Saturday, February 16, 2019

European Commission removes offensive blog post that called critics of copyright bill a "mob"

[Update] Please sign the related Change.org petition demanding an apology. [/Update]

Earlier today I shared my views on what needs to improve with respect to strategy and execution in order to prevent the EU's "copywrong" bill from being adopted. Later I became aware, through one of German Pirate Party MEP Julia Reda's tweets, of a European Commission blog post on Medium.com with a headline insulting all critics (even including law professors, by the way) of the proposed EU Directive on Copyright in the Digital Single Market:

"The Copyright Directive: how the mob was told to save the dragon and slay the knight" (emphasis added)

Here's a screenshot (from an archive; this post continues below the image):

Many people were outraged, and I called this a "new low" for political discourse in the EU. It's simply inappropriate and unacceptable for a government agency to insult citizens concerned about a legislative proposal (many of whom foot the bill of the Brussels gravy train with their taxes). If there had been a violent demonstration breaking the windows of the Berlaymont building, the term "mob" might have been justified. But no such thing happened in connection with the EU Copyright Directive.

We're just talking about citizens expressing their views on the Internet and participating in peaceful demonstrations. I actually think the opponents of that ill-conceived, misguided bill are too nice for their own good. Mudslinging and naming & shaming are not the name of the game, but sometimes it's hard to win entirely without them. Apart from some Internet memes involving one MEP (Axel Voss), they haven't really attacked some people as hard as they could have and in my view should have. My brothers-in-arms in the fight against the EU software patent directive, the FFII activists, maintained a wiki on which they documented the lies of countless politicians. I remember how some MEPs were really upset, especially when they realized that those unfavorable wiki pages were among the very first Google search results for their names. I'm quite sure one could research and publish a lot more information about longstanding relationships of numerous MEPs with certain media companies. And even if one did that, citizens would still be citizens, voters would still be voters, and taxpayers would still be taxpayers--not a "mob" unless there's violence involved, or at an absolute minimum, insults that can't be justified with political disagreement.

It's something else when President Trump takes to Twitter in his outspoken way. He's the President, and he gets attacked at a very personal level all the time. Also, he's already campaigning for reelection. But imagine the outcry you'd hear in the U.S. if the DOJ referred to dissidents in an IP context as a "mob!"

The EU Commission's blog post was an embarrassment, and the attempted retraction is ridiculous. If the Commission had officially apologized, then it would have been a regrettable--but rectified--mistake. But this here is as dishonest as it is deficient (click on the screenshot to enlarge; this post continues below the image):

I take issue with that retraction for two reasons:

  • It's an outright lie that the blog post was "understood in a way that doesn't reflect the Commission's position." They just blame the recipients of the post. But I showed you the headline before. What can be misunderstood about "how the mob was told to save the dragon and slay the knight" (emphasis added)? There's simply no plausible alternative explanation for whom they meant by "the mob" other than us dissidents.

  • The URL still contains the insult (as you can also see by enlarging the screenshot further above):

    https://medium.com/@EuropeanCommission/the-copyright-directive-how-the-mob-was-told-to-save-the-dragon-and-slay-the-knight-b35876008f16

First they said we (including the law professors among us) just didn't understand the effects the proposed piece of legislation would have if adopted. Now they say we just didn't understand an unambiguous headline.

The body of the deleted Medium blog post (still archived here, at least for the time being) wasn't a whole lot better--though more civilized--than the headline. For an example, they point to the (aggregate) trillion-dollar market cap of Silicon Valley giants. I'm dividing my time between California and Germany this year, and at a Silicon Valley breakfast meeting an executive (of a non-party to the disputes I comment on) told me that in his own experience, based on meetings with Commission officials in Brussels, the problem is that there's a lot of envy of Silicon Valley. He noted that EU officials appear to be more interested in how they can potentially weaken those companies than in how something similar could develop in Europe. The removed blog post validated that observation.

It's a dangerous obsession. Decisions and initiatives resulting from the aforementioned mindset won't strengthen the European economy on the bottom line, but they will harm European consumers. In some cases, the unintended consequence could even be that misguided legislation and regulation strengthens a company like Google. For an example, the bargaining power of news publishers will be quite limited as they need traffic, so Article 11 will likely be counterproductive and only serve to cement Google's news monopoly.

Even without the "mob" insult, the metaphor of a dragon (meaning Facebook and Google) versus a knight missed the point. This is not the black-and-white world of fairy tales. Yes, it's important to keep an eye on what such powerful players are doing. But no, if something is intended to weaken them, it won't necessarily make the world a better place. It takes more than that.

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EU Copyright Directive: rejection of entire bill or of Article 13 only realistic options for opponents of idiocy

I'm a copyright hardliner regarding the scope of copyrightable works, a reasonably narrow exception for fair use, and remedies. I can say so without fear of contradiction from those who read my postings on copyright on this blog, particularly on Oracle v. Google, or who debated the Blizzard v. bnetd DMCA case with me back in the day. Copyright has been the basis of my livelihood ever since I started writing articles for computer magazines first, then computer books, while in high school. Meanwhile I've spent a lot of time and money developing software, and I've written tens of thousands of trivia questions (even thousands in recent years).

It says something about the utter lunacy that is the EU's proposed Directive on Copyright in the Digital Single Market ("EU Copyright Directive") when a staunchly pro-copyright blogger and creator of copyrightable works like me opposes it--obviously not every single word of it, but, at a minimum, Articles 11 ("link tax") and 13 ("upload filter"). The only other occasion on which I felt like this involved the EU as well: the CJEU's outrageous link liability decision.

The purpose of this post is to provide some unsolicited advice to the companies, industry bodies, NGOs and activist groups thinking about their strategy in a situation in which there's every reason to assume, based on the information available, that the "trilogue" (EU-style backroom negotiations between Commission, Council (= Member States), and Parliament) resulted in a very bad deal.

In 2005 and 2007, I emerged victorious from two very similar situations in the EU. I'm not sure anyone presently campaigning against the insane parts of the EU Copyright Directive can claim to have prevailed under such circumstances even once. So here's the experience from which I'm speaking, and I hope those war stories will encourage those in the trenches and serve as instructive examples. But after the war stories, I'll make some recommendations (based on this experience) that are specific to the EU Copyright Directive. So, first the old stories:

  • In 2004 and 2005, I ran a campaign named NoSoftwarePatents against the proposed EU Directive on the Patentability of Computer-Implemented Inventions ("Software Patents Directive"). I was not the founder of that movement: Hartmut Pilch was. But my campaign got significant support from small and medium-sized U.S. and European companies, provided content in 17 European languages, and I advocated a "restart" motion (which the Parliament adopted and the Commission ignored) as well as, at a time when even our political allies were highly skeptical, outright rejection (without conciliation).

    For the first time in EU history (and possibly still the only time to date), the European Parliament threw out a bill at the second-reading stage, where it normally either adopts the Member States' position or goes into conciliation with the other institutions. This event was significant enough that the Economist Group handed me the Campaigner of the Year award (which had gone to a pope three years earlier and went to Governor Schwarzenegger two years later), though Bono was another nominee, and then-outgoing European Parliament President Josep Borrell mentioned it as one of the most significant events in the Parliament's history. It was widely seen as a move that strengthened the Parliament, especially since the hurdle is high (you need a majority of the members, but in that parliament you always have many absentees).

  • In 2007, the European Commission was preparing a White Paper on Sports. Helping my friends at Real Madrid, the world's most famous and most popular sports team, became the only non-IT project in my career. The problem was that left-wingers and conservatives in name only formed an unholy alliance with corrupt association officials and FC Bayern Munich (which just sought to harm rivals to have better chances of winning the most important title for club teams, the Champions League). They were trying to pressure the EU to turn competition law on its head and authorize an extreme case of tying that would have forced my client, but also our informal allies (on this issue) at FC Barcelona and AC Milan, to submit to a "collective selling" (of broadcasting rights) system that would have cost my client roughly 100 million euros per year (the amount they later paid for the transfer of Cristiano Ronaldo).

    I wasn't just a "lobbyist," but authored a 41-page paper that was an informal preemptive antitrust complaint with the Commission. It was the first time I made a FRAND argument.

    Due to delays on my client's side (soccer clubs are a bit chaotic and not too strategic), we missed the opportunity to influence the European Parliament's four committee votes on a resolution that was meant to influence the Commission. The committee votes had gone against us, with only JURI (Legal Affairs) having been close to reasonable and the other three taking ideological positions. It was pure socialism, but with support from the nominally conservative European People's Party.

    While I was comfortable with the Commission officials in charge at the time being far from pursuing a radical agenda, it was critical to show to the ultimate decision-makers that there was no parliamentary majority for radical proposals. A pro-Brexit UK conservative (then an MEP, now an MP), Chris Heaton-Harris, was less concerned about substance than about subsidiarity: he didn't want the EU to impose sports rules on national associations and leagues. During our first meeting, Chris signed a proposed deleting amendment: we just took aim at the one passage of the proposed resolution that was trying to build a (fake) pro-competitive justification for tying a team's participation in the Champions League to socialist redistribution in a national league.

    One of Chris's assistants and I immediately started collecting signatures from MEPs and reached the quorum (40 or so) only minutes before the deadline. I still remember us running (well, it was sports policy) down the corridors of the Parliament to the "Tabling Office" where you present bills and amendments, and we were a few minutes late, but the officials were generous. Then came the plenary vote. What continued to be a huge issue: the Parliament's rapporteur, Ivo Belet, was radically against us, but a member of the largest group in the Parliament, the aforementioned EPP, and parties rarely go against their own rapporteur. We narrowly won the EPP-internal vote, which shocked Belet, but when our deleting amendment came to the vote, he gave a thumbs-down sign, which could still have influenced some people. Nevertheless we secured a majority consisting of those preferring subsidiarity (obviously also including my UKIP friends and ODS from the Czech Republic), politicians interested in sane competition policy, and supporters of the wildly popular teams in my camp.

Apart from those two situations, I only got involved with one other "lobbying" effort: the 2006 resolution on EPLA, a predecessor to the Unified Patent Court (UPC). The outcome there was mixed, but the objective was primarily to delay that process (and as of today, there still is no European patent judiciary). At an EPLA conference in London in the summer of 2006, a Commission director said that "generations of students [would] be taught the story of [our anti-software-patent] campaign as an example of a perfect political campaign."

There still is a chance to defeat the craziest aspects of the EU Copyright Directive, but it will take an extremely forceful and focused push. It appears that things went wrong last time the Parliament decided. Now there's only one last chance, and besides the advice you could find between the lines of my summary of how I triumphed over EU idiocies a long time ago, I have some recommendations specific to the EU copyright situation:

  1. Make an institutional argument. In connection with the "restart" motion for the software patents directive (which paved the way for outright rejection as MEPs positioned it as retribution for the Commission's decision not to make a new proposal), the FFII's activists (all of them very idealistic) argued what's "right" while my position paper focused to a greater extent on what would make the Parliament "strong." It was like a forking situation in open source where we tried both, but when they showed both texts to MEPs, everyone preferred mine.

  2. Make a votes-focused argument. There are only two currencies in politics: votes and money (and money is often just a means to secure votes, though sometimes it's an end in its own right, especially in the EP, where numerous MEPs are on corporate payrolls). Tell MEPs (many of whom are seeking reelection this year) that it's the smartest thing for them to vote either the whole bill or at least Article 13 down just so no voters--especially young voters and, generally, Internet users--will be angry. More than at any other point in time, the political establishment fears that EU-skeptical parties may actually form the strongest bloc in the EP after this year's election. You must leverage those fears and sell them on killing the bill so they keep their seats! This will be their last major vote before the election.

  3. Focus on a simple message and demand for which there can be a broad consensus. I would ask MEPs to reject the entire bill because it's the clearest message (then the Commission will have to go back to the drawing board and a new EP, with many EU skeptics, will give them an even harder time) or, if they're hesitant to do what actually made sense in 2005 for the software patents bill, they should delete Article 13. The latter may be more achievable.

    Apparently, some modification was made to Article 11 ("link tax") that may make it more acceptable to Google. And ultimately, Article 11 directly impacts only Google. I absolutely agree with critics of Article 11, such as Berkeley professor Pamela Samuelson (here's a tax-free link to one of her writings on this issue). Article 11 is counterproductive and plain stupid. But if you now want to get the majority you failed to get last time, you need a simpler, clearer, more focused and more powerful message! Your attitude toward Article 11 should be: "This, too, shall pass." You can try to get it repealed after it's failed.

    Article 13 is the much better cause for campaigning purposes. It affects user-generated content (UGC), which is extremely important. Case in point, even my trivia app will sooner or later get UGC, and some other trivia apps already rely on it.

    With respect to Article 13, a strong case can be made for consumer harm as well as for this further weakening Europe. Most politicians don't understand economics, especially digital-era economics, well enough to figure it out themselves, but--apart from the issues raised in this Wall Street Journal op-ed that compares the eurozone's shrinking (since 2009) economy to growth in the U.S. and Asia and the ever lower performance of continental European students in math (in France and Germany, degeneration is mostly due to decades of unselective migration)--Europe's single biggest economic problem is that it doesn't have major digital platforms. There are only two significant European companies that can be considered digital platform companies: SAP (big by European standards but small compared to Silicon Valley and Seattle Sound giants) and Spotify, which loses the more money the more users it has and probably can't stay independent for too long. Successful digital platforms have enormous leverage and benefit from network effects, which makes it hard enough for Europe to catch up, but UGC is essential to digital platforms. The EU shouldn't cut off its nose in order to spite its case by complicating the creation and operation of UGC-centric platforms.

  4. Combat the idea of "compromise" being a virtue here. With the software patent directive we faced the problem that many politicians initially didn't like the idea of outright rejection because they argued politics is all about the ability to find a middle ground. That is, together with the high mathematical hurdle, the reason why the EP hadn't exercised its right to reject a bill at second reading (a right the EP had since the Maastricht Treaty in the early 1990s) before we came and won. But every once in a while, no deal is better than a bad deal. Blame it on the other institutions: the Commission and the Council. Blame it on Axel Voss, the EPP MEP who was appointed as the EP's chief negotiator, though his positions are far from balanced. Alleviate MEPs' concerns, and emphasize the benefits: it's the best shot for reelection.

  5. Appeal to center-right and right-of-center politicians. A large part of the reason why my NoSoftwarePatents campaign was started in parallel to the FFII's and various FOSS organizations' efforts was a positioning issue: the anti-software-patent movement was misperceived as the spearhead of a generally anti-IP movement that wanted "everything on the Internet to be free," as a still-influential German conservative MEP (thus I won't mention her name here) told me in a meeting. For the copyright debate it's very important that you emphasize not only consumers but also creators. This, again, will be easier when giving up on Article 11. With the greatest respect for an organization like EDRI, which is involved with the push against the EU Copyright Directive: they're so radical that even a staffer of the Greens/EFA group in the EP told me many years ago that the Greens didn't want to be seen as too closely associated with them.

    Many MEPs want to be seen as pro-business. You must reach out to them more effectively. Bring in app development companies and similar stakeholders who really want and depend on copyright, but oppose its most insane excesses. If you can't convince MEPs that one can be pro-copyright but against Article 13, and that it's actually good for copyright in general to oppose Article 13, then you probably won't build the majority you need. You'll only get much support from the left, and that's not enough.

  6. Better online mobilization. The NoSoftwarePatents effort was very much about mobilization. MEPs told us that they had never received so many messages (emails, letters, faxes) from voters until the FFII (and, later, my campaign) mobilized "the Internet." At the time, we had to rely on mailing lists. Nowadays, with social networks, there's better infrastructure. But I really don't think it makes sense to focus on the link tax. Focus on Article 13, user-generated content, digital platforms. That one affects far more people (not just Google, and Google can probably live with Article 11 now anyway, though again, it's crazy and I hope it will be repealed after a few years--when everyone knows with the benefit of hindsight that it's counterproductive).

    If you want to mobilize citizens to contact politicians, you need a simple and compelling message. SaveTheInternet.info did a great job collecting what will soon be 5 million signatures on change.org, but is not optimized for the final push for rejection. The numbers of signatories will basically impress only those MEPs who are already sympathetic to the cause. But what's key now is to send clearly organic and authentic messages to MEPs (so they can't claim these are just "bots," as some of them have incorrectly said), and to encourage people to request meetings with MEPs in Brussels, Strasbourg, and their constituencies.

    In late 2009 and early 2010, our "helpmysql" campaign (not about legislation, but related to Oracle's acquisition of Sun Micosystems) even broke the Commission's email servers, as we were told in a meeting with then-commissioner Neelie Kroes. We put it in place within only a couple of weeks, even during the Holiday Season.

    I strongly recommend either quickly optimizing SaveYourInternet.eu and/or SaveTheInternet.info for the name of the game at this stage or starting a complementary effort that will make a greater direct impact on MEPs.

  7. Attack mainstream media harder (if necessary). You have all those mainstream media companies--which President Trump often refers to as the "fake news media"--against you. We had a similar problem with our campaign against software patents, not because publishers wanted those patents but because, quite frankly, most news agency journalists were simply not smart enough to figure out that the claim "it's about software-powered devices like washing machines, not about patents on computer programs" was obviously a lie when SAP publicly stated that it wanted the proposed directive because it would protect SAP's "innovations" (which aren't washing machines). When the lie came from the Commission and national governments, the fake news media propagated it as if it were a truth and didn't believe us, just because they were brainless.

    If you give up on Article 11 now and focus on Article 13, maybe that will be a basis to get more reasonable mainstream media coverage of your efforts. I'm not sure because those traditional media companies probably also view UGC as a threat to their business model, but at least there's a chance. Time is not on your side, so you must find out quickly whether, after accepting Article 11, they'll give you a reasonably fair treatment. If not, don't shy away from bashing those publishers. They're backwards-oriented, they're rent-seeking losers, they don't innovate, they're the past and not the future. Make this a story of the winners of the digital age--and consumers are the winners when there's such an abundance of great original content--fighting against an evil scheme by the sore losers, for the sake of Europe's digital future, to the extent Europe has any digital future at all (Europe won't be able to compete with the U.S. and Asia with or without that EU Copyright Directive, but at least it shouldn't be self-destructive).

I haven't been to Brussels and Strasbourg (the two EP seats) in many years, and it's very unlikely, though depending on the circumstances not 100% inconceivable, that I'd go there in the build-up to the final "copywrong" vote to campaign for rejection/deletion. There are still some MEPs who remember the 2005 vote on software patents, and even many of those who weren't there yet in 2005 have meanwhile heard about it. The showdown in Strasbourg or Brussels could become a huge event, like the legendary July 2005 software patents vote, but it takes the right message and turnaround strategy to get a better outcome under even more difficult circumstances (where the strongest argument of the "copywrong" side will be that the result of a "trilogue" is sacrosanct and must be rubberstamped).

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Thursday, February 14, 2019

Apple's workaround for German fake injunction--Qualcomm-based variants of iPhone 7 and iPhone 8--exacerbates Qualcomm's antitrust woes

At the end of my shareholder-value-focused analysis of Qualcomm's $1.5 billion deposit for the immediate enforcement of a Germany-wide patent injunction against the iPhone 7 and the iPhone 8, I predicted it was going to be "a Pyrrhic victory." By now it's clear that "Pyrrhic victory" is a euphemism. It's a total disaster for Qualcomm, actually. A waste of money; zero leverage over Apple (which as of today is again selling all iPhone models in Germany without restrictions); zero proof of patent portfolio strength; a significant risk of additional EU antitrust problems because it underpins a complaint by Apple that had already given rise to preliminary investigations by the European Commission's Directorate-General for Competition (DG COMP); and adverse effects on Qualcomm's reputation in U.S. and Asian competition circles.

I wouldn't normally call a formally-enforceable injunction a "fake injunction," especially since I try to disagree respectfully. However, there's an accumulation of reasons for which I can't help but use strong and harsh terminology:

It was unfortunately necessary to repeat all of the above because otherwise one could mistakenly see an admission of "guilt" (in terms of infringement) in the fact that Apple is, as of today, shipping a workaround--now confirmed by media reports based on official statements by Apple and Intel, while last week it was a credible but unconfirmed scoop for WinFuture.de.

This is a workaround for a patent that is almost certainly not infringed anyway, and likely invalid. The whole purpose is to keep selling (or to resume selling the iPhone 7 and iPhone 8 in the German Apple Stores) and to moot any potential enforcement dispute. Earlier this week it became known that Apple has also modified iOS to be unaffected by a potential U.S. import ban despite still having reasonably good chances of avoiding a finding of a violation anyway.

I asked someone at the Apple Store in downtown Munich and was told that they'd have the iPhone 7 and iPhone 8 on sale again in the store by early next week, and that those models can already be ordered again on Apple's German online store. Indeed, my first tweet about this new development included two screenshots from the German Apple online store (this post continues below the tweet):

There still is a possibility of the injunction being lifted by the Oberlandesgericht München (Munich Higher Regional Court). I asked the appeals court earlier this week whether they had any news about Apple's motion to stay enforcement. The answer was that the court had just received a convoluted filing (they didn't say from which party) and was studying it.

A stay would help to restore sanity with respect to the defendant's dilemma (give up your secrets or your adversary will be rewarded for obstruction of justice). But availability is no longer an issue, unless Qualcomm were to try to cut off its supply of Qualcomm baseband chipsets to Apple's contract manufacturers: the new variants come with Qualcomm, not Intel, baseband chips.

Intel points out that there's no patent issue relating to its chips--and that's not even because it's a fake injunction. The reason is that no Intel chip was accused of infringement in the first place. It was about a Qorvo envelope tracker. So why would Apple replace Intel's baseband chipset with a Qualcomm product? That's because the envelope tracker is technically tightly integrated with the baseband chip. The envelope tracker plays a key role in efficient power management with respect to the radio frequenty (RF) signal. For a certain range of amplitudes, an amplifier is usually activated (but not for all other amplitudes where it isn't needed). So it's key not to activate the amplifier all the time, but only as needed. However, when the battery is running empty, then it's actually the lesser evil to drain more power from the battery. Since the amplified signal is the RF signal, an envelope tracker isn't just a component for which a drop-in replacement works; it's too closely related to the baseband chip, which generates the RF signal.

This leads us to the antitrust issue I mentioned further above:

With what has happened now, Apple's warnings against the potential anticompetitive effects of Qualcomm's enforcement of patent injunctions have been validated. Indeed, the only practical alternative that Apple apparently had was to use Qualcomm chips again, which means Intel loses some potential sales. Obviously, the impact on Intel is limited as long as it's just about Germany and even there just about the iPhone 7 and the iPhone 8. But Qualcomm wanted and still wants to make far greater impact with its patent injunctions.

In fact, Qualcomm has continued to escalate the dispute with Apple (which is to some extent about getting leverage over Apple, but the effect of Apple buying Qualcomm chips again would harm Intel and, ultimately, consumers). Some more German Qualcomm v. Apple patent infringement lawsuits will be decided this year:

The contempt proceedings in Munich are going to be much less interesting now.

So far, Qualcomm has clearly failed to prove the value of its patent portfolio. An agnostic decision by one court that is clearly outweighed by two facts-based non-infringement findings in other venues won't impress anyone. Nor will some Chinese software patent injunctions that have apparently been worked around by way of an iOS upgrade. Qualcomm wants a 3.25% royalty for its standard-essential patents (with the royalty being the device price, but capped at $400), and another 1.75% (thus a total of 5.0%) if its non-SEPs are included. The royalty demand for its cellular SEPs will be history once it's determined (in FTC v. Qualcomm) that Qualcomm actually must license (in general, and not only based on two specific FRAND declarations, which has already been decided) its cellular SEPs to rival chipset makers. In that case, even device makers with their own chip divisions could seek chipset-level licenses, and it would be hard for Qualcomm to get more than a $1 per-unit royalty or so on a $10 component. And as for Qualcomm's non-SEPs, all those enforcement efforts against Apple have made noise, but have failed to deliver a proof of concept. 1.75%, capped at $7 per unit, is a lot for a patent royalty--in fact, it even makes a host of workarounds the smarter choice.

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BlackBerry seeking German patent injunction against WhatsApp's message-forwarding feature: validity is primary--but not only--issue

I'm temporarily back to Germany for app development-related reasons, and seized the opportunity to return to the Munich I Regional Court for the first time since the envelope-tracker injunction Qualcomm obtained late last year through procedural shenanigans.

Today the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) held a first hearing in a BlackBerry v. WhatsApp & Facebook case that is part of a set of eight Munich patent infringement actions--over five different patents--against Facebook and its WhatsApp and Instagram subsidaries. The patent-in-suit discussed today: EP1746790 on a "method of sharing an Instant Messaging history."

It's undoubtedly a pure software patent, and Judge Dr. Zigann noted, diplomatically, that such patents are "at the margins of the scope of patent-eligible subject matter." However, the focus of first hearings in Munich is on claim construction and infringement analysis (so the parties can prepare accordingly for the second hearing, which is normally a decisive trial), not on validity.

Not only does the patent have a subject-matter problem but BlackBerry's lead counsel in this action, Quinn Emanuel's Dr. Jesko Preuss ("Preuß" in German), communicated right at the start of the hearing their decision to narrow the asserted claims by way of an additional claim limitation. Such claim amemdments are always an indication of a problem with distinguishing overbroad claims from the prior art. I believe the claims are still invalid, but BlackBerry and QE apparently believe that the narrowed claims are more defensible.

Facebook's lead counsel in this litigation, Freshfields Bruckhaus Deringer's Dr. Frank-Erich Hufnagel (frequently mentioned on this blog because of his representation of Apple in numerous other cases), wasn't impressed. The court even noted sua sponte that the additional claim limitation--requiring that the recipient of a forwarded message from a chat history not be the same as the one from whose chat it is copied--may contradict dependent claim 5. While this wasn't discussed, as a WhatsApp user I immediately realized that this modification means BlackBerry wouldn't have an infringement theory for the WhatsApp feature that allows one to copy a message (or its beginning in case it's long) when replying to a particular message from the history. Now it's exclusively about forwarding messages to a third party.

Judge Dr. Zigann noted that paragraph 10 of the patent specification mentions the possibility of performing a standard "copy and paste" operation for messages from a chat history, though it describes that approach as "woefully inadequate as well as cumbersome." As a matter of fact, the copy-and-paste option was widely used years before the priority date of that patent (July 20, 2005). I remember copying and pasting chat messages in 2000 using ICQ (then the leading instant messenger, and also mentioned in the patent specification) and in 2001 using mIRC, then (and possibly still) the most popular Internet Relay Chat (IRC) client. Old documentations of those (and other) tools should still be available in some Internet archives. Discussion boards also prove what I just said:

  • forums.mirc.com: When UTF support (= support for many more special characters than in ASCII) was added, users discussed the practical implications, and copying and pasting came up.

  • forums.techguy.org discussed in 2001 how to save ICQ chat histories, and "Daddad" proposed just copying and pasting them.

Therefore, if BlackBerry seeks to defend the patent (which it is trying for now, though I really can't imagine that it would win a case over such a junk patent), it will have to push for a claim construction that gives the patent some technical meaning while still allowing an inventiveness theory.

In the early part of the two-hour hearing, Dr. Hufnagel voiced concerns over Judge Dr. Zigann's remark that a defendant should always focus on the top three invalidity contentions. While the court would allow filing more of then, the defendant should assume that only the top three (as indicated by the defendant)--or, as he conceded the number was arbitrary, maybe also four or six--would get a lot of attention, but the court lacks the time to entertain an infinite number of invalidity contentions. Dr. Hufnagel said that is really weak and has technicity problems, an issue with an inadmissible extension of subject matter, and additionally is anticipated by ten prior art references, a defendant should be able to seek a stay (pending parallel invalidity proceedings) based on more than, for instance, a hard limit of three contentions. Judge Dr. Zigann said that if an invalidity argument beyond the most important few was overwhelmingly strong, it would impress the court at any rate.

Dr. Hufnagel's concern is particularly understandable in light of bifurcation and the enforcement gap: instead of a full invalidity defense, German patent infringement proceedings don't come with an invalidity defense in a narrow sense as defendants can merely seek a stay based on an analysis that rarely results in a stay for obviousness considerations (it's typically just about novelty, or admissibility issues). But infringement cases are adjudicated way faster, so patent holders often get to enforce injunctive relief in Germany and then force a defendant to settle. As a result, any invalidity challenges must be withdrawn, and the patent will survive, regardless of how week it may be.

Facebook's motion for a stay will be discussed in detail at the mid-September trial. Patent attorneys from Samson & Partner (a patent firm that also frequently represents Apple) will then explain how they're challenging the patent in the Federal Patent Court of Germany. Today, Facebook's lawyers Dr. Hufnagel and Dr. Sonja Mross ("Mroß" in German) primarily argued non-infringement in accordance with Munich procedures.

Facebook argues that WhatsApp doesn't practice the claim limitation of "wrapping said message history into a file object based on the selected transmission mode for sharing said message history with said selected recipient" for three distinct, independent reasons:

  • WhatsApp doesn't perform certain steps in the sequence shown in a flowchart (Fig. 2 of the patent specification). Here, the court has an inclination for the time being, and BlackBerry unsurprisingly agrees, that no particular sequence of those operations is claimed.

  • WhatsApp doesn't perform the wrapping operation baed on the selected transmission mode. The patent is about potentially emailing a message history or sharing it through other channels, but in WhatsApp you always just forwarded a message from one WhatsApp installation to another. Here, the court has an inclination for the time being, and BlackBerry naturally agrees, that even if just one transmission mode is used, the patent is still infringed.

  • Based on the patent specification, Facebook argues that the patent expects the wrapping operation to preserve the entire look & feel of a message history, while WhatsApp just forwards the text. Here, the court has an inclination for the time being, and BlackBerry unsurprisingly agrees, that "look & feel" is not explicitly claimed.

Some discussion also arose over the meaning of an "IM communication session," with Facebook arguing from a user-interface angle while the court tends to view a "session" as a duration as opposed to a particular window or set of windows (and BlackBerry, obviously, agrees with the court).

In other words, the court favors a broad claim construction. I venture to guess that Facebook is confident it can show a reasonably high likelihood of the patent being invalidated even with a narrow construction. But come the actual trial in September, I wouldn't be surprised to see Facebook make a "squeeze" argument where a broad interpretation of one or claim limitations is an indispensable requirement for BlackBerry having any infringement argument, but then there would be prior art references over which the claimed invention isn't novel (or maybe there is something novel, but if a novel element is clearly not technical in the sense of European patent law, that's also the end of the story).

What BlackBerry is doing here is the equivalent of buying some lottery tickets. Those lottery tickets aren't cheap, though the fact that no QE partner represented them today shows that at least this particular case here is not one they'd want to bet the farm on. They just hope that maybe one of those Munich cases will present enough of a threat to Facebook that BlackBerry can cash in. But the overall BlackBerry-Facebook dispute has been going for almost a year, and it may take another year or two. Since patents on software "as such" aren't allowed in Europe, I really can't see why BlackBerry should be able to collect any patent royalties on anyone's European revenues with patents of this kind.

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Wednesday, February 13, 2019

BlackBerry suing Facebook and its WhatsApp and Instagram subsidiaries over five European software patents in Munich

As the former director of the European NoSoftwarePatents campaign I always find it shocking what kinds of patents the European Patent Office (EPO) grants despite the exclusion of "programs for computers as such" from the scope of patentable inventions according to Article 52 of the European Patent Convention (EPC).

Post-grant reviews often do away with those patents, but rarely ever on the basis of Art. 52 EPC per se. What typically happens is that the Federal Patent Court of Germany or other courts of competent jurisdiction categorize some claim limitations as "non-technical" and purposely ignore them in their novelty or inventiveness analysis. Whatever little remains then is often anticipated by, or at the very least obvious over, the prior art. But, unfortunately, efficiency gains (reduced data volumes, increased processing speeds, economic use of screen space etc.) often serve as an excuse for circumventing Art. 52 EPC.

Tomorrow the Munich I Regional Court will hold a first hearing in one of eight BlackBerry v. Facebook/WhatsApp/Instagram cases over a total of five different patents--all of them pure software patents. Patents on "programs for computers as such."

In March 2018, BlackBerry sued Facebook as well as its WhatsApp and Instagram subsidiaries in the Central District of California (= L.A., though geographically it would be SoCal). Facebook's VP of Litigation and Deputy General Counsel, Paul Grewal, issued the following statement:

"Blackberry’s suit sadly reflects the current state of its messaging business. Having abandoned its efforts to innovate, Blackberry is now looking to tax the innovation of others. We intend to fight."

The fact that Facebook still isn't paying BlackBerry any royalties is a good sign. Don't feed the failed-business-turned-troll!

Mr. Grewal used to serve as a United States Magistrate Judge in the Northern District of California. Over the years this blog mentioned him quite often, most notably in connection with Apple v. Samsung discovery and (un)sealing disputes as well as his mediation effort with Oracle and Google, a case that he realized just had to go to trial.

While there has been some media coverage of BlackBerry's U.S. litigation against Facebook (and a countersuit by Facebook), I haven't been able to google any articles on the eight Munich lawsuits, even though a couple of first hearings have already taken place there. This is the list of patents and first hearing dates:

  1. EP1734728 on a "method and apparatus for switching between concurrent messaging sessions" (first hearing held on 01/10/2019)

    accused functionality: showing two chat histories in parallel

  2. EP1633114 on a "system and method for maintaining on a handheld electronic device information that is substantially current and is readily available to a user" (first hearing held on 01/17/2019)

    accused functionality: automatically identifying user profiles containing partly identical data

  3. EP1746790 on a "method of sharing an Instant Messaging history" (first hearing: tomorrow = 02/14/2019)

    accused functionality: sharing messages from the chat history

  4. EP1540495 on a "method and system for displaying group chat sessions on wireless mobile terminals" (first hearing: 02/28/2019)

    accused functionality: displaying chat history while text is being edited

  5. EP2339799 on an "IM contact list entry as a game in progress designate" (first hearing: 02/28/2019)

    accused functionality: chatting during gameplay

This is another series of Munich cases in which Quinn Emanuel is asserting patents on behalf of a patent monetization-focused client against a Freshfields client. QE is representing Qualcomm against Apple in a series of German infringement cases, and Freshfields is defending Apple. Here, QE is suing Freshfields client Facebook on BlackBerry's behalf.

The BlackBerry company was named Research In Motion (RIM) when it filed the related patent applications. The irony is that "Research In Motion" is structurally similar to the names of many patent trolls, but the company was actually focused on making products at the time and itself the target of lawsuits brought by trolls, with the NTP case (settled for $612.5 million) being the most well-known example, while it's now named BlackBerry, but far more interested in patent monetization while its namesake products became pretty irrelevant a long time ago, thanks to the iPhone and Android.

I was in frequent contact with RIM in 2006, shortly after the costly NTP settlement that happened on the eve of what would most likely have been a U.S. injunction. I remember that they were the first company (of many) to tell me about the problems they had with Qualcomm, and that they were really happy about the Supreme Court's eBay v. MercExchange ruling (on patent injunctions) that year. But times have changed, and now they're asserting software patents against Facebook and its two most famous subsidiaries as if Article 52 of the European Patent Convention didn't exist.

In addition to suing companies like Facebook directly, BlackBerry engages in privateering. Last week, PatentlyApple reported on a declaratory judgment action brought by Apple against a troll named "Fundamental Innovation Systems" that wants (but hopefully won't get any) license fees from Apple over a dozen former RIM/BlackBerry patents.

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250 million consumers v. Qualcomm: trial in 2019 no longer realistic

Only two things worked out well for Qualcomm on the litigation front this year: the Lasinski cross-examination and the fact that the United States Court of Appeals for the Ninth Circuit allowed Qualcomm's interlocutory appeal of Judge Lucy H. Koh's certification of a class of up to 250 million consumers suing Qualcomm for a partial refund of what those people paid for their smartphones (seeking $5 billion in total, or roughly $20 on average per person who bought a smartphone in the U.S. during the relevant period, which started in March 2011).

Other than that, the first month and a half of this year have been a near-total disaster for Qualcomm, especially since its Chinese and German injunctions appear to have been worked around and some of Qualcomm's offensive cases have recently failed.

The Ninth Circuit has set the following schedule for the interlocutory appeal of class certification:

  • Mediation Questionnaire due on 02/06/2019.

  • Transcript ordered by 02/22/2019. Transcript due 03/25/2019.

  • Appellant Qualcomm Incorporated opening brief due 05/03/2019.

  • Appellees' answering brief due 06/03/2019.

  • Appellant's optional reply brief is due 21 days after service of the answering brief.

If the related trial, originally scheduled for June, ever takes place, it won't happen this year, realistically. Judge Koh put the related pretrial proceedings on hold in January. After briefing, the Ninth Circuit will have to schedule a hearing, and then make a decision. This is all going to take time.

Theoretically, if both parties wanted to accelerate things, they could save time, but in the current situation that's not foreseeable. What they need more than anything else so they can even determine their preferred pace is (i) Judge Koh's ruling on the FTC's complaint (which the consumer class action is directly related to) and (ii) the Supreme Court's Apple v. Pepper (App Store commission case) opinion. I believe the FTC is going to score at least a partial victory over Qualcomm and that Apple is going to lose the App Store case (not referring to the case as a whole, just to the question before the Supreme Court), and then it will depend on the reasoning (the Supreme Court may decide Apple v. Pepper in consumers' favor with or without overruling the Illinois Brick doctrine).

For Qualcomm, the class action is a pain in the neck for at least four reasons:

  • With so many people being potentially entitled to a partial refund of what they paid for their phones, even a seemingly small per-class-member amount would still result in a sizable total payout.

  • Any payout, unless the amount was just laughable relative to the size of the class, would stigmatize Qualcomm forever as a company that owed consumers money for indirectly overcharging them.

  • As long as there's a class action connected to the FTC case, a settlement would have to be run by Judge Koh. And at this stage there is no indication that Qualcomm can even settle with the FTC on the terms it wants.

  • The consumer class can bring all sorts of motions that Qualcomm doesn't like, such as the antisuit motion that Judge Koh dismissed without prejudice only for timing reasons last year (timing was, by the way, described by this blog as the relatively most interesting argument Qualcomm had raised against that motion).

The problem with the schedule for mediation is that it will take place at a time when Judge Koh may still be working on her FTC v. Qualcomm opinion, and even though the Supreme Court held the Apple v. Pepper hearing in November, it may also need more time, especially since different justices appear to have different preferences for how to achieve the result that all of them but the Chief Justice appear to consider to be the right one.

All things considered, I'd be surprised if mediation succeeded under these circumstances.

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Monday, February 11, 2019

Apple has already defeated Qualcomm's first ITC complaint with a workaround in iOS 12.1 and later, blessed by Qualcomm's CTO

Qualcomm's patent enforcement campaign against Apple, which started in the spring of 2017, has produced some headlines but no real results. What Qualcomm wanted was to gain leverage over Apple well in advance of the Apple & contract manufacturers v. Qualcomm trial that will take place in San Diego in April. Qualcomm furthermore wanted to demonstrate the strength of its patent portfolio to the industry at large. But it has failed to achieve the former (practically zero leverage over Apple), and with respect to the latter, the very opposite is the case: the longer Qualcomm keeps litigating against Apple without real results, the less its royalty demands for non-standard-essential patents (a premium of 1.75% as Qualcomm charges 5% for its entire portfolio vs. 3.25% for only its standard-essential patents) will be accepted by the rest of the industry going forward.

On Friday, Dr. Ron Katznelson, a former Professor of Electrical Engineering at the University of California in Qualcomm's home town of San Diego, told the United States International Trade Commission (USITC, or just ITC) in a public-interest statement that there are dozens of alternative technologies to the asserted claim 31 of U.S. Patent No. 9,535,490 on "power[-]saving techniques in computing devices." That's the one Qualcomm patent an Administrative Law Judge (ALJ) deemed Apple to infringe, though the ALJ recommended (for public-interest considerations) that no import ban be ordered.

Dr. Katznelson was right. Qualcomm's sole remaining patent-in-suit in the investigation of its first ITC complaint against Apple is apparently as useful as having a fence on only one side of a property: anybody can just walk around it.

Today I downloaded the public redacted version of Apple's brief on review and remedy. It's Apple's response to the ITC's nine technical questions (any one of the first eight of which could be answered in a way that would singlehandedly overturn the finding of a violation) as well as the U.S. trade agency's five public-interest questions. In the middle of that document, Apple tells the ITC that it has already implemented a workaround for the '490 patent in all iOS versions since iOS 12.1 (this post continues below the document with further information on Apple's workaround):

19-02-08 Apple Brief on Rev... by on Scribd

The relevant passage starts on page 29 based on the page numbering at the bottom of each page, or page 35 based on the page numbering of the PDF viewer. Amazingly, Qualcomm's Chief Technology Officer Dr. James Thompson himself had blessed that workaround beforehand:

"Qualcomm's presentation at the hearing crystallized its theories regarding the scope and coverage of claim 31 of the ’490 patent. Against that backdrop, Apple recently changed its software (i.e., iOS) to remove the functionality that Qualcomm has accused of infringing claim 31, by implementing a design change that Qualcomm's own witnesses conceded would fall outside the scope of the patent. Thus, although Apple's Accused '490 Products with Intel baseband chipsets and the previous software do not infringe, products implementing the software change (included in iOS versions 12.1 and later) leave no doubt on that score."

"[...] [L]ate in the hearing and in post-hearing briefing, Qualcomm and its Chief Technology Officer James Thompson began suggesting that design-around options were readily available, including specifically for the '490 patent. With regard to claim 31 of the '490 patent, Qualcomm argued that removing the accused functionality would be 'relatively simple' [...] and that Apple and Intel could avoid any infringement of claim 31 by 'simply remov[ing]' the accused uplink (UL) / downlink (DL) synchronization feature in response to an exclusion order."

"[...] This fall, after the close of the hearing record, Apple implemented a new software-based design for its Accused '490 Products that removed the accused UL/DL synchronization feature that Qualcomm emphasized could be 'simply remove[d]' to avoid infringement of the '490 patent. To be clear, the pre-change versions also do not infringe the '490 patent, and thus there is no legal need to 'design around' it. But to moot any possible allegation of infringement from Qualcomm, Apple changed its products to do precisely what Qualcomm’s own witnesses testified would not infringe the '490 patent."

Apple asks the ITC for six months just so there's enough time for an official determination of non-infringement in all iOS versions since 12.1. Otherwise there would be a risk of customs officers mistakenly seizing non-infringing iPhones at the border.

There's no way that Qualcomm could credibly dispute Apple's workaround theory: Qualcomm's own CTO blessed this approach beforehand. Now it's too late. No government agency or judge is going to be persuaded by an after-the-fact about-face on Qualcomm's part. The workaround is in place, so even if Qualcomm obtained an import ban, it would be absolutely ineffectual.

In order to gain leverage, Qualcomm needs to prevail on a patent (by proving infringement while preventing Apple and Intel from proving invalidity) that is not exhausted, not licensed, and can't be easily worked around. Qualcomm has been unable to do so. There's every reason to believe Apple has worked around two Qualcomm software patents asserted in China; there are credible reports that a German workaround (for a Munich injunction that is most likely a fake injunction, a miscarriage of justice) is going to ship in a few weeks; and now it's official that Qualcomm's first ITC complaint against Apple has been a total waste of time and money. (Qualcomm's second ITC complaint is in even worse shape, by the way--the ITC staff identified no violation whatsoever.)

When Qualcomm brought that first ITC complaint in the spring of 2017, it published an infographic designed to stress the "vital" importance of the claimed "inventions" protected by the six Qualcomm patents-in-suit. But this is what's left of it--nothing (click on the image to enlarge; this post continues below the image):

Qualcomm dropped three of the six patents before the evidentiary hearing (the ITC equivalent of a trial). That's actually quite normal: the ITC expects complainants to narrow their case. But the idea is that complainants focus on strong patents, and the three that Qualcomm chose to continue to assert were anything but strong. The ALJ held that two of them weren't infringed, and the Commission (the six-member decision-making body at the top of the ITC) affirmed those findings by denying a Qualcomm petition for a review. Instead, the Commission granted Apple's petition for a review of the finding of a violation of the '490 patent. But even if the final ruling upheld the ALJ's finding of a violation, and if the Commission then ordered an import ban against ALJ Pender's recommendation, Qualcomm would still have lost the case for all practical intents and purposes. An import ban against products Apple isn't even importing anymore before the final ruling comes down is worthless.

Qualcomm is represented against Apple by some of the very best law firms, and one might expect Qualcomm and its lawyers to be able to find some really strong patents among the roughly 100,000 non-standard-essential patents in that portfolio of 130,000 patents. But after almost two years of infringement litigation, leverage is not in sight for Qualcomm.

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