Monday, January 10, 2011

Procedural win: Apple obtains transfer of a Nokia suit from Wisconsin to Delaware

Last week, Apple achieved a partial streamlining of its patent dispute with Nokia: a lawsuit in which each party asserted seven patents against the other was transferred from the Western District of Wisconsin to the District of Delaware, where the parties already had two suits going.

Nokia had argued against such a transfer, claiming that it would delay resolution of the related claims by more than a year and a half.

The transferred suit may now be consolidated into one of the other suits. At any rate, the number of courts in which the two companies are suing each other has been reduced from seven to six.

Here's an overview of the curent battlefield:

Nokia vs Apple 11.01.06

It's recommended to view that diagram in full screen mode. You can also download it as a PDF file from On page 21 you can see the latest changes highlighted: the Wisconsin suit and its counterclaims are gone, and the number of patents asserted in Delaware have gone up (now 25 Apple and 24 Nokia patents in that court alone).

The US District Court for the District of the Delaware is now the only federal court in which the two companies are suing each other. In addition, they are fighting each other in three ITC investigations as well as in four European courts.

Apple's motion succeeded against Nokia's opposition

Nokia had started the Western Wisconsin suit in May 2010 after previously suing Apple twice in Delaware (October and December 2009). When Apple answered to that complaint and made its counterclaims, it also filed a motion to transfer the suit to Delaware. Nokia opposed that motion unsuccessfully: on 04 January 2011 (Tuesday), the Wisconsin court agreed with Apple, and on 06 January 2011 (Thursday), it was received by the Delaware court.

Another Apple motion had previously failed: Apple wanted to consolidate four Delaware cases (two involving Nokia as well as two related to HTC). That motion was filed on 24 May 2010 and declined on 06 December 2010. The court concluded that in this particular case it wouldn't be efficient to consolidate cases involving different parties, and one of the cases involving Apple and Nokia had been stayed for the duration of certain ITC investigations. But that was a different matter than the transfer that Apple has obtained now.

Concerning the motion to transfer, the Wisconsin court found that "Apple has met its burden of establishing that the District of Delaware is clearly the more convenient forum on the specific facts and circumstances presented [in Wisconsin]".

For a transfer motion to succeed, the court must be convinced that the other forum is a proper venue. Nokia didn't disagree that Delaware is a district in which the action could have been brought. After all, Nokia itself had previously sued Apple twice in Delaware.

In its decision to grant the motion to transfer, the Wisconsin court recalled the following criteria:

"In deciding whether to transfer a case to another district, a court must consider whether the transfer (a) serves the convenience of the parties and witnesses and (b) will promote the interests of justice."

One of the efficiency considerations is "access to sources of proof". Since Nokia is a Finnish company without any particular connection with Wisconsin, the court didn't see why that particular suit would have to take place there instead of Delaware, where two similar suits had already been filed.

Another question the court looked into was whether the parties had "any meaningful connection to Wisconsin" (other than selling products to that state just like to any other part of the United States). Apple denied such a connection but pointed out that three companies -- Infineon Technologies, Foxconn Electronics, and Samsung Electronics -- would have to send witnesses to Delaware anyway (for the litigation taking place there between Apple and Nokia) and would, without a transfer, have to travel to Wisconsin as well. But since there was no indication that those witnesses would have to be compelled to testify (as opposed to being ready to do so), this wasn't a factor in the decision.

Nokia claimed a delay of more than 18 months as a result of a transfer

Nokia argued against a transfer that "it would experience a delay of over a year and a half from the expected trial date in Wisconsin." Nokia claimed that federal statistics indicate that "the median time between filing a lawsuit and trial in the Western District of Wisconsin is 15 months, while the median time between filing a lawsuit and trial in the District of Delaware is 34 months".

Nokia stressed the dynamics of the smartphone market as a need for speed. But the court wasn't convinced. It mentioned that Nokia filed its suits against Apple after licensing negotiations had filed, and concluded that if such negotiations had taken place, Nokia "could be readily compensated by a reasonable royalty, making a swift trial less critical."

What really appears to have hurt the credibility of Nokia's position is the fact that it filed the Wisconsin suit after suing Apple twice in Delaware. The court asked this rhetorical question:

"If Nokia was at risk of losing market share and thus sought a speedy resolution of its claims, then why did it not file the first two lawsuits in Wisconsin?"

The fact that Nokia brought its Wisconsin complaint about seven months after its first Delaware complaint also called into question that the allegations filed in Wisconsin needed to be resolved particularly quickly.

Possibility of post-transfer consolidation of Delaware cases

The court finally also had to analyze the feasibility of consolidation. While Nokia claimed that the issues it raised in its Wisconsin complaint weren't sufficiently related to the suits it filed in Delaware, the court disagreed:

"The feasibility and practicality of consolidation supports an expectation that this case would be consolidated with the related litigations between these parties in Delaware. The parties are the same and there will be common questions of law and fact because each action involves the same potentially infringing products: the Apple iPhone, iPhone 3G, and iPhone 3GS. In addition, the patents feature technological overlap, such as the manner in which mobile devices interface with users, transmit and receive user information over the air, and how these devices encode, modulate, and encrypt information transmitted over the air."

This reduced Nokia's argument against the possibility of consolidation to the fact that the suits relate to different patents. But "[t]he fact that there is no direct overlap in patents, however, is not, by itself, a sufficient justification to deny transfer" according to the court's citation of a ruling in a similar matter. It then stressed the following:

"In litigation of this size involving this number of patents, a party will surely be capable of drawing distinctions in the technology and its components."

In other words: when two such companies sue each other over dozens of patents, it's not too hard to argue that there are some differences between the various assertions, but that doesn't mean the cases can't be consolidated, especially in view of the following:

"At a minimum, these cases involve the same parties, same products, similar components, and at least some degree of overlapping technology. Chief Judge Sleet in Delaware will thus already be familiar with the general technology underlying Apple‟s wireless communication devices. When such is the case, it is to the parties' benefit to litigate before a judge that is familiar with the products and general technology. [...] To require two different courts to educate themselves about the same underlying technology does not promote judicial efficiency."

Another efficiency argument is that cases involving "many of the same product components" and "many of the same non-party witnesses" should be handled by the same court because "coordinating discovery in one district would promote efficiency by avoiding duplicative discovery" and, even more importantly, make "conflicting judicial decisions" less likely.


While this is just a procedural matter, Apple is probably glad that its motion succeeded against Nokia's opposition. There's now a possibility of some consolidation in Delaware.

Did Apple file that motion in order to stall? I don't know. There's no doubt to me that Nokia is a much tougher adversary for Apple to deal with than Motorola and HTC are. Nokia has a large patent portfolio and owns some intellectual property that may be fairly relevant to Apple. At the same time, Apple has patented inventions that are important for new generations of smartphones. This is a clash of two titans, and it will continue to be very interesting to watch. I wouldn't be surprised to see a settlement later this year, but they might still be suing each other in 2012.

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