Saturday, March 23, 2013

Nokia sues HTC over feature letting admins disable programs on employees' Android phones

Certain Android device makers, such as Samsung, make considerable effort to fulfill the needs of enterprise customers. But many of the features that are key to the enterprise-readiness of a platform or device have been patented long before Android.

On Friday afternoon I attended yet another Nokia v. HTC patent trial -- three days after Nokia won an injunction from the same court, the Mannheim Regional Court, against the same rival (over a power-saving patent). The patent-in-suit discussed yesterday is relevant to those administrating enterprise networks and trying to control the functionality available to end users. EP0879538 on a "mobile terminal having network services activation through the use of point-to-point short message service" cover the feature of sending messages from a particular network (such as a corporate network) to a wireless device which then activates or deactivates certain programs or features based on what the message instructs it to do.

Nokia is asserting claim 10, a typical means-plus-function claim:

A mobile terminal of a type that is bidirectionally coupled to a network through a wireless interface, comprising:

  • means for receiving at least one message from the network, the message being addressed to the mobile terminal; and characterized by control means

    • for determining if the at least one message is a special message from a network operator that specifies one of enabling or disabling a computer software program that implements a mobile terminal network service feature that is already present in the mobile terminal, and

    • if the at least one message is determined to be a special message, for storing data within a memory of the mobile terminal, the stored data selectively one of enabling and disabling the computer software program that implements the mobile terminal network service feature that is also specified by the special message.

The court was undecided at the outset of the trial as to the question of infringement. The longer the discussion lasted, the more likely Nokia appeared to prevail on infringement. HTC's primary defense to infringement is centered around a proposal to interpret the term "network" narrowly. This is a reoccurring claim construction challenge in the current wave of Nokia cases. Some of the patents Nokia is asserting are patents from the mid-1990s that reference telecommunications networks, and the courts in Mannheim (which cleared Google Play of infringement of a patent covering dynamic catalogs of offerings on a mobile device) and Munich (which hasn't ruled on any Nokia case yet, but has provided some preliminary indications at hearings) have so far been rather reluctant to construe the term sufficiently broadly to include the combination of a conventional telecommunications network and Internet services. The services activation patent, however, doesn't say "telecommunications network" -- just "network". Its claim language lends itself to a somewhat broader interpretation, which also appears to be supported by the description. Nokia's lead counsel in this action, Klaus Haft of Reimann Osterrieth Koehler Haft, stressed more than once -- and convincingly in my opinion -- that the asserted patent claim describes the invention from the perspective of an end-user device, which communicates with a network through the "wireless interface" disclosed by the patent and is agnostic with respect to the network infrastructure behind that connection.

In the reasonably likely event of an infringement finding, HTC would normally have a pretty good chance of winning a stay if not for its own attempts to stall, which may prove to be a mistake and carry the day for Nokia when the court announces its decision on May 17, 2013. In order to explain the procedural issue affecting HTC's request for a stay I have to clarify how a challenge to the validity of a patent affects patent infringement cases under Germany's bifurcation regime.

In Germany there's no invalidity defense per se in an infringement action. A defendant can, however, file a separate, parallel nullity (invalidation) complaint with the Munich-based Federal Patent Court (not to be confused with the Munich I Regional Court, which hears patent infringement cases like the one in Mannheim) and then move for a stay of the infringement case (in the event of an infringement finding) until the validity of the patent has been evaluated. The court will usually stay the infringement case only if there is, in its assessment based on the parties' pleadings, a high probability of the nullity action resulting in the invalidation of a given patent. This -- and now we're getting to HTC's potential problem -- means that a stay can only be requested if there is an ongoing nullity action that meets the threshold of being highly probable to succeed. HTC brought a nullity complaint, but under traditional German procedural rules a lawsuit only starts if the plaintiff has also paid an advance on court fees and the complaint is then served (by the court, not the plaintiff) on the defendant. This had not happened in this case at trial time. The court discussed HTC's invalidity contentions anyway, and I thought those would usually be fairly likely to succeed because of a Siemens patent that discloses (albeit in connection with three different described embodiments of the inventions) all of the elements of the claim-in-suit. But the nullity complaint has not yet been served on Nokia even though it was filed on November 30, 2012.

What happened is that HTC disagreed with the Federal Patent Court's initial assessment of the amount in dispute (relative to which the courts in Germany set their fees). The purpose of the initial assessment was to ask HTC to pay an advance. HTC disagreed. In the meantime Nokia and RIM settled, and RIM had brought another nullity complaint, which was withdrawn. This somehow affected the Federal Patent Court's determination on the basis for fees. HTC had paid some advance early on, but when the Federal Patent Court asked for more money, HTC petitioned for a reduction. The Federal Patent Court denied that motion and gave HTC (according to its patent attorney in this action, Dr. Karl-Ulrich Braun-Dullaeus) until April 9 to remit the payment. I'm sure it will now make the payment as quickly as possible. But its petition for a stay might fail now because the nullity action had not been ongoing in formal terms at the time of the infringement trial, which is the point in time that matters. HTC might have wanted to stall the nullity action (because after a stay is granted, a defendant wants it to last as long as possible), and as a result, it may fail to win a stay in the first place.

HTC's lead counsel, Dr. Martin Chakraborty of Hogan Lovells, also moved that Nokia be required to post a bond of 100 million euros ($130 million) if it seeks to enforce an injunction over this patent prior to resolution of an appeal. HTC already made such a request in at least one other Nokia v. HTC case in Mannheim. This amount is very high considering that the only cases in which such a requirement was determined by the court involved assertions of standard-essential (i.e., lethal) patents against Apple (a much larger player than HTC). In this context and a similar one in the UK (where HTC told a court that it would no longer be able to sell smartphones in Germany if Nokia prevailed on certain patents) HTC overstates the economic impact of the injunctions Nokia is seeking, but after Nokia won one on Tuesday, HTC told the public (including investors) that its revenue production in Germany would not be affected at all. I would encourage HTC to make perfectly consistent representations of how much harm it will suffer from the enforcement of injunctions. Otherwise it risks its credibility with judges (who also read some of the media reports on their cases) and/or reporters. In some cases there may be valid reasons for apparent inconsistencies (not all patents are equally strong, and workarounds may sometimes turn out to be easier than expected). But if HTC repeatedly demanded 100 million euro bonds (alleging substantial harm from enforcement) only to deny the impact of an injunction after it issues, the courts and certain observers would be hard-pressed to reconcile these positions.

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