Tuesday, July 23, 2013

Nokia wants to reassert patent that HTC's stalling tactics got dropped from previous ITC investigation

HTC has so far done a tremendous job defending itself against Nokia's patent infringement claims on the merits, but it's also very good at stalling, as Apple previously experienced. In February, Nokia's U.S. Patent No. 7,366,529 on a "communication network terminal supporting a plurality of applications" fell victim to HTC's masterful gamesmanship. An Administrative Law Judge referred Nokia's claims relating to that patent to arbitration, rendering the patent irrelevant for timing reasons to the investigation of Nokia's first ITC complaint against HTC, filed in May 2012. In March, the Commission, the six-member decision-making body at the top of the U.S. trade agency, affirmed this decision.

How did HTC accomplish this? It argued that the patent was subject to arbitration, and that the question of arbitrability itself was subject to arbitration. The ITC's case law sets the bar extremely low for a claim like this to succeed. A claim has to be beyond ridiculous (the official term is "wholly groundless") in order for the ITC to decline to refer the question of arbitrability to arbitration. And when such a referral happens, the patent is practically dead for the related ITC investigation for timing reasons. HTC's lawyers shrewdly identified and capitalized on this opportunity.

With the benefit of 20/20 hindsight it now appears that Nokia was right and the patent wasn't truly arbitrable. In a motion that became accessible late on Monday, Nokia says that "[r]ight before the first deadline [in the arbitration proceeding, which HTC also stalled] that would have required HTC to set forth its substantive position on expedited resolution of HTC's license theory to the ICC Tribunal, and having successfully removed the 529 patent from the 847 Investigation, HTC withdrew from its own arbitration". Obviously, this was all about stalling, and ITC didn't have the slightest basis for arguing that this patent falls under a standard-essential patent (SEP) agreement. But in the meantime Nokia had brought (in May 2013) a second ITC complaint against HTC, which the ITC has now been investigating for about a month. Nokia is now asking the ITC to allow the assertion of the '529 patent in that investigation.

The first argument Nokia makes for the proposed adition is that "HTC's improper use of arbitration as a delay tactic provides good cause to add the 529 patent to the Investigation". It apparently hopes that the ITC will not be amused when it sees how HTC made an end run around an investigation.

The motion also discusses HTC's latest and rather creative stalling tactic. According to the document, when HTC sought to withdraw from the arbitration it had triggered, it brought a UK complaint "declaration that the 529 patent is essential to one or more standards". Nokia is puzzled as to why HTC "believes the UK court has jurisdiction to adjudicate a United States patent".

Nokia says it accuses features not subject to the standards its existing SEP license agreement with HTC covers. For example, Nokia's infringement contentions concerning the '529 patent target "Google Cloud Messaging (GCM) in HTC's products". Google is already intervening in the ITC investigation of Nokia's second complaint against HTC. Its recent motion was not opposed, and it has meanwhile been granted.

[Update on July 24, 2013] HTC's opposition to this motion is discoverable, but the document itself is (at least for now) sealed. Nokia provided the following comment: "Nokia has moved to add US patent 7,366,529 to its complaint in the US International Trade Commission filed on May 23, 2013, as we continue to believe that HTC infringes this patent. Nokia included this patent in our first complaint to the Commission in 2012, but HTC moved to have it withdrawn pending an arbitration in the UK. Since HTC has now withdrawn from that arbitration without any resolution, we believe it is appropriate to assert it again in the ITC. We look forward to presenting our case on this patent in the pending ITC action." [/Update]

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