Monday, December 30, 2013

Nokia wins German patent injunction against all HTC Android devices including the One series

The New Year's Eve fireworks kicked off a day early at the Munich I Regional Court, where Judge Dr. Matthias Zigann just handed Nokia a Germany-wide patent injunction against all HTC Android devices (including the One series) that infringe EP1148681 on a "method for transferring resource information" by allowing end users to connect two HTC devices directly over NFC or Bluetooth (but not over WiFi or the Internet) to transfer resource information such as a URL. The patent is not standard-essential, meaning that Nokia does not have any FRAND licensing obligations.

HTC can and undoubtedly will appeal this ruling. But in the meantime, unless HTC manages to convince the appeals court right away that it is more likely than not to succeed with its appeal (a reasonably high hurdle), Nokia can enforce this injunction (including a recall of infringing devices from resellers and commercial users) on a provisional basis by posting a 400 million euro ($550 million) bond or giving security to the same amount. This is a permanent -- not preliminary -- injunction following an early first hearing held in October 2012 and a full trial held a few months ago (which I did not attend). But enforcement is provisional until all appeals are exhausted.

Nokia has enough cash to be able to afford the provisional enforcement of this injunction. The purpose of the bond is just to enable HTC to recover wrongful-enforcement damages should it prevail at the end of the proceedings and Nokia's financial condition deteriorate. At that stage, HTC would have to prove any damages it claims, and since it could always just remove the patented feature from its devices, it would have to convince the court (in that scenario) that it lost a certain amount of sales because of the reduced marketability of its products to German consumers. This is hardly going to deter Nokia from enforcement. Nokia has issued numerous statements since the start of its multijurisdictional infringement litigation campaign against HTC (in May 2012) that it seeks to put an end to HTC's alleged -- and repeatedly-proven -- infringement of Nokia's intellectual property.

Google realized during the course of this litigation that this Nokia patent is of concern to the entire Android ecosystem. (Earlier today I found out that Nokia is also in Android-related patent licensing discussions with Google's Motorola Mobility.) In addition to HTC's nullity complaint (invalidation action) challenging this patent before the Federal Patent Court of Germany, Google also brought a nullity complaint -- but too late to be considered by the Munich I Regional Court in connection with HTC's motion to stay the case pending those nullity cases. Under German law, a lawsuit is "rechtshängig" (pending) only after the complaint has been served by the court (which doesn't act before receiving an advance on court fees) on the defendant. Google acted too late, which is typical: it took Google (under a different CEO, though) quite long before it started to respond to the infringement actions brought against Android by Apple, Microsoft and other patent holders. Once again, it acted too late. Google's nullity complaint appears to involve additional invalidity contentions and may ultimately succeed -- but it wasn't legally pending at the time of the infringement trial, and the court found that HTC's declaration of its intent to add the same additional invalidity theories and prior art references to its own (pending) complaint was also too little, too late.

Originally, Nokia was alleging that a transfer of resource information over WiFi also fell within the scope of the patent-in-suit. It withdrew that part of the complaint ahead of the ruling. Since NFC and Bluetooth played a far greater role in this case at any rate, the court exercised its discretion to impose 100% of the court fees and of the recoverable part of Nokia's legal fees on HTC.

Ten days ago, Nokia won another Munich injunction against HTC, from a different panel of judges. Today's injunction was issued by the 7th Civil Chamber (Presiding Judge: Dr. Matthias Zigann), while the pre-Christmas ruling was handed down by the 21st Civil Chamber (Presiding Judge: Andreas Mueller). The earlier one did not relate to the HTC One according to a statement by HTC. In March Nokia had already won an injunction from another German court, the Mannheim Regional Court, but HTC simply removed a certain power-saving feature from its devices and kept selling its products in Germany. All three German Nokia injunctions against HTC were won by lawyers from the Dusseldorf office of the Bird & Bird firm.

Another Nokia v. HTC decision by Judge Dr. Zigann's court is scheduled for January 9, 2014.

Nokia is suing HTC in seven countries (U.S., UK, Germany, France, Italy, Netherlands, Japan) on three continents (North America, Europe, Asia).

In the U.S., the ITC, a trade agency with quasi-judicial powers, is currently reviewing a preliminary ruling that held HTC to infringe two Nokia hardware patents. Google, Verizon and Sprint, as well as other parties, have asked the ITC not to issue an import ban, citing public interest grounds, or to at least give HTC 12 months to modify the products it imports into the U.S. market. But Nokia argues that the ITC has already ordered import bans against smartphone and tablet computer makers with far greater market share, and counters arguments that injunctive relief should not issue against multifunctional products over patents covering single, minor features by saying that if the feature is minor, HTC should simply remove it.

In the UK, Nokia recently won an injunction, which was stayed by an appeals court for the duration of the appellate proceedings. The hurdle for such a stay is substantially lower in the UK than in Germany, where an infringement holding generally entitles patentees to injunctive relief without any equitable discretion.

Nokia's patent enforcement against HTC clearly has momentum now. The injunctions it has won so far have not given it decisive leverage. And it could be that HTC will decide to simply remove the resource transfer feature in Germany. But sooner or later, HTC will end up sending patent royalty checks to Finland.

So far Nokia's enforcement focuses on devices rather than the Android platform or Google's services, but a Nokia v. HTC lawsuit in Dusseldorf, Germany, involves Google Maps and Google Navigation, two services that are key to Google's overall strategy.

[Update] Nokia has released a statement, suggesting that HTC make it its first New Year's Resolution for 2014 to stop infringing:

"Nokia is pleased that the Regional Court in Munich, Germany has today ruled that any HTC product using Bluetooth or NFC connections infringes Nokia's patent EP 1 148 681, which covers the transfer of network resource information between mobile devices.

This judgment enables Nokia to enforce an injunction against the import and sale of all infringing HTC products in Germany, as well as to obtain damages for past infringement. This follows another ruling from the same court ten days earlier, which found that HTC products infringed Nokia's USB patent EP 1 246 071 and granting Nokia right to an injunction and damages against products infringing that patent.

Nokia began its actions against HTC in 2012, with the aim of ending HTC's unauthorised use of Nokia's proprietary innovations and has asserted more than 50 patents against HTC. During 2013, Nokia believes it has demonstrated beyond doubt the extent to which HTC has been free riding on Nokia technologies, with HTC found to infringe seven Nokia patents in venues including the Regional Courts in Mannheim and Munich, Germany, the UK High Court and the US International Trade Commission. HTC’s first New Year’s resolution for 2014 should be to stop this free riding and compete fairly in the market."


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