Friday, May 17, 2013

German court stays Nokia-HTC patent case over enterprise admin feature

Judge Andreas Voss ("Voß" in German) of the Mannheim Regional Court just announced an order to stay a Nokia v. HTC patent lawsuit over a feature giving enterprise IT administrators remote control over the availability of certain features on employees' Android devices. HTC was found to technically infringe this Nokia patent, but in the court's assessment this patent is likely invalid. The infringement proceedings may resume after the Munich-based Bundespatentgericht (Federal Patent Court) has ruled on HTC's nullity (invalidation) complaint, which I believe won't happen before late 2014 at the earliest or, more likely, 2015.

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.

At the March trial I noticed that Nokia effectively addressed the court's questions concerning infringement. But the court also expressed a favorable opinion on HTC's invalidity contentions. Based on today's decision it ultimately wasn't outcome-determinative that HTC had failed to make an additional downpayment on court fees in the nullity action before the infringement trial took place. Under a rather strict interpretation of procedural law, a case is not pending merely because a complaint has been filed but only after docketing, which follows a complete downpayment of court fees by the complainant. Judge Voss did not explain today why his court stayed the infringement case nevertheless, but I know that German courts enjoy considerable discretion in granting stays of patent infringement cases. Maybe HTC made the missing payment right after the trial and the court decided to take a pending nullity action into consideration even if may not have been formally pending at the time of the infringement trial.

HTC, which is represented by Dr. Martin Chakraborty of Hogan Lovells in most Nokia cases, continues to defend itself very successfully against Nokia's patent assertions. Nokia has won one German injunction against HTC so far, which is not impactful enough all by itself to force HTC into a settlement. Nokia has asserted approximately 40 different patents against HTC in the US, UK and Germany. The latest Nokia v. HTC infringement complaint was filed in April. Most of Nokia's assetions haven't come to judgment yet. I believe that Nokia will at some point have enough leverage to collect royalties on HTC'S Android-based devices, but more than a year has passed since the original round of filings and this could go on for quite some more time (though it's unlikely to take so long that the Federal Patent Court's nullity trial on today's patent-in-suit will actually be held).

Nokia's patent enforcement efforts have a fairly high drop-out rate so far, but this is not at all unusual in this industry. For example, Apple and Samsung have been suing each other in Germany over more than a dozen different patents without winning even one infringement ruling. Various Nokia-HTC cases have already been dismissed (presumably Nokia is appealing some or all of those decisions), whie others have been stayed (several of them voluntarily). A tethering patent Nokia is asserting at the ITC appears to be the strongest patent-in-suit so far. The ITC will hold an evdentiary hearing (trial) in two weeks.

The Mannheim court had originally also scheduled a ruling on a VP8-related Nokia v. HTC case for today, but this decision has been postponed.

UPDATE: HTC statement

An HTC spokesperson issue the following comments on today's decision:

"Today, the District Court of Mannheim handed down a judgment staying claims by Nokia that HTC had infringed the German part of patent EP 0879538 entitled 'Mobile Terminal having Network Services Activation through the use of Point-to-Point Short Message Service', because of serious doubts as to the validity of the patent. HTC is naturally delighted with this decision, which serves to confirm its view that the strength of Nokia’s patent-portfolio has been greatly exaggerated.

HTC shares the view of the District Court that this patent will very likely be revoked in the on-going invalidity actions pending before the German Federal Patents Court and the English Patents Court.

To date, of the twenty-five infringement actions that Nokia has brought against HTC in Germany, three (EP 1329982, EP 1474750, and EP 0879538) have been stayed because of concerns over validity and three (EP 0812120, EP 1312974 and EP 1581016,) have been dismissed outright.

In summary, HTC has won 6 out of 7 of the judgments that have so far been handed down, in the most patentee-friendly court in Europe. Nokia's single, limited success (EP 0673175) related to technology allegedly present in certain commercial chipsets bought by HTC in good faith from third parties. In spite of all of this, Nokia has repeatedly issued statements to the media accusing HTC of copying its technology. As there is clearly no factual basis for Nokia's statements, HTC can only conclude that these statements are solely intended to damage HTC's reputation in the eyes of its customers, presumably to pressure HTC into an unfair settlement.

Historically, HTC has called upon claimants in patent actions against it to compete in the marketplace rather than the court room. Clearly, Nokia is unable to do either."

This is, as usual, some aggressive rhetoric from HTC. I'd like to comment on a couple of things:

  • It's debatable whether the Mannheim Regional Court is indeed "the most patentee-friendly court in Europe" at this stage. It has, for all the right reasons in my opinion, stayed an increasing number of cases over the last 18 months. Considering that most patents are invalid as granted by the European Patent Office or the German Patent and Trademark Office, that's sensible. I believe plaintiffs nowadays sue in Mannheim because the court is very fast (far faster than the Düsseldorf court, which is according to statistics really the most patentee-friendly one in Europe) and highly knowledgeable in this field.

  • I totally understand HTC's concern about its reputation and I would agree that, for the reasons stated by HTC, Nokia has not yet proven in court that HTC (as opposed to third-party suppliers) infringes a single valid Nokia patent. (HTC is licensed to Nokia's standard-essential patents; the ongoing lawsuits are all about non-SEPs.) Given the breadth and depth of its patent portfolio, Nokia may very well have a good-faith reason to believe that there are some non-SEP infringements somewhere -- but it needs to prove this in court, such as at the ITC trial starting later this month.

UPDATE 2: Nokia statement

Nokia has now also commented on today's decision:

"Nokia is pleased that the court has found that HTC infringed our patent and we look forward to demonstrating the validity of this patent. Nokia has also asserted the patent against HTC in the UK. 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 has already been found to infringe Nokia's patent EP 0 673 175 and an injunction against infringing devices is already in effect in Germany. HTC must respect our intellectual property and compete using its own innovations."

Nokia is right that it has the opportunity to convince the Federal Patent Court of the validity of this patent, and if the patent is found valid, then HTC faces a problem due to today's infringement finding. However, as I wrote further above, a Federal Patent Court decision on the validity of this patent probably won't come down before 2015.

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