Sunday, March 24, 2019

Merkel's party in hurricane-strength shitstorm after falsely alleging U.S. corporations pay anti-Article 13 demonstrators

The day after tomorrow, Tuesday, March 26, the European Parliament will hold its first-reading plenary vote on the Directive on Copyright in the Digital Single Market aka EU Copyright Directive, at 12:30 PM local time in Strasbourg. The proponents of the totally ill-conceived Article 13 (which is technically Article 17 now due to a renumbering, but everyone knows what is meant by Article 13) would like it to be the final reading, but don't hold your breath:

  1. Under normal circumstances and according to conventional wisdom, you'd get your way. But this is an atypical situation with outside pressures and dynamics. There have been various defections in recent weeks from the pro-upload-filter camp, the most important one being Friday's announcement by Poland's Platforma Obywatelska (Civic Platform), the second-largest (by nmber of MEPs) party in the European People's Party group and even in the EU Parliament as a whole, to vote against Article 13 and, if necessary, against the entire bill. I thanked Platforma Obywatelska in my speech at yesterday's Munich demonstration (the largest one of roughly 100), which starts at 2h42m of the recorded livestream.

  2. Even if an unholy alliance between Merkel's party and numerous Southern European parties secured a majority on Tuesday, the proposed directive would still have to be formally adopted by the EU Council. Normally, such approvals following an earlier vote at the level of the diplomats are listed as an "A item," meaning for approval without discussion (they're approved by no one objecting). That's the way things work in the EU. But in this case, considering that even based on traditionally-conservative police estimates we had well over 100,000 people (mostly but not all of them rather young) on the streets across Germany (40,000 in Munich alone), I believe we have the potential to create a situation in which no member of the German government short of Merkel herself--she did a horse trade with Macron, who insisted on Article 13--would want to be responsible for the formal adoption of the bill by failing to raise a hand. And if Merkel herself wanted to take that step, it might even be the end of her government coalition.

    We're not there yet. The immediate objective is to get Article 13 voted down. But even if not, we won't give up. It would then be conceivable that the recently-elected chairwoman of Merkel's party, Annegret Kramp-Karrenbauer, could replace Merkel in a so-called Jamaica coalition (based on the colors of the parties involved) and kill Article 13. That's because the Social Democratic Party of Germany (SPD) opposes Article 13 and appears to be preparing for an exit from Merkel's coalition government. The number of people taking to the streets would reach stratospheric heights if we mobilized not only opponents of Article 13 but also disillusioned SPD voters who want Merkel's "grand coalition" to come to an end sooner rather than later (such as the SPD's youth organization) and other people who are tired of Merkel, of whom there's plenty.

    Should the EP adopt Article 13, I'll be among those who will immediately try to dissuade the German government from supporting its formal adoption regardless of unwritten diplomatic procedural rules.

We're less than 48 hours away from the EP vote, and Merkel's party (formally two parties--CDU and CSU--but practically just one as the CSU is basically the pseudo-independent Bavarian state party like Minnesota's DFL is just the Democrat Party in the North Star State) is going through a shitstorm now that beats everything they've ever been through. It's a hurrican.

What triggered this shitstorm is the most stupid and most outrageous claim made in the whole copyright reform debate, which means a lot because earlier this week the CDU/CSU delegation to the European Parliament already made itself the laughing stock of German Internet users by saying something totally foolish and incompetent about Google's inner workings. Also, the European Commission's "mob" blog post won't be forgotten anytime soon.

The CDU/CSU delegation's incompetence is an embarrassment, but now they're seriously antagonizing an entire generation of voters by falsely alleging that people taking to the streets against Article 13 are paid by "large American corporations" (click on the image to enlarge; this post continues below the screenshot of the tweet):

In the above tweet, the CDU/CSU EP delegation's official Twitter account shared a quote from an interview their leader in the EP, Daniel Caspary MEP, gave to the "Bild" tabloid newspaper, which I'll translate as follows:

"When American corporations attempt to prevent the adoption of a law by massively leveraging disinformation and paid demonstrators, our democracy is in jeopardy." (emphases added)

This. Is. Outrageous.

This. Is. Preposterous.

This. Is. Pathological.

What Mr. Caspary apparently confused for hired guns at demonstrations is that one NGO, EDRI (which is far left of my political inclinations to be sure) offset parts of some activists's travel costs, to the tune of 450 euros (many professional lobbyists charge more per hour) for coming to Brussels and Strasbourg to meet MEPs. But with roughly 150,000 demonstrators on German streets yesterday, plus dozens of demonstrations in other European cities (roughly 100 venues in total), it would have cost tens of millions to pay 450 euros to each participant in yesterday's demonstrations.

Various CDU politicians, also including some members of the German Bundestag (Federal Parliament), have distanced themselves from this idiocy in the strongest terms. The CDU youth organization's Hamburg-Harburg chapter even warned that this offensive behavior against people exercising their democratic rights would make their party lose an entire generation of voters.

Actually, the crowds across Germany even included some CDU members as this tweet shows (#cnetz is the CDU/CSU-aligned digital-economy think tank).

It's high time the CDU/CSU realized that this is a grassroots movement. I wasn't paid for my participation in the Munich demonstration and didn't have the slightest indication of anyone receiving anything. Instead, the organizers are even struggling to offset their hard costs with donations, as Arnold Schiller, the organizer of the Munich demonstration (which unexpectedly even surpassed the attendance in Berlin, which was originally expected to be the main event) explained on Twitter.

A leading German YouTuber, Rezo (@rezomusik on Twitter), replied to a retweet of mine of CDU politician distancing himself from his party's EP delegation's "communications" on Twitter that the issue is one of substance, not style: the problem is not how they say it, but what they say and, above all, the underlying disdain of democracy.

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Thursday, March 21, 2019

Qualcomm may seek declaration of having met FRAND obligations, gets minor adjustment of Korean antitrust fine, wholesale acquittal in Japan

There's three pieces of news regarding Qualcomm's antitrust issues, none of which has huge impact in its own right, but the combination of the three warrants an update.

First, Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California issued an order on Wednesday, denying a motion for judgment on the pleadings through which Apple sought to prevent Qualcomm from seeking, at the trial starting April 15, a declaratory judgment that Qualcomm has met its FRAND obligations under ETSI (a standard-setting organization based in Europe) through its licensing offers (this post continues below the document):

19-03-20 Order Denying Judg... by on Scribd

The legal standard here is that declaratory judgment is available if there's a definite and concrete controversy, and in case of doubt, courts tend to be permissive. In this particular case, the question was whether Qualcomm would stand to gain anything from the declaration it's seeking if it prevailed that it wouldn't already gain from successfully defending itself against Apple's FRAND breach claims. In other words, Qualcomm's defenses would require the court to either agree or disagree with Apple that Qualcomm breached its FRAND obligations; if the court agreed with Apple, Qualcomm would lose anyway, and if the court disagreed with Apple, it would conversely mean that Qualcomm met its obligations. So why issue a specific declaration? Judge Curiel has decided that such a declaration may have value beyond what a successful defense can provide.

Judge Curiel agrees with Apple that the requested declaration of FRAND compliance "will not resolve Apple's antitrust cause of action or disgorgement claims." That's simply the case because Qualcomm's declaratory judgment claim relates to a limited period of only a couple of years (the parties' negotiations in 2015-2017), while the antitrust claims here cover the time since 2008. However, pointing to an Eastern District of Texas decision (HTC v. Ericsson, December 17, 2018), which is obviously not binding on a district court in a different circuit and generally not too persuasive outside of that particular patentee-friendly district, Judge Curiel notes that the theory of an "unwilling licensee" no longer being entitled to the benefits of a FRAND licensing commitment "has been recognized as a legitimate basis for declaratory relief and is legally sufficient to survive Apple's motion." But, in any event, all of the evidence required to resolve this declaratory judgment claim will have to be put before the jury at any rate (just to adjudicate the claims that the parties agree must be resolved)--and Judge Curiel doesn't see a risk of confusion of the issues.

The idea of an implementer of a standard forfeiting its rights to a FRAND license through its conduct in negotiations looks like the kind of pro-patentee extremism the Eastern District of Texas is known for. It's already debatable whether a patent holder may have access to injunctive relief against the products of an unwilling licensee. But the idea that someone's (alleged) failure to make a FRAND counteroffer affords the patent holder the freedom to seek supra-FRAND terms, or hypothetically even to decline granting a license on any terms, is absurd simply because two wrongs don't make a right.

Given the facts, such as that Qualcomm collects about 25% of all patent license fees (counting all industries) in the world and the lion's share of all wireless patent license fees, it's hard to imagine that anyone would find its terms to be FRAND. In fact, Judge Lucy H. Koh's upcoming FTC v. Qualcomm decision may make this clear in a way that the Southern District of California could rely on the Northern District's decision. Even if a jury got confused or misled, the trial judge or, at the latest, the appeals court would certainly find that no reasonable jury could have considered Qualcomm's royalty rates (and various other terms) fair, reasonable, and non-discriminatory. That's why I guess the Ninth Circuit won't even get to decide on whether or not to adopt the Eastern District of Texas line on FRAND compliance declarations.

The second development to report briefly comes down "See I Told Ya So" with respect to a 2009 antitrust fine imposed on Qualcomm by the Korea Fair Trade Commission. As I had explained after a recent decision by South Korea's Supreme Court, it was only about an adjustment in the tens of millions of dollars, while the aggregate of the old 2009 fine and the late-2016 decision that basically kicked off the current wave of Qualcomm antitrust actions is on the order of a billion dollars.

As Reuters reports, the 2009 fine was lowered by 18% to $200 million.

The single most important issue facing Qualcomm in Korea is actually a requirement (resulting from the December 2016 order) to extend SEP licenses on FRAND terms to rival chipset makers. Continued non-compliance could at some point result in criminal charges.

The third tidbit relates to another very old Asian antitrust ruling: a 2009 cease-and-desist order by the Japan Fair Trade Commission. A week ago, Qualcomm issued a press release according to which the nine-year proceeding in Japan resulted in the conclusion that Qualcomm doesn't violate Japanese antitrust law through its cross-licensing requirements and non-assertion covenants. Qualcomm's attorneys also filed the Japanese decision with Judge Koh in the FTC case and announced they'd submit a certified translation later.

I have no idea what exactly the antitrust standard in Japan is and don't even know who the complainants were. What I do suspect very strongly is that the JFTC's about-face has a lot--or simply everything--to do with changes in market shares. In 2009, Japanese device makers played a far greater role in the worldwide handset market than today. They're still around, unlike their European counterparts, but almost insignificant outside of their domestic market compared to their rivals from the U.S. (Apple), Korea (Samsung), and China (Huawei, ZTE, Xiaomi etc.). And Sharp even got acquired by a Chinese company (Foxconn). Therefore, I believe the Japanese government's perspective on what benefits the likes of Sony and Panasonic changed fundamentally during the protracted process. Obviously, Qualcomm would have us believe that it simply prevailed in the end because of a more thorough analysis than the one underlying the original decision. But antitrust agencies don't hand down cease-and-desist orders (the most incisive remedy!) on a whimsical basis--they do so after in-depth investigations (and it's hard to imagine the standard would be lower in Japan). That's why a change in economic-policy priorites, with the JFTC potentially looking at Japanese companies as future net licensors, is the most plausible explanation.

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Wednesday, March 20, 2019

Merkel party's delegation to the European Parliament embarrasses itself with idiotic tweet displaying total digital-economy incompetence

According to the following tweet by a Financial Times reporter, the center-left S&D group in the European Parliament has decided to vote in favor of Article 13 of the EU copyright reform bill (this post continues below the tweet):

However, each MEP will be free to vote for or against anything. This week the political groups are just preparing their official recommendations, and given that the current version of the copyright bill resulted from a "trilogue" (interinstitutional negotiations between EU Council, European Commission and European Parliament), it's normal that the major political groups in the EP officially recommend to their MEPs that they vote in favor. That said, there definitely is a problem because southern European center-left parties are inclined to support the bill.

Comparing the current situation to the one we faced in 2005 before the plenary vote on software patents, there's certainly a wider gap now. However, there will be massive protests on Saturday. In my previous post I provided a list of demonstrations (which has even grown since) and mentioned that I'm going to be one of the speakers at the Munich demonstration. Should those demonstrations have major impact, then there's still a chance that Merkel's Christian Democratic Union (CDU) and its Bavarian sister party (Christian Social Union, CSU) may prefer to avoid holding a vote so shortly before EU elections in May.

The CDU and CSU delegation to the European Parliament has embarrassed and disqualified itself to the extent that no citizen could possibly trust them to understand the issues in the slightest. There are people in the CDU and CSU with a far better grasp of digital policy issues, but they're active in national politics, not in the European Parliament.

The CDU/CSU (technically two parties, practically just one) is the largest political party in the largest EU economy. This is the leading German government party, and they're the most powerful party within the European People's Party (EPP), which in turn is the most powerful political group in the European Parliament. The current EPP chairman, Manfred Weber, is a CSU politician; his predecessor was a German-speaking Alsatian Frenchman, whose predecessor was a CDU politician (Hans-Gert Pöttering). That family of parties wields a big stick in EU politics, and a CDU MEP, Axel Voss, is the EU Parliament's rapporteur on the controversial copyright directive.

As I mentioned in my previous post, I actually have a lot of compassion for what he's going through. I, too, have faced shitstorms because of pro-copyright positions I took in connection with Oracle v. Google (which were later validated by the Federal Circuit), but at least I wasn't threatened in that context (that happened to me, too, but because of my opposition to Oracle's acquisiton of Sun Microsystems).

What I can't help but conclude, however, is that Mr. Voss doesn't understand the inner workings of the Internet well enough to realize what kinds of problems "his" Article 13 is going to cause in practice. The unbelievably stupid tweet by his party's EP delegation that the headline mentions was issued in Mr. Voss's defense can only be understood in its specific context. And that context starts with an interview Mr. Voss gave to the German edition of Vice.com. I'll translate the key passage here, which is related to the risk of content "overblocking" by platforms:

"With a view to technical solutions our position is: yes, it may be that something gets blocked that shouldn't be. It's a safe assumption it won't work 100%. I'm not an engineer and can't explain to you whether [filters] can really identify remixes correctly. But on Google there's also that page where you can click on memes--an actual section." (emhasis added)

Article 13 doesn't mention filters, but high-traffic platforms can't practically meet its requirements without, at least not based on the wording of the directive itself (national implementations are a bridge that we'll cross when we get there). At the same time, Article 13 seeks to allow memes, remixes, parody, satire etc.--but as Mr. Voss conceded, automatic filters may end up overblocking.

The sentence I highlighted above means to say that Google is, in Mr. Voss's observation, capable of electronically identifying memes.

But while Google has special search modes (which one might compare to sections of a newspaper or magazine) for News, Images, Videos etc., memes aren't an "actual section" as Mr. Voss told Vice. "Memes" is merely one of literally (!) millions (across all languages) of keywords that Google identifies. If you find a keyword in an index of a book, it's just a keyword--and not the equivalent of a chapter.

Given that Google doesn't provide a memes "section," German social democratic MEP Tiemo Woelken ("Wölken" in German) raised a legitimate question on Twitter earlier today. My translation: "I've just been looking for a #memes section on #google. Has anyone found it? #Article13"

Instead of Mr. Voss graciously conceding that he had confused a keyword for a section, his party's delegation to the European Parliament rushed to his defense a few hours later with the most stupid tweet I've seen so far in connection with Article 13. Since they might recognize how foolish that tweet was and remove it then, here's a screenshot (click on the image to enlarge; this post continues below the screenshot with an English translation and further commentary):

Here's my translation:

"It seems @AxelVossMdEP is actually more knowledgeable on this than @woelken

Google's search engine can filter out #memes pretty well.

#servicetweet

#yes2copyright"

What you can see even on their screenshot is that "memes" is listed there as a keyword at a level with "buzzfeed", "leistungsschutzrecht" (= press publisher's right for news headlines), and "upload filter."

But the worst part is that the CDU/CSU chose to dig itself an even deeper hole by now claiming explicitly that Google's search engine can tell memes from other images that might have to be blocked by upload filters over fears of infringing someone's copyright. That is, of course, what Mr. Voss also meant in that Vice interview. The CDU/CSU delegation's tweet just makes it unmistakably clear how incompetent those guys are.

An upload filter would have to--and in the foreseeable future, even with Artifical Intelligence, won't be able to--tell a meme from an infringing use of someone else's copyrighted picture. That is a substantive question that one could spend hours in court debating--per image. And in many cases, even reasonable people might disagree on whether the text someone put on an image is creative enough for the derivative work to constitute a "meme" that should be in the clear. It's technically far easier for the computer to recognize a substantial overlap between the bitmaps of the two images (the meme and the original photo), and on that basis it would have to err on the side of caution and block the upload.

Google's "meme" keyword is not based on any "fair use"-style judgment. It's not like Google's software could reasonably reliably clear memes without overblocking. Instead, one can see with a limited number of clicks that Google attaches the keyword to certain images simply because of the word "meme" or íts plural showing up close to the image. Here's a screenshot of about a dozen results I got when searching for "Axel Voss" (as the CDU/CSU delegation did in its moronic tweet) in the Google "Images" section (click on the image to enlarge; this post continues below the screenshot with further analysis):

My screenshot makes it even clearer that "meme" is just a keyword. For "axel voss" Google also lists terms like "internet", "european parliament," or "celebrated."

But the most important thing is that all those images are on pages that contain the letters "meme" in their URL and/or on the related page:

  1. The first link ("Axel Voss, initiator of Articl...") points to https://www.reddit.com/r/memes/comments/9fhi3e/axel_voss_initiator_of_article_13_lets_meme_him/ and on that page the headline is "Axel Voss, initiator of Article 13. Let’s meme him into oblivion so he is censored by his own law." Also, various comments below the picture also contain the word "meme."

  2. The second link ("AXEL VOSS FORMAT SO ...") points to a site named "me.me" that is--guess what--dedicated to memes. On https://me.me/i/using-any-other-format-using-the-axel-voss-format-so-2bc17766802a4379964b57699e8f89be the word "MEME" appears at the top, in various combinations such as "Mecian Memes," "Gru Meme", or "I Don't Feel So Good Meme."

  3. The third link again goes to a pages in the Memes section of Reddit, with Memes in huge letters at the top of the page: https://www.reddit.com/r/memes/comments/9fq63g/seriously_i_cant_stand_axel_voss_and_his/

  4. The fourth link ("Exist* Axel Voss S Pree R...") again points to that me.me site: https://me.me/i/memes-exist-axel-voss-s-pree-real-estate-zencreek-9120a1c995aa4d1daa674ab4d00b72d1

  5. Then there's a link ("Image tagged in axel voss me...") that points to https://imgflip.com/i/2k7e2f and on that page one can see that whoever uploaded it specifically checked the "memes" checkbox (top right corner); also the page says that this image was created with the "Imgflip Meme Generator."

  6. Then there's a link to memedroid.com, and the subtitle says "Axel Voss - Meme by Daba ...".

  7. The rightmost link in the upper row ("Eins der letzten Memes mi...") again contains the word "meme" (or, in this case, its plural) in the subtitle.

  8. This also applies to the first link ("Axel Voss Meme by memedoggo2 - ...") in the second row, which points to memecenter.com,...

  9. ...and to the next one ("axel voss Memes & GIFs - Imgflip").

  10. The third one in the second row ("EU Copyright Directive ...") points to knowyourmeme.com, and the word "meme" appears on the image (as it does in the one before), meaning that optical character recognition (which even the software that comes with scanners is typically capable of) would suffice to categorize the image accordingly, but that wouldn't even be necessary because of various simpler options (such as the URL).

  11. Then we have yet another Reddit link ("Axel Voss memes on an all time high ...") with a clear description...

  12. ...and also another link to me.me.

  13. The last one points to https://netzpolitik.org/2018/copyright-update-2-upload-filter-fuer-alle-ausser-google-facebook-co/ and involves an image that contains the word "meme" ("MEME-KULTUR IM INTERNET? NICHT MIT MIR."). Even in that case, Google didn't have to perform optical character recognition, though OCR is clearly pretty straightforward compared to a graphics-based distinction between memes and infringements. Even OCR wasn't needed because the URL of the image (https://cdn.netzpolitik.org/wp-upload/2018/02/meme-axel-voss-837x484.jpg) contains the word "meme" next to "axel-voss." By the way, the word meme is most likely also found in many, if not most or even all of the other cases, but in the previous cases I didn't even have to look at the image URL to figure out how Google managed to categorize those pictures as memes.

This takes us full circle back to the upload-filter issue. An upload filter, especially in a situation where the only recommendation the layers could make is to err on the side of caution, couldn't rely on file names, subtitles, headlines, or other text found in the vicinity of an image. Otherwise end users could commit any kind of infringement by simply adding the word "meme" to a file name, a URL, an invisible tag, or by mentioning it somewhere on a web page, and the filter would have to accept everything on that basis.

Google's keyword search can live with false positives for a keyword like "meme." An upload filter could not rely on keywords because users would find out very quickly about such loopholes, tell each other about this on the Internet, and the whole filter would become useless.

The CDU/CSU delegation to the European Parliament is undoubtedly clueless as to how computer software like Google's search engine arrives at its results. That's why Article 13 imposes requirements and obligations that no existing technology can possibly meet. But there is a high risk of a majority of MEPs rubberstamping something that's going to be unworkable. MEPs would be well advised to heed the reasonable concerns voiced by critics of Article 13. Even if one doesn't necessarily have to agree with all of them, there really are serious issues, and the problem is just that the EU with its well-known, longstanding democratic deficit is on the wrong track.

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Europe-wide street protests to take place Saturday against Article 13 of EU copyright reform bill (I'll speak at the Munich demonstration)

Tomorrow (Thursday, March 21), the Conference of Presidents (= political group leaders) of the European Parliament will set the schedule for next week's Strasbourg plenary session, with the plenary debate on the Directive on Copyright in the Digital Single Market ("EU Copyright Directive") most likely to take place on Tuesday (March 26) and the vote later that day or the next day. In light of various developments, most notably a position paper by the Christian Democratic Union (CDU) of Germany (= Merkel's party) on the subsequent transposition of the EU directive into German law, I'm convinced the best and smartest thing to do for the Parliament, its largest parties and even for the EU as a whole would be to postpone the vote into the next legislative term. Certain discontinuity effects would be felt, with hundreds of new MEPs on board, but even the burdensome implications of a postponement would be preferable over a situation in which the important final two months of this year's EU election campaign would be overshadowed by public outrage over a rubberstamping of, above all, the ill-conceived Article 13.

But normally the vote will take place next week, and then the best thing to do would be for a majority of MEPs to vote to delete Article 13 so the process can continue. In fact, the EU Council (where the governments of the Member States cast their votes) could adopt the bill without Article 13. A new legislative process for Article 13 would be warranted. It's not just "one little article." Even by the narrowest definition, we're talking about 1,200 English words, making it almost as long as the Declaration of Independence--but if you include the directly-related Article 2 and, especially, the Article-13-specific recitals 37 and 38, the total length is at a level with the original (prior to amendments) U.S. Constitution.

I drew those comparisons at a first and small-scale press conference yesterday ahead of a demonstration that will take place on Saturday. Thankfully, the chairman of the Digital Agenda Committee of the German Bundestag (Federal Parliament), Jimmy Schulz, provided an introductory overview of the issues yesterday and will also speak at our demonstration. Jimmy, a member of the libertarian Free Democratic Party (FDP) and an IT entrepreneur, already was a tremendous ally on software patents (years before he was elected for the first time), so I've known him for about 15 years; later he also sponsored and authored a resolution against software patents that the Bundestag unanimously adopted in 2013. While a non-legislative resolution doesn't change the law, it was an important signal that the European Patent Office unfortunately ignored.

A bigger press conference will take place on Saturday at 11 AM local time, and the demonstration will start at 1:30 PM on Marienplatz, Munich's central and most famous square. We'll walk through some inner-city streets and reach our final rally point, Odeonsplatz, around 3 PM. I'll be one of the speakers at the final rally and I'll tell participants about a few things they can still do in the final days before the vote to influence the outcome. In order to be able to focus on a call to action, I asked to be the final or penultimate speaker.

The main event on that day will actually be the Berlin demonstration. But Munich is also strategically important as it's the capital of the only state in which the Christian Social Union (CSU), the CDU's Bavarian sister party, is running--and a CSU politician, Manfred Weber, is the European People's Party's spitzenkandidat (yes, they adopted that German word Europe-wide many years ago) and aspiring to succeed Jean-Claude Juncker as president of the European Commission.

All in all, there'll be demonstrations in dozens of European cities, from Helsinki to Cyprus, and new places get added to the list all the time (click on the image to enlarge; this post continues below the image):

While the Wikimedia Foundation isn't involved in our street protests, the German Wikipedia community (which must not be confused for the foundation!) recently voted to let Wikipedia.de go dark all day on Thursday (March 21) in the sense of blocking access to its content, showing only an information page that calls on Wikipedia users to contact their MEPs.

Roughly five million citizens have signed the SaveTheInternet petition on change.org, and a "diss track" video taking aim at Axel Voss MEP (CDU), the Parliament's copyright reform rapporteur, has been viewed more than one million times on YouTube alone (this post continues below the video):

I wish to distance myself from the insults ("go f*ck ***") and violent fantasies ("stuff your mouth with your necktie") in it. Before Mr. Voss became the anti-Article 13 movement's lightning rod (by the way, it's absolutely outrageous that someone made a bomb threat on Reddit), I was actually the number one shitstorm victim among those advocating strong copyright enforcement. In 2012, I went through a couple of shitstorms because of the district court's fundamentally flawed decisions, which the Federal Circuit reversed in two separate appeals just as I predicted (copyrightability in 2014, fair use in 2018). That's why I have more sympathy for his situation than many others, and it's not that his quest for stronger copyright enforcement is illegitimate: it's that his proposal overshoots and will cause massive collateral damage to 21st-century forms of creativity such as memes, fan fiction, and forms of commentary enabled by digital technologies (such as videos with overlay commentary), all of which would benefit from a U.S.-style fair use exception.

The reason for which I wanted to show the video regardless of the ways in which it steps over the line is that some people have put a lot of effort into it and it's been viewed more than a million times. The rap song repeatedly calls on listeners to take to the streets on 3/23 (= this week's Saturday).

It's hard to predict how many people will actually take to the streets on Saturday. At one recent demonstration, only three dozen people expressed their intent to join on the related Facebook page, but more than 1,000 showed up. In order for the demonstrations to have an impact, the aggregate number will have to be well above 100,000 in my view. For Munich I'm sure we'll be at least a few thousand, and I hope more than 5K.

If they held the vote today, and if every MEP showed up, I believe based on what I hear from different sources that we'd still be at least 50 votes short of a majority for the deletion of Article 13. But in an election year it's possible that some MEPs will just stay away from the vote (in the EP you always have a number of absentees) rather than making themselves unpopular by voting for Article 13. If our protests are very successful, the CDU and CSU may be scared of the impact of this vote on the EU election campaign. At a recent event called "Political Ash Wednesday" (a major tradition in German politics), Mr. Weber was heckled by anti-Article 13 protesters (this post continues below the embedded tweet):

Should Article 13 be adopted the CDU and CSU's candidates will likely face such backlash at virtually every campaign event--and especially on the Internet. They should go back to the drawing board with respect to Article 13, be it by postponing the vote or by a majority of MEPs voting to delete the article, in which case the ball will be in the EU Council's court (they could still bring back Article 13, and at the second-reading stage the hurdle for deletion is higher as a majority of MEPs will be required, with absentees having the same effect as a vote for the Council's position).

I rarely participate in street protests. I went to a few anti-software-patent demonstrations in 2004 and 2005 (including a couple of rally speeches), and reported on one or two Munich demonstrations organized by SUEPO (Staff Union of the European Patent Office). But I deeply care about this copyright matter--and I'm actually a staunchly pro-copyright blogger and have generated income from copyrighted works since my high-school days when I wrote computer books and articles for computer magazines.

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Saturday, March 16, 2019

Merkel's party proposes upload-filter-free national implementation of Article 13: constructive, but EU Parliament should postpone copyright vote

Late on Friday by local time, the Christian Democratic Union (CDU) of Germany--Chancellor Dr. Angela Merkel's party--and its Bavarian sister party, the Christian Social Union (CSU), provided by far the most compelling argument to date for a postponement of the European Parliament's copyright reform vote, which would normally take place right after the plenary debate envisioned for March 26.

Further to an initiative taken by the party's secretary-general Paul Ziemiak, who is 33 years young and likely better-placed than some others to understand the commercial and legal realities facing digital platforms, a group of CDU and CSU politicians focusing on policies for the digital economy unveiled a position paper on the future implementation of the contemplated EU directive into national law. You'll find my translation (unofficial unless and until one of the authors would approve it) of that paper further below (or just click here). Its main thrust is that a directive based on the recent interinstitutional compromise resulting from trilateral talks ("trilogue" in EU lingo) between EU Council (= Member States), EU Commission (= EU executive government and initiator of legislation) and EU Parliament could allegedly be transposed (= incorporated, implemented) into national law in a way that would render upload filters unnecessary.

Upload filters can result in overblocking, which even the EU Parliament's rapporteur Axel Voss MEP (CDU, state of North Rhine-Westphalia) conceded in an interview. In Germany, upload filters are as sensitive an issue as they are divisive. The written agreement based on which the CDU and CSU formed another government coalition about a year ago with the Social Democratic Party of Germany (SPD) explicitly rules out upload filters, but an EU-level compromise between the German and French governments resulted in a qualified majority in the EU Council for Article 13 of the proposed Directive on Copyright in the Digital Single Market ("EU Copyright Directive"). The CDU has consistently and vehemently denied--all the way up to the Chancellor's spokesman Steffen Seibert--that Article 13 in its post-trilogue form would entail upload filters. But critics have insisted that they would be a practical consequence borne out of necessity, and in recent weeks, two SPD politicians in senior government positions strategically undermined--one might even say "torpedoed"--that representation:

  1. The Federal Commissioner for Data Protection and Freedom of Information, Ulrich Kelber, elaborated on the negative implications of upload filters on data privacy due to a further concentration of Internet traffic as only a few companies would be in a position to provide such functionality (and everyone else would practically have to rely on their solutions in turn). He voiced this concern contingent upon the absence of a proposal for implementing Article 13 without such filters. Thankfully, Mr. Kelber's agency officially approved my English translation of his statement by confirming its accuracy.

  2. A state secretary of the Federal Ministry of Justice and Consumer Protection answered a question from a libertarian member of parliament and conceded in the ministry's reply--which officially constituted "the Federal Government's position" despite visible disunity--that high data volumes would practically necessitate such filters.

The CDU/CSU position paper (page 1; page 2; and translated below) seeks to alleviate the related concerns by arguing that the German Bundestag (federal parliament) could and would transpose the directive into national law with the guiding principle of favoring payments to copyright holders (without depriving them of their right to request takedowns) over precautionary blocking. There's a lot I could say, and at a later stage might say, about the substance of the proposal. But I'll refrain from it in this post (one of the reasons being that I'll seek official approval of my translation) and focus on procedural implications. The procedural aspect is most urgent: on Thursday (March 21), the Conference of Presidents of the EU Parliament (= the decision-making body of the leaders of the political groups) will have to formally adopt an agenda based on which the plenary vote on copyright would be held the week after. In my opinion, the CDU/CSU paper--which we should all welcome as a constructive step forward whether or not we consider it sufficient--indirectly provides three good reasons for postponing the EU Parliament's plenary vote into the new legislative term:

  1. The strongest point here is that CDU/CSU politicians have consistently argued in recent weeks that there must be closure for a legislative process that has been ongoing for years, with public protests escalating only in recent months--but now, only about 10 days prior to the envisioned plenary vote (where the CDU and CSU would like to see the EU bill rubberstamped), those very parties have put forward an 11th-hour proposal of the kind they, too, would have been free to present earlier in the process. Actions speak louder than words, so they've just conceded that further discussion at the EU level is warranted.

    The unusually high density of typos in that paper shows a sense of urgency on its authors' part.

  2. Again, for now I'm being intentionally nonjudgmental on how helpful the proposal is, but let's assume arguendo that it does alleviate/eliminate concerns over upload filters, and let's furthermore assume that the German implementation wouldn't be effectively overruled by the Court of Justice of the EU. On that optimistic basis, all Europeans should benefit from it; inconsistencies between national implementations should be minimized for the sake of the Digital Single Market; and I call on CDU/CSU to acknowledge the commercial reality that Germany, as large as it obviously is, represents but a minority of the Digital Single Market, so even if German law contained a valid and viable workaround for upload filters, platform operators addressing the Digital Single Market at large would likely still have to implement them on a precautionary basis so as to steer clear of liability issues in other countries.

  3. The CDU/CSU paper says that they do take citizens' concerns and criticism "very seriously." It is no secret that EU elections will be held two months after the presently-envisioned date of the plenary vote, and that the CDU/CSU's election campaign has already been impacted in various ways (in the digital as well as the physical worlds). The very best way--most meaningful and most helpful--for CDU/CSU to demonstrate their understanding of public concerns would be a postponement of the plenary vote.

The remainder of the post is my translation of the CDU/CSU paper.

Here's a direct link to this translation (designed to skip the above part proposing a postponement of the vote). Feel free to copy, paste, and distribute the translation below, provided that this notice is included. Translated by Florian Mueller (fosspatents.com). Translator's explanatory notes in [brackets].

----------- BEGINNING OF UNOFFICIAL TRANSLATION -----------

Promoting freedom of speech, improving the legal situation of end users, providing fair and effective compensation to creators, involving and obligating platform operators--but all of the foregoing without upload filters

Further to an initiative by CDU secretary-general Paul Ziemiak, CDU politicians focusing on legal and digital affairs as well as the spokespersons of #cnetz [a digital affairs think tank closely aligned with CDU/CSU] have agreed on a set of proposals for the national implementation of the EU-level compromise on copyright reform. By means of the proposals we've agreed upon, we seek to guarantee that the following objectives be reached:

  1. The German implementation will do without upload filters.

  2. We don't want content uploads to be blocked in practice--instead, we want to ensure fair compensation for content.

  3. Authors, musicians, artists, creatives and other producers of copyrighted works will be able to enforce their intellectual property rights on a better, more convenient, and simpler basis.

  4. End users' freedom of speech will be strengthened, and end users will enjoy a very high degree of legal certainty.

  5. Obligations will be imposed on Internet platform operators. Business models based upon copyright infringement will be intervened against. Platform operators must pass on a fair share of their profits to those who actually created the content. In exchange they, too, will enjoy legal certainty.

For two-and-a-half years, EU-level negotiations of a copyright bill have been taking place, with the following objective inmind: even in the digital space, authors, artsists, creatives, musicians and other creators of copyrighted works are entitled to intellectual property protection. Divergent interest had to be taken into consideration during this democratic and protracted process involving the EU Commission, the EU Council, and the EU Parliament. Finally, a compromise was reached in February 2019. A partly intense debate has been raging since said compromise at the latest. At the heart of said debate are concerns that the new legal framework would require the use of so-called upload filters. In this context, there are fears of an overblocking of content by platforms and, as a result, restrictions on the freedom of speech and the diversity of opinions.

The CDU takes concerns over and criticsm of the EU-level compromise very seriously. Like all EU directives, the copyright reform bill will also have to be transposed into national law. In that process we want to ensure that upload filters will not be used. At the same time, we are guided by the principle that work must be rewarded and seek to ensure that authors and artists will receive fair compensation. Furthermore we strive to provide certainty to Internet users that their uploads will not expose them to cease-and-desist claims. Finally, we are driven by the desire to impose obligations on platforms that have been making a lot of money with other people's creative works without providing a reasonable level of compensation to them. What the platform operators will get out of this is legal certainty.

In order to achieve these objectives, the CDU puts forward its proposals for the national implementation of the EU-level compromise. Our proposals are largely based on the following items:

  • The approach outlined herein, which prevents upload filters, will form the basis of our national [German] implementation of the copyright directive. Our guideline is: pay, don't block. There will not be any upload filters.

  • The bottom line is: you will be able to upload any content. Up to a certain period of time, uploads are exempt from license fees. Above and beyond that period, the platform operator will have to take a license to all copyrighted works that come with a digital fingerprint identifying the creator. That is normally the case.

  • Alternatively, right holders can also waive their rights or request a takedown. In all other cases, a legally mandatory bulk license fee will apply.

  • This will enable each and every creator to receive compensation for their works. The bulk license will relieve patforms of their obligation under Article 13 to perform an individual analysis of copyright violations prior to upload. Therefore, uploads will not have to be subjected to filtering, and overblocking will not occur.

  • Without exceptions and as envisioned by the directive, consumers will not be liable for violating copyright through their uploads. This will result in a fair balance between the interests of end users, creators, and platform operators.

  • In legal terms the bulk license will constitute a limitation of copyright law.

----------- END OF UNOFFICIAL TRANSLATION -----------

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Friday, March 15, 2019

Qualcomm can't leverage Chinese bogeyman or allege misuse of its trade secrets by Apple in upcoming antitrust and contract trial: pretrial rulings

Judge Gonzalo P. Curiel just entered a minute order summarizing various rulings on Apple's, its contract manufacturers', and Qualcomm's motions in limine (pretrial motions to exclude testimony, evidence, or argument). The rulings came down orally at yesterday's motion hearing as the order indicates.

While those decisions can have major impact on what the parties to a dispute can say or show at trial time, rulings on motions in limine are typically much less important than summary judgment orders, and a very important summary judgment was published yesterday but dated March 12 (Tuesday): under that one, Qualcomm has lost the opportunity (barring a successful appeal) to claw back billions of dollars from Apple, and it's now apparently a foregone conclusion that Apple is entitled to an extra $1 billion in payments under a Business Cooperation and Patent Agreement (BCPA). And in other news today a jury verdict (in Qualcomm's favor) came down in a sideshow case involving a very small amount of money compared to what's really at stake between the parties.

But there are tens of billions of dollars at stake in the trial that will start on April 15 (with Apple placing the emphasis on antitrust and FRAND arguments, while Qualcomm puts certain contracts front and center), so even the decisions on various motions in limine are worth looking at (even if not in great detail because there's so many of them). Relatively speaking, even those "MILs" are strategically more important than today's verdict in a case that is not even about a tenth of a percent of the big antitrust/FRAND/contract case.

It's important to consider that even if a motion in limine is denied, counsel may still successfully object (at trial time) to some of the related testimony, evidence, or argument.

Qualcomm's five motions in limine

  1. This Qualcomm motion has been denied, so Apple and the contract manufacturers remain free to present testimony and argument concerning "royalty stacking." This relates to the problem of numerous patent holders owning patents that have been declared to be essential to a given wireless industry standard, and if each and every one of those patent holders made Qualcomm-like demands on a per-patent basis, the aggregate royalty burden would be impossible for anyone to shoulder on a commercially viable basis.

  2. This one was granted, so Qualcomm has managed to preclude Apple from presenting evidence of its PR strategy, such as discussions between Qualcomm and its PR agents. But the motion made it clear in its first footnote that it "[did] not seek to exclude statements that Qualcomm has made to the press."

  3. The court deferred judgment on whether to exclude hearsay evidence from unretained experts. The related Qualcomm motion said: "Apple's exhibit list includes four expert papers by Karl Heinz Rosenbrock or Friedhelm Hillebrand regarding the Intellectual Property Rights Policy ('IPR Policy') of the European Telecommunication Standards Institute ('ETSI') (the 'Expert Papers')."

  4. Qualcomm's motion to exclude evidence of certain standard-essential patent (SEP) disclosures has been denied. This is about Apple saying certain disclosures by Qualcomm (of essential patents) to two U.S. standard-setting organizations, ATIS and TIA, weren't timely. This blog first mentioned them in connection with the summary judgment the FTC requested and actually obtained in the Northern District of California regarding licenses to rival chipset makers.

  5. Qualcomm's second successful motion in limine achieved the exclusion of certain transcripts of what companies that aren't parties to the Apple & Contract Manufacturers v. Qualcomm case in San Diego said at various investigative hearings held by the United States Federal Trade Commission (FTC). According to the motion, "[t]he witnesses who testified at these hearings included representatives from Samsung, Intel, Motorola, MediaTek and Huawei, among other companies." Qualcomm complained that using those transcripts would be unfair because "Qualcomm had no opportunity to attend the hearings and cross-examine the witnesses" (unlike at the later stages of the FTC v. Qualcomm proceedings).

Qualcomm's motions in limine had a pretty good hit rate (two out of five, and a third one may still succeed), but the impact is limited. Maybe there was something in the correspondence between Qualcomm and its PR companies that jurors might deem incriminating in some way, but I doubt it would have been absolutely damning. As for the investigative hearings, the fact that Qualcomm's lawyers weren't able to cross-examine those witnesses was a strong procedural argument for Qualcomm to make. However, the three SEP-specific motions in limine (#1, #3, #4) have been denied or deferred. And that's where the beef really is.

Apple and the contract manufacturers' 13 joint motions in limine

  1. Judge Curiel granted the motion to exclude testimony and argument regarding Apple non-SEP litigation. This is about positions Apple took in its dispute with Samsung over non-standard-essential patents. No one bashed Apple harder for its damages claims in one Samsung case than I did, but that's an old story and really doesn't have a bearing on what a FRAND royalty rate should be.

  2. Because of the denial of the related motion in limine, Qualcomm can still present certain fact witness testimony regarding the relative value of its portfolio. In their motion, Apple and the contract manufacturers had argued that "[t]hese and other Qualcomm fact witnesses have no basis to testify about the relative strength of Qualcomm's patents because these witnesses have no personal knowledge of other companies' patents." I'm sure they're going to raise this issue on cross-examination, just to minimize the weight any such testimony will be given.

  3. Qualcomm also remains free to present evidence or argument that Apple and the contract manufacturers allegedly make, use, offer to sell, sell, or import Qualcomm's patented technology. The fact that Qualcomm may say so doesn't mean it can prove large-scale infringement.

  4. The fourth motion in limine by Apple and its contract manufacturers has been granted in part and denied in part. The part that was granted appears very important: Qualcomm's allegations of Apple having misused Qualcomm's trade secrets or confidential information. There is a case pending under California state law, but so far nothing really appears to have come out of all those allegations, and they won't even be part of the big San Diego case. What Qualcomm will, however be allowed to say is that Apple has actually hired, or tried to hire, some Qualcomm employees. With Apple having set up shop in San Diego and recruiting wireless chipset engineers there, it's not really a secret--and not even 1% as incriminating as those--as of yet totally unproven--trade secret allegations.

  5. Qualcomm will be allowed to prsent some evidence regarding Apple's financial strength. Also, Apple would have preferred to separate the question of punitive damages through a bifurcation of the trial, which won't happen.

  6. Qualcomm can and likely will point to the fact that Apple has indemnification arrangements with its contract manufacturers (which is the normal course of business anyway).

  7. Apple prevailed on a motion in limine related to a totally unspecified contract with someone as well as its revenue sharing model for App Store purchases (as an app developer I have direct experience with that part), and its "MFi" program, which according to the motion "gives developers rights to traemarks, trade secrets, technical specifications, licenses to NEPs, and access to design components from vendors."

  8. A motion related to a 2015 Apple-Samsung meeting has been deemed moot.

  9. The huge Chinese bogeyman that was part of Qualcomm's PR strategy around the January FTC trial won't resurface at next month's trial. Judge Curiel granted a motion by Apple and its contract manufacturers to exclude evidence or argument that competitors who will benefit from the remedies sought are in Asia (last time I checked, Intel was still in California...) or portraying Qualcomm as an asset to U.S. national security (no patent can ever be an asset to national security since patents are published).

  10. Likewise, Judge Curiel agreed with Apple that some other antitrust cases involving either Apple or Qualcomm competitors like Intel over totally unrelated issues aren't relevant here.

  11. The parties stipulated that Apple and the contract manufacturers' motion to exclude evidence of Qualcomm's corporate character (such as how nice, generous, benevolent or whatever Qualcomm would like to be considered) was moot.

  12. Apple and the contract manufacturers didn't achieve a wholesale exclusion of "approximately, 92,438 pages of documents Qualcomm has produced since the cutoff [date in this case]" on top of "[m]ore than 18 million documents totaling over 08 million pages" already in the case. The denied motion argued that there was "a deliberate effort by Qualcomm to produce documents about events that have taken place after the fact discovery cutoff." This sounds like something that may give rise to various case-by-case objections later on.

  13. Granted in part and denied in part. Apple won the exclusion of deposition testimony of French law professor Bénédicte Fauvarque-Cosson regarding the interpretation of the ETSI FRAND declaration under French law (also served as an expert witness for Qualcomm in the FTC case, but wasn't made use of in the end) and former Bosch IP executive Dr. Bertram Huber (who sat across me at a 2004 government roundtable on patent policy) won't be allowed to give "improper testimony about legal conclusion," but he will be free to talk about the history or intent of the ETSI intellectual property rights policy.

Contract manufacturers' (without Apple involved) two motions in limine

  1. (No. 14) This was basically withdrawn and related to whether Qualcomm could tell the jury that the damage award might be enhanced by a factor of up to three.

  2. (No. 15) The court denied a motion relating to evidence Qualcomm may present regarding a pass-on of damages (by the contract manufacturers to Apple).

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San Diego jury decides Qualcomm v. Apple patent case in Qualcomm's favor: verdict is grossly inconsistent with outcome in the ITC

"You win some, you lose some." The same week that Apple won a multi-billion-dollar decision against Qualcomm (incorrectly portrayed by various media as a $1 billion matter), Qualcomm won a $31 million consolation prize (so we're talking about roughly 1% of what was at stake in the other context), with a San Diego jury having deemed Apple to infringe all three Qualcomm patents still in play (one had been thrown out by the court and two had been withdrawn by Qualcomm) and agreeing 100% with Qualcomm's damages claim.

This means it worked out for Qualcomm to make its case to a jury of laypersons--a case that had underwhelmed a professional judge (in fact, one of the most experienced patent judges in America, Administrative Law Judge Thomas Be. Pender). The discrepancies between the ITC's findings (which are final except for only one patent that Apple has already worked around anyway) and the verdict rendered by Qualcomm's hometown jury without a great deal of deliberation time could hardly be more extreme. The ITC case went nowhere, while the San Diego verdict sides with Qualcomm all the way, even with respect to the question of whether Qualcomm filed a patent application on an invention actually made by a then-Apple employee.

Jury verdicts enjoy a fair amount of deference, but as some other smartphone-related patent infringement cases have shown, there often are major differences between a verdict and the final result (after all appeals have been exhausted). Without a doubt, Apple, like any other party in the same situation, is now going to try to convince Judge Dana M. Sabraw that the verdict should be overturned or at least vacated. Some adjustments to the verdict may still happen in the Southern District of California, and then it's on to the Federal Circuit, which will also hear any appeal from the ITC case.

For the Quinn Emanuel lawyers representing Qualcomm in this case (led by David Nelson and Sean Pak) as well as some related cases, it's a really nice win and great for their track record. But for the wider dispute between Apple and Qualcomm, it's a sideshow in economic terms and far from a final outcome. The perspective of a judge, or a panel of appellate judges, on the evidence presented and whether a reasonable jury could possibly reach this result is often very different from what laypeople serving on a jury think.

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Apple obtains summary judgment against Qualcomm, can keep billions of dollars: no breach of contract by responding to antitrust regulators

In the Northern District of California, where the Federal Trade Commission is suing Qualcomm, an important summary judgment ruling came down in November, holding that Qualcomm owed rival chipset makers a cellular standard-essential patent (SEP) license on FRAND terms as per the FRAND declarations of two U.S. standard-setting organizations.

Qualcomm now has to digest a summary judgment order adverse to its interests in the Southern District of California, where Judge Gonzalo P. Curiel has determined that Qualcomm cannot claw back incentive payments made to Apple under a Business Cooperation and Patent Agreement (BCPA) based on allegations of Apple being responsible for some of Qualcomm's antitrust worries in the U.S., the EU, and South Korea, or based on Apple allegedly having induced its contract manufacturers to underreport royalties.

Considering that $1 billion out of the roughly $30 billion Apple and its contract manufacturers are seeking from Qualcomm in that San Diego action relates to Qualcomm having stopped such payments at some point, the amount at stake in this summary judgment context must be multiple billions of dollars as the BCPA took effect at the beginning of the 2013, so the period with respect to which Qualcomm was trying to claw back money must be a lot longer than the one during which Apple believes it should have received another billion dollars that Qualcomm withheld--simply because there were no signs of a dispute during most of that period. Apple's original 2017 complaint said in its § 160 that "Qualcomm conditioned billions of dollars on Apple's silence before courts and regulators about Qualcomm's business practices" (emphasis added).

Qualcomm can't get those billions of dollars back, apart from the hypothetical possibility of a successful appeal. And Apple is now virtually certain to get an extra $1 billion that Qualcomm withheld, though it may take another formal step, as I'll discuss further below.

Here's the order, followed by further analysis and commentary:

19-03-14 Apple v. Qualcomm ... by on Scribd

The final part ("CONCLUSION AND ORDER") grants summary judgment to the effect of dismissing, as requested by Apple, Counts VI-IX of Qualcomm's second amended counterclaims. The last one, Count IX, is one with which Qualcomm sought to get the court to decide that it didn't owe Apple the extra billion--and in the last passage before the final conclusion, Judge Curiel indeed finds that "Qualcomm has not shown a genuine dispute that, based on Apple filing a lawsuit, Qualcomm was relieved of its quarterly payment obligations for the second, third, and fourth quarters of 2016."

Does it mean that Qualcomm has to write a check now (in the event it can't obtain a stay)? In material terms I guess it does. In formal terms, the court still has to enter judgment on Apple's claim seeking the extra billion as the summary judgment order per se just declines to enter judgment on Qualcomm's related (declaratory judgment) counterclaim in Qualcomm's favor.

But what hurts Qualcomm even more is that it can't get back billions of dollars for the previous years.

The order is heavily redacted and I found it easier to understand after going back to a document I published a few weeks ago: the parties' trial brief on disputed contract terms, which addressed their positions on Sections 4 (based on which Qualcomm alleged interference by Apple with the contract manufacturers' relationships with its contract manufacturers) and Section 7 (based on which Qualcomm alleged a breach because of Apple's interactions with antitrust enforcement agencies). The related part of the pretrial brief on disputed contract terms (found in the older post I just linked to) begins on page 28 based on the numbering at the bottom of the page, or page 30 based on the page numbering of the PDF viewer. By the way, in that document Qualcomm, too, confirms that this issue here was about billions of dollars:

"In exchange for those commitments and other consideration, Qualcomm agreed to pay Apple billions of dollars in quarterly Business Cooperation and Patent Payments ('BCP payments')."

Note that those payments were made to Apple even though Apple wasn't making direct payments to Qualcomm itself: Apple's contract manufacturers bought the chips, paid the royalties, and charged eveything to Apple, and Apple then got an effective rebate in the form of Qualcomm paying Apple those kickbacks contingent upon some behavior (or on refraining from some behavior, to be precise).

Judge Curiel's reasoning is very balanced, but even though he agreed with Qualcomm on some subissues (such as that a safe harbor in the contract allowing Apple to respond to regulators wouldn't cover lies in the sense of things Apple would have said without reasonably believing they were true), Apple ultimately won and Qualcomm's BCPA-related clawback claims were found to have no merit--without any exception.

From a policy point of view, I'm profoundly concerned about any contract clause that prevents (by otherwise imposing a financial penalty) a party from antitrust complaints, be it with regulators or with courts. Let's look at it this way: a contract precluding a party from reporting crimes to the police would undoubtedly be unenforceable. Most antitrust violations aren't crimes--but they definitely are something that should also be reported to the appropriate authorities (competition enforcement agencies). There's a strong public interest in antitrust enforcement, and the freedom of parties to agree on certain term should end where that one is in jeopardy. However, Judge Curiel's ruling isn't that broad and general, though in one specific context he wrote:

"Under these circumstances, enforcing the BCPA so as punish Apple for responding to regulatory investigations would deter parties from responding to regulatory investigations and have the effect of concealing ongoing illegal conduct to the detriment of the public and perpetuating improper conduct."

The above sentence raises the question of why Qualcomm insists that its conduct was perfectly legal (as it did at the January FTC trial) while paying billions of dollars to ensure that no illegal conduct would be reported. The only conclusion a reasonable observer can reach is that Qualcomm has a lot of bad conduct to hide.

Judge Curiel reached his conclusion that Apple's summary judgment motion had merit by rejecting Qualcomm's theories one by one (except for some subissues that weren't sufficient for Qualcomm to get anything on the bottom line).

Qualcomm's allegations in the antitrust enforcement context come down to saying

  • that Apple "lied," but Judge Curiel can't see any credible evidence of Apple not having said things it reasonably believed to be true;

  • that Apple induced Samsung to influence the Korea Fair Trade Commission (KFTC) so it would broaden its investigation of Qualcomm's practices and impose worldwide remedies (as opposed to remedies specific to the Korean market);

  • that Apple's responses to questions from regulators such as the FTC or European Commission aren't protected by the BCPA's safe harbor for responses to regulators since Apple had played a role in instigating those investigations prior to signing the BCPA (but Judge Curiel disagreed with this because of the public interest in companies responding to questions from regulators);

  • that Apple attempted to expand the scope of the European Commission's investigation; and

  • that Apple induced the FTC to bring its 2017 lawsuit against Qualcomm.

Judge Curiel found that Apple didn't "lie" and that its answers were within the sometimes rather broad scope of the questions asked by regulators. Even if Qualcomm didn't like what Apple said or what regulators did in the aftermath, Apple was allowed to say what it said; also, some of what Qualcomm said Apple induced some agencies to do didn't even happen anyway.

The argument that Apple basically asked questions that were the effect of its pre-agreement efforts to get regulatory agencies interested didn't work because of the strong public interest in companies responding to those government agencies. Therefore, the judge disagrees with Qualcomm that Apple breached the implied covenant of good faith and fair dealing when negotiating and signing that BCPA with Qualcomm.

So before the related San Diego trial even begins (another one over "only" $31 million dollars is at the stage of jury deliberations, with no verdict reached yet), the first several billion dollars Qualcomm was seeking are already gone (again, absent a successful appeal by Qualcomm to the Ninth Circuit). Just like the FTC went into the January trial with tailwinds from summary judgment, Apple is going to go into its own Qualcomm trial next month on the basis of already having won something very significant.

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Wednesday, March 13, 2019

Official concession of upload filters by German government destroys credibility of proponents of Article 13 of EU Copyright Directive

The European Parliament will hold its plenary debate on the Directive on Copyright in the Digital Single Market on March 26, suggesting a plenary vote later that day or the next day. Further headway has meanwhile been made against Article 13, though probably still not enough. For an example, it's now likely that the number of mostly (but not exclusively) young people taking to the streets on March 23 will be in the six figures. The Berlin demonstration alone (which will be the main one) is now expected to have at least 20,000 participants, with more optimistic projections being in the range from 40,000 to 50,000. By the way I'm too busy to go to Berlin, but I will participate in the Munich demonstration that same day. Recently, additional MEPs have declared their intent to vote against Article 13, including the small-in-numbers but well-respected and influential Luxembourgish delegation to the center-right European People's Party (EPP) group in the EU Parliament.

Proponents of Article 13 might still succeed, but they'd pay dearly for it in the EU elections in May--and way beyond those elections. We're talking about generations of voters who have a pretty good idea of what's going on and are not going to take it lightly. There's quite some awareness now among teens, twens, and people in their thirties and fourties for the issue--and there'll be a lot more awareness among those age groups soon. No political grouping would bring up more voters against itself than the EPP, and it's the only political group that is still largely (apart from some pockets of resistance) in favor of that crazy Article 13.

What might happen is that the EPP will later remember its support of Article 13 as the biggest mistake in the history of that Europe-wide group of conservative (partly in name only) parties that for some time has been the most powerful political group in the EU.

If the EPP's national campaign managers in countries with a strong, vocal and growing anti-Article 13 movement aren't either totally incompetent or sleepwalking through this year's elections, they will already have realized that this is the number one problem they face, even eclipsing the issue of migration because of the power of the Internet.

The German government has just provided a silver bullet that may still persuade a majority of MEPs to vote against Article 13:

The big issue here is whether or not website operators and app makers would have to install upload filters in order to minimize their risk of being exposed to strict copyright liablity under Article 13 for failure to take measures necessary to prevent infringement. So far, Axel Voss MEP (EPP/Germany) and his brothers-in-arms have insisted that upload filters aren't mentioned explicitly in the proposed text. It's a particularly sensitive issue in Germany because the coalition agreement between Merkel's CDU (an EPP member party), its Bavarian sister party CSU (also an EPP member party) and the SPD (S&D group in the EP) explicitly speaks out against upload filters, yet the Merkel regime voted in its favor at the EU level (in the EU Council), over a rather half-hearted objection (more of a PR stunt) by the SPD.

Merkel's spokesman Steffen Seibert even tweeted a banner that said the bill doesn't require upload filters.

But what's happened now exposes Merkel and her minions as having misled MEPs and the general public all along. An official question submitted by a member of the German Bundestag (national parliament), the libertarian FDP's Konstantin Kuhle, provoked the following answer by state secretary (in the Federal Ministry of Justice) Christian Lange (SPD):

"In the federal government's view it appears likely that algorithmic measures will have to be taken in connection with large volumes of data for practical reasons alone."

"Algorithmic measures" obviously means "upload filters." There's no denying anymore. They aren't even trying.

The Federal Ministry of Justice is run by the social democrats, and when that ministry answers a question related to one of its areas of responsibility (intellectual property policy has always been handled by the Federal Ministry of Justice, with the Federal Ministry of Economic Affairs merely being able to provide input of limited influence), it's allowed to do so on the federal government's behalf--even if other parts of the government disagree.

The most likely reason would be that the social democrats decided to drop this bomb on Article 13 in retaliation for Merkel's breach of the coalition agreement. It's less likely that Merkel's party has meanwhile concluded that it stands to lose from Article 13, which Germany wouldn't have supported if not for a horse trade between Merkel and Muckron (yeah, that spelling is intended). In that case, they might be secretly supportive of the statement by the Federal Ministry of Justice and also hope that things would now fall apart in the EU with respect to Article 13. But I guess this was done by the SPD and won't be viewed favorably by Merkel's party.

Even Frankfurter Allgemeine Zeitung (FAZ), an economically conservative (though socially rather leftist) newspaper that used to spread the no-upload-filter propaganda now considers it ridiculous to deny that Article 13 involves upload filters. FAZ even violated ethical standards by publishing a pro-Article-13 op-ed by a "creative industry" (meaning music or whatever) lobbyist without properly disclosing his conflict of interests. And FAZ's EU reporter Hendrik Kafsack has traditionally been either unwilling or unable to figure out the legal and practical truth about intellectual property legislation: in the software patent context, he was adamant about the Commission's and the EPP's lie that it wasn't about patents on software, only patents on software-controlled devices like washing machines, though SAP placed a big advertisement in an EU publication in which SAP, which obviously never made washing machines or similar products, stated the directive would cover its "innovations." I only had one conversation with him a long time ago and can't tell for sure, but he may just lack the knowledge and skills to figure these things out himself, and when I read what he writes about the copyright bill, I also find fundamental misconceptions there.

The article I just linked to--which says that it's ridiculous to deny the upload-filter issue--was authored by a Berlin-based FAZ editor who apparently has a much better grasp of the issues. By the way, FAZ also made a major IP-related mistake in December when they wrote about Apple losing a lot of business in the final days of the last Christmas Selling Season because of that Munich patent injunction secured by Qualcomm on a fake basis. If the person who wrote that piece had even had a minimum of knowledge about how injunctions (not just patent-related ones) are enforced in Germany, he'd have known that enforcement prior to resolution of the appeal requires a bond or deposit, which always (and in this case it was about $1.5 billion) takes more than a day to make so the injunction can actually be served on the defendant in the form of a letter demanding immediate compliance.

At least they have now, at long last, recognized their mistake regarding Article 13. With software patents they never retracted anything, not even after we had defeated the liars. That's progress.

Many German EPP MEPs do pay attention to what FAZ writes. In the best case, some of them would ask Mr. Voss some tough internal questions now about what he's been saying for many months.

Unlike many Article 13 opponents who bash or even insult Mr. Voss, I actually have a lot of sympathy for him. Because of my pro-copyright positions in connection with Oracle v. Google, I've also suffered a couple of shitstorms, which wouldn't have happened if the lower court (Northern District of California) hadn't made some bad decisions that the higher court (Federal Circuit), which arrived at the very same conclusions regarding copyrightability (first appeal) and fair use (second appeal) as I did, found erroneous. In fact, before Mr. Voss became the lightning rod for Article 13 opponents, I was the #1 shitstorm victim among people voicing pro-copyright positions. But even I oppose Article 13. And if enough people take to the streets on March 23, as I will, maybe a miracle will still happen. I've seen those miracles in similar situations.

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Tuesday, March 12, 2019

Testimony on stolen patent deals huge blow to Qualcomm's San Diego infringement case against Apple

The ongoing Qualcomm v. Apple patent infringement trial in San Diego (Southern District of California) is generally the least interesting part of the earth-spanning dispute between these two companies. As I explained in the blog post I just linked to, it's basically an attempt to get a better outcome in a jury trial than Qualcomm achieved in the ITC, where the most experienced Administrative Law Judge and his six bosses appeared to be underwhelmed by a complaint over the same patents-in-suit as in the San Diego case.

But there is one aspect of that San Diego case that's definitely interesting. It's a perfect example of how truth is sometimes stranger than fiction. If we come from the reasonably safe assumption that Arjuna Sivasithambaresan--who simply abbreviates his last name as "Siva"--testified truthfully under oath in two different fora (ITC and Southern District of California), Qualcomm's '949 patent was filed on an invention a then-Apple employee (now with Google) actually made.

In other words, the most reasonable inference from that testimony is that Qualcomm decided to sue Apple over a patent Qualcomm applied for because it learned about the idea from a then-Apple employee. That story of a robbery attempted with a weapon stolen from the victim would be unbelievable in its own right, and maybe not unprecedented in the history of patent infringement cases (it may or may not be), but certainly rare enough that I hadn't heard anything remotely as outrageous in all those years of monitoring patent lawsuits. Actually, the situation is even more bizarre:

Even though Qualcomm already became aware of this problem in the aforementioned ITC case over the same patents, and decided to drop the '949 patent from the ITC case shortly thereafter (most likely for this very reason), Qualcomm nevertheless decided to give it another try in San Diego. "Unbelievable" is not strong enough a word to describe this. Not even remotely. It's not just that Qualcomm is hardly going to prevail on the '949 patent: a story of a stolen patent undermines a plaintiff's credibility to an extent that's the next best thing to self-sabotaging the entire case.

In her opening statement, Apple's lead counsel in this case, Fish & Richardson's Juanita Brooks, already told the jury what Mr. Siva was going to testify. Based on Apple's experience with him in the ITC as well as based on his deposition in connection with the San Diego case, the assumption apparently (and quite understandably) was that Mr. Siva would tell the San Diego jury the very story he had told (more than once) before.

There was some temporary uncertainty as to whether Mr. Siva would go down to San Diego and testify. In the alternative, Apple would have had to tell the jury that what Mrs. Brooks announced in her opening statement just didn't work out, so the jury would have had to content itself with a videotaped deposition of Mr. Siva. In that context, Apple asked the court for a curative instruction (which is no longer needed since Mr. Siva ultimately did testify in front of the San Diego jury), and raised the issue of potential "witness tampering."

The parties' lawyers disagree on what exactly happened and what the consequences should be. What's certain is that Mr. Siva had been represented by Wilmer Hale, a firm that counts Apple among its clients, earlier on, but just last week he was suddenly represented by San Francisco-based attorney Matt Warren. Mr. Warren is a former Quinn Emanuel partner, and QE is representing Qualcomm in its infringement cases against Apple. What had Apple puzzled was that Mr. Siva--the former Apple engineer now employed by Google--suddenly didn't want to testify voluntarily. One version of the story is that Mr. Warren wanted Apple to subpoena his then-client; Apple's version suggests the problem might have been bigger, and a subpoena would have contracted Apple's opening statement. After Apple's allegation of witness tampering came up, Mr. Siva (the witness) appointed different counsel again, went down to San Diego, and delivered testimony that is pretty damning for Qualcomm's case.

From the outside, it's far from inconceivable that Qualcomm selected the '949 patent for the San Diego trial because its lawyers somehow hoped Mr. Siva wouldn't show up in San Diego and say essentially the same thing as in the ITC: that the claimed invention was his. not Qualcomm's.

But it's impossible to know who made the decision to give the '949 patent another try (after the ITC experience), and on what basis.

That's why Apple's lawyers phrased their suspicion of witness tampering somewhat carefully (according to a filing made today). They steered clear of specifically accusing Qualcomm or Quinn Emanuel. The temporary uncertainty surrounding Mr. Siva's willingness to appear in front of the San Diego jury was, however, strange enough that Judge Sabraw said: "I do understand why Apple is very upset."

Without formally moving for sanctions, Qualcomm's lawyers stated they might seek all sorts of sanctions against Apple and its counsel, including a directed verdict on infringement and validity or the termination of Apple's lead counsel from the case. At this point I doubt anything serious is going to happen. If Mr. Siva had not appeared in San Diego, then there would have been something to fight about. But whether or not there was any uncertainty as to his willingness to come down to San Diego (which Qualcomm's lawyers deny), it's irrelevant to the jury. The jury heard his testimony, and it couldn't have gone worse for Qualcomm.

Here's Apple's latest filing related to this subissue of the wider dispute, and that filing describes the chronology of events (this post continues below the document):

19-03-12 Apple Response to ... by on Scribd

On this occasion I'd also like to show you Apple's motion for judgment as a matter of law, claiming that Qualcomm failed to prove infringement, willfulness, and its damages claims (invalidity is not addressed by that motion because it's Apple's--not Qualcomm's--case to make, and the motion was filed after Qualcomm's case-in-chief, not after Apple's):

19-03-11 Apple Motion for J... by on Scribd

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