Thursday, March 15, 2012

Munich court won't ban Motorola Gleam at this stage for infringement of an Apple patent of doubtful validity

Earlier today, the Munich I Regional Court held a second hearing, which under the local rules for patent litigation ("M√ľnchner Verfahren") roughly corresponds to a trial, on one of Apple's various German lawsuits against Motorola Mobility. In this particular action, Apple is asserting EP1430380 on a "computing device with dynamic ornamental appearance". It's the European equivalent of U.S. Patent No. 7,868,905, entitled "active enclosure for computing device".

The patent relates to devices with a housing that has illuminable zones, the appearance of which is determined by certain events. Apple claims that the Motorola Gleam -- a "flip phone" -- infringes on that patent. An injunction would also prevent Motorola from selling any other (including future) devices that infringe on the same patent. This patent may also read on the Samsung Galaxy Nexus (which would have to be clarified in a separate lawsuit, and I don't know if Apple has filed or intends to file one).

It's worth noting that Apple's patent was filed for in 2002. As its title indicates, it's a patent on any "computing device" with certain characteristics. It's not an iPhone patent.

Motorola disputed Apple's infringement allegations, but Judge Dr. Peter Guntz, the judge presiding over this litigation and a number of other patent cases in which Motorola has to defend itself in Munich, said at the beginning and, which is far more important, at the end of today's trial that the court deems Motorola to infringe. However, since the court has, for the time being, serious doubt about the validity of this patent, Apple won't win a ban of the Motorola Gleam until further developments in a parallel litigation over the validity of the patent (before a different court) support Apple's contention that the patent is valid.

Motorola's counsel disputed infringement but ultimately conceded that "the real issue with this patent is whether it's valid". While there is no public access to German court documents, some of the keywords and quotes that came up at the hearing enabled me to google up Motorola's primary prior art reference, a patent Ericsson filed for back in 1997 (U.S. Patent No. 5,877,695 on "visual alarm for a communication module").

While Apple's lawyers stressed a number of differences between the patent-in-suit and the earlier Ericsson invention, the court considered some of those differences irrelevant to the essence of the invention and others too likely to be obvious (or, pejoratively speaking, trivial). After a short recess, Judge Dr. Guntz explained to Apple's counsel that his client wouldn't be able to win an enforceable injunction at this stage. When German courts face a situation like this, they have different procedural options. If a court of first instance (for patent cases, that would be a regional court) believes that there's a high probability (80% or more) of the patent being invalidated as the outcome of a parallel nullity action (an invalidation lawsuit before the Munich-based Federal Patent Court), it typically stays (halts) the infringement case until there's more clarity concerning the validity of the patent.

In this case, the court has made clear that Apple won't get an enforceable injunction for the time being, but it hasn't yet decided on how to proceed. A decision on the next steps will be announced in two weeks. I will go there and report afterwards. One solution outlined by the court would be that the case is stayed until the Federal Patent Court gives a so-called Article 83(1) notice, which is a formal communication by the court informing the parties of the key issues that are likely going to be outcome-determinative. If that notice reaffirmed the Munich I Regional Court's doubts about the validity of Apple's patent, the case would be stayed further (or an injunction would be granted, but not on an immediately-enforceable basis) until the pendulum swings in Apple's favor, which could take a considerable amount of time (and might never happen). If that notice suggested that Apple's patent has a good chance of being upheld, the regional court might be willing to hand Apple an injunction that it can enforce.

I don't know how long it would likely take in this case for an Art. 83(1) notice to come down. I believe this would be a matter of months, but I will try to find out more between now and the March 29 announcement of the next steps.

Bifurcation: a structural deficiency of German patent litigation that benefits holders of dubious patents to the detriment of the economy at large

The fact that nullity actions take place in parallel proceedings that may or may not influence the related infringement proceedings is referred to as "bifurcation": German patent litigation hits a fork in the road if the defendant brings an invalidation action (as a deep-pocketed defendant like Apple would do pretty much 100% of the time). Bifurcation has the downside that holders of dubious patents may get to enforce injunctions based on patents that shouldn't have been granted in the first place -- only for a certain amount of time because enforcement would end once the patent has been declared invalid, but that window of opportunity can be substantial, and for the rapidly-evolving wireless device market it's huge.

The German approach basically comes down to eliminating the problem of "justice delayed is justice denied" for patent holders most of the time, but creating this problem for defendants in many cases in which a patent ultimately turns out to have been improperly issued.

To some degree, this problem also exists in the United States, where defendants have to prove by "clear and convincing evidence" (a high standard, comparable to the 80% threshold applied by German regional courts) that a patent is invalid. That's what it takes to overcome the presumption of validity that U.S. patents enjoy (though many patents ultimately don't turn out to have been valid as granted). But despite a similar evidence standard, the holder of an improperly-granted patent is still more likely to win a (temporarily enforceable) injunction in Germany. In Germany, defendants have to overcome the presumption of validity only to win a stay. In the United States, if they present clear and convincing evidence, they win the case (though it could still be appealed, of course) -- and in addition, they have the chance of a district court staying patent claims pending reexamination by the USPTO, and U.S. courts enjoy considerable discretion (no clear and convincing evidence requirement there).

While Apple certainly would have preferred to win an enforceable injunction against the Motorola Gleam at the earliest opportunity, any company that has to defend itself against patent litigation in this country (which obviously includes Apple) can't have an interest in excessive reluctance by German regional courts to stay cases if there appears to be a reasonably strong invalidity defense. At this stage, the invalidity defense is, in general, definitely not too strong, but unfortunately far too weak, in German patent lawsuits.

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