Thursday, January 24, 2019

Preliminary opinion of European Patent Office sides with Apple and Intel: two Qualcomm patents invalid

While the Ninth Circuit's decision to let Qualcomm appeal the certification of a 250-million consumer class and Judge Koh's related announcement to stay the $5 billion class action (which builds upon the FTC case, but not the other way round) pending the appeal is good news for Qualcomm, Kerrisdale Capital's opinion that Qualcomm's stock may lose half its value and a whopping number of 21 (twenty-one!) inter partes reviews (post-grant proceedings that may result in the invalidation of patents) instituted over the last eight days by the Patent Trial and Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO) against Qualcomm are significant setbacks.

Now there's bad news from Munich, the very city in which a regional court (comparable to a U.S. district court, though only the nation's top courts are federal courts) recently granted Qualcomm a pair of injunctions over a chip patent against Apple that Qualcomm is enforcing despite an ongoing appeal after posting bonds over more than $1.5 billion--but without getting any serious leverage over Apple as the enjoined products (iPhone 7 and 8) remain widely available through carriers and retailers. Qualcomm has obtained a preliminary injunction barring Apple from telling it like it is, so Apple must not issue press releases or give answers to journalists according to which those devices are available at more than 4,000 points-of-sale. But that preliminary injunction, which according to media reports is based on misleading promotional statements, just puts the next symbolical victory on top of another without representing actual leverage.

I asked the Munich I Regional Court, but the court declined to comment. I also asked the Munich Higher Regional Court about the status of Apple's appeal of the injunctions, but received no new information. The last thing I heard was that Qualcomm still had time to respond to Apple's motion to stay the enforcement of those injunctions.

In a week from today, the Munich I Regional Court's Seventh Civil Chamber under Presiding Judge Dr Matthias Zigann will rule on eight Qualcomm complaints over a set of four patents. The number of eight cases is due to two complaints having been filed over each of the four patents (one against Apple Inc., the U.S. parent entity, and another one against a couple of European Apple entities). The patents-in-suit are the German parts of four European patents from the same family, each covering a "method and device for communication channel selection": EP1956806, EP1955529, EP3054658, and EP3094067. The claimed "inventions" were made by SnapTrack, a GPS-focused Silicon Valley startup aquired by Qualcomm in 2000 for $1 billion.

Even if Qualcomm won any of those eight cases (which is highly unlikely now in light of what I'll explain below), it wouldn't get any leverage as iOS 12 contains a workaround.

But Qualcomm won't realistically win a single one of those eight cases.

Some of those cases were already dead in the water at the time of the trial because the particular patents asserted in those cases require a "standby" functionality where an app does not have to be started by the user by means of tapping on an icon.

There's a strong case for non-infringement (the absence of a filter that a correct claim construction would require), but even if the court wasn't sure about non-infringement, those cases are in all likelihood going to be stayed (they just wouldn't be stayed if they could be thrown out altogether).

As I reported in May, Apple and Intel are attacking two of those four Spotlight patents (the two youngest ones) in opposition proceedings before the European Patent Office. Yesterday (January 23, 2019), the EPO's Opposition Division scheduled a hearing in those two parallel proceedings for November 28, 2019, and tue summons to the hearing came with an annex: a preliminary opinion according to which those patents are invalid.

Here's one of the two near-identical opinions, and here's a link to the other (this post continues below the document with an explanation of the EPO's findings and a summary of Qualcomm's poor results in Germany):

19-ß1-23 Annex to EPO Commu... by on Scribd

Let me explain:

  • First, the decision looks at the relevant independent claims in their granted form, and finds them to be non-novel.

  • It then analyzes the relevant dependent claims and finds that what they add to the independent claims they're based on doesn't make them any more patentable.

  • Earlier in the infringement proceedings, Qualcomm already realized that those patents weren't going to survive in their granted form. That's why Qualcomm's counsel, Quinn Emanuel's Dr. Marcus Grosch, altered course and henceforth sought to prevail on the basis of amended (in the sense of "narrowed") claims.

    In the EPO documents, those amended claims are called "auxiliary requests."

    The two EPO opinions find that the amended claims ("auxiliary requests") aren't patentable because the additional elements introuced aren't supported by the patent specifications.

As a result, those two patents are (unless the EPO changes its opinion before or at the late-November 2019 hearing, which I doubt very much) finished. German courts hearing infringement cases attach significant weight to such preliminary holdings by the EPO because they know that the EPO's examiners have technical knowledge and give a fair amount of thought to such matters.

Those opinions relate to only two of the four patents-in-suit: EP3054658, and EP3094067. However, they're all from the same family and largely identical. The only reason for which Apple and Intel couldn't file oppositions with the EPO is a statute of limitation: Opposition to an EPO patent must be filed within nine months of the publication of the notice that the patent has been granted. But the other two patents are being challenged before the Federal Patent Court of Germany (Bundespatentgericht), which is even stricter than the EPO.

Some other German Qualcomm v. Apple cases have yet to go to trial (or a Munich first hearing; at some point one was scheduled for late March over an antenna patent).

The ones that have gone to trial are a mix of one symbolical victory that doesn't give Qualcomm leverage and a long list of defeats:

Qualcomm's patent infringement cases haven't delivered, apart from reports that overstated the significance of some symbolical victories. Too many gullible people write about patent cases. I know that last statement sounds arrogant, but unfortunately it's true. If everyone writing about them understood what the actual, practical, technical and economic consequences are, many misunderstandings could be avoided. Qualcomm has first-rate PR people, internally as well as externally. But I look at the substance of those cases and the actual impact, and I'm underwhelmed for the time being.

Neither has Qualcomm gained leverage nor has it had a "hit rate" that would support its claims of having an unbelievably strong patent portfolio compared to other companies in the industry. And some of the patents-in-suit aren't even original Qualcomm patents but were acquired at some point.

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