Thursday, October 17, 2013

Ruling canceled: HTC struggling to win patent case against Nokia before closing of Microsoft deal

The Munich I Regional Court had originally scheduled a decision on an HTC v. Nokia patent infringement lawsuit over a power-saving technique for this morning, but a spokeswoman for the court just confirmed to me that the announcement has been canceled as a result of new representations made by HTC. The court has reopened the proceedings and scheduled a retrial for February 6, 2014.

Previously, another German court, the Mannheim Regional Court, had dismissed two other HTC countersuits against Nokia:

All in all, HTC (including S3G) has brought five German lawsuits against Nokia over only two patents, four of them just over the power management patent. The courts in Mannheim and Munich severed HTC's claims against newer Nokia Lumia devices (running Windows Phone 8), which were brought through amended complaints, from the WP7 cases. I reported on those amended complaints back in June, when the additional claims were mentioned at the trial preceding the decision originally scheduled for today.

The window of opportunity for HTC to gain leverage against Nokia is now closing. Nokia is in the process of selling its wireless devices business to Microsoft. While its terms are unknown, it's a fact that Microsoft and HTC have a patent cross-license agreement in place, and it is known that various existing Microsoft cross-license agreements with other industry players will also cover those products once Nokia's wireless devices business is owned by Microsoft. I understand from public documents that the deal is expected to close in early 2014, with April being a reasonable estimate. Antitrust clearance will be needed for this deal because of its size, but there are no substantive issues that could result in an extended review, let alone a regulatory decision to block it.

Assuming that April is the month the deal closes, and considering that the Munich court typically hands down decisions two months after trial, the Munich ruling on the power management patent will presumably come too late for HTC's purposes. I understand that the February 2014 trial will relate to both HTC v. Nokia cases pending there (the one over WP7 devices and the one over WP8 devices). And HTC's/S3G's appeals of the Mannheim dismissals probably won't even be adjudicated before 2015. Also, I'm not aware of a near-term trial date in Mannheim for the WP8 power management case against Nokia Germany, and the Mannheim court also tends to rule about two months after trial.

Unless HTC unexpectedly finds a patent it can assert against the NSN mobile network infrastructure business and/or Nokia's Here maps business, it's not going to be able to countersue Nokia after the closing of the Microsoft deal. HTC will have to take a royalty-bearing license sooner or later. It can, of course, keep trying to delay the inevitable by defending itself against one Nokia lawsuit after the other and by modifying devices to comply with import and sales bans. But Nokia has so many relevant non-standard-essential patents that HTC will at some point elect to take a license.

Nokia would presumably like to put the dispute with HTC behind it and move on to greener pastures. Through the "Patentgate" scandal it came to light that Nokia and Samsung are negotiating a patent license deal.

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