Friday, February 15, 2013

HTC sues Nokia over Lumia phones in Germany, claims Qualcomm and Broadcom chips infringe

Last week I reported on the discoverability of an HTC countersuit against Nokia in Germany over a power management patent (EP2073096 on "power management systems and methods for electronic devices"). Yesterday I attended a first hearing on HTC's complaint at the Munich I Regional Court. For a first hearing in Munich, it took relatively long (well over two hours) and was quite informative in several respects.

Prior to the substantive part of the hearing the court had to discuss a procedural issue with the parties. Under German law non-EU plaintiffs must post a bond over the legal fees the defendant will recover if he prevails. The parties had stipulated to an amount of 209,000 euros. HTC was actually required to give security in time for the Thursday hearing, but HTC's lead counsel in this action, Preu Bohlig's Dr. Stephan Gruber, said that this week's Chinese New Year celebrations in Taiwan complicated coordination with his client and between a German bank (which would issue the bond) and HTC's Taiwanese bank. Nokia's lead counsel in this litigation, Bird & Bird's Boris Kreye, was hoping for a delay resulting from this, which makes particular sense in Germany where the validity of a patent is clarified in a parallel nullity (invalidation) proceeding that typically takes much longer than an infringement case. But Judge Dr. Matthias Zigann, who was only recently named this panel's Presiding Judge, presented Nokia with the choice of participating in the hearing or giving HTC an exclusive chance to be heard by the court on this occasion. A second trial, tantamount to a trial, will take place on June 20, 2013.

During this part of the discussion counsel for both parties made reference to a parallel proceeding before the Mannheim Regional Court, where HTC is asserting the same patent. In Munich, the defendant is Nokia Oyj, the Finnish parent company of the German subsidiary that is being sued in Mannheim. This is reminiscent of HTC's tactics against Apple. Its wholly-owned subsidiary S3 Graphics brought six German lawsuits against Apple over only two patents, suing Apple itself in one venue and different Apple distributors in two other venues. In the United States such litigations would be forcibly consolidated to conserve court and party resources and to avoid inconsistent decisions. In Germany that's not the case.

Another -- and even more important -- difference between U.S. and German patent litigation played a key role at the hearing. There's no such thing as pre-trial discovery. I already discussed this in last week's report on a Nokia v. HTC lawsuit over another power management patent. While HTC's problem in the Mannheim case in which it's the defendant is that it can't deny Nokia's allegations as to what its products do, Nokia may benefit from the absence of discovery in the Munich case brought by HTC unless the Taiwanese company presents sufficiently strong indications of an infringement to the court, in which case the court can order the production of documents in accordance with Article 140(c) of the German Patent Act. The court pointed HTC to a December 18, 2012 decision by the Bundesgerichtshof (Federal Court of Justice), dubbed "Rohrmuffe" ("pipe socket"), which clarified that a patentee's infringement contentions have to meet a rather high standard before any discovery is ordered against a defendant's will. Judge Dr. Zigann repeatedly told HTC that a high likelihood of infringement would be needed. HTC was already aware of that ruling and also said that the need to execute a German discovery order in Finland could cause substantial delay.

HTC's infringement allegations target the Lumia 710, Lumia 800 and Lumia 900 smartphones. These devices run on Windows Phone, but the operating system itself is not accused of infringement. HTC claims that the patented power-saving method (putting an application processing unit into a sleep state but waking it up again when application-specific messages are received) is implemented by the Qualcomm (baseband) and Broadcom (WiFi) chips incorporated into those Lumia phones. In an effort to meet the requirements for discovery or (which HTC would prefer) to reach a point at which the court would require Nokia to disprove HTC's allegations, HTC had presented to the court commented source code excerpts. The problem is, however, that all of the source code shown is Android-related: the related drivers are Linux drivers, developed for use with Android, for the relevant chipsets. But even if Android drivers infringe (which Nokia disputes), Windows drivers for the same chips could be in the clear. The court would likely have to appoint an expert to analyze those Android drivers, and if those infringe, HTC still needs to prove that their Windows equivalents do. This is another example of how open-source software is at a substantially greater risk of being found and proven to infringe patents than closed-source software.

I've taken detailed notes and will talk more specifically about this patent, its claim construction and the infringement analysis when reporting on the related trials in Mannheim and Munich (both in the spring).

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