail to agree on the terms of "formal recognition" of the trade unions. In the most optimistic one, there would be a new tone and a sense of partnership, which could lead to significant improvement.

Originally, president Battistelli declared himself unwilling to comply with a Dutch court order after the Dutch government ensured the ruling would not be enforced. The appeals court in The Hague had told the EPO to comply with certain rules that are fundamental human rights of employees of any organization in the civilized world. Enforceable or not, that decision has apparently shown to some of the governments of EPOrg member states that something needed to be done. The announcement of a plan to work toward formal recognition of trade unions suggests that the EPO(rg) at least doesn't want to overtly violate workers' rights and hide behind diplomatic immunity, which is always a last resort. So they say they're going to do something that happened in major EPOrg member states like the UK and Germany almost 150 years ago: to formally recognize trade unions. (Granted, EPO employees have always had the right to strike, so the current rules aren't medieval in all respects, but with recent changes that would require a strike to be approved by the president, the right to strike had also been effectively vitiated.)

That said, progress is progress. Better late than never.

There are still some important questions that need an answer. Judicial independence. Checks and balances. Conflicts of interest of AC members. Patent quality. But Rome wasn't built in a day, and staff input can (we'll see whether it actually will) help to arrive at better decisions in all those areas.

[Update] SUEPO has meanwhile reacted with an announcement of another demonstration (details will be communicated next month) and has expressed what I interpret as skepticism regarding the sincerity of the "social dialog" initative:

15 03 27 SUEPO Comments by Florian Mueller

[/Update]

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Thursday, March 26, 2015

European Patent Office revokes rubberbanding patent: Google and its partners win, Apple appeals

Two weeks ago I highlighted some smartphone patent cases that are still ongoing but have almost been forgotten by the public, including, among others, Google's continuing efforts to have Apple's European rubberbanding (overscroll bounce patent, EP 2126678, revoked. Originally, Samsung and HTC were also pushing for the same result, but due to HTC's worldwide settlement and Samsung's mutual ex-U.S. armistice with Apple, only Google (formally through Motorola Mobility) continued to participate in the proceedings. Still, Samsung and HTC's filings remained on the docket and relevant to the decision, so the time and money they had spent wasn't lost at all.

Last year, the EPO's Opposition Division had already communicated its preliminary position, which was that this patent is entirely invalid in Europe. The two-day hearing was held two weeks ago, with Google's lawyers from Quinn Emanuel Germany appearing on Motorola's behalf. At the end of the hearing, the decision to revoke this patent and to reject all of Apple's amendments (including any that were introduced in the meantime) was announced. This decision has now been made official on the EPO's website:

"The European Patent is revoked because, account being taken of the amendments made by the patent proprietor during opposition proceedings, the patent and the invention to which it relates were found not to meet the requirements of the [European Patent Convention] (Art. 101(3)(b) EPC)."

In mid-2013, the United States Patent and Trademark Office had upheld three claims of that patent, including one Apple asserted against Samsung in the 2012 trial (and the related 2013 retrial).

Apple still hasn't given up on its European rubberbanding patent. This is an iconic user interface feature that Apple clearly wouldn't want its competitors to implement in Europe. Apple's lawyers submitted a notice of appeal to the EPO on March 19, days after the hearing and prior to receiving the written decision that will state the reasons in detail soon. As a result, a Technical Board of Appeal will at some point have to review the Opposition Division's decision.

I've seen various Apple patents go down in Europe, but Apple hasn't been able to defend any European patent Android was actually found to infringe, not counting (of course) patents that were upheld in formal terms only because, after a negative decision that was appealed, settlements put an end to the proceedings. Depending on what kind of procedure we're talking about and in which jurisdiction, a settlement can salvage a patent only because of the withdrawal of a party, regardless of prior negative decisions on the merits.

If one brings a challenge to a European patent within nine months of publication of the grant, the EPO can still look at an opposition and, as in this case, revoke the patent with respect to al European countries in which it was registered. Thereafter, European patents have to be challenged on a country-by-country basis. That's why, for example, Apple's slide-to-unlock patent was held invalid by ten different judges in three different countries.

Losing a patent like slide-to-unlock or rubberbanding in Europe is a disappointment for Apple, but it has no bottom-line impact, at least not in the short term (and probably not even in the mid to long term, though it does make it harder for Apple to position itself as a breakthrough innovator and its competitors (especially those whose devices run on Android) as copycats.

To the extent that U.S. judges (especially at the Federal Circuit, the center of gravity of Apple v. Samsung at this stage) hear about such rulings, bad news for Apple's European patents may also, not as the most important factor but as another piece of the puzzle, dissuade American jurists from buying Apple's innovator v. copycat story. For someone who argues that courts need to protect its groundbreaking innovation, Apple's patent assertions haven't had a whole lot of merit, though this is an industry-wide issue: smartphone patent assertions usually go nowhere. The U.S. is not the only jurisdiction in which Apple can win at all, but it's the only one in which can win anything meaningful. Substantive patent law has not been harmonized between the U.S. and Europe, but cross-jurisdictional differences will likely play less of a role in the future given the impact of the Supreme Court's Alice decision (which has turned out bigger than I would have thought, though I still think some people blow it out of proportion).

Again, none of this should have Apple investors or its loyal fans concerned. Steve Jobs thought patent litigation would help to keep Android at bay, and we all know by now that it won't--still Apple is doing fantastically well and will continue to do so for years to come.

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Tuesday, March 24, 2015

This week's EPO Administrative Council meeting: revolution unlikely, progress badly needed

The Administrative Council of the European Patent Organisation, which operates the European Patent Office, still has to decide what to do about the (de facto) suspension of an internal judge (a member of a board of appeal, to be precise), an incident that has raised concerns from various sides, including high-profile judges and professional organizations. This is not the only rule-of-law issue the EPO(rg) faces: a ruling by a Dutch appeals court, even though it won't be enforced (at least for now), found the EPO's leadership in conflict with some fundamental human rights. This, in turn, has ever more politicians concerned.

Tomorrow and the day after (Wednesday and Thursday), the Administrative Council (basically the "shareholder assembly") of the EPO will meet. The IPKat blog (or at least one of its authors) has written an open letter to AC members, and I agree with its substance.

The AC will do all that it can to create the appearance of "business as usual," as it tried in December. It will focus on technicalities, which often come in handy as a smokescreen. I doubt that the EPO's president, Benoît Battistelli, will lose any sleep these days over fears he might be ousted. Still, progress is needed (badly, in fact) and there is at least hope (as I also sense in the IP community) that there could be at least some positive development.

A serious shake-up, which is probably inevitable in the mid to long term, would require different political dynamics. Turkeys don't vote for Christmas unless they are forced to. The national government delegates on the AC have reasons for backing Mr. Battistelli's controversial decisions and plans. The EPO is, indirectly, a cash cow for national patent offices (through renewal fees). Germany alone receives about 140 million euros per year in annual renewal fees for the German parts of patents granted by the EPO. National patent offices are given lucrative opportunities in the form of cooperation projects with the EPO, which the president controls. And AC members have frequently been (and some current AC members are rumored to be) given high-level posts at the EPO, where they usually get a much bigger paycheck than at home. More than enough reasons to favor stability over everything else.

So what can get those turkeys to vote for Christmas? Their bosses--the national ministers in charge--would have to order them to vote in certain ways, or there would have to be dynamics that threaten to have that effect (and possibly even worse effects for those who failed to exercise sufficient and responsible oversight). Unfortunately, the ministers have many things on their plate and they, too, want the EPO revenue stream (though they're unlikely to be interested in a VP post at the Office for themselves). But to a far greater extent than the public servants, the ministers will want to avoid bad publicity and critical parliamentary questions.

These past few months have apparently been the worst period in the EPO's history as far as bad publicity and critical parliamentary questions are concerned, apart from occasional debates over patents "on life." The news section of the EPO staff union's website contains links to various articles and official questions asked by members of the European Parliament (such as this document) as well as national parliaments.

For some more aggressive criticism, I recommend this website, which contains fliers written by anonymous EPO employees (thus not affiliated with SUEPO, the EPO staff union).

SUEPO will hold a demonstration tomorrow in Munich in order to draw additional attention to the issues (this post continues below the document):

15 03 23 SUEPO Flier by Florian Mueller

In a recent interview, Mr. Battistelli described the combination of the approach of French unions with German efficiency as a "dangerous cocktail." It's an interesting way to look at this, but those nationalities are found in many other international organizations (European Union, Council of Europe, NATO, and so many others), yet the EPO's labor dispute appears unique. I attribute this in no small part to the fact that some of the other large organizations actually have subscribed to human rights charters. If the European Patent Organisation joined the Council of Europe, as a SUEPO activist demanded at a demonstration I watched last year, EPO employees could take certain matters to the European Court of Human Rights (ECHR). Under the current circumstances, when a court like the one in the Netherlands confirms that even EPO employees have certain human rights, the EPO can use diplomatic immunity as a shield.

It will be interesting to see what comes out of this week's council meeting. Also, I plan to talk about the EPO's fees (the current ones as well as the proposed ones for the single European patent) soon in light of industry concern.

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Saturday, March 21, 2015

Revival of Oracle patent claims is another reason for Google to consider Java license agreement

If one applies "If you can't beat them, join them" to intellectual property rights (IPRs), the formula reads like this: "If you can't beat them and still need them, license them."

When Google's Android team decided to use Oracle's (at the time, Sun Microsystems') Java technology without a license, it knew pretty well that this could spell trouble. Andy Rubin himself wrote in an internal email that "[doing] Java anyway" would make it necessary to "defend [that] decision, perhaps making enemies along the way." I wouldn't consider parties to every legal dispute enemies, and in my view Oracle and Google could and should be great partners. But adversaries they are. Until they settle, that is.

More than 4 1/2 years ago, Oracle (after acquiring Sun Microsystems) sued Google for alleged patent and copyright infringement. Initially, the public perception (including mine) was that the seven patents in the case were more important than the copyright part. The initial complaint stated a set of specific patents and we were all able to look at them, while the copyright claim was initially unspecified (Oracle even had to amend its complaint for that reason). But as the dispute progressed, Oracle's lawyers placed an ever clearer emphasis on the copyright part of the case. I have no idea whether this had also been the priority from the get-go, but even though it might have been misperceived as a "throw in the kitchen sink" claim, I'm quite sure Oracle knew all along that the copyright claim all by itself had the potential to convince Google of the benefits of a license agreement.

In parallel to the district court case, Google challenged all of Oracle's patents-in-suit through reexamination requests filed with the United States Patent and Trademark Office. Depending on the rules applicable to each patent, Google requested either an inter partes (where the requester remains formally involved throughout the process) or an ex parte (where the requester triggers the proceedings without becoming a party to them) reexamination. Then a variety of first Office actions (which are sometimes just meant to challenge the patentee without necessarily indicating that a patent is doomed) and of "final" (but, in reality, far from final) decisions came down. It looked like Oracle's Java patents were falling apart. The district judge was unwilling to take patent claims to trial as long as the USPTO deemed those claims invalid. Oracle took only two patents to trial (on which it didn't prevail in district court and which it didn't even care to pursue on appeal) and dropped five with prejudice in order to save time.

Even while the trial was ongoing, one of the dropped patents rose like Phoenix from the ashes, but the judge said this reversal came too late for the patent to be reasserted.

As I explained then, this still doesn't mean Google would never have to worry about that patent: even if one assumed for the sake of the argument that Judge Alsup succeeded in getting Oracle to drop certain patents without any exception as far as Google itself is concerned, Android device makers might still be liable for infringing that patent with their devices.

The same holds true for any other patents that Oracle could salvage, and one other patent is now on the road to recovery. Yesterday (Friday), the United States Court of Appeals for the Federal Circuit handed down a ruling (PDF) on Oracle's appeal of the USPTO's rejection (affirmed in November 2013 by a Patent Trial and Appeal Board, basically a USPTO-internal court) of various claims of U.S. Patent No. 6,910,205 on "interpreting functions utilizing a hybrid of virtual and native machine instructions." While claims 1 and 8 remain invalidated, the Federal Circuit has held that the USPTO (to be more precise, the PTAB) had misconstrued a key claim term (which relates to overwriting data) and therefore remands for a new decision with respect to the claims for which the interpretation of that term is outcome-determinative: claims 2–4, 15, 16, and 18–21.

Like the aforementioned "Phoenix" patent, this one has a 1997 priority date, so it won't expire before the year after next. Theoretically there would still be time (after the USPTO reaches a new decision) for Oracle to seek injunctive relief (such as an ITC import ban) over it--but in more practical terms, any assertion would likely be about damages. This is actually still more hypothetical than anything else. I guess the parties will continue to focus their litigation efforts on the copyright part of the case and just sort out the patent-related aspect as one of various items whenever they settle. In settlement negotiations all options of both litigants must obviously be considered.

For Oracle (represented by a Morrison & Foerster team led by Marc Hearron), yesterday's ruling is another appellate victory over Google that demonstrates its determination to defend its Java IP. No matter how many years it may take.

Many patents asserted in the major smartphone patent disputes have faced uphill battles when their validity was challenged by defendants. It happened to those Java patents as well. But the longer it takes, the clearer it is that some "rejections" of claims were wrong.

I plan to write about the copyright part of Oracle v. Google again soon. In January, the Supreme Court asked the Obama Administration for input. After the SCOTUS receives the Administration's brief, it will decide on whether to hear the case (if it doesn't, or if it does grant certiorari but later affirms the Federal Circuit, Oracle will have prevailed definitively on copyrightability and the case will go back to district court for "fair use" proceedings).

Just yesterday, the Wall Street Journal described Google as "one of the White House's closest corporate allies." The Journal went on to note that "Google was the second-largest corporate source of campaign donations to President Barack Obama's re-election effort" and that "Google executives have visited the White House scores of times since Mr. Obama has been in office, according to visitor logs." But Google is pretty much isolated in the U.S. economy (with the greatest respect for the likes of Oracle foe HP and Java free-rider Red Hat). The software industry is overwhelmingly on Oracle's side.

In order to support Google here, the Department of Justice would have to take outlier legal positions. As the Copyright Alliance's TerryHart wrote, "Despite legal gymnastics, Google can't land split in Oracle cert petition." Not only would the DoJ have to subscribe to daring legal theories to do Google a favor (which I'm absolutely not suggesting that it even intends to do) but it would also have to act against broader U.S. interests. By and large, the world's most valuable application programming interfaces (APIs) belong to U.S. high-tech companies or they belong to no one (because they're available on open source terms). Again, I'm going to talk about that soon.

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