This morning Nokia won a German patent injunction against HTC that may give the Finnish handset maker enough leverage to sell a patent license to its Taiwanese rival unless Qualcomm, which provides baseband chipsets to HTC, can enable its customer to deactivate the patented power-saving technique. Deactivation, if possible, would come with the price of shorter battery life, harming the competitiveness of HTC's devices in the German market. [Update] HTC downplays the importance of this technique and claims to have removed it from the devices it is currently selling in Germany, suggesting that the fight will go on for some more time. I've published Nokia's and HTC's statements further below. [/Update]
Judge Dr. Holger Kircher of the Mannheim Regional Court announced that the panel of judges he presides over found HTC to infringe EP0673175 on "reduction of power consumption in a mobile station". At the February 5 trial counsel for HTC was unable to deny infringement of this patent by HTC devices incorporating Qualcomm baseband chips.
At a high level this patent is easily explained: it's about saving battery power by identifying during a mobile connection any messages (basically, packets of data) that can be reconstructed from only a portion of an encoded message (encoded for purposes of wireless transmission, with certain redundancies to allow for error correction) and, whenever possible, providing power to the receiving component only if and when further portions must be received in order to decode the message. If there's a strong radio signal, there's no point in wasting battery power on redundant data: it's more efficient to turn the receiving component on again just in time for the next message. This is particularly relevant when the phone is not in active use but still connected to a cellular network.
Nokia prevailed on a method claim and on an apparatus claim. With respect to the apparatus claim it's a straightforward injunction. For the method claim it's more complicated because it's only infringed if end users actually use the feature (which I believe is inevitable once an HTC device is connected to a network). Therefore, the part of the injunction relating to the method claim can theoretically be worked around by HTC selling such devices to their customers on the condition of them taking a license from Nokia (if Nokia offers a separate license to them at all). This is more of a theoretical option, especially since Nokia prevailed on an apparatus claim as well.
The injunction is a permanent (not preliminary) one. It can be enforced preliminarily (i.e., while it is being appealed) if Nokia posts a bond or makes a deposit of 5 million euros ($6.5 million) per patent claim and per defendant (Nokia was suing not only HTC's Taiwan-based parent company but also one or two European subsidiaries). In addition to a sales ban Nokia also won a recall of infringing devices from retail and a declaration that it is entitled to damages (the amount of which would have to be determined in a subsequent litigation). With a view to damages, HTC must makes disclosures to Nokia regarding any infringing activities.
Nokia is also asserting this patent against HTC in the US (where it is seeking an import ban from the ITC as well as additional remedies, particularly damages, in federal court) and the UK, as you can see further below.
Nokia's lead counsel in this action, Bird & Bird's Christian Harmsen, has scored two hits in a row in Mannheim. On Friday he won an injunction for Huawei against ZTE. In the HTC power-saving case Bird & Bird cooperated with Munich-based patent prosecution firm Samson & Partner.
Last week it became known that another Android device maker, ViewSonic, is already negotiating a settlement under which it will pay license fees to Nokia.
18 patent license deals involving Android have already been announced. HTC is already paying royalties to Apple and Microsoft, and it's only a question of when, not if, it will also make payments to Nokia.
The wider dispute: 40 patents-in-suit
Nokia is asserting 40 different patents against HTC in three countries (US, UK, Germany). Here's a complete list:
Nokia has recently stipulated to stay two Mannheim cases, and two others were dismissed earlier this month (Nokia can appeal those rulings to the Karlsruhe Hgher Regional Court). HTC is being defended against Nokia's German and UK patent assertions by Hogan Lovells.
Eight of the 40 patent assertions listed in the document shown further above were added after the initial 32 patent assertions Nokia brought against HTC last year. Nokia has well over 10,000 patent families and can always step up the pressure until HTC takes a royalty-bearing license.
HTC is countersuing Nokia in Germany in two cases involving one of its own power management patents as well as through its wholly-owned subsidiary S3 Graphics.
While Nokia's standard-essential patents (SEPs) are broadly licensed, its non-SEPs are not. Nokia is apparently willing to license some (but not all) of its non-SEPs. Other Android device makers than HTC and ViewSonic will sooner or later also need to agree with Nokia on a license to its non-standard-essential intellectual property. Apple and BlackBerry already have license agreements in place with Nokia covering SEPs as well as certain non-SEPs.
Update: Nokia's official statement
I usually don't publish corporate statements because I prefer to do my own research (reading court filings and attending hearings, trials and announcements of rulings). In this case I wish to publish Nokia's statement because its final sentence indicates that this is not merely about license fees but also about the competitive situation between the two companies:
"Nokia is pleased with this decision, which confirms the quality of Nokia’s patent portfolio. Nokia has also patented this power saving invention in the US, UK, France, Italy, Sweden, Austria, Japan and Hong Kong. In addition to this case in Germany, we have asserted the patent against HTC in the UK and in the US International Trade Commission, with a hearing in the US scheduled to start in two months’ time. More than 30 further Nokia patents have been asserted against HTC in other actions brought by Nokia in Germany, the US and the UK. HTC must now respect our intellectual property and compete using its own innovations."
The last sentence sounds a little bit like Apple. I still believe a license agreement will ultimately be struck, and it may only be a matter of weeks. But there's a strategic dimension to this and I interpret this statement as indicating that a license agreement would come with carve-outs and restrictions. Patent licensing is a key revenue source for Nokia, but at the end of the day it wants to increase its mobile handset market share.
Update 2: HTC's official statement
HTC subsequently responded:
"Today, the District Court of Mannheim handed down a judgment that HTC had infringed the German part of patent EP 0673175 (the '175 patent) entitled 'Reduction of Power Consumption in a Mobile Station'. HTC is naturally disappointed with the decision of the court, as it believes that Nokia failed to prove its case adequately. However, as the judgment only covers three handsets that HTC no longer imports into Germany (the Wildfire S, Desire S and Rhyme), this judgment is of little significance. HTC's German business will not be affected by it.
The power-saving technology described in this patent is trivial and contributes only a negligible reduction in power-consumption, so HTC has removed any allegedly corresponding functionality from all of its current German handsets as a precaution against any attempt by Nokia to extend the scope of the judgment unfairly. HTC will be appealing the present decision but also believes that this patent is invalid and so will be continuing with the invalidity actions pending before the German Federal Patents Court and the English Patents Court.
To date, of the twenty-two infringement actions that Nokia has brought against HTC in Germany, two (EP 1329982 and EP 1474750) have been stayed because of concerns over validity and two (EP 0812120 and EP 1312974) have been dismissed outright. This decision cannot be described as a 'win' for Nokia because it only applies to handsets that are no longer imported into Germany, and newer HTC handsets do not use the accused technology. As Nokia clearly went to great lengths to assert its strongest patents first, we are confident that its non-essential patent portfolio poses little threat to HTC."
Contrary to what HTC says, today's ruling generally prohibits any further infringement of the asserted patent claims. The devices HTC refers to are only exemplary accused devices, but the scope of the injunction at the enforcement stage is not limited to them: the injunction applies to all devices having the same infringement pattern. Having followed the trial I believe any HTC devices coming with a Qualcomm chip and infringing the patent fall within its scope. But I trust HTC to the extent that it says it has worked around the patent in its current products, which moots the question of the scope of the injunction.
I consider the last sentence of HTC's statement somewhat misleading. Nokia pretty much simultaneously asserted dozens of patents against HTC (back in the spring of 2012). It just depends on the courts when these cases come to judgment. The Mannheim court is faster than the ones in Munich and, especially, Düsseldorf, let alone the ITC and the United States District Court for the District of Delaware, but Nokia brought infringement actions in those venues as well, and even some Mannheim cases filed at the same time are still waiting to be adjudicated.
HTC is anything but a soft target. Its statement demonstrates its determination to keep on fighting.
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