Thursday, February 28, 2013

Nokia asks ITC to reverse 'wholly groundless' dismissal of a patent asserted against HTC

Earlier this month Administrative Law Judge Thomas Pender ordered a partial termination of the ITC investigation of Nokia's complaint against HTC, dismissing one of the nine patents-in-suit. The judge did not consider "wholly groundless" HTC's assertion that the patent in question, U.S. Patent No. 7,366,529 on a "communication network terminal supporting a plurality of applications" (basically, a patent on a way to route data to apps), fell within the scope of an arbitration clause of a standard-essential patent (SEP) license agreement between Nokia and HTC.

In mid-February Nokia filed a petition for review, asking the Commission, the six-member decision-making body at the top of the U.S. trade agency, to overrule Judge Pender on this matter. Today a public redacted version of Nokia's motion finally entered the public record, enabling me to report on why Nokia believes Judge Pender's decision was mistaken.

Nokia does not dispute that the legal standard HTC had to meet was that of a claim that is not "wholly groundless". That is, of course, a very low hurdle. But even a very low hurdle is a hurdle, and there must be scope for dismissing implausible and unsubstantiated theories. Nokia complains that Judge Pender applied the "wholly groundless" standard in a way that would render it meaningless, and that his ruling failed to offer any analysis of some basic aspects of HTC's argument for dismissal (Judge Pender had suggested that Nokia sought a "detailed evaluation of the facts" underlying HTC's motion, which Nokia says isn't needed, but at least some analysis of the merits of the motion must be performed in Nokia's opinion, even under the "wholly groundless" standard).

Nokia says that the arbitration HTC wants this patent referred to "cannot provide it with any defense in the investigation". Nokia's petition is heavily-redacted, allowing the general public to view only a skeleton of its argument, but at any rate, this is what Nokia is basically saying:

  • HTC's argument concerning the '529 patent is related to a feature that Nokia says it does not even accuse of infringement in this investigation. The description of that feature is redacted. Whatever it is, Nokia says that the most HTC could get out of arbitration (even if all of its factual representations were true) is a license to practice a feature that is not at issue in the investigation. Therefore, arbitration would not be dispositive of any part of the investigation: it would merely cause a delay.

  • According to Nokia, HTC does not even specify any particular industry standard to which it claims the '529 patent is essential, nor has Nokia based its infringement allegations on any industry standard. But it appears that the license agreement is clear (even though quotes from it are redacted) that only SEPs fall within its scope.

Most of the documents related to this motion have not been published yet. What I concluded from Judge Pender's order is that the question of arbitrability (i.e., whether an issue is subject to the arbitration clause in the existing SEP license agreement) should be resolved by an arbitrator as opposed to the ITC. Judge Pender apparently liked this idea. Nokia now hopes that the Commission is not going to "encourage parties to manufacture disputes where non exist, in an attempt to escape the Commisssion's reach" (and to cause delay).

At this stage of an investigation it rarely happens that the Commission overrules a judge, but this here could be a case in which the Commission identifies a now-or-never situation: if it doesn't use its authority to maintain a reasonable "wholly groundless" standard, it will give up its jurisdiction over numerous cases or parts of case with respect to which parties can raise frivolous arbitration defenses. For lack of access to some critical information I don't want to offer a prediction here, but so far there's really no indication of HTC having a credible arbitration defense. If I find any such indication in other documents that may show up on the ITC's document system in the future, or hear anything at any German Nokia v. HTC trial, I will definitely report on it.

By the way, the Mannheim Regional Court postponed its decision on Nokia's patent infringement lawsuit against HTC's distribution of the Google Play store app (in which Google is acting as a third-party intervenor) by one week. It was originally scheduled for tomorrow (March 1, 2013). The decision, which may or may not be a final ruling, is now going to come down on March 8, 2013.

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